As filed with the Securities and Exchange Commission on June 30, 1998
File No. 33-52784
File No. 811-7244
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 16
X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 17
X
ABN AMRO FUNDS
(Exact Name of Registrant as Specified in Charter)
One Exchange Place
Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 573-1556
Name and Address of Agent for Service: Copies to:
Coleen Downs Dinneen, Esq. Richard W. Grant, Esq.
First Data Investor Services Group, Inc. Morgan, Lewis & Bockius LLP
One Exchange Place 2000 One Logan Square
Boston, Massachusetts 02109 Philadelphia, Pennsylvania 19103
John H. Grady, Esq.
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
X on June 30, 1998 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) on [date] pursuant to
paragraph (a); or
75 days after filing pursuant to paragraph (a) of Rule 485
<PAGE>
ABN AMRO FUNDS
FORM N-1A
CROSS REFERENCE SHEET
INVESTOR SHARES AND COMMON SHARES
Part A
Item No. Prospectus Caption
Item 1. Cover Page
Cover Page
Item 2. Synopsis Fund
Highlights
Item 3. Condensed Financial Information Not Applicable
Item 4. General Description of Registrant
Fund Highlights;
General Information--
The Trust; Investment
Objective and Policies;
Certain Risk Factors;
Investment Limitations
Item 5. Management of the Trust
General Information--
Trustees of the Trust;
The Advisor; The
Administrator and Sub-
Administrator; The
Transfer Agent; The
Distributor
Item 6. Capital Stock and Other Securities
General Information--
Voting Rights;
General Information--
Shareholder Inquiries;
General Information--
Dividends; Taxes
Item 7. Purchase of Securities Being Offered Your Account and
Doing Business with Us
Item 8. Redemption or Repurchase Your Account and
Doing Business with Us
Item 9. Pending Legal Proceedings Not Applicable
<PAGE>
Part B
Information Caption Statement of Additional
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Description of
------------------------------------
Permitted Investments;
Investment Limitations;
Non-Fundamental
Policy
Item 14. Management of the Registrant Trustees and
Officers of
the Trust; The
Administrator and Sub-
Administrator
Item 15. Control Persons and Principal Holders Not Applicable
Item 16. Investment Advisory and Other Services The Advisor; The
Administrator
and Sub-
Administrator;
Distribution and
Shareholder Servicing
Item 17. Brokerage Allocation and other Practices Portfolio
Transactions;
Trading Practices and
Brokerage
Item 18. Capital Stock and Other Securities Description of
Shares
Item 19. Purchase, Redemption, and Pricing of Securities Being Offered
Purchase and
Redemption of Shares;
Determination of
Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters The Distribution and
Shareholder Servicing
Item 22. Calculation of Performance Data Computation of Yield;
Calculation of Total
Return
Item 23. Financial Statements Not Applicable
PART C -
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
<PAGE>
ABN AMRO Funds
(formerly, the "Rembrandt Funds")
Small Cap Value Fund
Supplement dated June 30, 1998 to the
Prospectus - Investor Share Class
dated June 30, 1998
This supplement contains new and additional information beyond that contained in
the Prospectus and should be retained and read in conjunction with such
Prospectus.
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101, will serve as the Custodian of ABN AMRO Funds (the "Trust")
on a temporary basis until its custody agreement with the Trust terminates. DST
Systems, Inc., 1004 Baltimore Avenue, Kansas City, Missouri 64105, will serve as
the Transfer Agent and dividend disbursing agent for the Trust on a temporary
basis until its tranfer agency agreement with the Trust terminates.
<PAGE>
ABN AMRO Funds
(formerly, the "Rembrandt Funds")
Small Cap Value Fund
Supplement dated June 30, 1998 to the
Prospectus - Common Share Class
dated June 30, 1998
This supplement contains new and additional information beyond that contained in
the Prospectus and should be retained and read in conjunction with such
Prospectus.
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101, will serve as the Custodian of ABN AMRO Funds (the "Trust")
on a temporary basis until its custody agreement with the Trust terminates. DST
Systems, Inc., 1004 Baltimore Avenue, Kansas City, Missouri 64105, will serve as
the Transfer Agent and dividend disbursing agent for the Trust on a temporary
basis until its tranfer agency agreement with the Trust terminates.
<PAGE>
[ABN-AMRO LOGO ON GRAPHIC]
ABN AMRO
Funds
Prospectus
Investor Share Class
June 30, 1998
Small Cap Value Fund
NOT FDIC INSURE NO BANK GUARANTEE MAY LOSE VALUE
ABN AMRO(r) is a registered service mark of ABN AMRO Holding N.V., the
ultimate parent of ABN AMRO Asset Management (USA) Inc., the investment
advisor to the ABN AMRO Funds. All rights reserved ABN AMRO Funds are
distributed by First Data Distributors, Inc. which is not a bank affiliate.
ABN AMRO FUNDS
(FORMERLY, THE "REMBRANDT FUNDS")
SMALL CAP VALUE FUND
INVESTOR SHARES
JUNE 30, 1998
-----------------
Please read this Prospectus carefully before investing, and
keep it on file for
future reference. It concisely sets forth information that can
help you decide
if the Fund's investment goals match your own.
A Statement of Additional Information ("SAI") dated June 30,
1998, has been
filed with the Securities and Exchange Commission (the "SEC")
and is available
upon request and without charge by calling 1-800-443-4725. The
SAI is
incorporated into this Prospectus by reference.
The ABN AMRO Funds (formerly, the "Rembrandt Funds") (the
"Trust") is an open-
end investment company (a mutual fund) that currently offers a
selection of
investment portfolios. This Prospectus describes the Investor
Shares of the
Small Cap Value Fund (the "Fund").
