<PAGE>
As filed with the Securities and Exchange Commission on January 5, 1998
Registration Nos. 333-36161
811-08373
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _1_ [X]
Post-Effective Amendment No. ___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. _1_ [X]
(Check appropriate box or boxes.)
----------------------
LaSalle Partners Funds, 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 Partners Funds, 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 the LaSalle Partners U.S. Real Estate
Fund series 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.
================================================================================
<PAGE>
LA SALLE PARTNERS FUNDS, 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 PARTNERS FUNDS, INC.
CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Form N-1A Item No. Section in the Prospectus
- ----------------- -------------------------
<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 JANUARY 5, 1998
PROSPECTUS
LA SALLE PARTNERS U.S. REAL ESTATE FUND
RETAIL CLASS AND INSTITUTIONAL CLASS SHARES
LaSalle Partners U.S. Real Estate Fund (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 the U.S. Real Estate Portfolio of
LaSalle Partners Master Trust (the "Trust"), which is a separate mutual fund
with an identical investment objective managed by LaSalle Partners Real Estate
Securities. The Fund's investment experience will correspond directly with the
investment experience of the Trust. This "master/feeder" structure differs from
that of mutual funds which invest directly and manage their own portfolio
securities.
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 January 5, 1998, has been filed with
the Securities and Exchange Commission ("SEC") and is incorporated herein by
reference. The Statement of Additional Information is available upon request
and without charge by calling the Fund at 1-800-LaSalle. The SEC also maintains
a Web site (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference, and other information
regarding the Fund.
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.
DECEMBER , 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 Partners U.S. Real Estate Fund (the "Fund") is a separate series of
LaSalle Partners Funds, Inc. (the "Company"), 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 the U. S. Real Estate Portfolio of LaSalle Partners 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." and "General Information."
INVESTMENT MANAGER, DISTRIBUTOR AND ADMINISTRATOR
LaSalle Partners Real Estate Securities (the "Manager" or "LaSalle
Securities") 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 1-800-LaSalle.
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
Company'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
------------ -------------------
<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 (after waiver)/2/ ........... 0.65% 0.65%
12b-1 Fees................................... 0.25% 0.00%
Shareholder Services Fee..................... 0.15% 0.00%
Other Expenses/3/ ........................... 0.40% 0.40%
Total Fund Operating Expenses (after fee
waiver)/2/,/4/.............................. 1.45% 1.05%
</TABLE>
1. Expenses shown for the Fund include 12b-1, shareholder services and
administration fees for the Fund and investment management fees and other
expenses for the Trust.
2. The Manager has voluntarily agreed to waive its management fee to limit
total operating expenses of the Fund during its first year of operations.
Absent such waiver, the management fee would be 0.75%.
3. 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, 12b-1 and
shareholder services fees.
4. The Manager has voluntarily agreed to waive its fee during the Fund's first
year of operations so that Total Fund Operating Expenses will not exceed
1.45% for the Retail Class and 1.05% for the Institutional Class. In the
absence of this waiver, Total Fund Operating Expenses for the Retail Class
and Institutional Class would be 1.55% and 1.15%, respectively. For
additional information regarding Fund expense limitations, see "Investment
Manager" in the Statement of Additional Information.
EXAMPLE
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
-------- -----------
<S> <C> <C>
You would pay the following expenses on a $1,000 invest-
ment, assuming
(1) 5% annual return and (2) redemption at the end of
each time period:
Retail Class........................................... $15 $46
Institutional Class.................................... $11 $34
</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
INVESTMENT MANAGER'S PERFORMANCE
The chart below shows the historical performance of all private accounts
having substantially the same investment objective as the Fund and the Trust
for which the investment manager is LaSalle Securities, 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 January 5, 1998, 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>
LaSalle Securities Asset
Weighted Rate of
Return/1/.............. 38.21% 16.28% 6.47% 18.01% 17.12% 35.57% (18.32)% 10.92% 13.91% (1.83)%
Mutual Fund/2/.......... 32.70% 18.20% -- -- -- -- -- -- -- --
NAREIT Equity/3/........ 35.27% 15.27% 3.17% 19.65% 14.59% 35.70% (15.35)% 8.84% 13.49% (3.64)%
NAREIT Composite/4/..... 35.75% 18.31% 0.81% 18.55% 12.18% 35.68% (17.35)% (1.81)% 11.36% (10.67)%
Wilshire Real Estate
Securities Index/5/.... 36.87% 13.65% 1.64% 15.23% 7.40% 20.03% (33.46)% 2.37% 24.18% (7.86)%
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
</TABLE>
1. The composite performance data shown above for the LaSalle Securities Asset
Weighted Rate of Return (the "LaSalle Securities Composite") was developed
from the aggregate performance of all private accounts that are managed on a
basis substantially the same as the Manager employs in managing the assets of
the Trust. The LaSalle Securities 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 LaSalle Securities 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"), which differs
from the SEC's method of performance calculation 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 and
the Trust. 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.
2. The Manager is the subadviser of a mutual fund with substantially the same
investment objective as the Fund and the Trust. The mutual fund's performance
results were obtained from the mutual fund's annual reports. The performance
results assume the reinvestment of dividends and capital gains distributions
and exclude the impact of any sales charge. If the sales charge were
reflected, the performance results would be lower.
3. The NAREIT Equity Index reflects the performance of all publicly traded
Equity REITs.
4. The NAREIT Composite Index reflects the performance of all publicly traded
REITs.
5. The Wilshire Real Estate Securities Index is a market capitalization
weighted index of publicly traded real estate securities, such as REITs, real
estate operating companies and partnerships. The Index is comprised of
4
<PAGE>
companies whose charter is the equity ownership and operation of commercial
real estate. The following security types are excluded from the Index: (i)
Mortgage REITs, (ii) Health Care REITs, (iii) real estate finance companies,
(iv) home builders, (v) large land owners and sub-dividers and (vi) Hybrid
REITs. To be included on the Index, a company must (i) have a book value of
real estate assets of at least $100 million, (ii) have a market capitalization
of at least $100 million, and (iii) derive at least 75% of its total revenue
from the ownership and operation of real estate assets.
THE MANAGER'S 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. THE MANAGER'S HISTORICAL
PERFORMANCE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF THE FUTURE
PERFORMANCE OF THE FUND OR THE TRUST.
FUND PERFORMANCE
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 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,
5
<PAGE>
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 (for which
no minimum rating is required). 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. See
"Risks to Consider--Investment 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.
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.
6
<PAGE>
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.
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 series of a 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.
7
<PAGE>
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 1-800-LaSalle.
The Board of Directors of the Company 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 (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 SEC, whenever the Company is requested to vote on
matters pertaining to the Trust, the Company will hold a meeting of Fund
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
Company'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 Company's Board of Directors. No investment
restriction of the Fund prevents the Fund from investing all of its investable
assets in the Trust.
8
<PAGE>
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 the
Board of Directors of the Company, while the business and affairs of the Trust
are managed under the supervision of its Board of Trustees. The Company's
Board of Directors approves all significant agreements between the Company 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 Company'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
LaSalle Securities serves as manager of the Fund pursuant to a management
agreement with the Company. 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 Company'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 under its management agreement with
the Company. Under such management agreement the Manager would be entitled to
receive an investment management fee from the Fund, accrued daily and paid
monthly, at the annual rate of 0.75% 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 0.75% of the Trust's
average net assets.
The Manager is a registered investment adviser and together with its
affiliates had as of September 30, 1997, approximately $2.8 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 over 1,300 employees in ten
corporate offices across the United States and seven international offices.
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 organized under the name
ABKB/LaSalle Securities Limited, 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.
The Trust may, from time to time, consistent with its investment policies and
applicable law, invest in securities of companies with which LaSalle Partners
has a business relationship. Any such relationship will not be a factor
considered by the Manager in making decisions regarding the securities to be
purchased or sold for the Trust.
9
<PAGE>
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 Company 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 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 0.11% of the first $250 million of the average
net assets of the Trust, 0.085% of the next $250 million of such assets, 0.06%
of the next $250 million of such assets, 0.05% of the next $250 million of
such assets and 0.04% of such assets in excess of $1 billion, subject to a
minimum monthly fee of $7,917, 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 $2,000, 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 Company has adopted a distribution plan for the Retail Class of the Fund
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 0.75%
annually of the average net assets of the Retail Class, or such lesser amount
as specified by the Company's Board of Directors. The Board of Directors has
authorized payment of an annual distribution fee of 0.25%. 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 Company. 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 0.25% annually of the average net assets of the Retail Class
attributable to applicable shareholder accounts, or such lesser amount as
specified by the Company's Board of Directors. The Board of Directors has
authorized payment of an annual shareholder services fee of 0.15%.
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 Company's directors who are not "interested persons" of the
Company (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 Company offers investors two classes of shares of the Fund -- 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. See "Management--
Distribution Arrangements."
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 Company and the Distributor reserve the right to reject any purchase order
and to suspend the offering of shares of the Fund. The Company 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 Company may waive the minimum initial investment requirement
for any investor.
RETAIL CLASS SHARES
Investors can purchase Retail Class shares 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 $10,000.
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 Partners Funds, Inc.--LaSalle Partners U.S. Real
Estate Fund" for the amount of the investment to the Company at the following
address: LaSalle Partners Funds, Inc., c/o PFPC Inc., P.O. Box 8976,
Wilmington, DE 19899-8976. Retail Class shares may not be purchased with a
check issued by a third party and endorsed over to the Fund.
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 Partners Funds, Inc.--LaSalle Partners U.S. Real
Estate Fund
Retail Class Shares
11
<PAGE>
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 1-800-LaSalle by 12:00 p.m. (Eastern Time) of their
intention to wire money. The Company 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, financial institutions (such as
banks, savings institutions and credit unions), pension and profit sharing and
employee benefit plans and trusts, insurance companies, investment companies,
and investment advisers and broker-dealers acting for their own accounts or
for the accounts of such institutional investors. The minimum initial
investment for Institutional Class shares is $250,000 ($1,000 for LaSalle
employee investment accounts). For more information contact the Fund at 1-800-
LaSalle.
EMPLOYEE PURCHASE PROGRAM
Current and former directors and officers of the Company, 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 Company by making an
initial investment of $1,000 or more. Institutional Class shares may be
purchased for an employee investment account as described under "Retail Class
Shares" above. To open an employee investment account, call 1-800-LaSalle 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.
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.
12
<PAGE>
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 Company at the following address: LaSalle Partners Funds,
Inc., c/o PFPC Inc., P.O. Box 8976, Wilmington, DE 19899-8976. 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
$25,000; (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
$25,000, by notifying the Fund's transfer agent by telephone at 1-800-LaSalle.
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 Company 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.
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 Company has the power under its charter to redeem the shares in any
shareholder account with a value of less than the minimum initial investment
for such shares 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 Company's policy is to make quarterly distributions from the net
investment company taxable income of the Fund. 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
13
<PAGE>
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 Company
currently expects that a portion of the Fund's 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.
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Fund is a series of the Company which 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 Company's Board of Directors. In the
event of liquidation of the Fund or dissolution of the Company, 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 Company 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 Company'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.
14
<PAGE>
The shares offered by this Prospectus have been designated Retail Class and
Institutional Class shares of the LaSalle Partners U.S. Real Estate Fund
series. The Board of Directors of the Company 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 1-800-LaSalle.
The Trust, in which all of the investable assets of the Fund will be invested,
is a series of a business trust organized 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 Company'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 Company 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 Company will assist with the
shareholder communications in connection with the meeting.
SHAREHOLDER REPORTS
The Company 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 Company's independent accountants, Coopers &
Lybrand L.L.P.
OFFICERS AND DIRECTORS OF THE FUND
<TABLE>
<S> <C>
Bruce D. Alexander Director
Lawrence S. Bacow Director
Richard A. Dobbins Director
John W. McCarter, Jr. Director
Lynn C. Thurber Director
William K. Morrill, Jr. Director and President
Keith R. Pauley Director and Executive Vice President
Stephen A. Smith Senior Vice President and Secretary
Audre' J. Melsbakas Senior Vice President and Assistant Secretary
James A. Ulmer, III Vice President
William E. Sullivan Treasurer
Denise M. Ruth Assistant Treasurer
</TABLE>
* Ms. Thurber and Messrs. Morrill and Pauley are directors who are "interested
persons" of the Company 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.
TRANSFER AGENT
PFPC Inc., 103 Bellevue Parkway, Wilmington, Delaware 19809, serves as
transfer agent and dividend paying agent for the Fund's shares.
15
<PAGE>
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia, Pennsylvania
19103, has been selected as independent accountants for the Company and the
Trust.
LEGAL COUNSEL
Piper & Marbury L.L.P., 36 South Charles Street, Baltimore, Maryland 21201,
serves as counsel to the Company and the Trust.
INVESTOR INQUIRIES
Investors with questions regarding the Fund should contact their dealer or
call the Company directly at 1-800-LaSalle.
ADDITIONAL INFORMATION
The Company 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, material incorporated by reference and other information regarding
the Fund and the Trust.
16
<PAGE>
LA SALLE PARTNERS FUNDS, 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
January 5, 1998
LaSalle Partners U.S. Real Estate Fund
STATEMENT OF ADDITIONAL INFORMATION
January 5, 1998
This Statement of Additional Information is not a prospectus but
provides additional information that should be read in conjunction with the
Prospectus dated January 5, 1998 including any supplements thereto. To
obtain additional copies of the Prospectus, please call 1-800-LaSalle.
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 Partners U.S. Real Estate Fund (the "Fund") is a series of
LaSalle Partners Funds, Inc. (the "Company"), an open-end diversified management
investment company. The Company currently offers two classes of shares of the
Fund: 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 Company and the
Trust is included in the Prospectus which may be obtained without charge from
the Company's distributor or securities dealers and other financial institutions
that have a sales agreement with the Company'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 a series of an
open-end management investment company having the same investment objective as
the Fund. The investment company is the U.S. Real Estate Portfolio of LaSalle
Partners Master Trust (the "Trust") for which LaSalle Partners Real Estate
Securities (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 Company was incorporated under the laws of the State of Maryland
on September 19, 1997. The Company 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 of the Fund
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.
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. 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 Company'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 its total assets in foreign
securities.
(5) Invest more than 20% of its total assets in any one issuer.
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 Company 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 Company 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 Company 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 Company and the Trust have elected to
be governed by Rule 18f-1 under the 1940 Act pursuant to which the Company
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 Company 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 Company may cause the redemption of a
Retail Class share account with a balance of less than $10,000, or an
Institutional Class share account with a balance of less than $250,000,
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
Company 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 Company 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 Company 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 Company
The Board of Directors of the Company consists of seven directors. The
directors and officers of the Company, their ages and their principal
occupations during the last five years are set forth below. Each director
who is an "interested person" of the Company (as defined in the 1940 Act)
is indicated by an asterisk (*).
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS AGE WITH REGISTRANT DURING PAST FIVE YEARS
- ---------------- --- ---------------- -----------------------
<S> <C> <C> <C>
Bruce D. Alexander 54 Director Adjunct Professor, Yale University
5062 Whetstone Road School of Mangement; Senior
Columbia, MD 21044 Vice President and Director of
New Business, The Rouse
Company
Lawrence S. Bacow 46 Director Professor, Massachusetts Institute
75 Summit of Technology
Newton, MA 02158
Richard A. Dobbins 52 Director President, Historical Data Systems,
520 Washington Street Inc.; President, Municipal Market
Duxbury, MA 02331 Data, Inc.
John W. McCarter, Jr. 59 Director President and Chief Executive
The Field Museum Officer of The Field Museum;
1200 South Lake Shore Drive Senior Vice President of Booz,
Chicago, IL 60605 Allen & Hamilton, Inc.
Lynn C. Thurber* 50 Director Director, LaSalle Partners
200 East Randolph Drive Incorporated; Co-President,
Chicago, IL 60601 LaSalle Advisors Capital
Management, Inc.; Managing
Director, LaSalle Advisors Limited
Partnership; Chief Executive
Officer of ABKB/LaSalle
Securities Limited; Chief
Operating Officer and Director of
Acquisitions, ABKB/LaSalle
Securities Limited
William K. Morrill, Jr.* 60 Director; President Managing Director, ABKB/
100 East Pratt Street LaSalle Securities Limited
Baltimore, MD 21202
Keith R. Pauley* 36 Director; Executive Managing Director/Portfolio
100 East Pratt Street Vice President Manager, ABKB/LaSalle
Baltimore, MD 21202 Securities Limited
Stephen A. Smith 39 Senior Vice President Managing Director, Private Capital
200 East Randolph Drive Secretary of LaSalle Advisors Limited
Chicago, IL 60601 Partnership
Audre' J. Melsbakas 34 Senior Vice President Principal, LaSalle Partners
200 East Randolph Drive Assistant Secretary Incorporated; Associate, The
Chicago, IL 60601 Keystone Group
James A. Ulmer, III 58 Vice President Vice President, ABKB/LaSalle
100 East Pratt Street Securities Limited; Principal,
Baltimore, MD 21202 AIRES Real Estate Services;
Chairman and President, Enoch
Pratt Free Library
William E. Sullivan 42 Treasurer Executive Vice President, Chief
200 East Randolph Drive Financial Officer and Director of
Chicago, IL 60601 LaSalle Partners Incorporated;
Executive Vice President and
Chief Financial Officer of LaSalle
Partners' predecessor partnerships;
Managing Director of the special
projects group of LaSalle Partners'
predecessor partnerships; Senior
Vice President of the special
projects group of LaSalle Partners'
predecessor partnerships
Denise M. Ruth 26 Assistant Secretary Operations Manager, ABKB/
100 East Pratt Street LaSalle Securities Limited;
Baltimore, MD 21202 Assistant Accountant, T. Rowe
Price, Inc.
