<PAGE>
As filed with the Securities and Exchange Commission on February 26, 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. 1 [X]
---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [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
It is proposed that this filing will become effective (check appropriate box):
( ) immediately upon filing pursuant to paragraph (b)
( ) on (date) pursuant to paragraph (b)
(X) 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
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 will be filed on
or before March 30, 1998. 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 __, 1999
Retail Class Shares
Institutional Class Shares
As with all mutual funds, the Securities and Exchange Commission does not
guarantee that the information in this prospectus is accurate or complete, nor
has it approved or disapproved the fund as an investment. It is a criminal
offense to state otherwise.
<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.
STRUCTURE: The Fund is a separate series of LaSalle Partners Funds, Inc. (the
"Company"), an open-end diversified investment management company. 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.
SHARE CLASSES: The Fund offers Retail Class shares and Institutional Class
shares.
MANAGER: LaSalle Investment Management (the "Manager"), a registered
investment adviser and a subsidiary of LaSalle Partners 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
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.
Total Return Bar Chart and Table
RETAIL CLASS*
Since Inception, -20.2%
INSTITUTIONAL CLASS
Since Inception, -19.9%
Within the period shown in the chart, the highest quarterly return for the
Retail Class and Institutional Class were -1.5% (quarter ended December 31,
1998) and -1.4% (quarter ended September 30, 1998), respectively. The lowest
quarterly returns were -15.1% (quarter ended September 30, 1998) and -15.0%
(quarter ended June 30, 1998), respectively.
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.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
WILSHIRE REAL ESTATE
CALENDAR PERIOD RETAIL CLASS* INSTITUTIONAL CLASS SECURITIES INDEX
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Life of the Fund (1) -20.2% -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 impact of
the sales charges which was implemented on April __, 1999 is not reflected in
the total returns shown above; if these amounts were reflected, total returns
would be less than those shown.
(1) The Retail Class and Institutional Class of the Fund each commenced
operations on March 30, 1998.
Principal Risks
An investment in the Fund involves risks, and you could lose money.
The Fund is subject to risks similar to those associated with owning real estate
directly. 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. The Fund also may
invest in illiquid securities, each of which has additional risks.
The Fund is part of a master/feeder structure. The Trust may sell shares to
other mutual funds or institutional investors. The Fund's investment in the
Trust may be adversely affected by the actions of these other investors.
For more information on the risks of investing in the Fund, see the Principal
Risks Section.
1
<PAGE>
FEES AND EXPENSES
The following tables summarize the fees and expenses related to investing in the
Fund.
SHAREHOLDER TRANSACTION EXPENSES
- ------------------------------------------------------------------------------
RETAIL CLASS INSTITUTIONAL CLASS
- ------------------------------------------------------------------------------
Sales charge on purchases 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
- -------------------------------------------------------------------------------
RETAIL CLASS INSTITUTIONAL CLASS
- -------------------------------------------------------------------------------
Management fee /2/ 0.75% 0.75%
- -------------------------------------------------------------------------------
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 to the Distributor for marketing and
distributing the Fund's shares.
SHAREHOLDER SERVICES FEE: A fee the Fund pays to the financial services
firms who have entered into shareholder services agreements with the
Company for shareholder account service and maintenance.
OTHER EXPENSES: These include fees for items related to transfer agency,
custody and other expenses.
/1/ 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.
/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>
EXPENSES EXAMPLE
- --------------------------------------------------------------
Retail Class Institutional Class
- ---------------------------------------------------------------
One year $ $
- ---------------------------------------------------------------
Three years $ $
- ---------------------------------------------------------------
Five years $ $
- ---------------------------------------------------------------
Ten years $ $
- ---------------------------------------------------------------
This example demonstrates the expenses a shareholder would pay on a $10,000
investment, assuming a 5% annual return and redemption at the end of each time
period and payment of the 5% sales charge. Of course, each investor's
actual expenses may vary.
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 U.S. Real Estate Portfolio of
LaSalle Partners Master Trust, a separate mutual fund with an investment
objective identical to the Fund and managed by LaSalle Partners Real Estate
Securities.
(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 top-down and bottom-up analysis
that covers industry and market-cycle trends and individual company research.
In addition, the Trust may invest 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 SECURITIES
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. 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 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 investment
manager to manage the Fund's asset directly or investing all the Fund assets in
another pooled investment entity having the same investment objective as the
Fund.
DISTRIBUTION IN KIND
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, the Fund may incur brokerage, tax and
other charges associated with converting the securities to cash. In addition, a
distribution in kind may result in a less diversified portfolio or adversely
affect the Fund's liquidity.
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.
6
<PAGE>
YEAR 2000 CONSIDERATIONS
Many computer systems were designed using only two digits to signify the year
(i.e., 98 for 1998). 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 LaSalle Investment
Management accounts having the same investment objective as the Fund and the
Trust. The data, calculated on an average annual total return basis, is
provided to illustrate LaSalle Investment Management's past performance in
managing accounts in accordance with the same strategy, research and
analytical models used for the Trust. These accounts consist of separate and
distinct portfolios, and their performance is not indicative of or a
substitute for the past or future performance of the Fund or the Trust.
8
<PAGE>
Years Ended December 31,
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
1998 1977 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LaSalle
Investment
Management
Asset
Weighted
Rate of
Return/1/
- ---------------------------------------------------------------------------------------------------------------
Mutual Fund/2/ (20.80%) 22.00% 32.70% 18.20% ---- ---- ---- ---- ---- ---- ----
- ---------------------------------------------------------------------------------------------------------------
LaSalle U.S.
Public Real
Estate
Securities
Fund, L.P./3/
- ---------------------------------------------------------------------------------------------------------------
Wilshire
Real Estate
Securities
Index/4/ (17.07%) 19.03% 36.87% 13.65% 1.64% 15.23% 7.40% 20.03% (33.46%) 2.37% 24.18%
---------------------------------------------------------------------------------------------------------------
Number of
portfolios 44 37 32 27 18 14 16 12 10 8 6
- ---------------------------------------------------------------------------------------------------------------
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 74.5
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------------
/1/ The composite performance data shown above for the LaSalle Investment
Management Asset Weighted Rate of Return (the "LaSalle Composite") was
developed from the aggregate performance of all private accounts that are
managed on a basis substantially the same as LaSalle Investment Management
employs in managing the assets of the Trust. The LaSalle Composite includes all
portfolios invested in U.S. based publicly-traded real estate companies for
which LaSalle Investment Management has full discretionary authority to manage
in accordance with LaSalle Investment Management's strategy. The LaSalle
Composite excludes for each respective year one portfolio invested in
international real estate securities and one portfolio invested in private
commingled funds. The composite performance data has been calculated in
accordance with recommended standards of the Association for Investment
Management and Research ("AIMR"), which differ from the SEC's method of
performance calculation, and the effect of fees has been reflected as described
below. Custodial fees and expenses have not been deducted from the performance
results, but investment management fees have been deducted. The fees and
expenses deducted from the composite performance data generally are
substantially lower than the expenses incurred by the Fund and Trust, and the
composite performance figures would have been lower if they had been subject to
the higher fees and expenses incurred by the Fund and the Trust. In addition, if
the accounts within the composite had been regulated as investment companies
under the federal securities and tax laws, the composite performance might have
been adversely affected by the diversification requirements, tax restrictions
and investment limitations to which the Fund and the Trust are subject.
