<PAGE>
As filed with the Securities and Exchange Commission on April 30, 1999
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. [ ]
Post-Effective Amendment No. 3 [X]
---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 4 [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: (800) 527-2553
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 Public Offering:
It is proposed that this filing will become effective (check appropriate box):
( ) immediately upon filing pursuant to paragraph (b)
(X) on April 30, 1999 pursuant to paragraph (b)
( ) 60 days after filing pursuant to paragraph (a)(1)
( ) on (date) pursuant to paragraph (a)(1)
( ) 75 days after filing pursuant to paragraph (a)(2)
( ) on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[_] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Declaration Pursuant to Rule 24f-2
The Registrant has previously elected 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 Rule 24f-2
Notice for the Registrant's fiscal year ended December 31, 1998 was filed on
March 29, 1999. The Registrant is a "feeder" fund within a "master-feeder" fund
structure. The "master" fund within this structure has executed this
Registration Statement.
================================================================================
<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
Exhibits
<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. Front and Back Cover Pages.................................... Front Cover Page; Back Cover Page
2. Risk/Return Summary: Investments, Risks, and Performance...... An Overview of the Fund; The Fund's Goal's and Strategies;
Principal Risks; Performance of
LaSalle Investment Management
3. Risk/Return Summary: Fee Table................................ An Overview of the Fund; Fee Table
4. Investment Objectives, Principal Investment Strategies, and
Related Risks............................................... An Overview of the Fund; The Fund's Goals and Strategies;
Principal Risks
5. Management's Discussion of Fund Performance................... Not applicable
6. Management, Organization, and Capital Structure............... Management of the Fund; Additional Fund Information
7. Shareholder Information....................................... Purchasing Shares; Redeeming Shares; Distributions and Taxes
8. Distribution Arrangements..................................... Fees and Expenses; Purchasing Shares
9. Financial Highlights Information.............................. Financial Highlights
</TABLE>
<PAGE>
LASALLE PARTNERS U.S. REAL ESTATE FUND
PROSPECTUS
April 30, 1999
Retail Class Shares
Institutional Class Shares
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
<PAGE>
(inside cover)
TABLE OF CONTENTS
An Overview of the Fund.............................................. 1
Fees and Expenses.................................................... 2
The Fund's Goals and Strategies...................................... 4
Principal Risks...................................................... 5
Performance of LaSalle Investment Management......................... 8
Purchasing Shares.................................................... 10
Redeeming Shares..................................................... 15
Distributions and Taxes.............................................. 17
Management of the Fund............................................... 18
Additional Fund Information.......................................... 20
Financial Highlights................................................. 21
OBJECTIVE: LaSalle Partners U.S. Real Estate Fund (the "Fund") seeks total
return primarily through investments in U.S. real estate securities. The Fund
operates under a master/feeder structure, whereby it invests all of its assets
in the U.S. Real Estate Portfolio of LaSalle Partners Master Trust (the
"Trust"). The Trust is a separate mutual fund with an investment objective
identical to the Fund.
The Fund is a separate series of LaSalle Partners Funds, Inc. (the "Company"),
an open-end diversified investment management company.
SHARE CLASSES: The Fund offers Retail Class shares and Institutional Class
shares.
MANAGER: LaSalle Investment Management (Securities) L.P. (the "Manager"), a
registered investment adviser and a subsidiary of Jones Lang LaSalle
Incorporated, manages the Fund and the Trust's assets.
DISTRIBUTOR: Funds Distributor, Inc. (the "Distributor") serves as principal
underwriter and distributor of the Fund's shares.
ADMINISTRATOR/TRANSFER AGENT: PFPC Inc. serves as the Fund's administrator and
as transfer agent and dividend disbursing agent for the Fund's shares.
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 (FDIC), the Federal Reserve Board or any other government
agency. Investing in the Fund involves risk, and you could lose money.
<PAGE>
AN OVERVIEW OF THE FUND
PRINCIPAL INVESTMENT STRATEGY
The Fund and the Trust seek to provide current income and capital appreciation
by investing in the equity securities of real estate investment trusts (REITs)
and other publicly-traded real estate industry companies. The Fund seeks to
achieve its investment strategy by investing all of its investable assets in the
Trust which has an identical investment objective. Under normal conditions, at
least 85% of the Trust's total assets will be invested in REITs and other
publicly-traded real estate industry companies. The Trust's investments normally
will be allocated among a number of companies representing diverse investment
policies and real property holdings. Certain securities will be selected for
high current return, while others will be chosen for long-term capital
appreciation potential.
Principal Risks
An investment in the Fund involves risks, and you could lose money.
The Fund is subject to market risk, which is the possibility that stock prices
overall will decline over short or even extended periods. If there is a decline
in the stock market in general, the Fund's share price may decline.
The Fund is subject to risks similar to those associated with owning real estate
directly. These risks include declines in the value of real estate and increased
costs associated with operating real estate. The Fund also is subject to various
risks related to investing in REITs. These risks include changes in the value of
and income from the underlying properties, and credit and interest rate risk.
Credit risk, which principally affects mortgage REITs, is the possibility that
an issuer will default on a security by failing to pay interest or principal
when due. Interest rate risk is the possibility that interest rates applicable
to the Trust's investments in fixed-rate obligations could change. The Fund also
may invest in illiquid securities which has additional risks.
For more information on the risks of investing in the Fund, see the Principal
Risks Section.
AVERAGE ANNUAL TOTAL RETURN
The table shows average total returns of the Fund's Retail Class and
Institutional Class shares, compared to the Wilshire Real Estate Securities
Index, a market capitalization weighted index of publicly-traded real estate
securities. This information gives some indication of the risks of an investment
in the Fund by comparing the Fund's performance with a broad measure of market
performance.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
WILSHIRE REAL ESTATE
CALENDAR PERIOD RETAIL CLASS* INSTITUTIONAL CLASS SECURITIES INDEX
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Life of the Fund (1) -24.2% -19.9% -16.6%
- -----------------------------------------------------------------------------------------------
</TABLE>
* The Retail Class shares are sold subject to a sales charge, which is waived
for certain investors (see Purchasing Shares-Retail Class Shares). The effect of
the sales charge is reflected in the total returns shown above.
(1) The Retail Class and Institutional Class of the Fund each commenced
operations on March 30, 1998.
1
<PAGE>
FEES AND EXPENSES OF THE FUND
The following tables summarize the fees and expenses related to investing in the
Fund.
SHAREHOLDER FEES (fees paid directly from your investment)
- ------------------------------------------------------------------------------
RETAIL CLASS INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------
Maximun sales charge imposed on
purchases (as a percentage of
offering price) 5%* None
- ------------------------------------------------------------------------------
Sales charge on reinvested dividends None None
- ------------------------------------------------------------------------------
Redemption fee None None
- ------------------------------------------------------------------------------
Exchange fee None None
- ------------------------------------------------------------------------------
* The sales charge is waived for certain investors (see Purchasing Shares-
Retail Class Shares).
ANNUAL FUND OPERATING EXPENSES /1/
AS % OF AVERAGE NET ASSETS
(expenses that are deducted from Fund assets)
- -------------------------------------------------------------------------------
RETAIL CLASS INSTITUTIONAL CLASS
- -------------------------------------------------------------------------------
Management fee /2/ 0.75% 0.75%
- -------------------------------------------------------------------------------
Distribution (12b-1) fee 0.25% None
- -------------------------------------------------------------------------------
Shareholder services fee 0.15% None
- -------------------------------------------------------------------------------
Other expenses /3/ 142.16% 112.42%
- -------------------------------------------------------------------------------
Total Fund operating expenses /3/ 143.31% 113.17%
- -------------------------------------------------------------------------------
Waivers/Reimbursements /2/ 141.86% 112.12%
- -------------------------------------------------------------------------------
Net expenses after
waivers/reimbursements 1.45% 1.05%
- -------------------------------------------------------------------------------
(sidebar)
EXPLANATION OF FEES
MANAGEMENT FEE: The fee the Trust pays to the Manager for managing the
Trust's assets.
12b-1 FEE: Fee the Fund pays for sales compensation to financial services
firms for marketing and distributing the Fund's shares.
SHAREHOLDER SERVICES FEE: A fee the Fund pays to the financial services
firms for shareholder account service and maintenance.
OTHER EXPENSES: These include fees for items related to transfer agency,
custody and other expenses.
/1/ The information in the table reflects the aggregate fees and expenses of the
Fund and the Trust. Expenses for the Fund include 12b-1, shareholder services
and administration fees; expenses for the Trust include management fees and
other expenses.
/2/ The Manager has contractually agreed to waive a portion of its management
fee and reimburse the Fund to limit total operating expenses until April 30,
2000.