</TABLE>
The Company's Articles of Incorporation require the Company to
indemnify its directors and officers to the full extent permitted by
Maryland law. Nothing in the charter or bylaws of the Company protects any
director or officer against any liability to the Company 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 Company who are "interested persons"
of the Company within the meaning of the 1940 Act do not receive
compensation directly from the Company for serving in the capacities
described above. However, those officers and directors who are affiliated
with the Manager may receive remuneration indirectly from the Company 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 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 Company to directors in the current fiscal
year. Neither the Company nor any investment company in the Fund Complex
offers any pension or retirement benefits to its directors or trustees.
B-10
<PAGE>
AGGREGATE COMPENSATION TOTAL COMPENSATION FROM THE
NAME OF DIRECTOR FROM THE COMPANY (1) COMPANY AND FUND COMPLEX (1)(2)
- ---------------- -------------------- -------------------------------
Bruce D. Alexander $6,000 $12,000
Lawrence S. Bacow $6,000 $12,000
Richard A. Dobbins $6,000 $12,000
John W. McCarter, Jr. $6,000 $12,000
William K. Morrill, Jr. -- --
Keith R. Pauley -- --
Lynn C. Thurber -- --
(1) The Company commenced operations in January, 1998. The amounts
indicated are estimates of the compensation expected to be paid to
directors of the Company during the Company's first fiscal year ending
November 30, 1998.
(2) As of the date hereof, the "Fund Complex" consisted of the Company and
the Trust (which also commenced operations in January, 1998).
As of the date of this Statement of Additional Information, the
officers, directors and trustees of the Company 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 seven trustees. The
trustees and officers of the Trust, their ages and their principal
occupations during the last five years are set forth below. Each trustee
who is an "interested person" of the Trust (as defined in the 1940 Act) is
indicated by an asterisk (*).
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS AGE WITH REGISTRANT DURING PAST FIVE YEARS
- ---------------- --- ---------------- -----------------------
<S> <C> <C> <C>
Bruce D. Alexander 54 Director Adjunct Professor, Yale University
5062 Whetstone Road School of Mangement; Senior
Columbia, MD 21044 Vice President and Director of
New Business, The Rouse
Company
Lawrence S. Bacow 46 Director Professor, Massachusetts Institute
75 Summit of Technology
Newton, MA 02158
Richard A. Dobbins 52 Director President, Historical Data Systems,
520 Washington Street Inc.; President, Municipal Market
Duxbury, MA 02331 Data, Inc.
John W. McCarter, Jr. 59 Director President and Chief Executive
The Field Museum Officer of The Field Museum;
1200 South Lake Shore Drive Senior Vice President of Booz,
Chicago, IL 60605 Allen & Hamilton, Inc.
Lynn C. Thurber* 50 Director Director, LaSalle Partners
200 East Randolph Drive Incorporated; Co-President,
Chicago, IL 60601 LaSalle Advisors Capital
Management, Inc.; Managing
Director, LaSalle Advisors Limited
Partnership; Chief Executive
Officer of ABKB/LaSalle
Securities Limited; Chief
Operating Officer and Director of
Acquisitions, ABKB/LaSalle
Securities Limited
William K. Morrill, Jr.* 60 Director; President Managing Director, ABKB/
100 East Pratt Street LaSalle Securities Limited
Baltimore, MD 21202
Keith R. Pauley* 36 Director; Executive Managing Director/Portfolio
100 East Pratt Street Vice President Manager, ABKB/LaSalle
Baltimore, MD 21202 Securities Limited
Stephen A. Smith 39 Senior Vice President Managing Director, Private Capital
200 East Randolph Drive Secretary of LaSalle Advisors Limited
Chicago, IL 60601 Partnership
Audre' J. Melsbakas 34 Senior Vice President Principal, LaSalle Partners
200 East Randolph Drive Assistant Secretary Incorporated; Associate, The
Chicago, IL 60601 Keystone Group
James A. Ulmer, III 58 Vice President Vice President, ABKB/LaSalle
100 East Pratt Street Securities Limited; Principal,
Baltimore, MD 21202 AIRES Real Estate Services;
Chairman and President, Enoch
Pratt Free Library
William E. Sullivan 42 Treasurer Executive Vice President, Chief
200 East Randolph Drive Financial Officer and Director of
Chicago, IL 60601 LaSalle Partners Incorporated;
Executive Vice President and
Chief Financial Officer of LaSalle
Partners' predecessor partnerships;
Managing Director of the special
projects group of LaSalle Partners'
predecessor partnerships; Senior
Vice President of the special
projects group of LaSalle Partners'
predecessor partnerships
Denise M. Ruth 26 Assistant Secretary Operations Manager, ABKB/
100 East Pratt Street LaSalle Securities Limited;
Baltimore, MD 21202 Assistant Accountant, T. Rowe
Price, Inc.
</TABLE>
Code of Ethics
The Board of Directors of the Company 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 Company 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, and
all Company 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
B-11
<PAGE>
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 Directors of the Company has approved a Management
Agreement between the Company 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 Company'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 0.75% 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 Company 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 Company 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 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 Company and the Trust. Each of the
Company 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
Company/Trust to federal, state or other governmental agencies; (v) the
cost of share certificates representing shares of the Company/Trust, (vi)
fees involved in registering and maintaining registrations of the
Company/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 Company/Trust; (xi) membership or association dues for the
Investment Company Institute or similar organizations; (xii) interest
payable on Company/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 Company 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 Fund 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 and the Trust will commence operations in January
1998, neither the Fund nor the Trust have paid any fees to the Administrator as
of January 5, 1998. 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 Company. The Distribution Agreement was
initially approved by the Board of Directors of the Company. 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 Company 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 Company or the
Distributor on 60 days' written notice. It will terminate automatically in
the event of its assignment (as defined by the 1940 Act).
The Company and the Distributor reserve the right to reject any
purchase order and to suspend the offering of shares of the Fund. The
Company 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 Company may waive the minimum
investment requirements for any investor. The factors to be considered in
the waiver or variation of such minimum investments include, but are not
limited to, the relationship of the investor to the Company, the amount of
the proposed investment, and the type of investor.
Distribution Plan
The Company has adopted a Distribution Plan for the Retail Class of
the Fund (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 0.75% annually of the average net assets of the Retail Class, or
such lesser amount as may be specified by the Company's Board of Directors.
The Board of Directors has authorized payment of an annual distribution fee
of 0.25% 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 Company 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 Company
(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 Company, and of the directors who are not
"interested persons" of the Company (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 Company (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 Company will commence operations in January, 1998 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 Company has adopted a Shareholder Services Plan for the Retail
Class of the Fund 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 0.25% of average
net assets of the Retail Class attributable to its shareholder accounts, or
such lesser amount as may be specified by the Company's Board of Directors.
The Board of Directors has authorized payment of an annual shareholder
services fee of 0.15%.
PERFORMANCE INFORMATION
The Fund may compare its performance to other funds or to relevant
indices, such as the Wilshire Real Estate Index, the NAREIT Composite
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 its performance 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 Company's registration statement (or the
later commencement of operations of the Fund or class). In calculating the
ending redeemable value for a class of 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 Company 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 Company is authorized to issue 50 million Retail Class shares and
50 million Institutional Class shares of its LaSalle Partners U.S. Real
Estate Fund series 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 Company'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 a single series of shares, the
LaSalle Partners U.S. Real Estate Fund, having two classes of shares:
Retail Class shares and Institutional Class shares. In the event additional
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 will be treated as
separate entities. Generally, each class of shares issued by a particular
series will be identical to every other class and expenses of the series
(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 class, have equal rights with
respect to voting, except that the holders of a particular class of shares
are not entitled to vote on any matter which does not affect any interest
of that class. All classes of Fund shares 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 Company. 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 of the Fund or dissolution of the
Company, 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
<PAGE>
LA SALLE PARTNERS FUNDS, INC.
LASALLE PARTNERS U.S. REAL ESTATE FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 29, 1997
<TABLE>
<S> <C>
ASSETS:
Investment in LaSalle Partners Master Trust
at Value (cost $100,000)........................................... $100,000
Prepaid State Registration Fees..................................... 29,710
Deferred Organization Expenses...................................... 95,063
--------
Total Assets...................................................... 224,773
--------
LIABILITIES:
Expenses Payable to the Manager..................................... 124,773
--------
NET ASSETS:........................................................... $100,000
========
NET ASSETS CONSIST OF:
Capital stock, par value $.01 per share, unlimited shares
authorized......................................................... $ 100
Additional paid-in capital.......................................... 99,900
--------
Total............................................................. $100,000
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER INSTITUTIONAL CLASS
SHARE
($99,000 / 9,900 shares outstanding)................................. $ 10.00
========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER RETAIL CLASS SHARE
($1,000 / 100 shares outstanding).................................... $ 10.00
========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-2
<PAGE>
LA SALLE PARTNERS FUNDS, INC.
LASALLE PARTNERS U.S. REAL ESTATE FUND
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 29, 1997
1. ORGANIZATION
LaSalle Partners Funds, Inc. (the "Company"), a Maryland Corporation, is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company currently offering one
series: LaSalle Partners U.S. Real Estate Fund (the "Fund"). The Company has
not commenced operations except those relating to organizational matters and
the issuance of Institutional and Retail Class shares to LaSalle Partners Co-
investment, Inc., the Fund's sponsor, and the investment proceeds in LaSalle
Partners Master Trust U.S. Real Estate Portfolio (the "Portfolio"). The
investment in the Portfolio is valued at the aggregate net asset value of the
Portfolio multiplied by the Fund's proportionate share of the Portfolio.
2. SIGNIFICANT ACCOUNTING POLICIES
Organization expenses will be amortized on a straight line basis over a
period not to exceed five years from the commencement date of operations. In
the event LaSalle Partners Co-investment, Inc. redeems all or part of its
initial investment in shares of the Fund, the proceeds will be reduced by the
product of any unamortized organization expenses and the proportion of the
number of shares redeemed to the initial shares invested.
The initial state registration costs have been deferred and will be charged
to expense over the period that a benefit is expected to be realized.
3. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Company has entered into (1) a Management Agreement with ABKB/LaSalle
Securities Limited (the "Manager"), (2) Administration and Accounting and
Transfer Agency Services Agreements with PFPC Inc. under which PFPC Inc.
provides administration, accounting, and transfer agency services to the
Company pursuant to the Agreements, and (3) a Distribution Agreement with
Funds Distributor, Inc. ("FDI") under which FDI will distribute shares of the
Fund and provide information to shareholders.
F-3
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of LaSalle Partners Funds, Inc.:
We have audited the accompanying Statement of Assets and Liabilities of
LaSalle Partners Funds, Inc. (the "Fund") as of December 29, 1997. This
financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of LaSalle Partners Funds,
Inc. as of December 29, 1997 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 29, 1997
F-4
<PAGE>
LA SALLE PARTNERS MASTER TRUST
U.S. REAL ESTATE PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 29, 1997
<TABLE>
<S> <C>
ASSETS:
Cash ............................................................... $100,000
Deferred Organization Expenses...................................... 80,863
--------
Total Assets...................................................... 180,863
--------
LIABILITIES:
Organization Expenses Payable to the Manager........................ 80,863
--------
NET ASSETS:........................................................... $100,000
========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE>
LA SALLE PARTNERS MASTER TRUST
U.S. REAL ESTATE PORTFOLIO
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 29, 1997
1. ORGANIZATION
LaSalle Partners Master Trust (the "Trust"), a Delaware Business Trust, is
registered under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company currently offering one
portfolio: U.S. Real Estate Portfolio (the "Portfolio"). The Trust has not
commenced operations except those relating to organizational matters and the
sale of beneficial interest in the amount of $100,000 to the LaSalle Partners
U.S. Real Estate Fund (the "Fund").
2. SIGNIFICANT ACCOUNTING POLICIES
Organization expenses will be amortized on a straight line basis over a
period not to exceed five years from the commencement date of operations. The
Fund will reimburse the Portfolio for any unamortized organization expenses
upon the withdrawal of any initial beneficial interest. The amount to be
reimbursed will be determined by the proportion of the amount of initial
beneficial interest withdrawn to the initial beneficial interest after taking
into account any prior withdrawals of such initial beneficial interest.
The value of an investor's beneficial interest in the Portfolio is equal to
the product of the aggregate net asset value of the Portfolio and the
percentage representing that investor's share of the aggregate beneficial
interest in the Portfolio effective for that day.
3. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER TRANSACTIONS WITH
AFFILIATES
The Trust has entered into an Investment Management Agreement with
ABKB/LaSalle Securities Limited (the "Manager") and an Administration and
Accounting Services Agreement with PFPC Inc. under which PFPC Inc. provides
administration and accounting services to the Trust pursuant to the Agreements.
F-6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Investors and Board of Trustees
of LaSalle Partners Master Trust:
We have audited the accompanying Statement of Assets and Liabilities of
LaSalle Partners Master Trust (the "Trust") as of December 29, 1997. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of LaSalle Partners Master
Trust as of December 29, 1997 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
F-7
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements:
Included in Parts A and B:
Statement of Assets and Liabilities of the Registrant at
December 29, 1997.
Notes to Statement of Assets and Liabilities.
Report of Independent Accountants.
Statement of Assets and Liabilities of LaSalle Partners Master
Trust at December 29, 1997.
Notes to Statement of Assets and Liabilities.
Report of Independent Accountants.
Included in Part C:
Consent of Independent Accountants.
All other financial statements, schedules and historical financial
information are omitted because the conditions requiring their filing do not
exist.
(b) Exhibits:
(1) (a) Articles of Incorporation of the Registrant. Incorporated
by reference to Exhibit 1 to the Registration Statement.
(b) Articles of Amendment of the Registrant.
(c) Articles Supplementary of the Registrant.
(2) By-Laws of the Registrant. Incorporated by reference to
Exhibit 2 to the Registration Statement.
(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.
(c) License Agreement between LaSalle Partners Incorporated
and the Registrant.
(10) Opinion and Consent of Piper & Marbury L.L.P.
<PAGE>
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Initial Capital Agreement.
(14) Not applicable.
(15) (a) Distribution Plan.
(b) Shareholder Services Plan.
(16) Not applicable.
(17) Not applicable.
(18) Multiple Class Plan.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Registrant invests all of its investable assets in LaSalle Partners
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 Series/Class Number of Record Holders*
--------------------- ------------------------
LaSalle Partners U.S. Real
Estate Fund
Retail Class 1
Institutional Class 1
* As of January 5, 1998.
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
Alan B. Closser Senior Vice President None
</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 5th day of
January, 1998.
LA SALLE PARTNERS FUNDS, 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) January 5, 1998
- --------------------------- and Director
William K. Morrill, Jr.
/s/ William E. Sullivan Treasurer (principal financial and January 5, 1998
- --------------------------- accounting officer)
William E. Sullivan
* Director
- ---------------------------
Bruce D. Alexander
* Director
- ---------------------------
Lawrence S. Bacow
* Director
- ---------------------------
Richard A. Dobbins
* Director
- ---------------------------
John W. McCarter, Jr.
* Director
- ---------------------------
Keith R. Pauley
* Director
- ---------------------------
Lynn C. Thurber
*By: /s/ William K. Morrill, Jr.
--------------------------------- January 5 1998
William K. Morrill, Jr.
Attorney-in-Fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, LaSalle
Partners 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 5th day of January, 1998.
LA SALLE PARTNERS 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 Partners Master Trust and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William K. Morrill, Jr.
- --------------------------- President (principal executive officer) January 5, 1998
William K. Morrill, Jr. and Trustee
/s/ William E. Sullivan
- --------------------------- Treasurer (principal financial and January 5, 1998
William E. Sullivan accounting officer)
*
- --------------------------- Trustee
Bruce D. Alexander
*
- --------------------------- Trustee
Lawrence S. Bacow
*
- --------------------------- Trustee
Richard A. Dobbins
*
- --------------------------- Trustee
John W. McCarter, Jr.
*
- --------------------------- Trustee
Keith R. Pauley
*
- --------------------------- Trustee
Lynn C. Thurber
*By: /s/ Willaim K. Morrill, Jr.
---------------------------------- January 5 1998
William K. Morrill, Jr.
Attorney-in-Fact
</TABLE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors and
officers of LaSalle Partners Funds, Inc. (the "Fund") and trustees and directors
of LaSalle Partners Master Trust do hereby constitute and appoint William K.
Morrill, Jr., Keith R. Pauley and Alan C. Porter, and each of them severally,
their true and lawful attorney-in-fact and agent, for them and in their names,
place and stead, in any and all capacities, to sign one or more registration
statements of the Fund to be filed with the Securities and Exchange Commission
under the Securities act of 1933, as amended, and/or the Investment Company Act
of 1940, as amended, and any and all amendments thereto, and any and all other
documents required to be filed with any regulatory authority, federal or state,
relating to the registration of the Fund of its shares of capital stock, without
limitation, granting unto said attorneys-in-fact, and each of them severally,
full power and order to effectuate the same as fully to all intents and purposes
as they might or could do if personally present, including, but not limited to,
the power to appoint a substitute or substitutes to act hereunder with the same
power and authority as said attorneys-in-fact, or any of them, would have if
acting personally, and hereby ratifying and confirming all that said attorneys-
in-fact, or any of them, or any substitutes, may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand as of
this 31st day of December, 1997.