INVESTOR SHARES OF THE FUND ARE OFFERED TO INDIVIDUALS AND
INSTITUTIONAL
INVESTORS THROUGH FINANCIAL INTERMEDIARIES WHICH HAVE
ESTABLISHED A DEALER
AGREEMENT WITH THE DISTRIBUTOR.
---------------------------------------------------------------
-----------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE
FUND'S SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED
BY, ANY BANK. THE FUND'S SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY.
INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS
OF THE PRINCIPAL
AMOUNT INVESTED.
<PAGE>
...............................................................
.................
TABLE OF CONTENTS
<TABLE>
<S>
<C>
Fund
Highlights.....................................................
......... 2
Portfolio Expenses........
Your Account and Doing Business with
Us...................................... 5
Investment Objectives and
Policies........................................... 8
Certain Risk
Factors........................................................
. 10
Investment
Limitations....................................................
... 11
The
Advisor........................................................
.......... 12
The Administrator and
Sub-Administrator...................................... 13
The Transfer
Agent..........................................................
. 14
Distribution and Shareholder
Servicing....................................... 14
Performance....................................................
.............. 15
Taxes..........................................................
.............. 16
Additional Information About Doing Business with
Us.......................... 17
General
Information....................................................
...... 18
Description of Permitted Investments and Risk
Factors........................ 20
</TABLE>
...............................................................
.................
HOW TO READ THIS PROSPECTUS
____________________________________________________
This Prospectus gives you information that you should know
about the Fund before
investing. Brief descriptions are also provided throughout the
Prospectus to
better explain certain key points.
FUND HIGHLIGHTS
_______________________________________________________________
_
The following summary provides basic information about the
Investor Shares of
the Small Cap Value Fund. This summary is qualified in its
entirety by reference
to the more detailed information provided elsewhere in this
Prospectus and in
the SAI.
INVESTMENT OBJECTIVE The Fund seeks a high level of total
return primarily
AND POLICIES through capital appreciation. For more
information, see
"Investment Objective and Policies" and
"Description of
Permitted Investments and Risk Factors."
UNDERSTANDING RISK Values of equity securities in which the
Fund invests may
be affected by the financial markets as
well as by
developments impacting specific issuers.
The Fund invests
primarily in small capitalization
companies which are
typically subject to a greater degree of
change in
earnings and business prospects than
larger, more
established companies. See "Certain Risk
Factors" and
"Description of Permitted Investments and
Risk Factors" in
this Prospectus and the SAI.
MANAGEMENT PROFILE ABN AMRO Asset Management (USA) Inc. (the
"Advisor,"
formerly, LaSalle Street Capital
Management, Ltd.), 208
South LaSalle Street, Chicago, Illinois
60604-1003, serves
as the Advisor to the Fund. ABN AMRO Fund
Services, Inc.
(the "Administrator") serves as the
Administrator of the
Fund. First Data Investor Services Group,
Inc. serves as
the Sub-Administrator of the Fund (the
"Sub-
Administrator") as well as the transfer
agent ("Transfer
Agent") and dividend disbursing agent for
the Fund. First
Data Distributors, Inc., an affiliate of
the Sub-
Administrator (the "Distributor"), serves
as distributor
of the Fund's shares. See "The Advisor,"
"The
Administrator and Sub-Administrator,"
"The Transfer Agent"
and "Distribution and Shareholder
Servicing."
2
<PAGE>
YOUR ACCOUNT You may generally open an Investor Shares
account with a
AND minimum investment of $2,000 and make
additional investments
DOING BUSINESS with as little as $100. However, please
contact your
WITH US financial intermediary for its specific
requirements
regarding minimum initial and subsequent
purchase amounts.
Purchases and redemptions of the Fund's
shares are made at
net asset value per share. See "Your Account
and Doing
Business With Us."
DIVIDENDS Substantially all of the Fund's net
investment income
(exclusive of net capital gains) is
distributed in the form
of periodic dividends. Any net capital gain
is distributed
at least annually. Distributions are paid in
additional
shares unless you elect to take the payment
in cash. See
"General Information--Dividends."
INFORMATION/ For more information, call your financial
intermediary.
SERVICE
CONTACTS
3
<PAGE>
PORTFOLIO EXPENSES
_____________________________________________________________
The purpose of the following table is to help you understand
the various costs
and expenses that you, as a shareholder, will bear directly or
indirectly in
connection with an investment in INVESTOR SHARES of the Fund.
The Fund's Annual
operating expenses are based on estimates for the current
fiscal year.
SHAREHOLDER TRANSACTION EXPENSES(1)(As a percentage of offering
price)
---------------------------------------------------------------
-----------------
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Redemption Fee(/2/) None
-----------------------------------------------
</TABLE>
(1) Certain financial intermediaries may impose account fees or
other charges.
An IRA Account may be charged separate account fees by its
custodian.
(2) A charge, currently $10.00, is imposed on wires of
redemption proceeds.
ANNUAL OPERATING EXPENSES(As a percentage of average net
assets)
---------------------------------------------------------------
-----------------
<TABLE>
<S>
<C>
Advisory
Fees...........................................................
.. 0.80%
12b-1
Fees...........................................................
..... 0.25%
Other Expenses (after fee
waivers)(/1/)................................... 0.62%
---------------------------------------------------------------
-----------------
Total Operating Expenses (after fee
waivers)(/2/)......................... 1.67%
---------------------------------------------------------------
-----------------
</TABLE>
(1) The Fund's Administrator is waiving, on a voluntary basis,
a portion of its
fee from the Fund. The Administrator reserves the right to
change the
amount of or terminate its waiver at any time in its sole
discretion.