/2/ LaSalle Investment Management is the subadviser of a mutual fund with
substantially the same investment objective as the Fund and the Trust. The
mutual fund's performance results were obtained from its annual reports. The
performance results assume the reinvestment of dividends and capital gains
distributions and exclude the impact of any sales charge. If the sales charge
were reflected, the performance results would be lower.
/3/ LaSalle Investment Management is the adviser of a limited partnership
which in March 1998 was reorganized as a feeder of the Trust. The limited
partnership's performance results are calculated net of fees. The performance
results assume the reinvestment of dividends and capital gains distributions
and exclude the impact of any sales charge. If the sales charge and fees were
reflected, the performance results would be lower.
/4/ The Wilshire Real Estate Securities Index is a market capitalization
weighted index of publicly-traded real estate securities, such as REITs, real
estate operating companies and partnerships. The index is comprised of companies
whose charter is the equity ownership and operation of commercial real estate.
The following security types are excluded from the Index: Mortgage REITs, Health
Care REITs, real estate finance companies, home builders, large land owners and
sub-dividers, and Hybrid REITs. To be included in the Index, a company must have
a book value of real estate assets of at least $100 million; have a market
capitalization of at least $100 million; and derive at least 75% of its total
revenue from the ownership and operation of real estate assets.
9
<PAGE>
PURCHASING SHARES
The Company offers two classes of shares of the Fund:
- 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
currently is being waived for certain investors (see Retail Class Shares below)
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 as of the close
of regular trading on the New York Stock Exchange (NYSE), which currently is 4
p.m., Eastern time.
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 in proper form. 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 4 p.m., Eastern time, 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 financial services firm that has a sales
agreement with the Distributor. The Fund accepts telephone orders for
shares from certain securities dealers and other financial services 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
- ------------------------------------------------------------------------------------------------------------------
<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 Company'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 the annual fee may not exceed 0.75% of the average daily net assets of
the Retail Class.
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 the annual fee may not
exceed 0.25% of the average daily net assets of the applicable shareholder
accounts.
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 LaSalle Partners,
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, contact your investment dealer,
see the Statement of Additional Information, or contact 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;
- - 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 LaSalle Partners Real Estate
Securities; current and retired officers, directors and employees of LaSalle
Partners 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 by
transmitting a redemption order either through their 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. Redemption proceeds are made by check and are
mailed within seven days.
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 Company at the following address:
LaSalle Partners Funds, Inc.
c/o PFPC Inc.
P.O. Bos 8976
Wilmington, DE 19899-8976
(sidebar)
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.
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 Company 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.
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.
- - 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 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 LaSalle Partners Funds, Inc., 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 manager, distributor, administrator, transfer agent and custodian. A
majority of the Company's directors are not affiliated with either the manager
or the distributor of the Fund. The same individuals serve as members of the
boards of the Fund and the Trust.
Investment Manager
- ------------------
Responsibilities
LaSalle Investment Management, 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 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. 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 Trust may, from time to time, consistent with its investment policies and
applicable law, invest in securities of companies with which LaSalle Partners
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.
Organization
- ------------
The Manager is one of several entities through which LaSalle Partners
Incorporated and its affiliates conduct real estate investment advisory and
related businesses. LaSalle Partners 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 LaSalle Partners
18
<PAGE>
Incorporated's extensive research and property management organization that
consists of more than 2,300 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., Managing Director; Keith R. Pauley, Managing Director;
and James A. Ulmer III, Principal of LaSalle Investment Management, share the
primary responsibility of managing the Trust's assets.
Mr. Morrill has more than 15 years of real estate securities investment
experience and has been a portfolio manager with LaSalle Investment Management
and its predecessors since 1985. Mr. Pauley has more than 14 years of real
estate securities investment experience and has been a portfolio manager with
LaSalle Investment Management and its predecessors since 1986. Mr. Ulmer has
more than 13 years of real estate securities investment experience and joined
LaSalle Investment Management 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 LaSalle Partners Funds, Inc. 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
Investors who have questions about the Fund may contact their broker-dealer or
the Company toll free at 1-800-LaSalle.
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 1,4,5 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
/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 LaSalle Partners U.S. Real Estate Fund and its pro rata share of the LaSalle
Partners Master Trust U.S. Real Estate Portfolio'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 other 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 more information about the Fund via:
- - Phone. Call toll free, 1-800-LaSalle.
- - Mail. Write to the Fund at: LaSalle Partners Funds, Inc. 60 State Street,
Suite 1300, Boston, M.A. 02109
- - The SEC. You also may obtain these 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.
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
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
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
STATEMENT OF ADDITIONAL INFORMATION
_____________, 1999
This Statement of Additional Information is not a prospectus but
provides additional information that should be read in conjunction with the
Prospectus dated _____________, 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-8
Redemption of Shares B-9
Taxation B-11
Management B-16
Investment Manager B-17
Administrator B-17
Custodian B-17
Transfer Agent B-17
Distribution Arrangements B-19
Performance Information B-20
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.
Under the rules and regulations of the Securities and Exchange
Commission (the "SEC"), all mutual funds are required to furnish prospective
investors with certain information regarding the activities of the fund being
considered for investment. Important information concerning the Company and the
Trust is included in the Prospectus which may be obtained without charge from
the Company's distributor or securities dealers and other financial institutions
that have a sales agreement with the Company's distributor. Some of the
information required to be in this Statement of Additional Information is also
included in the Prospectus. To avoid unnecessary repetition, references are made
to related sections of the Prospectus.
