Blacklined
Filed with the Securities and Exchange Commission on ^ [APRIL 28, 1997].
1933 Act Registration File No. 33-24611
1940 Act File No. 811-5659
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. __
Post-Effective Amendment No. ^ [11] X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. ^ [ 13] X
HEITMAN SECURITIES TRUST
(Exact Name of Registrant as Specified in Charter)
180 NORTH LASALLE STREET, SUITE 3600, CHICAGO, IL 60601
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (312) 849-4150
Nancy B. Lynn, Secretary Copy to:
HEITMAN SECURITIES TRUST Philip H. Newman
180 North LaSalle Street, Suite 3600 Goodwin, Procter & Hoar LLP
Chicago, IL 60601 One Exchange Place
(Name and Address of Agent for Service) Boston, MA 02109-2881
It is proposed that this filing will become effective
___ immediately upon filing pursuant to paragraph (b)
X on MAY 1, 199[7] pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)[(1)]
___ on __________ pursuant to paragraph (a)[(1)]
___ 75 days after filing pursuant to paragraph (a)(2)]
___ on __________ pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Registrant has filed a declaration registering an indefinite amount of
securities pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended [(the "1940 Act"). Registrant filed the notice required by Rule 24f-2
for its fiscal year ended December 31, 199^[6] on or about February [26],
199^[7].
<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)
HEITMAN SECURITIES TRUST
Items Required By Form N-1A
PART A - PROSPECTUS-HEITMAN/PRA INSTITUTIONAL CLASS
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ ------------------
1. Cover Page Cover Page
2. Synopsis Transaction and Expense Data
3. Condensed Financial Financial Highlights
Information Performance Information
4. General Description of Cover Page; Investment Objective and
Registrant Policies
Additional Information
5. Management of the Fund Management of the Fund
Additional Information
5A. Management's Discussion
of Fund Performance Not Applicable
6. Capital Stock and Other Income Dividends and Capital Gains
Securities Distributions
Additional Information
7. Purchase of Securities Purchase of Shares
Being Offered Determination of Net Asset Value
8. Redemption or Repurchase Redemptions
9. Pending Legal Proceedings Not Applicable
PART A - PROSPECTUS-ADVISOR CLASS
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- -------- ------------ ------------------
1. Cover Page Cover Page
2. Synopsis Transaction and Expense Data
3. Condensed Financial Financial Highlights
Information Performance Information
4. General Description of Cover Page; Investment Objective and
Registrant Policies
Additional Information
5. Management of the Fund Management of the Fund
Additional Information
5A. Management's Discussion
of Fund Performance Not Applicable
6. Capital Stock and Other Income Dividends and Capital Gains
Securities Distributions
Additional Information
<PAGE>
CROSS-REFERENCE SHEET
Pursuant to Rule 481(a)
HEITMAN SECURITIES TRUST
Items Required By Form N-1A (continued)
7. Purchase of Securities Purchase of Shares
Being Offered Determination of Net Asset Value
8. Redemption or Repurchase Redemptions
9. Pending Legal Proceedings Not Applicable
PART B - STATEMENT OF ADDITIONAL INFORMATION
CAPTION IN STATEMENT OF
ITEM NO. ITEM CAPTION ADDITIONAL INFORMATION
- -------- ------------ -----------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information General Information
and History Description of the Trust
13. Investment Objectives Additional Information Regarding
and Policies Investment
Policies and Limitations
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Investment Manager
Holders of Securities Description of the Trust
16. Investment Advisory and Investment Manager
Other Services Administrative, Accounting and
Distribution Services
17. Brokerage Allocation
and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Description of Trust
Securities
19. Purchase, Redemption and Purchase of Shares, Redemption of
Pricing of Securities Shares
Being Offered Valuation of Shares
20. Tax Status Taxes
21. Underwriters Administrative, Accounting,
Distribution and Shareholder Services
22. Calculation of Performance Advertising and Calculation of
Data Performance Data
23. Financial Statements Financial Statements
Report of Independent Auditors
2
<PAGE>
------------------------
HEITMAN REAL ESTATE FUND
------------------------
HEITMAN/PRA INSTITUTIONAL CLASS
Heitman Securities Trust (the "Trust") is a series mutual fund which
currently consists of one investment portfolio, the Heitman Real Estate Fund
(the "Fund"). The Fund's investment objective is to obtain high total return
consistent with reasonable risk by investing primarily in equity securities of
public companies principally engaged in the real estate business. Each
investment is selected based upon a determination by the Fund's investment
manager that the anticipated total return, considering both income and
potential for capital appreciation, is high relative to the risk assumed.
The Fund offers two classes of shares. The shares offered by this
Prospectus are the Heitman/PRA Institutional Class (the "Institutional Class")
of shares, which are available only for investment in a minimum initial
investment of $250,000. In addition, the Fund offers by separate Prospectus
the Advisor Class of shares (the "Advisor Class"), which are available for
purchase through certain securities brokers, registered investment advisers
and other service organizations in initial aggregate amounts of $5,000 or
more.
This Prospectus contains a concise summary of information regarding the
Fund that a prospective investor should know before investing. Investors
should read this Prospectus carefully and retain it for future reference.
Additional information regarding the Fund is contained in a Statement of
Additional Information dated May 1, 1997, which has been filed with the
Securities and Exchange Commission and which is incorporated into this
Prospectus by reference. Additional copies of this Prospectus and the
Statement of Additional Information are available without charge upon request
to the Trust at the address or telephone number set forth on the outside cover
of this document.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS DATED MAY 1, 1997
INVESTMENT ADVISOR DISTRIBUTOR
Heitman/PRA Securities Advisors, Inc. Rodney Square Distributors, Inc.
180 North LaSalle Street, Suite 3600 Rodney Square North
Chicago, IL 60601 1100 North Market Street
Wilmington, DE 19890-0001
CUSTODIAN TRANSFER AGENT AND ADMINISTRATOR
Wilmington Trust Company Rodney Square Management Corporation
Rodney Square North Rodney Square North
1100 North Market Street 1100 North Market Street
Wilmington, DE 19890-0001 Wilmington, DE 19890-0001
<PAGE>
TABLE OF CONTENTS
PAGE
----
TRANSACTION AND EXPENSE DATA................................... 1
FINANCIAL HIGHLIGHTS........................................... 2
INVESTMENT OBJECTIVE AND POLICIES.............................. 3
RISK FACTORS................................................... 7
MANAGEMENT OF THE FUND......................................... 8
DETERMINATION OF NET ASSET VALUE............................... 10
INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS............... 11
TAX STATUS..................................................... 11
PURCHASE OF SHARES............................................. 12
REDEMPTIONS.................................................... 14
PERFORMANCE INFORMATION........................................ 16
ADDITIONAL INFORMATION......................................... 17
<PAGE>
TRANSACTION AND EXPENSE DATA
The following table sets forth the costs and expenses that an investor in
Institutional Class shares of the Fund will incur directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average daily net assets)
Management Fees 0.75%
Other Expenses:
Professional Fees 0.10%
Trustee Fees and Expenses 0.05%
Other Fees and Expenses 0.33%
Total Other Expenses 0.48%
Total Fund Operating Expenses 1.23%
====
EXAMPLE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end
of each time period: $13 $39 $68 $148
Except as otherwise indicated, all information in the Transaction and
Expense Data table is based on actual expenses and average daily net assets of
the Fund for the fiscal year ended December 31, 1996. The purpose of the
table is to assist an investor in understanding the various costs and expenses
that an investor will bear directly or indirectly. The Example provided with
the table should not be considered a representation of past or future expenses
or performance. Actual expenses may be more or less than those shown.
Because the sales charges and expenses vary between the Institutional
Class and the Advisor Class, performance will vary with respect to each class.
Additional information concerning the Advisor Class may be obtained by calling
toll-free 1-800-888-REIT.
1
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for the year ended December 31, 1996
have been audited by Price Waterhouse LLP as indicated in their report dated
February 14, 1997 on the Fund's financial statements as of December 31, 1996.
The financial highlights for all periods prior to January 1, 1996 have been
audited by Arthur Andersen LLP. These financial highlights should be read in
conjunction with the Fund's financial statements and notes thereto which are
found in the Statement of Additional Information under "Financial Statements."
For further information about the performance of the Fund, see the Fund's
Annual Report, which may be obtained without charge by contacting the Fund's
Administrator.
INSTITUTIONAL CLASS SHARES
<TABLE>
<CAPTION>
For the Period
For the For the January 4, 1989
Fiscal Year Three-Month (Effective Date)
Ended Period Ended to
December 31, December 31, For the Fiscal Years Ended September 30, September 30,
---------------- ------------ -------------------------------------------- ---------------
1996 1995 1994 1994 1993 1992 1991 1990 1989
------- ------- ------ ------- -------- ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 8.65 $ 8.30 $ 9.23 $ 10.95 $ 8.29 $ 7.66 $ 6.99 $ 10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income a...... 0.37 0.33 0.10 0.32 0.40 0.45 0.49 0.64 0.40 b
Net realized and unrealized
gain (loss)
on investments ............ 2.82 0.53 (0.05) (0.92) 2.67 0.63 0.67 (3.16) 0.25
------- ------ ------- ------- -------- ------ ------ ------- ------
Total from investment
operations ............. 3.19 0.86 0.05 (0.60) 3.07 1.08 1.16 (2.52) 0.65
------- ------ ------- ------- -------- ------ ------ ------- ------
DISTRIBUTIONS
From net investment income a.. (0.37) (0.33) (0.10) (0.31) (0.41) (0.45) (0.49) (0.64) (0.40)
In excess of net investment
income...................... (0.10) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
From net realized gain on
investments................. (0.41) 0.00 (0.77) (0.67) 0.00 0.00 0.00 (0.10) 0.00
From tax return of capital c.. 0.00 ( 0.18) (0.11) (0.14) 0.00 0.00 0.00 0.00 0.00
------- ------ ------- ------- -------- ------ ------ ------- ------
Total distributions....... (0.88) (0.51) (0.98) (1.12) (0.41) (0.45) (0.49) (0.74) (0.40)
------- ------ ------- ------- -------- ------ ------ ------- ------
NET ASSET VALUE, END OF PERIOD..$ 10.96 $ 8.65 $ 8.30 $ 9.23 $ 10.95 $ 8.29 $ 7.66 $ 6.99 $10.25
======= ====== ======= ======= ======== ====== ====== ======= ======
Total Return ................... 38.06% 10.87% 0.65%d (5.22%) 37.76% 14.49% 19.56% (26.11%) 4.82%d
2
<PAGE>
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in 000's) ................ $129,275 $95,692 $105,569 $116,268 $141,672 $66,521 $54,880 $18,481 $23,174
Ratio of expenses to average
net assets................. 1.23% 1.29% 1.28%* 1.22% 1.24% 1.37% 1.25% 1.54% 0.90% b
Ratio of net investment
income .................... 4.09% 3.97% 4.35%* 2.87% 4.37% 5.75% 7.36% 7.25% 3.88%
to average net assets a
Portfolio Turnover........... 59.88% 65.33% 37.55%* 90.11% 61.47% 28.05% 16.24% 24.98% 12.96%
Average commission rate
paid e .................... $0.0504 _ _ _ _ _ _ _ _
</TABLE>
- ---------------------
* Annualized.
a Distributions from REIT investments generally include a return of capital.
For financial reporting purposes, through September 30, 1993, the Fund
recorded all distributions received, including the returns of capital, as
net investment income.
b The Investment Manager has reimbursed the Fund for certain expenses during
the period from the effective date until investment operations commenced.
The ratio of expenses to average net assets for the period January 4, 1989
to September 30, 1989 would otherwise have been 1.00%.
c Historically, the Fund has distributed to its shareholders amounts
approximating dividends received from the REITs. As more fully explained
in Note 2 to the Financial Statements, the Fund, for fiscal year ended
September 30, 1994, adopted an accounting pronouncement affecting the
presentation of distributions to shareholders. The financial highlights
for the period ended September 30, 1989 and for the years ended September
30, 1990 through 1993 have not been restated.
d The total return figure for the periods ended September 30, 1989 and
December 31, 1994 has not been annualized.
e Required disclosure for fiscal years beginning after September 1, 1995
pursuant to SEC regulations.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund's investment objective is to obtain high total return consistent
with reasonable risk by investing primarily in equity securities of public
companies principally engaged in the real estate business. Each investment
will be selected based upon a determination by Heitman/PRA Securities
Advisors, Inc. ("Heitman/PRA Advisors" or the "Investment Manager") that the
anticipated total return, considering both income and potential for capital
appreciation, is high relative to the risk assumed. There can be no assurance
that the Fund will achieve its objective and the Fund may not achieve as high
a total return as other investment companies that invest in a broader universe
of securities. The Fund's investment objective is a fundamental policy of the
Fund and may be changed only by the affirmative vote of the holders of a
majority of the Fund's shares.
3
<PAGE>
INVESTMENT POLICIES
The Fund seeks to achieve its objective by investing in equity securities
of public companies principally engaged in the real estate business. A
company is "principally engaged" in the real estate business if at least 50%
of the fair market value of its assets, as determined by the Investment
Manager, consists of interests in, or at least 50% of its gross income or net
profits are derived from the ownership, construction, management, financing or
sale of, residential, commercial, or industrial real estate. Equity
securities in which the Fund may invest are limited to common and preferred
stocks, convertible bonds and convertible preferred stocks and warrants. All
equity securities in which the Fund invests will be listed on a U.S. national
securities exchange or traded in the over-the-counter market.
Total return is composed of current income and capital appreciation.
Under normal circumstances, the Fund will seek to maintain a balanced
portfolio of securities which are income producing and securities which offer
potential for capital appreciation.
Under normal conditions at least 65% of the Fund's assets will be
invested in the equity securities of companies, a majority of whose assets are
represented by the ownership of real property, including leasehold interests.
Such companies may include equity, mortgage and hybrid real estate investment
trusts ("REITs") and other companies with substantial real estate holdings.
Although not an investment policy of the Fund, it is anticipated that under
normal circumstances approximately 60% to 90% of the Fund's assets will be
invested in REITs and that a majority of the Fund's REIT investments will
consist of equity securities of equity and hybrid REITs.
The Fund may invest up to 35% of its total assets in equity securities of
companies not principally engaged in the real estate business (as defined
above) but nonetheless engaged in businesses related thereto. These companies
may include manufacturers and distributors of building supplies, financial
institutions which make or service mortgages, and companies whose real estate
assets are substantial relative to the companies' stock market valuations,
such as retailers, railroads and paper and forest products companies.
REAL ESTATE INVESTMENT TRUSTS
A REIT is a corporation or business trust (that would otherwise be taxed
as a corporation) which meets the definitional requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). The Code permits a qualifying
REIT to deduct the dividends paid, thereby effectively eliminating corporate
level federal income tax and making the REIT a pass-through vehicle for
federal income tax purposes. To meet the definitional requirements of the
Code, a REIT must, among other things: invest substantially all of its assets
in interests in real estate (including mortgages and other REITs), cash and
government securities; derive most of its income from rents from real property
or interest on loans secured by mortgages on real property; and distribute
annually 95% or more of its otherwise taxable income to shareholders.
REITs are sometimes informally characterized as equity REITs, mortgage
REITs and hybrid REITs. An equity REIT invests primarily in the fee ownership
or leasehold ownership of land and buildings; a mortgage REIT invests
primarily in mortgages on real property, which may secure construction,
development or long-term loans; and a hybrid REIT invests in both real estate
equities and mortgages.
4
<PAGE>
SHORT-TERM CASH MANAGEMENT AND TEMPORARY DEFENSIVE POLICIES
For liquidity or temporary defensive purposes, the Fund may invest in
money market mutual funds and in the following short-term debt securities
(securities with remaining maturities of less than one year): high grade
corporate debt securities, including commercial paper, notes, bonds and
debentures; certificates of deposit, bankers' acceptances and time deposits;
debt obligations of the U.S. Government including U.S. Treasury bills, bonds
and notes and obligations issued or guaranteed as to principal and interest by
the U.S. Government, its agencies and instrumentalities; and repurchase
agreements that are fully collateralized by U.S. Government obligations,
including repurchase agreements that mature in more than seven days. The Fund
may invest up to 10% of its assets in such short-term securities on a regular
basis to maintain liquidity for purposes of redeeming shares and meeting other
cash obligations of the Fund. When the Investment Manager believes that
financial conditions warrant, it may invest all or any portion of the Fund's
assets in such securities for temporary defensive purposes. The Fund may not
invest more than 25% of its assets in securities or obligations issued by
banks. When the assets of the Fund are invested in short-term securities, the
Fund will not be invested in a manner consistent with achieving its investment
objective.
Repurchase agreements involve transactions by which an investor (such as
the Fund) purchases a security and simultaneously obtains the commitment of
the seller (a bank or broker-dealer) to repurchase the security at an agreed-
upon price on an agreed-upon date within a number of days (usually not more
than seven) from the date of purchase. The Fund may enter into repurchase
agreements with banks or primary dealers of U.S. Government securities,
provided the Fund's custodian always has possession of the securities serving
as collateral whose market value at least equals the amount of the
institution's repurchase obligation. The resale price reflects the purchase
price plus an agreed-upon market rate of interest which is unrelated to the
coupon rate or maturity of the purchased security. A repurchase transaction
involves the obligation of the seller to pay the agreed-upon price, which
obligation is in effect secured by the value of the underlying security. The
holder of a repurchase agreement bears the risk that the issuer thereof will
be unable to meet its repurchase obligation when due; however, since the
repurchase agreement is in effect fully collateralized by the underlying
security, the risk of loss on such an instrument is minimal. Repurchase
agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. In the event of a
bankruptcy or other default by the seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying security and could
experience losses, including: (i) the possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its
rights thereto; (ii) possible subnormal levels of income and lack of access to
income during this period; and (iii) expenses of enforcing its rights.
5
<PAGE>
COMPANIES WITH LIMITED OPERATING HISTORIES
The Fund's portfolio may include securities of companies which have
limited operating histories and may not yet be profitable. The investments in
such companies offer opportunities for capital gains, but entail significant
risks including, but not limited to, the volatility of the stock price and the
viability of the firms' operations. The Fund will not invest in companies
which together with predecessors have operating histories of less than three
(3) years if immediately thereafter and as a result of such investment the
value of the Fund's holdings of such securities (other than securities of
REITs) exceeds 5% of the value of the Fund's total assets. Although not an
investment policy of the Fund, it is anticipated that under normal
circumstances, approximately 10% to 15% of the REITs in which the Fund invests
will have operating histories of less than three years.
BORROWING
The Fund is authorized to borrow an amount not to exceed 33% of the value
of its total assets (including the amount borrowed) for temporary
administrative purposes, and to pledge all or any portion of its assets in
connection with such borrowings. Such borrowings may be used for ongoing cash
needs of the Fund including the payment of redemptions, dividends and other
administrative and operating expenses. The Fund may not borrow for the
purpose of leveraging its investment portfolio. The Fund may not purchase
additional securities while outstanding borrowings exceed 5% of the value of
its total assets.
PORTFOLIO TURNOVER
The Fund does not intend to use short-term trading as a primary means of
achieving its investment objective. The Fund, however, does expect to engage
in portfolio trading when considered appropriate. Although the Fund cannot
accurately predict its annual portfolio turnover rate, it is not expected to
exceed 75%. A 75% turnover rate would occur, for example, if the lesser of
the value of purchases or sales of portfolio securities for a year (excluding
all securities whose maturities at acquisition were one year or less) were
equal to 75% of the average monthly value of the securities held by the Fund
during such year. Higher portfolio turnover rates will increase aggregate
brokerage commission expenses which must be borne directly by the Fund and
ultimately by the Fund's shareholders.
LENDING OF PORTFOLIO SECURITIES
From time to time, the Fund may lend portfolio securities to broker-
dealers for the purpose of realizing additional income. The total amount of
all such loans outstanding will not exceed 33% of the Fund's total assets.
Loans of portfolio securities will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Although each loan
transaction must be fully collateralized at all times, it will involve some
risk to the Fund if the party borrowing the securities should default on its
obligation and the Fund is delayed in or prevented from recovering the
collateral. Securities loaned by the Fund will remain subject to fluctuations
of market value.
6
<PAGE>
RISK FACTORS
The Fund is not intended to constitute a complete investment program.
Under normal circumstances, at least 65% of the Fund's assets will be invested
in the equity securities of companies principally engaged in the real estate
industry. Because the Fund will be concentrated in this industry, the Fund
may be subject to the risks associated with the direct ownership of real
estate. For example, real estate values may fluctuate as a result of general
and local economic conditions, overbuilding and increased competition,
increases in property taxes and operating expenses, changes in zoning laws,
casualty or condemnation losses, regulatory limitations on rents, changes in
neighborhood values, changes in the appeal of properties to tenants, and
increases in interest rates. The value of securities of companies which
service the real estate business sector may also be affected by such risks.
Thus, the value of the Fund's shares may change at different rates compared to
the value of shares of a mutual fund with investments in many industries.
Because the Fund may invest a substantial portion of its assets in REITs,
the Fund may also be subject to certain risks associated with direct
investments in REITs. REITs may be affected by changes in the value of their
underlying properties and by defaults by borrowers or tenants. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in financing a
limited number of projects. REITs depend generally on their ability to
generate cash flow to make distributions to shareholders, and certain REITs
have self-liquidation provisions by which mortgages held may be paid in full
and distributions of capital returns may be made at any time. In addition,
the performance of a REIT may be affected by its failure to qualify for tax-
free pass-through of income under the Code or its failure to maintain
exemption from registration under the Investment Company Act of 1940 (the
"1940 Act").
Although an investment in the Fund is not without risk, the Fund follows
certain polices in managing its investments which may help to reduce these
risks. Set forth below are the more significant investment restrictions:
1. The Fund may not purchase a security if, as a result: (a) with respect
to 75% of its total assets, (i) more than 5% of its total assets would be
invested in the securities of any single issuer or (ii) the Fund would
own more than
10% of the voting securities of any single issuer; and (b) more than 5%
of its net assets would be invested in the securities of companies (other
than REITs) which together with their predecessors have been in
continuous operation for less than three years. These limitations do not
apply to investments in U.S. Government securities.
2. The Fund may borrow money solely for temporary administrative purposes
but not in an amount exceeding 33% of its total assets (including the
amount borrowed). The Fund may not borrow for the purpose of leveraging
its investment portfolio. The Fund may not purchase additional
securities while outstanding borrowings exceed 5% of the value of its
assets.
3. The Fund may temporarily lend its portfolio securities to broker-dealers
but only when the loans are fully collateralized. The Fund will limit
these loans to 33% of its total assets.
7
<PAGE>
4. The Fund may not invest more than 10% of its net assets in illiquid
securities, including securities restricted as to resale, repurchase
agreements extending for more than seven days and other securities which
are not readily marketable.
These investment restrictions may not be changed without shareholder
approval, except that the restriction in paragraph 1(b) may be changed by the
Board without shareholder approval. For a complete listing of the Fund's
fundamental investment restrictions, see the section entitled "Additional
Information Regarding Investment Policies and Limitations" in the Statement of
Additional Information.
MANAGEMENT OF THE FUND
The Board of Trustees is responsible for the overall supervision of the
business and affairs of the Fund and has approved contracts with certain
organizations to provide day-to-day management of the Fund.
The Fund has entered into an Investment Management Agreement with
Heitman/PRA Advisors to furnish investment services to the Fund. The
Investment Manager directs the investments of the Fund in accordance with the
Fund's investment objective and policies subject to supervision by the Board
of Trustees. Specifically, the Investment Manager is responsible for
performing the following services: (a) furnishing continuously an investment
program for the Fund and (b) determining which investments should be
purchased, held, sold or exchanged by the Fund and what portion, if any, of
the Fund's assets should be held uninvested. In connection with the
management of the investment and reinvestment of the Fund's assets, the
Investment Manager is authorized to select brokers or dealers to execute
purchase and sale transactions for the Fund. In addition, the Investment
Manager manages, supervises and conducts such other affairs and business of
the Fund as the Trust and the Investment Manager may determine from time to
time. For these services, the Fund pays Heitman/PRA Advisors a fee,
calculated daily and paid monthly in arrears, at the annual rate of 0.75% of
the Fund's first $100 million of average daily net assets plus 0.65% of the
average daily net assets of the Fund in excess of $100 million. The
Investment Manager has agreed that if the total expenses of the Fund
(exclusive of interest, taxes, brokerage expenses and extraordinary items) for
any fiscal year of the Fund exceed (i) 1.75% of the first $50 million of the
Fund's average net assets, and (ii) 1.50% of the Fund's average net assets in
excess of $50 million, the Investment Manager will pay or reimburse the Fund
for that excess up to the amount of its advisory fee payable with respect to
the Fund during that fiscal year. The fee paid by the Fund, although higher
than the investment advisory fees paid by most other mutual funds, is
comparable to the fees paid for similar services by many funds with similar
investment objectives and policies. In 1996, the Fund paid 0.72% of the
Fund's average daily net assets to the Investment Manager.
Heitman/PRA Advisors is a corporation organized on November 14, 1994
under the laws of Illinois to provide investment advice and discretionary
management primarily with respect to investment in publicly traded securities
of issuers principally engaged in the real estate business. The address of
Heitman/PRA Advisors is 180 North LaSalle Street, Suite 3600, Chicago,
Illinois 60601. Dean A. Sotter, President and Chief Financial Officer of the
Trust, Timothy J. Pire, Assistant Secretary of the Trust and Randall E.
Newsome, Assistant Secretary of the Trust are primarily responsible for
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monitoring the day-to-day investment activity of the Fund. Messrs. Sotter,
Pire and Newsome have extensive experience in direct real estate analysis,
securities research and portfolio management of publicly traded real estate
securities. Mr. Sotter is President of Heitman/PRA Advisors with overall
responsibility for portfolio management and marketing. Prior to joining
Heitman/PRA Advisors, Mr. Sotter was a Partner of PRA Securities Advisors,
L.P. He was a Portfolio Manager and Vice President of JMB Institutional
Realty Corporation from 1985-1992, where his responsibilities included
property level analysis, budgeting and valuation as well as financial
reporting and client communications. Mr. Pire is Vice President of
Heitman/PRA Advisors whose responsibilities include portfolio management,
investigation and analysis of publicly traded real estate securities and
implementation of the investment strategy through portfolio management. Prior
to joining Heitman/PRA Advisors, Mr. Pire served as Research Analyst with PRA
Securities Advisors, L.P., and he was an Associate Appraiser with Lyon, Skelte
& Speirs in Seattle, Washington from 1990-1992 where he was involved in
valuation of commercial real estate and writing full narrative appraisals.
Mr. Newsome is Vice President of Heitman/PRA Advisors whose responsibilities
include portfolio management, investigation and analysis of publicly traded
real estate securities and implementation of the investment strategy through
portfolio management. Mr. Newsome also oversees Heitman/PRA Advisors' trading
positions. Prior to joining Heitman/PRA Advisors, Mr. Newsome served as
Research Analyst with PRA Securities Advisors, L.P. and he was Vice President
with The Stratus Corporation in Chicago, Illinois from 1989-1993 where he was
responsible for property management, leasing and construction management.
Heitman/PRA Advisors is a wholly owned subsidiary of Heitman Financial
Ltd. ("Heitman") which is a wholly owned subsidiary of United Asset Management
Corporation ("UAM"). Affiliates of Heitman and UAM serve as investment
advisers and managers to funds, other collective investment vehicles and
separate accounts established for investment in real estate by pension and
profit sharing trusts, corporations, endowments, foundations and other tax-
exempt institutional investors. As of December 31, 1996, affiliates of
Heitman and UAM had gross assets under management totaling over $171 billion.
Since its inception in 1989 through January 1995, the Fund was advised by
PRA Securities Advisors, L.P. The general partner of PRA Securities Advisors,
L.P. was JMB Institutional Securities Corporation whose assets were acquired
by Heitman in January, 1995.
From time to time, Heitman/PRA Advisors may, without prior notice to
shareholders, voluntarily waive all or a portion of its fees payable by the
Fund. This would have the effect of lowering the overall expense ratio of the
Fund, and of increasing the yield or return to investors while the fee waiver
is in effect. Any such waiver in effect from time to time may be terminated
without prior notice to shareholders.
The Fund has also entered into contracts with Rodney Square Management
Corporation ("Rodney Square"), Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, and Rodney Square Distributors, Inc. ("RSD"),
Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-0001,
pursuant to which Rodney Square provides administrative, accounting and
transfer agency services to the Fund and RSD provides distribution services to
the Fund. Both Rodney Square and RSD are wholly owned subsidiaries of
Wilmington Trust Company ("WTC"), a Delaware-chartered banking institution and
the Trust's Custodian. For administrative services the Fund pays Rodney
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Square a fee, calculated daily and paid monthly in arrears, at the annual rate
of .10% of the Fund's average daily net assets of each class of the Fund,
subject to a minimum fee of $25,000 per class. For accounting services the
Fund pays Rodney Square an annual fee of $75,000 plus an amount equal to .02%
of that portion of the Fund's average daily net assets in excess of $100
million.
Among the services provided by Rodney Square are the following: the
coordination and monitoring of any third parties furnishing services to the
Fund; providing the necessary office space, equipment and personnel to perform
administrative and clerical functions for the Fund; preparing, filing and
distributing proxy materials and periodic reports to shareholders; preparation
and filing of registration statements and other documents or reports required
by federal, state and other laws; preparation and maintenance of financial
records of the Fund; and determination of net asset values and dividends for
the Fund.
The Investment Manager and ACG Capital Corporation ("ACG"), which is the
distributor of the Advisor Class shares, have entered into a marketing
services agreement with respect to the sale of certain Institutional Class
shares. Under the marketing services agreement, the Investment Manager will
pay ACG additional compensation in the amount of .25 of 1% of the net asset
value of the Fund represented by Institutional Class shares purchased by
investors introduced to the Investment Manager by ACG. In addition, the
Investment Manager has agreed to make certain continuing payments to ACG in
the event that the marketing services agreement is terminated (as long as ACG
remains registered as a broker/dealer). However, if the Investment Manager
terminates the agreement for "cause" or if ACG terminates its distribution
agreement with the Trust, ACG is not entitled to such continuing payments.
Finally, the agreement provides that ACG will not serve as a distributor of
any other open-end registered investment company that invests primarily in
shares of REITs (subject to a limited exception) and that the Investment
Manager will not offer, sponsor, advise or otherwise promote any open-end
registered investment company for which ACG is not the distributor, subject to
certain exceptions.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of a class of the Fund's shares is
determined by dividing the current value of the Fund's net assets attributable
to that class of shares, by the number of outstanding shares of that class.
The Fund calculates net asset value as of the close of regular trading hours
of each business day the New York Stock Exchange (the "NYSE") is open. The
NYSE is currently closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Generally, the Fund's investments are valued at market value or, in the
absence of a market value, in such manner as the Trustees in good faith deem
appropriate to reflect the investment's fair value. In determining fair
value, the Trustees may employ an independent pricing service. For further
information concerning the Fund's procedures for valuing its assets, see the
section entitled "Valuation of Shares" in the Statement of Additional
Information.
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INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
It is the policy of the Fund to declare and distribute dividends
consisting of substantially all of the Fund's net investment income quarterly
and to declare and distribute dividends of net short-term capital gains, if
any, annually. Net capital gains (the excess of net long-term capital gains
over net short-term capital losses) will be declared and distributed annually.
The Fund intends to make such additional distributions as deemed to be
necessary to avoid the imposition of any federal excise tax. The Fund has
historically and intends to make distributions which represent return of
capital to its shareholders.
Any income, dividend or capital gains distribution paid shortly after a
purchase of shares will reduce the net asset value per share of the Fund by
the amount of the distribution and such distributions are subject to taxes.
Dividends and distributions will be automatically reinvested in
additional shares of the Fund, without charge, at net asset value, unless the
shareholder chooses one of the following options:
x Automatic reinvestment of dividends in shares of the Fund, and
payment of capital gains distributions in cash;
x Automatic reinvestment of capital gains distributions in shares of
the Fund, and payment of dividends in cash; or
x All dividends and capital gains distributions paid in cash.
Options for the receipt of dividends and distributions may be changed at
any time by writing to the Trust, c/o Rodney Square Management Corporation,
P.O. Box 8987, Wilmington, DE 19899-9752.
Checks which are sent to shareholders who have requested dividends and/or
capital gains distributions to be paid in cash and which are subsequently
returned by the United States Postal Service as not deliverable or which
remain uncashed for six months or more will be invested in the shareholder's
account at the then current net asset value. Further, subsequent dividends
and distributions will be automatically reinvested in the shareholder's
account.
TAX STATUS
The Fund intends to continue to qualify and elect to be treated each
taxable year as a "regulated investment company" under subchapter M of the
Code. Accordingly, the Fund will not be liable for federal income taxes to
the extent its net investment income and capital gains net income (excess of
capital gains over capital losses) are distributed to shareholders, provided
that at least 90% of its net investment income and net short-term capital
gains for the taxable year are distributed. Dividends from net investment
income and distributions of net short-term capital gains are taxable to
shareholders as ordinary income for federal income tax purposes, whether
received in cash or invested in additional shares of the Fund. Distributions
of net capital gains are taxable to shareholders as long-term capital gains,
whether paid in cash or reinvested in additional shares, and regardless of the
length of time the investor has held his shares of the Fund.
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<PAGE>
A small portion of the dividends paid by the Fund to corporate
shareholders may qualify for the 70% dividends received deduction available to
corporations; dividends that are attributable to distributions made by a REIT
to the Fund will not qualify. Capital gains distributions paid by the Fund do
not qualify for this deduction. The Fund will notify shareholders each year
of the amount of the dividends qualifying for such deduction.
The Fund is subject to a nondeductible 4% excise tax calculated as a
percentage of certain undistributed amounts of taxable ordinary income and
capital gain net income. The Fund intends to make such additional
distributions of taxable ordinary income and capital gain net income as may be
necessary to avoid this excise tax.
The distributions received by the Fund from its investments may, for
federal income tax purposes, consist of ordinary income, long-term capital
gains, or a return of capital. The characterization of these distributions to
the Fund may, in turn, affect the tax treatment of the Fund's distributions to
its shareholders. Statements as to the tax status of each shareholder's
dividends and distributions are mailed annually by the Fund. Shareholders may
wish to consult their tax advisers about any state and local taxes that may
apply to payments received and, in particular, to determine whether dividends
paid by the Fund that represent interest derived from U.S. Government
securities are exempt from any applicable state or local income taxes.
Shareholders of the Fund should also be aware that, because the share
price of the Fund will fluctuate, redemptions of shares of the Fund will
generally result in the realization of capital gains or losses.
PURCHASE OF SHARES
Institutional Class shares of the Fund may be purchased directly from
RSD, the Distributor of the Institutional Class shares, at the net asset value
next determined after receipt of the order by the Transfer Agent, Rodney
Square, and after acceptance by RSD. There is no sales load in connection
with the purchase of Institutional Class shares. The Trust and RSD each
reserve the right to reject any purchase order and to suspend the offering of
Institutional Class shares of the Fund. The minimum initial investment is
$250,000, except that institutions purchasing shares of the Fund on behalf of
accounts maintained by the institution may aggregate such accounts to satisfy
the minimum initial investment requirement. Shareholders purchasing shares
after May 15, 1995 are required to maintain $250,000 in their account, and the
Fund may involuntarily redeem any account which, as a result of redemptions,
falls and remains below $250,000 for a period of 60 days after notice is
mailed to the applicable shareholder. Subsequent investments will be accepted
in any amount. The Trust reserves the right to vary the initial investment
minimum and institute minimums for additional investments at any time. In
addition, the Investment Manager may waive the minimum initial investment
requirement for any investor. It is anticipated that the minimum initial
investment amount will be waived for the following investors, among others:
Trustees and officers of the Trust; officers and employees of Heitman and each
of its subsidiaries (including Heitman/PRA Advisors); and officers and
employees of ACG Capital Corporation, Advisory Consulting Group, Inc., Rodney
Square and RSD.
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The Trust has agreed to pay certain registered investment advisers and
other service organizations that have entered into shareholder servicing
agreements with the Fund and that maintain omnibus shareholder accounts with
the Fund an amount equal to the savings realized by the Fund from lower
transfer agency costs attributable to the omnibus account arrangements.
At the discretion of the Trust, investors may be permitted to purchase
shares by transferring securities to the Fund that: (i) meet the Fund's
investment objectives and policies; (ii) are acquired for investment and not
for resale; (iii) are liquid securities which are not restricted as to
transfer either by law or liquidity of market; and (iv) have a value which is
readily ascertainable (and not established only by evaluation procedures) as
evidenced by a listing on the American Stock Exchange, the NYSE, or NASDAQ.
Securities transferred to the Fund will be valued in accordance with the same
procedures used to determine the Fund's net asset value.
Purchase orders for shares of the Fund which are received by the Transfer
Agent in proper form prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m., New York time) on any day that the Fund calculates its
net asset value are priced according to the net asset value determined on that
day. Purchase orders for shares of the Fund received after the close of the
NYSE are priced as of the time the net asset value per share is next
determined. See "Determination of Net Asset Value."
The Fund may accept telephone orders from certain broker-dealers or
service organizations which have been previously approved by the Fund. It is
the responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for the same to the Fund. Shares of the
Fund may be purchased through certain broker-dealers, banks, and bank trust
departments who may charge the investor a transaction fee or other fee for
their services at the time of purchase. Such fees would not otherwise be
charged if the shares were purchased directly from the Fund.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL
Shares may be purchased initially by completing the Application
accompanying this Prospectus and mailing it to the Trust's Transfer Agent,
together with a check payable to Heitman Securities Trust, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-9752. A purchase
order sent by overnight mail should be sent to Rodney Square Management
Corporation, 1105 North Market Street, Wilmington, DE 19801. Subsequent
investments in an existing account in the Fund may be made at any time and in
any amount by sending a check payable to the Trust, c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19899-9752, and using
the deposit slip found at the bottom of each shareholder statement or along
with a letter stating the amount of the investment and the name of the account
for which the investment is to be made.
PURCHASES BY WIRE
To order shares for purchase by wire, the Transfer Agent must first be
notified by calling (800) 435-1405. Shares of the Fund may be purchased by
wiring federal funds to WTC. Following notification to the Transfer Agent,
federal funds and registration instructions should be wired through the
Federal Reserve System to:
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Wilmington Trust Company
ABA # 0311-0009-2
DDA # 2629-5416
Further credit to Heitman Real Estate Fund
Further credit (Shareholder's Name)
Fund Account Number
All investors making initial investments by wire must promptly complete
the Application accompanying this Prospectus and forward it to the Transfer
Agent. Redemptions will not be processed until the Application has been
received by the Transfer Agent.
AUTOMATIC INVESTMENT PLAN
After the initial purchase, shareholders may purchase additional Fund
shares through an Automatic Investment Plan. Under the Plan, the Transfer
Agent will automatically debit a shareholder's bank checking account on a
monthly basis in an amount of $50 or more (subsequent to the $250,000 minimum
initial investment), as specified by the shareholder. The purchase of Fund
shares will be effected at their offering price at the close of regular
trading hours on the NYSE (currently 4:00 p.m., Eastern time) on or about the
20th day of the month. For further details about this service check the box
on the Application Form or call (800) 435-1405. This service may also not be
available for Service Organization clients who are provided similar services
by those organizations.
INDIVIDUAL RETIREMENT ACCOUNTS
Shares of the Fund may be purchased for tax-deferred retirement plans
such as individual retirement accounts ("IRAs"). Application forms and
brochures describing investments for IRAs can be obtained from the Transfer
Agent by calling (800) 435-1405. WTC makes available its services as an IRA
custodian for each shareholder account that is established as an IRA. For
these services, WTC receives an annual fee of $10.00 per account, which fee is
paid directly to WTC by the IRA shareholder. If the fee is not paid by the
date due, shares of the Fund owned by the IRA will be redeemed automatically
for purposes of making the payment.
REDEMPTIONS
Shareholders may redeem their shares of the Fund without charge on any
day that the Fund calculates its per share net asset value (see "Determination
of Net Asset Value"). Redemptions will be effective at the net asset value
per share next determined after the receipt by the Transfer Agent of a
redemption request meeting the requirements described below. Except under
certain emergency conditions, your redemption payment will be sent to you
within seven (7) days after receipt of your telephone or written redemption
request, in proper form, by the Transfer Agent. If your redemption request is
made with respect to shares purchased by check within ten (10) days of the
purchase date, the redemption payment will be held until the check has been
collected (which usually takes up to ten (10) days), although the shares
redeemed will be priced for redemption upon receipt of your redemption request
in proper form. You can avoid the inconvenience of this delay by purchasing
shares with a certified treasurer's or cashier's check, or with a federal
funds or bank wire.
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Except as noted below, redemption requests received in proper form by the
Transfer Agent prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m., New York time) on any business day that the Fund
calculates its per share net asset value are effective that day and the shares
redeemed earn dividends declared through the day of redemption.
Redemption requests received after the close of the NYSE are effective as
of the time the net asset value per share is next determined. No redemption
will be processed until the Transfer Agent has received a completed
Application with respect to the account.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Investment
Manager or the Trustees, result in the necessity of the Fund selling assets
under disadvantageous conditions and to the detriment of the remaining
shareholders of the Fund. The Fund may distribute readily marketable
securities from the Fund's portfolio in-kind in satisfaction or partial
satisfaction of the amount payable on redemption of shares in conformity with
applicable Securities and Exchange Commission ("SEC") rules and valued in the
same way as such securities would be valued for purposes of computing net
asset value of the Fund. In the event that an in-kind distribution is made, a
shareholder may incur additional expenses, such as the payment of brokerage
commissions, on the sale or other disposition of the securities received from
the Fund. In-kind payments need not constitute a cross-section of the Fund's
portfolio. The Fund has elected, however, to be governed by Rule 18f-1 under
the 1940 Act, as a result of which the Fund is obligated to redeem shares
solely in cash if redemption requests made by a shareholder account during any
90-day period do not exceed the lesser of $250,000 or 1% of the net assets of
the Fund at the beginning of such 90-day period. This election is irrevocable
unless the SEC permits its withdrawal.
Redemption proceeds in cash or in-kind will be remitted to a redeeming
shareholder by check payable, or securities transferred, only to the redeeming
shareholder or such shareholder's designated representative and only to the
shareholder's address, or that of the shareholder's designated representative,
on the books of the Fund. A shareholder may request that redemption proceeds
be wired directly to the shareholder's account at any commercial bank in the
United States. The redemption proceeds must be paid to the same bank and
account as designated on the application or in written instructions
subsequently received by the Transfer Agent.
Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to
the Transfer Agent at P.O. Box 8987, Wilmington, DE 19899-9752. A redemption
request sent by overnight mail should be sent to the Transfer Agent, 1105
North Market Street, Wilmington, DE 19801.
A written redemption request to the Transfer Agent must (i) identify the
shareholder's account name, (ii) state the number of shares to be redeemed,
and (iii) be signed by each registered owner exactly as the shares are
registered. If the shares to be redeemed were issued in certificate form, the
certificates must be endorsed for transfer (or be accompanied by an endorsed
stock power) and must be submitted to the Transfer Agent together with the
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<PAGE>
redemption request. A redemption request for any amount, if the proceeds are
to be sent elsewhere than the address of record, must be accompanied by
signature guarantee(s). The guarantor of a signature must be an eligible
institution acceptable to the Fund's Transfer Agent, such as a bank, broker,
dealer, municipal securities dealer, government securities dealer, credit
union, national securities exchange, registered securities association,
clearing agency, or savings association. The Trust may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees and guardians. A redemption request will not be
deemed to be properly received until the Transfer Agent receives all required
documents in proper form. Questions with respect to the proper form for
redemption requests should be directed to the Transfer Agent at (800) 435-
1405.
REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the Application, or have
subsequently arranged in writing to do so, may redeem shares by instructing
the Transfer Agent by telephone. In order to arrange for redemption by wire
or telephone after an account has been opened or to change the bank or account
designated to receive redemption proceeds, a written request must be sent to
the Transfer Agent at the address listed above. Such requests must be signed
by the shareholder, with signatures guaranteed (see "Redemption by Mail" above
for details regarding signature guarantees). Further documentation may be
requested from corporations, executors, administrators, trustees or guardians.
The Trust reserves the right to refuse a wire or telephone redemption if
it is believed advisable to do so. Procedures for redeeming Fund shares by
wire or telephone may be modified or terminated at any time by the Trust.
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares with a value of $10,000 or more may
participate in the Systematic Withdrawal Plan. Under the Plan, shareholders
may automatically redeem a portion of their Fund shares monthly, bimonthly,
quarterly, semiannually or annually. The minimum withdrawal available is
$100. The redemption of Fund shares will be effected at their net asset value
at the close of the NYSE on or about the 25th day of the month at the
frequency selected by the shareholder. If you expect to purchase additional
Fund shares, it may not be to your advantage to participate in the Systematic
Withdrawal Plan because contemporary purchases and redemption may result in
adverse tax consequences. This service may also not be available for Service
Organization clients who are provided similar services by those organizations.
For further details about this service, see the Application or call the
Transfer Agent at (800) 435-1405.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective investors, the Fund may provide yield and average annual total
return information, and the Fund may compare its performance, either in terms
of its total return or its yield, total return or ranking, to that of other
mutual funds with similar investment objectives and to other relevant indices.
The Fund may also include its rating as published by mutual fund statistical
services or major financial publications. For example, the Fund may compare
its performance to rankings prepared by Lipper Analytical Services, Inc., a
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<PAGE>
widely recognized independent service which monitors the performance of mutual
funds, or to other indices as appropriately determined. Total return and
yield information may be useful in reviewing the Fund's performance and for
providing a basis for comparison with other investment alternatives. However,
since the performance of the Fund changes in response to fluctuations in
market conditions and Fund expenses, no performance quotation should be
considered a representation as to the Fund's performance for any future
period. The Fund's Annual Report to Shareholders will contain detailed
information with respect to the performance of the Fund. The Annual Report
will be made available free of charge to prospective investors upon request.
The yield of the Fund refers to the income generated by an investment in
the Fund over a specified one month period identified in the advertisement and
is computed by dividing the net investment income per share earned for a
specified one month period by the net asset value at the end of the month and
expressing the result as an annualized percentage. In computing net
investment income all recurring charges are recognized.
The Fund's average annual total return generally measures the average
annual percentage growth in the dollar value of an investor's account over a
specified period, based on a hypothetical $1,000 initial investment in the
Fund and assuming the reinvestment of all dividends and distributions. The
Fund may also utilize a total return computed in the same manner but for
differing periods and without annualizing the total return. The Fund may show
total return broken down into its components of investment gain (or loss) and
total income (or distribution).
ADDITIONAL INFORMATION
ORGANIZATION, CAPITALIZATION AND VOTING
Heitman Securities Trust is organized as a Massachusetts business trust
on September 15, 1988, as Amended and Restated on February 28, 1995 and
operates under a Master Trust Agreement which was amended and restated on
February 28, 1995 (the "Master Trust Agreement"). The Trust is registered
with the SEC as an open-end diversified management investment company.
Under Massachusetts law and pursuant to the Master Trust Agreement, the
Trust is authorized to issue an unlimited number of shares of beneficial
interest in separate series, with shares of each series representing interests
in a separate portfolio of assets and operating as a separate distinct fund.
In addition, the Trust is authorized to issue an unlimited number of classes
of shares of beneficial interest in the Fund. To date, the Trust has
established one series, the Heitman Real Estate Fund with two classes of
shares, designated as the Heitman/PRA Institutional Class and the Advisor
Class. Each Fund share represents an equal proportionate interest in the
Fund, has a par value of $.001 per share, and is entitled to such dividends
and distributions earned on the assets belonging to the Fund as may be
declared by the Board of Trustees. Shares of the Fund are fully paid and non-
assessable by the Trust and have no preemptive or conversion rights. As of
April 1, 1997, the United Nations owned by virtue of shared or sole voting or
investment power on behalf of its underlying account 26.01% of the Heitman/PRA
Institutional Class shares, which represents 16.49% of all outstanding shares
of the Fund.
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The Trust is not required to hold annual shareholder meetings. However,
special meetings may be called for purposes such as electing or removing
Trustees, changing fundamental investment policies or approving certain
contracts. Shareholders holding an aggregate of at least 10% of the
outstanding shares of the Fund may request a meeting of shareholders at any
time for the purpose of voting to remove one or more of the Trustees, and the
Trust will assist shareholders in communicating with other shareholders in
connection with such a meeting. At any meeting of shareholders, each share
shall entitle the holder thereof to one vote.
Certificates for Fund shares are issued only upon specific written
request to the Fund's Transfer Agent. However, within five business days from
the date of completion of each purchase or redemption transaction in an
account, the Transfer Agent will mail to the shareholder a confirmation
statement which will indicate the number of shares involved and the balance of
shares held in the account. The Trust also sends annual statements to each
shareholder indicating the status of the shareholder's account. In addition,
shareholders will receive annual financial and semi-annual statements of the
Trust. Quarterly financial statements of the Trust are available upon
request. The Trust reserves the right to eliminate duplicate mailings of such
statements and other materials to shareholders who reside at the same address.
CUSTODIAN, TRANSFER AGENT, DISTRIBUTOR AND INDEPENDENT ACCOUNTANTS
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001 (the "Custodian") serves as Custodian of the
Fund's assets. The Custodian acts as the depository for the Fund, safekeeps
its portfolio securities, collects all income and other payments with respect
to portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties.
Rodney Square Management Corporation, P.O. Box 8987, Wilmington, Delaware
19899-9752 serves as the Fund's Transfer Agent. As Transfer Agent, it
maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of the
Fund's shares, acts as dividend and distribution disbursing agent and performs
all shareholder service functions. All shareholder inquiries with respect to
these services should be directed to Rodney Square at (800) 435-1405.
Rodney Square Distributors, Inc., Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001 serves as the Distributor with
responsibility for distributing the Institutional Class shares. Applicable
banking laws prohibit deposit-taking institutions from underwriting or
distributing securities. WTC and its affiliates
believe and have been advised by their counsel that they may perform the
services contemplated by their respective agreements with the Trust without
violation of applicable banking laws or regulations. If WTC or its affiliates
were prohibited from performing these services, it is expected that the
Trust's Board of Trustees would consider entering into agreements with other
entities.
Price Waterhouse LLP currently serves as the Fund's independent
accountants with responsibility for auditing the Fund's annual financial
statements.
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ADDITIONAL INFORMATION
Additional information regarding the Fund and the Trust may be obtained
from the Trust at the address and telephone number listed on the cover of this
Prospectus.
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INVESTMENT ADVISOR
Heitman/PRA Securities Advisors, Inc.
180 North LaSalle Street, Suite 3600
Chicago, IL 60601
OFFICERS
William L. Ramseyer, Chief Executive Officer
Dean A. Sotter, President and Treasurer
Timothy J. Pire, Assistant Secretary
Randall E. Newsome, Assistant Secretary
Laurie V. Brooks, Assistant Secretary
John J. Kelley, Assistant Treasurer
------------------------
BOARD OF TRUSTEES HEITMAN REAL ESTATE FUND
Robert W. Beeney ------------------------
Donald L. Foote
John F. Goydas
William L. Ramseyer
Maurice Wiener
DISTRIBUTOR HEITMAN/PRA
Rodney Square Distributors, Inc. INSTITUTIONAL
Rodney Square North CLASS
1100 North Market Street PROSPECTUS
Wilmington, DE 19890
CUSTODIAN May 1, 1997
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
TRANSFER AGENT AND ADMINISTRATOR
Rodney Square Management Corporation
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
TRUST HEADQUARTERS
180 North LaSalle Street, Suite 3600
Chicago, IL 60601
(800) 435-1405
269236.c2
4/18/96 7:40
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HEITMAN REAL ESTATE FUND
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ADVISOR CLASS
Heitman Securities Trust (the "Trust") is a series mutual fund which
currently consists of one investment portfolio, the Heitman Real Estate Fund
(the "Fund"). The Fund's investment objective is to obtain high total return
consistent with reasonable risk by investing primarily in equity securities of
public companies principally engaged in the real estate business. Each
investment is selected based upon a determination by the Fund's investment
manager that the anticipated total return, considering both income and
potential for capital appreciation, is high relative to the risk assumed.
The Fund offers two classes of shares. The shares offered by this
Prospectus are the Advisor Class of shares, which are available to
shareholders with a minimum initial investment of $5,000. In addition, the
Fund offers by separate Prospectus the Heitman/PRA Institutional Class of
shares, which are available for purchase in initial aggregate amounts of
$250,000 or more.
This Prospectus contains a concise summary of information regarding the
Fund that a prospective investor should know before investing. Investors
should read this Prospectus carefully and retain it for future reference.
Additional information regarding the Fund is contained in a Statement of
Additional Information dated May 1, 1997, which has been filed with the
Securities and Exchange Commission and which is incorporated into this
Prospectus by reference. Additional copies of this Prospectus and the
Statement of Additional Information are available without charge upon request
to the Trust at the address or telephone number set forth on the outside cover
of this document.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
PROSPECTUS DATED MAY 1, 1997
INVESTMENT ADVISOR DISTRIBUTOR
Heitman/PRA Securities Advisors, Inc. ACG Capital Corporation
180 North LaSalle Street, Suite 3600 1661 Tice Valley Boulevard, #200
Chicago, IL 60601 Walnut Creek, CA 94595
CUSTODIAN TRANSFER AGENT AND ADMINISTRATOR
Wilmington Trust Company Rodney Square Management Corporation
Rodney Square North Rodney Square North
1100 North Market Street 1100 North Market Street
Wilmington, DE 19890-0001 Wilmington, DE 19890-0001
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TABLE OF CONTENTS
PAGE
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TRANSACTION AND EXPENSE DATA..................................... 1
FINANCIAL HIGHLIGHTS............................................. 2
INVESTMENT OBJECTIVE AND POLICIES................................ 3
RISK FACTORS..................................................... 6
MANAGEMENT OF THE FUND........................................... 7
DETERMINATION OF NET ASSET VALUE................................. 10
INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS................. 10
TAX STATUS....................................................... 11
PURCHASE OF SHARES............................................... 11
REDEMPTIONS...................................................... 17
PERFORMANCE INFORMATION.......................................... 20
ADDITIONAL INFORMATION........................................... 21
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TRANSACTION AND EXPENSE DATA
The following table sets forth the costs and expenses that an investor in
Advisor Class shares of the Fund will incur directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases 4.75%
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of average daily net assets)
Management Fees 0.75%
12b-1 Fees (1) 0.25%
Other Expenses:
Shareholder Servicing Expenses 0.25%
Other Fees and Expenses 0.48%
Total Other Expenses 0.73%
Total Fund Operating Expenses 1.73%
====
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(1) Because the 12b-1 fee is an annual fee charged against the assets of the
Fund, long-term shareholders may indirectly pay more in 12b-1 fees than
the economic equivalent of the maximum front-end sales charge permitted
under applicable rules. See "Purchase of Shares - Fees and Charges" and
"Purchase of Shares - Distribution Plan."
EXAMPLE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following
expenses on a $1,000 investment,
assuming (1) 5% annual return and
(2) redemption at the end
of each time period: $64 $99 $137 $242
Except as otherwise indicated, all information in the Transaction and
Expense Data table is based on actual expenses and average daily net assets of
the Fund for the fiscal year ended December 31, 1996. The purpose of the
table is to assist the investor in understanding the various costs and
expenses that an investor will bear directly or indirectly. The Example
provided with the Table should not be considered a representation of past or
future expenses or performance. Actual expenses may be more or less than
those shown. For further information on sales charges and shareholder
servicing fees, see "Purchase of Shares - Fees and Charges" and "Shareholder
Servicing Agreement"; for further information on 12b-1 fees, see "Purchase of
Shares - Fees and Charges" and "Purchase of Shares - Distribution Plan"; and
for further information on management fees, see "Management of the Fund."
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Institutional Class shares are available in initial aggregate amounts of
$250,000 or more. Because the sales charges and expenses vary between the
classes, performance will vary with respect to each class. Additional
information concerning the Advisor Class may be obtained by calling toll-free
1-800-888-REIT.
FINANCIAL HIGHLIGHTS
The following financial highlights for the fiscal year ended December 31,
1996 have been audited by Price Waterhouse LLP as indicated in their report
dated February 14, 1997 on the Fund's financial statements as of December 31,
1996. The financial highlights for the period May 15, 1995 through December
31, 1995 have been audited by Arthur Andersen LLP. These financial highlights
should be read in conjunction with the Fund's financial statements and notes
thereto which are found in the Statement of Additional Information
under "Financial Statements." Effective May 15, 1995, the Fund began offering
the Advisor Class shares. For further information about the performance of
the Fund, see the Fund's Annual Report, which may be obtained without charge
by contacting the Fund's Administrator.
ADVISOR CLASS SHARES
--------------------
FOR THE FISCAL FOR THE PERIOD MAY 15, 1995
YEAR ENDED (COMMENCEMENT OF OPERATIONS)
DECEMBER 31, 1996 THROUGH DECEMBER 31, 1995
----------------- ---------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.67 $ 8.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income a 0.31 0.23
Net realized and unrealized gain
on investments 2.84 0.80
Total from investment operations 3.15 1.03
DISTRIBUTIONS
From net investment income a (0.31) (0.23)
In excess of net investment income (0.12) 0.00
From net realized gain
on investments (0.41) 0.00
From tax return of capital b 0.00 (0.13)
Total distributions (0.84) (0.36)
NET ASSET VALUE, END OF PERIOD $ 10.98 $ 8.67
------- ------
Total Return c 37.44% 13.19%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) $79,805 $5,520
Ratio of expenses to average net
assets 1.73% 1.99%*d
Ratio of net investment income to
average net assets a 3.91% 4.27%*d
Portfolio Turnover 59.88% 65.33%*
Average commission rate paid e $0.0504 _
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* Annualized.
a Distributions from REIT investments generally include a return of
capital, which the Fund records as a reduction in the cost basis of its
investments.
b Historically, the Fund has distributed to its shareholders amounts
approximating distributions received from the REITs. Such distributions
may include a portion which may be a return of capital.
c This result does not include the sales charge. If the charge had been
included, the return would have been lower. The total return for the
fiscal period ended December 31, 1995 has not been annualized.
d During 1995, the Advisor has agreed to reimburse a portion of the Advisor
Shares' expenses. Without reimbursement, the expense ratio would have
been 5.34% and the ratio of net investment income to average net assets
would have been 0.92%.
e Required disclosure for fiscal years beginning after September 1, 1995
pursuant to SEC regulations.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE
The Fund's investment objective is to obtain high total return consistent
with reasonable risk by investing primarily in equity securities of public
companies principally engaged in the real estate business. Each investment
will be selected based upon a determination by Heitman/PRA Securities
Advisors, Inc. ("Heitman/PRA Advisors" or the "Investment Manager") that the
anticipated total return, considering both income and potential for capital
appreciation, is high relative to the risk assumed. There can be no assurance
that the Fund will achieve its objective and the Fund may not achieve as high
a total return as other investment companies that invest in a broader universe
of securities. The Fund's investment objective is a fundamental policy of the
Fund and may be changed only by the affirmative vote of the holders of a
majority of the Fund's shares.
INVESTMENT POLICIES
The Fund seeks to achieve its objective by investing in equity securities
of public companies principally engaged in the real estate business. A
company is "principally engaged" in the real estate business if at least 50%
of the fair market value of its assets, as determined by the Investment
Manager, consists of interests in, or at least 50% of its gross income or net
profits are derived from the ownership, construction, management, financing or
sale of, residential, commercial, or industrial real estate. Equity
securities in which the Fund may invest are limited to common and preferred
stocks, convertible bonds and convertible preferred stocks and warrants. All
equity securities in which the Fund invests will be listed on a U.S. national
securities exchange or traded in the over-the-counter market.
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Total return is composed of current income and capital appreciation.
Under normal circumstances, the Fund will seek to maintain a balanced
portfolio of securities which are income producing and securities which offer
potential for capital appreciation.
Under normal conditions at least 65% of the Fund's assets will be
invested in the equity securities of companies, a majority of whose assets are
represented by the ownership of real property, including leasehold interests.
Such companies may include equity, mortgage and hybrid real estate investment
trusts ("REITs") and other companies with substantial real estate holdings.
Although not an investment policy of the Fund, it is anticipated that under
normal circumstances approximately 60% to 90% of the Fund's assets will be
invested in REITs and that a majority of the Fund's REIT investments will
consist of equity securities of equity and hybrid REITs.
The Fund may invest up to 35% of its total assets in equity securities of
companies not principally engaged in the real estate business (as defined
above) but nonetheless engaged in businesses related thereto. These companies
may include manufacturers and distributors of building supplies, financial
institutions which make or service mortgages, and companies whose real estate
assets are substantial relative to the companies' stock market valuations,
such as retailers, railroads and paper and forest products companies.
REAL ESTATE INVESTMENT TRUSTS
A REIT is a corporation or business trust (that would otherwise be taxed
as a corporation) which meets the definitional requirements of the Internal
Revenue Code of 1986, as amended (the "Code"). The Code permits a qualifying
REIT to deduct the dividends paid, thereby effectively eliminating corporate
level federal income tax and making the REIT a pass-through vehicle for
federal income tax purposes. To meet the definitional requirements of the
Code, a REIT must, among other things: invest substantially all of its
assets in interests in real estate (including mortgages and other REITs), cash
and government securities; derive most of its income from rents from real
property or interest on loans secured by mortgages on real property; and
distribute annually 95% or more of its otherwise taxable income to
shareholders.
REITs are sometimes informally characterized as equity REITs, mortgage
REITs and hybrid REITs. An equity REIT invests primarily in the fee ownership
or leasehold ownership of land and buildings; a mortgage REIT invests
primarily in mortgages on real property, which may secure construction,
development or long-term loans; and a hybrid REIT invests in both real estate
equities and mortgages.
SHORT-TERM CASH MANAGEMENT AND TEMPORARY DEFENSIVE POLICIES
For liquidity or temporary defensive purposes, the Fund may invest in
money market mutual funds and in the following short-term debt securities
(securities with remaining maturities of less than one year): high grade
corporate debt securities, including commercial paper, notes, bonds and
debentures; certificates of deposit, bankers' acceptances and time deposits;
debt obligations of the U.S. Government including U.S. Treasury bills, bonds
and notes and obligations issued or guaranteed as to principal and interest by
the U.S. Government, its agencies and instrumentalities; and repurchase
agreements that are fully collateralized by U.S. Government obligations,
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including repurchase agreements that mature in more than seven days. The Fund
may invest up to 10% of its assets in such short-term securities on a regular
basis to maintain liquidity for purposes of redeeming shares and meeting other
cash obligations of the Fund. When the Investment Manager believes that
financial conditions warrant, it may invest all or any portion of the Fund's
assets in such securities for temporary defensive purposes. The Fund may not
invest more than 25% of its assets in securities or obligations issued by
banks. When the assets of the Fund are invested in short-term securities, the
Fund will not be invested in a manner consistent with achieving its investment
objective.
Repurchase agreements involve transactions by which an investor (such as
the Fund) purchases a security and simultaneously obtains the commitment of
the seller (a bank or broker-dealer) to repurchase the security at an agreed-
upon price on an agreed-upon date within a number of days (usually not more
than seven) from the date of purchase. The Fund may enter into repurchase
agreements with banks or primary dealers of U.S. Government securities,
provided the Fund's custodian always has possession of the securities serving
as collateral whose market value at least equals the amount of the
institution's repurchase obligation. The resale price reflects the purchase
price plus an agreed-upon market rate of interest which is unrelated to the
coupon rate or maturity of the purchased security. A repurchase transaction
involves the obligation of the seller to pay the agreed-upon price, which
obligation is in effect secured by the value of the underlying security. The
holder of a repurchase agreement bears the risk that the issuer thereof will
be unable to meet its repurchase obligation when due; however, since the
repurchase agreement is in effect fully collateralized by the underlying
security, the risk of loss on such an instrument is minimal. Repurchase
agreements may also be viewed as loans made by the Fund which are
collateralized by the securities subject to repurchase. In the event of a
bankruptcy or other default by the seller of a repurchase agreement, the Fund
could experience both delays in liquidating the underlying security and could
experience losses, including: (i) the possible decline in the value of the
underlying security during the period while the Fund seeks to enforce its
rights thereto; (ii) possible subnormal levels of income and lack of access to
income during this period; and (iii) expenses of enforcing its rights.
COMPANIES WITH LIMITED OPERATING HISTORIES
The Fund's portfolio may include securities of companies which have
limited operating histories and may not yet be profitable. The investments in
such companies offer opportunities for capital gains, but entail significant
risks including, but not limited to, the volatility of the stock price and the
viability of the firms' operations. The Fund will not invest in companies
which together with predecessors have operating histories of less than three
(3) years if immediately thereafter and as a result of such investment the
value of the Fund's holdings of such securities (other than securities of
REITs) exceeds 5% of the value of the Fund's total assets. Although not an
investment policy of the Fund, it is anticipated that under normal
circumstances, approximately 10% to 15% of the REITs in which the Fund invests
will have operating histories of less than three years.
BORROWING
The Fund is authorized to borrow an amount not to exceed 33% of the value
of its total assets (including the amount borrowed) for temporary
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administrative purposes, and to pledge all or any portion of its assets in
connection with such borrowings. Such borrowings may be used for ongoing cash
needs of the Fund including the payment of redemptions, dividends and other
administrative and operating expenses. The Fund may not borrow for the
purpose of leveraging its investment portfolio. The Fund may not purchase
additional securities while outstanding borrowings exceed 5% of the value of
its total assets.
PORTFOLIO TURNOVER
The Fund does not intend to use short-term trading as a primary means of
achieving its investment objective. The Fund, however, does expect to engage
in portfolio trading when considered appropriate. Although the Fund cannot
accurately predict its annual portfolio turnover rate, it is not expected to
exceed 75%. A 75% turnover rate would occur, for example, if the lesser of
the value of purchases or sales of portfolio securities for a year (excluding
all securities whose maturities at acquisition were one year or less) were
equal to 75% of the average monthly value of the securities held by the Fund
during such year. Higher portfolio turnover rates will increase aggregate
brokerage commission expenses which must be borne directly by the Fund and
ultimately by the Fund's shareholders.
LENDING OF PORTFOLIO SECURITIES
From time to time, the Fund may lend portfolio securities to broker-
dealers for the purpose of realizing additional income. The total amount of
all such loans outstanding will not exceed 33% of the Fund's total assets.
Loans of portfolio securities will be collateralized by cash, letters of
credit or securities issued or guaranteed by the U.S. Government or its
agencies which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. Although each loan
transaction must be fully collateralized at all times, it will involve some
risk to the Fund if the party borrowing the securities should default on its
obligation and the Fund is delayed in or prevented from recovering the
collateral. Securities loaned by the Fund will remain subject to fluctuations
of market value.
RISK FACTORS
The Fund is not intended to constitute a complete investment program.
Under normal circumstances, at least 65% of the Fund's assets will be invested
in the equity securities of companies principally engaged in the real estate
industry. Because the Fund will be concentrated in this industry, the Fund
may be subject to the risks associated with the direct ownership of real
estate. For example, real estate values may fluctuate as a result of general
and local economic conditions, overbuilding and increased competition,
increases in property taxes and operating expenses, changes in zoning laws,
casualty or condemnation losses, regulatory limitations on rents, changes in
neighborhood values, changes in the appeal of properties to tenants, and
increases in interest rates. The value of securities of companies which
service the real estate business sector may also be affected by such risks.
Thus, the value of the Fund's shares may change at different rates compared to
the value of shares of a mutual fund with investments in many industries.
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Because the Fund may invest a substantial portion of its assets in REITs,
the Fund may also be subject to certain risks associated with direct
investments in REITs. REITs may be affected by changes in the value of their
underlying properties and by defaults by borrowers or tenants. Furthermore,
REITs are dependent upon specialized management skills, have limited
diversification and are, therefore, subject to risks inherent in financing a
limited number of projects. REITs depend generally on their ability to
generate cash flow to make distributions to shareholders, and certain REITs
have self-liquidation provisions by which mortgages held may be paid in full
and distributions of capital returns may be made at any time. In addition,
the performance of a REIT may be affected by its failure to qualify for tax-
free pass-through of income under the Code or its failure to maintain
exemption from registration under the Investment Company Act of 1940 (the
"1940 Act").
Although an investment in the Fund is not without risk, the Fund follows
certain polices in managing its investments which may help to reduce these
risks. Set forth below are the more significant investment restrictions:
1. The Fund may not purchase a security if, as a result: (a) with respect
to 75% of its total assets, (i) more than 5% of its total assets would be
invested in the securities of any single issuer or (ii) the Fund would
own more than 10% of the voting securities of any single issuer; and (b)
more than 5% of its net assets would be invested in the securities of
companies (other than REITs) which together with their predecessors have
been in continuous operation for less than three years. These
limitations do not apply to investments in U.S. Government securities.
2. The Fund may borrow money solely for temporary administrative purposes
but not in an amount exceeding 33% of its total assets (including the
amount borrowed). The Fund may not borrow for the purpose of leveraging
its investment portfolio. The Fund may not purchase additional
securities while outstanding borrowings exceed 5% of the value of its
assets.
3. The Fund may temporarily lend its portfolio securities to broker-dealers
but only when the loans are fully collateralized. The Fund will limit
these loans to 33% of its total assets.
4. The Fund may not invest more than 10% of its net assets in illiquid
securities, including securities restricted as to resale, repurchase
agreements extending for more than seven days and other securities which
are not readily marketable.
These investment restrictions may not be changed without shareholder
approval, except that the restriction in paragraph 1(b) may be changed by the
Board without shareholder approval. For a complete listing of the Fund's
fundamental investment restrictions, see the section entitled "Additional
Information Regarding Investment Policies and Limitations" in the Statement of
Additional Information.
MANAGEMENT OF THE FUND
The Board of Trustees is responsible for the overall supervision of the
business and affairs of the Fund and has approved contracts with certain
organizations to provide day-to-day management of the Fund.
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The Fund has entered into an Investment Management Agreement with
Heitman/PRA Advisors to furnish investment services to the Fund. The
Investment Manager directs the investments of the Fund in accordance with the
Fund's investment objective and policies subject to supervision by the Board
of Trustees. Specifically, the Investment Manager is responsible for
performing the following services: (a) furnishing continuously an investment
program for the Fund and (b) determining which investments should be
purchased, held, sold or exchanged by the Fund and what portion, if any, of
the Fund's assets should be held uninvested. In connection with the
management of the investment and reinvestment of the Fund's assets, the
Investment Manager is authorized to select brokers or dealers to execute
purchase and sale transactions for the Fund. In addition, the Investment
Manager manages, supervises and conducts such other affairs and business of
the Fund as the Trust and the Investment Manager may determine from time to
time. For these services, the Fund pays Heitman/PRA Advisors a fee,
calculated daily and paid monthly in arrears, at the annual rate of 0.75% of
the Fund's first $100 million of average daily net assets, plus 0.65% of the
average daily net assets of the Fund in excess of $100 million. The
Investment Manager has agreed that if the total expenses of the Fund
(exclusive of interest, taxes, brokerage expenses and extraordinary items) for
any fiscal year of the Fund exceed (i) 1.75% of the first $50 million of the
Fund's average net assets, and (ii) 1.50% of the Fund's average net assets in
excess of $50 million, the Investment Manager will pay or reimburse the Fund
for that excess up to the amount of its advisory fee payable with respect to
the Fund during that fiscal year. The fee paid by the Fund, although higher
than the investment advisory fees paid by most other mutual funds, is
comparable to the fees paid for similar services by many funds with similar
investment objectives and policies. In 1996, the Fund paid 0.72% of the
Fund's average daily net assets in advisory fees to the Investment Manager.
Heitman/PRA Advisors is a corporation organized on November 14, 1994
under the laws of Illinois to provide investment advice and discretionary
management primarily with respect to investment in publicly traded securities
of issuers principally engaged in the real estate business. The address of
Heitman/PRA Advisors is 180 North LaSalle Street, Suite 3600, Chicago,
Illinois 60601. Dean A. Sotter, President and Chief Financial Officer of the
Trust, Timothy J. Pire, Assistant Secretary of the Trust and Randall E.
Newsome, Assistant Secretary of the Trust, are primarily responsible for
monitoring the day-to-day investment activity of the Fund. Messrs. Sotter,
Pire and Newsome have extensive experience in direct real estate analysis,
securities research and portfolio management of publicly traded real estate
securities. Mr. Sotter is President of Heitman/PRA Advisors with overall
responsibility for portfolio management and marketing. Prior to joining
Heitman/PRA Advisors, Mr. Sotter was a Partner of PRA Securities Advisors,
L.P. He was a Portfolio Manager and Vice President of JMB Institutional
Realty Corporation from 1985-1992, where his responsibilities included
property level analysis, budgeting and valuation as well as financial
reporting and client communications. Mr. Pire is Vice President of
Heitman/PRA Advisors whose responsibilities include portfolio management,
investigation and analysis of publicly traded real estate securities and
implementation of the investment strategy through portfolio management. Prior
to joining Heitman/PRA Advisors, Mr. Pire served as Research Analyst with PRA
Securities Advisors, L.P., and he was an Associate Appraiser with Lyon, Skelte
& Speirs in Seattle, Washington from 1990-1992 where he was involved in
valuation of commercial real estate and writing full narrative appraisals. Mr.
Newsome is Vice President of Heitman/PRA Advisors whose responsibilities
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include portfolio management, investigation and analysis of publicly traded
real estate securities and implementation of the investment strategy through
portfolio management. Mr. Newsome also oversees Heitman/PRA Advisors' trading
positions. Prior to joining Heitman/PRA Advisors, Mr. Newsome served as
Research Analyst with PRA Securities Advisors, L.P. and he was Vice President
with The Stratus Corporation in Chicago, Illinois from 1989-1993 where he was
responsible for property management, leasing and construction management.
Heitman/PRA Advisors is a wholly owned subsidiary of Heitman Financial
Ltd. ("Heitman") which is a wholly owned subsidiary of United Asset Management
Corporation ("UAM"). Affiliates of Heitman and UAM serve as investment
advisers and managers to funds, other collective investment vehicles and
separate accounts established for investment in real estate by pension and
profit sharing trusts, corporations, endowments, foundations and other tax-
exempt institutional investors. As of December 31, 1996, affiliates of
Heitman and UAM had gross assets under management totaling over $171 billion.
Since its inception in 1989 through January, 1995, the Fund was advised
by PRA Securities Advisors, L.P. The general partner of PRA Securities
Advisors, L.P. was JMB Institutional Securities Corporation whose assets were
acquired by Heitman in January, 1995.
From time to time, Heitman/PRA Advisors may, without prior notice to
shareholders, voluntarily waive all or a portion of its fees payable by the
Fund. This would have the effect of lowering the overall expense ratio of the
Fund, and of increasing the yield or return to investors while the fee waiver
is in effect. Any such waiver in effect from time to time may be terminated
without prior notice to shareholders.
The Fund has also entered into contracts with Rodney Square Management
Corporation ("Rodney Square"), Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, and ACG Capital Corporation ("ACG" or the
"Distributor"), 1661 Tice Valley Boulevard, #200, Walnut Creek, CA 94595,
pursuant to which Rodney Square provides administrative, accounting and
transfer agency services to the Fund and ACG provides distribution services to
the Fund. Rodney Square is a wholly owned subsidiary of Wilmington Trust
Company ("WTC"), a Delaware-chartered banking institution and the Trust's
Custodian. For administrative services the Fund pays Rodney Square a fee,
calculated daily and paid monthly in arrears, at the annual rate of .10% of
the average daily net assets of each class of the Fund, subject to a minimum
fee of $25,000 per annum for each class. For accounting services the Fund
pays Rodney Square an annual fee of $75,000, plus an amount equal to .02% of
that portion of the Fund's average daily net assets in excess of $100 million.
Among the services provided by Rodney Square are the following: the
coordination and monitoring of any third parties furnishing services to the
Fund; providing the necessary office space, equipment and personnel to perform
administrative and clerical functions for the Fund; preparing, filing and
distributing proxy materials and periodic reports to shareholders; preparation
and filing of registration statements and other documents or reports required
by federal, state and other laws; preparation and maintenance of financial
records of the Fund; and determination of net asset values and dividends for
the Fund.
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DETERMINATION OF NET ASSET VALUE
The net asset value per share of a class of the Fund's shares is
determined by dividing the current value of the Fund's net assets attributable
to that class of shares, by the number of outstanding shares of that class.
The Fund calculates net asset value as of the close of regular trading hours
of each business day the New York Stock Exchange (the "NYSE") is open. The
NYSE is currently closed on the following holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Generally, the Fund's investments are valued at market value or, in the
absence of a market value, in such manner as the Trustees in good faith deem
appropriate to reflect the investment's fair value. In determining fair
value, the Trustees may employ an independent pricing service. For further
information concerning the Fund's procedures for valuing its assets, see the
section entitled "Valuation of Shares" in the Statement of Additional
Information.
INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
It is the policy of the Fund to declare and distribute dividends
consisting of substantially all of the Fund's net investment income quarterly
and to declare and distribute dividends of net short-term capital gains, if
any, annually. Net capital gains (the excess of net long-term capital gains
over net short-term capital losses) will be declared and distributed annually.
The Fund intends to make such additional distributions as deemed to be
necessary to avoid the imposition of any federal excise tax. The Fund has
historically and intends to make distributions which represent return of
capital to its shareholders.
Any income, dividend or capital gains distribution paid shortly after a
purchase of shares will reduce the net asset value per share of the Fund by
the amount of the distribution and such distributions are subject to taxes.
Dividends and distributions will be automatically reinvested in
additional shares of the Fund, without charge, at net asset value, unless the
shareholder chooses one of the following options:
x Automatic reinvestment of dividends in shares of the Fund, and
payment of capital gains distributions in cash;
x Automatic reinvestment of capital gains distributions in shares of
the Fund, and payment of dividends in cash; or
x All dividends and capital gains distributions paid in cash.
Options for the receipt of dividends and distributions may be changed at
any time by writing to the Trust, c/o Rodney Square Management Corporation,
P.O. Box 8987, Wilmington, DE 19899-9752.
Checks which are sent to shareholders who have requested dividends and/or
capital gains distributions to be paid in cash and which are subsequently
returned by the United States Postal Service as not deliverable or which
remain uncashed for six months or more will be invested in the shareholder's
account at the then current net asset value. Further, subsequent dividends
and distributions will be automatically reinvested in the shareholder's
account. 10
<PAGE>
TAX STATUS
The Fund intends to continue to qualify and elect to be treated each
taxable year as a "regulated investment company" under subchapter M of the
Code. Accordingly, the Fund will not be liable for federal income taxes to
the extent its net investment income and capital gains net income (excess of
capital gains over capital losses) are distributed to shareholders, provided
that at least 90% of its net investment income and net short-term capital
gains for the taxable year are distributed. Dividends from net investment
income and distributions of net short-term capital gains are taxable to
shareholders as ordinary income for federal income tax purposes, whether
received in cash or invested in additional shares of the Fund. Distributions
of net capital gains are taxable to shareholders as long-term capital gains,
whether paid in cash or reinvested in additional shares, and regardless of the
length of time the investor has held his shares of the Fund.
A small portion of the dividends paid by the Fund to corporate
shareholders may qualify for the 70% dividends received deduction available to
corporations; dividends that are attributable to distributions made by a REIT
to the Fund will not qualify. Capital gains distributions paid by the Fund do
not qualify for this deduction. The Fund will notify shareholders each year
of the amount of the dividends qualifying for such deduction.
The Fund is subject to a nondeductible 4% excise tax calculated as a
percentage of certain undistributed amounts of taxable ordinary income and
capital gain net income. The Fund intends to make such additional
distributions of taxable ordinary income and capital gain net income as may be
necessary to avoid this excise tax.
The distributions received by the Fund from its investments may, for
federal income tax purposes, consist of ordinary income, long-term capital
gains, or a return of capital. The characterization of these distributions to
the Fund may, in turn, affect the tax treatment of the Fund's distributions to
its shareholders. Statements as to the tax status of each shareholder's
dividends and distributions are mailed annually by the Fund. Shareholders may
wish to consult their tax advisers about any state and local taxes that may
apply to payments received and, in particular, to determine whether dividends
paid by the Fund that represent interest derived from U.S. Government
securities are exempt from any applicable state or local income taxes.
Shareholders of the Fund should also be aware that, because the share
price of the Fund will fluctuate, redemptions of shares of the Fund will
generally result in the realization of capital gains or losses.
PURCHASE OF SHARES
Advisor Class shares are available only to investors purchasing directly
from the Distributor or through securities brokers who have entered into sales
agreements with the Distributor ("Authorized Brokers") and registered
investment advisers and other service organizations that have entered into
shareholder servicing agreements with the Fund ("Servicing Organizations").
The Trust and the Distributor each reserve the right to reject any
purchase order and to suspend the offering of shares of the Fund. The minimum
initial investment is $5,000 unless waived by the Distributor based on a
determination by the Distributor that such waiver is in the best interest of
11
<PAGE>
the Fund. Subsequent investments will be accepted in any amount. The Trust
reserves the right to vary the initial investment minimum and institute
minimums for additional investments at any time.
At the discretion of the Trust, investors may be permitted to purchase
shares by transferring securities to the Fund that: (i) meet the Fund's
investment objectives and policies; (ii) are acquired for investment and not
for resale; (iii) are liquid securities which are not restricted as to
transfer either by law or liquidity of market; and (iv) have a value which is
readily ascertainable (and not established only by evaluation procedures) as
evidenced by a listing on the American Stock Exchange, the NYSE or NASDAQ.
Securities transferred to the Fund will be valued in accordance with the same
procedures used to determine the Fund's net asset value.
Shares of the Fund may be purchased at the offering price, which is the
per share net asset value plus the applicable sales charge, next determined
after the order is received by the Distributor or Transfer Agent, as described
below. The Fund determines its net asset value per share as of the close of
regular trading hours on the NYSE (currently 4:00 p.m., New York time). See
"Determination of Net Asset Value." Each Authorized Broker and Servicing
Organization is responsible for transmitting the order promptly to the
Distributor or Transfer Agent to permit the investor to obtain the current
price.
Purchases may be made in one of the following ways:
PURCHASES BY MAIL
Initial investments in the Fund may be made through an Authorized Broker
or Service Organization by having the Authorized Broker or Service
Organization mail or deliver a completed Application (accompanying this
Prospectus), together with a check for the total purchase price payable to the
Fund, to the address set forth below. Initial investments may also be made
directly from the Distributor by completing the Application and mailing it,
together with a check made payable to the Fund, to:
ACG Capital Corporation
c/o Rodney Square Management Corporation
P.O. Box 8987
Wilmington, DE 19899-9752
Subsequent investments in an existing account in the Fund may be made at
any time and in any amount through an Authorized Broker or Service
Organization, or by sending a check payable to the Fund at the above address
using the deposit slip found at the bottom of each shareholder statement or
along with a letter stating the amount of the investment and the name of the
account for which the investment is to be made.
PURCHASES BY WIRE
To order shares for purchase by wire, the Transfer Agent must first be
notified by calling (800) 435-1405. Following notification to the Transfer
Agent, federal funds and registration instructions should be wired through the
Federal Reserve System to:
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<PAGE>
Wilmington Trust Company
ABA # 0311-0009-2
DDA # 2629-5416
Further credit to Heitman Real Estate Fund - Advisor Class Shares
Further credit (Shareholder's Name)
Fund Account Number
All investors making initial investments by wire must promptly complete
the Application accompanying this Prospectus and deliver it to the investor's
Authorized Broker or Service Organization or the Distributor. Redemptions
will not be processed until the Application has been received by the Trust or
its agent.
AUTOMATIC INVESTMENT PLAN
After the initial purchase, shareholders may purchase additional Fund
shares through an Automatic Investment Plan. Under the Plan, the Transfer
Agent will automatically debit a shareholder's bank checking account on a
monthly basis in an amount of $50 or more (subsequent to the $5,000 minimum
initial investment), as specified by the shareholder. The purchase of Fund
shares will be effected at their offering price at the close of regular
trading hours on the NYSE (currently 4:00 p.m., Eastern time) on or about the
20th day of the month. For further details about this service, refer to the
Application or call (800) 435-1405. This service may not be available for
Service Organization clients who are provided similar services by those
organizations.
INDIVIDUAL RETIREMENT ACCOUNTS
Shares of the Fund may be purchased for tax-deferred retirement plans
such as individual retirement accounts ("IRAs"). Application forms and
brochures describing investments for IRAs can be obtained from the Transfer
Agent by calling (800) 435-1405. WTC makes available its services as an IRA
custodian for each shareholder account that is established as an IRA. For
these services, WTC receives an annual fee of $10.00 per account, which fee is
paid directly to WTC by the IRA shareholder. If the fee is not paid by the
date due, shares of the Fund owned by the IRA will be redeemed automatically
for purposes of making the payment.
FEES AND CHARGES
SALES CHARGES. Except as described under "Special Programs," the
purchase price of an Advisor Class share of the Fund is the Fund's per share
net asset value after the purchase order is duly received, as defined herein,
plus a sales charge that varies depending on the dollar amount of the shares
purchased as set forth below. A major portion of this sales charge is
reallowed by the Distributor to the Authorized Broker responsible for the
sale.