/s/ Bruce D. Alexander /s/ Keith R. Pauley
- ------------------------------ -----------------------------
Bruce D. Alexander Keith R. Pauley
/s/ Lawrence S. Bacow /s/ Lynn C. Thurber
- ------------------------------ -----------------------------
Lawrence S. Bacow Lynn C. Thurber
/s/ Richard A. Dobbins /s/ William K. Morrill, Jr.
- ------------------------------ -----------------------------
Richard A. Dobbins William K. Morrill, Jr.
/s/ John W. McCarter, Jr.
- ------------------------------
John W. McCarter, Jr.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
<S> <C> <C>
(1) (a) Articles of Incorporation. Incorporated by reference
to Exhibit 1 to the Registration Statement
(b) Articles of Amendment
(c) Articles Supplementary
(2) By-Laws. Incorporated by reference to Exhibit 2 to
the Registration Statement
(5) Management Agreement
(6) Distribution Agreement
(8) Custodian Services Agreement
(9) (a) Administration and Accounting Services Agreement
(b) Transfer Agency Services Agreement
(c) License Agreement
(10) Opinion and Consent of Piper & Marbury L.L.P.
(11) Consent of Independent Accountants
(13) Initial Capital Subscription and Investment Agreement
(15) (a) Distribution Plan
(b) Shareholder Services Plan
(18) Multiple Class Plan
</TABLE>
<PAGE>
Exhibit 1(b)
LASALLE REAL ESTATE SECURITIES FUND, INC.
ARTICLES OF AMENDMENT
CHANGING NAMES OF CORPORATION
PURSUANT TO MGCL SECTION 2-605(a)(4)
LaSalle Real Estate Securities Fund, Inc., a Maryland corporation, having
its principal office in Baltimore City, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is hereby amended to provide as
follows:
The name of the Corporation is hereby changed to "LaSalle Partners
Funds, Inc."
SECOND: The amendment does not change the outstanding capital stock of the
corporation or the aggregate par value thereof.
THIRD: The foregoing amendment to the Charter of the Corporation has been
approved by the Board of Directors and is limited to a change expressly
permitted by Section 2-605 of the Maryland General Corporation Law.
FOURTH: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these presents to be
signed in its name and on its behalf by its Executive Vice President and
witnessed by its Assistant Secretary on this day of December 30, 1997.
LASALLE REAL ESTATE SECURITIES FUND, INC.
By: /s/ Keith R. Pauley
--------------------------------------
Keith R. Pauley
Executive Vice President
ATTEST:
/s/ Audre' J. Melsbakas
- -------------------------------
Audre' J. Melsbakas
Assistant Secretary
THE UNDERSIGNED, the Executive Vice President of LaSalle Real Estate
Securities Fund, Inc. who executed on behalf of the Corporation the foregoing
Articles of Amendment of which this certificate is made a part, hereby
acknowledges in the name and on behalf of the Corporation the foregoing Articles
of Amendment to be the corporate act of the Corporation and hereby certifies to
the best of his knowledge, information and belief the matters and facts set
forth herein with respect to the authorization and approval thereof are true in
all material respects under the penalties of perjury.
/s/ Keith R. Pauley
-------------------------------------
Keith R. Pauley
Executive Vice President
<PAGE>
The undersigned, Executive Vice President of LaSalle Partners Funds,
Inc., who executed on behalf of said Corporation the foregoing Articles
Supplementary of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that, to the
best of his knowledge, information and belief, the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Keith R. Pauley
----------------------------
Keith R. Pauley
Executive Vice President
-2-
<PAGE>
Exhibit 1(c)
LASALLE PARTNERS FUNDS, INC.
ARTICLES SUPPLEMENTARY
LaSalle Partners Funds, Inc., a Maryland corporation having its principal
office in Baltimore City, Maryland (which is hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: (a) The Board of Directors of the Corporation has classified
100,000,000 unissued shares of the authorized Common Stock, par value $0.01 per
share, of the Corporation as a single series, designated the "LaSalle Partners
U.S. Real Estate Fund" and has divided and further classified the authorized
shares of such series into two classes, designated Retail Class and
Institutional Class, each such class of the series consisting, until further
changed, of 50,000,000 shares.
(b) The preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption of the Retail Class and Institutional Class shares of
the LaSalle Partners U.S. Real Estate Fund are set forth in the Charter of the
Corporation.
SECOND: The foregoing amendment to the Charter of the Corporation does not
increase the authorized capital stock of the Corporation.
THIRD: The aforesaid shares have been duly classified by the Board of
Directors pursuant to authority and power contained in the Charter of the
Corporation.
IN WITNESS WHEREOF, the Corporation has caused these presents to be signed
in its name and on its behalf by its Executive Vice President and attested by
its Assistant Secretary on this 30th day of December, 1997.
LASALLE PARTNERS FUNDS, INC.
BY: /s/ Keith R. Pauley
------------------------
KEITH R. PAULEY
EXECUTIVE VICE PRESIDENT
ATTEST:
/s/ Audre' J. Melsbakas
- ---------------------------
AUDRE' J. MELSBAKAS
ASSISTANT SECRETARY
<PAGE>
Exhibit 5
MANAGEMENT AGREEMENT
AGREEMENT made as of the __ day of _______, 1997, by and between LaSalle
Partners Funds, Inc., a Maryland corporation (the "Company"), and ABKB/LaSalle
Securities Limited d/b/a LaSalle Partners Real Estate Securities, a Maryland
limited partnership (the "Manager").
WITNESSETH:
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Company currently has a single investment portfolio and may
have additional investment portfolios from time to time; and
WHEREAS, the Manager is engaged in the business of providing investment
management and advisory services and is registered under the Investment Advisers
Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Company desires to retain the Manager to provide investment
management services to its investment portfolios listed in the Fee Schedule
appended hereto (the "Funds"), as from time to time amended, and the Manager is
willing to perform such services on the terms set forth herein; and
WHEREAS, the Company initially desires to invest all of the investable
assets of each Fund in a separate investment portfolio (a "Portfolio") of
another mutual fund (the "Trust") with the same investment objective, policies
and restrictions, and the Trust has retained the Manager to provide investment
management services to such Portfolios;
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:
1. Appointment of Manager. The Company hereby appoints the Manager as
----------------------
investment manager of the Funds for the period and on the terms set forth in
this Agreement. The Manager accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. Duties of Manager. (a) The Manager shall be responsible for
-----------------
monitoring the investment management services provided to the Portfolios,
including, among other things, review on a periodic basis of the investment
programs and practices of each Portfolio and the composition of its portfolio
investments, and shall report to the Board of Directors of the Company with
respect to such matters in connection with the Board's consideration of whether
<PAGE>
continued investment exclusively in the Portfolios is in the best interests of
shareholders of the Funds.
(b) In the event that the Board of Directors of the Company determines
to withdraw the investment of any Fund in a Portfolio, the Manager shall be
responsible, subject to the supervision of the Board of Directors, for providing
a continuous investment program for that Fund, including the provision of
investment research and management with respect to all securities and
investments and cash equivalents purchased, sold or held by the Fund and the
selection of brokers and dealers through which portfolio transactions for the
Fund are to be executed. In carrying out its responsibilities under this
paragraph (b), the Manager shall at all times act in accordance with the
investment objectives, policies and restrictions of the Funds as stated in the
Company's registration statement under the 1940 Act, as amended from time to
time (the "Registration Statement"), as well as all applicable laws and
regulations.
(c) The Manager agrees that it will:
(i) promptly advise the Company's custodian and accounting
services agent of each purchase and sale, as the case may be, made on behalf of
a Fund of any security or other investment specifying in each case: the name and
quantity of the investment purchased or sold, the units and aggregate purchase
or sale price, the commission paid, the market on which the transaction was
effected, the trade date, the settlement date, the identity of the effecting
broker or dealer, and such other information as the Company's custodian or
accounting agent may reasonably request, all in such manner as the Company's
custodian or accounting agent may from time to time reasonably request;
(ii) provide, in a timely manner, such information as the Company
or its authorized agent may reasonably request in connection with the
computation of the net asset value and net income of the Funds in accordance
with the procedures prescribed in the Registration Statement, or more frequently
as requested by the Board of Directors of the Company; provided, however, that
the Manager shall not be responsible for any such computation or for the
calculation of the net asset value per share of the Funds;
(iii) render regular reports to the Board of Directors of the
Company concerning the Manager's performance of its responsibilities under this
Agreement and such other periodic and special reports as the Board may request;
in particular, the Manager agrees that it will attend meetings of the Board of
Directors and the validly constituted committees thereof;
(iv) permit individuals who are officers or employees of the
Manager to serve (if duly elected or appointed) as officers, directors or
members of any advisory board or committee of the Company; and
-2-
<PAGE>
(v) furnish office space, facilitates, equipment and personnel
adequate for the performance of its duties under this Agreement.
3. Brokerage Transactions. (a) In the event that the Manager provides
----------------------
services pursuant to paragraph (b) of Section 2, the Manager, subject to the
control and direction of the Board of Directors of the Company, shall have
authority and discretion to select brokers and dealers to execute portfolio
transactions for each Fund, and to select the markets on or in which the
transactions will be executed. In acting pursuant to this Section 3, the Manager
shall place orders through such brokers or dealers in conformity with the
policies with respect to portfolio transactions set forth in the Registration
Statement. It is understood that neither the Company nor the Manager will adopt
a formula for allocation of the brokerage of the Funds. It is understood that
the Manager may, to the extent permitted by applicable laws and regulations,
aggregate securities to be sold or purchased for a Fund and for other clients in
order to obtain the most favorable execution. In such event, allocation for the
securities purchased or sold, as well as expenses incurred in the transaction,
shall be made by the Manager in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and to its other
clients. The Manager shall provide such reports as the Board of Directors may
reasonably request with respect to each Fund's total brokerage and portfolio
transaction activities, and the manner in which such transactions were
allocated.
(b) The Manager agrees that in placing orders with brokers and
dealers, it will attempt to obtain the best net results in terms of price and
execution; provided that, on behalf of any Fund, the Manager may, in its
discretion, purchase and sell portfolio securities through brokers-dealers that
provide research services (within the meaning of Section 28(e) of the Securities
Exchange Act of 1934), and the Manager may cause a Fund to pay those brokers-
dealers, in return for such brokerage and research services, a higher commission
than may be charged by other brokers-dealers, subject to the Manager determining
in good faith that such commission is reasonable in terms either of the
particular transaction or of the overall responsibility of the Manager to the
Fund and its other clients.
4. Books and Records. The Manager shall create and maintain all necessary
-----------------
books and records in accordance with all applicable laws and regulations,
including but not limited to the records required by Section 31(a) of the 1940
Act and the rules thereunder, as the same may be amended from time to time,
pertaining to the services performed by it hereunder which are not otherwise
created and maintained by or on behalf of the Company. The Manager agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act. In compliance with
the requirements of Rule 31a-3 under the 1940 Act, the Manager hereby agrees
that all records which it maintains for the Company or the Funds are the
property of the Company. The Manager further agrees that the Company, or the
Company's authorized representatives, shall have access to such books and
records at all times during the Manager's normal business hours and that copies
of any such books and records shall be provided to the Company promptly upon
request by the Company or its authorized representative.
-3-
<PAGE>
5. Activities and Affiliates of Manager. (a) The services furnished by
------------------------------------
the Manager hereunder shall not be deemed to be exclusive, the Manager being
free to render investment management services to others and to engage in other
activities; provided, however, that such services and activities do not, during
the term of this Agreement, interfere, in a material manner, with the Manager's
ability to meet its obligations to the Company and the Funds hereunder.
(b) The Company acknowledges that the Manager, or one or more of its
affiliated persons, may have investment responsibilities or render investment
advice to or perform other investment advisory services for other individuals or
entities; and that the Manager, its affiliated persons or any of its or their
directors, officers, agents or employees may buy, sell or trade in securities
for its or their respective accounts ("Affiliated Accounts"). Subject to the
provisions of Section 3, the Company agrees that the Manager or its affiliated
persons may give advice or exercise investment responsibility and take such
other action with respect to Affiliated Accounts which may differ from the
advice given or the timing or nature of action taken with respect to the Funds,
provided that the Manager acts in good faith. The Company acknowledges that one
or more Affiliated Accounts may at any time hold, acquire, increase, decrease,
dispose of or otherwise deal with positions in investments in which a Fund may
have an interest. The Manager shall have no obligation to acquire for any Fund
any investment that an Affiliated Account may acquire, and the Company shall
have no first refusal, co-investment or other rights in respect of any such
investment, either for the Funds or otherwise.
(c) Subject to and in accordance with the Company's Articles of
Incorporation and By-Laws, as currently in effect and as amended from time to
time, and the 1940 Act and the rules thereunder, it is understood that
directors, officers, agents and shareholders of the Company are or may be
interested in the Manager or its affiliated persons, as directors, officers,
agents and shareholders or otherwise; that directors, officers, agents and
shareholders of the Manager or its affiliated persons are or may be interested
persons of the Company, as directors, officers, agents, shareholders or
otherwise; that the Manager or its affiliated persons may be interested in the
Company, as shareholders or otherwise; and that the effect of any such interests
shall be governed by said Articles of Incorporation and By-Laws, and the 1940
Act and the rules thereunder.
6. Expenses. (a) The Manager agrees to bear all expenses incurred by it
--------
in performing its duties under this Agreement. In addition, the Manager shall,
at its own expense, pay the compensation of directors, officers and employees,
if any, of the Company who are affiliated persons of the Manager or its
affiliated persons.
(b) During the term of this Agreement, the Company shall bear all
expenses, not specifically assumed by the Manager, incurred in the conduct of
its operations, including, without limitation, the following: the expenses of
organizing the Company and continuing its existence; fees and expenses of
preparing and filing the Company's registration statement under the Securities
Act of 1933 and the 1940 Act, and any amendments thereto; fees and expenses of
-4-
<PAGE>
directors and officers of the Company who are not affiliated persons of the
Manager or its affiliated persons; fees for administrative services; expenses of
preparing, printing and distributing prospectuses, shareholder reports and other
materials to shareholders; interest; brokerage commissions; taxes and
governmental fees; expenses of issue, purchase, repurchase and redemption of
shares; charges and expenses of custodians, transfer agents, dividend disbursing
agents and registrars; printing and mailing costs; expenses of auditing,
accounting and legal services; expenses of meetings of the Board of Directors
and shareholders and proxy solicitations; insurance expenses; association
membership dues; and litigation and other extraordinary or non-recurring
expenses.
7. Compensation. (a) For the services provided and the expenses assumed
------------
by the Manager pursuant this Agreement, no fee shall be payable by the Company
to the Manager; provided, however, that in the event the Manager begins
performing services pursuant to paragraph (b) of Section 2, the Company shall
pay the Manager a fee in accordance with the Fee Schedule appended to this
Agreement. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. For purposes of calculating the
Manager's fee, the value the net assets of the Funds shall be determined as
described in the Registration Statement. If the Manager shall perform services
under paragraph (b) of Section 2 for less than the whole of any month, the
foregoing compensation shall be prorated.
(b) The Manager may, from time to time and for such periods as it
deems appropriate, reduce its compensation from a Fund (and, if appropriate,
assume expenses of one or more Funds or any class of shares thereof) to the
extent the expenses of such Fund or class exceed such expense limitation as the
Manager may, by notice to the Company, voluntarily declare to be effective with
respect to the Fund or class.
(c) The Manager agrees to waive all or part of its fee hereunder, or
reimburse expenses of a Fund, with the same frequency with which the fee is paid
to the Manager, to the extent the expenses borne by the Fund exceed the
applicable expense limitations imposed pursuant to the statutes or regulations
of any jurisdiction in which shares of the Fund are qualified or registered for
offer and sale. To the extent the Manager has reimbursed Fund expenses or
waived all or part of its fee, the Company agrees to reimburse the Manager, if
so requested by the Manager, provided that such reimbursement does not cause the
annual operating expenses of the Fund to exceed such expense limitations.
8. Liability of Manager. The Manager shall not be liable to the Company
--------------------
or any shareholder for any act or omission in connection with the performance of
its duties hereunder including, without limitation, losses that may be sustained
in the purchase, holding or sale of any security or the making of any investment
for or on behalf of the Funds, except for liability to which the Manager would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties under this Agreement.
-5-
<PAGE>
9. Term and Termination. (a) This Agreement shall become effective for
--------------------
each Fund as of the date of execution of the related Fee Schedule and shall
continue in effect with respect to each Fund initially listed in the Fee
Schedule (and any additional Funds added to the Fee Schedule during the initial
term of this Agreement) for two years from the date of this Agreement, provided
that this Agreement has first been approved by (i) the Board of Directors of the
Company, including a majority of the directors who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) the vote of a
majority of the outstanding voting securities of the Company. Thereafter, this
Agreement shall continue for successive periods of one year, but only so long as
such continuance is specifically approved at least annually by (i) the Board of
Directors or, with respect to any Fund, the vote of a majority of the
outstanding voting securities of the Fund, and (ii) the vote of a majority of
the directors of the Company who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval.
(b) Notwithstanding any provision hereof, this Agreement may be
terminated with respect to any Fund or the Company at any time, without payment
of any penalty, by the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Fund or the Company,
respectively, on 60 days' written notice to the Manager, or by the Manager on 60
days' written notice to the Company. Termination of this Agreement with respect
to any Fund shall in no way affect the continued validity of this Agreement or
performance hereunder with respect to any other Fund. This Agreement shall
terminate automatically and immediately in the event of its assignment.