As described in the Prospectus, the Fund seeks to achieve its
investment objective by investing all of its investable assets in a series of an
open-end management investment company having the same investment objective as
the Fund. The investment company is the U.S. Real Estate Portfolio of LaSalle
Partners Master Trust, a Delaware business trust (the "Trust"), for which
LaSalle Investment Management (the "Manager") serves as investment manager.
Since the investment characteristics of the Fund will correspond directly to
those of the Trust, the Prospectus and this Statement of Additional Information
include a discussion of the various investments of and techniques employed by
the Trust.
The Company was incorporated under the laws of the State of Maryland on
September 19, 1997. The Company filed a registration statement with the SEC
registering as an open-end diversified management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and registering an
indefinite number of 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.
INVESTMENT POLICIES AND PRACTICES
The Fund's investment objective is total return primarily through
investments in U.S. real estate securities. As described in the Prospectus, the
Fund will attempt to achieve its objective by investing all of its investable
assets in the Trust. The Trust will invest its assets primarily in equity
securities of real estate investment trusts ("REITs") and other real estate
industry companies that are publicly traded in the United States securities
markets. Equity securities of real estate industry companies in which the Trust
will invest consist of common stock, shares of beneficial interest of REITs and
securities with characteristics of common stock, such as preferred stock and
debt securities convertible into common stock. 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 be readily be resold or on an issuer's ability to
honor a demand for repayment. Therefore, the fact that there are contractual or
legal restrictions on resale to the general public or certain institutions is
not dispositive of the liquidity of these investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. The Trust may invest in Rule 144A securities
which, as disclosed in the Prospectus, are restricted securities which may or
may not be readily marketable. Rule 144A securities are readily marketable if
institutional markets for the securities develop pursuant to Rule 144A and
provide both readily ascertainable values for the securities and the ability to
liquidate the securities when liquidation is deemed necessary or advisable.
However, an insufficient number of qualified institutional buyers interested in
purchasing a Rule 144A security held by the Fund could affect adversely the
marketability of the security. In such an instance, the Trust might be unable to
dispose of the security promptly or at a reasonable price.
Securities eligible for resale pursuant to Rule 144A will not be
subject to the Trust's limitations on investing in securities that are not
readily marketable, provided that the Manager determines that a liquid market
exists for such securities under guidelines adopted and monitored by the Trust's
Board of Trustees. In making this determination, the Manager will consider the
following factors, among others: (1) the unregistered nature of a Rule 144A
security; (2) the frequency of trades and quotes for the security; (3) the
number of dealers willing to purchase or sell the security and the number of
additional potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of market place
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfers).
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.
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 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 director" 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 54 Director Adjunct Professor, Yale University
459 Prospect Streeet School of Management; Senior Vice
New Haven, CT 06511 President and Director of New
Business, The Rouse Company
Lawrence S. Bacow 46 Director Professor, Massachusetts Institute
75 Summit of Technology
Newton, MA 02158
Richard A. Dobbins 52 Director President, Historical Data
520 Washington Street Systems, Inc.; President,
Duxbury, MA 02331 Municipal Market Data, Inc.
John W. McCarter, Jr. 59 Director President and Chief Executive
The Field Museum Officer of The Field Museum;
1200 South Lake Shore Drive Senior Vice President of Booz,
Chicago, IL 60605 Allen & Hamilton, Inc.
Lynn C. Thurber* 50 Director Director, LaSalle Partners
200 East Randolph Drive Incorporated; Co-President,
Chicago, IL 60601 LaSalle Advisors Capital
Management, Inc.; Managing
Director, LaSalle Advisors Limited
Partnership; Chief Executive
Officer of ABKB/ LaSalle
Securities Limited; Chief
Operating Officer and Director of
Acquisitions, ABKB/LaSalle
Securities Limited
William K. Morrill, Jr.* 60 Director; President Managing Director, ABKB/ LaSalle
100 East Pratt Street Securities Limited
Baltimore, MD 21202
Keith R. Pauley* 36 Director; Executive Managing Director/Portfolio
100 East Pratt Street Vice President Manager, ABKB/LaSalle Securities
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, LaSalle Partners
200 East Randolph Drive Assistant Secretary Incorporated; Associate, The
Chicago, IL 60601 Keystone Group
</TABLE>
B-12
<PAGE>
<TABLE>
<S> <C> <C> <C>
James A. Ulmer, III 58 Vice President Vice President, ABKB/LaSalle
100 East Pratt Street Securities Limited; Principal,
Baltimore, MD 21202 AIRES Real Estate Services;
Chairman and President, Enoch
Pratt Free Library
William E. Sullivan 42 Treasurer Executive Vice President, Chief
200 East Randolph Drive Financial Officer and Director
Chicago, IL 60601 of LaSalle Partners Incorporated;
Executive Vice President and Chief
Financial Officer of LaSalle
Partners' predecessor partnerships;
Managing Director of the special
projects group of LaSalle Partners'
predecessor partnerships; Senior Vice
President of the special projects
group of LaSalle Partners'
predecessor partnerships
Denise M. Ruth 26 Assistant Secretary Operations Manager, ABKB/ LaSalle
100 East Pratt Street Securities Limited; 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 54 Trustee Adjunct Professor, Yale University
459 Prospect Streeet School of Management; Senior Vice
New Haven, CT 06511 President and Director of New
Business, The Rouse Company
Lawrence S. Bacow 46 Trustee Professor, Massachusetts Institute
75 Summit of Technology
Newton, MA 02158
Richard A. Dobbins 52 Trustee President, Historical Data
520 Washington Street Systems, Inc.; President,
Duxbury, MA 02331 Municipal Market Data, Inc.
John W. McCarter, Jr. 59 Trustee President and Chief Executive
The Field Museum Officer of The Field Museum;
1200 South Lake Shore Drive Senior Vice President of Booz,
Chicago, IL 60605 Allen & Hamilton, Inc.