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<PAGE>
DOLLAR AMOUNT SALES CHARGE PAID SALES CHARGE PAID DEALER
OF PURCHASE BY INVESTORS AS % BY INVESTOR AS % CONCESSION AS %
TRANSACTION OF PURCHASE PRICE OF NET ASSET VALUE OF PURCHASE PRICE
- ------------- ----------------- ------------------ -----------------
Less than $100,000 4.75 4.99 4.00
$100,000 or above
but less than $250,000 4.00 4.17 3.50
$250,000 or above
but less than $500,000 3.00 3.09 2.50
$500,000 or above
but less than $1 million 2.00 2.04 1.75
$1 million and above 1.00 1.01 .75
The reduced charges described above are applicable to purchases of
$100,000 or more made at any one time by groups of "related investors" such as
immediate family members. See the Statement of Additional Information for
more complete information concerning related investors.
At the discretion of ACG, the entire sales charge may at times be
reallowed to dealers. During periods when 90% or more of the sales charge is
reallowed, such dealers may be deemed to be underwriters as that term is
defined in the Securities Act of 1933. ACG or its affiliates, at their
expense, may also provide additional compensation to dealers in connection
with sales of Advisor Class shares of the Fund. Compensation may include
financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising,
sales campaigns and/or shareholder services and programs regarding the Fund
and other dealer-sponsored programs or events. In some instances, this
compensation may be made available only to certain dealers whose
representatives have sold or are expected to sell significant amounts of such
Advisor Class shares. Compensation may include payment for travel expenses,
including lodging, incurred in connection with trips taken by invited
registered representatives and members of their families to locations within
or outside of the United States for meetings or seminars of a business nature.
Details relating to any special reallowance or compensation arrangements
between the Distributor and any broker or dealer are set forth in the
Statement of Additional Information. Dealers may not use sales of the Fund's
shares to qualify for this compensation to the extent prohibited by the laws
of any state or any self-regulatory agency, such as the National Association
of Securities Dealers, Inc. (the "NASD"). None of the aforementioned
additional compensation is paid for by the Fund or its shareholders.
LETTER OF INTENT. Investors may purchase shares of the Fund at reduced
sales charges by executing a Letter of Intent to purchase no less than an
aggregate of $100,000 of shares of the Fund within a 13-month period. The
investor will be charged the sales charge applicable to each purchase made
pursuant to a Letter of Intent as if the total dollar amount set forth in the
Letter of Intent were being bought in a single transaction. Purchases made
within a 90-day period prior to the execution of a Letter of Intent may be
included therein; in such case the date of the earliest of such purchases
marks the commencement of the 13-month period.
An investor may include toward completion of a Letter of Intent the
current value of all of the investor's shares of the Fund held of record as of
the date of the Letter of Intent, plus the current value as of such date of
all of such shares held by any "related person" as eligible to join with the
investor in a single purchase.
14
<PAGE>
A Letter of Intent does not bind the investor to purchase the specified
amount. Shares equivalent to 2% of the specified amount will, however, be
taken from the initial purchase (or, if necessary, subsequent purchases) and
held in escrow in the investor's account as collateral against the higher
sales charge which would apply if the total purchase is not completed within
the allotted time. The escrowed shares will be released when the aggregate
purchase specified under the Letter of Intent is completed, or if it is not
completed, when the balance of the higher sales charge is, upon notice,
remitted by the investor. All dividends and capital gains distributions with
respect to the escrowed shares will be credited to the investor's account.
SPECIAL PROGRAMS
PURCHASES THROUGH SERVICE ORGANIZATIONS, AUTHORIZED BROKERS AND BY
CERTAIN OTHER INVESTORS. Advisor Class shares also may be purchased without a
sales charge by: registered investment advisers exercising discretionary
investment authority with respect to the purchase of Fund shares; accounts of
Service Organizations that charge account management fees; registered
representatives and employees (and their spouses and minor children) of any
Authorized Broker or Service Organization; trust departments of financial
institutions; other investment companies in connection with the sale to the
Fund of cash and securities owned by such other investment companies; separate
accounts established and maintained by an insurance company that are exempt
from registration under Section 3(c)(11) of the 1940 Act; members of
organizations that make recommendations to or permit group solicitations in
connection with the purchase of shares of the Fund; and "eligible employee
benefit plans" of employers who have at least 2,000 U.S. employees to whom
such a plan is made available and, regardless of the number of employees, if
such plan is established and maintained by any Authorized Broker or Service
Organization. An "eligible employee benefit plan" means any plan or
arrangement, whether or not tax qualified, which provides for the purchase of
Fund shares. Sales of shares to such plans must be made in connection with a
payroll deduction system of plan funding or other system acceptable to the
Distributor.
Purchases may also be made at net asset value, without a sales charge,
provided that such purchases are placed through a Service Organization and
such purchases are made by the following:
o investment advisers or financial planners who place trades for their
own accounts or the accounts of their clients and who charge a
management, consulting or other fee for their services;
o clients of such investment advisers or financial planners who place
trades for their own accounts if the accounts are linked to the
master account of such investment adviser or financial planner on
the books and records of the Service Organization; and
o retirement and deferred compensation plans and trusts used to fund
those plans, including, but not limited to, those defined in section
401(a), 403(b) or 457 of the Internal Revenue Code and "rabbi
trusts."
15
<PAGE>
PURCHASES BY NON-U.S. INVESTORS RESIDING IN JAPAN ONLY. Shares of the
Advisor Class are being made available to selected non-U.S. investors residing
in Japan through The Nomura Securities Co., Ltd. ("Nomura"), acting as a sub-
distributor for the Distributor. All purchases by such investors, regardless
of the amount, are subject to a sales charge of 4.00% of the net asset value
of the shares purchased (approximately 3.85% of the purchase price), all of
which will be reallowed by the Distributor to Nomura. In addition, the
Distributor has agreed to pay Nomura .25 of 1% of the net asset value of the
Fund represented by Advisor Class shares sold through Nomura for distribution
services provided to the Fund, and the Fund has agreed to pay Nomura
Securities International, Inc. ("NSI") .25 of 1% of the net asset value of the
shares of the Advisor Class sold through Nomura for shareholder services
provided by NSI or its delegate.
Advisor Class shares sold in Japan will be sold only to residents of
Japan in one or more private placements under Japanese law. In accordance
with Japanese securities laws, such shares may not be transferred without the
consent of a majority of the Trustees, which consent will not be granted if,
as a result of such transfer, there would be fifty or more shareholders of the
Advisor Class (including the underlying beneficial owners) who are residents
of Japan. These transfer restrictions will not affect a shareholder's
redemption rights as described in the Prospectus.
Dividends and distributions on shares of the Fund held by non-U.S.
investors residing in Japan will be subject to U.S. tax withholding
requirements. All distributions, other than distributions of capital gains,
will be subject to a U.S. withholding tax at the rate of 15% under the
applicable tax treaty between the United States and Japan. Japanese residents
may be able to obtain a refund of such tax payments to the extent such
distributions are ultimately determined to constitute a return of capital for
tax purposes. Japanese residents purchasing shares of the Advisor Class
should also consult their tax advisers about any taxes under the laws of Japan
or other applicable foreign jurisdictions that may apply to payments received
from the Fund.
DISTRIBUTION PLAN
The Fund has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the
"Distribution Plan") in accordance with the regulations under the 1940 Act.
Under the provisions of the Distribution Plan, the Fund makes payments to the
Distributor at an annual rate of 0.25% of the daily net assets of Advisor
Class shares of the Fund as a distribution fee. The distribution fees are used
by the Distributor to finance activities primarily intended to result in the
sale of shares of the Fund. Payments to the Distributor under the Plan are
not directly tied to expenses and payments under the Plan may be more or less
than actual expenses incurred by the Distributor. The excess of fees received
over expenditures may constitute a "profit" to the Distributor.
An NASD rule limits the annual expenditures which the Fund may incur
under the Distribution Plan to 1%, of which 0.75% may be used to pay
distribution expenses and 0.25% may be used to pay shareholder services fees.
The NASD rule also limits the aggregate amount which the Fund may pay for such
distribution costs and initial sales charges to 6.25% of gross share sales of
a class since the inception of any asset-based sales charge plus interest at
the prime rate plus 1% on unpaid amounts thereof. Such limitation does not
apply to shareholder service fees.
16
<PAGE>
MARKETING SERVICES AGREEMENT
The Investment Manager and ACG have entered into a marketing services
agreement with respect to the sale of Advisor Class shares and certain
Institutional Class shares. Under the marketing services agreement, the
Investment Manager will pay ACG additional compensation in the amount of .15
of 1% of the net asset value of the Fund represented by the Advisor Class
shares with the exception of Advisor Class shares sold through Nomura. The
Investment Manager has also agreed to pay ACG .10% of 1% of the net asset
value of Advisor Class shares held in omnibus shareholder accounts maintained
by certain Service Organizations. In addition, the Investment Manager has
agreed to make certain continuing payments to ACG in the event that the
marketing services agreement is terminated (as long as ACG remains registered
as a broker/dealer) or if the fees payable to ACG as distributor of the
Advisor Class shares are reduced. However, if the Investment Manager
terminates the agreement for "cause" or if ACG terminates its distribution
agreement with the Trust, ACG is not entitled to such continuing payments.
Finally, the agreement provides that ACG will not serve as a distributor of
any other open-end registered investment company that invests primarily in
shares of REITs (subject to a limited exception) and that the Investment
Manager will not offer, sponsor, advise or otherwise promote any open-end
registered investment company for which ACG is not the distributor, subject to
certain exceptions.
SHAREHOLDER SERVICING AGREEMENT
The Fund has also adopted a Shareholder Servicing Plan. Pursuant to the
Shareholder Servicing Plan, the Trust contracts with Service Organizations to
provide a variety of shareholder services, such as maintaining shareholder
accounts and records, answering inquiries regarding the Fund, and processing
purchase and redemption orders. The Fund pays fees to Service Organizations
(which vary depending upon the services provided) in amounts up to an annual
rate of 0.25% of the daily net asset value of Advisor Class shares owned by
shareholders with whom the Service Organization has a servicing relationship.
The Trust has also agreed to pay certain Service Organizations that maintain
omnibus shareholder accounts an additional amount equal to the savings
realized by the Fund from lower transfer agency costs attributable to the
omnibus account arrangements. Some Service Organizations may impose
additional or different conditions on their clients such as requiring their
clients to invest more than the minimum initial or subsequent investments
specified by the Trust or charging a direct fee for servicing. If imposed,
these fees would be in addition to any amounts which might be paid to the
Service Organization by the Trust. Shareholders using Service Organizations
are urged to consult them regarding any such fees or conditions.
REDEMPTIONS
Shareholders may redeem their shares of the Fund without charge on any
day that the Fund calculates its per share net asset value (see "Determination
of Net Asset Value"). Redemptions will be effective at the net asset value
per share next determined after the receipt by the Transfer Agent of a
redemption request meeting the requirements described below. Except under
certain emergency conditions, your redemption payment will be sent to you
within seven (7) days after receipt of your telephone or written redemption
request, in proper form, by the Transfer Agent. If your redemption request
is made with respect to shares purchased by check within ten (10) days of the
purchase date, the redemption payment will be held until the check has been
17
<PAGE>
collected (which usually takes up to ten (10) days), although the shares
redeemed will be priced for redemption upon receipt of your redemption request
in proper form. You can avoid the inconvenience of this delay by purchasing
shares with a certified, treasurer's or cashier's check, or with a federal
funds or bank wire.
Except as noted below, redemption requests received in proper form by the
Transfer Agent prior to the close of regular trading hours on the NYSE
(currently 4:00 p.m., New York time) on any business day that the Fund
calculates its per share net asset value are effective that day and the shares
redeemed earn dividends declared through the day of redemption.
Redemption requests received after the close of the NYSE are effective as
of the time the net asset value per share is next determined. NO REDEMPTION
WILL BE PROCESSED UNTIL THE TRANSFER AGENT HAS RECEIVED A COMPLETED
APPLICATION WITH RESPECT TO THE ACCOUNT.
The Fund will satisfy redemption requests in cash to the fullest extent
feasible, so long as such payments would not, in the opinion of the Investment
Manager or the Trustees, result in the necessity of the Fund selling assets
under disadvantageous conditions and to the detriment of the remaining
shareholders of the Fund. The Fund may distribute readily marketable
securities from the Fund's portfolio assets in-kind in satisfaction or partial
satisfaction of the amount payable on redemption of shares in conformity with
applicable Securities and Exchange Commission ("SEC") rules and valued in the
same way as such securities would be valued for purposes of computing net
asset value of the Fund. In the event that an in-kind distribution is made, a
shareholder may incur additional expenses, such as the payment of brokerage
commissions, on the sale or other disposition of the securities received from
the Fund. In-kind payments need not constitute a cross-section of the Fund's
portfolio. The Fund has elected, however, to be governed by Rule 18f-1 under
the 1940 Act, as a result of which the Fund is obligated to redeem shares
solely in cash if redemption requests made by a shareholder account during
any 90-day period do not exceed the lesser of $250,000 or 1% of the net assets
of the Fund at the beginning of such 90-day period. This election is
irrevocable unless the SEC permits its withdrawal.
Redemption proceeds in cash or in-kind will be remitted to a redeeming
shareholder by check payable, or securities transferred, only to the redeeming
shareholder or such shareholder's designated representative and only to the
shareholder's address, or that of the shareholder's designated representative,
on the books of the Fund. A shareholder may request that redemption proceeds
be wired directly to the shareholder's account at any commercial bank in the
United States. The redemption proceeds must be paid to the same bank and
account as designated on the application or in written instructions
subsequently received by the Transfer Agent.
Shares may be redeemed in one of the following ways:
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to
the Transfer Agent at P.O. Box 8987, Wilmington, DE 19899-9752. A redemption
request sent by overnight mail should be sent to the Transfer Agent, 1105
North Market Street, Wilmington, DE 19801.
18
<PAGE>
A written redemption request to the Transfer Agent must (i) identify the
shareholder's account name, (ii) state the number of shares to be redeemed,
and (iii) be signed by each registered owner exactly as the shares are
registered. A redemption request for any amount, if the proceeds are to be
sent elsewhere than the address of record, must be accompanied by signature
guarantee(s). The guarantor of a signature must be an eligible institution
acceptable to the Fund's Transfer Agent, such as a bank, broker, dealer,
municipal securities dealer, government securities dealer, credit union,
national securities exchange, registered securities association, clearing
agency, or savings association. The Trust may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees and guardians. A redemption request will not be deemed to be
properly received until the Transfer Agent receives all required documents in
proper form. Questions with respect to the proper form for redemption
requests should be directed to the Transfer Agent at (800) 435-1405.
REDEMPTION BY TELEPHONE
Shareholders who have so indicated on the Application, or have
subsequently arranged in writing to do so, may redeem shares by instructing
the Transfer Agent by telephone. In order to arrange for redemption by wire
or telephone after an account has been opened or to change the bank or account
designated to receive redemption proceeds, a written request must be sent to
the Transfer Agent at the address listed above. Such requests must be signed
by the shareholder, with signatures guaranteed (see "Redemption by Mail" above
for details regarding signature guarantees). Further documentation may be
requested from corporations, executors, administrators, trustees or guardians.
The Trust reserves the right to refuse a wire or telephone redemption if
it is believed advisable to do so. Procedures for redeeming Fund shares by
wire or telephone may be modified or terminated at any time by the Trust.
REDEMPTIONS THROUGH AUTHORIZED BROKERS AND SERVICE ORGANIZATIONS
For the convenience of shareholders, the Fund has authorized the
Distributor, as its agent, to accept orders from Authorized Brokers and
Service Organizations by wire or telephone for the repurchase of shares by the
Distributor from the Authorized Broker or Service Organization. The Fund may
revoke or suspend this authorization at any time. The repurchase price is the
net asset value next determined following the time at which the shares are
offered for repurchase by the Authorized Broker or Service Organization to the
Distributor. The Authorized Broker or Service Organization is responsible for
promptly transmitting a shareholder's order to the Distributor. Payment of
the repurchase proceeds is made to the Authorized Broker or Service
Organization who placed the order. Neither the Fund nor the Distributor
imposes any charge upon such a repurchase. However, the Authorized Broker or
Service Organization may impose a charge as agent for a shareholder for the
repurchase of shares.
The Trust reserves the right to change, modify or terminate the services
described above at any time.
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<PAGE>
SYSTEMATIC WITHDRAWAL PLAN
Shareholders who own shares with a value of $10,000 or more may
participate in the Systematic Withdrawal Plan. Under the Plan, shareholders
may automatically redeem a portion of their Fund shares monthly, bimonthly,
quarterly, semiannually or annually. The minimum withdrawal available is
$100. The redemption of Fund shares will be effected at their net asset value
at the close of the NYSE on or about the 25th day of the month at the
frequency selected by the shareholder. If you expect to purchase additional
Fund shares, it may not be to your advantage to participate in the Systematic
Withdrawal Plan because contemporary purchases and redemption may result in
adverse tax consequences and may cause you to pay a sales load on such
purchases. This service may also not be available for Service Organization
clients who are provided similar services by those organizations. For further
details above this service, see the Application or call the Transfer Agent at
(800) 435-1405.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective investors, the Fund may provide yield and average annual total
return information, and the Fund may compare its performance, either in terms
of its total return or its yield, total return or ranking, to that of other
mutual funds with similar investment objectives and to other relevant indices.
The Fund may also include its rating as published by mutual fund statistical
services or major financial publications. For example, the Fund may compare
its performance to rankings prepared by Lipper Analytical Services, Inc., a
widely recognized independent service which monitors the performance of mutual
funds, or to other indices as appropriately determined. Total return and
yield information may be useful in reviewing the Fund's performance and for
providing a basis for comparison with other investment alternatives. However,
since the performance of the Fund changes in response to fluctuations in
market conditions and Fund expenses, no performance quotation should be
considered a representation as to the Fund's performance for any future
period. The Fund's Annual Report to Shareholders will contain detailed
information with respect to the performance of the Fund. The Annual Report
will be made available free of charge to prospective investors upon request.
The yield of the Fund refers to the income generated by an investment in
the Fund over a specified one month period identified in the advertisement and
is computed by dividing the net investment income per share earned for a
specified one month period by the net asset value at the end of the month and
expressing the result as an annualized percentage. In computing net
investment income all recurring charges are recognized.
The Fund's average annual total return generally measures the average
annual percentage growth in the dollar value of an investor's account over a
specified period, based on a hypothetical $1,000 initial investment in the
Fund and assuming the reinvestment of all dividends and distributions. The
Fund may also utilize a total return computed in the same manner but for
differing periods and without annualizing the total return. The Fund may show
total return broken down into its components of investment gain (or loss) and
total income (or distribution).
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ADDITIONAL INFORMATION
ORGANIZATION, CAPITALIZATION AND VOTING
Heitman Securities Trust was organized as a Massachusetts business on
September 15, 1988 and operates under a Master Trust Agreement which was
amended and restated on February 28, 1995 (the "Master Trust Agreement") . The
Trust is registered with the SEC as an open-end diversified management
investment company.
Under Massachusetts law and pursuant to the Master Trust Agreement, the
Trust is authorized to issue an unlimited number of shares of beneficial
interest in separate series, with shares of each series representing interests
in a separate portfolio of assets and operating as a separate distinct fund.
In addition, the Trust is authorized to issue an unlimited number of classes
of shares of beneficial interest in the Fund. To date, the Trust has
established one series, the Heitman Real Estate Fund, with two classes of
shares designated as the Heitman/PRA Institutional Class and the Advisor
Class. Each Fund share represents an equal proportionate interest in the
Fund, has a par value of $.001 per share, and is entitled to such dividends
and distributions earned on the assets belonging to the Fund as may be
declared by the Board of Trustees. Shares of the Fund are fully paid and non-
assessable by the Trust and have no preemptive or conversion rights. As of
April 1, 1997, Charles Schwab & Company, Inc. owned, by virtue of shared or
sole voting or investment power on behalf of its underlying customer accounts
49.67% of the Advisor Class shares of the Fund, which represents 18.17% of all
outstanding shares of the Fund.
The Trust is not required to hold annual shareholder meetings. However,
special meetings may be called for purposes such as electing or removing
Trustees, changing fundamental investment policies or approving certain
contracts. Shareholders holding an aggregate of at least 10% of the
outstanding shares of the Fund may request a meeting of shareholders at any
time for the purpose of voting to remove one or more of the Trustees, and the
Trust will assist shareholders in communicating with other shareholders in
connection with such a meeting. At any meeting of shareholders, each share
shall entitle the holder thereof to one vote.
REPORTS TO SHAREHOLDERS
In the interest of economy and convenience, the Fund does not issue share
certificates. The Trust sends annual statements to each shareholder
indicating the status of the shareholder's account. In addition, shareholders
will receive annual and semi-annual financial statements of the Trust.
Quarterly financial statements of the Trust are available upon request. The
Trust reserves the right to eliminate duplicate mailings of such statements
and other materials to shareholders who reside at the same address.
CUSTODIAN, TRANSFER AGENT, DISTRIBUTOR AND INDEPENDENT ACCOUNTANTS
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001 (the "Custodian") serves as Custodian of the
Fund's assets. The Custodian acts as the depository for the Fund, safekeeps
its portfolio securities, collects all income and other payments with respect
to portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties.
21
<PAGE>
Rodney Square Management Corporation, P.O. Box 8987, Wilmington, Delaware
19899-9752 serves as the Fund's Transfer Agent. As Transfer Agent, it
maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of the
Fund's shares, acts as dividend and distribution disbursing agent and performs
all shareholder service functions. All shareholder inquiries with respect to
these services should be directed to Rodney Square at (800) 435-1405.
ACG Capital Corporation, 1661 Tice Valley Boulevard #200, Walnut Creek,
California 94595 serves as the Fund's Distributor for the Advisor Class with
responsibility for distributing the Fund's shares. Rodney Square
Distributors, Inc., Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001 acts as agent for ACG solely for the purpose of accepting
orders on behalf of the Fund and forwarding those orders to the Transfer Agent
for processing. Applicable banking laws prohibit deposit-taking institutions
from underwriting or distributing securities. WTC and its affiliates believe
and have been advised by their counsel that they may perform the services
contemplated by their respective agreements with the Trust without violation
of applicable banking laws or regulations. If WTC or its affiliates were
prohibited from performing these services, it is expected that the Trust's
Board of Trustees would consider entering into agreements with other entities.
Price Waterhouse LLP currently serves as the Fund's independent
accountants with responsibility for auditing the Fund's annual financial
statements.
ADDITIONAL INFORMATION
Additional information regarding the Fund and the Trust may be obtained
from the Distributor or the Trust at the addresses and telephone numbers
listed on the cover of this Prospectus.
22
<PAGE>
INVESTMENT ADVISOR
Heitman/PRA Securities Advisors, Inc.
180 North LaSalle Street, Suite 3600
Chicago, IL 60601
OFFICERS
William L. Ramseyer, Chief Executive Officer
Dean A. Sotter, President and Treasurer
Timothy J. Pire, Assistant Secretary
Randall L. Newsome, Assistant Secretary
Laurie V. Brooks, Assistant Secretary
John J. Kelley, Assistant Treasurer
------------------------
BOARD OF TRUSTEES HEITMAN REAL ESTATE FUND
Robert W. Beeney ------------------------
Donald L. Foote
John F. Goydas
William L. Ramseyer
Maurice Wiener
DISTRIBUTOR
ACG Capital Corporation HEITMAN SECURITIES TRUST
1661 Tice Valley Boulevard #200 180 NORTH LASALLE STREET,
Walnut Creek, CA 94595 SUITE 3600
(800) 888-REIT CHICAGO, ILLINOIS 60601
CUSTODIAN
Wilmington Trust Company ADVISOR CLASS
Rodney Square North PROSPECTUS
1100 North Market Street
Wilmington, DE 19890
TRANSFER AGENT AND ADMINISTRATOR May 1, 1997
Rodney Square Management Corporation
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
TRUST HEADQUARTERS
180 North LaSalle Street, Suite 3600
Chicago, IL 60601
(800) 435-1405
269236.c2
4/18/96 7:40
<PAGE>
HEITMAN REAL ESTATE FUND
STATEMENT OF ADDITIONAL INFORMATION
HEITMAN SECURITIES TRUST
180 North LaSalle Street, Suite 3600
Chicago, Illinois 60601
Advisor Class SharesInstitutional Class Shares
(800) 888-REIT (800) 435-1405
May 1, 1997
This Statement of Additional Information expands upon and supplements the
information contained in the current Heitman/PRA Institutional Class
Prospectus of Heitman Securities Trust (the "Trust"), dated May 1, 1997,
pursuant to which the Trust offers Heitman/PRA Institutional Class shares of
its sole investment portfolio, the Heitman Real Estate Fund (the "Fund"), and
the Advisor Class Prospectus of the Trust dated May 1, 1997, pursuant to which
the Trust offers Advisor Class shares of the Fund. This Statement of
Additional Information should be read in connection with the prospectus for
the class of shares offered thereby (each such prospectus hereinafter referred
to as the "Prospectus"). This Statement of Additional Information, although
not in itself a Prospectus, is incorporated by reference into the Prospectus
in its entirety. A copy of the current Prospectus may be obtained, without
charge, upon request to the Trust at the address or telephone number set forth
above.
<PAGE>
TABLE OF CONTENTS
PAGE
----
ADDITIONAL INFORMATION REGARDING INVESTMENT POLICIES AND LIMITATIONS... 1
EXECUTION OF PORTFOLIO TRANSACTIONS.................................... 3
MANAGEMENT OF THE TRUST................................................ 4
INVESTMENT MANAGER..................................................... 8
PURCHASE OF SHARES..................................................... 9
ADMINISTRATIVE, ACCOUNTING, DISTRIBUTION AND SHAREHOLDER SERVICES...... 9
DESCRIPTION OF THE TRUST............................................... 13
REDEMPTION OF SHARES................................................... 17
VALUATION OF SHARES.................................................... 17
ADVERTISING AND CALCULATION OF PERFORMANCE DATA........................ 18
GENERAL INFORMATION.................................................... 19
FINANCIAL STATEMENTS................................................... 21
<PAGE>
HEITMAN REAL ESTATE FUND
ADDITIONAL INFORMATION REGARDING
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. The Fund may not:
1. As to 75% of the total assets of the Fund, purchase securities for the
Fund of any issuer, if immediately thereafter (i) more than 5% of the
Fund's total assets (taken at market value) would be invested in the
securities of such issuer, or (ii) more than 10% of the outstanding
voting securities of any class of such issuer would be held by the Fund,
provided that this limitation does not apply to U.S. Government
securities.
2. Make investments in real estate (including real estate limited
partnership interests, but excluding readily marketable interest in real
estate investment trusts ("REITs") or readily marketable securities of
companies which invest in real estate) or commodities or commodity
contracts, although the Fund may purchase securities of issuers which
deal in real estate and may purchase securities which are secured by
interests in real estate, and the Fund may invest in futures contracts
and related options.
3. Act as a securities underwriter.
4. Make loans, except that the Fund may (i) purchase bonds, debentures and
other publicly-distributed securities of a like nature, (ii) make loans
in the form of call loans or loans maturing in not more than one year
which are secured by marketable collateral and are in amounts and on
terms similar to those currently in effect in the case of loans made by
national banks, (iii) enter into repurchase agreements with respect to
portfolio securities, and (iv) lend the portfolio securities of the Fund.
5. Borrow money, except that (i) the Fund may borrow money for temporary
administrative purposes provided that the aggregate of all such
borrowings does not exceed 33% of the value of the Fund's total assets
and is not for more than 60 days, and (ii) the Fund may enter into
interest-rate futures contracts. The Fund may not borrow for the purpose
of leveraging its investment portfolio. The Fund may not purchase
additional securities while outstanding borrowings exceed 5% of the value
of its assets.
6. Lend the portfolio securities of the Fund in an amount in excess of 33%
of the total assets of the Fund, taken at market value. Any loans of
portfolio securities will be made according to guidelines established by
the Securities and Exchange Commission and the Trustees, including the
borrower's maintaining collateral equal at all times to the value of the
securities loaned.
7. Purchase "illiquid" securities for the Fund, including repurchase
agreements maturing in more than seven days, options traded "over-the-
counter," securities lacking readily available market quotations and
securities which cannot be sold without registration or the filing of a
notification under federal or state securities laws, if, as a result,
more than 10% of the Fund's net assets would then be invested in such
securities.
<PAGE> 1
8. Purchase securities on margin, except short-term credits as are necessary
for the purchase and sale of securities. For purposes of this
restriction, the deposit or payment of initial or variation margin in
connection with futures contracts or related options will not be deemed
to be a purchase of securities on margin by the Fund.
9. Purchase securities of any other investment company, except in connection
with a merger, consolidation, acquisition or reorganization, and except
that the Fund may purchase securities of money market mutual funds to the
extent permitted by applicable law. This restriction shall not prohibit
the Fund from investing in securities issued by REITs.
10. Purchase securities for the Fund of companies which together with
predecessors have a record of less than three years' continuous
operation, and equity securities of issuers which are not readily
marketable, if, as a result, more than 5% of the Fund's net assets would
then be invested in such securities, except that this restriction shall
not apply to the purchase of securities of REITs.
11. Invest in puts, calls, straddles, spreads and any combination thereof,
except that (i) the Fund may write covered put and call options on
securities and write and purchase put and call options on stock indexes,
and (ii) the Fund may write covered put and call options on U.S.
Government securities.
12. Invest in oil, gas or other mineral exploration or development programs,
or leases, provided, however, this shall not prohibit the Fund from
purchasing publicly traded securities of companies engaging in whole or
in part in such activities.
13. Purchase securities from or sell securities to any of its officers or
Trustees, except with respect to its own shares and as is permissible
under applicable statutes, rules and regulations.
14. Purchase securities of companies for the purpose of exercising control.
15. Invest in warrants except that the Fund may invest in warrants valued at
the lower of cost or market, not exceeding 5% of the value of its net
assets; included within that amount, but not to exceed 2% of the value of
its net assets, warrants not listed on the New York or American Stock
Exchange, provided that this restriction does not apply to warrants
attached to or acquired as units to securities.
16. Make short sales whereby the dollar amount of short sales at any one time
shall exceed 25% of the net assets of the Fund, or the value of
securities of any one issuer in which the Fund is short exceeds the
lesser of 2% of the value of the Fund's net assets or 2% of the value of
securities of any class of any issuer, except that the Fund may make
short sales against the box.
If a percentage restriction is adhered to at the time of an investment, a
later increase or decrease in such percentage resulting from a change in the
values of assets will not constitute a violation of such restriction.
2
<PAGE>
The investment restrictions numbered 1 through 6 above have been adopted
by the Trust as fundamental policies of the Fund. Under the Investment
Company Act of 1940, as amended (the "1940 Act"), a fundamental policy may not
be changed without the vote of a majority of the outstanding voting securities
of the Fund, as defined in the 1940 Act. "Majority" means the lesser of (1)
67% or more of the shares present at a Trust meeting, if the holders of more
than 50% of the outstanding shares of the Fund are present or represented by
proxy, or (2) more than 50% of the outstanding shares of the Trust.
Investment restrictions 7 through 16 are non-fundamental policies and may be
changed by vote of a majority of the Trust's Board of Trustees at any time.
While the Trust has the power to pledge its assets to secure borrowings,
the Trust has no intention of pledging the assets of the Fund taken at market
value in any amount in excess of 33% of the Fund's total assets taken at
market value. The deposit of assets in escrow in connection with the writing
of covered put or call options and the purchase of securities on a when-issued
or delayed-delivery basis, and collateral arrangements with respect to the
purchase and sale of stock options and stock index options and initial and
variation margin for futures contracts, are not deemed to be pledges of assets
of the Fund. Also, although the Trust has the power to make call loans, it has
no intention to do so.
Government securities in which the Fund may invest include (a) direct
obligations of the U.S. Treasury, including bills, bonds and notes, and (b)
obligations issued or guaranteed as to principal and interest by U.S.
Government agencies or instrumentalities and supported by any of (i) the full
faith and credit of the U.S. Treasury (e.g., Government National Mortgage
Association participation certificates); (ii) the right of the issuer to
borrow a limited amount from the U.S. Treasury (e.g., securities of Federal
Farm Credit Banks); (iii) the discretionary authority of the U.S. Government
to purchase certain obligations of the agency or instrumentality (e.g.,
securities of the Federal National Mortgage Association); or (iv) the credit
of the agency or instrumentality (e.g., securities of the Student Loan
Marketing Association).
Although the Fund has the ability to invest in futures contracts and
options, the Fund has no current intention of doing so without first notifying
its shareholders and supplying further information in the Prospectus.
Although not an investment policy, it is anticipated that under normal
circumstances approximately 60% to 90% of the Fund's assets will be invested
in REITs which, according to the National Association of Real Estate
Investment Trusts, have grown over five-fold since 1991.
EXECUTION OF PORTFOLIO TRANSACTIONS
The Fund's portfolio securities transactions are placed by Heitman/PRA
Securities Advisors, Inc. ("Heitman/PRA Advisors" or the "Investment
Manager"), the Fund's investment adviser and manager. The objective of the
Fund is to obtain the best available prices in its portfolio transactions,
taking into account the costs, promptness of executions and other qualitative
considerations. There is no agreement or commitment to place orders with any
broker-dealer. Heitman/PRA Advisors evaluates a wide range of criteria in
seeking the most favorable price and market for the execution of transactions,
including the broker's commission rate, execution capability, positioning and
distribution capabilities, back-office efficiency, ability to handle difficult
3
<PAGE>
trades, financial stability, and prior performance in serving Heitman/PRA
Advisors and its clients. In transactions on equity securities and U.S.
Government securities executed in the over-the-counter market, purchases and
sales are transacted directly with principal market-makers except in those
circumstances where, in the opinion of Heitman/PRA Advisors, better prices and
executions are available elsewhere.
Subject to the requirement of seeking the best available prices and
execution, Heitman/PRA Advisors may, in circumstances in which two or more
broker-dealers are in a position to offer comparable prices and execution,
give preference to broker-dealers which have provided research, statistical,
and other related services to Heitman/PRA Advisors for the benefit of the Fund
and/or other clients served by Heitman/PRA Advisors if in the judgment of
Heitman/PRA Advisors the Fund will obtain prices and execution comparable with
those available from other qualified firms. This research information
received from such brokers and dealers covers a wide range of topics,
including U.S. economic data, prices of various government securities, company
specific information including EDGAR filings of securities issuers, economic
indices, economic outlook, political environment, demographic and social
trends and industry analysis. The Fund will not pay commissions to brokers in
recognition of their having provided research, statistical or other related
services in excess of commissions other qualified brokers would have charged
for handling comparable transactions.
Heitman/PRA Advisors may from time to time provide investment management
services to other institutional clients, including corporate pension plans,
profit-sharing and other employee benefit trusts, individuals and other
investment pools. There may be occasions on which other investment advisory
clients advised by Heitman/PRA Advisors may also invest in the same securities
as the Fund. When these clients buy or sell the same securities at
substantially the same time, Heitman/PRA Advisors may average the transactions
as to price and allocate the amount of available investments in a manner which
it believes to be equitable to each client, including the Fund. In some
instances, this investment procedure may adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund. On
the other hand, to the extent permitted by law, Heitman/PRA Advisors may
aggregate the securities to be sold or purchased for the Fund with those to be
sold or purchased for other clients managed by it in order to obtain lower
brokerage commissions, if any.
During the fiscal years ended December 31, 1996 and December 31, 1995,
the three-month period ended December 31, 1994 and the fiscal year ended
September 30, 1994 the Fund paid $400,540, $334,132, $98,851, and $510,528,
respectively, in brokerage commissions. During the fiscal year ended December
31, 1996, transactions of the Fund aggregating $112,774,163 were allocated to
brokers providing research, statistical and other related services and
$232,200 in brokerage commissions were paid on these transactions.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Trust, their principal
occupations during the last five years and their current addresses are set
forth below. Those Trustees who are "interested persons" of the Trust (as
defined in the 1940 Act) by virtue of their affiliations with the Fund or
Heitman/PRA Advisors are indicated by an asterisk (*).
4
<PAGE>
*WILLIAM L. RAMSEYER, (BORN 1941)
Chairman of the Board of Trustees and Chief Executive Officer. Mr.
Ramseyer serves as Chairman of the Board, Chief Executive Officer and Chairman
of Heitman/PRA Advisors and as a member of the Investment Committee and the
Executive Committee of Heitman Financial Ltd. Mr. Ramseyer served as a member
of the Executive Committee of Heitman/JMB Advisory Corporation and Executive
Vice President of JMB Institutional Realty Corp. from September, 1988 to
December, 1995.
From June 1982 to August 1988 he was President of Pension Realty
Advisors, Inc., managing Pension Realty Advisors' practice, which focused on
assisting tax-exempt clients with development of equity real estate investment
objectives and policies, selection of managers and advisors, and review of
portfolio performance. The firm's client base was comprised substantial
pension plans, endowments and other tax-exempt institutions. Mr. Ramseyer co-
founded the predecessor to Heitman/PRA Advisors in 1987.
Mr. Ramseyer is a member of the American Society of Real Estate
Counselors, where he serves on the Board of Governors, the National
Association of Real Estate Investment Trusts, and the National Association of
Real Estate Investment Managers. Mr. Ramseyer is past chairman of the Pension
Real Estate Association. Address: Heitman/PRA Securities Advisors, Inc., 180
North LaSalle Street, Suite 3600, Chicago, IL 60601.
ROBERT W. BEENEY, (BORN 1940)
Trustee of the Trust. Mr. Beeney is the Proprietor of Robert Beeney and
Company of San Francisco, Real Estate Consultants and Advisors. He has been
continuously engaged in real estate appraisal, consultancy and brokerage since
1959 and is a Fellow of the Royal Institution of Chartered Surveyors (Harriott
Prize 1963) and a member of the San Francisco Board of Realtors and the
International Real Estate Federation. Mr. Beeney has been a frequent speaker
to real estate industry groups and associations including the National
Association of Realtors, International Real Estate Federation, Royal
Institution of Chartered Surveyors, Building Owners and Managers Association,
Society of Industrial Realtors, and Building Industry Association.
Prior to re-forming Robert Beeney and Company in 1987, Mr. Beeney was a
founding partner of Jones Lang Wootton, USA (1978-1984) and Executive Director
of Marcus and Millichap Capital Markets group (1985-1987). Address: Robert
Beeney and Company, 433 California Street, San Francisco, CA 94104.
DONALD L. FOOTE, (BORN 1929)
Trustee of the Trust. Mr. Foote is the Chairman of the Board of First
National Acceptance Company. He is also the President of 1889 Bankshares,
Inc. Address: First National Acceptance Company, 241 East Saginaw, East
Lansing, MI 48826.
JOHN F. GOYDAS, (BORN 1934)
Trustee of the Trust. Mr. Goydas is a retired Managing Director of J. P.
Morgan Investment Management, Inc. having spent 33 years of employment with
the Morgan Bank. Mr. Goydas was responsible for all corporate and real estate-
related fixed-rate private placement investments; was a member of Morgan
Bank's Special Investments Committee (Convertible, Oil & Gas and Real Estate
investments) and the Credit Committee. Address: 217-55 Peck Avenue, Hollis
Hills, NY 11427.
5
<PAGE>
MAURICE WIENER, (BORN 1942)
Trustee of the Trust. Mr. Wiener is Chairman of the Board and Chief
Executive Officer of HMG/Courtland Properties, Inc., a real estate investment
trust, and Courtland Group, Inc., a real estate advisory company. He is also
Executive Trustee of Transco Realty Trust, a real estate investment company,
and Vice Chairman of the Board of T.G.I.F. Texas, Inc., a real estate
investment company. Address: HMG/Courtland Properties, Inc., 2701 South
Bayshore Drive, Coconut Grove, FL 33133.
DEAN A. SOTTER, (BORN 1960)
President, Chief Financial Officer, Chief Accounting Officer and
Treasurer of the Trust. Mr. Sotter is President of Heitman/PRA Advisors and a
member of its Investment Committee. Mr. Sotter has overall responsibility for
portfolio management and marketing.
Prior to joining Heitman/PRA Advisors, Mr. Sotter was a Partner of PRA
Securities Advisors, L.P. He was a Portfolio Manager and Vice President of JMB
Institutional Realty Corporation (1985-1992), where his responsibilities
included property level analysis, budgeting and valuation as well as financial
reporting and client communications. During the last several years, Mr. Sotter
was responsible for servicing approximately 70 institutional clients in 13
states and prospects for new business in those areas. In addition, in 1992,
Mr. Sotter worked extensively on the feasibility of the formation of a
publicly traded REIT.
For three years (1982-1985), Mr. Sotter was employed by Price Waterhouse
in the areas of audit and taxation. Mr. Sotter received a Bachelor of Science
degree from Indiana University, an MBA from the University of Chicago and is a
CPA. Address: Heitman/PRA Securities Advisors, Inc., 180 North LaSalle
Street, Suite 3600, Chicago, IL 60601.
NANCY B. LYNN, (BORN 1957)
Secretary to the Trust. Ms. Lynn is Vice President of Heitman/PRA Advisors.
Ms. Lynn has overall responsibility for compliance and Trust administration
and is also involved in corporate administration.
Prior to joining Heitman/PRA Advisors, Ms. Lynn served as Administrator with
PRA Securities Advisors, L.P. and with JMB Realty Corporation as Supervisor of
Partnership Operations (1985-1992) where she was responsible for the transfer
agent functions of the JMB sponsored limited partnerships. She previously
served as Retirement Savings Specialist for Bell Federal Savings and Loan
Association of Chicago, Illinois (1979-1983).
Ms. Lynn received a Bachelor of Arts degree from the University of Illinois
at Chicago. Address: Heitman/PRA Securities Advisors, Inc., 180 North LaSalle
Street, Suite 3600, Chicago, IL 60601.
TIMOTHY J. PIRE, CFA (BORN 1962)
Assistant Secretary to the Trust. Mr. Pire is Vice President of
Heitman/PRA Advisors. Mr. Pire's responsibilities include portfolio
management, investigation, and analysis of publicly traded real estate
securities and implementation of the investment strategy through portfolio
management.
Prior to joining Heitman/PRA Advisors, Mr. Pire served as Research
Analyst with PRA Securities Advisors, L.P., and he was an Associate Appraiser
with Lyon, Skelte & Speirs in Seattle, Washington (1990-1992). He was
involved in valuation of commercial real estate and writing full narrative
appraisals. For over three years, Mr. Pire was employed by First Wisconsin
National Bank where he was involved in underwriting commercial loans.