Absent such fee waiver, "Other Expenses" would be 1.40%.
"Other Expenses"
for the Fund are based on estimated amounts for the current
fiscal year.
(2) Absent waivers described above, "Total Operating Expenses"
would be 2.45%.
EXAMPLE
<TABLE>
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-------------
<CAPTION>
1
YEAR 3 YEARS
------ -------
<S>
<C> <C>
An investor would pay the following expenses on a $1,000 in-
vestment assuming (1) 5% annual return and (2) redemption at
the end of each time period:
$17 $53
---------------------------------------------------------------
-------------
</TABLE>
THE EXAMPLE IS BASED UPON ESTIMATED EXPENSES FOR THE CURRENT
FISCAL YEAR. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of this
table is to assist you in understanding the various costs and
expenses that may
be directly or indirectly borne by investors in Investor Shares
of the Fund.
Over the long-term, you may indirectly pay more than the
equivalent of the
maximum front-end sales charges permitted by the National
Association of
Securities Dealers, Inc. If you purchase shares through a
financial
intermediary, you may be charged separate fees by the financial
intermediary.
An IRA Account may be charged separate fees by its custodian.
See "The
Advisor," "The Administrator and Sub-Administrator" and
"Distribution and
Shareholder Servicing."
4
<PAGE>
...............................................................
.................
WHAT IS AN INTERMEDIARY?
Any entity, such as a bank, bro-ker-dealer, other financial
institution, as-
sociation or or-ganization that has entered into an
arrangement with the Dis-
tributor to sell Fund shares to its customers.
...............................................................
.................
YOUR ACCOUNT AND DOING BUSINESS WITH US
Investor Shares of the Fund are sold on a continuous basis and
may be purchased
through financial institutions or broker-dealers which have
established a
dealer agreement with the Distributor ("Intermediaries"). The
Fund may make
Investor Shares available to other investors in the future.
Shares of the Fund
are offered only to residents of states and other jurisdictions
in which the
shares are eligible for purchase. For more information about
the following
topics, see "Additional Information About Doing Business with
Us."
---------------------------------------------------------------
-----------------
HOW TO Shares of the Fund may be purchased through
Intermediaries,
PURCHASE, which provide various services to their
customers, on any day
REDEEM AND on which the New York Stock Exchange ("NYSE")
is open for
EXCHANGE business (a "Business Day"). The purchase
price of Investor
SHARES Shares of the Fund is the net asset value next
determined after
a purchase order is effective. A purchase
order for Investor
Shares will be effective as of the Business
Day received by the
Transfer Agent if the Transfer Agent receives
the order and
payment before net asset value is determined.
However, an order
may be canceled if the custodian does not
receive Federal funds
before net asset value is determined on the
next Business Day,
and you could be liable for any fees or
expenses incurred by
the Trust. Each Intermediary may impose its
own rules regarding
investing in the Fund, including procedures
for purchases,
redemptions and exchanges. Contact your
Intermediary for
information about the services available to
you and for
specific instructions on how to purchase, sell
and exchange
shares. Certain Intermediaries may charge
account fees.
Information concerning shareholder services
and any charges
will be provided to you by your Intermediary.
Some
Intermediaries may be required to register as
broker-dealers
under state law.
The shares you purchase through an
Intermediary may be
held "of record" by that Intermediary. If you
want to
transfer the registration of shares
beneficially owned by
you, but held "of record" by an Intermediary,
you should call
the Intermediary to request this change.
Other Purchases of Investor Shares may be made by
direct deposit or
Information Automated Clearing House ("ACH") transactions
if your
Regarding Intermediary offers such services. Please
contact your
Purchases Intermediary to find out if these services are
available to
you and for more information about direct
deposit or ACH
transactions.
Your Intermediary also may impose a wire
charge on
purchases.
No certificates representing shares will be
issued.
5
<PAGE>
...............................................................
.................
HOW DOES AN EXCHANGE TAKE PLACE?
When making an exchange, you authorize the sale of your shares
of the Fund in
order to purchase the shares of another fund offered by the
Trust. In other
words, you are executing a sell order and then a buy order.
This sale of your
shares is a taxable event which could result in taxable gain
or loss.
...............................................................
.................
Automatic You may systematically purchase Investor
Shares through
Investment deductions from your checking account,
provided these
Plan ("AIP") accounts are maintained through banks which
are part of the
ACH system. Upon notice, the amount you commit
to the AIP may
be changed or canceled at any time. The
minimum pre-
authorized investment amount is $50 per month.
You should
contact your Intermediary to find out if the
AIP is available
to you. You may obtain an AIP application form
by calling 1-
800-443-4725 or by contacting your
Intermediary.
HOW TO
EXCHANGE
SHARES
When Can You Once payment for your shares has been received
and
Exchange accepted (i.e., an account has been
established), you
Shares? may exchange some or all of your Investor
Shares for Investor
Shares of other funds within the Trust.
Exchanges will be made only after
instructions in writing or
by telephone are received by the Transfer
Agent. Shares may be
ex-changed on any Business Day.
The Trust reserves the right to change the
terms and
conditions of the exchange privilege discussed
herein, or to
terminate the exchange privilege, upon 60
days' notice.
Requesting an To exchange shares, you should contact your
Intermediary, who
Exchange of will contact the Transfer Agent and effect the
exchange on
Shares your behalf.