/3/ Expenses shown in the fee table are estimated based on expenses incurred in
the last fiscal year. Actual expenses may be higher or lower.
2
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year, payment of
the 5% sales charge on Retail Class shares and that the Fund's operating
expenses remain the same. ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER,
BASED ON THESE ASSUMPTIONS YOURS COST WOULD BE:
Retail Class Institutional Class
One year $ 640 $ 107
Three years 936 334
Five years 1,253 579
Ten years 2,148 1,283
3
<PAGE>
THE FUND'S GOALS AND STRATEGIES
INVESTMENT OBJECTIVE
The Fund's investment objective is total return through investments primarily in
U.S. real estate securities. The Fund seeks to achieve its objective by
investing all of its investable assets in the Trust, a separate mutual fund with
an investment objective identical to the Fund and managed by the Manager.
(sidebar)
A NOTE ABOUT THE FUND'S OBJECTIVE
The investment objective is not a fundamental policy, meaning that it
may be changed upon notice to, but without the approval of, the Fund's
shareholders or the Trust's investors. There can be no assurance that
the Fund or the Trust will achieve the investment objective.
PRINCIPAL INVESTMENT STRATEGIES
The Trust seeks to provide investors with current income from dividends and
distributions. It also seeks to provide capital appreciation from the selection
of securities that the Manager believes are undervalued, meaning that the
securities may achieve price gains if their true value is realized in the
marketplace.
Under normal conditions, at least 85% of the Trust's total assets will be
invested in the equity securities of real estate investment trusts (REITs) and
other publicly-traded real estate industry companies. These real estate industry
companies must derive at least half of their revenues or net profits from the
ownership, development, construction, financing, management or sale of
commercial, industrial or residential real estate.
(sidebar)
REAL ESTATE INVESTMENT TRUSTS
REITs pool investors' funds 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 specific regulatory
requirements and distributes to its shareholders at least 95% of its
taxable income for each taxable year.
Generally, REITs are classified as:
- EQUITY REITS, which invest their assets directly in real property and
derive their income primarily from rents;
- MORTGAGE REITS, which invest in real estate mortgages and derive their
income primarily from interest payments; and
- HYBRID REITS, which combine the characteristics of Equity and Mortgage
REITs.
The Manager expects to invest primarily in REITs.
The Trust's investments normally will be allocated among a number of companies
representing diverse investment policies and real property holdings. For
example, certain securities may be selected for high current return, while
others may be chosen for long-term capital appreciation potential. In selecting
these securities, the Manager may use intensive analysis that covers economic,
industry and market-cycle trends and individual company research.
The Trust may invest up to 15% of its total assets in illiquid securities and up
to 10% of its total assets in foreign securities.
The Manager typically invests a portion of the Trust's assets in money market
securities, primarily to provide liquidity for payment of expenses and the
proceeds of redemptions.
4
<PAGE>
PRINCIPAL RISKS
As with all investments, an investment in the Fund could cause you to lose
money. The specific risks associated with investing in the Fund are described
below.
GENERAL RISKS OF REAL ESTATE INDUSTRY
Because the Fund concentrates its investments in the real estate industry, the
Fund will be subject to risks similar to those associated with the direct
ownership of real estate, including:
. 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
. Changes in interest rates
REIT RISKS
Investors also will be subject to certain risks associated with REITs. For
example, 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. Credit risk is the possibility that an issuer
will default on a security by failing to pay interest or principal when due. If
this happens the Fund could lose money. Equity and Mortgage REITs depend on
management skills and generally may not be diversified. These REITs also are
dependent on the income generated by the underlying properties to meet operating
expenses, and they are subject to borrower default and to self-liquidation. In
addition, Equity and Mortgage REITs possibly could fail to qualify for tax-free
pass-through of income or to maintain their exemptions from registration under
the Investment Company Act of 1940.
The above factors also may 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
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, particularly Mortgage REITs, are 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
5
<PAGE>
mortgage loans are reset periodically, yields on a REIT's investments in such
loans gradually will align themselves to reflect changes in market interest
rates. This causes the value of these investments to fluctuate less dramatically
in response to interest rate fluctuations than investments in fixed-rate
obligations.
MASTER/FEEDER FUND STRUCTURE
The Fund is a separate series of the Company, governed by its board of
directors. 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.
In addition to selling its shares 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 different price than the Fund. So, the Trust's various investors may
earn different returns.
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, which can lower returns. (Of course, this possibility also exists for
traditionally structured funds that have large institutional investors.)
Additionally, the Trust may become less diverse, resulting in increased risk.
Also, funds with a greater pro rata ownership in the Trust could have effective
voting control of the Trust's operations.
The Fund may withdraw its investment from the Trust at any time, as long as the
Company's board of directors determines that the withdrawal is in the best
interest of Fund shareholders. Upon any such withdrawal, the board of directors
would consider what action might be taken, including retaining the Manager to
manage the Fund's assets directly or investing all the Fund assets in another
pooled investment entity having the same investment objective as the Fund.
Certain changes in the Trust's investment objective, policies or restrictions
may require the Fund to withdraw its interest in the Trust. Such withdrawal
could result in a distribution "in kind" of portfolio securities, rather than
cash, from the Trust. If this happens, it may result in less diversified
portfolio or adversley affect the Fund's liquidity. In addition, if the Fund
found it necessary to convert its securities to cash it may incur brokerage, tax
and other charges.
ILLIQUID SECURITIES
According to the Trust's guidelines for investing in illiquid securities, the
Trust may purchase Rule 144A securities, which are restricted securities that
have not been registered under the Securities Act of 1933. Nevertheless, certain
qualified institutional investors may trade these securities. The presence or
absence of a secondary market in these securities may affect their value.
GENERAL RISKS OF INVESTING IN STOCKS
The Fund is subject to market risk, which is the possibility that stock prices
overall will decline over short or even extended periods. Stock markets tend to
move in cycles, with periods of rising stock prices and periods of falling stock
prices. The Trust's portfolio will reflect changes in prices of individual
portfolio stocks or general changes in stock valuations. As a result, the Fund's
share price may decline and you could lose money.
6
<PAGE>
YEAR 2000 CONSIDERATIONS
Many computer systems were designed using only two digits to signify the year
(i.e., 99 for 1999). On January 1, 2000, if these systems are not corrected,
they may incorrectly interpret 00 as 1900 instead of 2000, leading to computer
shutdowns and errors. To the extent these systems conduct forward-looking
calculations, the computer problems could occur prior to January 1, 2000.
Like other investment companies and financial and business organizations, the
Company and the Trust could be adversely affected in their ability to conduct
normal business operations if the computer systems used by the Manager or other
service providers do not adequately address this problem in a timely manner. The
Manager does not anticipate the year 2000 processing issue will have any
material impact on its ability to continue to service the Trust and the Fund. In
addition, the Company has sought assurances from its other service providers
that they are taking the steps necessary to deal with the year 2000 problem. The
cost of any systems remediation by persons other than the Company and the Trust
will not be borne by the Fund. However, no assurances can be given that the
actions taken by service providers will be sufficient to avoid any adverse
effect to the Fund.
7
<PAGE>
PERFORMANCE OF LASALLE INVESTMENT MANAGEMENT
The chart below shows the historical performance of all accounts and funds of
the Manager having the same investment objective, policies and strategy as the
Fund and the Trust. 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
used for the Trust. THIS INFORMATION DOES NOT REPRESENT THE PERFORMANCE OF THE
FUND AND THE TRUST. YOU SHOULD NOT CONSIDER THIS PERFORMANCE DATA AS AN
INDICATION OF FUTURE PERFORMANCE OF THE FUND OR THE TRUST. The Fund's
performance for the period March 30, 1998 (commencement of operations) through
December 31, 1998 is contained in the Fund's 1998 Annual Report.