Mr. Pire received a Bachelor of Science and a Masters of Science degree
from the University of Wisconsin. Mr. Pire is also a Chartered Financial
Analyst. Address: Heitman/PRA Securities Advisors, Inc., 180 North LaSalle
Street, Suite 3600, Chicago, IL 60601.
RANDY NEWSOME (BORN 1959)
Assistant Secretary to the Trust. Mr. Newsome is Vice President of
Heitman/PRA Advisors. Mr. Newsome's responsibilities include portfolio
management, investigation, and analysis of publicly traded real estate
securities and implementation of the investment strategy through portfolio
management. Mr. Newsome also oversees Heitman/PRA Advisors' trading
positions.
6
<PAGE>
Prior to joining Heitman/PRA Advisors, Mr. Newsome served as Research
Analyst with PRA Securities Advisors, L.P., and he was Vice President with The
Stratus Corporation in Chicago, Illinois from 1989-1993 where he was
responsible for property management, leasing and construction management.
Mr. Newsome received a Bachelor of Science degree from Illinois Wesleyan
University. Address: Heitman/PRA Securities Advisors, Inc., 180 North
LaSalle Street, Suite 3600, Chicago, IL 60601.
JOHN J. KELLEY, (BORN 1959)
Assistant Treasurer to the Trust. Mr. Kelley is a Vice President of
Rodney Square Management Corporation where he oversees the accounting services
provided to the Trust.
Prior to joining Rodney Square Management Corporation, Mr. Kelley served
as an Officer/Group Supervisor in the Mutual Fund Accounting and
Administration Department of Provident Financial Processing Corporation (1984-
1989).
Mr. Kelley received his MBA and Bachelor of Science degree from St.
Joseph's University.
LAURIE V. BROOKS, (BORN 1962)
Assistant Secretary to the Trust. Ms. Brooks is a Senior Mutual Fund
Administrator for Rodney Square Management Corporation where she provides
administrative services to the Trust.
Prior to joining Rodney Square Management Corporation, Ms. Brooks worked
as a legal assistant for Skadden, Arps, Slate Meagher & Flom (1989-1994).
Ms. Brooks received her Bachelor of Arts degree from Dickinson College
and a Paralegal Certificate in Corporate Finance and Business Law from The
Institute for Paralegal Training.
No officer or employee of Heitman/PRA Advisors, or of its affiliates,
receives any compensation from the Trust for serving as an officer or Trustee
of the Trust. The Trust pays each Trustee who is not an officer or employee
of Heitman/PRA Advisors, or of its affiliates, $10,000 per annum, $1,000 per
quarterly meeting attended, $500 for attendance by phone and reimburses each
such Trustee for travel and out-of-pocket expenses. During the calendar year
ended December 31, 1996, the Trustees of the Trust received compensation in
the amounts set forth in the table below:
COMPENSATION TABLE
AGGREGATE PENSION OR RETIREMENT
COMPENSATION BENEFITS ACCRUED AS PART OF
NAME POSITION FROM THE TRUST FUND EXPENSES1
- --------------- ------------ --------------------- --------------
Robert W. Beeney Trustee $14,500 $0
Donald L. Foote Trustee 12,500 0
John F. Goydas Trustee 14,500 0
William L. Ramseyer Trustee 0 0
Maurice Wiener Trustee 13,000 0
- ----------------------
1 The Trust does not provide retirement or pension benefits to any of its
Trustees.
7
<PAGE>
INVESTMENT MANAGER
The investment manager of the Fund is Heitman/PRA Advisors, a registered
investment adviser under the Investment Advisers Act of 1940. As of March 31,
1997, Heitman/PRA Advisors managed investment portfolios of publicly traded
REITs totaling approximately $480 million. The Fund has retained Heitman/PRA
Advisors as investment manager to provide day-to-day discretionary investment
management services to the Fund pursuant to an Investment Management Agreement
dated January 31, 1995.
Heitman/PRA Advisors is a wholly owned subsidiary of Heitman Financial
Ltd. ("Heitman") which is a wholly owned subsidiary of United Asset Management
Corporation. Established in 1913, Heitman is one of the nation's largest
institutional real estate advisers with over 870 real estate professionals in
92 offices throughout the United States, currently managing $10.2 billion in
real estate.
The Investment Management Agreement provides that Heitman/PRA Advisors
shall furnish advice to the Fund and, to the extent authorized by the
Trustees, determine what securities shall be purchased or sold. Heitman/PRA
Advisors uses its own personnel and facilities and securities analysis to
provide in depth research to formulate and implement investment strategy.
This research is supplemented by outside services provided by the brokerage
and investment banking community. Heitman/PRA Advisors, at its expense, pays
the compensation of all employees of Heitman/PRA Advisors (if any such person,
or other affiliated person of Heitman/PRA Advisors, is a Trustee of the Trust,
or serves as an employee thereof, such person serves as such without
additional compensation from the Trust). For its services, Heitman/PRA
Advisors is entitled to receive from the Trust an investment management fee as
described in the Prospectus under the caption "Management of the Fund." The
investment management fee is allocated to each class of shares of the Fund on
the basis of the net asset value of that class in relation to the net asset
value of the Fund.
The Investment Management Agreement for the Trust was approved by the
Board of Trustees of the Trust, including a majority of the Trustees who are
not parties to the Investment Management Agreement or "interested persons" (as
defined in the 1940 Act) of any such party on December 5, 1994 and by the
Fund's shareholders on January 23, 1995. The Investment Management Agreement
continues in effect from year to year, provided that its continuance is
approved annually both (i) by the holders of a majority of the outstanding
voting securities of the Trust or by the Board of Trustees, and (ii) by a
majority of the Trustees who are not parties to such Agreement or "interested
persons" of any such party. The Investment Management Agreement was last
approved by the Board of Trustees of the Trust and by a majority of Trustees
who are not parties to such Agreement or "interested persons" of any such
party on March 10, 1997 for the one-year period commencing April 1, 1997. The
Investment Management Agreement may be terminated on sixty (60) days' written
notice by any party and will terminate automatically if it is assigned.
The Trust bears expenses for its own legal and auditing services, taxes,
interest, brokerage fees, fees of Trustees other than Trustees affiliated with
the Investment Manager, governmental fees, certain insurance premiums, the
cost of stock certificates, fees and disbursements of the custodian and
transfer agent, if any, brokerage, interest and other expenses properly
payable by the Trust and not specifically borne by the Investment Manager.
The Trust pays all costs of shareholder notices, reports and Prospectuses used
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in complying with laws regulating the issue or sale of securities. The Trust
also pays the charges and expenses of any servicing agent appointed by the
Trust to provide bookkeeping, accounting and administrative services for the
Fund. During the fiscal years ended December 31, 1996 and December 31, 1995,
the three-month period ended December 31, 1994 and the fiscal year ended
September 30, 1994, the fees paid to the Investment Manager were $992,968,
$724,658, $201,070, and $881,646, respectively. The Investment Manager has
agreed that if in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to the Investment Management Agreement, but excluding
interest, brokerage expenses, taxes and extraordinary items) exceed 1.75% of
the first $50 million of the Fund's average net assets and 1.5% of assets in
excess of $50 million, the Investment Manager will reduce its advisory fee by
the amount of such excess expense. Such a fee reduction, if any, will be
reconciled on a monthly basis.
PURCHASE OF SHARES
General information on how to buy shares of the Fund, as well as sales
charges, if any, involved, is set forth under "Purchase of Shares" in the
Prospectus. The following supplements that information.
For purposes of determining whether a purchase of the Advisor Class
shares of beneficial interest in the Fund (the "Advisor Class") qualifies for
reduced sales charges and for purposes of determining whether an investor can
join with another investor in a single purchase for inclusion toward
completion of a Letter of Intent with respect to Advisor Class shares, the
term "related person" includes: (i) an individual, or an individual combining
with his or her spouse and their children and purchasing for his, her or their
own account; (ii) a "company" as defined in Section 2(a)(8) of the 1940 Act;
(iii) a trustee or other fiduciary purchasing for a single trust estate or
single fiduciary account (including a pension, profit sharing or other
employee benefit trust created pursuant to a plan qualified under Section 401
of the Internal Revenue Code); (iv) a tax-exempt organization under
Section 501(c)(3) of (13) of the Internal Revenue Code; and (v) an employee
benefit plan of a single employer or of affiliated employers.
ADMINISTRATIVE, ACCOUNTING, DISTRIBUTION AND SHAREHOLDER SERVICES
Rodney Square Management Corporation ("Rodney Square"), Rodney Square
North, 1100 North Market Street, Wilmington DE 19890-0001, provides certain
administrative and accounting services to the Fund pursuant to an Amended and
Restated Administration Agreement (the "Administration Agreement") and an
Amended and Restated Accounting Services Agreement (the "Accounting Services
Agreement"), each dated as of November 14, 1996.
Under the Administration Agreement, Rodney Square (1) coordinates with
the Fund's Custodian and Transfer Agent and monitors the services they provide
to the Fund; (2) coordinates with and monitors any other third parties
furnishing services to the Fund; (3) provides the Fund with necessary office
space, telephones and other communications facilities and personnel competent
to perform administrative and clerical functions for the Fund; (4) supervises
the maintenance by third parties of such books and records of the Fund as may
be required by applicable Federal or state law; (5) prepares and, after
approval by the Fund, files and arranges for the distribution of proxy
materials and periodic reports to shareholders of the Fund as required by
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applicable law; (6) prepares and, after approval by the Fund, arranges for the
filing of such registration statements and other documents with the Securities
and Exchange Commission and other Federal and state regulatory authorities as
may be required by applicable law; (7) reviews and submits to the officers of
the Fund for their approval invoices or other requests for payment of Fund
expenses and instructs the Fund's custodian to issue checks in payment
thereof; and (8) takes such other action with respect to the Fund as may be
necessary in the opinion of Rodney Square to perform its duties under the
agreement.
As compensation for services performed under the Administration
Agreement, Rodney Square receives a fee payable monthly computed on the
average daily net assets of each class of the Fund at the end of each business
day at an annual rate of .10%, plus any out-of-pocket expenses. During the
fiscal years ended December 31, 1996 and 1995, the three-month period ended
December 31, 1994, and the fiscal period ended September 30, 1994, the fees
paid to Rodney Square by the Trust pursuant to the Administration Agreement
were $141,640, $107,310, $29,091, and $134,382, respectively.
Under the Accounting Services Agreement, Rodney Square (a) maintains and
keeps current the books, accounts, records, journals or other records of
original entry relating to the business of the Fund; (b) calculates daily net
asset value per share and determines dividends; and (c) performs other related
accounting services including the preparation of periodic financial statements
for the Fund.
As compensation for services performed under the Accounting Services
Agreement, Rodney Square receives a fee payable monthly at an annual rate of
$75,000, plus .02% of the average net assets in excess of $100 million,
computed on the average daily net assets of the Fund at the end of each
business day, plus any out-of-pocket expenses. During the fiscal years ended
December 31, 1996 and December 31, 1995, the three-month period ended December
31, 1994, and the fiscal period ended September 30, 1994, fees paid to Rodney
Square by the Fund pursuant to the Accounting Services Agreement were $73,582,
$56,863, $11,915, and $50,124, respectively.
Rodney Square Distributors, Inc. ("RSD"), Rodney Square North, 1100 North
Market Street, Wilmington DE 19890-0001, provides distribution services to the
Fund with respect to the Heitman/PRA Institutional class of shares of the Fund
(the "Institutional Class") pursuant to a Distribution Agreement, dated as of
December 4, 1993 (the "RSD Distribution Agreement").
Under the RSD Distribution Agreement, RSD is granted the right to sell
Institutional Class shares of the Fund as agent for the Trust. Institutional
Class shares of the Fund are offered continuously. RSD agrees to use all
reasonable efforts to secure purchasers for Institutional Class shares of the
Fund and to pay expenses of printing and distributing prospectuses, statements
of additional information and reports prepared for use in connection with the
sale of Institutional Class shares and any other literature and advertising
used in connection with the offering, subject to reimbursement from the Fund's
Investment Manager. RSD receives no compensation from the Fund.
The RSD Distribution Agreement was last approved by the Board of Trustees
of the Trust, including a majority of the Trustees who are not interested
persons of the Trust on November 14, 1996, and will remain in effect for one
year and then will continue in effect from year to year as long as its
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continuance is approved at least annually by a majority of the Trustees,
including a majority of the Independent Trustees. The RSD Distribution
Agreement terminates automatically in the event of its assignment. The
Agreement is also terminable without payment of any penalty with respect to
the Fund (i) by the Fund (by vote of a majority of the Trustees of the Trust
who are not interested persons of the Trust or by vote of a majority of the
outstanding voting securities of the Trust) on sixty (60) days' written notice
to RSD; or (ii) by RSD on sixty (60) days' written notice to the Trust.
ACG Capital Corporation ("ACG"), 1661 Tice Valley Boulevard, #200, Walnut
Creek, CA 94595, provides distribution services to the Fund with respect to
Advisor Class shares pursuant to a Distribution Agreement, dated as of May 15,
1995 (the "ACG Distribution Agreement").
Under the ACG Distribution Agreement, ACG is granted the right to sell
Advisor Class shares as agent for the Trust. ACG agrees to use all reasonable
efforts to secure purchasers for the Advisor Class shares and to pay expenses
of printing and distributing prospectuses, statements of additional
information and reports prepared for use in connection with the sale of
Advisor Class shares and any other literature and advertising used in
connection with the offering. In connection with the services to be provided
by ACG under the ACG Distribution Agreement, ACG receives from the Fund as
compensation for services provided thereunder, subject to the terms and
conditions of the Trust's Plan of Distribution Pursuant to Rule 12b-1, an
amount with respect to Advisor Class shares determined at an annual rate of
.25% of the average daily value of net assets represented by such shares, such
amount to be paid in arrears at the end of each calendar month. For the
fiscal years ended December 31, 1996 and December 31, 1995, the Fund paid
$89,289 and $2,985, respectively, in compensation to ACG pursuant to the ACG
Distribution Agreement.
The ACG Distribution Agreement dated May 15, 1995, was initially approved
by the Board of Trustees of the Trust, including a majority of the Trustees
who are not interested persons of the Trust, on April 28, 1995, and will
continue in effect from year to year as long as its continuance is approved at
least annually by a majority of the Trustees, including a majority of the
Independent Trustees. The ACG Distribution Agreement terminates automatically
in the event of its assignment. The Agreement is also terminable without
payment of any penalty with respect to the Fund (i) by the Fund (by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust or by vote of a majority of the outstanding voting securities of the
Advisor Class shares of the Fund) on sixty (60) days' written notice to ACG;
or (ii) by ACG on sixty (60) days' written notice to the Trust.
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 (the
"Distribution Plan") with respect to the distribution of Advisor Class shares
in accordance with the regulations under the 1940 Act. General information
about the Distribution Plan is set forth under "Purchase of Shares -
Distribution Plan" in the Advisor Class Prospectus. The following supplements
that information.
Under the Distribution Plan, the Fund may engage, directly or indirectly,
in financing any activities primarily intended to result in the sale of
Advisor Class shares, including, but not limited to, (1) making payments to
underwriters, securities dealers and others engaged in the sale of shares,
including payments to ACG to be used to compensate or reimburse ACG or
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<PAGE>
securities dealers (which securities dealers may be affiliates of ACG) engaged
in the distribution and marketing of shares and furnishing ongoing assistance
to investors, and (2) reimbursement of direct out-of-pocket expenditures
incurred by ACG in connection with the distribution and marketing of shares
and the servicing of investor accounts, including expenses relating to the
formulation and implementation of marketing strategies and promotional
activities such as direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising, the preparation, printing and
distribution of Prospectuses of the Fund and reports for recipients other than
existing shareholders of the Fund, and obtaining such information, analyses
and reports with respect to marketing and promotional activities and investor
accounts as the Fund may, from time to time, deem advisable.
The expenditures to be made pursuant to the Distribution Plan may not
exceed an annual rate of 0.25% of the average daily value of net assets
represented by Advisor Class shares. ACG may have also used additional
resources of its own for further expenses on behalf of the Fund.
The Investment Manager and ACG have entered into an amended Marketing
Services Agreement effective as of March 11, 1996 (the "Marketing Services
Agreement"), with respect to the sale of certain Advisor Class and
Institutional Class shares. Under the Marketing Services Agreement, the
Investment Manager will pay ACG, in addition to the compensation paid to ACG
under the ACG Distribution Agreement and the Distribution Plan, compensation
at an annual rate of (i) .15 of 1% of the net asset value of the Fund
represented by Advisor Class shares with the exception of Advisor Class shares
sold through The Nomura Securities Co., Ltd. and (ii) .25 of 1% of the net
asset value of the Fund represented by Institutional Class shares purchased by
investors introduced to the Investment Manager by ACG and acknowledged by the
Investment Manager as introduced by ACG. The Investment Manager has also
agreed to pay ACG .10 of 1% of the net asset value of Advisor Class shares
held in omnibus shareholder accounts maintained by Charles Schwab & Company,
Inc. or Resources Trust Company as well as certain expenses related to the
Advisor Class shares.
Pursuant to the Marketing Services Agreement, if the Distribution Plan is
terminated or modified, the Investment Manager will be required to pay to ACG
an amount equal to 50% of any reduction in fees paid to ACG under the
Distribution Agreement as a result of such termination or modification, up to
a maximum of .125 of 1% per annum of the net asset value of the Fund
represented by the Advisor Class shares. In addition, the Investment Manager
has agreed to make certain continuing payments to ACG in the event that the
Marketing Services Agreement is terminated. Depending on the reason for
termination, the continuing payments are either .25 of 1% or .15 of 1% per
annum of the net asset value of the Fund represented by Advisor Class shares
and qualified Institutional Class shares held by investors as of the date of
termination of the Marketing Services Agreement and are payable for a period
of 5 years if the applicable rate is .15 of 1% and for a period of 10 years if
the applicable rate is .25 of 1%. The continuing payments are contingent upon
ACG remaining registered as a broker/dealer. In addition, if the Investment
Manager terminates the Marketing Services Agreement for "cause" or if ACG
terminates the ACG Distribution Agreement, ACG will not be entitled to any
continuing payments.
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The Marketing Services Agreement also provides that ACG will not serve as
a distributor of shares of any other open-end registered investment company
that invests primarily in REITs (other than indirectly as a result of
marketing asset management programs of which REIT mutual funds are a
component) and that the Investment Manager and its affiliates will not offer,
sponsor, advise or otherwise promote any mutual fund or class of shares of a
mutual fund for which ACG is not the distributor, with certain exceptions,
including Institutional Class shares, certain offerings of shares of closed-
end investment companies, shares of investment companies offered outside the
United States, certain insurance products and investment products offered to
certain qualified retirement plans.
The Fund has also adopted a Shareholder Servicing Plan which is described
in the Advisor Class Prospectus under the captions "Purchase of Shares-
Shareholder Servicing Agreement." The Shareholder Servicing Plan provides
that the Advisor Class may spend annually, directly or indirectly, up to 0.25%
of the average daily value of the net assets attributable to Advisor Class
shares for shareholder servicing activities. During the fiscal years ended
December 31, 1996 and December 31, 1995, the Fund paid an aggregate of $89,289
and $2,985, respectively, to service organizations under contracts entered
into pursuant to the Shareholder Servicing Plan.
A quarterly report of the amounts expended under the Distribution Plan
and the Shareholder Servicing Plan, and the purposes for which such
expenditures were incurred, must be made to the Trustees for their review.
Neither the Distribution Plan nor the Shareholder Servicing Plan may be
amended without shareholder approval to increase materially the distribution
or shareholder servicing costs that the Fund may pay with respect to Advisor
Class shares. The Distribution Plan, the Shareholder Servicing Plan and
material amendments to either such Plan must be approved annually by all of
the Trustees and by the Trustees who are neither interested persons of the
Fund nor have any direct or indirect financial interest in the operation of
the respective Plan or any related agreements.
DESCRIPTION OF THE TRUST
The Trust is a diversified, open-end management investment company
organized as a Massachusetts business trust under the laws of the Commonwealth
of Massachusetts under a Master Trust Agreement dated September 15, 1988, as
amended and restated on February 28, 1995. In March 1995, the Trust's name
was changed from PRA Securities Trust to Heitman Securities Trust.
The Trustees have authority to issue an unlimited number of shares of
beneficial interest in one or more separate series, $.001 par value per share.
The shares of the Fund offered hereby constitute the sole series authorized to
date. In addition, the Trustees are authorized to issue an unlimited number
of classes of shares of beneficial interest in each series. To date, the
Trust has established one series, the Heitman Real Estate Fund, and two
classes of shares, designated as the Advisor Class and the Heitman/PRA
Institutional Class.
The assets received by the Trust for the issue or sale of shares of the
Fund and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are specially allocated to each class of the Fund,
and constitute the underlying assets of the Fund. The underlying assets of
the Fund are required to be segregated on the books of account, and are to be
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charged with the expenses in respect of each class of the Fund and with a
share of the general expenses of the Trust. Except for those differences
between the classes of shares described below and elsewhere in the
Prospectuses and this Statement of Additional Information, each share of the
Fund has equal dividend, redemption and liquidation rights with other shares
of the Fund. Upon any liquidation of the Fund, shareholders thereof are
entitled to share pro rata in the net assets of each class belonging to the
Fund available for distribution.
Each share of each class of shares represents an identical interest in
the same portfolio of investments of the Fund and has the same rights,
privileges and preferences, except with respect to: (a) the designation of
each class; (b) the sales charge applicable to the Advisor Class; (c) the
distribution and service fees borne by the Advisor Class; (d) the expenses
allocable exclusively to each class, if any; and (e) voting rights on matters
exclusively affecting a single class. The Trust has adopted an expense
allocation plan under which all expenses other than distribution and service
fees borne by the Advisor Class, are allocated pro rata based on the relative
net assets of each class.
Shares of the Fund entitle its holders to one vote per share (with
proportionate voting for fractional shares) irrespective of the relative net
asset value of the Fund's shares.
The Trust does not hold annual meetings of shareholders. There will
normally be no meetings of shareholders for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of Trustees.
Shareholders of record of not less than two-thirds of the outstanding shares
of the Trust may remove a Trustee through a declaration in writing or by vote
cast in person or by proxy at a meeting called for that purpose. The Trustees
are required to call a meeting of shareholders for the purposes of voting upon
the question of removal of any Trustee when requested in writing to do so by
the shareholders of record of not less than 10% of the Trust's outstanding
shares. Generally, shares of the Fund will be voted on a Fund-wide basis on
all matters except matters affecting only the interests of one class. The
Advisor Class will have exclusive voting rights with respect to any amendments
to the Fund's Rule 12b-1 Plan of Distribution or Shareholder Servicing Plan
that would materially increase any amounts paid thereunder.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Master Trust Agreement disclaims shareholder liability for acts or obligations
of the Trust and requires that notice of such disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
Trustee. The Master Trust Agreement provides for indemnification from Trust
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations, a
possibility which Heitman/PRA Advisors believes is remote. Upon payment of
any liability incurred by the Fund, the shareholder of the Fund paying such
liability will be entitled to reimbursement from the general assets of the
Fund. The Trustees intend to conduct the operations of the Fund in such a way
so as to avoid, to the greatest extent possible, ultimate liability of the
shareholders for liabilities of the Fund.
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As of April 1, 1997, the following shareholders were known to own of
record more than 5% of the total outstanding shares of either the
Institutional Class or Advisor Class of the Fund, as the case may be:
PERCENTAGE PERCENTAGE PERCENTAGE
OWNERSHIP OWNERSHIP OWNERSHIP
OF INSTITUTIONAL OF ADVISOR OF ALL
NAME AND ADDRESS CLASS SHARES CLASS SHARES FUND SHARES
- ---------------- ---------------- ------------ -----------
United Nations, for the
United Nations Joint 26.01% - 16.49%
Staff Pension Fund, a United
Nations Organization
c/o Fiduciary Trust International
Two World Trade Center
New York, NY 10048
Charles Schwab & Company, Inc. 20.28% 49.67% 31.03%
101 Montgomery Street
San Francisco, CA 94104
HAWCO 8.49% - 5.30%
Hawaiian Trust Company, Ltd.
as Trustee
P.O. Box 1930
Honolulu, HI 96805
FTC & Co. _ 8.07% 2.95%
Attn. Datalynx
P.O. Box 173736
Denver, CO 80217
Donoldson, Lufkin & Jenrette 8.49% _ 4.12 %
1 Pershing Plaza
Jersey City, NJ 07399
Singhin & Co. 5.04% _ 3.19%
c/o Bankers Trust Company
Two Pacific Place, 26th Floor
88 Queensway
Hong Kong
As of April 1, 1997, the officers and Trustees of the Trust as a group
owned less than 1% of the outstanding shares of the Fund.
The following is a summary of selected federal income tax considerations
that may affect the Fund and its shareholders. The summary is not intended as
a substitute for individual tax advice, and investors are urged to consult
their own tax advisers with specific reference to their own federal, state or
local tax situations.
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<PAGE>
TAXATION OF THE FUND
The Fund intends to continue to qualify and elect to be treated each
taxable year as a "regulated investment company" under subchapter M of the
Internal Revenue Code of 1986, as amended. Accordingly, the Fund will not be
liable for federal income taxes on its net investment income and net capital
gain that are distributed to shareholders, provided that the Fund distributes
at least 90% of its net investment income and net short-term capital gains for
that year.
To qualify as a regulated investment company, the Fund must, among other
things, (i) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to loans of securities and gains
from the sale or other disposition of stock, securities or foreign currencies,
or other income derived with respect to its business of investing in such
stock, securities or currencies; (ii) derive in each taxable year less than
30% of its gross income from the sale or other disposition of stock or
securities held less than three months; and (iii) satisfy certain
diversification requirements.
The Internal Revenue Code of 1986, as amended, imposes a nondeductible 4%
excise tax on a regulated investment company that fails to distribute during
each calendar year an amount equal to the sum of (i) at least 98% of its
ordinary income for the calendar year, (ii) at least 98% of its capital gain
net income for the twelve-month period ending on October 31 of the calendar
year; and (iii) any portion (not taxed to the Fund) of the respective balances
from the prior year. The Fund intends to make such distributions as are
necessary to avoid imposition of the excise tax.
TAXATION OF INVESTMENTS BY THE FUND
Gains or losses on sales of securities by the Fund will generally be long-
term capital gains or losses if the Fund has held the securities for more than
one year. Gains or losses on sales of securities held for less than one year
will generally be short-term.
TAXATION OF THE FUND'S SHAREHOLDERS-SPECIAL CONSIDERATIONS
The portion of the dividends received from the Fund by its corporate
shareholders which qualifies for the 70% dividends-received deduction will be
reduced to the extent that the Fund holds dividend-paying stock for less than
46 days (91 days for certain preferred stocks). In addition, distributions
that the Fund receives from a REIT will not constitute "dividends" for
purposes of the dividends-received deduction and, thus, Fund dividends
attributable to such distributions will not qualify for the dividends-received
deduction. Accordingly, only a small percentage of dividends from the Fund
are expected to qualify for the dividends-received deduction. Dividends-
received deductions will be allowed only with respect to shares that a
corporate shareholder has held for at least 46 days within the meaning of the
same holding period rules applicable to the Fund.
Dividends paid by the Fund from net investment income and net short-term
capital gains will be taxable to shareholders as ordinary income for federal
income tax purposes, whether received in cash or reinvested in additional
shares. Distributions of net capital gain will be taxable to shareholders as
long-term capital gain, whether paid in cash or reinvested in additional
shares, and regardless of the length of time the shareholder has held his or
her shares of the Fund.
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If a shareholder receives a distribution taxable as long-term capital
gain with respect to shares of the Fund, and redeems or exchanges the shares
before he or she has held them for more than six months, any loss on the
redemption or exchange will be treated as a long-term capital loss to the
extent of such capital gain distribution.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to fully report dividend or interest income, or fails to certify
that he or she has provided a correct taxpayer identification number or that
he or she is not subject to "backup withholding," then the shareholder may be
subject to a 31% federal backup withholding tax with respect to (i) taxable
dividends and distributions and (ii) the proceeds of redemptions or exchanges.
The 31% backup withholding tax is not an additional tax and may be credited
against a shareholder's regular federal income tax liability. An individual's
taxpayer identification number is his or her social security number.
REDEMPTION OF SHARES
Detailed information on methods for redemption of shares is included in
the Prospectus. The right to redeem shares of the Fund may be suspended or
the date of payment postponed (i) for any period during which the New York
Stock Exchange ("NYSE") is closed (other than for customary weekend or holiday
closings), (ii) when trading in the markets the Fund normally uses is
restricted or when an emergency exists as determined by the Securities and
Exchange Commission ("SEC") so that disposal of the Fund's investments or
determination of its net asset value is not reasonably practicable, or (iii)
for such other periods as the SEC, by order, may permit for protection of the
Fund's shareholders.
VALUATION OF SHARES
The Prospectus describes the time at which the net asset value of the
Fund is determined for purposes of sales and redemptions. The following is a
description of the procedures used by the Fund in valuing its assets.
Readily marketable portfolio securities dually listed on the NYSE and
other national securities exchanges are valued at the last sale price as
reported on the NYSE on the business day as of which such value is being
determined. Readily marketable securities not reported on the NYSE tape, but
listed on national securities exchanges, shall be valued at the last sale
price, on the business day as of which such value is being determined, on the
exchange considered by the Trustees to be the primary trading market for such
securities. If there has been no sale on such day, the security shall be
valued at the average between closing bid and closing offer quoted on such
day. If no bid or offer price is quoted on such day, then the security is
valued by such method as the Trustees shall determine in good faith to reflect
its fair market value. Readily marketable securities traded only in the over-
the-counter market are valued at the last price as reported on the National
Market System, or, if the security is not reported on the National Market
System, at the last reported bid on such day. If market quotations for over-
the-counter traded securities are not readily available, a fair value, as
determined in good faith by the Trustees, will be used. The value of the
securities in the Fund's portfolio may be more or less than cost.
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<PAGE>
Short-term securities with 60 days or less to maturity will be amortized
to maturity based on their cost to the Fund if acquired within 60 days of
maturity or, if already held by the Fund, on the 60th day, based on the value
determined on the 61st day.
Options are generally valued at the last sale price; in the absence of
last sale price, the average between the highest bid and the lowest offer
quoted on such day is used. When the Fund writes an option, an amount equal
to the premium received by it is included in the Fund's statement of assets
and liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked to market to reflect the current market value
of the option written. When the Fund purchases a stock index option, the
premium paid by the Fund is recorded as an asset and is subsequently adjusted
to the current market value of the option. Investments in U.S. Government
securities (other than short-term securities) are valued at the average of the
quoted bid and asked prices in the over-the-counter market.
Notwithstanding the aforementioned methods of valuation, the Trustees may
in their discretion permit or require some other method or methods of
valuation to be used if they consider that such other methods better reflect
the fair market value of all or a portion of the assets of the Fund.
ADVERTISING AND CALCULATION OF PERFORMANCE DATA
From time to time, the Fund may advertise the performance of the Fund in
terms of its total return or its yield and total return. The yield and total
return calculations give effect to all recurring expenses of the Fund and are
computed separately for each class of shares of the Fund.
Average Annual Total Return. Average annual total return is computed by
determining the average annual compounded rate of return over the designated
periods that, if applied to the initial amount invested would produce the
ending redeemable value, 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
ERV = ending redeemable value at the end of the
designated period assuming a hypothetical $1,000
payment made at the beginning of the designated
period
The calculation is based on the further assumptions that the maximum
initial sales charge is deducted, and that all dividends and distributions by
the Fund are reinvested at net asset value on the reinvestment dates during
the designated periods. Based upon the foregoing calculations, the average
annual total returns of the Institutional Class for the one-year and five-year
periods ended December 31, 1996 and for the life of the Fund were 38.06%,
17.38% and 10.18%, respectively, and the average annual total returns of the
Advisor Class for the one-year period ended December 31, 1996 and for the life
of the Fund were 30.91%, and 27.18 %, respectively.
Aggregate Total Return. Aggregate total return is computed by
determining the rate of return over the designated period that, if applied to
the initial amount invested would produce the ending redeemable value,
according to the following formula:
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P(1 + T) = ERV
WHERE: P = a hypothetical initial payment of one share
of the Fund, at the net asset value reported on
the first day of the designated period
T = the total return for the period
ERV = ending redeemable value at the end of the
designated period for one share of the Fund
The calculation is based on the further assumptions that the maximum
initial sales charge is deducted, and that all dividends and distributions by
the Fund are reinvested at net asset value on the reinvestment dates during
the designated period.
Based upon the foregoing assumptions, the aggregate total return of the
Institutional Class for the one-year and five-year periods ended December 31,
1996 and from inception to December 31, 1996 was 38.06%, 122.82% and 113.26%,
respectively and the aggregate total return for the Advisor Class for the one-
year period ended December 31, 1996 and from inception to December 31, 1996
was 30.91% and 48.17% respectively.
Monthly Yield. Yield is computed by dividing the net investment income
per share earned during a specified one month period by the maximum offering
price per share on the last day of the month and analyzing the result,
according to the following formula:
YIELD = 2 { ( (A-B) + 1)6 -1}
----
cd
WHERE: a = dividends and interest earned during the month
b = expenses accrued for the month (net of reimbursements)
c = the average daily number of shares outstanding
during the month that were entitled to receive dividends
d = the maximum offering price per share on the
last day of the month
The Fund may also advertise its performance for other time periods than
those discussed above.
From time to time the Fund may include information in advertising
concerning its portfolio holdings. For example, the Fund may advertise its
current holding of REITs, their location and category of real estate held by
such REITs, and a sector analysis of the Fund's portfolio composition.
GENERAL INFORMATION
DISTRIBUTIONS TO SHAREHOLDERS
It is the policy of the Fund to declare and distribute dividends
consisting of substantially all of the Fund's net investment income quarterly
and to declare and distribute dividends from the Fund's net short-term capital
gains, if any, annually. The Fund will make distributions of long-term
capital gains at least annually. All such distributions will be made pro rata
to the shareholders based on the number of shares held by each shareholder as
of the record date for each such distribution. The Fund intends to make such
19
<PAGE>
additional distributions of net investment income and capital gain (net of
capital losses) as may be necessary to avoid the imposition of any federal
excise tax. The Trustees may change the Fund's distribution policy in their
sole discretion.
Quarterly distributions will automatically be reinvested in additional
shares unless a shareholder elects to receive distributions in cash as
described in the Prospectus.
REPORTS TO SHAREHOLDERS
The Trustees will issue to the shareholders semi-annual and annual
financial statements of the Trust. Quarterly financial statements of the
Trust are available upon request. At the end of the year the shareholders
will also receive audited financial statements audited by the Fund's
independent public accountants. In addition, shareholders will receive annual
statements of the status of their accounts reflecting current net asset value
per share, and the total value of the Fund's net assets. Daily pricing will
be made available to shareholders upon request.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP currently serves as independent accountants for the
Fund. Arthur Andersen LLP served as independent public accountants for the
Fund for all periods prior to January 1, 1996. The financial statements in
this Statement of Additional Information and the Financial Highlights included
in the Prospectuses, each for the fiscal year ended December 31, 1996, have
been audited by Price Waterhouse LLP, independent accountants, given the
authority of said firm as experts in auditing and accounting. The Financial
Statements and Financial Highlights for each of the fiscal periods prior to
January 1, 1996 have been audited by Arthur Andersen LLP,independent public
public accountants, as indicated in their report with respect thereto, and are
included herein in reliance of said Firm as experts in giving said report.
COUNSEL
Legal matters in connection with the offering of shares hereby and the
formation of the Trust are being passed upon for the Trust by Goodwin, Procter
& Hoar LLP, Boston, Massachusetts.
CUSTODIAN
Wilmington Trust Company, Wilmington, Delaware serves as custodian for
the cash and securities of the Fund.
20
<PAGE>
FINANCIAL STATEMENTS
CONTENTS
FINANCIAL STATEMENTS
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
21
<PAGE>
HEITMAN REAL ESTATE FUND
SCHEDULE OF INVESTMENTS DECEMBER 31, 1996
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAREIT
CLASSIFICATION MARKET VALUE
SHARES (UNAUDITED) (NOTE 2)
------ ----------- --------
<S> <C> <C> <C>
COMMON STOCK - 91.6%
Alexander Haagen Properties, Inc. .............................. 201,400 Equity $ 2,970,650
Arden Realty Group, Inc. ....................................... 376,700 Equity 10,453,425
Associated Estates Realty Corp. ................................ 170,600 Equity 4,051,750
Avalon Properties, Inc. ........................................ 243,672 Equity 7,005,570
Bay Apartment Communities, Inc. ................................ 99,600 Equity 3,585,600
Brandywine Realty Trust ........................................ 27,900 Equity 544,050
Cali Realty Corporation ........................................ 329,900 Equity 10,185,663
Carramerica Realty Corp. ....................................... 175,600 Equity 5,136,300
Catellus Development Corp.* .................................... 2,300 Equity 26,162
Centerpoint Properties Corp. ................................... 212,900 Equity 6,972,475
Chateau Properties, Inc. ....................................... 134,758 Equity 3,571,087
Chelsea GCA Realty, Inc. ....................................... 165,893 Equity 5,744,045
Colonial Properties Trust ..... ................................ 134,638 Equity 4,089,629
Developers Diversified Realty Corp. ............................ 115,330 Equity 4,281,626
Essex Property Trust, Inc. ..................................... 361,400 Equity 10,616,125
Excel Realty Trust, Inc. ....................................... 287,000 Equity 7,282,625
Felcor Suite Hotels, Inc. ...................................... 198,900 Equity 7,036,088
Grubb & Ellis Realty Income Trust* ............................. 189,700 Mortgage 83,468
Homestead Village, Inc. (Warrants)* ............................ 16,387 Equity 133,144
Homestead Village, Inc. ........................................ 24,426 Equity 439,668
Kimco Realty Corp. ............................................. 219,500 Equity 7,655,063
Liberty Property Trust ......................................... 188,700 Equity 4,859,025
Meridian Industrial Trust ...................................... 335,200 Equity 7,039,200
Post Properties, Inc. ......................................... 45,177 Equity 1,818,374
Regency Realty Corp. .......................................... 189,000 Equity 4,961,250
Rouse Company ................................................. 174,900 Equity 5,553,075
Security Capital Industrial Trust ............................. 139,491 Equity 2,981,620
Security Capital Pacific Trust ................................. 201,230 Equity 4,603,136
Simon Debartolo Group Inc. ..................................... 92,536 Equity 2,868,616
South West Property Trust ...................................... 282,266 Equity 4,763,239
Sovran Self Storage, Inc. ...................................... 231,200 Equity 7,225,000
Spieker Properties, Inc. ....................................... 179,500 Equity 6,462,000
Starwood Lodging Trust ......................................... 74,200 Equity 4,090,275
Storage Trust Realty ........................................... 280,000 Equity 7,560,000
Storage USA Inc. ............................................... 46,000 Equity 1,730,750
Tanger Factory Outlet Center, Inc. ............................. 98,800 Equity 2,679,950
Trizec Hahn Corp. .............................................. 702,600 Equity 15,457,200
Vornado Realty Trust ........................................... 93,900 Equity 4,929,750
-----------
TOTAL COMMON STOCK (COST $146,843,055) ............................................... 191,446,673
-----------
PAR ($000) OR MARKET VALUE
NUMBER OF SHARES (NOTE 2)
---------------- --------
PREFERRED STOCK - 0.4%
Security Capital Industrial Trust, 7.00%,
Convertible (COST $797,600).................................... 33,600 $ 915,600
-----------
U.S. GOVERNMENT AGENCY OBLIGATION - 9.0%
Federal Home Loan Banks Discount Notes, 5.00%,
due 01/02/97 (COST $18,777,392)................................ $18,780 18,777,392
-----------
TOTAL INVESTMENTS (COST $166,418,047) - 101.0%................................................ 211,139,665
-----------
OTHER ASSETS AND LIABILITIES, NET -(1.0)%..................................................... (2,059,999)
-----------
NET ASSETS -100.0%............................................................................ $209,079,666
------------
* Non-income priducing security.