10. Amendment. No material provision of this Agreement may be changed,
---------
waived, discharged or terminated except by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of any material term of this Agreement
shall be effective until it has been approved both by the Board of Directors of
the Company, including a majority of the directors who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such amendment, and, when required by the
1940 Act with respect to any Fund, by a majority of the outstanding voting
securities of the Fund.
11. Definitions. As used in this Agreement, the terms "affiliated
-----------
person", "assignment", "control", "interested person", and "vote of a majority
of the outstanding voting securities" shall have the meanings given them in the
1940 Act, subject to any applicable orders of exemption issued by the Securities
and Exchange Commission.
12. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Maryland, without giving effect to the
choice of law principles thereof. To the extent applicable Maryland law or any
provision of this Agreement conflicts with applicable provisions of the 1940
Act, the Advisers Act, or other applicable federal laws or regulations, the
latter shall control.
-6-
<PAGE>
13. Miscellaneous. If any provision of this Agreement shall be held or
-------------
made invalid by a court decision, statute, rule or otherwise, the remainder
shall not be affected thereby. The title of this Agreement and the headings of
the sections herein are for convenience of the parties only, and are not
intended to be part of or affect the meaning or interpretation of this
Agreement. This Agreement constitutes the entire agreement of the parties
hereto with respect to the matters referred to herein, and no other agreement,
verbal or otherwise, shall be binding as between the parties. No failure or
delay on the part of any party hereto in exercising any right power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. Any waiver
granted hereunder must be in writing and shall be valid only in the specific
instance in which given.
IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of
the undersigned as of the day and year first above written.
Attest: LA SALLE PARTNERS FUNDS, INC.
By:
- -------------------- --------------------------
Attest: ABKB/LA SALLE SECURITIES LIMITED
By:
- -------------------- --------------------------
-7-
<PAGE>
FEE SCHEDULE
The fees payable to the Manager pursuant to Section 7 of the Agreement
shall be as follows:
<TABLE>
<CAPTION>
Fund Annual Fee Rate
---- ---------------
<S> <C>
LaSalle Partners U.S. Real Estate Fund 0.75% of average net assets
</TABLE>
Attest: LA SALLE PARTNERS FUNDS, INC.
By:
- -------------------- --------------------------
Attest: ABKB/LA SALLE SECURITIES LIMITED
By:
- -------------------- --------------------------
Dated: _______ __, 1997
<PAGE>
Exhibit 6
DISTRIBUTION AGREEMENT
LASALLE PARTNERS FUNDS, INC.
_________________, 1997
Funds Distributor, Inc.
60 State Street
Suite 1300
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Fund") has agreed that you
shall be, for the period of this agreement, the distributor of (a) shares of
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series are set forth
on such Exhibit, shares of the Fund. For purposes of this agreement the term
"Shares" shall mean the authorized shares of the relevant Series, if any, and
otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by, and in
accordance with, the registration statement and prospectus then in effect under
the Securities Act of 1933, as amended, and will transmit promptly any orders
received by you for purchase or redemption of Shares to the Transfer and
Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing.
1.2 You agree to use your best efforts to solicit orders for the sale of
Shares. It is contemplated that you may enter into sales or servicing agreements
with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitations, the
Investment Company Act of 1940, as amended, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended and the National
Association of Securities Dealers, Inc.'s (the "NASD") Conduct Rules,
Constitution and By-Laws. You represent and warrant that you are a broker-dealer
registered with the Securities and Exchange Commission and that you are
registered with the relevant securities regulatory agencies in all fifty states,
the District of Columbia and Puerto Rico. You also represent and warrant that
you are a member of the NASD.
1
<PAGE>
1.4 You shall file Fund advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory agencies
and shall obtain such approvals for their use as may be required by the
Securities and Exchange Commission and the NASD.
1.5 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions, or by abnormal circumstances of any kind
deemed by the parties hereto to render sales of a Fund's Shares not in the best
interest of the Fund, the parties hereto may decline to accept any orders for,
or make any sales of, any Shares until such time as those parties deem it
advisable to accept such orders and to make such sales and each party shall
advise promptly the other party of any such determination.
1.6 The Fund agrees to pay all costs and expenses in connection with the
registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided however, that
the Fund shall not pay any of the costs of advertising or promotion for the sale
of Shares, except for the payment of Rule 12b-1 fees under the terms of a
written agreement.
1.7 The Fund agrees to execute any and all documents and to furnish any and
all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all expenses which may be
incurred in connection with such qualification. You shall pay all expenses
connected with your own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this agreement, all other
expenses incurred by you in connection with the sale of Shares as contemplated
in this agreement.
1.8 The Fund shall furnish you from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund or any
relevant Series and the Shares as you may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information, when so signed
by the Fund's officers, shall be true and correct. The Fund also shall furnish
you upon request with: (a) semi-annual reports and annual audited reports of
the Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements prepared by the Fund,
(c) a monthly itemized list of the securities in the Fund's or, if applicable,
each Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the Fund's financial condition as you may reasonably request.
1.9 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the Shares have been carefully prepared in
conformity with the requirements of said Acts and rules and regulations of the
Securities and Exchange Commission thereunder. As used in this agreement the
terms "registration statement" and "prospectus" shall mean any registration
2
<PAGE>
statement and prospectus, including the statement of additional information
incorporated by reference therein, filed with the Securities and Exchange
Commission and any amendments and supplements thereto which at any time shall
have been filed with said Commission. The Fund represents and warrants to you
that any registration statement and prospectus, when such registration statement
becomes effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Fund
may, but shall not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from you to do so stating
that your internal or external legal counsel believes such amendments or
supplements to be legally required, you may, at your option, terminate this
agreement or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any material amendment to any
registration statement or material supplement to any prospectus without giving
you reasonable notice thereof in advance; provided, however, that nothing
contained in this agreement shall in any way limit the Fund's right to file at
any time such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.10 The Fund authorizes you and any dealers with whom you have entered
into dealer agreements to use any prospectus in the form furnished by the Fund
in connection with the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person who controls you
within the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the reasonable cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling persons, may incur under the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, or common law or otherwise,
arising out of or on the basis of any untrue statement, or alleged untrue
statement, of a material fact required to be stated in either any then-current
registration statement or any then-current prospectus or any then-current
statement of additional information, or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
any then-current registration statement, any then-current prospectus or any
then-current statement of additional information or necessary to make the
statements in any of them not misleading, except that the Fund's agreement to
------
indemnify you, your officers or directors, and any such controlling person will
not be deemed to cover any such claim, demand, liability or expense to the
extent that it arises out of or is based upon any such untrue statement, alleged
untrue statement, omission or alleged omission made in any then-current
registration statement, any then-current prospectus or any then-current
statement of additional information in reliance upon information furnished by
you, your officers, directors or any such controlling person to the Fund or its
representatives for use in the preparation thereof, and except that the Fund's
------
agreement to
3
<PAGE>
indemnify you and the Fund's representations and warranties set out in paragraph
1.9 of this Agreement will not be deemed to cover any liability to the Funds or
their shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties under this
Agreement ("Disqualifying Conduct"). The Fund's agreement to indemnify you, your
officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Fund's being notified of any action brought
against you, your officers or directors, or any such controlling person, such
notification to be given by letter, by facsimile or by telegram addressed to the
Fund at its address set forth above within a reasonable period of time after the
summons or other first legal process shall have been served. The failure so to
notify the Fund of any such action shall not relieve the Fund from any liability
which the Fund may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Fund's indemnity agreement contained
in this paragraph 1.10. The Fund will be entitled to assume the defense of any
suit brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by the Fund
and approved by you. In the event the Fund elects to assume the defense of any
such suit and retain counsel of good standing approved by you, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to assume
the defense of any such suit, the Fund will reimburse you, your officers and
directors, or the controlling person or persons named as defendant or defendants
in such suit, for the reasonable fees and expenses of any counsel retained by
you or them. The Fund's indemnification agreement contained in this paragraph
1.10 and the Fund's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of you, your officers and directors, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit of your several
officers and directors, and their respective estates, and to the benefit of any
controlling persons and their successors. The Fund agrees promptly to notify you
of the commencement of any litigation or proceedings against the Fund or any of
its officers or Board members in connection with the issue and sale of Shares.
1.11 You agree to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the reasonable cost of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, or under common law or otherwise,
but only to the extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting from such claims
or demands, (a) shall arise out of or be based upon any unauthorized sales
literature, advertisements, information, statements or representations or any
Disqualifying Conduct in connection with the offering and sale of any Shares, or
(b) shall arise out of or be based upon any untrue, or alleged untrue, statement
of a material fact contained in information furnished in writing by you to the
Fund specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus or statement of additional
information, or shall arise out of or be based
4
<PAGE>
upon any omission, or alleged omission, to state a material fact in connection
with such information furnished in writing by you to the Fund and required to be
stated in such answers or necessary to make such information not misleading.
Your agreement to indemnify the Fund, its officers and Board members, and any
such controlling person, as aforesaid, is expressly conditioned upon your being
notified of any action brought against the Fund, its officers or Board members,
or any such controlling person, such notification to be given by letter, by
facsimile or by telegram addressed to you at your address set forth above within
a reasonable period of time after the summons or other first legal process shall
have been served. You shall have the right to control the defense of such
action, with counsel of your own choosing, satisfactory to the Fund, if such
action is based solely upon such alleged misstatement or omission on your part,
and in any other event the Fund, its officers or Board members, or such
controlling person shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure so to notify you of
any such action shall not relieve you from any liability which you may have to
the Fund, its officers or Board members, or to such controlling person by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of your indemnity agreement contained in
this paragraph 1.11. This agreement of indemnity will inure exclusively to the
Fund's benefit, to the benefit of the Fund's officers and Board members, and
their respective estates, and to the benefit of any controlling persons and
their successors. You agree promptly to notify the Fund of the commencement of
any litigation or proceedings against you or any of your officers or directors
in connection with the issue and sale of Shares.
1.12 No Shares shall be offered by either you or the Fund under any of the
provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.12 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
1.13 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or
for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement of
a material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
5
<PAGE>
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus which
may from time to time be filed with the Securities and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be offered at
a price per share (the "offering price") approximately equal to (a) the net
asset value (determined in the manner set forth in the Fund's charter documents
or then-current prospectus) plus (b) a sales charge, if any and except to those
persons set forth in the then-current prospectus, which shall be the percentage
of the offering price of such Shares as set forth in the Fund's then-current
prospectus. The offering price, if not an exact multiple of one cent, shall be
adjusted to the nearest cent. In addition, Shares of any class of the Fund
offered for sale by you may be subject to a contingent deferred sales charge as
set forth in the Fund's then-current prospectus. You shall be entitled to
receive any sales charge or contingent deferred sales charge in respect of the
Shares. Any payments to dealers shall be governed by a separate agreement
between you and such dealer and the Fund's then-current prospectus.
3. Term
This Agreement shall become effective with respect to the Fund as of the
date hereof and will continue for an initial two-year term and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Fund's Board or (ii) by a vote of a majority of the Shares
of the Fund or the relevant Series, as the case may be, provided that in either
event its continuance also is approved by a majority of the Board members who
are not "interested persons" of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
agreement is terminable with respect to the Fund or a Series, without penalty,
on not less than sixty days' notice, by the Fund's Board of Directors, by vote
of a majority of the outstanding voting securities of such Fund, or by you.
This Agreement will automatically and immediately terminate in the event of its
"assignment." (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings as such terms have in the Investment Company Act of 1940). You
agree to notify the Fund immediately upon the event of your expulsion or
suspension by the NASD. This Agreement will automatically and immediately
terminate in the event of your expulsion or suspension by the NASD.
4. Miscellaneous
4.1 The Fund recognizes that, except to the extent otherwise agreed to by
the parties hereto, your directors, officers and employees may from time to time
serve as directors, trustees, officers and employees of corporations and
business trusts (including other investment companies), and that you or your
affiliates may enter into distribution or other agreements with such other
corporations and trusts.
4.2 No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
6
<PAGE>
4.3 This Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts without giving effect to principles of conflicts
of laws.
4.4 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below, whereupon it
shall become a binding Agreement between us.
Very truly yours,
LASALLE PARTNERS FUNDS, INC.
By: ___________________________
Name: _________________________
Title: ________________________
Accepted:
FUNDS DISTRIBUTOR, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
7
<PAGE>
EXHIBIT A
8
<PAGE>
Exhibit 8
CUSTODIAN SERVICES AGREEMENT
----------------------------
THIS AGREEMENT is made as of December __, 1997 by and between PNC BANK,
NATIONAL ASSOCIATION, a national banking association ("PNC Bank"), and LASALLE
PARTNERS FUNDS, INC., a Maryland corporation (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PNC Bank to provide custodian services,
and PNC Bank wishes to furnish custodian services, either directly or through an
affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, In consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
----------------------------------------
(a) "1933 Act" means the Securities Act of 1933, as amended.
----------
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
----------
(c) "Authorized Person" means any officer of the Fund and any other person
-------------------
duly authorized by the Fund's Board of Directors to give Oral Instructions and
Written Instructions on behalf of the Fund and listed on the Authorized Persons
Appendix attached hereto and made a part hereof or any amendment thereto as may
be received by PNC Bank. An Authorized Person's scope of authority may be
limited by the Fund by setting forth such limitation in the Authorized Persons
Appendix.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry system
-------------------
for United States and federal agency securities, its successor or successors,
and its nominee or nominees and any book-entry system maintained by an exchange
registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
-----
<PAGE>
(f) "Oral Instructions" mean oral instructions received by PNC Bank from
-------------------
an Authorized Person or from a person reasonably believed by PNC Bank to be an
Authorized Person.
(g) "PNC Bank" means PNC Bank, National Association or a subsidiary or
----------
affiliate of PNC Bank, National Association.
(h) "SEC" means the Securities and Exchange Commission.
-----
(i) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940 Act and
-----------------
the CEA.
(j) "Shares" mean the shares of capital stock of any series or class of
--------
the Fund.
(k) "Property" means:
----------
(i) any and all securities and other investment items which the
Fund may from time to time deposit, or cause to be
deposited, with PNC Bank or which PNC Bank may from time to
time hold for the Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of securities issued by the Fund,
which are received by PNC Bank from time to time, from or on
behalf of the Fund.
(l) "Written Instructions" mean written instructions signed by two
----------------------
Authorized Persons and received by PNC Bank. The instructions may be delivered
by hand, mail, tested telegram, cable, telex or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PNC Bank to provide custodian
-----------
services to the Fund, on behalf of each of its investment portfolios (each, a
"Portfolio"), and PNC Bank accepts such appointment and agrees to furnish such
services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
---------------------
will provide PNC Bank with the following:
2
<PAGE>
(a) certified or authenticated copies of the resolutions of the Fund's
Board of Directors, approving the appointment of PNC Bank or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to each class of
Shares;
(e) a copy of each Portfolio's administration agreement if PNC Bank is not
providing the Portfolio with such services;
(f) copies of any shareholder servicing agreements made in respect of the
Fund or a Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
--------------------
PNC Bank undertakes to comply with all applicable requirements of the
Securities Laws and any laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by PNC Bank
hereunder. Except as provided herein, PNC Bank assumes no responsibility for
such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
------------
(a) Unless otherwise provided in this Agreement, PNC Bank shall act only
upon Oral Instructions and Written Instructions.
(b) PNC Bank shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from a person
reasonably believed by PNC Bank to be an Authorized Person) pursuant to this
Agreement. PNC Bank may assume that any Oral Instructions or Written
Instructions received hereunder are not in any way inconsistent with the
provisions of organizational documents of the Fund or of any vote,
resolution or proceeding of the Fund's Board of Directors or of the Fund's
shareholders, unless and until PNC Bank receives Written Instructions to the
contrary.
3
<PAGE>
(c) The Fund agrees to forward to PNC Bank Written Instructions confirming
Oral Instructions (except where such Oral Instructions are given by PNC Bank or
its affiliates) so that PNC Bank receives the Written Instructions by the close
of business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PNC Bank shall in
no way invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. Where Oral Instructions or Written
Instructions reasonably appear to have been received from an Authorized Person,
PNC Bank shall incur no liability to the Fund in acting upon such Oral
Instructions or Written Instructions provided that PNC Bank's actions comply
with the other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
-----------------------
(a) Advice of the Fund. If PNC Bank is in doubt as to any action it
------------------
should or should not take, PNC Bank may request directions or advice, including
Oral Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in doubt as to any question
-----------------
of law pertaining to any action it should or should not take, PNC Bank may
request advice at its own cost from such counsel of its own choosing (who may be
counsel for the Fund, the Fund's investment adviser or PNC Bank, at the option
of PNC Bank).
(c) Conflicting Advice. In the event of a conflict between directions,
------------------
advice or Oral Instructions or Written Instructions PNC Bank receives from the
Fund, and the advice it receives from counsel, PNC Bank shall be entitled to
rely upon and follow the advice of counsel. In the event PNC Bank so relies on
the advice of counsel, PNC Bank remains liable for any action or omission on the
part of PNC Bank which constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by PNC Bank of any duties, obligations or
responsibilities set forth in this Agreement.