If an exchange request in good order is
received by the
Transfer Agent prior to the time the net asset
value is
determined for the Fund on any Business Day,
the exchange
usually will occur on that day. Exchanges are
made at the net
asset value next determined after the request
is received by
the Transfer Agent. Your Intermediary may have
earlier cutoff
times for exchange requests. Please contact
your Intermediary
for more information about its exchange
policies.
HOW TO REDEEM You may redeem your shares on any Business
Day. Redemption
(SELL) SHARES requests must be made directly to your
Intermediary. If a
redemption request is received by the Transfer
Agent prior to
the time net asset value is determined for the
Fund on any
Business Day, the redemption usually will
occur on that day.
Redemptions are made at the net asset value
next determined
after the request is received by the Transfer
Agent. Your
Intermediary may have earlier cutoff times for
redemption
requests. Please contact your Intermediary for
more
information regarding redemption orders.
A redemption request submitted by mail must
be received by
the Transfer Agent in order to constitute a
valid request for
redemption. The Transfer Agent may require
that
6
<PAGE>
...............................................................
.................
WHAT IS ASIGNATURE GUARANTEE?
A signature guarantee verifies the authenticity of your
signature and may be
obtained from any of the following: banks, brokers, dealers,
certain credit
unions, securities exchange or association, clearing agency or
savings
association. A notary public cannot provide a signature
guarantee.
...............................................................
.................
the signature on the written request be
guaranteed by a bank
which is a member of the Federal Deposit
Insurance Corporation,
a trust company, broker, dealer, credit union
(if authorized
under state law), securities exchange or
association, clearing
agency or savings association. This signature
guarantee
requirement will be waived if all of the
following conditions
apply: (1) the redemption is for $5,000 worth
of shares or
less, (2) the redemption check is payable to
the shareholder(s)
of record, and (3) the redemption check is
mailed to the
shareholder(s) at the address of record or to
a commercial bank
account previously designated either on the
Account Application
or by written instruction to the Transfer
Agent.
Redemption Payment to shareholders for shares redeemed
generally will be
Proceeds made within seven days after receipt by the
Transfer Agent of
the valid redemption request. However, at
various times, the
Fund may be asked to redeem shares for which
it has not yet
received good payment. In such circumstances,
the forwarding
of proceeds may be delayed for up to 15 days
from the date of
purchase or until payment has been collected
for the purchase
of your shares.
The Fund intends to pay cash for all shares
redeemed, but
under conditions which make payment in cash
unwise, payment
may be made wholly or partly in portfolio
securities with a
market value equal to the redemption price. In
such cases,
you may incur brokerage costs and taxes in
converting such
securities to cash.
You may have redemption proceeds mailed to
your address or
mailed or wired to a commercial bank account
previously
designated on your Account Application. There
is no charge
for having redemption proceeds mailed to a
designated bank
account. Under most circumstances, payments
will be wired on
the next Business Day following receipt of a
valid redemption
request. Redemption proceeds may be
transferred by wire for a
wire charge of $10.00, which is deducted from
the amount of
the redemption. Redemption proceeds may not be
transmitted by
Federal Reserve wire on federal holidays
restricting wire
transfers.
Communications Neither the Trust nor the Transfer Agent will
be responsible
with the for any loss, liability, cost or expense for
acting upon wire
Transfer Agent instructions or upon telephone instructions
that it
reasonably believes to be genuine. The Trust
and the Transfer
Agent will each employ reasonable procedures
to confirm that
instructions communicated by telephone are
genuine, including
requiring a form of personal identification
prior to acting
upon instructions received by telephone and
recording
telephone instructions. If market conditions
are
extraordinarily
7
<PAGE>
...............................................................
.................
WHAT ARE INVESTMENT OBJECTIVES AND POLICIES?
The Fund's investment objective is a statement of what it
seeks to achieve. It
is important to make sure that the investment objective
matches your own
financial needs and circumstances. The investment policies
section spells out
the types of securities in which the Fund invests.
...............................................................
.................
active, or other extraordinary circumstances
exist, and an
Intermediary experiences difficulties placing
redemption
orders by telephone, the Intermediary may wish
to consider
placing the order by other means. Your
Intermediary may not
close your account by telephone. Please
contact your
Intermediary for more information regarding
its specific
requirements for written and telephone
requests for
redemptions and signature guarantee
requirements.
See "Purchase and Redemption of Shares" in
the Statement
of Additional Information for examples of when
your right to
redeem your shares may be suspended.
Systematic The Fund offers a Systematic Withdrawal Plan
("SWP") for
Withdrawal Investor Shareholders who wish to receive
regular
Plan distributions from their account. Upon
commencement of the
SWP, your account must have a current value of
$5,000 or
more. You may elect to receive automatic
payments by check or
ACH of $50 or more on a monthly, quarterly,
semi-annual or
annual basis. You should contact your
Intermediary to find
out if a SWP is available to you and for
information about
the SWP. A SWP Application Form may be
obtained by calling 1-
800-443-4725 or by contacting your
Intermediary.
If SWP withdrawals exceed income dividends,
your invested
principal in your account will be depleted.
Thus, depending
on the frequency and amounts of the withdrawal
payments
and/or any fluctuations in the net asset value
per share,
your original investment could be exhausted
entirely. To
participate in the SWP, you must have your
dividends
automatically reinvested. To change or cancel
the SWP, please
contact your Intermediary.
INVESTMENT OBJECTIVE AND POLICIES
______________________________________________
The Small Cap Value Fund seeks a high level of
total return
primarily through capital appreciation.