<PAGE>
Years Ended December 31,
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LaSalle
Investment
Management
Asset
Weighted
Rate of
Return/1/ (19.1) 21.2 37.8% 15.8% 6.0% 17.5% 16.7% 35.0% (18.7%) 10.5%
- --------------------------------------------------------------------------------------------------------
Wilshire
Real Estate
Securities
Index/2/ (17.1%) 19.0% 36.9% 13.7% 1.6% 15.2% 7.4% 20.0% (33.5%) 2.4%
-------------------------------------------------------------------------------------------------------
Assets end
of period
($ millions) 3,177.4 3,134.2 2,250.3 1,346.4 629.4 291.5 144.4 127.8 84.5 84.3
- --------------------------------------------------------------------------------------------------------
Number of
portfolios 44 37 32 27 18 14 16 12 10 8
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
/1/ The composite performance data shown above for the LaSalle Securities Asset
Weighted Rate of Return (the "LaSalle Composite") was developed from the
aggregate performance of all accounts managed with sole discretionary
investment authority by the Manager on a basis substantially the same as the
Trust. The composite performance data is provided net of investment management
fees, but custodial fees and custodial expenses have not been deducted. The
investment management fees deducted generally are substantially lower than the
fees and expenses paid by the Fund and the Trust, and the composite returns
would have been lower if the accounts included had been subject to the fees and
expenses incurred by the Fund and the Trust. In addition, if the accounts were
regulated investment companies under federal securities and tax laws, the
composite returns might have been adversely affected by the diversification
requirements, tax restrictions and investment limitations to which the Fund and
the Trust are subject. The net investment performance represents total return,
assuming reinvestment of all dividends and proceeds from capital transactions.
The composite performance data have been computed in accordance with the
Performance Presentation Standards established by the Association for Investment
Management and Research ("AIMR"), but have not been verified by an entity
independent of the Manager. These standards differ from the SEC's method of
performance calculation.
/2/ The Wilshire Real Estate Securities Index is an unmanaged index of REITs
and real estate operating companies and is widely recognized as an indicator
of the performance of the real estate securities market.
<PAGE>
PURCHASING SHARES
The Fund offers two classes of shares:
- RETAIL CLASS, with a minimum initial investment of $10,000
- INSTITUTIONAL CLASS, with a minimum initial investment of $250,000
Other than the minimum investment requirements, the primary difference between
the two classes is that the Retail Class is sold with a sales charge that is
waived for certain investors (see Retail Class Shares on the following page) and
is subject to distribution and shareholder services fees, while the
Institutional Class is not. Because each class is subject to different expenses,
they likely will have different share prices.
DETERMINATION OF SHARE PRICE
The Fund's net asset value (NAV) is determined each business day (any day the
NYSE is open for trading) as of the close of regular trading on the New York
Stock Exchange (NYSE), which currently is 4 p.m., Eastern time. Shares will not
be priced on days which the NYSE is closed for trading.
NAV CALCULATION
The NAV of a share class is calculated by valuing its portion of the Fund's
assets (the value of its investment in the Trust and other assets), deducting
all liabilities attributable to that class, and dividing the result by the
number of shares outstanding for that particular class. For this purpose, the
Trust's portfolio securities are valued primarily on the basis of market
quotations or, if market values are not available, at fair value determined by
the Trust.
PURCHASE PRICE
Investors purchase shares at the NAV next determined after the transfer agent
receives the purchase order. Purchase orders that are received by the transfer
agent prior to the close of regular trading on the NYSE on any business day are
priced at the NAV determined that day. Purchase orders received after the close
of trading on a business day are priced as of the time the next NAV is
calculated. (If you place a purchase order through your investment
representative, it is that representative's responsibility to forward the order
to the transfer agent in a timely matter.)
RETAIL CLASS SHARES
PURCHASING RETAIL CLASS SHARES
Investors may purchase Retail Class shares:
- - Through any securities dealer or other financial services firm that has a
sales agreement with the Distributor. The Fund accepts telephone orders
for shares from certain firms. 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 fees for
their services. These fees are not charged if the shares are purchased
directly through the Fund's transfer agent.
- - Directly through the Fund's transfer agent (PFPC Inc., P.O. Box 8976,
Wilmington, DE 19899-8976).
MAKING ADDITIONAL INVESTMENTS
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" to the following address:
LaSalle Partners Funds, Inc.
c/o PFPC Inc.
P.O. Box 8976
Wilmington, DE 19899-8976
Shareholders may not purchase shares with a check issued by a third party and
endorsed over to the Fund.
Shareholders also may purchase shares for an existing account via a wire
transfer. Wire funds to:
PNC Bank, N.A.
Philadelphia, Pennsylvania
ABA #0310-0005-3
Credit DDA #8601726436
For credit to: LaSalle Partners Funds, Inc.--LaSalle Partners U.S. Real
Estate Fund
Account No.:
Account Name:
SALES CHARGE
The Fund's Retail Class shares are offered and sold at NAV plus a sales charge
that varies according to the size of your purchase. The Fund receives the NAV,
and the sales charge is allocated between your investment dealer and the
Distributor as shown in the following table. However, the Distributor, at its
discretion, may allocate the entire sales charge to your investment dealer.
10
<PAGE>
<TABLE>
<CAPTION>
Amount of transaction Sales charge as a % of net Sales charge as a % of the Dealers' reallowance as a
asset value per share offering price per share % of offering price per share
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less than $50,000 5.26% 5.00% 4.25%
- -----------------------------------------------------------------------------------------------------------------------
$50,000 but less than
$100,000 4.71% 4.50% 3.75%
- -----------------------------------------------------------------------------------------------------------------------
$100,000 but less than
$250,000 3.63% 3.50% 2.85%
- -----------------------------------------------------------------------------------------------------------------------
$250,000 but less than
$500,000 2.56% 2.50% 2.10%
- -----------------------------------------------------------------------------------------------------------------------
$500,000 but less than
$1 million 2.04% 2.00% 1.60%
- -----------------------------------------------------------------------------------------------------------------------
$1 million or more See below See below See below
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
PURCHASES OF $1 MILLION OR MORE
No initial sales charge applies to purchases of Retail Class shares of $1
million or more. However, a contingent deferred sales charge (CDSC) of 1% is
imposed if you redeem these shares within one year of purchase. A dealer
concession of up to 1% may be paid on these investments.
The CDSC is based on the lesser of the original purchase cost or the current NAV
of the shares being redeemed, and it is not charged on shares you acquired by
reinvesting dividends. To keep your CDSC as low as possible, each time you place
a request to redeem shares, we first redeem any shares in your account that are
not subject to the CDSC. The Distributor receives the entire amount of any CDSC
you pay.
(sidebars)
DISTRIBUTION PLAN
The Fund's distribution plan provides for the payment of a distribution
fee (12b-1 fee) from the assets of the Retail Class. This fee supports
activities designed to increase sales of the Retail Class, including
advertising, the creation of sales literature and compensation to dealers.
The board of directors has authorized an annual distribution fee of 0.25%,
and, under the plan, the annual fee may not exceed 0.75% of the average
daily net assets of the Retail Class. Because this fee is paid out of the
assets of the Retail Class, over time this fee will increase the cost of
your investment and may cost you more than paying other types of sales
charges.
SHAREHOLDER SERVICES PLAN
This plan allows the Fund to pay 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. The board of directors has authorized
an annual shareholder services fee of 0.15%, and, under the plan, the
annual fee may not exceed 0.25% of the average daily net assets of the
applicable shareholder accounts. Because this fee is paid out of the assets
of the Retail Class, over time this fee will increase the cost of your
investment.
SALES COMPENSATION
Whenever you invest in Retail Class shares, your financial services firm
receives compensation. These firms typically pass along a portion of this
compensation to your financial representative. Compensation payments
originate from sales charges paid by investors and from 12b-1 fees paid out
of the assets of the Fund's Retail Class.
11
<PAGE>
Financial services firms selling large amounts of Fund shares may
receive extra compensation. This compensation, which the Manager pays
out of its own resources, may include asset retention fees as well as
reimbursement for marketing expenses.
REDUCING YOUR SALES CHARGE
There are three ways you may be able to combine your purchases and reduce your
sales charge:
- - ACCUMULATION PRIVILEGE lets you add the value of any Fund shares you
already own to the amount of your next Retail Class investment for
purposes of calculating the sales charge.
- - GROUP INVESTMENT PROGRAM lets a group purchase Retail Class shares at a
reduced sales charge. A qualified group is treated as a single purchaser
under this privilege. Each investor has an individual account, but the
group's investments are lumped together for sales charge purposes, making
the investors potentially eligible for reduced sales charges. There is no
charge to participate, no obligation to invest (although initial
investments must total at least $10,000) and individual investors may
close their accounts at any time.
- - LETTER OF INTENTION lets you purchase Retail Class shares over a 13-month
period and receive the same sales charge as if all shares had been
purchased at once.
To take advantage of any of these programs, complete the appropriate section of
your account application. For more information, see the Statement of Additional
Information, or contact your investment dealer or the Fund.
REINSTATEMENT PRIVILEGE
When you redeem Retail Class shares, you may reinvest some or all of the
proceeds within 120 days without a sales charge, as long as you notify the Fund
in writing before you reinvest. If you paid a CDSC when you redeemed your
shares, you will be credited with that amount. All accounts involved must have
the same registration.