(d) Protection of PNC Bank. PNC Bank shall be protected in any action it
----------------------
takes or does not take in reliance upon directions, advice or Oral Instructions
or Written Instructions it receives from the Fund or from counsel and which PNC
Bank believes, in good
4
<PAGE>
faith, to be consistent with those directions, advice or Oral Instructions or
Written Instructions. Nothing in this section shall be construed so as to impose
an obligation upon PNC Bank (i) to seek such directions, advice or Oral
Instructions or Written Instructions, or (ii) to act in accordance with such
directions, advice or Oral Instructions or Written Instructions unless, under
the terms of other provisions of this Agreement, the same is a condition of PNC
Bank's properly taking or not taking such action.
7. RECORDS; VISITS. The books and records pertaining to the Fund and any
---------------
Portfolio, which are in the possession or under the control of PNC Bank, shall
be the property of the Fund. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities laws,
rules and regulations. The Fund and Authorized Persons shall have access to
such books and records at all times during PNC Bank's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by PNC Bank to the Fund or to an authorized representative of
the Fund, at the Fund's expense.
8. CONFIDENTIALITY. PNC Bank agrees to keep confidential all records of
---------------
the Fund and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in writing, by
the Fund. The Fund agrees that such consent shall not be unreasonably withheld
and may not be withheld where (i) PNC Bank may be exposed to civil or criminal
contempt proceedings or when required to divulge such information or records to
duly constituted authorities; and (ii) where PNC Bank has notified the Fund of
such release of confidential records.
9. COOPERATION WITH ACCOUNTANTS. PNC Bank shall cooperate with the Fund's
----------------------------
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to ensure that the
necessary information is made available to such accountants for the expression
of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PNC Bank shall enter into and shall maintain in
-----------------
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the
5
<PAGE>
event of equipment failures, PNC Bank shall, at no additional expense to the
Fund, take reasonable steps to minimize service interruptions. PNC Bank shall
have no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not caused by
PNC Bank's own willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties or obligations under this Agreement.
11. COMPENSATION. As compensation for custody services rendered by PNC
------------
Bank during the term of this Agreement, the Fund, on behalf of each of the
Portfolios, will pay to PNC Bank a fee or fees as may be agreed to in writing
from time to time by the Fund and PNC Bank.
12. INDEMNIFICATION. The Fund, on behalf of each Portfolio, agrees to
---------------
indemnify and hold harmless PNC Bank and its affiliates from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the Securities Laws and any state and foreign
securities and blue sky laws, and amendments thereto, and expenses, including
(without limitation) attorneys' fees and disbursements, arising directly or
indirectly from any action or omission to act which PNC Bank takes (i) at the
request or on the direction of the Fund or (ii) upon Oral Instructions or
Written Instructions. Neither PNC Bank, nor any of its affiliates, shall be
indemnified against any liability (or any expenses incident to such liability)
arising out of PNC Bank's or its affiliates' own willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties under this Agreement.
13. RESPONSIBILITY OF PNC BANK.
--------------------------
(a) PNC Bank shall be under no duty to take any action on behalf of the
Fund or any Portfolio except as specifically set forth herein or as may be
specifically agreed to by PNC Bank in writing. PNC Bank shall be obligated to
exercise care and diligence in the performance of its duties hereunder, to act
in good faith and to use its best efforts, within reasonable limits, in
performing services provided for under this Agreement. PNC Bank shall be liable
for any damages arising out of PNC Bank's failure to perform its duties under
this agreement to the extent such damages arise out of PNC Bank's willful
misfeasance, bad faith, gross negligence or reckless disregard of its duties
under this Agreement.
6
<PAGE>
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PNC Bank shall not be under any duty or
obligation to inquire into and shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PNC Bank reasonably believes to be
genuine; or (B) subject to section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PNC Bank's control, including acts
of civil or military authority, national emergencies, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PNC Bank nor its affiliates shall be liable to the Fund or to any Portfolio for
any consequential, special or indirect losses or damages which the Fund may
incur or suffer by or as a consequence of PNC Bank's or its affiliates'
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PNC Bank or its affiliates.
14. DESCRIPTION OF SERVICES.
-----------------------
(a) Delivery of the Property. The Fund will deliver or arrange for
------------------------
delivery to PNC Bank, all the Property owned by the Portfolios, including cash
received as a result of the distribution of Shares, during the period that is
set forth in this Agreement. PNC Bank will not be responsible for such
property until actual receipt.
(b) Receipt and Disbursement of Money. PNC Bank, acting upon Written
---------------------------------
Instructions, shall open and maintain separate accounts in the Fund's name using
all cash received from or for the account of the Fund, subject to the terms of
this Agreement. In addition, upon Written Instructions, PNC Bank shall open
separate custodial accounts for each separate series or Portfolio of the Fund
(collectively, the "Accounts") and shall hold in the Accounts all cash received
from or for the Accounts of the Fund specifically designated to each separate
series or Portfolio.
7
<PAGE>
PNC Bank shall make cash payments from or for the Accounts of a Portfolio
only for:
(i) purchases of securities in the name of a Portfolio or PNC Bank or
PNC Bank's nominee as provided in sub-section (j) and for which
PNC Bank has received a copy of the broker's or dealer's
confirmation or payee's invoice, as appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PNC
Bank;
(iii) payment of, subject to Written Instructions, interest, taxes,
administration, accounting, distribution, advisory, management
fees or similar expenses which are to be borne by a Portfolio;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, an amount
equal to the amount of dividends and distributions stated in the
Written Instructions to be distributed in cash by the transfer
agent to shareholders, or, in lieu of paying the Fund's transfer
agent, PNC Bank may arrange for the direct payment of cash
dividends and distributions to shareholders in accordance with
procedures mutually agreed upon from time to time by and among
the Fund, PNC Bank and the Fund's transfer agent.
(v) payments, upon receipt Written Instructions, in connection with
the conversion, exchange or surrender of securities owned or
subscribed to by the Fund and held by or delivered to PNC Bank;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments made to a sub-custodian pursuant to provisions in sub-
section (c) of this Section; and
(viii) payments, upon Written Instructions, made for other proper Fund
purposes.
PNC Bank is hereby authorized to endorse and collect all checks, drafts or
other orders for the payment of money received as custodian for the Accounts.
(c) Receipt of Securities; Subcustodians.
------------------------------------
(i) PNC Bank shall hold all securities received by it for the
Accounts in a separate account that physically segregates
such securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry
System. All such securities shall be held or disposed of
only upon Written Instructions of the Fund
8
<PAGE>
pursuant to the terms of this Agreement. PNC Bank shall
have no power or authority to assign, hypothecate, pledge
or otherwise dispose of any such securities or investment,
except upon the express terms of this Agreement and upon
Written Instructions, accompanied by a certified resolution
of the Fund's Board of Directors, authorizing the
transaction. In no case may any member of the Fund's Board
of Directors, or any officer, employee or agent of the Fund
withdraw any securities.
At PNC Bank's own expense and for its own convenience, PNC
Bank may enter into sub-custodian agreements with other
United States banks or trust companies to perform duties
described in this sub-section (c). Such bank or trust
company shall have an aggregate capital, surplus and
undivided profits, according to its last published report,
of at least one million dollars ($1,000,000), if it is a
subsidiary or affiliate of PNC Bank, or at least twenty
million dollars ($20,000,000) if such bank or trust company
is not a subsidiary or affiliate of PNC Bank. In addition,
such bank or trust company must be qualified to act as
custodian and agree to comply with the relevant provisions
of the 1940 Act and other applicable rules and regulations.
Any such arrangement will not be entered into without prior
written notice to the Fund.
PNC Bank shall remain responsible for the performance of all
of its duties as described in this Agreement and shall hold
the Fund and each Portfolio harmless from its own acts or
omissions, under the standards of care provided for herein,
or the acts and omissions of any sub-custodian chosen by
PNC Bank under the terms of this sub-section (c).
(d) Transactions Requiring Instructions. Upon receipt of Oral Instructions
-----------------------------------
or Written Instructions and not otherwise, PNC Bank, directly or through the use
of the Book-Entry System, shall:
(i) deliver any securities held for a Portfolio against the
receipt of payment for the sale of such securities;
(ii) execute and deliver to such persons as may be designated in
such Oral Instructions or Written Instructions, proxies,
consents, authorizations, and any other instruments whereby
the authority of a Portfolio as owner of any securities may
be exercised;
(iii) deliver any securities to the issuer thereof, or its
agent, when such securities are called, redeemed, retired or
otherwise become payable; provided that, in any such case,
the cash or other consideration is to be delivered to PNC
Bank;
9
<PAGE>
(iv) deliver any securities held for a Portfolio against receipt
of other securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, tender
offer, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio to any
protective committee, reorganization committee or other
person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of
any corporation, and receive and hold under the terms of
this Agreement such certificates of deposit, interim
receipts or other instruments or documents as may be issued
to it to evidence such delivery;
(vi) make such transfer or exchanges of the assets of the
Portfolios and take such other steps as shall be stated in
said Oral Instructions or Written Instructions to be for the
purpose of effectuating a duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
(vii) release securities belonging to a Portfolio to any bank or
trust company for the purpose of a pledge or hypothecation
to secure any loan incurred by the Fund on behalf of that
Portfolio; provided, however, that securities shall be
released only upon payment to PNC Bank of the monies
borrowed, except that in cases where additional collateral
is required to secure a borrowing already made subject to
proper prior authorization, further securities may be
released for that purpose; and repay such loan upon
redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing
the loan;
(viii) release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into on
behalf of the Fund, but only on receipt of payment therefor;
and pay out moneys of the Fund in connection with such
repurchase agreements, but only upon the delivery of the
securities;
(ix) release and deliver or exchange securities owned by the Fund
in connection with any conversion of such securities,
pursuant to their terms, into other securities;
(x) release and deliver securities owned by the fund for the
purpose of redeeming in kind shares of the Fund upon
delivery thereof to PNC Bank; and
10
<PAGE>
(xi) release and deliver or exchange securities owned by the Fund
for other corporate purposes.
PNC Bank must also receive a certified resolution describing the
nature of the corporate purpose and the name and address of the
person(s) to whom delivery shall be made when such action is
pursuant to sub-paragraph d.
(e) Use of Book-Entry System. The Fund shall deliver to PNC Bank certified
------------------------
resolutions of the Fund's Board of Directors approving, authorizing and
instructing PNC Bank on a continuous basis, to deposit in the Book-Entry System
all securities belonging to the Portfolios eligible for deposit therein and to
utilize the Book-Entry System to the extent possible in connection with
settlements of purchases and sales of securities by the Portfolios, and
deliveries and returns of securities loaned, subject to repurchase agreements or
used as collateral in connection with borrowings. PNC Bank shall continue to
perform such duties until it receives Written Instructions or Oral Instructions
authorizing contrary actions.
PNC Bank shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which are maintained
in the Book-Entry System, the records of PNC Bank shall identify
by Book-Entry or otherwise those securities belonging to each
Portfolio. PNC Bank shall furnish to the Fund a detailed
statement of the Property held for each Portfolio under this
Agreement at least monthly and from time to time and upon written
request.
(ii) Securities and any cash of each Portfolio deposited in the Book-
Entry System will at all times be segregated from any assets and
cash controlled by PNC Bank in other than a fiduciary or
custodian capacity but may be commingled with other assets held
in such capacities. PNC Bank and its sub-custodian, if any, will
pay out money only upon receipt of securities and will deliver
securities only upon the receipt of money.
(iii) All books and records maintained by PNC Bank which relate to
the Fund's participation in the Book-Entry System will at all
times during PNC Bank's regular business hours be open to the
inspection of Authorized Persons, and PNC Bank will furnish to
the Fund all information in respect of the services rendered as
it may require.
11
<PAGE>
PNC Bank will also provide the Fund with such reports on its own system of
internal control as the Fund may reasonably request from time to time.
(f) Registration of Securities. All Securities held for a Portfolio which
--------------------------
are issued or issuable only in bearer form, except such securities held in the
Book-Entry System, shall be held by PNC Bank in bearer form; all other
securities held for a Portfolio may be registered in the name of the Fund on
behalf of that Portfolio, PNC Bank, the Book-Entry System, a sub-custodian, or
any duly appointed nominees of the Fund, PNC Bank, Book-Entry System or sub-
custodian. The Fund reserves the right to instruct PNC Bank as to the method of
registration and safekeeping of the securities of the Fund. The Fund agrees to
furnish to PNC Bank appropriate instruments to enable PNC Bank to hold or
deliver in proper form for transfer, or to register in the name of its nominee
or in the name of the Book-Entry System, any securities which it may hold for
the Accounts and which may from time to time be registered in the name of the
Fund on behalf of a Portfolio.
(g) Voting and Other Action. Neither PNC Bank nor its nominee shall vote
-----------------------
any of the securities held pursuant to this Agreement by or for the account of
a Portfolio, except in accordance with Written Instructions. PNC Bank, directly
or through the use of the Book-Entry System, shall execute in blank and promptly
deliver all notices, proxies and proxy soliciting materials to the registered
holder of such securities. If the registered holder is not the Fund on behalf
of a Portfolio, then Written Instructions or Oral Instructions must designate
the person who owns such securities.
(h) Transactions Not Requiring Instructions. In the absence of contrary
---------------------------------------
Written Instructions, PNC Bank is authorized to take the following actions:
(i) Collection of Income and Other Payments.
----------------------------------------
(A) collect and receive for the account of each Portfolio,
all income, dividends, distributions, coupons, option
premiums, other payments and similar items, included or
to be included in the Property, and, in addition,
promptly advise each Portfolio of such receipt and credit
such income, as collected, to each Portfolio's custodian
account;
12
<PAGE>
(B) endorse and deposit for collection, in the name of the
Fund, checks, drafts, or other orders for the payment of
money;
(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the Portfolio's
securities as a result of a stock dividend, share split-
up or reorganization, recapitalization, readjustment or
other rearrangement or distribution of rights or similar
securities issued with respect to any securities
belonging to a Portfolio and held by PNC Bank hereunder;
(D) present for payment and collect the amount payable upon
all securities which may mature or be called, redeemed,
or retired, or otherwise become payable on the date such
securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such income
and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments.
(ii) Miscellaneous Transactions.
--------------------------
(A) deliver or cause to be delivered Property against payment
or other consideration or written receipt therefor in the
following cases:
(1) for examination by a broker or dealer selling for
the account of a Portfolio in accordance with
street delivery custom;
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
(3) for transfer of securities into the name of the Fund
on behalf of a Portfolio or PNC Bank or nominee of
either, or for exchange of securities for a
different number of bonds, certificates, or other
evidence, representing the same aggregate face
amount or number of units bearing the same interest
rate, maturity date and call provisions, if any;
provided that, in any such case, the new securities
are to be delivered to PNC Bank.
13
<PAGE>
(B) Unless and until PNC Bank receives Oral Instructions or
Written Instructions to the contrary, PNC Bank shall:
(1) pay all income items held by it which call for
payment upon presentation and hold the cash received
by it upon such payment for the account of each
Portfolio;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of each
Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued with
respect to any securities held by PNC Bank; and
(4) execute as agent on behalf of the Fund all necessary
ownership certificates required by the Internal
Revenue Code or the Income Tax Regulations of the
United States Treasury Department or under the laws
of any state now or hereafter in effect, inserting
the Fund's name, on behalf of a Portfolio, on such
certificate as the owner of the securities covered
thereby, to the extent it may lawfully do so.
(i) Segregated Accounts.
-------------------
(i) PNC Bank shall upon receipt of Written Instructions or Oral
Instructions establish and maintain a segregated accounts on
its records for and on behalf of each Portfolio. Such
accounts may be used to transfer cash and securities,
including securities in the Book-Entry System:
(A) for the purposes of compliance by the Fund with the
procedures required by a securities or option exchange,
providing such procedures comply with the 1940 Act and
any releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies;
and
(B) Upon receipt of Written Instructions, for other proper
corporate purposes.
(ii) PNC Bank shall arrange for the establishment of IRA
custodian accounts for such shareholders holding Shares
through IRA accounts, in accordance with the Fund's
prospectuses, the Internal Revenue Code of 1986, as amended
(including regulations
14
<PAGE>
promulgated thereunder), and with such other procedures as
are mutually agreed upon from time to time by and among the
Fund, PNC Bank and the Fund's transfer agent.
(j) Purchases of Securities. PNC Bank shall settle purchased securities
-----------------------
upon receipt of Oral Instructions or Written Instructions from the Fund or its
investment advisers that specify:
(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through
whom the purchase was made. PNC Bank shall upon receipt of
securities purchased by or for a Portfolio pay out of the
moneys held for the account of the Portfolio the total
amount payable to the person from whom or the broker through
whom the purchase was made, provided that the same conforms
to the total amount payable as set forth in such Oral
Instructions or Written Instructions.
(k) Sales of Securities. PNC Bank shall settle sold securities upon
-------------------
receipt of Oral Instructions or Written Instructions from the Fund
that specify:
(i) the name of the issuer and the title of the security,
including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
15
<PAGE>
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to whom
the sale was made;
(vii) the location to which the security must be delivered and
delivery deadline, if any; and
(viii) the Portfolio involved.
PNC Bank shall deliver the securities upon receipt of the total amount
payable to the Portfolio upon such sale, provided that the total amount payable
is the same as was set forth in the Oral Instructions or Written Instructions.
Subject to the foregoing, PNC Bank may accept payment in such form as shall be
satisfactory to it, and may deliver securities and arrange for payment in
accordance with the customs prevailing among dealers in securities.
(l) Reports; Proxy Materials.