Lynn C. Thurber* 50 Trustee Director, LaSalle Partners
200 East Randolph Drive Incorporated; Co-President,
Chicago, IL 60601 LaSalle Advisors Capital
Management, Inc.; Managing
Director, LaSalle Advisors Limited
Partnership; Chief Executive
Officer of ABKB/ LaSalle
Securities Limited; Chief
Operating Officer and Director of
Acquisitions, ABKB/LaSalle
Securities Limited
</TABLE>
B-14
<PAGE>
<TABLE>
<S> <C> <C> <C>
William K. Morrill, Jr.* 60 Trustee; President Managing Director, ABKB/ LaSalle
100 East Pratt Street Securities Limited
Baltimore, MD 21202
Keith R. Pauley* 36 Trustee; Executive Managing Director/Portfolio
100 East Pratt Street Vice President Manager, ABKB/LaSalle Securities
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, LaSalle Partners
200 East Randolph Drive Assistant Secretary Incorporated; Associate, The
Chicago, IL 60601 Keystone Group
James A. Ulmer, III 58 Vice President Vice President, ABKB/LaSalle
100 East Pratt Street Securities Limited; Principal,
Baltimore, MD 21202 AIRES Real Estate Services;
Chairman and President, Enoch
Pratt Free Library
William E. Sullivan 42 Treasurer Executive Vice President, Chief
200 East Randolph Drive Financial Officer and Director of
Chicago, IL 60601 LaSalle Partners Incorporated;
Executive Vice President and Chief
Financial Officer of LaSalle
Partners' predecessor partnerships;
Managing Director of the special
projects group of LaSalle Partners'
predecessor partnerships; Senior Vice
President of the special projects
group of LaSalle Partners'
predecessor partnerships
Denise M. Ruth 26 Assistant Secretary Operations Manager, ABKB/ LaSalle
100 East Pratt Street Securities Limited; Assistant
Baltimore, MD 21202 Accountant, T. Rowe Price, Inc.
</TABLE>
CODE OF ETHICS
The Board of Directors of the Company and the Board of Trustees of the
Trust have adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940 Act.
The Code of Ethics applies to the personal investing activities of all
directors/trustees and officers of the Company and the Trust, as well as to
designated officers, directors and employees of the Manager and the Distributor.
As described below, the Code of Ethics imposes significant restrictions on the
Manager's investment personnel, including the portfolio managers and employees
who execute or help execute a portfolio manager's decisions or who obtain
contemporaneous information regarding the purchase or sale of a security by the
Trust.
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 or purchases that are part of an automatic dividend reinvestment
plan). The preclearance requirement and associated procedures are designed to
identify any substantive prohibition or limitation applicable to the proposed
investment. The substantive restrictions applicable to investment personnel
include a ban on acquiring any securities in an initial public offering, a
prohibition from profiting on short-term trading in securities and special
preclearance of the acquisition of securities in private 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 Fund and the Trust was $72,098
(of which $36,049 was waived) and $27,323 (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
PFPF 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
Pricewaterhouse Coopers LLP 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 Pricewaterhouse Coopers 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.*
(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 has duly caused this Post-
Effective Amendment No. 1 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 26th day of February, 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. 1 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) February 26, 1999
- --------------------------- and Director
William K. Morrill, Jr.
/s/ William E. Sullivan Treasurer (principal financial and February 26, 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.
--------------------------------- February 26, 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 has duly caused this Post-Effective Amendment No. 1 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 26th
day of February, 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. 1 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) February 26, 1999
William K. Morrill, Jr. and Trustee
/s/ William E. Sullivan
- --------------------------- Treasurer (principal financial and February 26, 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.
---------------------------------- February 26, 1999
William K. Morrill, Jr.
Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
(b) Amended and Restated By-laws
(j) Consent of Independent Accountants
</TABLE>
<PAGE>
Exhibit (b)
LA SALLE REAL ESTATE SECURITIES FUND, INC.
BY-LAWS
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. Annual Meeting. The Corporation is not required to hold an
annual meeting of its stockholders in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940, as amended (the "1940 Act"). If the Corporation is required by the 1940
Act to hold a meeting of stockholders to elect directors, such meeting shall be
held at a date and time set by the Board of Directors in accordance with the
1940 Act and no later than 120 days after the occurrence of the event requiring
the meeting. Any stockholders' meeting held in accordance with the preceding
sentence shall for all purposes constitute the annual meeting of stockholders
for the fiscal year of the Corporation in which the meeting is held. Except as
the Charter or statute provides otherwise, any business may be considered at an
annual meeting without the purpose of the meeting having been specified in the
notice. Failure to hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts.
SECTION 1.02. Special Meeting. At any time in the interval between annual
meetings, a special meeting of stockholders may be called by the Chairman or the
President or by a majority of the Board of Directors by vote at a meeting or in
writing (addressed to the Secretary of the Corporation) with or without a
meeting. Special meetings of the stockholders shall be called by the Secretary
at the request of stockholders only on the written request of stockholders
entitled to cast at least 25 percent of all the votes entitled to be cast at the
meeting. A request for a special meeting shall state the purpose of the meeting
and the matters proposed to be acted on at it. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of preparing
and mailing a notice of the meeting and, on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any special
meeting of stockholders held in the preceding 12 months.
SECTION 1.03. Place of Meetings. Meetings of stockholders shall be held at
such place in the United States as is set from time to time by the Board of
Directors.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ten nor
more than 90 days before each stockholders' meeting, the Secretary shall give
written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The notice
shall state the time and place of the meeting and, if the meeting is a special
meeting or notice of the purpose is required by statute, the purpose of the
meeting.
<PAGE>
Notice is given to a stockholder when it is personally delivered to him or her,
left at his or her residence or usual place of business, or mailed to him or her
at his or her address as it appears on the records of the Corporation.
Notwithstanding the foregoing provisions, each person who is entitled to notice
waives notice if he or she before or after the meeting signs a waiver of the
notice which is filed with the records of stockholders' meetings, or is present
at the meeting in person or by proxy.
SECTION 1.05. Quorum; Voting. Unless statute or the Charter provides
otherwise, at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast at
the meeting constitutes a quorum, and a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve any matter which
properly comes before the meeting, except that a plurality of all the votes cast
at a meeting at which a quorum is present is sufficient to elect a director.
SECTION 1.06. Adjournments. Whether or not a quorum is present, a meeting
of stockholders convened on the date for which it was called may be adjourned
from time to time without further notice by a majority vote of the stockholders
present in person or by proxy to a date not more than 120 days after the
original record date. Any business which might have been transacted at the
meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. General Right to Vote; Proxies. Unless the Charter provides
for a greater or lesser number of votes per share or limits or denies voting
rights, each outstanding share of stock is entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. In all elections for
directors, each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted, and cumulative voting in the election of directors is not permitted. A
stockholder may vote the stock the stockholder owns of record either in person
or by proxy. A stockholder may sign a writing authorizing another person to act
as proxy. Signing may be accomplished by the stockholder or the stockholder's
authorized agent signing the writing or causing the stockholder's signature to
be affixed to the writing by any reasonable means, including facsimile
signature. A stockholder may authorize another person to act as proxy by
transmitting, or authorizing the transmission of, a telegram, cablegram,
datagram, or other means of electronic transmission to the person authorized to
act as proxy or to a proxy solicitation firm, proxy support service
organization, or other person authorized by the person who will act as proxy to
receive the transmission. Unless a proxy provides otherwise, it is not valid
more than 11 months after its date. A proxy is revocable by a stockholder at any
time without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
SECTION 1.08. List of Stockholders. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number of shares
- 2 -
<PAGE>
held by each and certified by the transfer agent or by the Secretary, shall be
furnished by the Secretary.