Under normal circumstances, the Fund will
invest at least
65% of its total assets in common stocks of
corporations with
small capitalization levels that the Advisor
believes are
undervalued and present the opportunity to
increase shareholder
value. The Fund will invest in common stocks
that: (i) have
below average price to earnings, price to book
value, price to
sales, and price to cash flow ratios; and (ii)
are issued by
companies that the Advisor believes are
financially sound. The
Advisor emphasizes a diversified portfolio of
common stocks of
companies with market capitalization of less
than $1.5 billion.
8
<PAGE>
Any remaining Fund assets may be invested
in: (i)
warrants to purchase common stocks; (ii) debt
securities
convertible into common stocks; (iii)
preferred stock
convertible into common stocks; (iv) U.S.
dollar denominated
equity securities of foreign issuers
(including sponsored
American Depositary Receipts ("ADRs")); and
(v) interests in
real estate investment trusts ("REITs"). The
Fund invests in
equity securities of foreign issuers only if
they satisfy in
substance the criteria for investing in
smaller
capitalization stocks set forth above.
The Fund may invest up to 15% of its total
assets in
restricted securities. The Fund invests no
more than 15% of
its net assets in illiquid securities. The
Fund may invest
in variable and floating rate obligations and
may purchase
securities on a when-issued basis, and may
enter into
repurchase agreements. The Fund may enter
into futures
contracts and options on futures for bona
fide hedging
purposes only.
In addition, the Fund may engage in
securities lending.
There is no limit to the percentage of
portfolio
securities that the Fund may purchase subject
to a standby
commitment, but the amount paid directly or
indirectly for a
standby commitment held by the Fund may not
exceed 1/2 of 1%
of the value of the total assets of the Fund.
For temporary defensive purposes, when the
Advisor
determines that market conditions warrant,
the Fund may
invest up to 100% of its assets in money
market instruments
and may hold U.S. dollars and foreign
currencies, including
multinational currency units.
RATINGS Nationally recognized statistical rating
organizations
("NRSROs") provide ratings for certain
instruments in which
the Fund may invest. For example, bonds rated
in the fourth
highest rating category (investment grade
bonds) have an
adequate capacity to pay principal and
interest, but may
have speculative characteristics as well. The
quality
standards of debt securities and other
obligations as
described for the Fund must be satisfied at
the time an
investment is made. In the event that an
investment held by
the Fund is assigned a lower rating or ceases
to be rated,
the Advisor will promptly reassess whether
such security
presents suitable credit risks and whether
the Fund should
continue to hold the security or obligation
in its
portfolio. If a portfolio security or
obligation no longer
presents suitable credit risks or is in
default, the Fund
will dispose of the security or obligation as
soon as
reasonably practicable unless the Trustees of
the Trust
determine that to do so is not in the best
interest of the
Fund. The Fund may invest in unrated
securities that the
Advisor determines to be of comparable
quality at the time
of purchase.
9
<PAGE>
CERTAIN RISK FACTORS
___________________________________________________________
The investment policies of the Fund entail
certain risks and
considerations of which an investor should be
aware.
Equity Investments in equity securities are
generally subject to
Securities market risks that may cause their prices to
fluctuate over
time. The values of convertible equity
securities are also
affected by prevailing interest rates, the
credit quality of
the issuer and any call provision.
Fluctuations in the value
of equity securities in which the Fund
invests will cause
the net asset value of the Fund to fluctuate.
Securities of Investments in small capitalization companies
involve
Small greater risk than is customarily associated
with larger,
Capitalization more established companies due to the greater
business risks
Companies of small size, limited markets and financial
resources,
narrow product lines and frequent lack of
depth of
management. The securities of small-sized
companies are
often traded over-the-counter, and may not be
traded in
volumes typical of securities traded on a
national
securities exchange. Consequently, the
securities of smaller
companies may have limited market stability
and may be
subject to more abrupt or erratic market
movements than
securities of larger, more established
companies of the
market averages in general. Because the Fund
invests
primarily in common stocks of smaller
capitalization
companies, the Fund's shares may fluctuate
significantly in
value, and thus may be more suitable for
long-term investors
who can bear the risk of short-term
fluctuations.
Convertible The market value of fixed income investments
such as
Debt Securities convertible debt securities will change in
response to
interest rate changes and other factors.
During periods of
falling interest rates, the values of
convertible debt
securities generally rise. Conversely, during
periods of
rising interest rates, the values of such
securities
generally decline. Moreover, while securities
with longer
maturities tend to produce higher yields, the
prices of
securities with longer maturities are also
subject to
greater market fluctuations as a result of
changes in
interest rates. Changes by NRSROs in the
rating of any fixed
income security and in the ability of an
issuer to make
payments of interest and principal also
affect the value of
these investments. There is a risk that the
current interest
rate on floating and variable rate
instruments may not
accurately reflect existing market interest
rates. Fixed
income securities rated BBB by Standard &
Poor's Ratings
Service, a division of McGraw Hill Companies,
Inc., or Baa
by Moody's Investor Services, Inc. (the
lowest ratings of
investment grade bonds) are deemed by these
rating services
to have speculative characteristics.
Foreign Securities of foreign issuers are subject to
certain risks
Securities not typically associated with domestic
securities,
including, among other risks, limited
publicly available
information
10
<PAGE>
regarding foreign issuers, lack of uniformity
in accounting,
auditing and financial standards and
requirements, greater
securities market volatility, less liquidity
of securities,
less government supervision and regulations
of securities
markets, withholding taxes and changes in
taxes on income on
securities, and possible seizure,
nationalization or
expropriation of the foreign issuer or
foreign deposits.