WAIVERS FOR CERTAIN INVESTORS
The Fund may sell Retail Class shares at NAV without a sales charge to various
individuals and institutions, including:
- - Registered representatives and other employees (and their families) of
broker-dealers having sales agreements with the Distributor;
- - Employees (and their families) of financial institutions having sales
agreements with the Distributor (or otherwise having an arrangement with a
broker-dealer or financial institution with respect to sales of Fund
shares);
- - "Wrap accounts" for the benefit of clients of broker-dealers, financial
institutions or financial planners adhering to certain standards
established by the Distributor;
- - Financial representatives using Fund shares in fee-based investment
products under a signed agreement with the Distributor or the Manager; and
- - Individuals transferring assets from an employee benefit plan.
12
<PAGE>
INSTITUTIONAL CLASS SHARES
Institutional Class shares currently are available only to certain qualified
purchasers, including financial institutions; pension, profit-sharing and
employee benefit plans and
13
<PAGE>
trusts; insurance companies; investment companies; and investment advisers and
broker-dealers acting for their own accounts or for the accounts of such
institutional investors.
EMPLOYEE PURCHASE PROGRAM
Current and former directors and officers of the Manager; current and retired
officers, directors and employees of Jones Lang LaSalle Incorporated and its
direct and indirect subsidiaries; and their spouses and minor children may
purchase Institutional Class shares by opening an employee investment account
directly with the Company. The account requires an initial investment of $1,000
or more. Call 1-800-LaSalle for an account application.
RETIREMENT PLANS
Fund investors can establish an account under one of several tax-sheltered
plans, including Individual Retirement Accounts (IRAs). For more information on
IRAs and other retirement plans, along with their benefits, provisions and fees,
contact your investment professional.
14
<PAGE>
REDEEMING SHARES
Shareholders may redeem all or part of their investment on any business day (any
day the NYSE is open for trading) by transmitting a redemption order either
through their investment dealer (who may charge a fee for the service) or
directly to the Fund's transfer agent.
Your shares will be sold at the NAV next determined after the Fund receives your
redemption order in proper form. Under normal conditions, redemption proceeds
are paid by check and are mailed within seven days. However, if the board of
directors of the Fund determines that it would be in the best interests of the
remaining shareholders to pay the redemption proceeds in whole or in part by a
distribution in kind of portfolio securities in lieu of cash, the Fund may make
such distributions in kind in compliance with applicable SEC rules. If shares
are redeemed in kind, the redeeming shareholder may incur brokerage costs in
later converting the assets to cash. In no event will a redeeming shareholder of
the Fund receive a security issued by the Trust.
BY MAIL
Shareholders may redeem Fund shares via written requests delivered to the Fund's
transfer agent. To redeem by mail, you must send a letter containing written
instructions specifying:
1. The account number
2. The number of shares or dollar amount to be redeemed
All account owners must sign the letter in the exact names in which the account
is registered. (Additional documentation may be required for redemptions by
corporations, partnerships, trusts or fiduciaries.)
Send the letter to the Fund at the following address: LaSalle Partners Funds,
Inc. c/o PFPC Inc., P.O. Box 8976, Wilmington, DE 19899-8976
BY TELEPHONE
Shareholders who authorize telephone transactions on their account application
may redeem up to $25,000 by calling the Fund's transfer agent toll free at 1-
800-LaSalle. A check for the redeemed shares will be mailed to the account
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
believes to be genuine. The Fund
15
<PAGE>
and transfer agent will employ reasonable
procedures to confirm that the telephone instructions are genuine.
OTHER REDEMPTION INFORMATION
- - Selling recently purchased shares: Redemption proceeds for shares recently
purchased by check will be mailed after the check for the purchase has
cleared.
- - Dividends and redemptions: Dividends payable up to the redemption date
will be paid on the next dividend payment date. If a shareholder redeems
all shares in an account, the Fund will remit a check to the shareholder.
- - Low balances: Upon 60 days' notice, the Fund may redeem the shares in
any account that falls below the minimum required balance, unless the
decline in account value is due solely to a decline in the Fund's
NAV.
SIGNATURE GUARANTEES
To protect against fraud, you must include a signature guarantee
along with your redemption request if:
- The redemption is for more than $25,000;
- You request redemption proceeds to be sent to a name or
address that differs from your account registration; or
- You request a transfer of registration.
You may obtain a signature guarantee from most banks, trust
companies, brokerage firms, clearing agencies or savings
associations that are participants in a medallion program
recognized by the securities transfer association. Signature
guarantees that are not a part of these programs will not be
accepted.
16
<PAGE>
DISTRIBUTIONS AND TAXES
Dividends and distributions
- - Shareholders will receive quarterly distributions of investment company
taxable income, which consists of all taxable income, other than capital
gains, reduced by deductible expenses of the Fund.
- - The Company expects that a portion of the Fund's dividends will be
considered return of capital, which is not subject to current taxation.
- - Net capital gains, if any, will be distributed at least annually.
DIVIDEND REINVESTMENT
All dividends and any capital gain distributions will be reinvested in
additional Fund shares of the same class, unless a shareholder has requested to
receive dividend payments by check. Shareholders may cancel automatic dividend
reinvestment by notifying the Fund's transfer agent either directly or through
their investment dealer at least five days before the next dividend or
distribution payment date.
FUND'S TAX STATUS
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 investment company taxable income and net
capital gains 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.
TAXES AND DISTRIBUTIONS
As with any investment, there are tax implications associated with investing in
the Fund. The following is a summary of some of the important tax issues
generally affecting the Fund's shareholders. Consult your tax advisor regarding
issues specific to your own tax situation.
- - Dividends from the Fund's investment company taxable income are taxable to
shareholders as ordinary income, whether received as cash or additional
Fund shares. The Fund intends to make such distributions and expects that,
as a result of its investment strategy, these distributions will consist
primarily of either ordinary income or capital gains.
- - Capital gain distributions are taxable to shareholders as long-term
capital gains, regardless of how long the shares are held or whether the
distributions are taken in cash or additional Fund shares.
- - Shareholders may realize capital gains or losses on the sale or redemption
of Fund shares.
- - The Fund expects only a portion of its dividends paid to qualify for the
dividends-received deduction available to corporate shareholders.
- - The Fund provides shareholders with annual information regarding the
federal income tax status of its dividends and distributions.
17
<PAGE>
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
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 those furnishing services to the Fund, including the agreements with
the Fund's investment manager, distributor, administrator, transfer agent and
custodian.
A majority of the Company's directors are not affiliated with either the
investment manager or the distributor of the Fund. The same individuals serve as
members of the boards of the Fund and the Trust.
INVESTMENT MANAGER
LaSalle Investment Management (Securities) L.P. (the "Manager"), a registered
investment adviser with principal offices at 100 East Pratt St., Baltimore,
Maryland 21202, serves as the investment manager of the Fund, pursuant to an
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 currently receives no fee for providing these services.
However, in the event that the Manager becomes responsible for managing the
Fund's portfolio directly, it would be entitled to receive an investment
management fee of 0.75% of average net assets.
The Fund seeks to achieve its investment objective by investing all of its
assets in the Trust. The Manager also serves as the Trust's investment manager
pursuant to an agreement with the Trust. In that capacity, the Manager is
responsible for managing the Trust's portfolio in accordance with its investment
objective, policies and restrictions, making investment decisions, placing
purchase and sale orders for securities, and employing portfolio managers and
securities analysts who provide research services to the Trust. The investment
management fee under the agreement with the Trust is 0.75% of average net
assets, a portion of which is being waived by the investment manager.
The Trust may, from time to time, consistent with its investment policies and
applicable law, invest in securities of companies with which Jones Lang LaSalle
Incorporated has a business relationship. The Manager will not consider any such
relationship in making decisions regarding the securities to be purchased or
sold for the Trust.
The Manager is one of several entities through which Jones Lang LaSalle
Incorporated and its affiliates conduct real estate investment advisory and
related businesses. Jones Lang LaSalle Incorporated 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.
Together with its affiliates, the Manager had $3.2 billion in real estate
securities under management as of December 31, 1998. The Manager, together with
its predecessors, has provided real estate investment advice to pension funds
and other institutional investors since 1985. The Manager's investment team has
more than 14 years of experience managing accounts similar to the Trust and is
supported by Jones Lang LaSalle
18
<PAGE>
Incorporated's extensive research and property management organization that
consists of more than 6,000 employees in offices throughout the world. The
Manager uses the same research, analytical models and professional staff in
managing the Trust's assets and its other accounts.
PORTFOLIO MANAGERS
William K. Morrill, Jr., Keith R. Pauley, and James A. Ulmer III,
share the primary responsibility of managing the Trust's assets.