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
HEITMEN REAL ESTATE FUND
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at market value
(identified cost $166,418,047) (Note 3)................................. $ 211,139,665
Cash...................................................................... 4,800
Receivables:
Capital shares sold...................................................... 1,212,839
Dividends................................................................ 1,271,793
Other assets.............................................................. 17,624
-------------
TOTAL ASSETS........................................................... 213,646,721
-------------
LIABILITIES:
Payables:
Capital shares redeemed.................................................. 108,851
Investment management fees (Note 4)...................................... 114,760
Investment securities purchased.......................................... 4,113,815
Accrued expenses......................................................... 229,629
-------------
TOTAL LIABILITIES...................................................... 4,567,055
-------------
NET ASSETS:
(Applicable to 19,058,912 shares of $0.001 par value
beneficial interest issued and outstanding; unlimited
number of shares authorized)............................................. $ 209,079,666
=============
Net asset value, offering price and redemption price per
Institutional class share ($129,275,157 / 11,790,030).................. $10.96
======
Net asset value and redemption price per
Advisor class share ($79,804,509 / 7,268,882).......................... $10.98
======
Offering price per Advisor class share ($10.98 / 0.9525).................. $11.53
======
COMPONENTS OF NET ASSETS:
Paid-in capital........................................................... $ 164,539,659
Distributions in excess of net realized gain on investments............... (181,611)
Net unrealized appreciation of investments................................ 44,721,618
-------------
NET ASSETS................................................................. $ 209,079,666
=============
</TABLE>
<PAGE>
HEITMAN REAL ESTATE FUND
STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (Note 2)........................................................ $ 6,796,180
Interest.................................................................. 622,678
-------------
Total investment income.................................................. 7,418,858
-------------
EXPENSES:
Advisory fees (Note 4).................................................... $ 992,968
Administration fees (Note 4).............................................. 141,640
Trustees' fees and expenses (Note 5)...................................... 71,359
Accounting fees (Note 4).................................................. 73,582
Professional fees......................................................... 134,268
Custodian fees............................................................ 42,889
Insurance................................................................. 41,875
Federal Registration fees................................................. 16,407
State Registration fees................................................... 24,520
Shareholder report fees................................................... 31,966
Distribution fees - Advisor Shares (Note 4)............................... 89,289
Shareholder Servicing fees - Advisor Shares (Note 4)...................... 89,289
Transfer agent fees....................................................... 87,449
Other..................................................................... 30,583
-------------
Total expenses......................................................... 1,868,084
-------------
Net investment income................................................ 5,550,774
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from security transactions.............................. 11,165,013
Net change in unrealized appreciation of investments...................... 34,985,157
-------------
Net realized and unrealized gain on investments........................ 46,150,170
-------------
Net increase in net assets resulting from operations...................... $ 51,700,944
=============
</TABLE>
<PAGE>
HEITMAN REAL ESTATE FUND
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Fiscal For the Fiscal
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income (Note 2)............................................ $ 5,550,774 $ 3,839,479
Net realized gain (loss) from security transactions....................... 11,165,013 (1,952,399)
Net change in unrealized appreciation of investments...................... 34,985,157 7,936,118
-------------- -------------
Net increase in net assets resulting from operations..................... 51,700,944 9,823,198
-------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS - INSTITUTIONAL SHARES (NOTE 2):
From net investment income ($0.37 and $0.33 per share, respectively)...... (4,155,578) (3,778,062)
In excess of net investment income ($0.10 and $0.00 per share,
respectively)............................................................ (1,094,050) -
From net capital gains ($0.41 and $0.00 per share, respectively).......... (4,677,017) (37,013)
From tax return of capital ($0.00 and $0.18 per share, respectively)...... - (2,081,064)
DISTRIBUTIONS TO SHAREHOLDERS - ADVISOR SHARES (NOTE 2):
From net investment income ($0.31 and $0.23 per share, respectively)...... (1,395,196) (69,725)
In excess of net investment income ($0.12 and $0.00 per share,
respectively)............................................................ (529,580) -
From net capital gains ($0.41 and $0.00 per share, respectively).......... (2,751,674) (683)
From tax return of capital ($0.00 and 0.13 per share, respectively)....... - (38,406)
-------------- -------------
Total distributions paid to shareholders................................. (14,603,095) (6,004,953)
-------------- -------------
CAPITAL SHARE TRANSACTIONS:
Receipt from Institutional Shares sold.................................... 45,944,221 16,694,861
Receipt from Institutional Shares issued on reinvestment of distributions. 3,754,881 3,002,158
Institutional Shares redeemed............................................. (41,272,537) (33,136,352)
Receipt from Advisor Shares sold.......................................... 67,072,455 10,634,266
Receipt from Advisor Shares issued on reinvestment of distributions....... 4,469,947 72,560
Advisor Shares redeemed................................................... (9,199,099) (5,442,423)
-------------- -------------
Increase (decrease) in net assets resulting from capital share
transactions (a)......................................................... 70,769,868 (8,174,930)
-------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................................ 107,867,717 (4,356,685)
NET ASSETS:
Beginning of year......................................................... 101,211,949 105,568,634
-------------- -------------
End of year............................................................... $ 209,079,666 $ 101,211,949
============== =============
(a)TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST WERE:
Institutional Shares sold................................................. 4,898,411 2,056,156
Institutional Shares issued on reinvestment of distributions.............. 376,263 368,561
Institutional Shares redeemed............................................. (4,542,560) (4,093,559)
Advisor Shares sold....................................................... 7,164,380 1,276,166
Advisor Shares issued on reinvestment of distributions.................... 429,486 8,519
Advisor Shares redeemed................................................... (961,503) (648,167)
-------------- -------------
Net increase (decrease) in shares......................................... 7,364,477 (1,032,324)
Shares outstanding - Beginning balance.................................... 11,694,435 12,726,759
-------------- -------------
Shares outstanding - Ending balance....................................... 19,058,912 11,694,435
============== =============
</TABLE>
<PAGE>
HEITMAN REAL ESTATE FUND
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout each fiscal period presented.
INSTITUTIONAL SHARES
<TABLE>
<CAPTION>
For the For the
Fiscal Years Three-Month
Ended Period Ended For the Fiscal Years
December 31, Dec. 31, Ended September 30,
-------------- ------------------------
1996 1995 1994 1994 1993 1992
----- ----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $8.65 $8.30 $9.23 $10.95 $8.29 $7.66
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)....................... 0.37 0.33 0.10 0.32 0.40 0.45
Net realized and unrealized gain (loss)
on investments................................. 2.82 0.53 (0.05) (0.92) 2.67 0.63
------ ------ ------ ------ ------ ------
Total from investment operations............. 3.19 0.86 0.05 (0.60) 3.07 1.08
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From net investment income (a).................. (0.37) (0.33) (0.10) (0.31) (0.41) (0.45)
In excess of net investment income.............. (0.10) 0.00 0.00 0.00 0.00 0.00
From net realized gain on investments........... (0.41) 0.00 (0.77) (0.67) 0.00 0.00
From tax return of capital (b).................. 0.00 (0.18) (0.11) (0.14) 0.00 0.00
------ ------ ------ ------ ------ ------
Total distributions.......................... (0.88) (0.51) (0.98) (1.12) (0.41) (0.45)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD................... $10.96 $8.65 $8.30 $9.23 $10.95 $8.29
====== ====== ====== ====== ====== ======
Total Return..................................... 38.06% 10.87% 0.65%c (5.22)% 37.76% 14.49%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)............ $129,275 $95,692 $105,569 $116,268 $141,672 $66,521
Ratio of expenses to average net assets......... 1.23% 1.29% 1.28%* 1.22% 1.24% 1.37%
Ratio of net investment income to
average net assets (a)......................... 4.09% 3.97% 4.35%* 2.87% 4.37% 5.75%
Portfolio Turnover.............................. 59.88% 65.33% 37.55%* 90.11% 61.47% 28.05%
Average commission rate paid (d)................ $0.0504 - - - - -
</TABLE>
- ---------------------
* Annualized.
a Distributions from REIT investments generally include a return of
capital. For financial reporting purposes, through September 30, 1993,
the Fund recorded all distributions received, including the returns of
capital, as net investment income.
b Historically, the Fund has distributed to its shareholders amounts
approximating dividends received from the REITs. As more fully explained
in Note 2, the Fund, for the fiscal year ended September 30, 1994,
adopted an accounting pronouncement affecting the presentation of
distributions to shareholders. The financial highlights for the years
ended September 30, 1992 and 1993 have not been restated.
c Not annualized.
d Required disclosure for fiscal years beginning after September 1, 1995
pursuant to SEC regulations.
<PAGE>
HEITMAN REAL ESTATE FUND
FINANCIAL HIGHLIGHTS - CONTINUED
- -------------------------------------------------------------------------------
The table below sets forth financial data for a share of beneficial interest
outstanding throughout the fiscal periods presented.
ADVISOR SHARES
For the Period
May 15, 1995
(Commencement
For the Fiscal of Operations)
Year Ended through
December 31, 1996 December 31, 1995
----------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD....... $8.67 $8.00
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (a)................. 0.31 0.23
Net realized and unrealized gain
on investments........................... 2.84 0.80
------ ------
Total from investment operations....... 3.15 1.03
------ ------
DISTRIBUTIONS
From net investment income (a)............ (0.31) (0.23)
In excess of net investment income........ (0.12) 0.00
From net realized gain on investments..... (0.41) 0.00
From tax return of capital (b)............ 0.00 (0.13)
------ ------
Total distributions.................... (0.84) (0.36)
------ ------
NET ASSET VALUE, END OF PERIOD............. $10.98 $8.67
====== ======
Total Return (c)........................... 37.44% 13.19%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...... $79,805 $5,520
Ratio of expenses to average net assets... 1.73% 1.99%* d
Ratio of net investment income to
average net assets (a)................... 3.91% 4.27%* d
Portfolio Turnover........................ 59.88% 65.33%*
Average commission rate paid (e).......... $0.0504 -
- ------------------------
* Annualized.
a Distributions from REIT investments generally include a return of
capital, which the Fund records as a reduction in the cost basis of its
investments.
b Historically, the Fund has distributed to its shareholders amounts
approximating distributions received from the REITs. Such distributions
may include a portion which may be a return of capital.
c These results do not include the sales charge. If the charge had been
included, the returns would have been lower. The total return figure for
the fiscal period ended December 31, 1995 has not been annualized.
d During 1995, the Advisor agreed to reimburse a portion of the Advisor
Shares' expenses. Without reimbursement, the expense ratio would have
been 5.34% and the ratio of net investment income to average net assets
would have been 0.92%.
e Required disclosure for fiscal years beginning after September 1, 1995
pursuant to SEC regulations.
<PAGE>
HEITMAN REAL ESTATE FUND
NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996
- ------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
Heitman Securities Trust (the "Trust") is registered as a diversified
open-end management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"). The Trust was organized on
September 15, 1988, as a Massachusetts business trust under a Master
Trust Agreement which was amended and restated on February 28, 1995 (the
"Master Trust Agreement"). The Master Trust Agreement permits the
issuance of an unlimited number of shares of beneficial interest in
separate series, with shares of each series representing interests in a
separate portfolio of assets. Heitman Real Estate Fund (the "Fund") was
organized as a series of the Trust on September 15, 1988 and shares of
the Trust representing interests in the Fund were registered with the
Securities and Exchange Commission on January 4, 1989. The Fund's
investment objective is to obtain high total return consistent with
reasonable risk by investing primarily in equity securities of public
companies principally engaged in the real estate business.
The Fund offers two classes of shares (Institutional Shares and Advisor
Shares). Institutional Shares and Advisor Shares are substantially
identical, except that Advisor Shares bear the fees that are payable
under a Distribution Plan adopted by the Board of Trustees ( the
"Distribution Plan") at an annual rate of 0.25% of the average daily net
assets of Advisor Shares. The Advisor Shares bear the fees payable to
service organizations pursuant to a Shareholder Servicing Plan at an
annual rate of 0.25% of the average daily net assets of Advisor Shares
owned by shareholders with whom the service organizations have a
servicing relationship. In addition to the fees paid pursuant to the
Distribution Plan and the Shareholder Servicing Plan, each class bears
the expenses associated with transfer agent fees and expenses, printing
of shareholder reports, registration fees, administrative, and
accounting fees. Institutional Shares were offered for sale on March 13,
1989 and Advisor Shares were offered for sale on May 15, 1995.
Because the Fund may invest a substantial portion of its assets in
REITs, the Fund may also be subject to certain risks associated with
direct investments in REITs. REITs may be affected by changes in the
value of their underlying properties and by defaults by borrowers or
tenants. Furthermore, REITs are dependent upon specialized management
skills, have limited diversification and are, therefore, subject to
risks inherent in financing a limited number of projects. REITs depend
generally on their ability to generate cash flow to make distributions
to shareholders, and certain REITs have self-liquidation provisions by
which mortgages held may be paid in full and distributions of capital
returns may be made at any time. In addition, the performance of a REIT
may be affected by its failure to qualify for tax-free pass-through of
income under the Internal Revenue Code or its failure to maintain
exemption from registration under the 1940 Act.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT SECURITIES TRANSACTIONS AND INVESTMENT INCOME
- --------------------------------------------------------
The Fund's investment securities portfolio consists primarily of
investments in public companies engaged in the real estate business.
Investment securities transactions are recorded on a trade date basis.
Dividend income and distributions to shareholders are recorded on the ex-
dividend date. Interest income is recorded on the accrual basis.
Realized gains or losses on sales of investment securities are
determined on the first-in, first-out ("FIFO") basis.
The majority of the dividend income recorded by the Fund is from Real
Estate Investment Trusts ("REITs"). For tax purposes, a portion of these
dividends consists of capital gains and returns of capital. For
financial reporting purposes through September 30, 1993, these dividends
were recorded as dividend income, and the investment in the REIT
reported at market value. During the fiscal year ended September 30,
1994, effective October 1, 1993, the Fund changed its accounting policy
to record the return of capital portion of dividends received, as
provided by the REITs, as a reduction in the cost basis of its
investments in the REITs. This change has no effect on the calculation
of net asset value per share.
Generally, the Fund has distributed to its shareholders amounts
approximating distributions received from the REITs. Accordingly, the
Fund's distributions to shareholders have included the return of capital
received from the REITs as well as returns of capital attributed to
distributions of other income for financial reporting purposes which was
not subject to current taxation. In accordance with Statement of
Position 93-2, Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital Distributions
by Investment Companies ("SOP"), distributions representing a return of
capital for tax purposes are charged to paid-in capital.
INVESTMENT SECURITIES VALUATION
- -------------------------------
Investment securities traded on a national securities exchange are
valued at the last reported sales price on the day of valuation. If
there has been no sale, the investment security is valued at the average
between the closing bid and closing offer quoted on such day. Investment
securities traded only in the over-the-counter market are valued at the
last price reported on the NASDAQ National Market System, or, if the
security is not reported on the NASDAQ National Market System, at the
last reported bid on such day. Otherwise, the investment security is
valued by such method as the Trustees shall determine in good faith to
reflect its fair value.
Effective May 14, 1992, Grubb & Ellis Realty Trust ("GRIT") completed
its dissolution by transferring all its remaining assets to a
liquidating trust. On the date of the dissolution, GRIT's shares were
canceled and replaced by beneficial interests in a liquidating trust,
which are not transferable. On March 25, 1994, the Fund received a
distribution from GRIT in the amount of $369,915, representing $1.95 for
each share of the GRIT liquidating trust held by the Fund. The Trustees
have determined that the Fund's ownership in the remainder of the
liquidating trust should be valued at $0.44 per share. At December 31,
1996, the Fund owned 189,700 shares of the GRIT liquidating trust for a
value of $83,468.
INCOME TAXES
- ------------
The Fund intends to continue to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as
amended. As a regulated investment company, the Fund will be entitled to
claim a dividends paid deduction for distributions of income and capital
gains to shareholders. Accordingly, the Fund will not be liable for
federal income taxes to the extent its taxable investment income and net
realized capital gains are fully distributed to shareholders.
The Fund is also subject to a nondeductible 4% excise tax calculated as
a percentage of certain undistributed amounts of net investment income
and net capital gains. The Fund intends to distribute its net investment
income and capital gains as necessary to avoid this excise tax. The
amount of capital loss carryforward utilized during the fiscal year
ended December 31, 1996 was approximately $3,735,000.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
EXPENSES
- --------
All expenses of the Fund (other than expenses incurred under the
Distribution Plan and the Shareholder Servicing Plan) are allocated to
each class on the basis of the net asset value of that class in relation
to the net asset value of the Fund.
NOTE 3 - INVESTMENT SECURITIES
For the fiscal year ended December 31, 1996, the cost of purchases and
the proceeds from sales of investment securities (excluding short-term
investments) aggregated $131,165,704 and $77,468,388, respectively.
Cost for federal income tax purposes is $166,599,658 and unrealized
appreciation consists of:
Gross unrealized appreciation $45,002,458
Gross unrealized depreciation (462,451)
-----------
Net unrealized appreciation $44,540,007
===========
NOTE 4 - INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund entered into an Investment Management Agreement (the
"Agreement") with Heitman/PRA Securities Advisors, Inc. (the "Advisor")
on January 31, 1995. The Advisor is a wholly owned subsidiary of Heitman
Financial Ltd. ("Heitman"), a wholly owned subsidiary of United Asset
Management Corporation. The Fund pays the Advisor a fee for its
services, calculated daily and paid monthly, at the annual rate of 0.75%
of the Fund's first $100 million of average daily net assets and 0.65%
of the average daily net assets of the Fund in excess of $100 million,
excluding assets invested in any money market mutual fund. The
Agreement provides that in the event total expenses of the Fund
(exclusive of interest, taxes, brokerage expenses, distribution expenses
and extraordinary items) for any fiscal year of the Fund exceed (i)
1.75% of the Fund's average net assets up to $50 million plus (ii) 1.50%
of the Fund's average net assets in excess of $50 million, the Advisor
will pay or reimburse the Fund for that excess up to the amount of its
advisory fee during that fiscal year.
Prior to January 31, 1995, PRA Securities Advisors, L.P. (the "Prior
Advisor") served as the Fund's advisor pursuant to an Investment
Management Agreement whose terms were substantially the same as the
Fund's current Agreement with the Advisor.
Rodney Square Management Corporation ("Rodney Square"), a wholly owned
subsidiary of Wilmington Trust Company ("WTC"), which is wholly owned by
Wilmington Trust Corporation, a publicly held bank holding company,
provides accounting, administration and transfer agent services. For
accounting services provided through November 13, 1996, Rodney Square
received an annual fee of $45,000 plus an amount equal to 0.02% of that
portion of the Institutional Shares' average daily net assets for the
year in excess of $100 million, plus any out-of-pocket expenses. In
addition, for accounting services provided through November 13, 1996,
Rodney Square also received an amount equal to 0.02% of the Fund's
average daily net assets with respect to the Advisor Shares, subject to
a minimum annual fee of $25,000, plus any out-of-pocket expenses.
Effective November 14, 1996 the Board of Trustees agreed to a change in
the accounting services fee. Under the new agreement the Fund pays an
annual fee of $75,000, plus an amount equal to 0.02% of the Fund's
average daily net assets in excess of $100 million, plus any out-of-
pocket expenses. For administrative services provided, Rodney Square
receives a monthly administration fee from the Fund at an annual rate of
0.10% of the Fund's average daily net assets, plus any out-of-pocket
expenses. Additionally, for administrative services provided, the
Advisor Shares are subject to a minimum annual fee of $25,000.
The Fund has adopted a Distribution Plan for the Advisor Shares in
accordance with Rule 12b-1 under the 1940 Act. Under the provisions of
the Distribution Plan, the Fund makes payments to ACG Capital
Corporation, the distributor for the Advisor Shares ( "ACG" or the
"Distributor") at an annual rate of 0.25% of the daily net assets of
Advisor Shares of the Fund as a distribution fee. The distribution fees
are used by the Distributor to finance activities primarily intended to
result in the sale of Advisor Shares of the Fund.
The Fund has also adopted a Shareholder Servicing Plan for the Advisor
Shares. Pursuant to the Shareholder Servicing Plan, the Trust contracts
with service organizations to provide a variety of shareholder services,
such as maintaining shareholder accounts and records, answering
inquiries regarding the Fund, and processing purchase and redemption
orders. The Fund pays fees to service organizations in amounts up to an
annual rate of 0.25% of the daily net asset value of Advisor Shares
owned by shareholders with whom the service organization has a servicing
relationship.
NOTE 5 - REMUNERATION OF TRUSTEES
Certain officers and trustees of the Fund are also officers and/or
affiliates of the Advisor or certain shareholders.
<PAGE>
HEITMAN REAL ESTATE FUND
REPORT OF INDEPENDENT ACCOUNTANTS
- ------------------------------------------------------------------------
To the Trustees and Shareholders of Heitman Real Estate Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of
Heitman Real Estate Fund, Inc. (the "Fund") at December 31, 1996, and
the results of its operations, the changes in its net assets and the
financial highlights for the year then ended, in conformity with
generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit of these financial
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement
presentation. We believe that our audit, which included confirmation of
securities at December 31, 1996 by correspondence with the custodian
and, where appropriate, the application of alternative auditing
procedures for unsettled security transactions, provides a reasonable
basis for the opinion expressed above. The financial statements of the
Fund for the fiscal periods presented prior to the year ended December
31, 1996 were audited by other independent accountants whose report
dated February 26, 1996 expressed an unqualified opinion on those
statements.
PRICE WATERHOUSE LLP
Philadelphia, PA
February 14, 1997
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Included in the Heitman/PRA Institutional Class Prospectus
(Part A):
Financial Highlights for the Fiscal Years Ended December 31,
1996 and 1995, for the Three-Month Period Ended December 31,
1994, Years Ended September 30, 1994, 1993, 1992, 1991 and 1990
and the Period January 4, 1989 (Effective Date) to September
30, 1989
Included in the Advisor Class Prospectus (Part A):
Financial Highlights for the Fiscal Year Ended December 31,
1996 and for the period May 15, 1995 (Commencement of
Operations) through December 31, 1995 (Advisor Class), for the
Fiscal Years ended December 31, 1996 and 1995, the Three-Month
Period Ended December 31, 1994, Years Ended September 30, 1994,
1993, 1992, 1991 and 1990 and the Period January 4, 1989
(Effective Date) to September 30, 1989 (Institutional Class)
Included in the Statement of Additional Information (Part B):
(i) Report of Independent Public Accountants dated February
14, 1997 (Except as noted)
(ii) Audited Financial Statements of Heitman Real Estate Fund
for the Fiscal Year Ended December 31, 1996
Included in Part C:
Consent of Independent Public Accountants
(b) Exhibits:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
1(a) First Amended and Restated Master
Trust Agreement dated February 28, 1995.
(Incorporated by reference to Post-
Effective Amendment No. 9 to the
Registration Statement on Form N-1A, filed
March 16, 1995.)
1(b) Amendment No. 1 to First Amended
and Restated Master Trust Agreement dated
March 3, 1995. (Incorporated by reference
to Post-Effective Amendment No. 9 to the
Registration Statement filed March 16, 1995.)
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
Item 24. FINANCIAL STATEMENTS AND EXHIBITS-CONTINUED
1(c) Amendment No. 2 to First Amended
and Restated Master Trust Agreement
effective as of August 7, 1995.
(Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registration Statement filed April 29, 1996.)
2 By-Laws. (Incorporated by reference to initial filing
of Registration Statement No. 33-24611.)
3 Not Applicable.
4(a) Specimen Certificate for Shares
of Beneficial Interest of Heitman Real
Estate Fund - Heitman/PRA Institutional
Class. (Incorporated by reference to Post-
Effective Amendment No. 9 to the
Registration Statement filed on March 16,
1995.)
5 Investment Management Agreement
between the Registrant and PRA Securities
Advisors, Inc. ("Heitman/PRA Advisors")
dated as of January 31, 1995.
(Incorporated by reference to Post-
Effective Amendment No. 9 to the
Registration Statement filed on March 16,
1995.)
6(a) Distribution Agreement between
the Registrant and Rodney Square
Distributors, Inc. dated as of December 3,
1993 with respect to the Institutional
Class. (Incorporated by reference to Post-
Effective Amendment No. 6 to the
Registration Statement filed on December 3,
1993.)
6(b) Distribution Agreement between
the Registrant and ACG Capital Corporation
("ACG") with respect to the Advisor Class
dated May 15, 1995. (Incorporated by
reference to Post-Effective Amendment No.
10 to the Registration Statement filed
April 29, 1996.)
6(c) Form of Selected Broker Agreement
with respect to the Advisor Class.
(Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registration Statement filed April 29, 1996.)
2
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
Item 24. FINANCIAL STATEMENTS AND EXHIBITS-CONTINUED
6(d) Sub-Distributor Agreement by and
between ACG and the Nomura Securities, Co.,
Ltd. dated as of August 22, 1995.
(Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registration Statement filed April 29,
1996.)
7 Not Applicable.
8 Amended and Restated Custody Agreement
between the Registrant and Wilmington Trust
Company dated November 14, 1996.
9(a) Amended and Restated Transfer
Agency Agreement between the Registrant and
Rodney Square Management Corporation dated
November 14, 1996.
9(b) Amended and Restated Administration
Agreement between the Registrant
and Rodney Square Management
Corporation dated November 14, 1996.
9(c) Amended and Restated Accounting
Services Agreement between the Registrant
and Rodney Square Management Corporation
dated November 14, 1996.
9(d) Amended Marketing Services Agreement
by and between Heitman/PRA Advisors dated
as of March 11, 1996. (Incorporated by
reference to Post-Effective Amendment No.
10 to the Registration Statement filed
April 29, 1996.)
10(a) Opinion of Counsel with respect
to issuance of both Heitman/PRA
Institutional Class and Advisor Class
shares. (Incorporated by reference to Post-
Effective Amendment No. 9 to the
Registration Statement filed on March 16,
1995.)
10(b) Consent of Counsel
11(a) Consent of Independent Accountants.
11(b) Consent of Independent Public Accountants.
12 Not Applicable.
13 Letter of Investment Intent.
(Incorporated by reference to Pre-Effective
Amendment No. 2 to the Registration
Statement.)
14 Not Applicable.
3
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
Item 24. FINANCIAL STATEMENTS AND EXHIBITS-CONTINUED
15(a) Plan of Distribution Pursuant to
Rule 12b-1 with respect to the Advisor
Class. (Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registration Statement filed April 29,
1996.)
15(b) Shareholder Servicing Plan
(Advisor Class Shares). (Incorporated by
reference to Post-Effective Amendment No.
10 to the Registration Statement filed
April 29, 1996.)
15(c) Shareholder Servicing Agreement
(Advisor Class Shares).
15(d) Form of Shareholder Servicing
Agreement for Omnibus Account Arrangements
(Advisor Class shares).
15(e) Form of Shareholder Servicing
Agreement for Omnibus Account Arrangements
(Institutional Class shares).
(Incorporated by reference to Post-
Effective Amendment No. 10 to the
Registration Statement filed April 29,
1996.)
15(f) Form of Operating Agreement by
and between the Registrant, Charles Schwab
& Co., Inc. ("Schwab") dated as of August
30, 1995, as amended by Retirement Plan
Order Processing Amendment dated as of
March 25, 1996 by and among the Registrant,
Schwab and the Charles Schwab Trust
Company. (Incorporated by reference to
Post-Effective Amendment No. 10 to the
Registration Statement filed April 29,
1996.)
15(g) Institutional Services Agreement
by and between the Registrant and Schwab
dated as of August 30, 1995. (Incorporated
by reference to Post-Effective Amendment
No. 10 to the Registration Statement filed
April 29, 1996.)
16 Schedules of Performance Calculations.
17 Financial Data Schedules.
18 Multiple Class Expense Allocation Plan
Adopted Pursuant to Rule 18f-3 dated of
January 1, 1996. (Incorporated by
reference to Post-Effective Amendment No.
10 to the Registration Statement filed
April 29, 1996.)
4
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
Powers of Attorney (Included as part of
Signature Page).
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
Item 26. NUMBER OF HOLDERS OF SECURITIES
Set forth below are the number of record holders, as of April 1, 1997
of each class of securities of the Registrant:
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
-------------- --------------
Heitman/PRA Institutional Class 608
Advisor Class 1512
Item 27. INDEMNIFICATION
Under a provision of the Registrant's First Amended and Restated Master
Trust Agreement and Declaration of Trust (the "Declaration of Trust"), any
past or present trustee or officer of the Registrant is indemnified to the
fullest extent permitted by law against liability and all expenses reasonably
incurred by him/her in connection with any action, suit or proceeding to which
he/she may be a party or otherwise involved by reason of his being or having
been a trustee or officer of Registrant. This provision does not authorize
indemnification where it is determined, in the manner specified in the
Declaration of Trust, that such trustee or officer has not acted in good faith
in the reasonable belief that his actions were in the best interest of
Registrant. Moreover, this provision does not authorize indemnification where
such trustee or officer is finally adjudged to have been liable to Registrant
or its shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties.
Paragraph 8 of the Investment Management Agreement (the "Management
Agreement") between Registrant and Heitman/PRA Advisors (the "Advisor")
provides that the Advisor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or its shareholders in
connection with the performance of its duties under the Management Agreement
in the absence of willful misfeasance, bad faith or gross negligence or
reckless disregard of his duties. Paragraph 11 states that the obligations of
the Trust under the Management Agreement shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust
personally, but shall bind only the trust property of the Trust, as provided
in the Declaration of Trust.
5
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
ITEM 27. INDEMNIFICATION -CONTINUED
Paragraph 10(a) of the Distribution Agreement (the "Heitman/PRA
Distribution Agreement") between the Registrant and Rodney Square
Distributors, Inc. ("RSD") provides that the Registrant agrees to indemnify
and hold harmless RSD and each of its directors and officers and each person,
if any, who controls RSD within the meaning of Section 15 of the Securities
Act of 1933 (the "1933 Act") against any loss, liability, claim, damages or
expense arising by reason of any person acquiring any shares, based upon the
1933 Act or any other statute or common law, alleging any wrongful act of the
Registrant or any of its employees or representatives, or based upon the
ground that the registration statements, or other information filed or made
public by the Registrant included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order
to make the statements not misleading. RSD, however, will not be indemnified
to the extent that the statement or omission is based on information provided
in writing by RSD. In no case is the indemnity of the Registrant in favor of
RSD or any person indemnified to be deemed to protect RSD or any person
against any liability to the Registrant or its security holders to which RSD
or such person would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties or by reason of
its reckless disregard of its obligations and duties under this Heitman/PRA
Distribution Agreement. Paragraph 10(b) of the Heitman/PRA Distribution
Agreement provides that RSD agrees to indemnify the Registrant in the same
manner as described in Paragraph 10(a) of the Heitman/PRA Distribution
Agreement. Paragraph 15 of the Heitman/PRA Distribution Agreement is similar
to Paragraph 11 of the Management Agreement.
Paragraph 10(a) of the Distribution Agreement (Advisor Class Shares) (the
"Advisor Class Distribution Agreement") between the Registrant and ACG Capital
Corporation ("ACG") states that the Registrant agrees to indemnify and hold
harmless ACG and each of its directors and officers and each person, if any,
who controls ACG within the meaning of Section 15 of the 1933 Act against any
loss, liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees) arising out of or based upon: (i) any
violation of the Registrant's representations or covenants contained in the
Advisor Class Distribution Agreement; (ii) any allegation of any wrongful act
of the Item
Registrant or any of its representatives (other than ACG or any of its
employees or representatives or any other person for whose acts ACG is
responsible (including any selected dealer or person through whom sales are
made pursuant to an agreement with ACG)); (iii) any allegation of any person
acquiring any shares, based upon the 1933 Act or any other statute or common
law, that the registration statements, Prospectuses, SAIs, or shareholder
reports of the Registrant included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order
to make the statements not misleading, to the extent the statement or omission
was made in reliance upon, and in conformity with, information furnished in
6
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
ITEM 27. INDEMNIFICATION -CONTINUED
writing to the Registrant by or on behalf of ACG; or (iv) any allegation that
any advertising material included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order
to make the statements not misleading, to the extent that such statement or
omission was made in reliance upon, and in conformity with, information
furnished in writing to ACG by the Registrant. In no case is the indemnity of
the Registrant in favor of ACG or any person indemnified to be deemed to
protect ACG or any person against any liability to the Registrant or its
security holders to which ACG or such person would otherwise be subject by
reason of willful misfeasance, bad faith or ordinary negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under the Advisor Class Distribution Agreement.
Paragraph 10(b) of the Advisor Class Distribution Agreement provides that ACG
agrees to indemnify the Registrant in the same manner as described in
Paragraph 10(a) of the Advisor Class Distribution Agreement. Paragraph 16 of
the Advisor Class Distribution Agreement is similar to Paragraph 11 of the
Management Agreement.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The list required by this Item 28 of officers and directors of
Heitman/PRA Advisors, together with information as to any other business
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of FORM ADV filed by Heitman/PRA Advisors pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-48252).
Item 29. PRINCIPAL UNDERWRITER (HEITMAN/PRA INSTITUTIONAL CLASS)
(a) The Rodney Square Fund
The Rodney Square Tax-Exempt Fund
The Rodney Square Strategic Fixed-Income Fund
The Rodney Square Multi-Manager Fund
Kiewit Mutual Fund
The Brazos Mutual Funds
1838 Investment Advisors Funds
The HomeState Group
The Olstein Funds
Kalmar Pooled Investment Trust
(b) The Principal Business Address for the Officers and Directors of Rodney
Square Distributors, Inc. is: 1100 North Market Street, Wilmington, DE
19890-0001.
7
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
(1) (2) (3)
NAME AND PRINCIPAL POSITION AND OFFICES WITH POSITION AND OFFICES
BUSINESS ADDRESS RODNEY SQUARE DISTRIBUTORS, INC. WITH REGISTRANT
- ------------------ -------------------------------- --------------------
Jeffrey O. Stroble President, Secretary, None
Treasurer & Director
Martin L. Klopping Director None
Cornelius G. Curran Vice President None
(c) None.
PRINCIPAL UNDERWRITER (ADVISOR CLASS)
(a) None.
(b)
(1) (2) (3)
NAME AND PRINCIPAL POSITION AND OFFICES WITH POSITION AND OFFICES
BUSINESS ADDRESS ACG CAPITAL CORPORATION WITH REGISTRANT
- ------------------ ------------------------- --------------------
Ronald D. Cordes President/CEO & Director None
1661 Tice Valley Blvd.
Suite 200
Walnut Creek CA 94595
Richard E. Steiny Secretary/Treasurer None
1255 Post Street & Director
Suite 700
San Francisco, CA 94109
Richard T. O'Toole Vice President & Director None
100 Galleria Parkway
Suite 1200
Atlanta, GA 30339
Brian R. O'Toole Vice President & Director None
100 Galleria Parkway
Suite 1200
Atlanta, GA 30339
(c) None.
8
<PAGE>
HEITMAN SECURITIES TRUST
PART C
OTHER INFORMATION -CONTINUED
Item 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books, records and other documents of the Registrant
relating to portfolio transactions are maintained at the offices of the
Registrant at 180 North LaSalle Street, Suite 3600, Chicago, IL 60601, the
offices of Heitman/PRA Advisors, the Investment Manager, 180 North LaSalle
Street, Suite 3600, Chicago, IL 60601 except certain custodial records which
are maintained at the offices of Wilmington Trust Company, the Custodian, at
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-
0001, and certain accounts and records relating to administration, accounting
and transfer agent services which are maintained by Rodney Square Management
Corporation at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
1. Registrant undertakes to call a meeting of shareholders for the purpose
of voting upon the question of removal of one or more Trustees when
requested in writing to do so by the holders of at least 10% of the
Trust's outstanding shares, and in connection with such meeting to comply
with the provisions of Section 16(c) of the Investment Company Act of
1940 relating to shareholder communications.
2. Registrant hereby undertakes to furnish a copy of the Registrant's latest
Annual Report to Shareholders to each person to whom a copy of the
registrant's Prospectus is delivered, upon request and without charge.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Heitman Securities Trust,
certifies that this Post-Effective Amendment to its Registration Statement
meets all of the requirements for effectiveness pursuant to Rule 485(b) under
the Securities Act of 1933 and the Registrant further certifies that it has
duly caused this Post-Effective Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago, Illinois the 21st day of April, 1997.
HEITMAN SECURITIES TRUST
By: /S/ WILLIAM RAMSEYER
William L. Ramseyer, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Post
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ WILLIAM L. RAMSEYER Chairman (Principal Executive April 21, 1997
William L. Ramseyer Officer) and Trustee
/S/ DEAN A. SOTTER President, Chief April 21, 1997
Dean A. Sotter Accounting Officer
and Treasurer (Principal
Accounting and Financial
Officer)
/S/ ROBER W. BEENEY Trustee April 21, 1997
Robert W. Beeney *
/S/ ROBERT W. BEENEY Trustee April 21, 1997
Donald L. Foote *
/S/ JOHN F. GOYDAS Trustee April 21, 1997
John F. Goydas *
/S/ MAURICE WIENER Trustee April 21, 1997
Maurice Wiener *
* By: /S/ DEAN A. SOTTER
Dean A. Sotter
(Pursuant to Power of Attorney filed herewith)
<PAGE>
POWER OF ATTORNEY
Each of the undersigned in his capacity as a Trustee or officer, or both,
as the case may be, of the Registrant, does hereby appoint Dean A. Sotter and
Laurie V. Brooks, and each of them, or jointly, his true and lawful attorney
and agent to execute in his name, place and stead (in such capacity) any and
all post-effective amendments to the Registration Statement and all
instruments necessary or desirable in connection therewith, to attest the seal
of the Registrant thereon and to file the same with the Securities and
Exchange Commission. Each of said attorneys and agents have power and
authority to do and perform in the name and on behalf of each of the
undersigned, in any and all capacities, every act whatsoever necessary or
advisable to be done in the premises as fully and to all intents and purposes
as each of the undersigned might or could do in person, hereby ratifying and
approving the act of said attorneys and agents and each of them.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ ROBERT W. BEENEY
Robert W. Beeney Trustee March 25, 1996
/S/ DONALD L. FOOTE
Donald L. Foote Trustee March 25, 1996
/S/ JOHN F. GOYDAS Trustee March 25, 1996
John F. Goydas
/S/ WILLIAM L. RAMSEYER Trustee and March 25, 1996
William L. Ramseyer Chairman of the Board
/S/ GEORGE C. WEIR
George C. Weir Trustee March 25, 1996
/S/ MAURICE WIENER
Maurice Wiener Trustee March 25, 1996
<PAGE>
File No. 33-24611
File No. 811-5659
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 11
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 13
TO THE REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
HEITMAN SECURITIES TRUST
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- -------------------------------------------------------------------------
8 Amended and Restated Custody Agreement between the Registrant
and Wilmington Trust Company dated November 14, 1996.
9(a) Amended and Restated Transfer Agency Agreement between the
Registrant and Rodney Square Management Corporation dated
November 14, 1996.
9(b) Amended and Restated Administration Agreement between the
Registrant and Rodney Square Management Corporation dated
November 14, 1996.
9(c) Amended and Restated Accounting Services Agreement between the
Registrant and RodneySquare Management Corporation dated
November 14, 1996.
10(b) Consent of Counsel
11(a) Consent of Independent Accountants.
11(b) Consent of Independent Public accountants
15(c) Shareholder Servicing Agreement (Advisor Class Shares).
15(d) Form of Shareholder Servicing Agreement for Omnibus Account
Arrangements (Advisor Class shares).
16 Schedules of Performance Calculations.
17 Financial Data Schedules.
<PAGE>
Exhibit 8
THIS AMENDED AND RESTATED CUSTODY AGREEMENT is made as of this 14th
day of November, 1996, between HEITMAN SECURITIES TRUST (formerly
known as PRA SECURITIES TRUST), hereinafter called the "Trust," and
WILMINGTON TRUST COMPANY, a Delaware corporation, hereinafter called
"Custodian."
WHEREAS, on December 6, 1993, the Trust entered into an agreement (the
"Original Agreement") with Custodian with respect to the provision of
custodian services by the Custodian to the Trust with respect to the
Heitman Real Estate Fund (the "Fund") (formerly, the "PRA Real Estate
Securities Fund"), the sole series of the Trust; and
WHEREAS, the Trust and Custodian now desire to amend and restate the
Original Agreement.
NOW, THEREFORE, in consideration of the premises, and intending to be
legally bound, the Trust and Custodian hereby agree to amend and restate
the Original Agreement, as follows:
I. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Trust hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Master Trust Agreement. The Trust agrees
to deliver to the Custodian substantially all securities and cash owned by
it on behalf of the Fund(s), and substantially all payments of income,
securities and cash owned by it on behalf of the Fund(s), and substantially
all payments of income, payments of principal or capital distributions
received by it with respect to substantially all securities owned by the
Trust on behalf of the Fund(s) from time to time, and the cash
consideration received by it on behalf of the Fund(s) for such new or
treasury shares of beneficial interest ("Shares") of the Fund(s) as may be
issued or sold from time to time. The Custodian shall not be responsible
for any property of the Trust held or received by the Trust and not
delivered to the Custodian.
II. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE TRUST HELD BY
THE CUSTODIAN
A. HOLDING SECURITIES
The Custodian shall hold, earmark and physically segregate for the
account of each Fund all non-cash property, including all securities
owned by the Trust on behalf of the Fund(s), other than securities
which are maintained pursuant to Section J of the this Article II, in
a clearing agency which acts as a securities depository or in a book-
entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as a "Securities System."
B. DELIVERY OF SECURITIES
The Custodian shall release and deliver securities owned by each Fund
held by the Custodian or in a Securities System account of the
Custodian only upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1. Upon sale of such securities for the account of each Fund
and receipt of payment therefor;
2. Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by
the Trust with respect to a Fund;
3. In the case of a sale effected through a Securities System,
in accordance with the provisions of Section J hereof;
4. To the depository agent in connection with tender or other
similar offers for securities of the Funds;
5. To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6. To the issuer thereof, or its agent, for transfer into the
name of the Trust on behalf of any Fund or into the name of any
nominee or nominees of the Custodian or into the name or nominee
name of any agent appointed pursuant to Section I of this Article
II or into the name or nominee name of any sub-custodian
appointed pursuant to Section I of Article II; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7. To the broker selling the same for examination in accordance
with the "street delivery" custom; provided that the Custodian
shall adopt such procedures, as the Trust from time to time shall
approve, to ensure their prompt return to the Custodian by the
broker in the event the broker elects not to accept them;
8. For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of securities, or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9. In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10. For delivery in connection with any loans of securities made
by the Trust on behalf of any Fund, but only against receipt of
adequate collateral, as agreed upon from time to time by the
Custodian and the Trust, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities;
11. For delivery as security in connection with any borrowings
by the Trust on behalf of any Fund requiring a pledge of assets
by the Trust on behalf of that Fund against receipt of amounts
borrowed;
12. Upon receipt of instructions from the transfer agent for the
Trust, for delivery to such transfer agent or to holders of
Shares in connection with distributions in kind in satisfaction
of requests by holders of Shares for repurchase or redemption;
and
13. For any other proper corporate purposes, but only upon
receipt of, in addition to proper instructions, a certified copy
of a resolution of the Board of Trustees signed by an officer of
the Trust and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made,
declaring such purposes to be proper corporate purposes, and
naming the persons to whom delivery of such securities shall be
made.
C. REGISTRATION OF SECURITIES
Securities held by the Custodian (other than bearer securities) shall
be registered in the name of the Trust on behalf of any Fund, or in
the name of any nominee of the Trust, or of any nominee of the
Custodian, provided the Custodian maintains a mechanism for
identifying all securities belonging to each Fund, wherever held or
registered, or in the name or nominee name of any agent or sub-
custodian appointed pursuant to Section I of Article II hereof. All
securities accepted by the Custodian on behalf of the Trust for any
Fund under the terms of this Agreement shall be in "street name" or
other good delivery form.
D. BANK ACCOUNTS
The Custodian shall open and maintain a separate bank account or
accounts in the name of the Trust, subject only to draft or order by
the Custodian acting pursuant to the terms of this Agreement, and
shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Funds,
other than cash maintained by the Trust in a bank account established
and used in accordance with Rule 17f-3 under the 1940 Act.
E. PAYMENT FOR SHARES
The Custodian shall receive from the distributor of the Trust's Shares
or from the transfer agent of the Trust (the "Transfer Agent") and
deposit into the Trust's account for that Fund such payments as are
received for Shares issued or sold from time to time by the Trust.
The Custodian will provide timely notification to the Trust and the
Transfer Agent of any receipt by it of cash payments for Shares.
F. Investment and Availability of Federal Funds
Upon mutual agreement between the Trust and the Custodian, the
Custodian shall, upon the receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties:
1. invest in such instruments as may be set forth in such
instructions, on the same day as received, all federal funds
received after a time agreed upon between the Custodian and the
Trust; and
2. make federal funds available to the Trust as of specified
times agreed upon from time to time by the Trust and the
Custodian in the amount of checks received in payment for Fund
Shares which are deposited into the account for that Fund.