SECTION 1.09. Conduct of Business. Nominations of persons for election to the
Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving notice provided for in Section 1.11, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in Section 1.11. The chairman of the meeting shall have the power and duty
to determine whether a nomination or any business proposed to be brought before
the meeting was made in accordance with the procedures set forth in this Section
and Section 1.11 and, if any proposed nomination or business is not in
compliance with this Section and Section 1.11, to declare that such defective
nomination or proposal be disregarded.
SECTION 1.10. Conduct of Voting. At all meetings of stockholders, unless
the voting is conducted by inspectors, the proxies and ballots shall be
received, and all questions touching the qualification of voters and the
validity of proxies, the acceptance or rejection of votes and procedures for the
conduct of business not otherwise specified by these By-Laws, the Charter or
law, shall be decided or determined by the chairman of the meeting. If demanded
by stockholders, present in person or by proxy, entitled to cast 10 percent in
number of votes entitled to be cast, or if ordered by the chairman, the vote
upon any election or question shall be taken by ballot and, upon like demand or
order, the voting shall be conducted by two inspectors, in which event the
proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided, by such inspectors. Unless so demanded or
ordered, no vote need be by ballot and voting need not be conducted by
inspectors. The stockholders at any meeting may choose an inspector or
inspectors to act at such meeting, and in default of such election the chairman
of the meeting may appoint an inspector or inspectors. No candidate for election
as a director at a meeting shall serve as an inspector thereat.
SECTION 1.11. Stockholder Proposals. For any stockholder proposal to be
presented in connection with an annual meeting of stockholders of the
Corporation (other than proposals made under Rule 14a-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than 10 days following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a
- 3 -
<PAGE>
director if elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and of
the beneficial owner, if any, on whose behalf the proposal is made; and (c) as
to the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the number of shares of stock of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the Charter or By-Laws. The Board may delegate the duty of management of the
assets and the administration of the day-to-day operations of the Corporation to
one or more entities or individuals pursuant to a written contract or contracts
which have obtained the approvals, including the approval of renewals thereof,
required by the 1940 Act.
SECTION 2.02. Number of Directors. The Corporation shall have at least
three directors; provided that, if there is no stock outstanding, the number of
directors may be less than three but not less than one, and, if there is stock
outstanding and so long as there are less than three stockholders, the number of
directors may be less than three but not less than the number of stockholders.
The Corporation shall have the number of directors provided in the Charter until
changed as herein provided. A majority of the entire Board of Directors may
alter the number of directors set by the Charter to not exceeding 15 nor less
than the minimum number then permitted herein, but the action may not affect the
tenure of office of any director.
SECTION 2.03. Election and Tenure of Directors. At each annual meeting, the
stockholders shall elect directors to hold office until the next annual meeting
and until their successors are elected and qualify.
SECTION 2.04. Removal of Director. Unless statute or the Charter provides
otherwise, the stockholders may remove any director, with or without cause, by
the affirmative vote of a majority of all the votes entitled to be cast for the
election of directors.
SECTION 2.05. Vacancy on Board. The stockholders may elect a successor to
fill a vacancy on the Board of Directors which results from the removal of a
director. A director elected by the stockholders to fill a vacancy which results
from the removal of a director serves for the balance of the term of the removed
director. A majority of the remaining directors, whether or not sufficient to
constitute a quorum, may fill a vacancy on the Board of Directors
- 4 -
<PAGE>
which results from any cause except an increase in the number of directors;
provided, however, that no vacancy shall be so filled unless immediately
thereafter at least two-thirds of the directors then holding office shall have
been elected to such office by the stockholders; and, provided further, that if
at any time (other than prior to the first annual meeting of stockholders) less
than a majority of the directors holding office at that time were elected by the
stockholders, a meeting of the stockholders shall be held promptly and in any
event within 60 days for the purpose of electing directors to fill any existing
vacancy in the Board of Directors, unless the Securities and Exchange Commission
(the "Commission") shall by order extend such period under the authority granted
by Section 16(a) of the 1940 Act. The Board of Directors may not fill a vacancy
which results from an increase in the number of directors. A director elected by
the Board of Directors to fill a vacancy serves until the next annual meeting of
stockholders and until his or her successor is elected and qualifies.
SECTION 2.06. Regular Meetings. After each meeting of stockholders at which
directors shall have been elected, the Board of Directors shall meet as soon as
practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board, the President or the Chairman, with notice in accordance with
Section 2.08, the Board of Directors shall meet immediately following the close
of, and at the place of, such stockholders' meeting. Any other regular meeting
of the Board of Directors shall be held on such date and at any place as may be
designated from time to time by the Board of Directors.
SECTION 2.07. Special Meetings. Special meetings of the Board of Directors
may be called at any time by the Chairman or the President or by a majority of
the Board of Directors by vote at a meeting, or in writing with or without a
meeting. A special meeting of the Board of Directors shall be held on such date
and at any place as may be designated from time to time by the Board of
Directors. In the absence of designation such meeting shall be held at such
place as may be designated in the call.
SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06, the
Secretary shall give notice to each director of each regular and special meeting
of the Board of Directors. The notice shall state the time and place of the
meeting. Notice is given to a director when it is delivered personally to him or
her, left at his or her residence or usual place of business, or sent by
telegraph, facsimile transmission or telephone, at least 24 hours before the
time of the meeting or, in the alternative by mail to his or her address as it
shall appear on the records of the Corporation, at least 72 hours before the
time of the meeting. Unless these By-Laws or a resolution of the Board of
Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened, or to any director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the Board of Directors,
regular or special, may
- 5 -
<PAGE>
adjourn from time to time to reconvene at the same or some other place, and no
notice need be given of any such adjourned meeting other than by announcement.