Mr. Morrill, a Managing Director, has more than 15 years of real estate
securities investment experience and has been a portfolio manager with the
Manager and its predecessors since 1985. Mr. Pauley, a Managing Director, has
more than 14 years of real estate securities investment experience and has been
a portfolio manager with the Manager and its predecessors since 1986. Mr. Ulmer,
a Principal, has more than 13 years of real estate securities investment
experience and joined the Manager in 1997 as a securities analyst and portfolio
manager. Prior to 1997, Mr. Ulmer was a principal at AIRES Real Estate Services,
providing security analysis and portfolio strategy for institutional investors
in real estate securities.
19
<PAGE>
ADDITIONAL FUND INFORMATION
DESCRIPTION OF SHARES
The board of directors of the Company is authorized to establish "series" of
shares of capital stock 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.
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 may add additional series or share classes in the future.
SHAREHOLDER MEETINGS
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.
The Company does not expect to hold annual meetings. However, Fund shareholders
have the right, under certain circumstances, to request a meeting for the
purpose of considering the removal of a director. If a proper request is made,
the Company will assist with the shareholder communications in connection with
the meeting.
INVESTOR INQUIRIES
For additional information about the Fund or to obtain a copy of this prospectus
call toll free at 1-800-557-5753. Investors who have questions about the Fund
may contact their investment dealer or the Company toll free, 1-800-LaSalle
ext.55.
20
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights are intended to help you understand the
Fund's financial performance since its inception. Certain information reflects
financial results for a single share of the Fund. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in the Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP whose report, along
with the Fund's audited financial statements, is included in the Annual Report
for the Fund and the Trust which is available upon request.
Lasalle Partners Funds, Inc.--LaSalle Partners U.S. Real Estate Fund
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
For the period from
March 30, 1998*
through December 31, 1998
- -------------------------------------------------------------------------------------------------
Institutional Retail
Class Class
------------ --------
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $ 10.00 $ 10.00
- -------------------------------------------------------------------------------------------------
INCREASE/(DECREASE) FROM OPERATIONS:
- -------------------------------------------------------------------------------------------------
Net investment income from operations 0.26 0.22
- -------------------------------------------------------------------------------------------------
Net realized and unrealized (loss) on investments (2.24) (2.23)
------- -------
- -------------------------------------------------------------------------------------------------
Total from investment operations (1.98) (2.01)
- -------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
- -------------------------------------------------------------------------------------------------
Distributions from net investment income (0.24) (0.20)
- -------------------------------------------------------------------------------------------------
Distributions from return of capital (0.02) (0.02)
------- -------
- -------------------------------------------------------------------------------------------------
Total distributions (0.26) (0.22)
- -------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.76 $ 7.77
- -------------------------------------------------------------------------------------------------
Total Return/1/ (19.92%) (20.22%)
- -------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTARY DATA:
- -------------------------------------------------------------------------------------------------
Net assets, end of period (000) $ 154 $ 45
- -------------------------------------------------------------------------------------------------
Ratio of net expenses to average net assets 2,3,4 1.05% 1.45%
- -------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 2,4,5 4.28% 3.93%
- -------------------------------------------------------------------------------------------------
Portfolio turnover rate on LaSalle Partners Master Trust
U.S. Real Estate Portfolio 31% 31%
- -------------------------------------------------------------------------------------------------
* Commencement of operations
</TABLE>
- -----------------------
/1/ Not annualized. Sales charges are not reflected in Total Return.
/2/ Annualized
/3/ The annualized expense ratio without waivers and reimbursements for the
period ended December 31, 1998 would have been 113.17% and 143.31% for the
Institutional and Retail Classes, respectively.
/4/ Expense and net investment income ratios represent the combined ratios for
the Fund and its pro rata share of the Trust's expenses and income.
/5/ The annualized net investment income ratio without waivers and
reimbursements for the period ended December 31, 1998 would have been (106.79%)
and (136.93%) for the Institutional and Retail Classes, respectively.
21
<PAGE>
(back cover)
OBTAINING ADDITIONAL INFORMATION
The Company makes available free of charge the following information about the
Fund:
- - Annual/Semiannual Reports
These reports highlight performance of the Fund and the Trust and feature
discussions on investment strategy, portfolio holdings and market
conditions and influences.
- - Statement of Additional Information (SAI)
The SAI contains more details about the Fund and its policies, and is
incorporated by reference into (legally considered part of) this
prospectus. A current SAI is on file with the SEC.
You may obtain the SAI, annual reports, semi-annual reports and other
information about the Fund via:
- - Phone. Call toll free, 1-800-557-5753.
- - Mail. Write to the Fund at: LaSalle Partners Funds, Inc. 60 State Street,
Suite 1300, Boston, MA 02109.
- - The SEC. You also may obtain other Fund documents via the SEC's web site,
http://www.sec.gov, by visiting the SEC's Public Reference Room in
Washington, D.C., or by sending your request and a duplicating fee to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. The phone number
is 1-800-SEC-0330. The Fund's Investment Company Act file number is
811-08373.
22
<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 and Table of Contents.................................... Cover Page; Financial Statements
11. Fund History........................................................ General Information
12. Description of the Fund and Its Investments and Risks............... Investment Policies and Practices; Investment
Restrictions; Portfolio Transactions and Brokerage
13. Management of the Fund.............................................. Management
14. Control Persons and Principal Holders of Securities................. Management
15. Investment Advisory and Other Services.............................. Management; Investment Manager; Administrator;
General Information
16. Brokerage Allocation and Other Practices............................ Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities.................................. Description of Capital Stock
18. Purchase, Redemption, and Pricing of Shares......................... Valuation of Portfolio Securities;
Purchase of Shares;
Redemption of Shares; Distribution Arrangements
19. Taxation of the Fund................................................ Taxation
20. Underwriters........................................................ Distribution Arrangements
21. Calculation of Performance Data..................................... Performance Information
22. Financial Statements................................................ Financial Statements
</TABLE>
<PAGE>
LaSalle Partners U.S. Real Estate Fund
LaSalle Partner Funds, Inc.
STATEMENT OF ADDITIONAL INFORMATION
April 30, 1999
This Statement of Additional Information is not a prospectus but
provides additional information that should be read in conjunction with the
Prospectus dated April 30, 1999 including any supplements thereto. To obtain
additional copies of the Prospectus, please call 1-800-LaSalle.
Table of Contents
-----------------
Page
----
General Information B-2
Investment Policies and Practices B-2
Investment Restrictions B-5
Portfolio Transactions and Brokerage B-6
Valuation of Portfolio Securities B-7
Purchase of Shares B-7
Redemption of Shares B-9
Taxation B-9
Management B-11
Investment Manager B-16
Administrator B-17
Custodian B-17
Transfer Agent B-17
Distribution Arrangements B-17
Performance Information B-19
Description of Capital Stock B-21
Independent Accountants B-21
Legal Counsel B-21
Financial Statements B-21
<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.
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 Retail Class and Institutional Class shares of the Fund
under the Securities Act of 1933, as amended (the "1933 Act"). The Fund
commenced operations on March 30, 1998.
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, a Delaware business trust (the "Trust"), for which
LaSalle Investment Management (Securities) L.P. (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.
Under the rules and regulations of the Securities and Exchange
Commission (the "SEC"), all mutual funds are required to furnish prospective
investors with certain information regarding the activities of the fund being
considered for investment. Important information concerning the Fund and the
Company 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.
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 invests 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.
Equity securities of real estate industry companies in which the Trust invests
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. The Trust does not have a policy
requiring a minimum rating for investment in debt securities. The Trust does not
expect to invest in debt securities during the current fiscal year. 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:
B-2
<PAGE>
- 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.
- 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 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).
B-3
<PAGE>
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.
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.
Money market instruments are subject to risks including market risks and
credit risks.
Prices of fixed income securities respond to market changes in interest
rates for similar securities. Generally, when interest rates rise, prices of
fixed income securities fall.
Certain risk is the possibility that an issuer will default on a security
by failing to pay interest or principal when due. If an issuer defaults, the
Trust will lose money. Services such as Standard & Poor's and Moody's Investors
Service assign credit ratings to many fixed income securities. Securities
receive ratings based on the likelihood of issuer default. Lower credit ratings
correspond to higher credit risk. If a security has not received a rating, the
Trust must rely entirely upon the investment manager's credit assessment. Fixed
income securities generally compensate for greater credit risk by paying
interest at a higher rate. The difference between the yield of a security and
the yield of a U.S. Treasury security with a comparable maturity (the spread)
measures the additional interest paid for risk. Spreads may increase generally
in response to adverse economic or market conditions. A security's spread may
also increase if the security's rating is lowered, or the security is perceived
to have an increased credit risk. An increase in the spread will cause the price
of the security to decline.