REITs REITs may be affected by changes in the value
of their
underlying properties and by defaults by
borrowers or
tenants. Mortgage REITs may be affected by
the quality of
the credit extended. Furthermore, REITs are
dependent on
specialized management skills. Some REITs may
have limited
diversification and may be subject to risks
inherent in
investments in a limited number of
properties, in a narrow
geographic area, or in a single property
type. REITs depend
generally on their ability to generate cash
flow to make
distributions to shareholders or unitholders,
and may be
subject to defaults by borrowers and to
self-liquidations.
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 of 1986, as
amended (the
"Code"), or its failure to maintain exemption
from
registration under the Investment Company Act
of 1940, as
amended (the "1940 Act"). Rising interest
rates may cause
the value of the debt securities in which the
Fund may
invest to decline. Conversely, falling
interest rates may
cause their value to rise. Changes in the
value of portfolio
securities does not necessarily affect cash
income derived
from these securities but will effect the
Fund's net asset
value.
INVESTMENT LIMITATIONS
_________________________________________________________
The Fund may not:
1. Purchase securities of any issuer (except
securities
issued or guaranteed by the United States,
its agencies
or instrumentalities and repurchase
agreements involving
such securities) if as a result more than
5% of the total
assets of the Fund would be invested in
the securities of
such issuer or more than 10% of the
outstanding voting
securities of such issuer would be owned
by the Fund.
This restriction applies to 75% of the
Fund's assets.
2. Purchase securities of any issuer (other
than securities
issued or guaranteed by the U.S.
Government or any of its
agencies or instrumentalities; repurchase
agreements
involving such securities) if, as a
result, more than 25%
of the total assets of the Fund are
invested in the
securities of one or more issuers whose
principal
business activities are in the same
industry.
3. Make loans, except as permitted by the
1940 Act, and the
rules and regulations thereunder.
The foregoing percentages apply at the time
of purchase of a
security. Additional investment limitations
are set forth in
the SAI.
11
<PAGE>
...............................................................
.................
INVESTMENT ADVISOR
An investment advisor manages the investment activities and is
responsible for
the performance of the Fund. The advisor conducts investment
research, exe-
cutes investment strategies based on an as-sessment of
economic and market
conditions, and determines which securities to buy, hold or
sell.
...............................................................
.................
THE ADVISOR
_______________________________________________________________
_____
The Trust and the Advisor, 208 South LaSalle
Street, Chicago,
Illinois 60604-1003, have entered into an
advisory agreement
(the "Advisory Agreement"). Under the Advisory
Agreement, the
Advisor makes the investment decisions for the
assets of the
Fund and continuously reviews, supervises and
administers the
Fund's investment program, subject to the
supervision of, and
policies established by, the Trustees of the
Trust.
Under the Advisory Agreement, the Advisor
is entitled to a
fee, which is calculated daily and paid
monthly, at an annual
rate of 0.80% of the average daily net assets
of the Fund. The
Advisor may voluntarily waive a portion of its
fee in order to
limit the total operating expenses of the
Fund. The Advisor
reserves the right, in its sole discretion, to
terminate this
voluntary fee waiver at any time. The Fund may
execute
brokerage or other agency transactions through
an affiliate of
the Advisor for which the affiliate may
receive compensation.
ABN AMRO Asset Management (USA) Inc. was
organized in
March, 1991 under the laws of the State of
Delaware. The
Advisor manages assets for corporations,
unions, governments,
insurance companies and charitable
organizations. As of
December 31, 1997, total assets under
management by the
Advisor were approximately $5.8 billion.
The Advisor is a direct, wholly-owned
subsidiary of ABN
AMRO Capital Markets Holding, Inc., which is
an indirect,
wholly-owned subsidiary of ABN AMRO Holding
N.V., a
Netherlands company.
Edwin Bruere, Senior Vice President and
Director of the
Equity Group of the Advisor, serves as lead
portfolio manager
of the Fund. As lead portfolio manager, he
makes investment
decisions on behalf of the Fund and formulates
the Fund's
investment strategy. Previously, he has served
as a portfolio
manager and a member of various equity
committees. Mr. Bruere
has been involved in investment management
since 1988 and has
been associated with the Advisor and an
affiliate of the
Advisor since January, 1997.
Jac A. Cerney, Senior Vice President of the
Advisor,
serves as co-portfolio manager of the Fund. As
co-portfolio
manager, he is primarily responsible for
implementing the
Fund's investment strategy under Mr. Bruere's
direction. Mr.
Cerney has been associated with the Advisor
and its
predecessor since April, 1990 as a portfolio
manager.
Prior The performance information on the following
page relates to
Performance of an account managed by Mr. Edwin Bruere, who
currently serves
a Managed as lead portfolio manager of the Fund. The
account has an
Account investment objective, policies, and
restrictions
substantially similar to that of the Fund. Mr.
Bruere has
also managed other accounts with a similar
investment
objective,
12
<PAGE>
policies and restrictions as that of the
Fund; however, the
performance information below reflects the
account with the
longest performance history.
This account was not subject to certain
investment
limitations, requirements, and other
restrictions imposed by
the 1940 Act and the Code. If these had been
imposed, the
account's performance would have been
adversely affected.
Furthermore, the account belongs to an
affiliate of the
Advisor and was funded with the affiliate's
own money. As a
proprietary account, it did not incur any
expenses, such as
the advisory, administrative, and other fees
to which the
Fund is subject. If the account had incurred
these expenses,
its performance would have been lower.
You should not rely on the following
performance
information as an indication of future
performance of the
Fund. The performance reflected below does
not represent the
historical performance of the Fund. The
performance
information relates to a period of time
before the effective
date of the Fund's registration with the SEC
as an open-end
investment company.