SECTION 2.09. Quorum; Action by Directors. A majority of the entire Board
of Directors shall constitute a quorum for the transaction of business. In the
absence of a quorum, the directors present by majority vote and without notice
other than by announcement may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally notified. Unless statute or the Charter or By-Laws
requires a greater proportion, the action of a majority of the directors present
at a meeting at which a quorum is present is action of the Board of Directors.
Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the Board and filed with the
minutes of proceedings of the Board.
SECTION 2.10. Meeting by Conference Telephone. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
SECTION 2.11. Compensation. By resolution of the Board of Directors a
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Directors, may be paid to directors. Directors who are affiliates of any entity
serving as investment adviser or administrator of the Corporation need not be
paid for attendance at meetings of the board or committees thereof for which
fees are paid to other directors. A director who serves the Corporation in any
other capacity also may receive compensation for such other services, pursuant
to a resolution of the directors.
SECTION 2.12. Resignation. Any director may resign at any time by sending
a written notice of such resignation to the home office of the Corporation
addressed to the Chairman of the Board or the President. Unless otherwise
specified therein such resignation shall take effect upon receipt thereof by the
Chairman of the Board or the President.
SECTION 2.13. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent or abstention shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who votes in favor of such action.
- 6 -
<PAGE>
ARTICLE III.
COMMITTEES
SECTION 3.01. Committees. The Board of Directors may appoint from among
its members an Executive Committee, an Audit Committee, and other committees
composed of one or more directors and delegate to these committees any of the
powers of the Board of Directors, except the power to authorize dividends on
stock, elect directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder approval,
amend these By-Laws, or approve any merger or share exchange which does not
require stockholder approval. If the Board of Directors has given general
authorization for the issuance of stock providing for or establishing a method
or procedure for determining the maximum number of shares to be issued, a
committee of the Board, in accordance with that general authorization or any
stock option or other plan or program adopted by the Board of Directors, may
authorize the terms on which any stock may be issued, including all terms and
conditions required or permitted to be established or authorized by the Board of
Directors.
SECTION 3.02. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any meeting
thereof by conference telephone in accordance with the provisions of Section
2.10.
SECTION 3.03. Emergency. In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Corporation by its directors and officers as contemplated by the Charter and
these By-Laws, any two or more available members of the then incumbent Executive
Committee shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Corporation in accordance with the
provisions of Section 3.01. In the event of the unavailability, at such time, of
a minimum of two members of the then incumbent Executive Committee, the
available directors shall elect an Executive Committee consisting of any two
members of the Board of Directors, whether or not they be officers of the
Corporation, which two members shall constitute the Executive Committee for the
full conduct and management of the affairs of the Corporation in accordance with
the foregoing provisions of this Section. This Section shall be subject to
implementation by resolution of the Board of Directors passed from time to time
for that purpose, and any provisions of these By-Laws (other than this Section)
and any resolutions which are contrary to the provisions of this Section or to
the provisions of any such implementary resolutions shall be suspended until it
shall be determined by any interim Executive Committee acting under this Section
that it shall be to the advantage of the
- 7 -
<PAGE>
Corporation to resume the conduct and management of its affairs and business
under all the other provisions of these By-Laws.
ARTICLE IV.
OFFICERS
SECTION 4.01. Executive and Other Officers. The Corporation shall have a
President, a Secretary, and a Treasurer. The Corporation may also have a
Chairman. The Board of Directors shall designate who shall serve as chief
executive officer, who shall have general supervision of the business and
affairs of the Corporation, and may designate a chief operating officer, who
shall have supervision of the operations of the Corporation. In the absence of
any designation by the Board of Directors, the Chairman, if one is elected,
shall serve as chief executive officer, and the President shall serve as chief
operating officer. In the absence of the Chairman, or if a Chairman is not
elected, the President shall be the chief executive officer. The same person may
hold both offices. The Corporation may also have one or more Vice-Presidents,
assistant officers, and subordinate officers as may be established by the Board
of Directors. A person may hold more than one office in the Corporation except
that no person may serve concurrently as both President and Vice-President of
the Corporation. The Chairman shall be a director, and the other officers may be
directors.
SECTION 4.02. Chairman. The Chairman shall preside at all meetings of the
Board of Directors and of the stockholders at which he or she shall be present.
Unless otherwise specified by the Board of Directors, he or she shall be the
chief executive officer of the Corporation. In general, he or she shall perform
such duties as are customarily performed by the chief executive officer of a
corporation and may perform any duties of the President and shall perform such
other duties and have such other powers as are from time to time assigned to him
or her by the Board of Directors.
SECTION 4.03. President. Unless otherwise provided by resolution of the
Board of Directors, the President, in the absence of the Chairman, shall preside
at all meetings of the Board of Directors and of the stockholders at which he or
she shall be present. Unless otherwise specified by the Board of Directors, the
President shall be the chief operating officer of the Corporation and perform
the duties customarily performed by chief operating officers. He or she may
execute, in the name of the Corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the Corporation. In general, he or she shall perform such other duties
customarily performed by a president of a corporation and shall perform such
other duties and have such other powers as are from time to time assigned to him
or her by the Board of Directors or the chief executive officer of the
Corporation.
SECTION 4.04. Vice-Presidents. The Vice-President or Vice-Presidents, at
the request of the chief executive officer or the President, or in the
President's absence or during his or her
- 8 -
<PAGE>
inability to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice-President, the Board of Directors may determine which one
or more of the Vice-Presidents shall perform any of such duties or exercise any
of such functions, or if such determination is not made by the Board of
Directors, the chief executive officer, or the President may make such
determination; otherwise any of the Vice-Presidents may perform any of such
duties or exercise any of such functions. Each Vice-President shall perform such
other duties and have such other powers, and have such additional descriptive
designations in their titles (if any), as are from time to time assigned to them
by the Board of Directors, the chief executive officer, or the President.
SECTION 4.05. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for the purpose; he or she shall see that all notices are duly
given in accordance with the provisions of these By-Laws or as required by law;
he or she shall be custodian of the records of the Corporation; he or she may
witness any document on behalf of the Corporation, the execution of which is
duly authorized, see that the corporate seal is affixed where such document is
required or desired to be under its seal, and, when so affixed, may attest the
same. In general, he or she shall perform such other duties customarily
performed by a secretary of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.06. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he or she shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation. In general, he or she shall perform such other duties customarily
performed by a treasurer of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.07. Assistant and Subordinate Officers. The assistant and
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary, or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Directors, the chief executive officer, or the President.
SECTION 4.08. Election, Tenure and Removal of Officers. The Board of
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. Election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be
appointed to hold their offices, respectively, during the pleasure of the Board.