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 of 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.
B-4
<PAGE>
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 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.
B-5
<PAGE>
The following investment restrictions are not fundamental policies and
may be changed by the Fund's Board of Directors or by the Trust's Board of
Trustees without shareholder approval. The Fund and the Trust will not as a
matter of operating policy:
(1) Borrow money, except that the Fund/Trust may borrow money for
temporary or emergency purposes in an amount not exceeding 10% of the value of
its total assets at the time of such borrowing, provided that, while borrowings
by the Fund/Trust equaling 5% or more of its total assets are outstanding, the
Fund/Trust will not purchase securities for investment.
(2) Invest in shares of any other investment company registered under
the 1940 Act, except as permitted by federal law.
(3) Invest for the purpose of exercising control or management.
(4) Invest more than 10% of 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
B-6
<PAGE>
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.
For the fiscal year ended December 31, 1998, the Trust paid brokerage
commissions of $37,641. For the fiscal year ended December 31, 1998, the Trust
paid no brokerage commissions to affiliated brokers.
The Company and the Trust are required to identify any securities of
its "regular brokers or dealers" (as such term is defined in the 1940 Act) which
each of them has acquired during its most recent fiscal year. As of December 31,
1998, neither the Fund nor the Trust held securities of its "regular brokers or
dealers".
VALUATION OF PORTFOLIO SECURITIES
The Fund's net asset value per share is determined daily as of the
close of regular trading 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.
PURCHASE OF SHARES
Retail Class shares of the Fund are offered and sold at a public
offering price equal to their net asset value plus a sales charge that varies
depending on the size of your purchase. The sales charges applicable to
purchases of Retail Class shares are described in the Prospectus. Investors may
reduce or eliminate the sales charge under one or more of the privileges and
programs described below.
ACCUMULATION PRIVILEGE
A purchaser of Retail Class shares may qualify for a quantity discount
by combining a current purchase with certain other shares of any class of the
Fund already owned. The applicable sales charge is based on the total of: (i)
the investor's current purchase; and (ii) the maximum public offering price (at
the close of business on the previous day) of all shares held by the investor in
the Fund. To obtain the accumulation privilege on a purchase through an
investment dealer, when each purchase is made the investor or dealer must
provide the Fund's Administrator with sufficient information to verify that the
purchase qualifies for the privilege. The shareholder must furnish this
information to the Fund's transfer agent when making direct cash investments.
B-7
<PAGE>
LETTER OF INTENTION
A Letter of Intention allows an investor to receive a reduced sales
charge on purchases of Retail Class shares purchased during a 13-month period as
if the total amount invested had been invested in a single lump sum. A
non-binding Letter of Intention must be filed with the Fund's Administrator
within 90 days of the start of your purchases. The initial investment must be at
least 5% of the total amount to be invested. Out of the initial investment, 5%
of the dollar amount specified in the Letter of Intention will be registered in
the investor's name and held in escrow. The investor will earn income dividends
and capital gain distributions on the escrowed shares. Neither income dividends
nor capital gain distributions reinvested in additional shares will apply toward
completion of the Letter of Intention. When the full amount indicated has been
purchased, the escrow will be released. Investors are not obligated to complete
the Letter of Intention and, in such case, sufficient escrowed shares will be
redeemed to pay any applicable sales charge.
GROUP INVESTMENT PROGRAM
Members of qualified groups may purchase Retail Class shares of the
Fund at a reduced sales charge. To receive the Retail Class group rate, group
members must purchase shares through a single investment dealer designated by
the group. Purchases of shares are made at the public offering price based on
the net asset value next determined after payment for the shares is received.
The minimum investment requirements described in the Prospectus apply to
purchases by any group member. Only shares purchased under the Retail Class
group discount are included in calculating the purchased amount for the purposes
of these requirements. Qualified groups include the employees of a corporation
or a sole proprietorship, members and employees of a partnership or association,
or other organized groups of persons (the members of which may include other
qualified groups) provided that: (i) the group has at least 25 members of which
at least 10 members participate in the initial purchase; (ii) the group has been
in existence for at least six months; (iii) the group has some purpose in
addition to purchasing investment company shares at a reduced sales charge; (iv)
the group's sole organizational nexus or connection is not that the members are
credit card holders of a company, policyholders of an insurance company,
customers of a bank or broker-dealer, clients of an investment adviser or
security holders of a company; (v) the group agrees to provide its designated
investment dealer access to the group's membership by means of written
communication or direct presentation to the membership at a meeting not less
frequently than on an annual basis; (vi) the group or its investment dealer will
provide annual certification in form satisfactory to the Distributor that the
group then has at least 25 members and that at least 10 members participated in
group purchases during the immediately preceding 12 calendar months; and (vii)
the group or its investment dealer will provide periodic certification in form
satisfactory to the Distributor as to the eligibility of the purchasing members
of the group. Members of a qualified group include: (i) any group that meets the
requirements stated above and is a constituent member of a qualified group; (ii)
any individual purchasing for his or her own account who is carried on the
records of the group or on the records of any constituent member of the group as
being a good standing employee, partner, member or person of like status of the
group or constituent member; or (iii) any fiduciary purchasing shares for the
account of a member of a qualified group or a member's beneficiary. For example,
a qualified group could consist of a trade association which would have as its
members individuals, sole proprietors, partnerships and corporations. The
members of the group would then consist of the individuals, the sole proprietors
and their employees, the members of the partnerships and their employees, and
the corporations and their employees, as well as the trustees of employee
benefit trusts acquiring Retail Class shares for the benefit of any of the
foregoing. Interested groups should contact their investment dealer or the Fund.
The Fund reserves the right to revise the terms of or to suspend or discontinue
group sales at any time.
WAIVER OF THE SALES CHARGE
Certain investors who are eligible to purchase Retail Class shares without a
sales charge are listed in the Prospectus. In addition, the Fund may sell Retail
Class shares at net asset value without an initial sales charge or a CDSC in
connection with the acquisition by the Fund of assets of an investment company
or personal holding company.
B-8
<PAGE>
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.
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
B-9
<PAGE>
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 not subject to federal
income tax on the portion of 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 Income Requirement, the Diversification Test and certain other
requirements of the Code. 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 would 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.
The Fund will invest all of its investable assets in the Trust. As a
partnership, the Trust will not be subject to federal income or excise taxes
under the Code. Instead, the Fund and other investors in the Trust must take
into account, in computing their federal tax liability, their proportionate
share of the Trust's income, gain, losses, deductions, credits and tax
preference items, without regard to whether they have received any cash
distributions from the Trust. In addition, the Fund will be deemed to own a
proportionate share of the Trust's assets and income for the purpose of
determining whether the Fund qualifies as a regulated investment company.
Accordingly, the Trust intends to conduct its operations so that the Fund will
be able to satisfy applicable tax requirements.
If the Trust acquires stock in certain non-U.S. corporations ("passive
foreign investment companies" or "PFICs") that receive at least 75% of their
annual gross income from passive sources (such as interest, dividends, rents,
royalties or capital gains) or at least 50% of whose average assets produce or
are held for the production of such passive income, the Fund indirectly through
its interest in the Trust could be subject to federal income tax and additional
interest charges on "excess distributions" received from such companies or gain
from the sale of stock in such companies, even if the Fund distributes its share
of the PFIC income as a taxable dividend to its shareholders. A certain election
(treating the PFIC as a "qualified electing fund") filed with the Fund's federal
income tax return may, if available, ameliorate these adverse tax consequences,
but any such election would require the Fund to recognize ordinary taxable
income and net capital gain of the PFIC without the corresponding receipt of
cash which may need to be distributed by the Fund to satisfy the Distribution
Requirement.
Pursuant to proposed regulations, open-end regulated investment
companies such as the Fund would be entitled to avoid the tax consequences
described in the preceding paragraph by electing to mark-to-market their stock
in certain PFICs. Marking to market in this context means recognizing as gain
for each taxable year the excess, as of the end of that year, of the fair market
value of each PFIC's stock over the owner's adjusted basis in that stock
(including mark-to-market gains of a prior year for which an election was in
effect). Making the election
B-10
<PAGE>
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 Trust holds unrealized receivables or
substantially appreciated inventory items (collectively, "tainted assets")
immediately before the distribution and (a) the distribution includes tainted
assets and reduces the Fund's interest in non-tainted assets of the Trust or (b)
the distribution includes non-tainted assets and reduces the Fund's interest in
tainted assets of 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 tainted assets. 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 capital gain (i.e., the excess, if any, of the net
gains realized by the Fund or the Trust on dispositions of capital assets held
for more than 1 year over the net losses, if any, realized by the Fund or the
Trust on dispositions of capital assets held for 1 year or less), if any, are
taxable to shareholders as net 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. The net
capital gain of a noncorporate taxpayer is generally subject to tax at a maximum
rate of 20%; a corporation is taxed on net capital gain at the same rates that
apply to ordinary income. 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 distributions. Any gain or loss recognized on a sale or redemption of
shares of the Fund by a shareholder who is not a dealer in securities generally
will be treated as a long-term capital gain or loss if the shares have been held
for more than twelve months and otherwise generally will be treated as a
short-term capital gain or loss.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of distributions payable to any shareholder who (i) has
provided the Fund either an incorrect tax identification number or no number at
all, (ii) is subject to backup withholding by the Internal Revenue Service for
failure to properly report payments of interest or dividends, or (iii) has
failed to certify to the Fund that such shareholder is not subject to backup
withholding.