F. COLLECTION OF INCOME
The Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to which
the Fund(s) shall be entitled either by law or pursuant to custom in
the securities business and shall collect on a timely basis all income
and other payments with respect to bearer securities if, on the date
of payment by the issuer, such securities are held by the Custodian or
agent thereof and shall credit such income, as collected, to the
Fund's custodian account. Without limiting the generality of the
foregoing for that Fund, the Custodian shall detach and present for
payment all coupons and other income items requiring presentations as
and when they become due and shall collect interest when due on
securities held hereunder.
G. PAYMENT OF TRUST MONEYS
Upon receipt of proper instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out moneys of the Trust on behalf of the Fund(s) in the
following cases only:
1. Upon the purchase of securities for the account of a Fund,
but only (a) against the delivery of such securities to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under
the 1940 Act to act as a custodian and has been designated by the
Fund or by the Custodian as its agent for this purpose)
registered in the name of the Trust or in the name of a nominee
of the Custodian referred to in Section C of Article II hereof or
in proper form for transfer; (b) in the case of a purchase
effected through a Securities System, in accordance with the
conditions set forth in Section J of Article II hereof or; (c) in
the case of repurchase agreements entered into between the Trust
on behalf of any Fund and the Custodian, or another bank, (i)
against delivery of securities either in certificate form or
through an entry crediting the Custodian's account at the Federal
Reserve Bank with such securities and with an indication on the
books of the Custodian that such securities are held for the
benefit of the Fund and (ii) against delivery of the receipt
evidencing purchase by the Trust on behalf of any Fund of
securities owned by the Custodian or other bank along with
written evidence of the agreement by the Custodian or other bank
to repurchase such securities from the Trust;
2. In connection with conversion, exchange or surrender of
securities owned by the Trust on behalf of any Fund as set forth
in Section B of Article II hereof;
3. For the redemption or repurchase of Shares as set forth in
Section H of Article II hereof;
4. For the payment of any expense or liability incurred by the
Trust with respect to its Fund(s), including, but not limited to,
the following payments for the accounts of the Trust for the
affected Fund(s): interest, dividend disbursements, taxes, trade
association dues, advisory, administration, accounting, transfer
agent and legal fees, and operating expenses allocated to the
Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5. For the payment of any dividend declared on behalf of any
Fund pursuant to the governing documents of the Trust; and
6. For any other proper corporate purposes, but only upon
receipt of, in addition to proper instructions, a certified copy
of a resolution of the Board of Trustees of the Trust signed by
an officer of the Trust and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is to be made.
I. Liability for Payment in Advance of Receipt of Securities Purchased
In any and every case where payment for purchase of securities for the
account of a Fund is made by the Custodian in advance of receipt of
the securities purchased, in the absence of specific written
instructions from the Trust to so pay in advance, the Custodian shall
be absolutely liable to the Trust for such securities to the same
extent as if the securities had been received by the Custodian, except
that in the case of repurchase agreements entered into by the Trust on
behalf of any Fund with a bank which is a member of the Federal
Reserve System, the Custodian may transfer funds to the account of
such bank prior to the receipt of (i) written evidence that the
securities subject to such repurchase agreement have been transferred
by book-entry into a segregated non-proprietary account of the
Custodian maintained with the Federal Reserve Bank of Philadelphia or
the safe-keeping receipt and (ii) the repurchase agreement, provided
that such written evidence or documents are received prior to the
close of business on the same day.
H. PAYMENTS FOR REPURCHASE OR REDEMPTIONS OF SHARES OF THE TRUST
From such funds as may be available for the purpose but subject to the
limitations of the Master Trust Agreement, Bylaws and any applicable
votes of the Board of Trustees of the Trust pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent,
make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of
Shares, the Custodian is authorized upon receipt of instructions from
the Transfer Agent to wire funds to a commercial bank designated by
the redeeming shareholders.
[In connection with the redemption or repurchase of Shares, the
Custodian shall honor checks drawn on the Custodian by a holder of
Shares, which checks have been furnished by the Trust to the holder of
Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Trust and the Custodian.]
I. APPOINTMENT OF AGENTS
The Custodian may at any time in its discretion appoint, but only in
accordance with an applicable vote by the Trustees of the Trust, (and
may at any time remove) any other bank or trust company, which is
itself qualified under the 1940 Act to act as a custodian, as its
agent or sub-custodian to carry out such of the provisions of this
Article II as the Custodian may from time to time direct; provided,
however, that the appointment of any such agent or sub-custodian shall
not relieve the Custodian of any of its responsibilities or
liabilities hereunder.
J. DEPOSIT OF TRUST ASSETS IN SECURITIES SYSTEMS
The Custodian may deposit and/or maintain securities owned by the
Trust on behalf of a Fund in a clearing agency registered with the
Securities and Exchange Commission (the "SEC") under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies (collectively
referred to herein as a "Securities System") in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
1. The Custodian may keep securities of the Trust in a
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian, or otherwise for
customers;
2. The records of the Custodian with respect to securities of
the Fund(s) which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund(s);
3. The Custodian shall pay for securities purchased for the
account of a Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian
to reflect, such payment and transfer for the account of the
Fund. The Custodian shall transfer securities sold for the
account of the Fund upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of any entry on
the records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of a
Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Trust at its request. The
Custodian shall furnish the Trust a monthly account statement
showing confirmation of each transfer to or from the account of
the Fund and each day's transactions in the Securities System for
the account of the Fund;
4. The Custodian shall have received the certificate required
by Article IX hereof;
5. The Custodian shall provide the Trust with any report
obtained by the Custodian on the Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
6. The Custodian shall be liable to the Trust on behalf of any
Fund for any direct loss or damage to the Trust on behalf of any
Fund resulting from use of the Securities System to the extent
caused by the negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees. In no event shall the Custodian be liable for any
indirect, special, consequential or punitive damages.
K. SEGREGATED ACCOUNTS FOR FUTURES COMMISSION MERCHANTS
The Custodian may enter into separate custodial agreements with
various Futures Commission Merchants ("FCM's") which the Trust uses
(each an "FCM agreement"), pursuant to which the Trust's margin
deposits made on behalf of its series in certain transactions
involving futures contracts and options on futures contracts will be
held by the Custodian in accounts (each an "FCM account") subject to
the disposition by the FCM involved in such contracts in accordance
with the customer contract between FCM and the Trust ("FCM contract"),
SEC rules governing such segregated accounts, Commodities Futures
Trading Commission ("CFTC") rules and the rules of applicable
securities or commodities exchanges. Such custodial agreements shall
only be entered into upon receipt of written instructions from the
Trust which state that (a) a customer agreement between the FCM and
the Trust has been entered into, and (b) the Trust is in compliance
with all the rules and regulations of the CFTC. Transfers of initial
margin shall be made into an FCM account only upon written
instructions; transfers of premium and variation margin may be made
into an FCM account pursuant to oral instructions. Transfers of
funds from an FCM account to the FCM for which the Custodian holds
such an account may only occur upon certification by the FCM to the
Custodian that pursuant to the FCM agreement and the FCM contract, all
conditions precedent to its right to give the Custodian such
instructions have been satisfied.
L. OWNERSHIP CERTIFICATES FOR TAX PURPOSES
The Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with
receipt of income or other payments with respect to securities of the
Fund(s) held by it and in connection with transfers of securities.
M. PROXIES
The Custodian shall, with respect to the securities held by it
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of the Trust on behalf of a Fund or a nominee of the Trust,
all proxies, without indication of the manner in which such proxies
are to be voted, and shall promptly deliver to the Trust's investment
advisor for the offered Fund (the "Advisor") such proxies, all proxy
soliciting materials and all notices relating to such securities.
N. COMMUNICATIONS RELATING TO TRUST FUND SECURITIES
The Custodian shall transmit promptly to the Advisor of that Fund all
written information (including, without limitation, pendency of calls
and maturities of securities and expirations of rights in connection
therewith) received by the Custodian from issuers of the securities
being held for the Trust for a Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Advisor
all written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Advisor
desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Advisor shall notify the
Custodian at least five business days prior to the date on which the
Custodian is to take such action.
O. PROPER INSTRUCTIONS
"Proper Instructions" as used throughout this Article II mean a
writing signed or initialed by one or more person or persons in such
manner as the Trustees shall have from time to time authorized. Each
such writing shall set forth the transaction involved, including a
specific statement of the purpose for which such action is requested.
Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Trust shall cause all oral instructions to be confirmed
promptly in writing. Upon receipt of a certificate of the Secretary
or an Assistant Secretary as to the authorization by the Trustees of
the Trust accompanied by a detailed description of procedures approved
by the Trustees, Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices
provided that the Trustees and the Custodian are satisfied that such
procedures afford adequate safeguards for the assets of the Funds.
P. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Trust:
1. make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties
under this Agreement, provided that all such payments shall be
accounted for to the Trust;
2. surrender securities in temporary form for securities in
definitive form;
3. endorse for collection, in the name of the Trust for a given
Fund, checks, drafts and other negotiable instruments; and
4. in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Funds of the Trust except as otherwise directed by the Trust
or the Board of Trustees of the Trust.
Q. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instruction,
notice, request, consent, certificate or other instrument or paper
reasonably believed by it to be genuineand to have been properly
executed by or on behalf of the Trust. The Custodian may receive and
accept a certified copy of a vote of the Board of Trustees of the
Trust as conclusive evidence (a) of the authority of any person to act
in accordance with such vote, or (b) of any determination or of any
action by the Board of Trustees pursuant to the Master Trust Agreement
as described in such vote, and such vote may be considered as in full
force and effect until receipt by the Custodian of written notice to
the contrary.
III. DUTIES OF CUSTODIAN WITH RESPECT TO BOOKS OF ACCOUNT
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees to keep the books
of account of the Trust. If so instructed in writing, which written
instructions shall be transmitted to the Custodian reasonably in advance of
the date on which it is to act, the Custodian shall supply quotations for
all portfolio securities to the entity or entities appointed by the Board
of Trustees to compute the net asset value per share of the outstanding
shares of the Fund(s) on each day on which such net asset value per share
is to be computed under the Trust's Master Trust Agreement.
IV. RECORDS
The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet
the obligations of the Trust under the 1940 Act, with particular attention
to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder, applicable
federal and state tax laws and any other law or administrative rules or
procedures which may be applicable to the Trust. All such records shall be
property of the Trust and shall at all times during the regular business
hours of the Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of the SEC. The
Custodian shall, at the Trust's request, supply the Trust with a tabulation
of securities owned by the Fund(s) and held by the Custodian and shall,
when requested to do so by the Trust and for such compensation as shall be
agreed upon between the Trust and the Custodian, include certificate
numbers in such tabulations.
V. OPINION OF TRUST'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action to obtain from year to
year favorable opinions from the Trust's independent accountants with
respect to its activities hereunder in connection with the preparation of
the Trust's Form N-1A, as the Trust may from time to time request, and the
Trust's Form N-SAR or other annual or semiannual reports to the SEC and
with respect to any other requirements of the SEC.
VI. REPORTS TO TRUST BY AUDITORS
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by its internal or independent auditors on
the accounting system, internal accounting control and procedures for
safeguarding securities, including reports as are available on securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Agreement; such reports,
which shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Trust, to provide reasonable assurance that
any material inadequacies would be disclosed, shall state in detail
material inadequacies disclosed by such examination, and if there are no
such inadequacies, shall so state.
VII. COMPENSATION OF CUSTODIAN
For the services the Custodian provides under this Custody Agreement,
the Custodian shall be entitled to reasonable compensation as agreed to
between the Trust and the Custodian from time to time. Until agreed
otherwise, the compensation shall be as set forth on Schedule A attached
hereto and made part hereof, as such schedule may be amended from time to
time.
VIII.RESPONSIBILITY OF CUSTODIAN/INDEMNIFICATION
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in
acting upon any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed by the proper
party or parties.
The Custodian shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice.
The Custodian shall be held to the exercise of reasonable care in
carrying out the provisions of this Agreement but shall be liable only for
its own negligent or bad faith acts or failures to act. The Trust shall
indemnify the Custodian and hold it harmless from and against all claims,
liabilities, and expenses (including attorneys' fees) which the Custodian
may suffer or incur on account of being Custodian hereunder except such
claims, liabilities and expenses arising from the Custodian's own
negligence or bad faith. Notwithstanding the foregoing, nothing contained
in this paragraph is intended to nor shall it be constructed to modify the
standards of care and responsibility set forth in Section I of Article II
hereof with respect to sub-custodians and in Section J(6) of Article II
hereof with respect to the Securities System.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may,
in the reasonable opinion of the Custodian, result in the Custodian or its
nominee assigned to the Trust being liable for the payment of money or
incurring liability of some other form, the Trust, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
IX. EFFECTIVE PERIOD; TERMINATION; AMENDMENT; ASSIGNMENT
This Agreement will become effective as of the date hereof and remain
effective until terminated as provided herein. This Agreement may be
amended at any time only by written instrument signed by both parties.
This Agreement may be terminated at any time on sixty (60) days' written
notice by either party; provided that the Trust will not amend or terminate
the Agreement in contravention of any applicable federal or state
regulations, or any provision of the governing documents of the Trust, and
further provided, that the Trust may at any time by action of its Board of
Trustees immediately terminate this Agreement in the event of the
appointment of a conservator or receiver for the Custodian by the
applicable federal regulator or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction. Upon termination of this Agreement, the Trust shall
reimburse the Custodian for all costs, expenses and disbursement that are
due as of the date of such termination. This Agreement may not be assigned
by the Trust without the consent of Custodian, and this Agreement may not
be assigned by Custodian without the consent of the Trust, authorized or
approved by a resolution of its Board of Trustees.
Upon termination of the Agreement, the Trust shall reimburse the
Custodian for those costs, expenses and disbursements that are due as of
the date of such termination.
X. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and
the Trust may from time to time agree on such provisions interpretive of,
or in addition to, the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Master Trust Agreement of the Trust.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
XI. TRUSTEES
All references to actions of or by Trustees or herein shall require
action by such Trustees acting as a board or formally constituted group and
not individually.
XII. DELAWARE LAW TO APPLY
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement
shall be binding and shall inure to the benefits of the parties hereto and
their respective successors.
XIII. LIMITATION OF SHAREHOLDER LIABILITY
The Custodian acknowledges that it has received notice of and
accepts the limitations of liability set forth in the Trust's Master Trust
Agreement. The Custodian agrees that the Trust's obligations hereunder
shall be limited to the Trust, and that the Custodian shall have recourse
solely against the assets of the Portfolio with respect to which the
Trust's obligations hereunder relate and shall have no recourse against the
assets of any other Portfolio or against any shareholder, Trustee, officer,
employee, or agent of the Trust.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on behalf by its duly authorized representative
and its seal to be hereunder affixed as of the date first written above.
HEITMAN SECURITIES TRUST
By: /S/ William Ramseyer
--------------------------------
President
WILMINGTON TRUST COMPANY
By: /S/ Lario Marino
--------------------------------
Vice President
<PAGE>
SCHEDULE A
HEITMAN SECURITIES TRUST
FEE SCHEDULE
For the services Wilmington Trust Company ("WTC") provides under this
Custody Agreement, the Trust on behalf of the Fund(s) listed below agrees
to pay WTC a fee payable monthly expressed as follows:
Heitman Real Estate Fund An annual fee based upon the daily
average net assets as follows:
.02% on the first $50 million
.015% on the assets in excess of $50
million
subject to a minimum fee of $500
per month plus
$15 per purchase, sale or maturity of a
portfolio security, and
plus
any out-of-pocket expenses.
HEITMAN SECURITIES TRUST
AMENDED AND RESTATED TRANSFER AGENCY AGREEMENT Exhibit 9(a)
THIS AMENDED AND RESTATED TRANSFER AGENCY AGREEMENT is made as of the
14th day of November, 1996, by and between Heitman Securities Trust, a
Massachusetts business trust (the "Trust"), having its principal place of
business in Chicago, Illinois, and Rodney Square Management Corporation, a
corporation organized under the laws of the State of Delaware ("RSMC"),
having its principal place of business in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company and offers for public sale one or more distinct, series of shares
of beneficial interest, par value $0.001 per share, ("Series") each
corresponding to a distinct portfolio;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each
Series has a separate investment objective and policies;
WHEREAS, at the present time, the Trust has one Series, the Heitman Real
Estate Fund (the "Fund"), which consists of two classes of shares, the
Heitman/PRA Institutional Class shares and the Advisor Class shares;
WHEREAS, the Trust currently employs the services of RSMC as the Trust's
transfer agent pursuant to a Transfer Agency Agreement dated as of December
3, 1993 (the "Original Agreement"); and
WHEREAS, the Trust and RSMC desire to amend and restate the Original
Agreement in its entirety by adopting this Amended and Restated Transfer
Agency Agreement, which shall supersede the Original Agreement from and
after the date hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Trust and RSMC agree as follows:
1. APPOINTMENTS. The Trust hereby appoints RSMC as transfer agent,
registrar and dividend disbursing agent for the shares of beneficial
interest (the "Shares") of the Trust and as servicing agent in
connection with the disbursement of dividends and distributions and as
shareholders' servicing agent for the Trust, each such appointment to
take effect as of the close of business on the date first written
above, and RSMC shall act as such and perform its obligations thereof
upon the terms and conditions hereafter set forth and in accordance
with the principles of principal and agent as enunciated by applicable
common law.
2. DOCUMENTS. The Trust has furnished RSMC with copies of the Trust's
Master Trust Agreement, Bylaws, Investment Management Agreement,
Custodian Agreement, Administration Agreement, Distribution Agreement,
Accounting Services Agreement, most recent Registration Statement on
Form N-1A, current Prospectus(s) and Statement of Additional
Information (the "SAI"), all forms relating to any plan, program or
service offered by the Trust and a certified copy of the resolution of
its Board of Trustees (the "Trustees") approving RSMC's appointment
hereunder and identifying and containing the signatures of the Trust's
officers authorized to issue Oral Instructions and to sign Written
Instructions, as hereinafter defined, on behalf of the Fund(s) and to
execute certificates representing Shares. Subject to the provisions of
Section 21 hereof, the Trust shall furnish promptly to RSMC a copy of
any amendment or supplement to the above-listed documents. The Trust
shall furnish to RSMC any additional documents necessary for it to
perform its functions hereunder.
3. DEFINITIONS.
(a) Authorized Person. As used in this Agreement, the term "Authorized
Person" means any officer of the Trust and any other person, whether or
not any such person is an officer or employee of the Trust, duly
authorized by the Trustees of the Trust to give Oral and Written
Instructions on behalf of the Fund(s) and certified by the Secretary or
an Assistant Secretary of the Trust, or any amendment thereto as may be
received by RSMC from time to time.
(b) Oral Instructions. As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by RSMC from an
Authorized Person or from a person reasonably believed by RSMC to be an
Authorized Person. The Trust agrees to deliver to RSMC, at the time
and in the manner specified in Section 4(b) of this Agreement, Written
Instructions confirming Oral Instructions.
(c) Written Instructions. As used in this Agreement, the term "Written
Instructions" means written instructions delivered by hand, mail,
telegram, cable, telex or facsimile, signed by an Authorized Person and
received by RSMC.
4. INSTRUCTIONS CONSISTENT WITH MASTER TRUST AGREEMENT, ETC.
(a) Unless otherwise provided in this Agreement, RSMC shall act only
upon Oral or Written Instructions. Although RSMC may know of the
provisions of the Master Trust Agreement and Bylaws of the Trust, RSMC
in its capacity under the Agreement may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent with
any provisions of such Master Trust Agreement or Bylaws or any vote,
resolution or proceeding of the shareholders, or of the Trustees, or of
any committee thereof.
(b) RSMC shall be entitled to rely upon any Oral Instructions and any
Written Instructions actually received by RSMC pursuant to this
Agreement. The Trust agrees to forward to RSMC Written Instructions
confirming Oral Instructions in such manner that the Written
Instructions are received by RSMC by the close of business of the same
day that such Oral Instructions are given to RSMC. The Trust agrees
that the fact that such confirming Written Instructions are not
received by RSMC shall in no way affect the validity of the
transactions or enforceability of the transactions authorized by such
Oral Instructions. The Trust agrees that RSMC shall incur no liability
to the Trust in acting upon Oral Instructions given to RSMC hereunder
concerning such transactions, provided such instructions reasonably
appear to have been received from an Authorized Person.
5. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, RSMC is authorized to take the following actions:
(a) Issuance of Shares. Upon receipt of a purchase order from either
Rodney Square Distributors, Inc. or ACG Capital Corporation, as the
case may be (each, a "Distributor"), or a prospective shareholder for
the purchase of Shares and sufficient information to enable RSMC to
establish a shareholder account or to issue Shares to an existing
shareholder account, and after confirmation of receipt or crediting of
Federal funds for such order from RSMC's designated bank, RSMC shall
issue and credit the account of the investor or other record holder
with Shares in the manner described in the Prospectus. RSMC shall
deposit all checks received from prospective shareholders into an
account on behalf of the Trust, and shall promptly transfer all
Federal funds received from such checks to the Custodian, as defined in
the Custodian Agreement between the Trust and the Custodian.
(References herein to "Custodian" shall also be construed to refer to a
"Sub-Custodian" if such appointment has been made.) If so directed by
the Distributor, the confirmation supplied to the shareholder to mark
such issuance will be accompanied by a Prospectus.
(b) Transfer of Shares; Uncertificated Securities. Where a shareholder
does not hold a certificate representing the number of Shares in its
account and does provide RSMC with instructions for the transfer of
such Shares which include a signature guaranteed by a commercial bank,
trust company or member firm of a national securities exchange and such
other appropriate documentation to permit a transfer, then RSMC shall
register such Shares and shall deliver them pursuant to instructions
received from the transferor, pursuant to the rules and regulations of
the Securities and Exchange Commission (the "SEC"), and the laws of the
Commonwealth of Massachusetts relating to the transfer of shares of
beneficial interest.
(c) Share Certificates. If at any time the Fund issues share
certificates, the following provisions will apply:
(1)The Trust will supply RSMC with a sufficient supply of share
certificates representing Shares, in the form approved from time
to time by the Trustees of the Trust, and, from time to time,
shall replenish such supply upon request of RSMC. Such share
certificate shall be properly signed, manually or by facsimile
signature, by the duly authorized officers of the Trust, and shall
bear the corporate seal or facsimile thereof of the Trust, and
notwithstanding the death, resignation or removal of any officer
of the Trust, such executed certificates bearing the manual or
facsimile signature of such officer shall remain valid and may be
issued to shareholders until RSMC is otherwise directed by Written
Instructions.
(2)In the case of the loss or destruction of any certificate
representing Shares, no new certificate shall be issued in lieu
thereof, unless there shall first have been furnished an
appropriate bond of indemnity issued by a surety company approved
by RSMC.
(3)Upon receipt of signed share certificates, which shall be in
proper form for transfer, and upon cancellation or destruction
thereof, RSMC shall countersign, register and issue new
certificates for the same number of Shares and shall deliver them
pursuant to instructions received from the transferor, the rules
and regulations of the SEC, and the laws of the Commonwealth of
Massachusetts relating to the transfer of shares of beneficial
interest.
(4)Upon receipt of the share certificates, which shall be in
proper form for transfer, together with the shareholder's
instructions to hold such share certificates for safekeeping, RSMC
shall reduce such Shares to uncertificated status, while retaining
the appropriate registration in the name of the shareholder upon
the transfer books.
(5)Upon receipt of written instructions from a shareholder of
uncertificated securities for a certificate in the number of
shares in its account, RSMC will issue such share certificates and
deliver them to the shareholder.
(d) Redemption of Shares. Upon receipt of a redemption order from the
Distributor or a shareholder, RSMC shall redeem the number of Shares
indicated thereon from the redeeming shareholder's account and receive
from the Trust's Custodian and disburse pursuant to the instructions of
a redeeming shareholder or his or her agent or the redemption proceeds
therefor, or arrange for direct payment of redemption proceeds by the
Custodian to the redeeming shareholder or as instructed by the
shareholder or his or her agent, in accordance with such procedures and
controls as are mutually agreed upon from time to time by and among the
Trust, RSMC and the Trust's Custodian.
6. AUTHORIZED ISSUED AND OUTSTANDING SHARES. The Trust agrees to notify
RSMC promptly of any change in the number of authorized Shares and of
any change in the number of Shares registered under the Securities Act
of 1933, as amended (the "1933 Act"), or termination of the Trust's
declaration under Rule 24f-2 of the 1940 Act. In the event that the
Trust shall declare a stock dividend, a stock split or a reverse stock
split, the Trust shall deliver to RSMC a certificate, upon which RSMC
shall be entitled to rely for all purposes, certifying (i) the number
of Shares involved, (ii) that all appropriate corporate action has been
taken, and (iii) that any amendment to the Master Trust Agreement of
the Trust which may be required has been filed and is effective. Such
certificate shall be accompanied by an opinion of counsel to the Trust
relating to the legal adequacy and effect of the transaction.
7. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish RSMC with
appropriate evidence of action by the Trust's Trustees authorizing the
declaration and payment of dividends and distributions as described in
the Prospectus. After deducting any amount required to be withheld by
any applicable tax laws, rules and regulations or other applicable
laws, rules and regulations, RSMC shall, in accordance with
instructions in proper form from a shareholder and the provisions of
the Trust's Master Trust Agreement and Prospectus, issue and credit the
account of the shareholder with Shares, or, if the shareholder so
elects, pay such dividends or distributions in cash to the shareholder
in the manner described in the Prospectus. In lieu of receiving from
the Trust's Custodian and paying to shareholders cash dividends or
distributions, RSMC may arrange for the direct payment of cash
dividends and distributions to shareholders by the Custodian, in
accordance with such procedures and controls as are mutually agreed
upon from time to time by and among the Trust, RSMC and the Trust's
Custodian.
RSMC shall prepare, file with the Internal Revenue Service and other
appropriate taxing authorities, and address and mail to shareholders
such returns and information relating to dividends and distributions
paid by the Trust as are required to be so prepared, filed and mailed
by applicable laws, rules and regulations, or such substitute form of
notice as may from time to time be permitted or required by the
Internal Revenue Service. On behalf of the Trust, RSMC shall mail
certain requests for shareholders' certifications under penalties of
perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and distributions
paid by the Trust, all as required by applicable Federal tax laws and
regulation.
In accordance with the Prospectus, resolutions of the Trust's Trustees
that are not inconsistent with this Agreement and are provided to RSMC
from time to time, and such procedures and controls as are mutually
agreed upon from time to time by and among the Trust, RSMC and the
Trust's Custodian, RSMC shall arrange for issuance of Shares obtained
through transfers of funds from Fund shareholders' accounts at
financial institutions.
8. COMMUNICATIONS WITH SHAREHOLDERS.
(a) Communications to Shareholders. RSMC will address and mail all
communications by the Trust to its shareholders, including reports to
shareholders, confirmations of purchases and sales of Shares, monthly
statements, dividend and distribution notices and proxy material for
its meetings of shareholders. RSMC will receive and tabulate the proxy
cards for shareholder meetings.
(b) Correspondence. RSMC will answer such correspondence from
shareholders, securities brokers and others relating to its duties
hereunder and such other correspondence as may from time to time be
mutually agreed upon between RSMC and the Trust.
9. SERVICES TO BE PERFORMED. RSMC shall be responsible for administering
and/or performing transfer agent functions, for acting as service agent
in connection with dividend and distribution functions and for
performing shareholder account functions in connection with the
issuance, transfer and redemption or repurchase (including coordination
with the Trust's custodian bank in connection with shareholder
redemption by check) of the Trust's Shares as set forth in Schedule A
hereto. The details of the operating standards and procedures to be
followed shall be determined from time to time by agreement between
RSMC and the Trust and may be expressed in written schedules which
shall constitute attachments to this Agreement.
10.RECORD KEEPING AND OTHER INFORMATION.
(a) RSMC shall maintain records of the accounts for each shareholder
showing the items listed in Schedule B hereto.
(b) RSMC shall create and maintain all necessary records in accordance
with all applicable laws, rules and regulations, including but not
limited to records required by Section 31(a) of the 1940 Act and the
rules thereunder and any applicable regulations of the Federal Deposit
Insurance Corporation ("FDIC") or any successor regulatory authority,
as the same may be amended from time to time, and those records
pertaining to the various functions performed by it hereunder. All
records shall be the property of the Trust at all times and shall be
available for inspection and use by the Trust. Where applicable, such
records shall be maintained by RSMC for the periods and in the places
required by Rule 31a-2 under the 1940 Act and any applicable
regulations of the FDIC or any successor regulatory authority.
11.AUDIT, INSPECTION AND VISITATION. RSMC shall make available during
regular business hours all records and other data created and
maintained pursuant to this Agreement for reasonable audit and
inspection by the Trust or any person retained by the Trust. Upon
reasonable notice by the Trust, RSMC shall make available during
regular business hours its facilities and premises employed in
connection with its performance of this Agreement for reasonable
visitation by the Trust, or any person retained by the Trust.
12.COMPENSATION. Compensation for services and duties performed pursuant
to this Agreement is provided in Schedule C hereto. Certain other fees
due and expenses incurred pursuant to this Agreement are payable by the
Trust or the shareholder on whose behalf the service is performed and
are also listed in Schedule C.
The Trust shall reimburse RSMC for all reasonable out-of-pocket
expenses incurred by RSMC or its agents in the performance of its
obligations hereunder. Such reimbursement for expenses incurred in any
calendar month shall be made on or before the tenth day of the next
succeeding month.
The term "out-of-pocket expenses" shall mean the following expenses
incurred by RSMC in the performance of its obligations hereunder: the
cost of stationery and forms (including but not limited to checks,
proxy cards, and envelopes), the cost of postage, the cost of insertion
of non-standard size materials in mailing envelopes and other special
mailing preparation by outside firms, the cost of first-class mailing
insurance, the cost of external electronic communications as approved
by the Trustees (to include telephone and telegraph equipment and an
allocable portion of the cost of personnel responsible for the
maintenance of such equipment), toll charges, data communications
equipment and line charges and the cost of microfilming of shareholder
records (including both the cost of storage as well as charges for
access to such records). If RSMC shall undertake the responsibility
for microfilming shareholder records, it may be separately compensated
therefor in an amount agreed upon by the principal financial officer of
the Trust and RSMC, such amount not to exceed the amount which would be
paid to an outside firm for providing such microfilming services.
13.USE OF RSMC'S NAME. The Trust shall not use the name of RSMC in any
Prospectus, SAI, sales literature or other material relating to the
Trust in a manner not approved prior thereto, provided, however, that
RSMC shall approve all uses of its name which merely refer in accurate
terms to its appointments hereunder or which are required by the SEC or
a state securities commission and, provided further, that in no event
shall such approval be unreasonably withheld.
14.USE OF TRUST'S NAME. RSMC shall not use the name of the Trust or the
Fund of the Trust or material relating to the Trust or the Fund on any
checks, bank drafts, bank statements or forms for other than internal
use in a manner not approved prior thereto, provided, however, that the
Trust shall approve all uses of its name which merely refer in accurate
terms to the appointment of RSMC hereunder or which are required by the
FDIC, the SEC or a state securities commission, and, provided, further,
that in no event shall such approval be unreasonably withheld.
15.SECURITY. RSMC represents and warrants that the various procedures and
systems which RSMC has implemented with regard to safeguarding from
loss or damage attributable to fire, theft or any other cause
(including provision for twenty-four hours a day restricted access) the
Trust's blank checks, records and other data and RSMC's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes
therein from time to time as in its judgment are required for the
secure performance of its obligations hereunder. The parties shall
review such systems and procedures on a periodic basis.
16.INSURANCE. Upon request RSMC shall provide the Trust with details
regarding its insurance coverage, and RSMC shall notify the Trust
should any of its insurance coverage be materially changed. Such
notification shall include the date of change and the reason or reasons
therefor. RSMC shall notify the Trust of any material claims against
it, whether or not they may be covered by insurance and shall notify
the Trust from time to time as may be appropriate of the total
outstanding claims made by RSMC under its insurance coverage.
17.ASSIGNMENT OF DUTIES TO OTHERS. Neither this Agreement nor any rights
or obligations hereunder may be assigned by RSMC without the written
consent of the Trust. RSMC may, however, at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company, which is itself qualified under the Securities Exchange Act of
1934, as amended (the "1934 Act"), to act as a transfer agent, as its
agent to carry out such of the services to be performed under this
agreement as RSMC may from time to time direct; provided, however, that
the appointment of any agent shall not relieve RSMC of any of its
responsibilities or liabilities hereunder.
18.INDEMNIFICATION.
(a) The Trust agrees to indemnify and hold harmless RSMC, its
directors, officers, employees, agents and representatives from all
taxes, charges, expenses, assessments, claims and liabilities
including, without limitation, liabilities arising under the 1933 Act,
the 1934 Act, the 1940 Act, and any applicable state and foreign laws
and amendments thereto (the "Applicable Laws"), and expenses, including
without limitation reasonable attorneys' fees and disbursements arising
directly or indirectly from any action or omission to act which RSMC
takes (i) at the request of or on the direction of or in reliance on
the advice of the Trust or (ii) upon Oral or Written Instructions.
Neither RSMC nor any of its nominees shall be indemnified against any
liability (or any expenses incident to such liability) arising out of
RSMC's or its directors', officers', employees', agents' and
representatives own willful misfeasance, bad faith, negligence or
reckless disregard of RSMC's duties and obligations under this
Agreement.
(b) RSMC agrees to indemnify and hold harmless the Trust from all
taxes, charges, expenses, assessments, claims, liabilities (including,
without limitation, liabilities arising under the Applicable Laws) and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) arising directly or indirectly from any action or
omission to act which RSMC or any of RSMC's directors, officers,
employees, agents and/or representatives take or fail to take provided
such action or omission to act constitutes willful misfeasance, bad
faith, negligence or reckless disregard of RSMC's duties and
obligations under this Agreement.
(c) In order that the indemnification provisions contained in this
Section 18 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
19.RESPONSIBILITY OF RSMC. RSMC shall be under no duty to take any action
on behalf of the Trust except as specifically set forth herein or as
may be specifically agreed to by RSMC in writing. RSMC shall be
obligated to exercise due care and diligence in the performance of its
duties hereunder, to act in good faith and to use its best efforts in
performing services provided for under this Agreement. RSMC shall be
liable for any damages arising out of or in connection with RSMC's
performance of or omission or failure to perform its duties under this
Agreement to the extent such damages arise out of RSMC's negligence,
reckless disregard of its duties hereunder, bad faith or willful
misfeasance.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, RSMC, in connection with its duties under
this Agreement, shall not be under any duty or obligation to inquire
into and shall not be liable for (i) the validity or invalidity or
authority or lack thereof of any Oral or Written Instruction, notice or
other instrument which conforms to the applicable requirements of this
Agreement, and which RSMC reasonably believes to be genuine; or (ii)
subject to the provisions of Section 20 hereof, delays or errors or
loss of data occurring by reason of circumstances beyond RSMC's
control, including acts of civil or military authority, national
emergencies, labor difficulties, fire, flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
20.ACTS OF GOD, ETC. RSMC shall not be liable for delays or errors
occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national
emergencies, labor difficulties, fire, flood or catastrophe, acts of
God, insurrection, war, riots, or failure of the mails, transportation,
communication or power supply. In the event of equipment breakdowns
beyond its control, RSMC shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions but shall have
no liability with respect thereto. RSMC shall enter into and shall
maintain in effect with appropriate parties one or more agreements
making reasonable provision for emergency use of electronic data
processing equipment to the extent appropriate equipment is available.
21.AMENDMENTS. RSMC and the Trust shall regularly consult with each other
regarding RSMC's performance of its obligations and its compensation
hereunder. In connection therewith, the Trust shall submit to RSMC at
a reasonable time in advance of filing with the SEC copies of any
amended or supplemented registration statements (including exhibits)
under the 1933 Act and the 1940 Act, and a reasonable time in advance
of their proposed use, copies of any amended or supplemented forms
relating to any plan, program or service offered by the Trust. Any
change in such material which would require any change in RSMC's
obligations hereunder shall be subject to RSMC's approval, which shall
not be unreasonably withheld. In the event that such change materially
increases the cost to RSMC of performing its obligations hereunder,
RSMC shall be entitled to receive reasonable compensation therefor.
22.DURATION, TERMINATION, ETC. Neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated orally, but
only by written instrument which shall make specific reference to this
Agreement and which shall be signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
This Agreement shall become effective as of the close of business on
the date first above written and shall continue in force unless
terminated as herein provided. This Agreement may at any time be
terminated by the Trust on sixty (60) days' written notice given to
RSMC or by RSMC on six (6) months' written notice given to the Trust;
provided, however, that this Agreement may be terminated immediately at
any time for cause either by the Trust or by RSMC in the event that
such cause remains unremedied for a period of time not to exceed sixty
(60) days after receipt of written specification of such cause. Any
such termination shall not affect the rights and obligations of the
parties under Section 18 hereof.
Upon the termination hereof, the Trust shall reimburse RSMC for any out-
of-pocket expenses reasonably incurred by RSMC during the period prior
to the date of such termination. In the event that the Trust
designates a successor to any of RSMC's obligations hereunder, RSMC
shall, at the expense and direction of the Trust, transfer to such
successor a certified list of the shareholders of the Trust (with name,
address, and, if provided, tax identification or Social Security
number), a complete record of the account of each shareholder, and all
other relevant books, records and other data established or maintained
by RSMC hereunder. RSMC shall be liable for any losses sustained by
the Trust as a result of RSMC's failure to accurately and promptly
provide these materials.
23.REGISTRATION AS A TRANSFER AGENT. RSMC represents that it is currently
registered with the appropriate Federal agency for the registration of
transfer agents, and that it will remain so registered for the duration
of this Agreement. RSMC agrees that it will promptly notify the Trust
in the event of any material change in its status as a registered
transfer agent. Should RSMC fail to be registered with the Federal
Deposit Insurance Corporation or any successor regulatory authority as
a transfer agent at any time during this Agreement, the Trust may, on
written notice to RSMC, immediately terminate this Agreement.
24.NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party
to this Agreement at its principal place of business.
25.SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
26.GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws
(without regard, however, to laws as to conflicts of law) of the State
of Delaware.
27.LIMITATION OF LIABILITY. RSMC acknowledges that it has received notice
of and accepts the limitations of liability set forth in the Trust's
Master Trust Agreement. RSMC agrees that the Trust's obligations
hereunder shall be limited to the Trust, and that RSMC shall have
recourse solely against the assets of the Portfolio with respect to
which the Trust's obligations hereunder relate and shall have no
recourse against the assets of any other Portfolio or against any
shareholder, Trustee, officer, employee, or agent of the Trust.
28.MISCELLANEOUS. Both parties agree to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two counterparts, each
of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this agreement as of
the day and year first above written.
HEITMAN SECURITIES TRUST
By: /s/ William L. Ramseyer
-----------------------
William L. Ramseyer, President
RODNEY SQUARE MANAGEMENT
CORPORATION
By: /s/ Martin L. Klopping
-----------------------
Martin L. Klopping, President
<PAGE>
AMENDED AND RESTATED TRANSFER AGENCY AGREEMENT
SCHEDULE A
HEITMAN SECURITIES TRUST
SERVICES TO BE PERFORMED
Rodney Square Management Corporation ("RSMC") will perform the following
functions as transfer agent on an ongoing basis with respect to the Fund:
(a)furnish state-by-state registration reports;
(b)provide toll-free lines for direct shareholder use, plus customer
liaison staff with on-line inquiry capacity;
(c)mail duplicate confirmations to dealers and other financial
institutions ("Service Organization") of their clients' activity,
whether executed through the Service Organization or directly with
RSMC;
(d)provide detail for underwriter or Service Organization confirmations
and other Service Organization shareholder accounting, in accordance
with such procedures as may be agreed upon between the Trust and RSMC;
(e)provide shareholder lists and statistical information concerning
shareholder accounts to the Trust;
(f)provide timely notification of Fund activity and such other information
as may be agreed upon from time to time between RSMC and the Fund or
the Custodian, to the Trust or the Custodian; and
(g)with respect to dividends and distributions, prepare and file required
reports with the Internal Revenue Service ("IRS"), prepare and mail
reports to shareholders as required by the IRS and described in the
Prospectus(s) and Statement of Additional Information.
<PAGE>
AMENDED AND RESTATED TRANSFER AGENCY AGREEMENT
SCHEDULE B
HEITMAN SECURITIES TRUST
SHAREHOLDER RECORDS
Rodney Square Management Corporation ("RSMC") shall maintain records of the
accounts for each Fund shareholder showing the following information:
(a)name, address and United States Tax Identification or Social Security
number;
(b)number of Shares held and number of Shares for which certificates, if
any, have been issued, including certificate numbers and denominations;
(c)historical information regarding the account of each shareholder,
including dividends and distributions paid and the date and price for
all transactions on a shareholder's account;
(d)any stop or restraining order placed against a shareholder's account;
(e)any correspondence relating to the current maintenance of a
shareholder's account;
(f)information with respect to withholding; and,
(g)any information required in order for RSMC to perform any calculations
contemplated or required by this Agreement.
<PAGE>
AMENDED AND RESTATED TRANSFER AGENCY AGREEMENT
SCHEDULE C
HEITMAN SECURITIES TRUST
FEE SCHEDULE
For the services RSMC provides under the Transfer Agency Agreement attached
hereto, the Trust agrees to pay RSMC an administration fee on a monthly
basis with respect to each Class of the Fund listed below equal to 1/12 of
the annual maintenance fee, subject to a minimum fee as listed below, plus
out-of-pocket expenses as follows:
(A) HEITMAN/PRA INSTITUTIONAL CLASS - Minimum Fee: $1,875 per month
(B) ADVISOR CLASS - Minimum Fee: $2,250 per month
Maintenance Fee per Annum
TYPE OF TRUST/ACCOUNT PER ACCOUNT
--------------------- -----------
Annual, Semi-Annual or Quarterly Dividend $15.00
Monthly Dividend $16.50
Daily Accrual Fund $18.00
Per account fees will be applied to active accounts and zero balance
accounts with no dividend payable. Zero balance account will be purged
after year end tax reporting.
Out of pocket expenses shall be reimbursed by the Trust to Rodney
Square Management Corporation ("RSMC") or paid directly by the Trust.