The Board of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the Board) may remove an officer at any time.
The removal of an officer does not prejudice any of his or her contract rights.
The Board of Directors (or, as to any assistant or subordinate
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officer, any committee or officer authorized by the Board) may fill a vacancy
which occurs in any office for the unexpired portion of the term.
SECTION 4.09. Compensation. The Board of Directors shall have power to fix
the salaries and other compensation and remuneration, of whatever kind, of all
officers of the Corporation. No officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee or officer, upon
whom the power of appointing assistant and subordinate officers may have been
conferred, to fix the salaries, compensation and remuneration of such assistant
and subordinate officers.
ARTICLE V.
STOCK
SECTION 5.01. Certificates for Stock. The Board of Directors may determine
to issue certificated or uncertificated shares of capital stock and other
securities of the Corporation. For certificated stock, each stockholder is
entitled to certificates which represent and certify the shares of stock he or
she holds in the Corporation. Each stock certificate shall include on its face
the name of the Corporation, the name of the stockholder or other person to whom
it is issued, and the class of stock and number of shares it represents. It
shall also include on its face or back (a) a statement of any restrictions on
transferability and (b) a statement which provides in substance that the
Corporation will furnish to any stockholder on request and without charge a full
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue, of the differences in the relative rights
and preferences between the shares of each series of a preferred or special
class in series which the Corporation is authorized to issue, to the extent they
have been set, and of the authority of the Board of Directors to set the
relative rights and preferences of subsequent series of a preferred or special
class of stock and any restrictions on transferability. Such request may be made
to the Secretary or to its transfer agent. Upon the issuance of uncertificated
shares of capital stock, the Corporation shall send the stockholder a written
statement of the same information required above on the certificate and by the
Maryland Uniform Commercial Code - Investment Securities. It shall be in such
form, not inconsistent with law or with the Charter, as shall be approved by the
Board of Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be signed by
the Chairman, the President, or a Vice-President, and countersigned by the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Each certificate may be sealed with the actual corporate seal or a facsimile of
it or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued. A certificate may not be
issued until the stock represented by it is fully paid, except in the case of
stock
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purchased under a plan, agreement, or transaction as provided by law and with
such statement on future payments as required by law.
SECTION 5.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of stock; and may appoint transfer agents
and registrars thereof. The duties of transfer agent and registrar may be
combined.
SECTION 5.03. Record Dates or Closing of Transfer Books. The Board of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted other
rights. The record date may not be prior to the close of business on the day the
record date is fixed nor, subject to Section 1.06, more than 90 days before the
date on which the action requiring the determination will be taken; the transfer
books may not be closed for a period longer than 20 days; and, in the case of a
meeting of stockholders, the record date or the closing of the transfer books
shall be at least ten days before the date of the meeting.
SECTION 5.04. Stock Ledger. The Corporation shall maintain a stock ledger
which contains the name and address of each stockholder and the number of shares
of stock which the stockholder holds. The stock ledger may be in written form or
in any other form which can be converted within a reasonable time into written
form for visual inspection. The original or a duplicate of the stock ledger
shall be kept at the offices of a transfer agent, or, if none, at the principal
office in the State of Maryland or the principal executive offices of the
Corporation.
SECTION 5.05. Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In their discretion, the Board of Directors or such officer or
officers may require the owner of the certificate to give bond, with sufficient
surety, to indemnify the Corporation against any loss or claim arising as a
result of the issuance of a new certificate. In their discretion, the Board of
Directors or such officer or officers may refuse to issue such new certificate
save upon the order of some court having jurisdiction in the premises.
ARTICLE VI.
FINANCE
SECTION 6.01. Checks, Drafts, Etc. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness, issued in the name
of the Corporation, shall, unless otherwise provided by resolution of the Board
of Directors, be signed by any two of the Chairman, the President, a Vice-
President, an Assistant Vice-President, the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary.
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SECTION 6.02. Annual Statement of Affairs. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
placed on file at the Corporation's principal office within 120 days after the
end of the fiscal year.
SECTION 6.03. Fiscal Year. The fiscal year of the Corporation shall be the
12 calendar month period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
SECTION 6.04. Dividends. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the Charter.
ARTICLE VII.
INDEMNIFICATION
SECTION 7.01. Procedure. Any indemnification by the Corporation for a
specific action, suit or proceeding shall (unless ordered by a court) be made by
the Corporation only upon (a) a final decision on the merits by a court or other
body before whom the action, suit or proceeding was brought that a person
permitted by the Charter to seek indemnification (the "Covered Person") was not
liable by reason of Disabling Conduct (hereafter defined), (b) dismissal of the
proceeding against the Covered Person for insufficiency of evidence of any
Disabling Conduct, or (c) a reasonable determination, based upon a review of the
facts, by a majority of a quorum of the directors who are neither "interested
persons" of the Corporation as defined in the 1940 Act nor parties to the
proceeding ("Disinterested, Non-Party Directors"), or an independent legal
counsel in a written opinion, that the Covered Person was not liable by reason
of Disabling Conduct. Disabling Conduct includes (a) liability in connection
with any proceeding in which it is determined that (i) the act or omission of
the Covered Person was material to the matter giving rise to the proceeding, and
was committed in bad faith or was the result of active and deliberate
dishonesty, or (ii) the Covered Person actually received an improper personal
benefit in money, property or services, or (iii) in the case of any criminal
proceeding, the Covered Person had reasonable cause to believe that the act or
omission was unlawful, and (b) liability to the Corporation or its stockholders
to which the Covered Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. The termination of any proceeding
by judgment, order or settlement shall not create a presumption that the Covered
Person did not meet the required standard of conduct; the termination of any
proceeding by conviction, or a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, shall create a rebuttable
presumption that the Covered Person did not meet the required standard of
conduct. Any determination pursuant to this Section 7.01 shall not prevent
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recovery from any Covered Person of any amount paid to him in accordance with
this By-Law as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to be liable by reason of
Disabling Conduct.
SECTION 7.02. Enforcement of Indemnification Right. Any indemnification,
or payment of expenses in advance of the final disposition of any action, suit
or proceeding, shall be made promptly, and in any event within 60 days, upon the
written request of the Covered Person. The right to indemnification and advances
hereunder shall be enforceable by the Covered Person in any court of competent
jurisdiction, if (i) the Corporation denies such request, in whole or in part,
or (ii) no disposition thereof is made within 60 days. The Covered Person's
costs and expenses incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such action shall also
be reimbursed by the Corporation. It shall be a defense to any action for
advance for expenses that (a) a determination has been made that the facts then
known to those making the determination would preclude indemnification or (b)
the Corporation has not received both (i) an undertaking as required by law to
repay such advances in the event it shall ultimately be determined that the
standard of conduct has not been met and (ii) a written affirmation by the
Covered Person of such Covered Person's good faith belief that the standard of
conduct necessary for indemnification by the Corporation has been met.