Rules of state and local taxation of dividend and capital gains
distributions from RICs often differ from the rules for federal income taxation
described above. Shareholders are urged to consult their tax advisors as to the
consequences of these and other state and local tax rules affecting an
investment in the Fund and also as to the application of the rules set forth
above to a shareholder's particular circumstances.
MANAGEMENT
DIRECTORS AND OFFICERS OF THE FUND
The Board of Directors of the Company is responsible for managing
the business affairs and for exercising all the Fund's powers except those
reserved for shareholders. The Board of Directors consists of seven directors.
The directors and officers of the Fund, 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 (*).
B-11
<PAGE>
<TABLE>
<CAPTION>
Position(s) Held Principal Occupations(s)
Name and Address Age With Registrant During the Past Five Years
- ---------------- --- --------------- --------------------------
<S> <C> <C>
Bruce D. Alexander 55 Director Vice President, Yale University;
2B2 Prospect Streeet Adjunct Professor, Yale University
New Haven, CT 06511 School of Management; Senior Vice
President and Director of New
Business, The Rouse Company
Lawrence S. Bacow 47 Director Chancellor, Massachusetts Institute of
75 Summit Technology; Professor, Massachusetts
Newton, MA 02458 Institute of Technology
Richard A. Dobbins 54 Director President, Historical Data
520 Washington Street Systems, Inc.; President,
Duxbury, MA 02331 Municipal Market Data, Inc.
John W. McCarter, Jr. 61 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* 52 Director Co-Chief Executive Officer, LaSalle
200 East Randolph Drive Investment Management; Director and
Chicago, IL 60601 Chairman of LaSalle Investment Management
(Securities), L.P., the adviser to the Fund;
Co-President, LaSalle Investment Management,
Inc.; Managing Director and Co-President,
LaSalle Advisors Limited Partnership;
Chief Executive Officer, Alex Brown
Kleinwort Benson Realty Advisors Corporation.
William K. Morrill, Jr.* 61 Director; President Managing Director, LaSalle Investment Management
100 East Pratt Street (Securities) L.P.; Managing Director, ABKB/
LaSalle Realty Adivsors
Baltimore, MD 21202
Keith R. Pauley* 37 Director; Executive Managing Director, LaSalle Investment Management
100 East Pratt Street Vice President (Securities) L.P.
Baltimore, MD 21202 Limited
Stephen A. Smith 41 Senior Vice President Managing Director, Private Capital
200 East Randolph Drive Secretary of LaSalle Advisors Limited
Chicago, IL 60601 Partnership
Audre' J. Melsbakas 36 Senior Vice President Principal, Jones Lang LaSalle Incorporated;
200 East Randolph Drive Assistant Secretary Associate, The Keystone Group
Chicago, IL 60601
</TABLE>
B-12
<PAGE>
<TABLE>
<S> <C> <C> <C>
James A. Ulmer, III 58 Vice President Vice President, LaSalle Investment
100 East Pratt Street Management (Securities) L.P.;
Baltimore, MD 21202 Principal, 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
Chicago, IL 60601 of Jones Lang LaSalle Incorporated;
Executive Vice President and Chief
Financial Officer of Jones Lang
LaSalle's predecessor partnerships;
Managing Director of the special
projects group of Jones Lang
LaSalle's predecessor partnerships;
Senior Vice President of the special
projects group of Jones Lang LaSalle's
predecessor partnerships
Denise M. Ruth 26 Assistant Secretary Operations Manager, LaSalle Investment
100 East Pratt Street Management (Securities) L.P.; Assistant
Baltimore, MD 21202 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.
Aggregate Compensation Total Compensation from the
Name of Director From the Fund (1) Fund 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 -- --
B-13
<PAGE>
(1) The Company commenced operations on March 30, 1998. The amounts indicated
are estimates of the compensation expected to be paid to directors of the
Company during the Company's current fiscal year ending December 31, 1999.
(2) As of the date hereof, the "Fund Complex" consisted of the Company and the
Trust.
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 Occupations(s)
Name and Address Age With Registrant During the Past Five Years
- ---------------- --- --------------- --------------------------
<S> <C> <C> <C>
Bruce D. Alexander 55 Trustee Vice President, Yale University; Adjunct
282 Prospect Streeet Professor, Yale University School of
New Haven, CT 06511 Management; Senior Vice President and
Director of New Business, The Rouse Company
Lawrence S. Bacow 47 Trustee Chancellor, Massachusetts Institute of
75 Summit Technology; Professor, Massachusetts
Newton, MA 02458 Institute of Technology
Richard A. Dobbins 54 Trustee President, Historical Data Systems, Inc.;
520 Washington Street President, Municipal Market Data, Inc.
Duxbury, MA 02331
John W. McCarter, Jr. 61 Trustee President and Chief Executive Officer of The
The Field Museum Field Museum; Senior Vice President of Booz,
1200 South Lake Shore Drive Allen & Hamilton, Inc.
Chicago, IL 60605
Lynn C. Thurber* 52 Trustee Co-Chief Executive Officer, LaSalle Investment
200 East Randolph Drive Management; Director and Chairman of LaSalle
Chicago, IL 60601 Investment Management (Securities), Inc., the
general partner of LaSalle Investment Management
(Securities), L.P., the adviser to the Trust; Co-
President, LaSalle Investment Management, Inc.,
Managing Director and Co-President, LaSalle
Advisors Limited Partnership; Chief Executive
Officer, Alex Brown Kleinwort Benson Realty
Advisors Corporation.
</TABLE>
B-14
<PAGE>
<TABLE>
<S> <C> <C> <C>
William K. Morrill, Jr.* 61 Trustee; President Managing Director, LaSalle Investment
100 East Pratt Street Management (Securities) L.P.
Baltimore, MD 21202
Keith R. Pauley* 37 Trustee; Executive Managing Director/Portfolio Manager, LaSalle
100 East Pratt Street Vice President Investment Management(Securities) L.P.
Baltimore, M.D, 21202
Stephen A. Smith 41 Senior Vice President Managing Director, Private Capital of LaSalle
200 East Randolph Drive Secretary Advisors Limited Partnership
Chicago, IL 60601
Audre' J. Melsbakas 36 Senior Vice President Principal, Jones Lang LaSalle Incorporated;
200 East Randolph Drive Assistant Secretary Associate, The Keystone Group
Chicago, IL 60601
James A. Ulmer, III 58 Vice President Vice President, LaSalle Investment Management
100 East Pratt Street (Securities) L.P; Principal, AIRES Real Estate
Baltimore, MD 21202 Services; Chairman and President, Enoch Pratt
Free Library
William E. Sullivan 42 Treasurer Executive Vice President, Chief Financial Officer
200 East Randolph Drive and Director of Jones Lang LaSalle Incorporated;
Chicago, IL 60601 Executive Vice President and Chief Financial
Officer of Jones Lang LaSalle's predecessor
partnerships; Managing Director of the special
projects group of Jones Lang LaSalle's
predecessor partnerships; Senior Vice President
of the special projects group of Jones Lang
LaSalle's predecessor partnerships
Denise M. Ruth 26 Assistant Secretary Operations Manager, LaSalle Investment Management
100 East Pratt Street (Securities) L.P.; Assistant Accountant,
Baltimore, MD 21202 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.
B-15
<PAGE>
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, purchases that are part of an automatic dividend reinvestment plan
or purchases of securities that are not eligible for purchase by the Trust).
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 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 Fund and the Manager. Under the agreement, the Manager
monitors the operations of the Fund. The Manager receives no fee for providing
these monitoring services. In the event the 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 daily 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
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
B-16
<PAGE>
Investment Company Institute or similar organizations; (xii) interest payable on
Company/Trust borrowings; and (xiii) postage.