Such expenses include but are not limited to the following:
a. Toll-free lines (if required)
b. Forms, envelopes, checks, checkbooks
c. Postage (bulk, pre-sort, first-class at current prevailing
rates)
d. Hardware/phone lines for remote terminal(s) (if required)
e. Microfiche/Microfilm
f. Wire fee for receipt - $7.50 per wire; disbursement - $12.50.
g. Mailing fee - approximately $45.00 per 1,000 items
h. Cost of proxy solicitation, mailing and tabulation (if
required)
i. Certificate issuance - $2.00 per certificate
j. Record retention storage - $3.50 per cubic foot per month, plus
runner charges.
k. Development/programming costs/special projects - time and
material Ad-hoc report set up $125, plus $ .012 per record
passed. Labels - $ .12 per label ( $75.00 minimum)
l. ACH transaction charges - $0.25 per transaction
m. "B" notice mailing - $5.00 per item
n. Locating lost shareholders in anticipation of escheating -
5.00 per name
o. Commission and 12b-1 calculations - $ .25 per account, per run.
p. Retroactive Record Dates for dividends, proxies, etc.
q. Conversion expenses - to be determined, time and materials
The following is a list of additional out-of -pocket expenses which shall
be reimbursed by the Trust to RSMC or paid directly by the Trust. Such
expenses include but are not limited to the following:
NATIONAL SECURITIES CLEARING CORPORATION (NSCC) CHARGES
1. FUND/SERV
Participation Fee $50.00 per month
CPU Access Fee $40.00 per month
Transaction Fee $ 0.50 per transaction
2. Networking
Participation Fee $250.00 per month
CPU Access Fee $40.00 per month
Account Fee $.045 per month on monthly dividend
funds
$.030 per month on all other
dividend funds
3. Commission Settlements
Participation Fee $50.00 per month
Account Fee $ 0.30 per account per month.
RODNEY SQUARE SYSTEM ACCESS CHARGES FOR NSCC
1. FUND/SERV
Base Facility Use Fee $500.00 per month
Transaction Fee $.25 per transaction
Plus out-of-pocket expenses for settlements, wire charges, NSCC pick-up
charges, etc.
2. Networking
Base Facility Use Fee $500.00 per month
Matrix Level Charges:
Level 1, 2 or 4 $.24 per acct/month
Level 3 $.06 per acct/month
RODNEY SQUARE WIRE ORDER DESK
Master/Omnibus Account $7.50 per purchase/redemption
transaction
ADDITIONAL EXPENSES (WHICH MAY BE PAID BY SHAREHOLDER):
Direct IRA/Keogh processing $10.00 per account per annum
$ 7.50 new account set-up fee
$ 2.50 per distribution
$10.00 per transfer out
Exchange Fees $5.00 per transaction
PAYMENT
The above will be billed within the first five (5) business days of each
month and will be paid by wire within five (5) business days of receipt.
HEITMAN SECURITIES TRUST
RODNEY SQUARE MANAGEMENT CORPORATION
AMENDED AND RESTATED ADMINISTRATION AGREEMENT Exhibit 9(b)
THIS AMENDED AND RESTATED ADMINISTRATION AGREEMENT is made as of the
14th day of November, 1996, by and between Heitman Securities Trust, a
Massachusetts business trust (the "Trust"), having its principal place of
business in Chicago, Illinois, and Rodney Square Management Corporation, a
corporation organized under the laws of the State of Delaware ("RSMC"),
having its principal place of business in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company
and offers for public sale distinct series of shares of beneficial interest
("Series"), par value $0.001 per share;
WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each
Series has a separate investment objective and policies;
WHEREAS, at the present time, the Trust has one Series, the Heitman Real
Estate Fund (the "Fund"), which consists of two classes of shares, the
Heitman/PRA Institutional Class shares and the Advisor Class shares;
WHEREAS, the Trust currently employs the services of RSMC with respect
to the Fund pursuant to an Administration Agreement dated as of December 3,
1993 (the "Original Agreement"); and
WHEREAS, the Trust and RSMC desire to amend and restate the Original
Agreement in its entirety by adopting this Amended and Restated
Administration Agreement, which shall supersede the Original Agreement from
and after the date hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and RSMC agree as follows:
1. APPOINTMENT. The Trust hereby appoints and employs RSMC as agent to
perform the fund administration services described in this Agreement
for the period and upon the terms and conditions set forth in this
Agreement. RSMC accepts such appointment and agrees to perform the
obligations thereof upon the terms and conditions hereinafter set forth
and in accordance with the principles of principal and agent as
enunciated by applicable common law.
2. DOCUMENTS. The Trust has furnished RSMC copies of the Trust's First
Amended and Restated Master Trust Agreement (the "Master Trust
Agreement"), Bylaws, Investment Management Agreement, Distribution
Agreement between the Trust and Rodney Square Distributors, Inc., with
respect to the Heitman/PRA Institutional Class shares, the Distribution
Agreement between the Trust and ACG Capital Corporation with respect to
the Advisor Class shares, Accounting Services Agreement, Custody
Agreement, Transfer Agency Agreement, and all amendments thereto and
restatements thereof, the Trust's current Prospectus(s) and Statement
of Additional Information (the "SAI") and all forms relating to any
plan, program or service offered by the Trust. The Trust shall furnish
promptly to RSMC a copy of any amendment or supplement to the above-
mentioned documents. The Trust shall furnish promptly to RSMC any
additional documents necessary for it to perform its functions
hereunder or such other documents as RSMC shall request.
3. FUND ADMINISTRATION. Subject to the direction and control of the Board
of Trustees (the "Trustees") of the Trust and to the extent not
otherwise the responsibility of, or provided by, the Trust or other
supply agents of the Trust, RSMC shall provide the following
administrative services for the Trust:
(a) Supply:
(i) office facilities (which may be in RSMC's or its affiliates'
own offices);
(ii) non-investment related statistical and research data;
(iii) executive and administrative services;
(iv) stationery and office supplies;
(v) corporate secretarial services, such as the preparation and
distribution of materials at the Trust's expense for meetings
of the Trustees or shareholders; and
(vi) Directors' and Officers' questionnaires.
(b) Prepare and file, if necessary, reports to shareholders of the
Trust and reports with the Securities and Exchange Commission (the
"SEC"), state securities commissions and Blue Sky authorities,
including preliminary and definitive proxy materials, post-
effective amendments to the Trust's registration statement, Rule
24f-2 Notices, Form N-SAR filings and prospectus supplements;
(c) Monitor the Trust's compliance with the investment restrictions and
limitations imposed by the 1940 Act, and state Blue Sky laws and
applicable regulations thereunder, the fundamental and non-
fundamental investment policies and limitations set forth in the
Trust's Prospectus(s) and SAI, and the investment restrictions and
limitations necessary for each Fund of the Trust to qualify as a
regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") or any successor
statute;
(d) Monitor sales of the Trust's shares and ensure that such shares are
properly registered with the SEC and applicable state authorities;
(e) Prepare and distribute to appropriate parties notices announcing
the declaration of dividends and other distributions to
shareholders;
(f) Prepare financial statements and footnotes and other financial
information with such frequency and in such format as required to
be included in reports to shareholders and the SEC;
(g) Review sales literature and file such with regulatory authorities,
as necessary;
(h) Maintain the Trust's membership in Fund/Serv;
(i) Provide information regarding material developments in state
securities regulation; and
(j) Provide personnel to serve as officers of the Trust if so elected
by the Board of Trustees.
4. EXPENSES OF THE TRUST. The Trust agrees that it will pay all its
expenses other than those expressly stated to be payable by RSMC
hereunder, which expenses payable by the Trust shall include, without
limitation:
(a)Fees payable for investment advisory services provided by the
Trust's investment Advisor;
(b)Fees payable for services provided by the Trust's independent
public accountants;
(c)Fees payable for accounting, transfer agency and custodial
services;
(d)The cost of obtaining quotations for calculating the value of the
assets of the Fund;
(e)Taxes levied against the Trust or the Fund;
(f)Brokerage fees, mark-ups and commissions in connection with the
purchase and sale of portfolio securities;
(g)Costs, including the interest expense, of borrowing money;
(h)Costs and/or fees incident to holding meetings of the Trustees and
shareholders, preparation (including typesetting, EDGAR conversion,
filing and printing charges) and mailing of prospectuses, reports
and proxy materials to the existing shareholders of the Trust,
filing of reports with regulatory bodies, maintenance of the
Trust's corporate existence, and registration of shares with
federal and state securities authorities;
(i)Legal fees and expenses;
(j)Costs of printing share certificates representing shares of the
Trust;
(k)Fees payable to, and expenses of, members of the Trustees who are
not "interested persons" of the Trust;
(l)Out-of-pocket expenses incurred by RSMC, its agents or affiliates
in connection with the provision of fund administration,
accounting, custodial and transfer agency services;
(m)Premiums payable on the fidelity bond required by Section 17(g) of
the 1940 Act, and any other premiums payable on insurance policies
related to the Trust's business and the investment activities of
its Funds;
(n)Distribution fees, if any;
(o)Service fees, if any, payable by the Fund for providing personal
services to the shareholders of the Fund and for maintaining
shareholder accounts for those shareholders;
(p)Fees, voluntary assessments and other expenses incurred in
connection with the Trust's membership in investment company
organizations; and
(q)Such non-recurring expenses as may arise, including actions, suits
or proceedings to which the Trust is a party and the legal
obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
Except as otherwise agreed by RSMC, RSMC will not reimburse the Trust
for (or have deducted from its fees payable under this Agreement) any
Trust expenses in excess of any expense limitations imposed by state
securities commissions having jurisdiction over the sale of Fund
shares.
5. RECORDKEEPING AND OTHER INFORMATION. RSMC shall create and maintain
all necessary records in accordance with all applicable laws, rules and
regulations, including, but not limited to, records required by Section
31(a) of the 1940 Act and the rules thereunder, as the same may be
amended from time to time, pertaining to the various functions
(described above) performed by it and not otherwise created and
maintained by another party pursuant to contract with the Trust. All
records shall be the property of the Trust at all times and shall be
available for inspection and use by the Trust. Where applicable, such
records shall be maintained by RSMC for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
6. AUDIT, INSPECTION AND VISITATION. RSMC shall make available during
regular business hours all records and other data created and
maintained pursuant to the foregoing provisions of this Agreement for
reasonable audit and inspection by the Trust, any person retained by
the Trust or any regulatory agency having authority over the Trust.
7. COMPENSATION. For the performance of its obligations under this
Agreement, the Trust shall pay RSMC an administrative fee with respect
to each Fund in accordance with the fee arrangements described in
Schedule A attached hereto, as such schedule may be amended from time
to time.
8. APPOINTMENT OF AGENTS. RSMC may at any time or times, in its
discretion, appoint (and may at any time remove) other parties as its
agent to carry out such of the provisions of this Agreement as RSMC may
from time to time direct; provided, however, that the appointment of
any such agent shall not relieve RSMC of any of its responsibilities or
liabilities hereunder.
9. USE OF RSMC'S NAME. The Trust shall not use the name of RSMC or any of
its agents or affiliates in any Prospectus, SAI, sales literature or
other material relating to the Trust in a manner not approved prior
thereto in writing by RSMC; provided, however, that RSMC shall approve
all uses of its, its agents' or its affiliates' names that merely refer
in accurate terms to their appointments hereunder or that are required
by the SEC or a state securities commission; and further provided, that
in no event shall such approval be unreasonably withheld.
10.USE OF TRUST'S NAME. Neither RSMC nor any of its affiliates shall use
the name of the Trust or material relating to the Trust on any forms
(including any checks, bank drafts or bank statements) for other than
internal use in a manner not approved prior thereto by the Trust;
provided, however, that the Trust shall approve all uses of its name
that merely refer in accurate terms to the appointment of RSMC
hereunder or that are required by the SEC or a state securities
commission; and further provided, that in no event shall such approval
be unreasonably withheld.
11.LIABILITY OF RSMC OR AFFILIATES. RSMC and its affiliates shall not be
liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which this
Agreement relates, except to the extent of a loss resulting from
willful misfeasance, bad faith, negligence or reckless disregard of
their obligations and duties under this Agreement. Any person, even
though also an officer, director, employee or agent of RSMC or any of
its affiliates who may be or become an officer or director of the
Trust, shall be deemed, when rendering services to the Trust as such
officer or acting on any business of the Trust in such capacity (other
than services or business in connection with RSMC's duties under this
Agreement), to be rendering such services to or acting solely for the
Trust and not as an officer, director, employee or agent or one under
the control or direction of RSMC or any of its affiliates, even though
paid by one of those entities. RSMC shall not be liable or responsible
for any acts or omissions of any predecessor administrator or any other
persons having responsibility for matters to which this Agreement
relates nor shall RSMC be responsible for reviewing any such act or
omissions. RSMC shall, however, be liable for its own acts and
omissions subsequent to assuming responsibility under this Agreement as
herein provided.
12.RESPONSIBILITY OF RSMC. In the performance of its duties hereunder,
RSMC shall be obligated to exercise due care and diligence and to act
in good faith and to use its best efforts within reasonable limits.
RSMC shall be under no duty to take any action on behalf of the Trust
except as specifically set forth herein or as may be specifically
agreed to by RSMC in writing. To the extent that duties, obligations
and responsibilities assumed by RSMC are not expressly set forth in
this Agreement, RSMC shall not be liable for any act or omission which
does not constitute willful misfeasance, bad faith or negligence on the
part of RSMC or reckless disregard by RSMC of such duties, obligations
and responsibilities. Without limiting the generality of the foregoing
or of any other provision of this Agreement, RSMC, in connection with
its duties under this Agreement, shall not be under any duty or
obligation to inquire into, and shall not be liable for or in respect
of: (i) the validity or invalidity or authority or lack thereof of any
oral or written instruction, notice or other instrument which conforms
to the applicable requirements of this Agreement, and which RSMC
reasonably believes to be genuine; or (ii) delays or errors or loss of
data occurring by reason of circumstances beyond RSMC's control,
including acts of civil or military authority, national emergencies,
labor difficulties, fire, mechanical breakdown, flood or catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply, in which circumstances
RSMC shall take reasonable actions to minimize loss of data resulting
therefrom.
13. RIGHT TO RECEIVE ADVICE.
a. Advice of Trust. If RSMC shall be in doubt as to any action to be
taken or omitted by it, it may request, and shall receive, from the
Trust directions or advice, including oral or written instructions
where appropriate.
b. Advice of Counsel. If RSMC shall be in doubt as to any question of
law involved in any action to be taken or omitted by RSMC, it may
request directions or advice at its own cost from counsel of its
own choosing (who may be the regularly retained counsel for the
Trust or RSMC or the in-house counsel for RSMC, at the option of
RSMC).
c. Conflicting Advice. In case of conflict between oral or written
instructions received by RSMC pursuant to (a) above, RSMC shall be
entitled to rely upon and follow written instructions alone. In
case of conflict between directions and advice pursuant to (a) and
(b) above, RSMC shall be entitled to rely upon and follow
directions and advice obtained in accordance with (b) above.
d. Protection of RSMC. RSMC shall be protected in any action or
inaction which it takes in reliance on any directions, advice or
oral or written Instructions received pursuant to subsections a. or
b. of this Section which RSMC, after receipt of any such
directions, advice or oral or written instructions, in good faith
believes to be consistent with such directions, advice or oral or
written instructions, as the case may be. However, nothing in this
Section shall be construed as imposing upon RSMC any obligation (i)
to seek such direction, advice or oral or written instructions, or
(ii) to act in accordance with such directions, advice or oral or
written instructions when received, unless, under the terms of
another provision of this Agreement, the same is a condition to
RSMC's properly taking or omitting to take such action. Nothing is
this subsection shall excuse RSMC when an action or omission on the
part of RSMC constitutes willful misfeasance, bad faith, negligence
or reckless disregard by RSMC of its duties under this Agreement.
14. INDEMNIFICATION.
a. The Trust agrees to indemnify and hold harmless RSMC and its
directors, officers, employees, agents and representatives from all
taxes, charges, expenses, assessments, claims and liabilities
including, without limitation, liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), the Securities
Exchange Act of 1934, as amended the ("1934 Act") or the 1940 Act
and any applicable state and foreign securities laws, and
amendments thereto (the "Securities Laws"), and expenses, including
without limitation reasonable attorneys' fees and disbursements,
arising directly or indirectly from any action or omission to act
which RSMC takes or does or omits to take or to do: (i) at the
request of or on the direction of or in reliance upon the advice of
the Trust; or (ii) upon oral or written instructions received from
the Trust. Neither RSMC nor any of its directors, officers,
employees, agents and representatives shall be indemnified against
any liability (or any expenses incident to such liability) arising
out of RSMC's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this
Agreement.
b. RSMC agrees to indemnify and hold harmless the Trust from all
taxes, charges, expenses, assessments, claims, liabilities
(including, without limitation, liabilities arising under the
Securities Laws) and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) arising directly or
indirectly from any action or omission to act which RSMC or any of
RSMC's directors, officers, employees, agents and/or
representatives take or fail to take provided such action or
omission to act constitutes willful misfeasance, bad faith,
negligence or reckless disregard of RSMC's duties and obligations
under this Agreement.
c. Upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion, and shall
keep the other party advised with respect to all developments
concerning such claim. The party who may be required to indemnify
shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
15.AMENDMENTS. RSMC and the Trust shall regularly consult with each other
regarding RSMC's performance of its obligations and its compensation
under the foregoing provisions. In connection therewith, the Trust
shall submit to RSMC at a reasonable time in advance of filing with the
SEC copies of any amended or supplemented registration statement of the
Trust (including exhibits) under the 1933 Act and the 1940 Act, and, a
reasonable time in advance of their proposed use, copies of any amended
or supplemented forms relating to any plan, program or service offered
by the Trust. Any change in such materials that would require any
change in RSMC's obligations under the foregoing provisions shall be
subject to the burdened party's approval, which shall not be
unreasonably withheld. In the event that a change in such documents or
in the procedures contained therein increases the cost to RSMC of
performing its obligations hereunder by more than an insubstantial
amount, RSMC shall be entitled to receive reasonable compensation
therefor.
16.DURATION, TERMINATION, ETC. The provisions of this Agreement may not
be changed, waived, discharged or terminated orally, but only by
written instrument that shall make specific reference to this Agreement
and that shall be signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.
This Agreement shall become effective as of the close of business on
the date first above written and shall continue in force unless
terminated as herein provided. This Agreement may at any time be
terminated by the Trust on sixty (60) days' written notice given to
RSMC or by RSMC on six (6) months' written notice given to the Trust;
provided, however, that this Agreement may be terminated by the Trust
immediately at any time for cause either by the Trust or by RSMC in the
event that such cause shall have remained unremedied for sixty (60)
days or more after receipt of written specification of such cause. Any
such termination shall not affect the rights and obligations of the
parties under Sections 11 and 14 hereof.
Upon the termination of this Agreement, the Trust shall pay to RSMC
such compensation as may be payable for the period prior to the
effective date of such termination, including reimbursement for any out-
of-pocket expenses reasonably incurred by RSMC to such date. In the
event that the Trust designates a successor to any of RSMC's
obligations hereunder, RSMC shall, at the expense and direction of the
Trust, transfer to such successor all relevant books, records and other
data established or maintained by RSMC under the foregoing provisions.
17.NOTICE. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party
to this Agreement at its principal place of business.
18.SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
19.GOVERNING LAW. To the extent that state law has not been preempted by
the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws
(without regard, however, to laws as to conflicts of law) of the State
of Delaware.
20.LIMITATION OF LIABILITY. RSMC acknowledges that it has received notice
of and accepts the limitations of liability set forth in the Trust's
Master Trust Agreement. RSMC agrees that the Trust's obligations
hereunder shall be limited to the Trust, and that RSMC shall have
recourse solely against the assets of the portfolio with respect to
which the Trust's obligations hereunder relate and shall have no
recourse against the assets of any other portfolio or against any
shareholder, Trustee, officer, employee, or agent of the Trust.
21.MISCELLANEOUS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed in two counterparts, each of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
HEITMAN SECURITIES TRUST
By: /s/ William L. Ramseyer
-------------------------
William L. Ramseyer, President
RODNEY SQUARE MANAGEMENT
CORPORATION
By: /s/ Martin L. Klopping
------------------------
Martin L. Klopping, President
<PAGE>
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
SCHEDULE A
HEITMAN SECURITIES TRUST
FEE SCHEDULE
For the services RSMC provides under the Administration Agreement
attached hereto, the Trust agrees to pay RSMC an administrative fee
with respect to each class of the Fund listed below at an annual rate
of .10% based on the average of the daily net assets of each such
class as determined at the close of business on each day throughout
the month:
Heitman/PRA Institutional Class--Heitman Real Estate Fund
Advisor Class--Heitman Real Estate Fund
The Advisor Class and any subsequent classes of the Heitman Real
Estate Fund shall be subject to a minimum annual fee of $25,000 per
class.
The administrative fee shall be payable monthly in arrears as soon as
practicable after the last day of each month.
HEITMAN SECURITIES TRUST
RODNEY SQUARE MANAGEMENT CORPORATION
AMENDED AND RESTATED ACCOUNTING SERVICES AGREEMENT Exhibit 9(c)
THIS AMENDED AND RESTATED ACCOUNTING SERVICES AGREEMENT made as of the
14th day of November, 1996, by and between Heitman Securities Trust, a
Massachusetts business trust (hereinafter called the "Trust"), having its
principal place of business in Chicago, Illinois, and Rodney Square
Management Corporation, a corporation organized under the laws of the State
of Delaware (hereinafter called "RSMC"), having its principal place of
business in Wilmington, Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end management
investment company and offers for public sale one or more distinct series
of shares of beneficial interest ("Series"), par value $.001 per share,
each corresponding to a distinct portfolio;
WHEREAS, each share of a Series represents an undivided interest in
the assets, subject to the liabilities, allocated to that Series and each
Series has a separate investment objective and policies;
WHEREAS, at the present time, the Trust has one Series, the Heitman Real
Estate Fund (the "Fund"), which consists of two classes of shares, the
Heitman/PRA Institutional Class shares and the Advisor Class shares;
WHEREAS, the Trust currently to employs RSMC to provide certain
accounting services with respect to the Fund pursuant to an Accounting
Services Agreement dated as of December 3, 1993 (the "Original Agreement");
and
WHEREAS, the Trust and RSMC desire to amend and restate the Original
Agreement in its entirety by adopting this Amended and Restated Accounting
Services Agreement which shall supersede the Original Agreement from and
after the date hereof;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and RSMC agree as follows:
1. APPOINTMENT. The Trust hereby appoints RSMC to provide certain
accounting services to the Trust for the period and upon the terms and
conditions set forth in this Agreement. RSMC accepts such appointment and
agrees to furnish the services herein set forth in return for the
compensation provided for in Section 11 of this Agreement. RSMC agrees to
comply with all relevant provisions of the Investment Company Act of 1940,
as amended (the "1940 Act"), and applicable rules and regulations
thereunder, and to remain open for business on any day on which the New
York Stock Exchange, the Philadelphia branch office of the Federal Reserve
and Wilmington Trust Company are open for business. The Trust may from time
to time issue separate series or classes or classify and reclassify shares
of such series or class. RSMC shall identify to each such series or class
property belonging to such series or class and in such reports,
confirmations and notices to the Trust called for under this Agreement and
shall identify the series or class to which such report, confirmation or
notice pertains.
2. DOCUMENTS. The Trust has furnished RSMC with copies properly
certified or authenticated of each of the following:
A. Resolutions of the Trust's Board of Trustees authorizing the
appointment of RSMC to provide certain accounting services to the Trust and
approving this Agreement;
B. Schedule B identifying and containing the signatures of
those Trust officers and other persons authorized ("Authorized Persons") to
sign "Written Instructions" on behalf of the Trust;
C. The Trust's Amended and Restated Master Trust Agreement
filed with the Secretary of the Commonwealth of Massachusetts on March 3,
1995 and all amendments thereto and restatements thereof;
D. The Trust's Bylaws and all amendments thereto and
restatements thereof (such Bylaws, as presently in effect and as they shall
from time to time be amended or restated, are herein called "Bylaws");
E. The Investment Management Agreement between Heitman/PRA
Securities Advisors, Inc. (the "Advisor") and the Trust with respect to
Heitman Securities Trust dated as of January 31, 1995;
F. The Distribution Agreement between the Trust and Rodney
Square Distributors, Inc. dated as of December 3, 1993;
G. The Distribution Agreement between the Trust and ACG Capital
Corporation dated as of May 15, 1995;
H. The Amended and Restated Administration Agreement between
the Trust and RSMC of even date herewith;
I. The Amended and Restated Custodian Agreement between
Wilmington Trust Company (the "Custodian") and the Trust, of even date
herewith;
J. The Amended and Restated Transfer Agency Agreement between
the Trust and RSMC of even date herein;
K. The Trust's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act as filed with the Securities and Exchange
Commission ("SEC") on September 15, 1988;
L. The Trust's most recent Registration Statement on Form N-1A
under the Securities Act of 1933 (the "1933 Act") (File No. 33-24611) and
under the Investment Company Act (File No. 811-5659), as filed with the SEC
relating to shares of beneficial interest in the Trust, and all amendments
thereto;
M. The Trust's most recent prospectuses and statements of
additional information relating to the Fund(s); and
N. If required, a copy of either (i) a filed notice of
eligibility to claim the exclusion from the definition of "commodity pool
operator" contained in Section 2(a)(1)(A) of the Commodity Exchange Act
("CEA") that is provided in Rule 4.5 under the CEA, together with all
supplements as are required by the Commodity Futures Trading Commission
("CFTC"), or (ii) a letter which has been granted the Trust by the CFTC
which states that the Trust will not be treated as a "pool" as defined in
Section 4.10(d) of the CFTC's General Regulations, or (iii) a letter which
has been granted the Trust by the CFTC which states that CFTC will not take
any enforcement action if the Trust does not register as a "commodity pool
operator."
The Trust will furnish RSMC from time to time with copies,
properly certified or authenticated, of all additions, amendments or
supplements to the foregoing, if any.
3. INSTRUCTIONS CONSISTENT WITH MASTER TRUST AGREEMENT, ETC.
A. Unless otherwise provided in this Agreement, RSMC shall act
only upon Oral and Written Instructions. ("Oral Instructions", as used in
this Agreement, shall mean oral instructions actually received by RSMC from
an Authorized Person or from a person reasonably believed by RSMC to be an
Authorized Person. "Written Instructions", as used in this Agreement,
shall mean written instructions signed by two Authorized Persons delivered
by hand, mail, telegram, cable, telex or facsimile, and received by RSMC.
"Authorized Person", as used in this Agreement, means any officer of the
Trust and any other person, whether or not any such person is an officer or
employee of the Trust, duly authorized by the Trustees of the Trust to give
Oral and Written Instructions on behalf of the Fund(s) and certified by the
Secretary or an Assistant Secretary of the Trust, or any amendment thereto
as may be received by RSMC from time to time.) Although RSMC may know of
the provisions of the Master Trust Agreement and Bylaws of the Trust, RSMC
in its capacity under this Agreement may assume that any Oral or Written
Instructions received hereunder are not in any way inconsistent with any
provisions of such Master Trust Agreement or Bylaws or any vote, resolution
or proceeding of the shareholders, or of the Board of Trustees, or of any
committee thereof.
B. RSMC shall be entitled to rely upon any Oral Instructions
and any Written Instructions actually received by RSMC pursuant to this
Agreement. The Trust agrees to forward to RSMC Written Instructions
confirming Oral Instructions in such manner that the Written Instructions
are received by RSMC, whether by hand delivery, telex, facsimile or
otherwise, by the close of business of the same day that such Oral
Instructions are given to RSMC. The Trust agrees that the fact that such
confirming Written Instructions are not received by RSMC shall in no way
affect the validity of the transactions or enforceability of the
transactions authorized by the Trust by giving Oral Instructions. The Trust
agrees that RSMC shall incur no liability to the Trust in acting upon Oral
Instructions given to RSMC hereunder concerning such transactions provided
such instructions reasonably appear to have been received from an
Authorized Person.
4. FUND ACCOUNTING.
A. RSMC shall provide the following accounting functions on a
daily basis:
(1)Journalize each Fund's investment, capital share and
income and expense activities;
(2)Verify investment buy/sell trade tickets when received
from the Advisor(s) and transmit trades to the Trust's
Custodian for proper settlement;
(3)Maintain individual ledgers for investment securities;
(4)Maintain historical tax lots for each security;
(5)Reconcile cash and investment balances of each Fund with
the Custodian, and provide the Advisor(s) with the
beginning cash balance available for investment
purposes;
(6)Update the cash availability throughout the day as
required by the Advisor(s);
(7)Post to and prepare each Fund's Statement of Assets and
Liabilities and Statement of Operations;
(8)Calculate expenses payable pursuant to the Trust's
various contractual obligations;
(9)Control all disbursements from the Trust on behalf of
each Fund and authorize such disbursements upon Written
Instructions;
(10)Calculate capital gains and losses;
(11)Determine each Fund's net income;
(12)Obtain security market prices or if such market prices
are not readily available, then obtain such prices from
services approved by the Advisor(s), and in either case
calculate the market or fair value of each Fund's
investments;
(13)In the case of debt instruments with remaining
maturities of sixty (60) days or less, calculate the
amortized cost value of those instruments;
(14)Transmit or mail a copy of the portfolio valuations to
the Advisor(s);
(15)Compute the net asset value of each Fund;
(16)Compute each Fund's yields, total returns, expense
ratios and portfolio turnover rate; and
(17)Prepare and monitor the expense accruals and notify
Trust management of any proposed adjustments.
B. In addition, RSMC will:
(1)Prepare monthly financial statements, which will include
without limitation the Schedule of Investments, the
Statement of Assets and Liabilities, the Statement of
Operations, the Statement of Changes in Net Assets, the
Cash Statement, and the Schedule of Capital Gains and
Losses;
(2)Prepare monthly security transactions listings;
(3)Prepare monthly broker security transactions summaries;
(4)Supply various Trust and Fund statistical data as
requested on an ongoing basis;
(5)Assist in the preparation of support schedules necessary
for completion of Federal and state tax returns;
(6)Assist in the preparation and filing of the Trust's
annual and semiannual reports with the SEC on Form N-
SAR;
(7)Assist in the preparation and filing of the Trust's
annual and semiannual reports to shareholders and proxy
statements;
(8)Assist with the preparation of amendments to the Trust's
registration statements on Form N-1A and other filings
relating to the registration of shares; and
(9)Monitor each Fund's status as a regulated investment
company under Subchapter M of the Internal Revenue Code
of 1986, as amended from time to time;
(10)Determine the amount of dividends and other
distributions payable to shareholders as necessary to,
among other things, maintain the qualification as a
regulated investment company of each Fund of the Trust
under the Code.
5. RECORDKEEPING AND OTHER INFORMATION. RSMC shall create and
maintain all necessary records in accordance with all applicable laws,
rules and regulations, including, but not limited to, records required by
Section 31(a) of the 1940 Act and the rules thereunder, as the same may be
amended from time to time, pertaining to the various functions (described
above) performed by it and not otherwise created and maintained by another
party pursuant to contract with the Trust. All records shall be the
property of the Trust at all times and shall be available for inspection
and use by the Trust or the Trust's authorized representatives. Upon
reasonable request of the Trust, copies of such records shall be provided
by RSMC to the Trust or the Trust's authorized representatives at the
Trust's expense. Where applicable, such records shall be maintained by RSMC
for the periods and in the places required by Rule 31a-2 under the 1940
Act.
6. LIAISON WITH ACCOUNTANTS. RSMC shall act as liaison with the
Trust's independent public accountants and shall provide account analysis,
fiscal year summaries and other audit related schedules. RSMC shall take
all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to
such accountants for the expression of their opinion, as such may be
required by the Trust from time to time.
7. CONFIDENTIALITY. RSMC agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and its
prior, present or potential shareholders, and not to use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except, after prior notification to and approval in
writing by the Trust, which approval shall not be unreasonably withheld and
may not be withheld where RSMC may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Trust.
8. EQUIPMENT FAILURE. In the event of equipment failures beyond
RSMC's control, RSMC shall, at no additional expense to the Trust, take
reasonable steps to minimize service interruptions but shall have no
liability with respect thereto. RSMC shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provision of emergency use of electronic data processing equipment to the
extent appropriate equipment is available.
9. RIGHT TO RECEIVE ADVICE.
A. ADVICE OF TRUST. If RSMC shall be in doubt as to any action
to be taken or omitted by it, it may request, and shall receive, from the
Trust directions or advice, including Oral or Written Instructions where
appropriate.
B. ADVICE OF COUNSEL. If RSMC shall be in doubt as to any
question of law involved in any action to be taken or omitted by RSMC, it
may request directions or advice at its own cost from counsel of its own
choosing (who may be the regularly retained counsel for the Trust or RSMC
or the in-house counsel for RSMC, at the option of RSMC).
C. CONFLICTING ADVICE. In case of conflict between directions,
advice or Oral or Written Instructions received by RSMC pursuant to
subsection A of this Section and directions or advice received by RSMC
pursuant to subsection B of this Section, RSMC shall be entitled to rely
upon and follow the directions or advice obtained in accordance with the
latter provision alone.
D. PROTECTION OF RSMC. RSMC shall be protected in any action or
inaction which it takes in reliance on any directions, advice or Oral or
Written Instructions received pursuant to subsections A or B of this
Section which RSMC, after receipt of any such directions, advice or Oral or
Written Instructions, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
However, nothing in this Section shall be construed as imposing upon RSMC
any obligation (i) to seek such direction, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or
Oral or Written Instructions when received, unless, under the terms of
another provision of this Agreement, the same is a condition to RSMC's
properly taking or omitting to take such action. Nothing in this subsection
shall excuse RSMC when an action or omission on the part of RSMC
constitutes willful misfeasance, bad faith, negligence or reckless
disregard by RSMC of its duties under this Agreement.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. Except as
otherwise provided herein in Sections 4 and 5, the Trust assumes full
responsibility for ensuring that the Trust complies with all applicable
requirements of the Securities Act of 1933 (the "1933 Act"), the Securities
Exchange Act of 1934 (the "1934 Act"), the 1940 Act, the CEA and any laws,
rules and regulations of governmental authorities having jurisdiction.
11. COMPENSATION. For the performance of its obligations under this
Agreement, the Trust on behalf of each Fund shall pay RSMC in accordance
with the fee arrangements described in Schedule A attached hereto, as such
schedule may be amended from time to time.
12. INDEMNIFICATION. (a) The Trust agrees to indemnify and hold
harmless RSMC and its directors, officers, employees, agents and
representatives from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the
1933 Act, the 1934 Act, the 1940 Act, the CEA and any applicable state and
foreign laws, all as or to be amended from time to time) ("Applicable
Laws") and expenses, including (without limitation) reasonable attorneys'
fees and disbursements arising directly or indirectly from any action or
thing which RSMC takes or does or omits to take or do (i) at the request or
on the direction of or in reliance on the advice of the Trust or (ii) upon
Oral or Written Instructions, provided, that neither RSMC nor any of its
directors, officers, employees, agents and representatives shall be
indemnified against any liability to the Trust or to its shareholders (or
any expenses incident to such liability) arising out of RSMC's own willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement.
(b) RSMC agrees to indemnify and hold harmless the Trust from all
taxes, charges, expenses, assessments, claims, liabilities (including,
without limitation, liabilities arising under the Applicable Laws) and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) arising directly or indirectly from any action or omission
to act which RSMC or any of RSMC's directors, officers, employees, agents
and/or representatives take or fail to take that constitutes willful
misfeasance, bad faith, negligence or reckless disregard of RSMC's duties
and obligations under this Agreement.
(c) Upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The
party who may be required to indemnify shall have the option to participate
with the party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or make
any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
13. RESPONSIBILITY OF RSMC. In the performance of its duties
hereunder, RSMC shall be obligated to exercise due care and diligence and
to act in good faith and to use its best efforts within reasonable limits.
RSMC shall be under no duty to take any action on behalf of the Trust
except as specifically set herein or as may be specifically agreed to by
RSMC in writing. To the extent that duties, obligations and
responsibilities assumed by RSMC are not expressly set forth in this
Agreement, RSMC shall not be liable for any act or omission which does not
constitute willful misfeasance, bad faith or negligence on the part of RSMC
or reckless disregard by RSMC of such duties, obligations and
responsibilities. Without limiting the generality of the foregoing or of
any other provision of this Agreement, RSMC, in connection with its duties
under this Agreement, shall not be under any duty or obligation to inquire
into, and shall not be liable for or in respect of: (i) the validity or
invalidity or authority or lack thereof of any Oral or Written Instruction,
notice or other instrument which conforms to the applicable requirements of
this Agreement, and which RSMC reasonably believes to be genuine; or (ii)
delays or errors or loss of data occurring by reason of circumstances
beyond RSMC's control, including acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdown
(except as provided in Section 8), flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation,
communication or power supply, in which circumstances RSMC shall take
reasonable actions to minimize loss of data resulting therefrom.
14. DURATION, TERMINATION, ETC. The provisions of this Agreement may
not be changed, waived, discharged or terminated orally, but only by
written instrument that shall make specific reference to this Agreement and
that shall be signed by the party against which enforcement of such change,
waiver, discharge or termination is sought.
This Agreement shall become effective as of the close of business on
the date first above written and shall continue in force unless terminated
as herein provided. This Agreement may at any time be terminated by the
Trust on sixty (60) days' written notice given to RSMC or by RSMC on six
(6) months' written notice given to the Trust; provided, however, that the
foregoing provisions of this Agreement may be terminated immediately at any
time for cause either by the Trust or by RSMC in the event that such cause
shall have remained unremedied for sixty (60) days or more after receipt of
written specification of such cause. Any such termination shall not affect
the rights and obligations of the parties under Section 12 hereof.
Upon the termination of this Agreement, the Trust shall pay to RSMC
such compensation as may be payable for the period prior to the effective
date of such termination, including reimbursement for any out-of-pocket
expenses reasonably incurred by RSMC to such date. In the event that the
Trust designates a successor to any of RSMC's obligations hereunder, RSMC
shall, at the expense and direction of the Trust, transfer to such
successor all relevant books, records and other data established or
maintained by RSMC under the foregoing provisions.
15. NOTICES. Any notice under this Agreement shall be given in
writing addressed and delivered or mailed, postage prepaid, to the other
party to this Agreement at its principal place of business.
16. FURTHER ACTIONS. Each Party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the
purposes hereof.
17. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
18. DELEGATION. On thirty (30) days' prior written notice to the
Trust, RSMC may assign any part or all its rights and delegate its duties
hereunder to any wholly owned direct or indirect subsidiary of Wilmington
Trust Company provided that (i) the delegate agrees with RSMC to comply
with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder; (ii) RSMC shall remain responsible for the
performance of all of its duties under this Agreement; (iii) RSMC and such
delegate shall promptly provide such information as the Trust may request;
and (iv) RSMC shall respond to such questions as the Trust may ask,
relative to the delegation, including (without limitation) the capabilities
of the delegate.
19. MISCELLANEOUS.
A. RSMC acknowledges that it has received notice of and accepts
the limitations of liability set forth in the Trust's Master Trust
Agreement. RSMC agrees that the Trust's obligations hereunder shall be
limited to the Trust, and that RSMC shall have recourse solely against the
assets of the Portfolio with respect to which the Trust's obligations
hereunder relate and shall have no recourse against the assets of any other
Portfolio or against any shareholder, Trustee, officer, employee, or agent
of the Trust.
B. This Agreement embodies the entire agreement and
understanding between the parties thereto, and supersedes all matters
hereof, provided that the parties hereto may embody in one or more separate
documents their agreement, if any, with respect to Written and/or Oral
Instructions. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. This Agreement
shall be deemed to be a contract made in Delaware and shall be
administered, construed and enforced according to the laws (without regard,
however, to laws as to conflicts of law) of the State of Delaware. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding and shall inure to
the benefits of the parties hereto and their respective successors.
IN WITNESS WHEREOF the parties have caused this instrument to be
signed on their behalf by their respective officers thereunto duly
authorized all as of the date first written above.
HEITMAN SECURITIES TRUST
By: /s/ William L. Ramseyer
-----------------------
William L. Ramseyer, President
RODNEY SQUARE MANAGEMENT
CORPORATION
By: /s/ Martin L. Klopping
-----------------------
Martin L. Klopping, President
<PAGE>
SCHEDULE A
HEITMAN SECURITIES TRUST
FEE SCHEDULE
For the services RSMC provides under the Accounting Services Agreement
attached hereto, the Trust, on behalf of the Fund, agrees to pay RSMC an
annual accounting fee payable monthly in arrears, which consists of a
$75,000 minimum fee, plus 0.02% on total Fund assets in excess of $100
million. In addition, RSMC will receive a $25,000 minimum fee for each
additional class of the Fund's shares added after the date hereof.
<PAGE>
SCHEDULE B
HEITMAN SECURITIES TRUST
AUTHORIZED PERSONS
The following persons have been duly authorized by the Board of
Trustees to give Oral and Written Instructions on behalf of the Fund:
Nancy B. Lynn /S/ Nancy Lynn
___________________________
Randy Newsome /S/ Randy Newsome
___________________________
Timothy J. Pire /S/ Timothy Pire
___________________________
Dean A. Sotter /S/ Dean Sotter
___________________________
Exhibit 10(b)
GOODWIN, PROCTER & HOAR LLP
COUNSELLORS AT LAW
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
TELEPHONE (617) 570-1000
TELECOPIER (617) 523-1231
April 24, 1997
Heitman Securities Trust
180 North LaSalle Street
Suite 3600
Chicago, Illinois 60601
Ladies and Gentlemen:
We hereby consent to the reference in Post-Effective Amendment No. 11
(the "Amendment") to the Registration Statement (No. 33-24611) on Form N-1A
(the "Registration Statement") of Heitman Securities Trust (the "Registrant"),
a Massachusetts business trust, to our opinion dated March 8, 1995 with
respect to the legality of Advisor Class and Heitman/PRA Institutional Class
shares of beneficial interest, $.001 par value, of the Registrant representing
interests in the Heitman Real Estate Fund of the Registrant, which opinion was
filed with Post-Effective Amendment No. 9 of the Registration Statement.
We also hereby consent to the reference to this firm in the Statement of
Additional Information under the heading "General Information--Counsel" which
forms a part of the Amendment and to the filing of this consent as a exhibit
to the Amendment.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
Exhibit 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 11 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
February 14, 1997, relating to the financial statements and financial
highlights of Heitman Real Estate Fund, which appears in such Statement of
Additional Information, and to the incorporation by reference of our report
into the Prospectuses which constitute part of this Registration Statement.
We also consent to the reference to us under the heading "Independent
Accountants" in such Statement of Additional Information and to the references
to us under the headings "Financial Highlights" and "Custodian, Transfer
Agent, Distributor and Independent Accountants" in such Prospectuses.
/s/ Price Waterhouse LLP
Philadelphia, PA
April 24, 1997
<PAGE>
Exhibit 11(b)
ARTHUR ANDERSEN
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to our
firm included in Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A of Heitman Securities
Trust (File No. 33-24611).