------------------------
(i) PNC Bank shall furnish to the Fund the following reports:
(A) such periodic and special reports as the Fund may reasonably
request;
(B) a monthly statement summarizing all transactions and entries
for the account of each Portfolio, listing each Portfolio
securities belonging to each Portfolio with the adjusted
average cost of each issue and the market value at the end
of such month and stating the cash account of each Portfolio
including disbursements;
(C) the reports required to be furnished to the Fund pursuant to
Rule 17f-4; and
(D) such other information as may be agreed upon from time to
time between the Fund and PNC Bank.
(ii) PNC Bank shall transmit promptly to the Fund any proxy statement,
proxy material, notice of a call or conversion or similar
communication received by it as custodian of the Property. PNC
Bank shall be under no other obligation to inform the Fund as to
such actions or events.
16
<PAGE>
(m) Collections. All collections of monies or other property in respect,
-----------
or which are to become part, of the Property (but not the safekeeping thereof
upon receipt by PNC Bank) shall be at the sole risk of the Fund. If payment is
not received by PNC Bank within a reasonable time after proper demands have been
made, PNC Bank shall notify the Fund in writing, including copies of all demand
letters, any written responses, memoranda of all oral responses and shall await
instructions from the Fund. PNC Bank shall not be obliged to take legal action
for collection unless and until reasonably indemnified to its satisfaction.
PNC Bank shall also notify the Fund as soon as reasonably practicable whenever
income due on securities is not collected in due course and shall provide the
Fund with periodic status reports of such income collected after a reasonable
time.
15. DURATION AND TERMINATION. This Agreement shall continue until
------------------------
terminated by the Fund or by PNC Bank on sixty (60) days' prior written notice
to the other party. In the event this Agreement is terminated (pending
appointment of a successor to PNC Bank or vote of the shareholders of the Fund
to dissolve or to function without a custodian of its cash, securities or other
property), PNC Bank shall not deliver cash, securities or other property of the
Portfolios to the Fund. It may deliver them to a bank or trust company of PNC
Bank's choice, having an aggregate capital, surplus and undivided profits, as
shown by its last published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under terms similar to
those of this Agreement. PNC Bank shall not be required to make any such
delivery or payment until full payment shall have been made to PNC Bank of all
of its fees, compensation, costs and expenses.
16. NOTICES. All notices and other communications, including Written
-------
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed (a) if to PNC Bank at
Airport Business Center, International Court 2, 200 Stevens Drive, Lester,
Pennsylvania 19113, marked for the attention of the Custodian Services
Department (or its successor) (b) if to the Fund, at 100 East Pratt Street,
Baltimore, MD 21202, Attn: Secretary, with a copy to Fund counsel or (c) if to
neither of the foregoing, at such other
17
<PAGE>
address as shall have been given by like notice to the sender of any such notice
or other communication by the other party. If notice is sent by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed to have
been given on the day it is delivered. If notice is sent by first-class mail,
it shall be deemed to have been given five days after it has been mailed. If
notice is sent by messenger, it shall be deemed to have been given on the day
it is delivered.
17. AMENDMENTS. This Agreement, or any term hereof, may be changed or
----------
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. DELEGATION; ASSIGNMENT. PNC Bank may assign its rights and delegate
----------------------
its duties hereunder to any wholly-owned direct or indirect subsidiary of PNC
Bank, National Association or PNC Bank Corp., provided that (i) PNC Bank gives
the Fund sixty (60) days' prior written notice; (ii) the delegate (or assignee)
agrees with PNC Bank and the Fund to comply with all relevant provisions of the
1940 Act; and (iii) PNC Bank and such delegate (or assignee) promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation (or assignment), including (without
limitation) the capabilities of the delegate (or assignee).
19. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. FURTHER ACTIONS. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effectuate the purposes
hereof.
21. MISCELLANEOUS.
-------------
(a) Entire Agreement. This Agreement embodies the entire agreement and
----------------
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegated duties and Oral Instructions.
18
<PAGE>
(b) Captions. The captions in this Agreement are included for convenience
--------
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(c) Governing Law. This Agreement shall be deemed to be a contract made in
-------------
Pennsylvania and governed by Pennsylvania law, without regard to principles of
conflicts of law.
(d) Partial Invalidity. If any provision of this Agreement shall be held
------------------
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
(f) Facsimile Signatures. The facsimile signature of any party to this
--------------------
Agreement shall constitute the valid and binding execution hereof by such party.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:
-------------------------------------
Title:
----------------------------------
LASALLE PARTNERS FUNDS, INC.
By:
-------------------------------------
Title:
----------------------------------
20
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
21
<PAGE>
Exhibit 9(a)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
------------------------------------------------
THIS AGREEMENT is made as of December __, 1997 by and between LA SALLE
PARTNERS FUNDS, INC., a Maryland corporation (the "Fund"), and PFPC INC., a
Delaware corporation ("PFPC"), which is an indirect wholly owned subsidiary of
PNC Bank Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to provide administration and
accounting services to its investment portfolios listed on Exhibit A attached
hereto and made a part hereof, as such Exhibit A may be amended from time to
time (each a "Portfolio"), and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
----------------------------------------
(a) "1933 Act" means the Securities Act of 1933, as amended.
----------
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
----------
(c) "Authorized Person" means any officer of the Fund and any other
-------------------
person duly authorized by the Fund's Board of Directors to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PFPC. An Authorized Person's scope of
authority may be limited by the Fund by setting forth such limitation in the
Authorized Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
-----
(e) "Oral Instructions" mean oral instructions received by PFPC from
-------------------
an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
-----
<PAGE>
(g) "Securities Laws" means the 1933 Act, the 1934 Act, the 1940 Act
-----------------
and the CEA.
(h) "Shares" mean the shares of capital stock of any series or class
--------
of the Fund.
(i) "Written Instructions" mean written instructions signed by an
----------------------
Authorized Person and received by PFPC. The instructions may be delivered by
hand, mail, tested telegram, cable, telex or facsimile sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide administration
-----------
and accounting services to the each of the Portfolios, in accordance with the
terms set forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable,
---------------------
will provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC or
its affiliates to provide services to each Portfolio and
approving this Agreement;
(b) a copy of Fund's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreement or agreements;
(d) a copy of the distribution agreement with respect to each class
of Shares representing an interest in a Portfolio;
(e) a copy of any additional administration agreement with respect to
a Portfolio;
(f) a copy of any shareholder servicing agreement made in respect of
the Fund or a Portfolio; and
(g) copies (certified or authenticated, where applicable) of any and
all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS.
-------------------------------------
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by PFPC
hereunder. Except as provided herein, PFPC assumes no responsibility for such
compliance by the Fund or any Portfolio.
2
<PAGE>
5. INSTRUCTIONS.
------------
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to this
Agreement. PFPC may assume that any Oral Instruction or Written Instruction
received hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Board of Directors or of the Fund's shareholders,
unless and until PFPC receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions (except where such Oral Instructions are given by PFPC or its
affiliates) so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. Where Oral Instructions or Written Instructions
reasonably appear to have been received from an Authorized Person, PFPC shall
incur no liability to the Fund in acting upon such Oral Instructions or Written
Instructions provided that PFPC's actions comply with the other provisions of
this Agreement.
6. RIGHT TO RECEIVE ADVICE.
-----------------------
(a) Advice of the Fund. If PFPC is in doubt as to any action it should
------------------
or should not take, PFPC may request directions or advice, including Oral
Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question
-----------------
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's investment adviser or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between directions,
------------------
advice or Oral Instructions or Written Instructions PFPC receives from the Fund
and the advice PFPC
3
<PAGE>
receives from counsel, PFPC may rely upon and follow the advice of counsel. In
the event PFPC so relies on the advice of counsel, PFPC remains liable for any
action or omission on the part of PFPC which constitutes willful misfeasance,
bad faith, gross negligence or reckless disregard by PFPC of any duties,
obligations or responsibilities set forth in this Agreement.
(d) Protection of PFPC. PFPC shall be protected in any action it takes
------------------
or does not take in reliance upon directions, advice or Oral Instructions or
Written Instructions it receives from the Fund or from counsel and which PFPC
believes, in good faith, to be consistent with those directions, advice and Oral
Instructions or Written Instructions. Nothing in this section shall be construed
so as to impose an obligation upon PFPC (i) to seek such directions, advice or
Oral Instructions or Written Instructions, or (ii) to act in accordance with
such directions, advice or Oral Instructions or Written Instructions unless,
under the terms of other provisions of this Agreement, the same is a condition
of PFPC's properly taking or not taking such action.
7. RECORDS; VISITS.
---------------
(a) The books and records pertaining to the Fund and the Portfolios
which are in the possession or under the control of PFPC shall be the property
of the Fund. Such books and records shall be prepared and maintained as required
by the 1940 Act and other applicable securities laws, rules and regulations. The
Fund and Authorized Persons shall have access to such books and records at all
times during PFPC's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by PFPC to the Fund
or to an Authorized Person, at the Fund's expense.
(b) PFPC shall keep the following records:
(i) all books and records with respect to each Portfolio's books
of account ;
(ii) records of each Portfolio's securities transactions; and
(iii) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act in connection with the
services provided hereunder.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the
---------------
Fund and information relating to the Fund and its shareholders, unless the
release of such records or
4
<PAGE>
information is otherwise consented to, in writing, by the Fund. The Fund agrees
that such consent shall not be unreasonably withheld and may not be withheld
where (i) PFPC may be exposed to civil or criminal contempt proceedings or when
required to divulge such information or records to duly constituted authorities;
and (ii) where PFPC has notified the Fund of such release of confidential
records.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
------------------------
independent public accountants and shall provide account analyses, fiscal year
summaries, and other audit-related schedules with respect to each Portfolio.
PFPC shall take all reasonable action in the performance of its duties under
this Agreement to assure that the necessary information is made available to
such accountants for the expression of their opinion, as required by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect
-----------------
with appropriate parties one or more agreements making reasonable provisions for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available. In the event of equipment failures, PFPC shall, at no
additional expense to the Fund, take reasonable steps to minimize service
interruptions. PFPC shall have no liability with respect to the loss of data or
service interruptions caused by equipment failure, provided such loss or
interruption is not caused by PFPC's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or obligations under this
Agreement.
11. COMPENSATION. As compensation for services rendered by PFPC during
------------
the term of this Agreement, the Fund, on behalf of each Portfolio, will pay to
PFPC a fee or fees as may be agreed to in writing by the Fund and PFPC.
12. INDEMNIFICATION. The Fund, on behalf of each Portfolio, agrees to
---------------
indemnify and hold harmless PFPC and its affiliates from all taxes, charges,
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under the Securities Laws and any state or foreign
securities and blue sky laws, and amendments thereto), and expenses, including
(without limitation) attorneys' fees and disbursements arising directly or
indirectly from any action or omission to act which PFPC takes (i) at the
request or on the direction of the Fund or (ii) upon Oral Instructions or
Written Instructions. Neither PFPC, nor any of its affiliates', shall
5
<PAGE>
be indemnified against any liability (or any expenses incident to such
liability) arising out of PFPC's or its affiliates' own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties and obligations
under this Agreement. Any amounts payable by the Fund hereunder shall be
satisfied only against the relevant Portfolio's assets and not against the
assets of any other investment portfolio of the Fund.
13. RESPONSIBILITY OF PFPC.
----------------------
(a) PFPC shall be under no duty to take any action on behalf of the
Fund or any Portfolio except as specifically set forth herein or as may be
specifically agreed to by PFPC in writing. PFPC shall be obligated to exercise
care and diligence in the performance of its duties hereunder, to act in good
faith and to use its best efforts, within reasonable limits, in performing
services provided for under this Agreement. PFPC shall be liable for any damages
arising out of PFPC's failure to perform its duties under this Agreement to the
extent such damages arise out of PFPC's willful misfeasance, bad faith, gross
negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC shall not be liable for losses beyond its
control, provided that PFPC has acted in accordance with the standard of care
set forth above; and (ii) PFPC shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral Instruction or Written
Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PFPC reasonably believes to be
genuine; or (B) subject to Section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood, catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable to the Fund or to any Portfolio
for any consequential, special or indirect losses or damages which the Fund or
any Portfolio may incur or suffer by or as a consequence of PFPC's or any
affiliates' performance of the services provided hereunder, whether or not the
likelihood of such losses or damages was known by PFPC or its affiliates.
14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
--------------------------------------------------------
6
<PAGE>
PFPC will perform the following accounting services with respect to each
Portfolio:
(i) Journalize investment, capital share and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from the
investment adviser for a Portfolio (the "Adviser") and transmit
trades to the Fund's custodian (the "Custodian") for proper
settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the
Custodian, and provide the Adviser with the beginning cash
balance available for investment purposes;
(vi) Update the cash availability throughout the day as required by
the Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities and
the Statement of Operations;
(viii) Calculate various contractual expenses (e.g., advisory and
----
custody fees);
(ix) Monitor the expense accruals and notify an officer of the Fund
of any proposed adjustments;
(x) Control all disbursements and authorize such disbursements upon
Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing services
approved by the Fund, or if such quotes are unavailable, then
obtain such prices from the Adviser, and in either case
calculate the market value of each Portfolio's Investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation to the
Adviser;
(xv) Compute net asset value;
(xvi) Transmit or fax net asset value and related financial data to
reporting agencies as required;
(xvii) As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average
dollar-weighted maturity; and
7
<PAGE>
(xviii) Prepare a monthly financial statement, which will include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
15. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
------------------------------------------------------------
PFPC will perform the following administration services with respect to
each Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Fund
statistical data as requested on an ongoing basis;
(iv) Prepare for execution and file the Fund's Federal and state
tax returns;
(v) Prepare and file the Fund's Semi-Annual Reports with the SEC
on Form N-SAR;
(vi) Prepare and file with the SEC the Fund's annual, semi-annual,
and quarterly shareholder reports;
(vii) Assist in the preparation of registration statements and other
filings relating to the registration of Shares;
(viii) Monitor each Portfolio's status as a regulated investment
company under Sub-chapter M of the Internal Revenue Code of
1986, as amended;
(ix) Coordinate contractual relationships and communications
between the Fund and its contractual service providers;
(x) Monitor the Fund's compliance with the amounts and conditions
of each state qualification; and
(xi) Perform such additional administrative duties relating to the
administration of the Portfolio as may subsequently be agreed
upon in writing between the Fund and PFPC.
16. DURATION AND TERMINATION. This Agreement shall continue until
------------------------
terminated by
8
<PAGE>
either party on sixty (60) days' prior written notice to the other party.
17. NOTICES. All notices and other communications, including Written
-------
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. If notice is sent by confirming telegram, cable,
telex or facsimile sending device, it shall be deemed to have been given on the
day it is delivered. If notice is sent by first-class mail, it shall be deemed
to have been given three days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day it is delivered.
Notices shall be addressed (a) if to PFPC, at 400 Bellevue Parkway, Wilmington,
Delaware 19809; (b) if to the Fund, at 100 East Pratt Street, Baltimore, MD
21202, Attn: Secretary, with a copy to Fund counsel; or (c) if to neither of the
foregoing, at such other address as shall have been provided by like notice to
the sender of any such notice or other communication by the other party.
18. AMENDMENTS. This Agreement, or any term thereof, may be changed or
----------
waived only by written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
19. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its
----------------------
duties hereunder to any wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (i) PFPC gives the Fund
sixty (60) days' prior written notice; (ii) the delegate (or assignee) agrees
with PFPC and the Fund to comply with all relevant provisions of the 1940 Act;
and (iii) PFPC and such delegate (or assignee) promptly provide such information
as the Fund may request, and respond to such questions as the Fund may ask,
relative to the delegation (or assignment), including (without limitation) the
capabilities of the delegate (or assignee).
20. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
21. FURTHER ACTIONS. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effectuate the purposes
hereof.
22. MISCELLANEOUS.
-------------
(a) Entire Agreement. This Agreement embodies the entire agreement
----------------
and
9
<PAGE>
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegated duties and Oral Instructions.
(b) Captions. The captions in this Agreement are included for
--------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) Governing Law. This Agreement shall be deemed to be a contract
-------------
made in Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(d) Partial Invalidity. If any provision of this Agreement shall
------------------
be held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
(f) Facsimile Signatures. The facsimile signature of any party to
--------------------
this Agreement shall constitute the valid and binding execution hereof by such
party.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:__________________________________
Title:_______________________________
LA SALLE PARTNERS FUNDS, INC.
By:__________________________________
Title:_______________________________
11
<PAGE>
EXHIBIT A
---------
THIS EXHIBIT A, dated as of December __, 1997, is Exhibit A to that certain
Administration and Accounting Services Agreement dated as of December __, 1997
between PFPC Inc. La Salle Partners Funds, Inc..
FUNDS
-----
[List all Funds here]
12
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
13
<PAGE>
Exhibit 9(b)
TRANSFER AGENCY SERVICES AGREEMENT
----------------------------------
THIS AGREEMENT is made as of December __, 1997 by and between PFPC INC., a
Delaware corporation ("PFPC"), and LA SALLE PARTNERS FUNDS, INC., a Maryland
corporation (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to its
investment portfolios listed on Exhibit A attached hereto and made a part
hereof, as such Exhibit A may be amended from time to time (each a "Portfolio"),
and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Definitions. As Used in this Agreement:
---------------------------------------
(a) "1933 Act" means the Securities Act of 1933, as amended.
----------
(b) "1934 Act" means the Securities Exchange Act of 1934, as
----------
amended.