For the fiscal year ended December 31, 1998, the investment management
fee payable to the Manager was $166,972 of which $22,263 was waived.
ADMINISTRATOR
PFPC Inc. (the "Administrator"), 103 Bellevue Parkway, Wilmington,
DE 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. The
Administration Agreements will continue in effect until terminated by either
party on 60 days' prior written notice to the other party.
For the fiscal year ended December 31, 1998, the administration fee
payable to the Administrator with respect to the Trust and the Fund was $72,098
(of which $36,049 was waived) and $27,322 (of which $13,662 was waived),
respectively.
CUSTODIAN
PFPC Trust Company, 400 Bellevue Parkway, Wilmington, DE 19809,
serves as custodian of the Fund's and the Trust's assets consisting of cash and
securities.
TRANSFER AGENT
PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19809, serves as
transfer agent and dividend paying agent of the Fund's shares.
DISTRIBUTION ARRANGEMENTS
DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor"), located at 60 State
Street, Suite 1300, Boston, MA 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.
B-17
<PAGE>
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.
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 daily 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 may 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
B-18
<PAGE>
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.
For the fiscal year ended December 31, 1998, the Retail Class of the
Fund accrued distribution fees of $79. No amount of the fee was paid.
As of the date of this Statement of Additional Information, all
distribution fees received by the Distributor under the Plan are paid to
qualified securities brokers or financial institutions or other investment
professionals in respect of their share accounts.
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 daily 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%.
For the fiscal year ended December 31, 1998, the Retail Class of the
Fund accrued shareholder servicing fees of $47. No amount of the fee was paid.
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.
B-19
<PAGE>
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 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.
The cumulative total returns for the period ended December 31, 1998
(since inception) for the Retail Class and the Institutional Class of the Fund
were (20.22)% and (19.92)%, respectively.
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
B-20
<PAGE>
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.
For the thirty-day period ended December 31, 1998, the yields for the
Retail Class and Institutional Class shares of the Fund were 1.80% and 2.19%,
respectively.
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, 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.
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.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 2400 Eleven Penn Center, Philadelphia, PA
19103, serves as independent accountants for the Company and the Trust.
LEGAL COUNSEL
Piper & Marbury L.L.P. serves as legal counsel to the Company and the
Trust.
FINANCIAL STATEMENTS
Audited financial statements for the Fund and the Trust as of and for
the period ended December 31, 1998, together with the notes thereto and the
reports of PricewaterhouseCoopers LLP, are incorporated herein by reference to
the Annual Report of the Fund and the Trust.
B-21
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) (i) Articles of Incorporation of the Registrant. Incorporated
by reference to Exhibit 1 to the Registration Statement.
(ii) Articles of Amendment of the Registrant. Incorporated by
reference to Exhibit 1(b) to Pre-Effective Amendment No. 1
to the Registration Statement.
(iii) Articles Supplementary of the Registrant. Incorporated
by reference to Exhibit 1(c) to Pre-Effective Amendment
No. 1 to the Registration Statement.
(b) Amended and Restated By-Laws of the Registrant.
Incorporated by reference to Exhibit (b) to Post-Effective
Amendment No. 1 to the Registration Statement.
(c) Not applicable.
(d) Management Agreement between the Registrant and
ABKB/LaSalle Securities Limited. Incorporated by
reference to Exhibit 5 to Pre-Effective Amendment No. 1
to the Registration Statement.
(e) Distribution Agreement between the Registrant and Funds
Distributor, Inc. Incorporated by reference to Exhibit
6 to Pre-Effective Amendment No. 1 to the Registration
Statement.
(f) Not applicable.
(g) Custodian Services Agreement between the Registrant and
PNC Bank, National Association. Incorporated by reference
to Exhibit 8 to Pre-Effective Amendment No. 1 to the
Registration Statement.
(h) (i) Administration and Accounting Services Agreement between
the Registrant and PFPC Inc. Incorporated by reference to
Exhibit 9(a) to Pre-Effective Amendment No. 1 to the
Registration Statement.
(ii) Transfer Agency Services Agreement between the Registrant
and PFPC Inc. Incorporated by reference to Exhibit 9(b)
to Pre-Effective Amendment No. 1 to the Registration
Statement.
(iii) License Agreement between LaSalle Partners Incorporated
and the Registrant. Incorporated by reference to Exhibit
9(c) to Pre-Effective Amendment No. 1 to the Registration
Statement.
(i) Opinion and Consent of Piper & Marbury L.L.P.
Incorporated by reference to Exhibit 10 to Pre-Effective
Amendment No. 1 to the Registration Statement.
<PAGE>
(j) Consent of Independent Accountants.*
(k) Not applicable.
(l) Initial Capital Agreement. Incorporated by reference to
Exhibit 13 to Pre-Effective Amendment No. 1 to the
Registration Statement.
(m) (i) Distribution Plan. Incorporated by reference to Exhibit
15(a) to Pre-Effective Amendment No. 1 to the Registration
Statement.
(ii) Shareholder Services Plan. Incorporated by reference to
Exhibit 15(b) to Pre-Effective Amendment No. 1 to the
Registration Statement.
(n) Not applicable.
(o) Multiple Class Plan. Incorporated by reference to Exhibit
18 to Pre-Effective Amendment No. 1 to the Registration
Statement.
* Filed herewith.
Item 24. 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 25. 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 26. 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 27. Principal Underwriters
(a) Funds Distributor, Inc. serves as principal underwriter and
distributor for shares of the Registrant. Funds Distributor, Inc. also acts as
principal underwriter for the following investment companies:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
Kobrick-Cendant Investment Trust
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Orbitex Group of Funds
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
C-3
<PAGE>
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
Funds Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor is located at 60 State Street, Suite 1300,
Boston, MA 02109. Funds 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.
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
Director, President and Chief -Marie E. Connolly
Executive Oficer
Executive Vice President -George A. Rio
Executive Vice President -Donald R. Roberson
Executive Vice President -William S. Nichols
Senior Vice President, General -Margaret W. Chambers
Counsel, Chief Compliance Officer,
Secretary and Clerk
Senior Vice President -Michael S. Petrucelli
Director, Senior Vice President, -Joseph F. Tower, III
Treasurer and Chief Financial
Officer
Senior Vice President -Paula R. David
Senior Vice President -Gary S. MacDonald
Senior Vice President -Judith K. Benson
Chairman and Director -William J. Nutt
(c) Not applicable.
Item 28. 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,
MD 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, DE 19809. Certain records relating to the physical possession
of the Registrant's securities may be maintained at the offices of the
Registrant's custodian, PFPC Trust Company, 400 Bellevue Parkway, Wilmington,
DE 19809.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this amendment to the registration
statement under Rule 485(b) under the Securities Act and has duly caused this
Post-Effective Amendment No. 3 to the 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 29th day of April, 1999.
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
Post-Effective Amendment No. 2 to the 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) April 29, 1999
- --------------------------- and Director
William K. Morrill, Jr.
/s/ William E. Sullivan Treasurer (principal financial and April 29, 1999
- --------------------------- 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.
--------------------------------- April 29, 1999
William K. Morrill, Jr.
Attorney-in-Fact
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, LaSalle
Partners Master Trust certifies that it meets all of the requirements for
effectiveness of this amendment to the registration statement under Rule 485(b)
under the Securities Act and has duly caused this Post-Effective Amendment No. 3
to the 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 29th day of April, 1999.
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
Post-Effective Amendment No. 2 to the 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) April 29, 1999
William K. Morrill, Jr. and Trustee
/s/ William E. Sullivan
- --------------------------- Treasurer (principal financial and April 29, 1999
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/ William K. Morrill, Jr.
---------------------------------- April 29, 1999
William K. Morrill, Jr.
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
(j) Consent of Independent Accountants
</TABLE>
<PAGE>
EXHIBIT (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment No. 3
to the Registration Statement of LaSalle Partners Funds, Inc. (the "Company") on
Form N-1A (File No. 333-36161) of our report dated February 12, 1999 on our
audit of the financial statements and financial highlights of the Company which
report is included in the Annual Report to Shareholders for the period ended
December 31, 1998 which is incorporated by reference in the Post-Effective
Amendment to the Registration Statement. We also consent to the reference to our
Firm under the heading "Financial Highlights" in the Prospectus and under the
headings "Independent Accountants" and "Financial Statements" in the Statement
of Additional Information.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 27, 1999
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion of our report dated February 12, 1999 on our audit
of the financial statements and financial highlights of LaSalle Partners Master
Trust as of December 31, 1998 with respect to this Post-Effective Amendment No.
3 to the Registration Statement (No. 333-36161) under the Securities Act of 1933
on Form N-1A.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 27, 1999