The performance information below
represents equity-only
returns and assumes reinvestment of net
income and capital
gain distributions. The Fund normally holds a
portion of its
assets in cash to meet redemptions and make
purchases.
Unlike the Fund, the account did not hold any
cash during
the period shown. If it had, the account's
performance would
have been lower. Since the period shown
occurred during a
rising market, the absence of cash in the
account results in
even higher returns. The performance
information is
calculated using the same methods for
valuation of portfolio
securities used by the Fund.
<TABLE>
<CAPTION>
PERIOD ENDED
RUSSELL 2000
MAY 31, 1998 ACCOUNT
VALUE INDEX
--------------------------------- -------
------------
<S> <C>
<C>
Since Inception (January 1, 1997) 44.06%
25.79%
12 Month 48.10%
26.66%
YEAR ENDED DECEMBER 31, 1997 52.67%
31.78%
</TABLE>
The Russell 2000 Value Index shows total
return assuming
the reinvestment of dividends but does not
reflect the
deduction of fees, expenses and taxes.
Source: Frank Russell
Company. The Russell 2000 Value Index is
comprised of
securities in the Russell 2000 Index with
less than average
growth orientation. Companies in this Index
generally have
low price to book and price-earnings ratios.
THE ADMINISTRATOR
AND SUB-ADMINISTRATOR
__________________________________________________________
ABN AMRO Fund Services, Inc. serves as the
Administrator for
the Trust. The Administrator is an affiliate
of the Advisor
and both are under the common control of ABN
AMRO Holding
N.V., a Netherlands Company. As
Administrator, it provides
the Trust with administrative services,
including oversight
and monitoring of the sub-administrator,
transfer agent,
distributor and custodian. The Administrator
is entitled to
a fee, which is
13
<PAGE>
calculated daily and paid monthly, at an
annual rate of
0.15% of the average daily net assets of the
Fund.
First Data Investor Services Group, Inc.
serves as the
Sub-Administrator for the Trust. As
Sub-Administrator it
provides the Trust with sub-administrative
services,
including fund accounting, regulatory
reporting, necessary
office space, equipment, personnel and
facilities.
Compensation for these services is paid under
a sub-
administration and fund accounting agreement
with the
Administrator.
THE TRANSFER
AGENT
_______________________________________________________________
___________
First Data Investor Services Group, Inc.,
4400 Computer
Drive, Westborough, MA 01581, serves as the
Transfer Agent,
and dividend disbursing agent for the Trust.
Compensation
for these services is paid under a transfer
agency agreement
with the Trust.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
_______________________________________________________________
_______
First Data Distributors, Inc., 4400 Computer
Drive,
Westborough, MA 01581 and the Trust are
parties to a
distribution agreement (the "Distribution
Agreement").
The Fund has adopted a distribution plan
(the
"Distribution Plan") and a shareholder
servicing plan (the
"Shareholder Servicing Plan") under which
firms, including
the Distributor, may provide shareholder and
administrative
services to Investor Shares shareholders for
compensation.
Under each plan, the Distributor may provide
those services
itself, or may enter into arrangements under
which third
parties provide such services and are
compensated by the
Distributor.
Under the Distribution Plan, the Trust
pays a fee of .25%
of the average daily net assets of Investor
Shares to the
Distributor as compensation for its services.
From this
amount, the Distributor may make payments to
financial
institutions and intermediaries such as
banks, savings and
loan associations, insurance companies, and
investment
counselors, broker-dealers, and the
Distributor's affiliates
and subsidiaries as compensation for
services, reimbursement
of expenses incurred in connection with
distribution
assistance, or provision of shareholder
services. The
Distribution Plan is characterized as a
compensation plan
since the distribution fee is paid to the
Distributor
without regard to the distribution or
shareholder services
expenses incurred by the Distributor or the
amount of
payments made to financial institutions and
intermediaries.
Under the Shareholder Servicing Plan, the
Trust pays a
fee of .25% of the average daily net assets
of the Investor
Shares to the Distributor in exchange for the
Distributor
(or its agent's) efforts in maintaining
client accounts,
arranging bank wires, responding to client
inquiries
concerning services provided or investment,
and assisting
clients in
14
<PAGE>
purchase, redemption and exchange
transactions and changing
their dividend options, account designations
and addresses.
It is possible that an institution may
offer different
classes of shares to its customers and
differing services to
the classes, and thus receive compensation
with respect to
different classes. These financial
institutions may also
charge separate fees to their customers.
The Trust also offers Common Shares, which
are sold
without a 12b-1 fee or shareholder servicing
fee, primarily
to individuals and institutional investors
directly and
through wrap programs, retirement plans,
discount brokerage
programs, and various brokerage firms. For
more information
about Common Shares, you may call
1-800-433-4725.
PERFORMANCE
_______________________________________________________________
_____
From time to time, the Fund may advertise
yield and total
return. These figures will be based on
historical earnings
and are not intended to indicate future
performance. The
yield of the Fund refers to the annualized
income generated
by an investment in the Fund over a specified
30-day period.
The yield is calculated by assuming that the
same amount of
income generated by the investment during
that period is
generated in each 30-day period over one
year, and is shown
as a percentage of the investment.
The total return of the Fund refers to the
average compounded rate of return on a hypothetical
investment for
designated time periods (including, but not
limited to, the
period from which the Fund commenced
operations through the
specified date), assuming that the entire
investment is
redeemed at the end of each period and
assuming the
reinvestment of all dividend and capital gain
distributions.
The total return of the Fund may also be
quoted as a dollar
amount, on an aggregate basis, or an actual
basis.