(c) "Authorized Person" means any officer of the Fund and any
-------------------
other person duly authorized by the Fund's Board of Directors to give Oral
Instructions and Written Instructions on behalf of the Fund and listed on the
Authorized Persons Appendix attached hereto and made a part hereof or any
amendment thereto as may be received by PFPC. An Authorized Person's scope of
authority may be limited by the Fund by setting forth such limitation in the
Authorized Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
-----
(e) "Oral Instructions" mean oral instructions received by PFPC
-------------------
from an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
-----
<PAGE>
(g) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940
-----------------
Act and the CEA.
(h) "Shares" mean the shares of capital stock of any series or
--------
class of the Fund.
(i) "Written Instructions" mean written instructions signed by an
----------------------
Authorized Person and received by PFPC. The instructions may be delivered by
hand, mail, tested telegram, cable, telex or facsimile sending device.
2. Appointment. The Fund hereby appoints PFPC to serve as transfer
-----------
agent, registrar, dividend disbursing agent and shareholder servicing agent to
the Fund in accordance with the terms set forth in this Agreement. PFPC accepts
such appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where applicable,
---------------------
will provide PFPC with the following:
(a) Certified or authenticated copies of the
resolutions of the Fund's Board of Directors, approving the
appointment of PFPC or its affiliates to provide services to the Fund
and approving this Agreement;
(b) A copy of the Fund's most recent effective
registration statement;
(c) A copy of the advisory agreement with respect to
each investment Portfolio of the Fund (each, a Portfolio);
(d) A copy of the distribution agreement with respect
to each class of Shares of the Fund;
(e) A copy of each Portfolio's administration
agreements if PFPC is not providing the Portfolio with such services;
(f) Copies of any shareholder servicing agreements made
in respect of the Fund or a Portfolio; and
(g) Copies (certified or authenticated where
applicable) of any and all amendments or supplements to the
foregoing.
4. Compliance with Rules and Regulations. PFPC undertakes to comply
-------------------------------------
with all applicable requirements of the Securities Laws and any laws, rules and
regulations
2
<PAGE>
of governmental authorities having jurisdiction with respect to the duties to be
performed by PFPC hereunder. Except as provided herein, PFPC assumes no
responsibility for such compliance by the Fund or any of its investment
portfolios.
5. Instructions.
------------
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to this
Agreement. PFPC may assume that any Oral Instruction or Written Instruction
received hereunder is not in any way inconsistent with the provisions of
organizational documents or this Agreement or of any vote, resolution or
proceeding of the Fund's Board of Directors or of the Fund's shareholders,
unless and until PFPC receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions so that PFPC receives the Written Instructions by
the close of business on the same day that such Oral Instructions are received.
The fact that such confirming Written Instructions are not received by PFPC
shall in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral Instructions or
Written Instructions reasonably appear to have been received from an Authorized
Person, PFPC shall incur no liability to the Fund in acting upon such Oral
Instructions or Written Instructions provided that PFPC's actions comply with
the other provisions of this Agreement.
6. Right to Receive Advice.
-----------------------
(a) Advice of the Fund. If PFPC is in doubt as to any action it
------------------
should or should not take, PFPC may request directions or advice, including Oral
Instructions or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any question
-----------------
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost
3
<PAGE>
from such counsel of its own choosing (who may be counsel for the Fund, the
Fund's investment adviser or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between
------------------
directions, advice or Oral Instructions or Written Instructions PFPC receives
from the Fund, and the advice it receives from counsel, PFPC may rely upon and
follow the advice of counsel. In the event PFPC so relies on the advice of
counsel, PFPC remains liable for any action or omission on the part of PFPC
which constitutes willful misfeasance, bad faith, gross negligence or reckless
disregard by PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
(d) Protection of PFPC. PFPC shall be protected in any action it
------------------
takes or does not take in reliance upon directions, advice or Oral Instructions
or Written Instructions it receives from the Fund or from counsel and which PFPC
believes, in good faith, to be consistent with those directions, advice or Oral
Instructions or Written Instructions. Nothing in this section shall be
construed so as to impose an obligation upon PFPC (i) to seek such directions,
advice or Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of this Agreement, the
same is a condition of PFPC's properly taking or not taking such action.
7. Records; Visits. The books and records pertaining to the Fund, which
---------------
are in the possession or under the control of PFPC, shall be the property of the
Fund. Such books and records shall be prepared and maintained as required by
the 1940 Act and other applicable securities laws, rules and regulations. The
Fund and Authorized Persons shall have access to such books and records at all
times during PFPC's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by PFPC to the Fund
or to an Authorized Person, at the Fund's expense.
8. Confidentiality. PFPC agrees to keep confidential all records of the
---------------
Fund and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in writing, by
the Fund. The Fund agrees that such consent shall not be unreasonably withheld
and may not be withheld where (i) PFPC may be
4
<PAGE>
exposed to civil or criminal contempt proceedings or when required to divulge
such information or records to duly constituted authorities; and (ii) where PFPC
has notified the Fund of such release of confidential records.
9. Cooperation with Accountants. PFPC shall cooperate with the Fund's
----------------------------
independent public accountants and shall take all reasonable actions in the
performance of its obligations under this Agreement to ensure that the necessary
information is made available to such accountants for the expression of their
opinion, as required by the Fund.
10. Disaster Recovery. PFPC shall enter into and shall maintain in
-----------------
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall have no liability with respect to the
loss of data or service interruptions caused by equipment failure, provided such
loss or interruption is not caused by PFPC's own willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties or obligations under this
Agreement.
11. Compensation. As compensation for services rendered by PFPC during
------------
the term of this Agreement, the Fund will pay to PFPC a fee or fees as may be
agreed to from time to time in writing by the Fund and PFPC.
12. Indemnification. The Fund agrees to indemnify and hold harmless PFPC
---------------
and its affiliates from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
Securities Laws and any state and foreign securities and blue sky laws, and
amendments thereto), and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from (i) any action or
omission to act which PFPC takes (a) at the request or on the direction of the
Fund or (b) upon Oral Instructions or Written Instructions or (ii) the
acceptance, processing and/or negotiation of checks or other methods utilized
for the purchase of Shares. Neither PFPC, nor any of its affiliates, shall be
indemnified against any liability (or any expenses incident to such liability)
arising out of PFPC's
5
<PAGE>
or its affiliates' own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement, provided
that in the absence of a finding to the contrary the acceptance, processing
and/or negotiation of a fraudulent payment for the purchase of Shares shall be
presumed not to have been the result of PFPC's or its affiliates own willful
misfeasance, bad faith, gross negligence or reckless disregard of such duties
and obligations.
13. Responsibility of PFPC.
----------------------
(a) PFPC shall be under no duty to take any action on behalf of the
Fund except as specifically set forth herein or as may be specifically agreed to
by PFPC in writing. PFPC shall be obligated to exercise care and diligence in
the performance of its duties hereunder, to act in good faith and to use its
best efforts, within reasonable limits, in performing services provided for
under this Agreement. PFPC shall be liable for any damages arising out of PFPC's
failure to perform its duties under this Agreement to the extent such damages
arise out of PFPC's willful misfeasance, bad faith, gross negligence or reckless
disregard of such duties.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC, shall not be liable for losses beyond its
control, provided that PFPC has acted in accordance with the standard of care
set forth above; and (ii) PFPC shall not be under any duty or obligation to
inquire into and shall not be liable for (A) the validity or invalidity or
authority or lack thereof of any Oral Instruction or Written Instruction, notice
or other instrument which conforms to the applicable requirements of this
Agreement, and which PFPC reasonably believes to be genuine; or (B) subject to
Section 10, delays or errors or loss of data occurring by reason of
circumstances beyond PFPC's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable to the Fund for any
consequential, special or indirect losses or damages which the Fund may incur or
suffer by or as a consequence of PFPC's or its affiliates'
6
<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC or its affiliates.
14. Description of Services.
-----------------------
(a) Services Provided on an Ongoing Basis, If Applicable.
-----------------------------------------------------
(i) Calculate 12b-1 payments;
(ii) Maintain proper shareholder registrations;
(iii) Review new applications and correspond with shareholders
to complete or correct information;
(iv) Direct payment processing of checks or wires;
(v) Prepare and certify stockholder lists in conjunction with
proxy solicitations;
(vi) Countersign share certificates;
(vii) Prepare and mail to shareholders confirmation of
activity;
(viii) Provide toll-free lines for direct shareholder use, plus
customer liaison staff for on-line inquiry response;
(ix) Mail duplicate confirmations to broker-dealers of their
clients' activity, whether executed through the broker-dealer or
directly with PFPC;
(x) Provide periodic shareholder lists and statistics to the
clients;
(xi) Provide detailed data for underwriter/broker
confirmations;
(xii) Prepare periodic mailing of year-end tax and statement
information;
(xiii) Notify on a timely basis the investment adviser,
accounting agent, and custodian of fund activity; and
(xiv) Perform other participating broker-dealer shareholder
services as may be agreed upon from time to time.
(b) Services Provided by PFPC Under Oral Instructions or Written
------------------------------------------------------------
Instructions.
------------
(i) Accept and post daily Fund purchases and redemptions;
7
<PAGE>
(ii) Accept, post and perform shareholder transfers and
exchanges;
(iii) Pay dividends and other distributions;
(iv) Solicit and tabulate proxies; and
(v) Issue and cancel certificates (when requested in writing
by the shareholder).
(c) Purchase of Shares. PFPC shall issue and credit an account of an
------------------
investor, in the manner described in the Fund's prospectus, once it receives:
(i) A purchase order;
(ii) Proper information to establish a shareholder account;
and
(iii) Confirmation of receipt or crediting of funds for such
order to the Fund's custodian.
(d) Redemption of Shares. PFPC shall redeem Shares only if that
--------------------
function is properly authorized by the certificate of incorporation or
resolution of the Fund's Board of Directors. Shares shall be redeemed and
payment therefor shall be made in accordance with the Fund's prospectus, when
the recordholder tenders Shares in proper form and directs the method of
redemption. If Shares are received in proper form, Shares shall be redeemed
before the funds are provided to PFPC from the Fund's custodian (the
"Custodian"). If the recordholder has not directed that redemption proceeds be
wired, when the Custodian provides PFPC with funds, the redemption check shall
be sent to and made payable to the recordholder, unless:
(i) the surrendered certificate is drawn to the order of an
assignee or holder and transfer authorization is signed by the
recordholder; or
(ii) Transfer authorizations are signed by the recordholder
when Shares are held in book-entry form.
When a broker-dealer notifies PFPC of a redemption desired by a customer, and
the Custodian provides PFPC with funds, PFPC shall prepare and send the
redemption check to the broker-
8
<PAGE>
dealer and made payable to the broker-dealer on behalf of its customer.
(e) Dividends and Distributions. Upon receipt of a resolution of the
---------------------------
Fund's Board of Directors authorizing the declaration and payment of dividends
and distributions, PFPC shall issue dividends and distributions declared by the
Fund in Shares, or, upon shareholder election, pay such dividends and
distributions in cash, if provided for in the Fund's prospectus. Such issuance
or payment, as well as payments upon redemption as described above, shall be
made after deduction and payment of the required amount of funds to be withheld
in accordance with any applicable tax laws or other laws, rules or regulations.
PFPC shall mail to the Fund's shareholders such tax forms and other information,
or permissible substitute notice, relating to dividends and distributions paid
by the Fund as are required to be filed and mailed by applicable law, rule or
regulation. PFPC shall prepare, maintain and file with the IRS and other
appropriate taxing authorities reports relating to all dividends above a
stipulated amount paid by the Fund to its shareholders as required by tax or
other law, rule or regulation.
(f) Shareholder Account Services.
----------------------------
(i) PFPC may arrange, in accordance with the prospectus, for
issuance of Shares obtained through:
- Any pre-authorized check plan; and
- Direct purchases through broker wire orders, checks and
applications.
(ii) PFPC may arrange, in accordance with the prospectus, for a
shareholder's:
- Exchange of Shares for shares of another fund with which the
Fund has exchange privileges;
- Automatic redemption from an account where that shareholder
participates in a automatic redemption plan; and/or
- Redemption of Shares from an account with a checkwriting
privilege.
(g) Communications to Shareholders. Upon timely Written Instructions, PFPC
------------------------------
shall mail all communications by the Fund to its shareholders, including:
9
<PAGE>
(i) Reports to shareholders;
(ii) Confirmations of purchases and sales of Fund shares;
(iii) Monthly or quarterly statements;
(iv) Dividend and distribution notices;
(v) Proxy material; and
(vi) Tax form information.
In addition, PFPC will receive and tabulate the proxy cards for the
meetings of the Fund's shareholders.
(h) Records. PFPC shall maintain records of the accounts for each
-------
shareholder showing the following information:
(i) Name, address and United States Tax Identification or Social
Security number;
(ii) Number and class of Shares held and number and class of Shares
for which certificates, if any, have been issued, including certificate
numbers and denominations;
(iii) Historical information regarding the account of each shareholder,
including dividends and distributions paid and the date and price for
all transactions on a shareholder's account;
(iv) Any stop or restraining order placed against a shareholder's
account;
(v) Any correspondence relating to the current maintenance of a
shareholder's account;
(vi) Information with respect to withholdings; and
(vii) Any information required in order for the transfer agent to
perform any calculations contemplated or required by this Agreement.
(i) Lost or Stolen Certificates. PFPC shall place a stop notice against
---------------------------
any certificate reported to be lost or stolen and comply with all applicable
federal regulatory
10
<PAGE>
requirements for reporting such loss or alleged misappropriation. A new
certificate shall be registered and issued only upon:
(i) The shareholder's pledge of a lost instrument bond or such
other appropriate indemnity bond issued by a surety company
approved by PFPC; and
(ii) Completion of a release and indemnification agreement
signed by the shareholder to protect PFPC and its affiliates.
(j) Shareholder Inspection of Stock Records. Upon a request from any
---------------------------------------
Fund shareholder to inspect stock records, PFPC will notify the Fund and the
Fund will issue instructions granting or denying each such request. Unless PFPC
has acted contrary to the Fund's instructions, the Fund agrees and does hereby
release PFPC from any liability for refusal of permission for a particular
shareholder to inspect the Fund's stock records.
(k) Withdrawal of Shares and Cancellation of Certificates.
-----------------------------------------------------
Upon receipt of Written Instructions, PFPC shall cancel outstanding
certificates surrendered by the Fund to reduce the total amount of outstanding
shares by the number of shares surrendered by the Fund.
15. DURATION AND TERMINATION. This Agreement shall continue until
------------------------
terminated by the Fund or by PFPC on sixty (60) days' prior written notice to
the other party.
16. NOTICES. All notices and other communications, including Written
-------
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices shall be addressed (a) if to PFPC, at 400
Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at 100 East
Pratt Street, Baltimore, MD 21202, Attn: Secretary, with a copy to Fund counsel
or (c) if to neither of the foregoing, at such other address as shall have been
given by like notice to the sender of any such notice or other communication by
the other party. If notice is sent by confirming telegram, cable, telex or
facsimile sending device, it shall be deemed to have been given on the day it is
delivered. If notice is sent by first-class mail, it shall be deemed to have
been given three days after it has been mailed. If notice is sent by messenger,
it shall be deemed to have been given on the day it is delivered.
11
<PAGE>
17. AMENDMENTS. This Agreement, or any term thereof, may be changed or
----------
waived only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
18. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its
----------------------
duties hereunder to any wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (i) PFPC gives the Fund
thirty (30) days' prior written notice; (ii) the delegate (or assignee) agrees
with PFPC and the Fund to comply with all relevant provisions of the 1940 Act;
and (iii) PFPC and such delegate (or assignee) promptly provide such information
as the Fund may request, and respond to such questions as the Fund may ask,
relative to the delegation (or assignment), including (without limitation) the
capabilities of the delegate (or assignee).
19. COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. FURTHER ACTIONS. Each party agrees to perform such further acts and
---------------
execute such further documents as are necessary to effectuate the purposes
hereof.
21. MISCELLANEOUS.
-------------
(a) Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that the parties
may embody in one or more separate documents their agreement, if any, with
respect to delegated duties and Oral Instructions.
(b) Captions. The captions in this Agreement are included for
--------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) Governing Law. This Agreement shall be deemed to be a contract
-------------
made in Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
12
<PAGE>
(d) Partial Invalidity. If any provision of this Agreement shall be
------------------
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(e) Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
(f) Facsimile Signatures. The facsimile signature of any party to
--------------------
this Agreement shall constitute the valid and binding execution hereof by such
party.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
Title:
LA SALLE PARTNERS FUNDS, INC.
By:
Title:
14
<PAGE>
EXHIBIT A
---------
THIS EXHIBIT A, dated as of December __, 1997, is Exhibit A to that certain
Transfer Agency Services Agreement dated as of December __, 1997 between PFPC
Inc. and La Salle Real Estate Funds, Inc.
FUNDS
-----
[List all Funds here]
15
<PAGE>
AUTHORIZED PERSONS APPENDIX
Name (Type) Signature
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
16
<PAGE>
Exhibit 9(c)
LICENSE AGREEMENT
This License Agreement dated as of [_____ __], 1997, by and between LaSalle
Partners Incorporated, a Maryland corporation ("Licensor"), and LaSalle Partners
Funds, Inc.], a Maryland corporation ("Licensee").