/s/ Arthur Andersen LLP
Philadelphia, Pa
April 24, 1997
Exhibit 15(c)
[Letterhead of Heitman Securities Trust]
SHAREHOLDER SERVICING AGREEMENT
Chicago, Illinois
Gentlemen:
We are hereby inviting you, subject to the terms and conditions set forth
below, to serve as the agent of your customers ("Customers") for purposes of
performing certain administrative functions in connection with purchases and
redemptions of Advisor Class shares of beneficial interest ("Shares") of
Heitman Securities Trust (the "Trust") from time to time upon the order and
for the account of Customers, and to provide related services to your
Customers in connection with their investments in the Trust.
1. APPOINTMENT. You hereby agree to perform certain services for
Customers as hereinafter set forth. Your appointment hereunder is non-
exclusive, and the parties recognize and agree that, from time to time, the
Trust may enter into other shareholder servicing agreements, with other
financial institutions.
2. SERVICES TO BE PERFORMED. You shall be responsible for performing
shareholder account administrative and servicing functions, which shall
include, without limitation, one or more of the following activities:
(a) answering Customer inquiries regarding account status and history, the
manner in which purchases and redemptions of the Shares may be effected, and
certain other matters pertaining to the Trust; (b) assisting Customers in
designating and changing dividend options, account designations and addresses;
(c) providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records, as requested from time to time by
the Trust; (d) assisting in processing purchase and redemption transactions;
(e) arranging for the wiring of funds; (f) transmitting and receiving funds in
connection with Customer orders to purchase or redeem Shares; (g) verifying
and guaranteeing Customer signatures in connection with redemption orders,
transfers among and changes in Customer-designated accounts; (h) providing
periodic statements showing a Customer's account balances and, to the extent
practicable, integration of such information with other client transactions
otherwise effected with or through you; (i) furnishing (either separately or
on an integrated basis with other reports sent to a Customer by you) monthly
and annual statements and confirmations of all purchases and redemptions of
Shares in a Customer's account; (j) transmitting proxy statements, annual
reports, prospectuses and other communications from the Trust to Customers;
(k) receiving, tabulating and transmitting to the Trust proxies executed by
Customers with respect to annual and special meetings of shareholders of the
Trust; and (l) providing such other related services as the Trust or a
Customer may reasonably request. You shall provide all personnel and
facilities necessary in order for you to perform one or more of the functions
described in this paragraph with respect to your Customers. You shall
exercise reasonable care in performing all such services and shall be liable
for any failure to exercise such reasonable care.
<PAGE>
3. FEES.
3.1. FEES FROM THE TRUST. In consideration for the services
described in section 2 hereof and the incurring of expenses in connection
therewith, you shall receive fees at an annual rate of 0.25% of the average
daily value of all Shares owned by or for all Customers with whom you maintain
a servicing relationship. Such fee to be paid in arrears at the end of each
calendar quarter.
3.2. FEES FROM CUSTOMERS. It is agreed that you may impose certain
conditions on Customers, in addition to or different from those imposed by the
Trust, such as requiring a minimum initial investment or charging Customers
direct fees for the same or similar services as are provided hereunder by you
(which fees may either relate specifically to your services with respect to
the Trust or generally cover services not limited to those with respect to the
Trust). You shall bill Customers directly for such fees. In the event you
charge Customers such fees, you shall make appropriate prior written
disclosure (such disclosure to be in accordance with all applicable laws) to
Customers both of any direct fees charged to the Customer and of the fees
received or to be received by you from the Trust pursuant to section 3.1 of
this Agreement. It is understood, however, that in no event shall you have
recourse or access to the account of any shareholder of the Trust except to
the extent expressly authorized by law or by the Trust or by such shareholder
for payment of any direct fees referred to in this section 3.2.
4. CAPACITY AND AUTHORITY TO ACT. You and your officers, employees and
agents are not authorized to make any representations concerning the Trust or
the Shares to Customers or prospective Customers, excepting only accurate
communication of factual information contained in the then-current prospectus
and statement of additional information or such other communications as may be
expressly authorized by the Trust. In performing your services under this
Agreement, you shall act as agent for the Customer and shall have no authority
to act as agent for the Trust. Upon request by the Trust, you shall provide
the Trust with copies of any materials which are generally circulated by you
to your Customers or prospective Customers.
5. USE OF THE AGENT'S NAME. The Trust shall not use your name in any
prospectus, sales literature or other material relating to the Trust in a
manner not approved by you prior thereto in writing; PROVIDED, HOWEVER, that
your approval shall not be required for any use of its name which merely
refers accurately to your appointment hereunder or which is required by the
Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; PROVIDED,
FURTHER, that in no event shall such approval be unreasonably withheld or
delayed.
6. USE OF THE TRUST'S NAME. You shall not use the name of the Trust
(other than for internal use in connection with performing its duties under
this agreement) in a manner not approved by the Trust prior thereto in
writing; PROVIDED, HOWEVER, that the approval of the Trust shall not be
required for the use of the Trust's name in connection with communications
permitted by section 4 hereof or for any use of the Trust's name which merely
refers accurately to your role hereunder or which is required by the
Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; PROVIDED,
FURTHER, that in no event shall such approval be unreasonably withheld or
delayed.
2
<PAGE>
7. SECURITY. You represent and warrant that, to the best of your
knowledge, the various procedures and systems which you have implemented
(including provision for twenty-four hours a day restricted access) with
regard to safeguarding from loss or damage attributable to fire, theft or any
other cause the Trust's records and other data and your records, data,
equipment, facilities and other property used in the performance of your
obligations hereunder are adequate and that you will make such changes therein
from time to time as in its judgment are required for the secure performance
of your obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Trust may from time to time specify
the types of records and other data of the Trust to be safeguarded in
accordance with this section 7.
8. COMPLIANCE WITH LAWS; ETC. You shall comply with all applicable
federal and state laws and regulations, including securities laws. You hereby
agree to maintain all records required by law relating to transactions on the
Shares, and upon our request, or of the Trust, promptly make such of these
records available to us or the Trust's administrator as are requested. In
addition, you hereby agree to establish appropriate procedures and reporting
forms and/or mechanisms and schedules in conjunction with us and the Trust's
administrator, to enable the Trust to identify the location, type of, and
sales to all accounts opened and maintained by your customers or by you on
behalf of your customers. You represent and warrant to the Trust that the
performance of all its obligations hereunder will comply with all applicable
laws and regulations, the provisions of your charter documents and by-laws and
all material contractual obligations binding upon you. You furthermore
undertakes that you will promptly inform the Trust of any change in applicable
laws or regulations (or interpretations thereof) or in your charter or by-laws
or material contracts which would prevent or impair full performance of any of
your obligations hereunder.
9. REPORTS. To the extent requested by the Trust from time to time,
you agree that you will provide the Trust with a written report of the amounts
expended by you pursuant to this Agreement and the purposes for which such
expenditures were made. Such written reports shall be in a form satisfactory
to the Trust and shall supply all information necessary for the Trust to
discharge its responsibilities under applicable laws and regulations.
10. RECORD KEEPING.
10.1. SECTION 31(A), ETC. You shall maintain records in a form
acceptable to the Trust and in compliance with applicable laws and the rules
and regulations of the Securities and Exchange Commission, including but not
limited to the record-keeping requirements of section 31(a) of the Investment
Company Act 1940, as amended (the "1940 Act"), and the rules thereunder. Such
records shall be deemed to be the property of the Trust and will be made
available, at the Trust's reasonable request, for inspection and use by the
Trust, representatives of the Trust and governmental authorities. You agree
that, for so long as you retain any records of the Trust, you will meet all
reporting requirements pursuant to the 1940 Act with respect to such records.
10.2. TRANSFER OF CUSTOMER DATA. In the event this Agreement is
terminated or a successor to you are appointed, you shall, at the expense of
the Trust, transfer to such designee as the Trust may direct a certified list
of the shareholders of the Trust serviced by you (with name, address and tax
identification or Social Security number), a complete record of the account of
each such shareholder and the status thereof, and all other relevant books,
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records, correspondence and other data established or maintained by you under
this Agreement. In the event this Agreement is terminated, you will use your
best efforts to cooperate in the orderly transfer of such duties and
responsibilities, including assistance in the establishment of books, records
and other data by the successor.
10.3. SURVIVAL OF RECORD-KEEPING OBLIGATIONS. The record-
keeping obligations imposed in this section 10 shall survive the termination
of this Agreement.
11. FORCE MAJEURE. You shall not be liable or responsible for delays or
errors by reason of circumstances beyond its control, including, but not
limited to, acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, Acts of God,
insurrection, war, riots or failure of communication or power supply.
12. INDEMNIFICATION.
12.1. INDEMNIFICATION OF THE AGENT. The Trust shall indemnify and
hold you harmless from and against any and all losses, claims, damages,
liabilities and expenses incurred by you and resulting from any claim, demand,
action or suit (collectively, "Claims") brought against you and arising out of
or in connection with the performance of your obligations hereunder, other
than any Claim resulting from (i) the bad faith or negligence of you, your
officers, employees or agents, or (ii) any breach of your obligation under
this Agreement or applicable law by you, your officers, employees or agents,
or (iii) any false or misleading statement contained in any communication by
you to any Customer or prospective Customer not prepared by or expressly
authorized by the Trust for your use.
In any case in which the Trust may be asked to indemnify or hold you
harmless, the Trust shall be advised of all pertinent facts concerning the
situation in question and you shall use reasonable care to identify and notify
the Trust promptly concerning any situation which presents or appears likely
to present a claim for indemnification against the Trust. The Trust shall
have the option to defend you against any Claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend
against such claim the defense shall be conducted by counsel chosen by the
Trust and satisfactory to you. You may retain additional counsel at its
expense. Except with the prior written consent of the Trust, you shall not
confess any Claim or make any compromise in any case in which the Trust will
be asked to indemnify you.
12.2. INDEMNIFICATION OF THE TRUST. You shall indemnify and hold
the Trust harmless from and against any and all losses, claims, damages,
liabilities and expenses incurred by the Trust and resulting from any Claim
brought against the Trust and resulting from (i) the bad faith or negligence
of you, your officers, employees or agents, or (ii) any breach of your
obligations under this Agreement or applicable law by you, your officers,
employees or agents, or (iii) any false or misleading statement contained in
any communication by you to any Customer or prospective Customer not prepared
by or expressly authorized by the Trust for your use.
In any case in which you may be asked to indemnify or hold the Trust
harmless, you shall be advised of all pertinent facts concerning the situation
in question and the Trust shall use reasonable care to identify and notify you
promptly concerning any situation which presents or appears likely to present
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a claim for indemnification against you. You shall have the option to defend
the Trust against any Claim which may be the subject of indemnification
hereunder. In the event that you elect to defend against such Claim, the
defense shall be conducted by counsel chosen by you and satisfactory to the
Trust. The Trust may retain additional counsel at its expense. Except with
the prior written consent of the agent, the Trust shall not confess any Claim
or make any compromise in any case in which you will be asked to indemnify the
Trust.
12.3. SURVIVAL OF INDEMNITIES. The indemnities granted by the
parties in this section 12 shall survive the termination of this Agreement.
13. INSURANCE. You shall maintain reasonable insurance coverage against
any and all liabilities which may arise in connection with the performance of
its duties hereunder. You shall provide information with respect to the
extent of such coverage upon our request.
14. NOTICES. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such
party at the address of such party set forth in this Agreement or at such
other address as such party may have designated by written notice to the
other.
15. FURTHER ASSURANCES. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. TERMINATION. This Agreement may be terminated by the Trust, without
the payment of any penalty, at any time upon not more than 60 days' nor less
than 30 days' notice to you, by a vote of a majority of the Board of Trustees
of the Trust who are not "interested persons" of the Trust (as defined in the
1940 Act) and have no direct or indirect financial interest in the operation
of the Trust's Shareholder Servicing Plan (the "Plan"), this Agreement or any
other agreement related to such Plan, or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Trust. You
may terminate this Agreement upon not more than 60 days' nor less than 30
days' notice to the Trust. Notwithstanding anything herein to the contrary,
this Agreement may not be assigned and shall terminate automatically without
notice to either party upon any assignment. Upon termination hereof, the
Trust shall pay such compensation as may be due you as of the date of such
termination.
17. CHANGES; AMENDMENTS. This Agreement may be changed or amended only
by written instrument signed by both parties.
18. LIMITATION OF LIABILITY. The First Amended and Restated Master
Trust Agreement dated February 28, 1995, as amended from time to time,
establishing the Trust, which is hereby referred to and a copy of which is on
file with the Secretary of The Commonwealth of Massachusetts, provides that
the name of the Trust means the Trustees from time to time serving (as
Trustees but not personally) under said Master Trust Agreement. It is
expressly acknowledged and agreed that the obligations of the Trust hereunder
shall not be binding upon any of the shareholders, Trustees, officers,
employees or agents of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in its Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the Trustees
of the Trust and signed by an officer of the Trust, acting as such, and
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neither such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Master Trust Agreement.
19. MISCELLANEOUS. This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts
without giving effect to the conflicts of laws provisions thereof. The
captions in this Agreement are included for convenience of reference only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement has been executed on behalf of
the Trust by the undersigned not individually, but in the capacity indicated.
This Agreement shall be effective when accepted by you below.
Please confirm your agreement hereto by signing and returning the
enclosed counterpart of this Agreement at once to: Heitman Securities Trust,
180 North LaSalle Street, Suite 3600, Chicago, Illinois 60611, Attention:
President. Upon receipt thereof, this Agreement and such signed duplicate
copy will evidence the agreement between us.
HEITMAN SECURITIES TRUST
By:/s/_______________________________
NAME:
TITLE:
ATTEST:______________________________
ACCEPTED:
[ ]
(Shareholder Servicing Agent)
By:/s/______________________________
NAME:
TITLE:
ATTEST:______________________________
_______________________________________
_______________________________________
_______________________________________
(ADDRESS TO WHICH ALL COMMUNICATIONS ARE
TO BE SENT)
Dated:_________________________
275672.c2
Exhibit 15(d)
[Letterhead of Heitman Securities Trust]
SHAREHOLDER SERVICING AGREEMENT
FOR OMNIBUS ACCOUNT ARRANGEMENTS
Chicago, Illinois
Ladies and Gentlemen:
We are hereby inviting you, subject to the terms and conditions set forth
below, to serve as the as the agent for your customers ("Customers") for
purposes of performing certain administrative functions in connection with
purchases and redemptions of Advisor Class shares of beneficial interest
("Shares") of Heitman Securities Trust (the "Trust") from time to time upon
the order and for the account of Customers, and to provide related services to
your Customers in connection with their investments in the Trust. Each series
of the Trust for which you serve as servicing agent pursuant to this Agreement
is hereafter referred to as a "Fund."
1. APPOINTMENT. You hereby agree to perform certain services for
Customers as hereinafter set forth. Your appointment hereunder is non-
exclusive, and the parties recognize and agree that, from time to time, the
Trust may enter into other shareholder servicing agreements with other
financial institutions.
2. SERVICES TO BE PERFORMED. You shall be responsible for performing
shareholder account administrative and servicing functions, which shall
include, without limitation, one or more of the following activities:
(a) answering Customer inquiries regarding account status and history, the
manner in which purchases and redemptions of the Shares may be effected, and
certain other matters pertaining to the Trust; (b) assisting Customers in
designating and changing dividend options, account designations and addresses;
(c) providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records, as requested from time to time by
the Trust, including complete subaccounting records regarding Shares
beneficially owned by Customers; (d) assisting in processing purchase and
redemption transactions; (e) arranging for the wiring of funds;
(f) transmitting and receiving funds in connection with Customer orders to
purchase or redeem Shares; (g) verifying and guaranteeing Customer signatures
in connection with redemption orders, transfers among and changes in Customer-
designated accounts; (h) providing periodic statements showing a Customer's
account balances and, to the extent practicable, integration of such
information with other client transactions otherwise effected with or through
you; (i) furnishing (either separately or on an integrated basis with other
reports sent to a Customer by you) monthly and annual statements and
confirmations of all purchases and redemptions of Shares in a Customer's
account; (j) transmitting proxy statements, annual reports, prospectuses and
other communications from the Trust to Customers; (k) receiving, tabulating
and transmitting to the Trust proxies executed by Customers with respect to
annual and special meetings of shareholders of the Trust; (l) aggregating and
processing Customer purchase and redemption requests for Shares and placing
net purchase and redemption orders with the Trust's transfer agent ("Transfer
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Agent") in the manner described in section 4 hereof; and (m) providing such
other related services as the Trust or a Customer may reasonably request. You
shall provide all personnel and facilities necessary in order for you to
perform one or more of the functions described in this paragraph with respect
to your Customers. You shall exercise reasonable care in performing all such
services and shall be liable for any failure to exercise such reasonable care.
3. FEES.
[ALTERNATIVE 1:
3.1. FEES FROM THE TRUST. In consideration for the services
described in section 2 hereof and the incurring of expenses in connection
therewith, you shall receive fees at an annual rate of 0.25% of the average
daily value of all Shares owned by or for all Customers with whom you maintain
a servicing relationship, such fee to be paid in arrears at the end of each
calendar quarter.
3.2. Fees from Customers. It is agreed that you may impose
certain conditions on Customers, in addition to or different from those
imposed by the Trust, such as requiring a minimum initial investment or
charging Customers direct fees for the same or similar services as are
provided hereunder by you (which fees may either relate specifically to your
services with respect to the Trust or generally cover services not limited to
those with respect to the Trust). You shall bill Customers directly for such
fees. In the event you charge Customers such fees, you shall make appropriate
prior written disclosure (such disclosure to be in accordance with all
applicable laws) to Customers both of any direct fees charged to the Customer
and of the fees received or to be received by you from the Trust pursuant to
section 3.1 of this Agreement. It is understood, however, that in no event
shall you have recourse or access to the account of any shareholder of the
Trust except to the extent expressly authorized by law or by the Trust or by
such shareholder for payment of any direct fees referred to in this
section 3.2.]
[ALTERNATIVE 2:
3.1. FEES FROM THE TRUST. In consideration for the services
described in Section 2 hereof and the incurring of expenses in connection
therewith, you shall receive (i) fees at an annual rate of 0.25% of the
average daily value of all Shares owned by or for all Customers with whom you
maintain a servicing relationship (the "Base Fee") plus (ii) an amount equal
to 0.10% (per annum) of the average daily value of all Shares owned by or for
all Customers with whom you maintain a servicing relationship (the "Additional
Fee" and, together with the Base Fee, the "Total Fee"). The Total Fee shall
be paid in arrears at the end of each calendar quarter.
3.2. FEES TO BE PAID BY THE TRUST. The Trust shall be obligated
to pay the Base Fee plus an amount equal to the lesser of (i) the Additional
Fee and (ii) an amount equal to the fees that would have been charged by the
Trust's transfer agent with respect to the Shares owned by or for all
Customers with whom you maintain a servicing relationship had such shares been
held in accounts for which the Trust's transfer agent acted as transfer agent.
3.3. FEES TO BE PAID BY ACG CAPITAL CORPORATION. At all times
during the term of the Agreement and after the termination of the Agreement,
ACG Capital Corporation shall be responsible for payment of the Total Fee less
any amounts payable by the Trust pursuant to Section 3.2 hereof.
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<PAGE>
3.4. FEES FROM CUSTOMERS. It is agreed that you may impose
certain conditions on Customers, in addition to or different from those
imposed by the Trust, such as requiring a minimum initial investment or
charging Customers direct fees for the same or similar services as are
provided hereunder by you (which fees may either relate specifically to your
services with respect to the Trust or generally cover services not limited to
those with respect to the Trust). You shall bill Customers directly for such
fees. In the event you charge Customers such fees, you shall make appropriate
prior written disclosure (such disclosure to be in accordance with all
applicable laws) to Customers both of any direct fees charged to the Customer
and of the fees received or to be received by you from the Trust or ACG
Capital Corporation pursuant to section 3.2 or 3.3 of this Agreement,
respectively. It is understood, however, that in no event shall you have
recourse or access to the account of any shareholder of the Trust except to
the extent expressly authorized by law or by the Trust or by such shareholder
for payment of any direct fees referred to in this section 3.4.]
4. PURCHASE AND REDEMPTION ORDERS.
4.1. OMNIBUS ACCOUNTS. It is agreed that you will open with the
Transfer Agent a minimum of two omnibus accounts per Fund: capital gains and
dividend distributions payable with respect to Shares held in one account
shall be paid in cash, and capital gains and dividend distributions payable
with respect to Shares held in another account shall be paid in additional
Shares of the Fund.
4.2. AGGREGATION OF ORDERS. For each business day on which any
Customer places with you a purchase or redemption order for Shares of a Fund,
you shall aggregate all such purchase orders and aggregate all such redemption
orders and communicate to Transfer Agent, by facsimile or, where feasible, by
direct or indirect systems access, an aggregate purchase order and an
aggregate redemption order for each omnibus account. To be effective on the
date received, all orders must be received by Transfer Agent in accordance
with the terms set forth in the current prospectus and statement of additional
information for the Trust.
4.3. NOTIFICATION OF NET ASSET VALUE. After 4:00 p.m. Eastern
Time and prior to ___ p.m. Eastern Time on each business day, the Trust shall
notify you of the net asset value per share of each Share of each Fund for
that business day.
4.4. PAYMENT OF REDEMPTION PROCEEDS. In the case of a redemption
order, federal funds, in the amount of the redemption order shall be wired by
[DATE/TIME] to you at __________. Each party shall bear the cost of any
wire transfer that it sends.
4.5. NET ASSET VALUE ADJUSTMENTS. In the event adjustments are
required to correct any error in the computation of the net asset value or
public offering price of Fund Shares, the Trust shall notify you prior to
making any adjustments and describe the need for such adjustments (including
the date of the error, the incorrect price and the correct price). In such
case, an appropriate adjustment shall be made to the relevant omnibus
account(s) and you shall make corresponding adjustments to the accounts of
your Customers. If as a result of such error Customers have received accounts
in excess of the amounts to which they otherwise would have been entitled
prior to an adjustment, at the request of the Trust you will make a good faith
effort to collect such excess amounts from such Customers.
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4.6. SUSPENSION OF SALES OR REDEMPTIONS. The Trust may cease
offering Shares at any time, and in its sole discretion may refuse any
purchase order. Further, the Trust shall not be required to accept orders for
redemption of Shares of a Fund under this section 4 if the Trust has suspended
redemptions with respect to such Fund in accordance with section 22(e) of the
Investment Company Act of 1940, as amended (the "1940 Act").
4.7. DEFINITION. For the purposes of this Agreement, "business
day" shall mean each day that the New York Stock Exchange is open for
business.
5. DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. As to each Fund, as soon
as practicable after the announcement of a distribution, you shall be notified
of the ex-date, record date, payable date, distribution rate per Share, record
date Share balances and cash and reinvestment payment amounts. On the payable
date, the Trust shall wire the cash distribution from the appropriate Fund to
you at _______________________________ For annual tax reporting purposes, the
Trust shall inform you of the portion of distributions that include any of the
following: foreign source income, tax exempt income by state of origin, or
return of capital.
6. PREPARATION AND DISTRIBUTION OF WRITTEN MATERIALS.
6.1. PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION. The
Trust shall provide you with such number of copies of each Fund's prospectus
and statement of additional information ("SAI") relating to the Shares as is
necessary for delivery to Customers in connection with the purchase of Shares,
and you shall be responsible for making timely delivery of Prospectuses and
SAIs to Customers in compliance with applicable law. As soon as practicable
following the filing under the Securities Act of 1933, as amended, of a
definitive prospectus or SAI of any Fund or a supplement to the prospectus of
SAI of any Fund, the Trust shall provide copies of the prospectus and SAI of
each Fund affected by the amendment or a copy of such supplement. You shall
not be responsible for the preparing or filing with any governmental authority
any registration statement, prospectus, SAI or supplement for the Trust or any
Fund. However, upon request by the Trust or any of the Trust's service
providers, you shall timely provide information necessary for the Trust or any
of the Trust's service providers to: (i) prepare and file any of the written
materials mentioned in this section 6 or (ii) otherwise comply with applicable
law regarding the Trust.
6.2. FORWARDING OF STATEMENTS AND REPORTS. You shall timely
provide copies of the following materials to Customers: proxy statements,
annual reports and semi-annual reports. At no expense to you, the Trust shall
provide you with as many copies of such materials as you may reasonably
request. Such materials shall be sent to you at the following address:
_______________.
7. COMPLIANCE WITH BLUE SKY LAWS. You will only place purchase orders
for Shares of a Fund on behalf of Customers whose addresses recorded on your
books are in jurisdictions in which the Trust has notified you in writing that
the Shares of the Fund are registered or qualified for sale under applicable
law. You shall immediately cease offering Shares of a Fund in any
jurisdiction where the Trust notifies you in writing that the Fund's
registration or qualification has terminated or if the Trust otherwise wishes
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you to cease offering Shares of such Fund in such jurisdiction. You shall
furnish the Trust or its designee with monthly written statements of the
number of Shares of each Fund purchased on behalf of Customers resident in
each jurisdiction.
8. CAPACITY AND AUTHORITY TO ACT. You and your officers, employees and
agents are not authorized to make any representations concerning the Trust or
the Shares to Customers or prospective Customers, excepting only accurate
communication of factual information contained in the then-current prospectus
and statement of additional information or such other communications as may be
expressly authorized by the Trust. In performing your services under this
Agreement, you shall act as agent for the Customer and shall have no authority
to act as agent for the Trust. Upon request by the Trust, you shall provide
the Trust with copies of any materials which are generally circulated by you
to your Customers or prospective Customers.
9. USE OF THE AGENT'S NAME. The Trust shall not use your name in any
prospectus, sales literature or other material relating to the Trust in a
manner not approved by you prior thereto in writing; PROVIDED, HOWEVER, that
your approval shall not be required for any use of its name which merely
refers accurately to your appointment hereunder or which is required by the
Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; PROVIDED,
FURTHER, that in no event shall such approval be unreasonably withheld or
delayed.
10. USE OF THE TRUST'S NAME. You shall not use the name of the Trust
(other than for internal use in connection with performing its duties under
this agreement) in a manner not approved by the Trust prior thereto in
writing; PROVIDED, HOWEVER, that the approval of the Trust shall not be
required for the use of the Trust's name in connection with communications
permitted by section 4 hereof or for any use of the Trust's name which merely
refers accurately to your role hereunder or which is required by the
Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; PROVIDED,
FURTHER, that in no event shall such approval be unreasonably withheld or
delayed.
11. SECURITY. You represent and warrant that, to the best of your
knowledge, the various procedures and systems which you have implemented
(including provision for twenty-four hours a day restricted access) with
regard to safeguarding from loss or damage attributable to fire, theft or any
other cause the Trust's records and other data and your records, data,
equipment, facilities and other property used in the performance of your
obligations hereunder are adequate and that you will make such changes therein
from time to time as in its judgment are required for the secure performance
of your obligations hereunder. The parties shall review such systems and
procedures on a periodic basis, and the Trust may from time to time specify
the types of records and other data of the Trust to be safeguarded in
accordance with this section 11.
12. COMPLIANCE WITH LAWS; ETC. You shall comply with all applicable
federal and state laws and regulations, including securities laws. You hereby
agree to maintain all records required by law relating to transactions on the
Shares, and upon our request, or of the Trust, promptly make such of these
records available to us or the Trust's administrator as are requested. In
addition, you hereby agree to establish appropriate procedures and reporting
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forms and/or mechanisms and schedules in conjunction with us and the Trust's
administrator, to enable the Trust to identify the location, type of, and
sales to all accounts opened and maintained by your customers or by you on
behalf of your customers. You represent and warrant to the Trust that the
performance of all its obligations hereunder will comply with all applicable
laws and regulations, the provisions of your charter documents and by-laws and
all material contractual obligations binding upon you. You furthermore
undertakes that you will promptly inform the Trust of any change in applicable
laws or regulations (or interpretations thereof) or in your charter or by-laws
or material contracts which would prevent or impair full performance of any of
your obligations hereunder.
13. REPORTS. To the extent requested by the Trust from time to time,
you agree that you will provide the Trust with a written report of the amounts
expended by you pursuant to this Agreement and the purposes for which such
expenditures were made. Such written reports shall be in a form satisfactory
to the Trust and shall supply all information necessary for the Trust to
discharge its responsibilities under applicable laws and regulations.
14. RECORD KEEPING.
14.1. SECTION 31(A), ETC. You shall maintain records in a form
acceptable to the Trust and in compliance with applicable laws and the rules
and regulations of the Securities and Exchange Commission, including but not
limited to the record-keeping requirements of section 31(a) of the 1940 Act,
and the rules thereunder. Such records shall be deemed to be the property of
the Trust and will be made available, at the Trust's reasonable request, for
inspection and use by the Trust, representatives of the Trust and governmental
authorities. You agree that, for so long as you retain any records of the
Trust, you will meet all reporting requirements pursuant to the 1940 Act with
respect to such records.
14.2. TRANSFER OF CUSTOMER DATA. In the event this Agreement is
terminated or a successor to you are appointed, you shall, at the expense of
the Trust, transfer to such designee as the Trust may direct a certified list
of the shareholders of the Trust serviced by you (with name, address and tax
identification or Social Security number), a complete record of the account of
each such shareholder and the status thereof, and all other relevant books,
records, correspondence and other data established or maintained by you under
this Agreement. In the event this Agreement is terminated, you will use your
best efforts to cooperate in the orderly transfer of such duties and
responsibilities, including assistance in the establishment of books, records
and other data by the successor.
14.3. SURVIVAL OF RECORD KEEPING OBLIGATIONS. The record keeping
obligations imposed in this section 14 shall survive the termination of this
Agreement.
15. FORCE MAJEURE. You shall not be liable or responsible for delays or
errors by reason of circumstances beyond its control, including, but not
limited to, acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, Acts of God,
insurrection, war, riots or failure of communication or power supply.
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16. INDEMNIFICATION.
16.1. INDEMNIFICATION OF THE AGENT. The Trust shall indemnify and
hold you harmless from and against any and all losses, claims, damages,
liabilities and expenses incurred by you and resulting from any claim, demand,
action or suit (collectively, "Claims") brought against you and arising out of
or in connection with the performance of your obligations hereunder, other
than any Claim resulting from (i) the bad faith or negligence of you, your
officers, employees or agents, or (ii) any breach of your obligation under
this Agreement or applicable law by you, your officers, employees or agents,
or (iii) any false or misleading statement contained in any communication by
you to any Customer or prospective Customer not prepared by or expressly
authorized by the Trust for your use.
In any case in which the Trust may be asked to indemnify or hold you
harmless, the Trust shall be advised of all pertinent facts concerning the
situation in question and you shall use reasonable care to identify and notify
the Trust promptly concerning any situation which presents or appears likely
to present a claim for indemnification against the Trust. The Trust shall
have the option to defend you against any Claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend
against such claim the defense shall be conducted by counsel chosen by the
Trust and satisfactory to you. You may retain additional counsel at its
expense. Except with the prior written consent of the Trust, you shall not
confess any Claim or make any compromise in any case in which the Trust will
be asked to indemnify you.
16.2. INDEMNIFICATION OF THE TRUST. You shall indemnify and hold
the Trust harmless from and against any and all losses, claims, damages,
liabilities and expenses incurred by the Trust and resulting from any Claim
brought against the Trust and resulting from (i) the bad faith or negligence
of you, your officers, employees or agents, or (ii) any breach of your
obligations under this Agreement or applicable law by you, your officers,
employees or agents, or (iii) any false or misleading statement contained in
any communication by you to any Customer or prospective Customer not prepared
by or expressly authorized by the Trust for your use.
In any case in which you may be asked to indemnify or hold the Trust
harmless, you shall be advised of all pertinent facts concerning the situation
in question and the Trust shall use reasonable care to identify and notify you
promptly concerning any situation which presents or appears likely to present
a claim for indemnification against you. You shall have the option to defend
the Trust against any Claim which may be the subject of indemnification
hereunder. In the event that you elect to defend against such Claim, the
defense shall be conducted by counsel chosen by you and satisfactory to the
Trust. The Trust may retain additional counsel at its expense. Except with
the prior written consent of the agent, the Trust shall not confess any Claim
or make any compromise in any case in which you will be asked to indemnify the
Trust.
16.3. SURVIVAL OF INDEMNITIES. The indemnities granted by the
parties in this section 16 shall survive the termination of this Agreement.
17. INSURANCE. You shall maintain reasonable insurance coverage against
any and all liabilities which may arise in connection with the performance of
its duties hereunder. You shall provide information with respect to the
extent of such coverage upon our request.
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18. NOTICES. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such
party at the address of such party set forth in this Agreement or at such
other address as such party may have designated by written notice to the
other.
19. FURTHER ASSURANCES. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
20. TERMINATION. This Agreement may be terminated by the Trust, without
the payment of any penalty, at any time upon not more than 60 days' nor less
than 30 days' notice to you, by a vote of a majority of the Board of Trustees
of the Trust who are not "interested persons" of the Trust (as defined in the
1940 Act) and have no direct or indirect financial interest in the operation
of the Trust's Shareholder Servicing Plan (the "Plan"), this Agreement or any
other agreement related to such Plan or by "a vote of a majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Trust. You
may terminate this Agreement upon not more than 60 days' nor less than 30
days' notice to the Trust. Notwithstanding anything herein to the contrary,
this Agreement may not be assigned and shall terminate automatically without
notice to either party upon any assignment. [TO BE USED WITH ALTERNATIVE 1:
Upon termination hereof, the Trust shall pay such compensation as may be due
you as of the date of such termination.] [TO BE USED WITH ALTERNATIVE 2:
Upon termination hereof, ACG Capital Corporation shall continue to pay you the
compensation contemplated hereby, and you shall continue to render the
services contemplated hereby, in respect of Shares held by you as of the date
of termination for so long as such Shares are held and the Trust shall have no
obligation to pay any compensation to you with respect to such Shares.]
21. CHANGES; AMENDMENTS. This Agreement may be changed or amended only
by written instrument signed by both parties.
22. LIMITATION OF LIABILITY. The First Amended and Restated Master
Trust Agreement dated February 28, 1995, as amended from time to time,
establishing the Trust, which is hereby referred to and a copy of which is on
file with the Secretary of The Commonwealth of Massachusetts, provides that
the name of the Trust means the Trustees from time to time serving (as
Trustees but not personally) under said Master Trust Agreement. It is
expressly acknowledged and agreed that the obligations of the Trust hereunder
shall not be binding upon any of the shareholders, Trustees, officers,
employees or agents of the Trust, personally, but shall bind only the trust
property of the Trust, as provided in its Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the Trustees
of the Trust and signed by an officer of the Trust, acting as such, and
neither such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Master Trust Agreement.
23. MISCELLANEOUS. This Agreement shall be construed and enforced in
accordance with and governed by the laws of The Commonwealth of Massachusetts
without giving effect to the conflicts of laws provisions thereof. The
captions in this Agreement are included for convenience of reference only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement has been executed on behalf of
the Trust by the undersigned not individually, but in the capacity indicated.
14
<PAGE>
This Agreement shall be effective when accepted by you below.
Please confirm your agreement hereto by signing and returning the
enclosed counterpart of this Agreement at once to: Heitman Securities Trust,
180 North LaSalle Street, Suite 3600, Chicago, Illinois 60611, Attention:
President. Upon receipt thereof, this Agreement and such signed duplicate
copy will evidence the agreement between us.
HEITMAN SECURITIES TRUST
By: /s/____________________
NAME:
TITLE:
ATTEST:
ACCEPTED:
[ ]
(Shareholder Servicing Agent)
By: /s/
NAME:
TITLE:
ATTEST:
_______________________________________
_______________________________________
_______________________________________
(ADDRESS TO WHICH ALL COMMUNICATIONS ARE
TO BE SENT)
Dated:___________________________
[TO BE USED WITH ALTERNATIVE 2:
ACKNOWLEDGED AND AGREED, SOLELY
WITH RESPECT TO SECTION 3.3 AND THE
LAST SENTENCE OF SECTION 20 HEREOF, BY:
ACG CAPITAL CORPORATION
By:/s/________________________
NAME:
TITLE: ]
147118.c5
EXHIBIT 16
FUND NAME: HEITMAN/PRA REAL ESTATE FUND - INSTITUTIONAL CLASS
(STANDARDIZED RETURNS)
1 YR 5 YR INCEPTION
-------- -------- ---------
# YEARS IN PERIOD 1 5 7.810959
AVERAGE ANNUAL TOTAL RETURN 38.06% 17.38% 10.18%
CUMULATIVE TOTAL RETURN 38.06% 122.82% 113.26%
MAXIMUM SALES LOAD 0.00% 0.00% 0.00%
ANNUAL
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(1,380.61/1,000)1 -1 = T (1,380.61/1,000) -1 = T
0.3806 = T 0.3806 = T
38.06% = T 38.06% = T
5 YEARS ENDING 12/31/96
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(2,228.19/1,000)1/5 -1 = T (2,228.19/1,000) -1 = T
0.1738 = T 1.2282 = T
17.38% = T 122.82% = T
INCEPTION THROUGH 12/31/96
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(2,132.55/1,000)1/7.810959 -1 = T (2,132.55/1,000) -1 = T
.1018 = T 1.1326 = T
10.18% = T 113.26% = T
<PAGE>
EXHIBIT 16
FUND NAME: HEITMAN/PRA REAL ESTATE FUND - ADVISOR CLASS
(STANDARDIZED RETURNS)
1 YR INCEPTION
------- ---------
# YEARS IN PERIOD 1 1.635616
AVERAGE ANNUAL TOTAL RETURN 30.91% 27.18%
CUMULATIVE TOTAL RETURN 30.91% 48.17%
MAXIMUM SALES LOAD 4.75% 4.75%
ANNUAL
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(1,309.13/1,000)1 -1 = T (1,309.13/1,000) -1 = T
0.3091 = T 0.3091 = T
30.91% = T 30.91% = T
INCEPTION THROUGH 12/31/96
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(1,481.72/1,000)1/1.635616 -1 = T (1,481.72/1,000) -1 = T
0.2718 = T .4817 = T
27.18% = T 48.17% = T
<PAGE>
EXHIBIT 16
FUND NAME: HEITMAN/PRA REAL ESTATE FUND - ADVISOR CLASS
(NON-STANDARDIZED RETURNS)
1 YR INCEPTION
-------- ---------
# YEARS IN PERIOD 1 1.635616
AVERAGE ANNUAL TOTAL RETURN 37.44% 31.02%
CUMULATIVE TOTAL RETURN 37.44% 55.56%
MAXIMUM SALES LOAD 0.00% 0.00%
ANNUAL
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(1,374.40/1,000)1 -1 = T (1,374.40/1,000) -1 = T
0.3744 = T 0.3744 = T
37.44% = T 37.44% = T
INCEPTION THROUGH 12/31/96
AVERAGE ANNUAL TOTAL RETURN CUMULATIVE TOTAL RETURN
- --------------------------- -----------------------
(ERV/P)1/N -1 = T (ERV/P) - 1 = T
(1,555.60/1,000)1/1.635616 -1 = T (1,555.60/1,000) -1 = T
0.3102 = T .5556 = T
31.02% = T 55.56% = T
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HEITMAN REAL ESTATE FUND'S ANNUAL REPORT FOR THE HEITMAN/PRA INSTITUTUINAL CLASS
DATED DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
ANNUAL REPORT DATED DECEMBER 31, 1996.
</LEGEND>
<CIK> 0000840084
<NAME> HEITMAN SECURITIES TRUST
<SERIES>
<NUMBER> 1
<NAME> HEITMAN REAL ESTATE FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 166418
<INVESTMENTS-AT-VALUE> 211140
<RECEIVABLES> 2485
<ASSETS-OTHER> 22
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 213647
<PAYABLE-FOR-SECURITIES> 4114
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 453
<TOTAL-LIABILITIES> 4567
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164540
<SHARES-COMMON-STOCK> 19059
<SHARES-COMMON-PRIOR> 11694
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (182)
<ACCUM-APPREC-OR-DEPREC> 44722
<NET-ASSETS> 209080
<DIVIDEND-INCOME> 6796
<INTEREST-INCOME> 623
<OTHER-INCOME> 0
<EXPENSES-NET> 1868
<NET-INVESTMENT-INCOME> 5551
<REALIZED-GAINS-CURRENT> 11165
<APPREC-INCREASE-CURRENT> 34985
<NET-CHANGE-FROM-OPS> 51701
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5249
<DISTRIBUTIONS-OF-GAINS> 4677
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4898
<NUMBER-OF-SHARES-REDEEMED> 4543
<SHARES-REINVESTED> 376
<NET-CHANGE-IN-ASSETS> 107868
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4143)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 993
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1868
<AVERAGE-NET-ASSETS> 101673
<PER-SHARE-NAV-BEGIN> 8.65
<PER-SHARE-NII> .37
<PER-SHARE-GAIN-APPREC> 2.82
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .88
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.96
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
HEITMAN REAL ESTATE FUND'S ANNUAL REPORT FOR THE ADVISOR CLASS DATED
DECEMBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE TO THE
ANNUAL REPORT DATED DECEMBER 31, 1996.
</LEGEND>
<CIK> 0000840084
<NAME> HEITMAN SECURITIES TRUST
<SERIES>
<NUMBER> 1
<NAME> HEITMAN REAL ESTATE FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 166418
<INVESTMENTS-AT-VALUE> 211140
<RECEIVABLES> 2485
<ASSETS-OTHER> 22
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 213647
<PAYABLE-FOR-SECURITIES> 4114
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 453
<TOTAL-LIABILITIES> 4567
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164540
<SHARES-COMMON-STOCK> 19059
<SHARES-COMMON-PRIOR> 11694
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (182)
<ACCUM-APPREC-OR-DEPREC> 44722
<NET-ASSETS> 209080
<DIVIDEND-INCOME> 6796
<INTEREST-INCOME> 623
<OTHER-INCOME> 0
<EXPENSES-NET> 1868
<NET-INVESTMENT-INCOME> 5551
<REALIZED-GAINS-CURRENT> 11165
<APPREC-INCREASE-CURRENT> 34985
<NET-CHANGE-FROM-OPS> 51701
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1925
<DISTRIBUTIONS-OF-GAINS> 2752
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7164
<NUMBER-OF-SHARES-REDEEMED> 962
<SHARES-REINVESTED> 429
<NET-CHANGE-IN-ASSETS> 107868
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4143)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 993
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1868
<AVERAGE-NET-ASSETS> 35716
<PER-SHARE-NAV-BEGIN> 8.67
<PER-SHARE-NII> .31
<PER-SHARE-GAIN-APPREC> 2.84
<PER-SHARE-DIVIDEND> .84
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.98
<EXPENSE-RATIO> 1.73
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