SECTION 7.03. Advance Payment of Expenses. Reasonable expenses (including
attorney's fees) incurred by a Covered Person may be paid or reimbursed by the
Corporation in advance of the final disposition of an action, suit or proceeding
upon receipt by the Corporation of (a) a written affirmation by the Covered
Person of his or her good faith belief that the standard of conduct necessary
for indemnification under this By-Law has been met and (b) a written undertaking
by or on behalf of the Covered Person to repay the amount if it is ultimately
determined that such standard of conduct has not been met, so long as either (i)
the Covered Person has provided a security for his or her undertaking, (ii) the
Corporation is insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the Disinterested, Non-Party Directors or an
independent legal counsel in a written opinion has determined, based on a review
of readily available facts (as opposed to a full trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be found entitled
to indemnification.
SECTION 7.04. Insurance. The Corporation may purchase and maintain
insurance on behalf of any Covered Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of his or her
status as such; provided, however, that the Corporation shall not purchase
insurance to indemnify any Covered Person against liability for Disabling
Conduct.
SECTION 7.05. Exclusivity, Etc. The indemnification and advance of
expenses provided by the Charter and this By-Law shall not be deemed exclusive
of any other rights to which a Covered Person seeking indemnification or advance
of expenses may be entitled under any law (common or statutory), or any
agreement, vote of stockholders or disinterested directors,
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or other provision that is consistent with law, both as to action in an official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, shall continue in respect of
all events occurring while the Covered Person was a director or officer after
such Covered Person has ceased to be a director or officer, and shall inure to
the benefit of the estate, heirs, executors and administrators of such Covered
Person. The Corporation shall not be liable for any payment under this By-Law in
connection with a claim made by a director or officer to the extent such
director or officer has otherwise actually received payment under an insurance
policy, agreement, vote or otherwise, of the amounts otherwise indemnifiable
hereunder. All rights to indemnification and advance of expenses under the
Charter and hereunder shall be deemed to be a contract between the Corporation
and each director or officer of the Corporation who serves or served in such
capacity at any time while this By-Law is in effect. Nothing herein shall
prevent the amendment of this By-Law, provided that no such amendment shall
diminish the rights of any Covered Person hereunder with respect to events
occurring or claims made before its adoption or as to claims made after its
adoption in respect of events occurring before its adoption. Any repeal or
modification of this By-Law shall not in any way diminish any rights to
indemnification or advance of expenses of a Covered Person or the obligations of
the Corporation arising hereunder with respect to events occurring, or claims
made, while this By-Law or any provision hereof is in force.
SECTION 7.06. Severability; Definitions. The invalidity or
unenforceability of any provision of this Article VII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this By-
Law" in this Article VII means this Article VII in its entirety.
ARTICLE VIII.
SUNDRY PROVISIONS
SECTION 8.01. Books and Records. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors. The
books and records of the Corporation may be in written form or in any other form
which can be converted within a reasonable time into written form for visual
inspection. Minutes shall be recorded in written form but may be maintained in
the form of a reproduction. The original or a certified copy of these By-Laws
shall be kept at the principal office of the Corporation.
SECTION 8.02. Corporate Seal. The Board of Directors shall provide a
suitable seal, bearing the name of the Corporation, which shall be in the charge
of the Secretary. The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof. If the Corporation is required to
place its corporate seal to a document, it is sufficient to meet the requirement
of any law, rule, or regulation relating to a corporate seal to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
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SECTION 8.03. Bonds. The Board of Directors may require any officer, agent
or employee of the Corporation to give a bond to the Corporation, conditioned
upon the faithful discharge of his or her duties, with one or more sureties and
in such amount as may be satisfactory to the Board of Directors.
SECTION 8.04. Voting Stock in Other Corporations. Stock of other
corporations or associations, registered in the name of the Corporation, may be
voted by the Chairman, the President, a Vice-President, the Treasurer or a proxy
appointed by any of them. The Board of Directors, however, may by resolution
appoint some other person to vote such shares, in which case such person shall
be entitled to vote such shares upon the production of a certified copy of such
resolution.
SECTION 8.05. Mail. Any notice or other document which is required by
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
SECTION 8.06. Contracts and Agreements. To the extent permitted by
applicable law, and except as otherwise prescribed by the Charter or these By-
Laws, the Board of Directors may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation. Such authority may be general or
confined to specific instances. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute, acknowledge, or
verify an instrument required by law to be executed, acknowledged, or verified
by more than one officer.
SECTION 8.07. Reliance. Each director, officer, employee and agent of the
Corporation shall, in the performance of his or her duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
SECTION 8.08. Certain Rights of Directors, Officers, Employees and Agents.
The directors shall have no responsibility to devote their full time to the
affairs of the Corporation. Any director or officer, employee or agent of the
Corporation, in his or her personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
SECTION 8.09. Employment of Custodian. The Corporation shall place and
maintain its securities and similar investments in the custody of one or more
custodians meeting the requirements of the 1940 Act, or may serve as its own
custodian in accordance with such rules and regulations or orders as the
Commission may from time to time prescribe for the protection of investors.
Securities held by a custodian may be registered in the name of the Corporation
or any such custodian, or the nominee of either of them. Subject to such rules,
regulations, and
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orders as the Commission may adopt as necessary or appropriate for the
protection of investors, the Corporation or any custodian, with the consent of
the Corporation, may deposit all or any part of the securities owned by the
Corporation in a system for the central handling of securities, pursuant to
which system all securities of a particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities.
SECTION 8.10. Amendments. Subject to the special provisions of Section
2.02, (a) any and all provisions of these By-Laws may be altered or repealed and
new by-laws may be adopted at any annual meeting of the stockholders, or at any
special meeting called for that purpose, and (b) the Board of Directors shall
have the power, at any regular or special meeting thereof, to make and adopt new
by-laws, or to amend, alter or repeal any of these By-Laws of the Corporation.
Amended and Restated
as of October 1, 1998
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EXHIBIT (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment No. 1
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
February 26, 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.
1 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
February 26, 1999