W I T N E S S E T H:
WHEREAS, Licensee has retained an affiliate of Licensor to provide
investment advisory services to Licensee; and
WHEREAS, Licensee desires to use the marks "LaSalle" and "LaSalle Partners"
in its corporate name and business and Licensor is willing to permit the use of
the marks by Licensee subject to the terms and conditions set forth herein;
NOW THEREFORE, it is hereby agreed between the parties hereto as follows:
1. License. Licensor grants to Licensee a non-exclusive, non-transferable
--------
license (the "License") to use the marks in its corporate name and in connection
with its activities as a registered open-end management investment company, and
for no other purpose.
2. Use of Marks. Licensee agrees and warrants to Licensor that it shall
------------
not at any time use the marks in connection with the sale of, or offer to sell,
any security in violation of applicable federal and state laws and regulations.
Licensor may license, use or grant to any other person the right to use the
marks in any form, alone or in association with any other name or mark, in
connection with the business of another investment company, or for any other
purpose whatsoever.
3. Infringements. Licensee shall promptly notify Licensor of any
--------------
potential infringements of the marks by third persons which come to Licensee's
attenttion. Licensor retains the exclusive right to determine what constitues
an infringement and to decide whether to take legal action. Licensee agrees to
cooperate fully in any such undertaking, and Licensor shall maintain complete
control over the action.
4. Termination. The License shall terminate: (i) upon 30 days' written
-----------
notice by Licensor to Licensee; (ii) automatically if Licensee shall become
insolvent, make a general assignment for the benefit of crreditors, suffer or
permit the appointment of a receiver for its busineess or assets, become the
subject of any proceeding under any bankruptcy or insolvency law whether
domestic or foreign, or have wound up its business or liquidated, whether
voluntarily or otherwise; or (iii) automatically in the event that Licensor or
its affiliates or subsidiaries shall cease to be the investment adviser to
Licensee. Upon termiantion of the License, Licensee shall cease and desist from
all use of the marks in any way.
-1-
<PAGE>
5. Ownership of the Marks. Licensee acknowledges Licensor's exclusive
----------------------
right, title and interest in and to the marks and any registration that has
issued or may issue thereon, and will not at any time do or cause to be done any
act or thing contesting or in any way impairing or tending to impair such right,
title and interest. Licensee further agrees to take all appropriate action,
including the use of recognized symbols and abbreviations, to evidence
Licensor's ownership of the marks.
6. Notices. Any notice or other communication shall be deemed
--------
sufficiently given if given in writing and delivered in person or mailed by
first class mail, postage prepaid, addressed as follows:
If to Lisensor:
If to Licensee:
7. Governing Law. This Agreement shall be governed by and construed under
--------------
the laws of the State of Maryland, without giving effect to the conflict of laws
provisions thereof.
8. Miscellaneous. If any provision of this Agreement shall be held or
-------------
made invalid by a court decision, statute, rule or otherwise, the remainder
shall not be affected thereby. the title of this Agreement and the headings of
the sections herein are for convenience of the parties only, and are not
intended to be part of or affect the meaning or interpretation of this
Agreement. This Agreement constitutes the entire agreement of the parties
hereto with respect to the matters referred to herein, and no other agreement,
verbal or otherwise, shall be binding as between the parities. No failure or
delay on the part of any party hereto in exercising any right power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. Any
waiver granted hereunder must be in writing and shall be valid only in the
specific instance in which given.
[9. Limitation of Liability. The Adviser expressly acknowledges the
-----------------------
limitation of liability set forth in the Agreement and Declaration of Trust of
the Trust The Adviser agrees that the obligations assumed by the Trust pursuant
to this Agreement shall be limited in any case to the assets of the Trust and
the Adviser shall not seek satisfaction of any such obligations from the
interestholders, trustees or officers of the Trust, or any of them.]
-2-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of
the undersigned as of the day and year first above written.
Attest: LA SALLE PARTNERS INCORPORATED
By:
- ------------------------ ------------------------
Secretary [Name/Title]
Attest: LASALLE PARTNERS FUNDS, INC.
By:
- ------------------------ ------------------------
[Name/Title]
-3-
<PAGE>
[LETTERHEAD OF PIPER & MARBURY APPEARS HERE]
December 31, 1997
LaSalle Partners Funds, Inc.
100 East Pratt Street
Baltimore, MD 21202
Re: Registration Statement on Form N-1A
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to LaSalle Partners Funds, Inc., a Maryland
corporation (the "Company"), in connection with the filing with the Securities
and Exchange Commission of a registration statement on Form N-1A (File Nos. 333-
36161; 811-08373), as amended (the "Registration Statement"), registering an
indefinite number of Retail Class and Institutional Class shares of the LaSalle
Partners U.S. Real Estate Fund series of Common Stock, par value $.01 per share
(the "Shares"), of the Company under the Securities Act of 1933, as amended. In
our capacity as counsel to the Company, we have examined the charter and bylaws
of the Company, the Registration Statement, the corporate action taken by the
Company that provides for the issuance of the Shares, and such other documents
and matters as we have deemed necessary and appropriate to render the opinions
set forth in this letter. In reaching the opinions set forth below, we have
assumed all documents submitted to us as originals are authentic, all documents
submitted to us as certified or photostatic copies conform to the original
documents, all signatures on all documents submitted to us for examination are
genuine, and all public records reviewed are accurate and complete.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized for issuance and, when issued and paid for as
described in the Registration Statement, the Shares will be validly issued,
fully paid and non-assessable.
<PAGE>
LaSalle Partners Funds, Inc.
December 31, 1997
Page 2
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement and to the reference to our firm and the opinions set
forth herein in the prospectus included in the Registration Statement. In giving
our consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion of our report dated December 29, 1997 on our audit
of the Statement of Assets and Liabilities of LaSalle Partners Funds, Inc. as of
December 29, 1997 with respect to this Pre-Effective Amendment No. 1 to the
Registration Statement (No. 333-36161) under the Securities Act of 1933 on Form
N-1A. We also consent to the reference to our Firm under the heading
"Independent Accountants" in the Prospectus and under the heading "Financial
Statements" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 5, 1998
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion of our report dated December 29, 1997 on our audit
of the Statement of Assets and Liabilities of LaSalle Partners Master Trust
as of December 29, 1997 with respect to this Pre-Effective Amendment No. 1 to
the Registration Statement (No. 333-36161) under the Securities Act of 1933 on
Form N-1A. We also consent to the reference to our Firm under the heading
"Independent Accountants" in the Prospectus and under the heading "Financial
Statements" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 5, 1998
<PAGE>
Exhibit 13
INITIAL CAPITAL AGREEMENT
December __, 1997
LaSalle Partners Funds, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
LaSalle Partners Funds, Inc. (the "Company"), a newly-organized open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "1940 Act"), proposes to issue and sell to the public
shares of its LaSalle Partners U.S. Real Estate Fund (the "Fund") pursuant to a
registration statement on Form N-1A (File No. 333-36161), as from time to time
amended (the "Registration Statement"), filed with the Securities and Exchange
Commission. The Fund seeks to achieve its investment objective by investing all
of its investable assets in LaSalle Partners Master Trust (the "Trust"), a
newly-organized open-end management investment company registered under the 1940
Act. In order to provide the Company and the Trust with a net worth sufficient
to commence operations and to meet the requirements of Section 14 of the 1940
Act, we agree to purchase shares of the Fund in accordance the terms and
conditions set forth below.
We hereby agree to purchase from the Company ___________ Institutional
Class shares (the "Shares") of the Fund for an aggregate purchase price of
$________. We shall deliver payment for the Shares in immediately available
funds to the Company's custodian bank at least two business days prior to the
date specified by the Company as the effective date of the Registration
Statement.
We represent and warrant that we are acquiring the Shares for our own
account for investment and not with a view to the resale or further distribution
thereof, and that we have no present plan or intention to sell, redeem or
otherwise dispose of the Shares or any part thereof. We acknowledge and agree
that in the event that any of the Shares are redeemed prior to complete
amortization of the deferred organizational expenses of the Fund, the proceeds
of redemption of such Shares shall be reduced by the pro rata share (based on
the number of Shares redeemed and the total number of Shares then outstanding)
of the unamortized organizational expenses as of the date of such redemption.
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please so indicate by signing in the space provided below, whereupon this letter
will become a binding agreement between us in accordance with its terms.
Very truly yours,
LA SALLE
------------------------
By:
-----------------------------
Name:
Title:
The foregoing Initial Capital Agreement
is hereby confirmed and accepted
as of the date first written above.
LA SALLE PARTNERS FUNDS, INC.
By:
-----------------------------------
Name:
Title:
<PAGE>
Exhibit 15(a)
DISTRIBUTION PLAN
Pursuant to Rule 12b1
This Distribution Plan is adopted as of December __, 1997, by LaSalle
Partners Funds, Inc., a Maryland corporation (the "Fund"), with respect to its
Retail Class of Common Stock, par value $.01 per share (the "Retail Class").
1. Rule 12-1 Plan. This Plan is intended to be a written plan referred to
--------------
in Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act").
2. Distribution Activities. This Plan is adopted to permit the Retail
-----------------------
Class to finance activities which are primarily intended to result in the sale
of Retail Class shares, including, but not limited to, the following: (i)
making payments to securities dealers and others engaged in the sale of Retail
Class shares; (ii) providing training, marketing and support to securities
dealers and others with respect to the sale of Retail Class shares; (iii)
preparation, printing and distribution of sales literature; (iv) preparation,
printing and distribution of prospectuses and shareholder reports to recipients
other than existing shareholders; (v) formulation and implementation of
marketing and promotional activities; and (vi) obtaining such information,
analyses and reports with respect to marketing and promotional activities as the
Fund's principal underwriter may from time to time deem advisable.
3. Authorized Payments. Payments made by the Fund pursuant to this Plan
-------------------
shall not exceed 0.75% annually of the average net assets of the Retail Class.
Subject to the foregoing and to the provisions of paragraph 2, the amount of
such payments and the purposes for which they are made shall be determined by
the Board of Directors of the Fund in its sole discretion. The Board of
Directors may, at any time and from time to time, reduce the amount of any fee
paid pursuant to this Plan to the Fund's principal underwriter or securities
dealers and others engaged in the sale of Retail Class shares, or suspend
payment of such fee, in such amount or for such period of time as it, in its
sole discretion, may determine.
3. Related Agreements. Payment of a fee hereunder to the Fund's principal
------------------
underwriter or securities dealers and others engaged in the sale of Retail Class
shares shall be made pursuant to a written agreement in the form approved by the
Board of Directors. Any such related agreement shall provide that (i) it may be
terminated in the manner provided in paragraph 7 and (ii) for its automatic
termination in the event of its assignment.
4. Quarterly Reports. While this Plan is in effect, the Fund's principal
-----------------
underwriter or any other person authorized to direct the disposition of moneys
paid or payable hereunder shall provide to the Board of Directors of the Fund,
and the Board of Directors shall review, at least quarterly, a written report of
the amounts expended pursuant to this Plan and the purposes for which such
expenditures were made.
<PAGE>
5. Term. This Plan shall take effect as of the date hereof. Unless
----
sooner terminated as herein provided, this Plan shall continue in effect for
successive periods of one year, but 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 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.
6. Amendment. This Plan may not be amended to increase materially the
---------
maximum expenditures permitted under paragraph 3 unless such amendment is
approved by a vote of a majority of the outstanding voting securities of the
Fund, and no material amendments of this Plan shall be effective unless approved
in the manner provided in paragraph 5.
7. Termination. This Plan may be terminated at any time, without payment
-----------
of any penalty, by vote of a majority of the members of the Board of Directors
who are not interested persons of the Fund 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.
8. Disinterested Directors. While this Plan is in effect, the selection
-----------------------
and nomination of those directors of the Fund who are not interested persons of
the Fund shall be committed to the discretion of such disinterested directors.
9. Definitions. As used in this Plan, the terms "assignment", "interested
-----------
person", "principal underwriter" and "vote of a majority of the outstanding
voting securities" shall have the meanings given them in the 1940 Act and the
rules and regulations promulgated thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
-2-
<PAGE>
Exhibit 15(b)
SHAREHOLDER SERVICES PLAN
This Shareholder Services Plan is adopted as of December __, 1997, by
LaSalle Partners Funds, Inc., a Maryland corporation (the "Fund"), with respect
to its Retail Class of Common Stock, par value $.01 per share (the "Retail
Class").
1. Shareholder Services. The Fund may enter into agreements with
--------------------
securities dealers and other financial institutions ("Agents") for the provision
to Retail Class shareholders of personal and account maintenance services within
the meaning of Conduct Rule 2830 of the National Association of Securities
Dealers, Inc. Such services may include, but are not limited to, the following:
(i) answering routine inquiries from shareholders regarding the Fund; (ii)
providing shareholders with information on their investment in Retail Class
shares; (iii) assisting in the establishment and maintenance of shareholder
accounts or sub-accounts; (iv) making the Fund's investment plans and dividend
payment options available to shareholders; and (v) providing such other
information and shareholder liaison services and the maintenance of accounts, as
the Fund or its principal underwriter may reasonably request.
2. Authorized Payments. Shareholder services fees paid by the Fund to a
-------------------
particular Agent pursuant to this Plan shall not exceed 0.25% annually of the
average net assets of the Retail Class attributable to such Agent. Subject to
the foregoing and to the provisions of paragraph 1, the amount of the payments
made hereunder and the purposes for which they are made shall be determined by
the Board of Directors of the Fund in its sole discretion. The Board of
Directors may, at any time and from time to time, reduce the amount of any fee
pay paid pursuant to this Plan or suspend payment of such fee in such amount or
for such period of time as it, in its sole discretion, may determine.
3. Related Agreements. Payment of a fee hereunder shall be made pursuant
------------------
to a written agreement the form approved by the Board of Directors. Any such
related agreement shall provide that (i) it may be terminated in the manner
provided in paragraph 6 and (ii) for its automatic termination in the event of
its assignment.
4. Quarterly Reports. While this Plan is in effect, the Treasurer of the
-----------------
Fund shall provide to the Board of Directors, and the Board of Directors shall
review, at least quarterly, a written report of the amounts expended pursuant to
this Plan and the purposes for which such expenditures were made.
5. Term. This Plan shall take effect as of the date hereof. Unless
----
sooner terminated as herein provided, this Plan shall continue in effect for
successive periods of one year, but 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 directors who are not interested persons of the Fund 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.
<PAGE>
6. Amendment. No material amendments of this Plan shall be effective
---------
unless approved in the manner provided in paragraph 5.
7. Termination. This Plan may be terminated at any time, without payment
-----------
of any penalty, by vote of a majority of the members of the Board of Directors
who are not interested persons of the Fund 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.
8. Definitions. As used in this Plan, the terms "assignment", "interested
-----------
person", "principal underwriter" and "vote of a majority of the outstanding
voting securities" shall have the meanings given them in the 1940 Act and the
rules and regulations promulgated thereunder, subject to any applicable orders
of exemption issued by the Securities and Exchange Commission.
-2-
<PAGE>
Exhibit 18
LA SALLE PARTNERS FUNDS, INC.
Multiple Class Plan
This Multiple Class Plan (the "Plan") is adopted by LaSalle Partners Funds,
Inc. (the "Company") with respect to the classes of shares (individually, a
"Class") of the separate investment series (individually, a "Portfolio") set
forth in Exhibit A hereto.
1. Purpose. This Plan is adopted pursuant to Rule 18f-3 under the
--------
Investment Company Act of 1940, as amended, for the Portfolios of the Company so
that a Portfolio may issue more than one class of shares as contemplated under
Rule 18f-3.
2. Designation of Classes. Each Portfolio may offer two classes of
----------------------
shares: Retail Class and Institutional Class.
3. Allocation of Fees and Expenses. Distribution and shareholder services
-------------------------------
fees shall be allocated exclusively to a Class in accordance with the terms of
the then-effective distribution or shareholder services plan for that Class.
The distribution and shareholder services fees currently authorized for each
Class and Portfolio are as set forth in Exhibit A. Each Class shall bear such
other expenses as are permitted to be allocated under applicable law and the
governing documents of the Company.
4. Distribution of Shares. Retail and Institutional Class shares may be
----------------------
sold subject to such front-end or contingent deferred sales charges, or without
a sales charge, as set forth in Exhibit A.
5. Exchange Privileges. A holder of Retail and Institutional Class shares
-------------------
of a Portfolio may exchange his or her shares for shares of the same Class of
any other Portfolio for which such shareholder is eligible for investment.
Exchanges shall be made on the basis of the relative net asset values of the
shares being exchanged as next determined after receipt of the request for
exchange in good order. Shares of any Class subject to a contingent deferred
sales charge being which are being acquired in an exchange shall be deemed to
have been acquired on the date of purchase of the exchanged shares for purposes
of calculating such deferred sales charge.
6. Voting Rights. Each Class of shares subject to this Plan: (i) shall
-------------
have exclusive voting rights on any matter submitted to shareholders relating
solely its arrangement; and (ii) shall have separate voting rights on any matter
submitted to a vote of shareholders in which the interests of one Class differ
from the interests of any other Class.
7. Effective Date; Amendment. This Plan, and any material amendment
-------------------------
hereto, shall become effective following approval by a majority of the
directors/trustees of the Company, and a majority of the directors/trustees who
are not interested persons of the Company.
Adopted: December __, 1997
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Portfolio/Class Sales Charge Distribution Fee Shareholder Services Fee
- --------------- ------------ ---------------- ------------------------
<S> <C> <C> <C>
LaSalle Partners U.S.
Real Estate Fund
Retail Class None 0.25% 0.15%
Institutional Class None None None
</TABLE>