The Fund may periodically compare its
performance to that
of other mutual funds tracked by mutual fund
rating services
(such as Lipper Analytical Securities Corp.)
or by financial
and business publications and periodicals,
broad groups of
comparable mutual funds or unmanaged indices
which may
assume investment of dividends but generally
do not reflect
deductions for administrative and management
costs. The Fund
may quote services such as Morningstar, Inc.,
a service that
ranks mutual funds on the basis of
risk-adjusted
performance, and Ibbotson Associates of
Chicago, Illinois,
which provides historical returns of the
capital markets in
the U.S. The Fund may use long-term
performance of these
capital markets to demonstrate general
long-term risk versus
reward scenarios and could include the value
of a
hypothetical investment in any of the capital
markets. The
Fund may also quote financial and business
publications and
periodicals as they relate to fund
management, investment
philosophy, and investment techniques.
The Fund may quote various measures of
volatility and
benchmark correlation in advertising, and may
compare these
measures to those of other funds. Measures of
volatility
attempt to compare historical share price
fluctuations or
total returns to a
15
<PAGE>
...............................................................
.................
TAXES
You must pay taxes on your Fund's earnings, whether you take
your payments in
cash or additional shares.
...............................................................
.................
DISTRIBUTIONS
The Fund distributes income dividends and capital gains. Income
dividends
represent the earnings from the Fund's investments; capital
gains are generally
produced when investments are sold for more than the original
purchase price.
...............................................................
.................
benchmark while measures of benchmark
correlation indicate
the validity of a comparative benchmark.
Measures of
volatility and correlation are calculated
using averages of
historical data and cannot be precisely
calculated.
The portfolio turnover rate for the Fund is
expected not
to exceed 100%. A high turnover rate will
result in higher
transaction costs and may result in additional
tax
consequences for shareholders. The performance
of Common
Shares normally will be higher than that of
Investor Shares
because of the additional distribution and
shareholder
services expenses charged to Investor Shares.
TAXES
_______________________________________________________________
___________
The following summary of Federal income tax
consequences is
based on current tax laws and regulations,
which may be
changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed
explanation of
the Federal, state, or local income tax
treatment of the Fund
or its shareholders. In addition, state and
local tax
consequences on an investment in the Fund may
differ from the
Federal income tax consequences described
below. Accordingly,
you are urged to consult your tax advisor
regarding specific
questions as to federal, state, and local
income taxes.
Additional information concerning taxes is set
forth in the
SAI.
Tax Status of The Fund is treated as a separate entity for
Federal income
the Fund tax purposes and is not combined with the
Trust's other funds.
The Fund intends to qualify for the special
tax treatment
afforded regulated investment companies as
defined under
Subchapter M of the Code. As long as the Fund
qualifies for
this special tax treatment, it will be
relieved of Federal
income tax on that part of its net investment
income and net
capital gains (the excess of net long-term
capital gain over
net short-term capital loss) which is
distributed to
shareholders.
Tax Status of The Fund will distribute substantially all of
its net
Distributions investment income (including, for this
purpose, net short-term
capital gain) to shareholders. Dividends from
net investment
income will be taxable to you as ordinary
income whether
received in cash or in additional shares. Any
net capital gains
will be distributed annually as capital gains
distributions and
will be treated as gain from the sale or
exchange of a capital
asset held for more than one year, regardless
of how long you
have held shares and regardless of whether the
distributions
are received in cash or in additional shares.
The Fund will
notify you annually of the Federal income tax
character of all
distributions.
16
<PAGE>
Dividends declared by the Fund in October,
November or
December of any year and payable to
shareholders of record
on a date in that month will be deemed to
have been paid by
the Fund and received by shareholders on
December 31 of that
year, if paid by the Fund at any time during
the following
January.
The Fund intends to make sufficient
capital gains
distributions prior to the end of each
calendar year to
avoid liability for the Federal excise tax
applicable to
regulated investment companies.
Investment income received by the Fund
from sources
within foreign countries may be subject to
foreign income
taxes withheld at the source.
As a general rule, income dividends (not
capital gain
distributions) paid by the Fund, to the
extent the dividend
is derived from dividends received from
domestic
corporations, may if certain conditions are
met, qualify for
the dividends received deduction for
corporate shareholders.
Distributions of net capital gains from the
Fund do not
qualify for the dividends received deduction.
Each exchange or redemption (sale) of Fund
shares is a
taxable event to you.
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH US
____________________________
Minimum The minimum initial investment in the
Investor Shares is
Investment $2,000, which may be waived at the
Distributor's discretion.
All subsequent investments must be at least
$100. The Fund
is intended to be a long-term investment
vehicle and is not
designed to provide investors with a means of
speculating on
short-term movements. Consequently, the Trust
reserves the
right to reject a purchase order for Investor
Shares when
the Trust or the Transfer Agent determines
that it is not in
the best interest of the Trust or its
shareholders to accept
such order.
Your intermediary may impose its own
minimum initial and
subsequent investment requirements. You
should contact your
intermediary for information about any such
requirements.
Maintaining a Due to the relatively high cost of handling
small
Minimum Account investments, the Fund reserves the right to
redeem your
Balance shares, at net asset value, if, because of
redemptions of
shares by or on your behalf, your account in
the Fund has a
value of less than $2,000. Accordingly, if
you purchase
shares of the Fund in only the minimum
investment amount you
may be subject to such involuntary redemption
if you
thereafter redeem any of these shares. Before
the Fund
exercises its right to redeem such shares and
send the
proceeds to you, you will be given notice
that the value of
the shares in your account is less than the
minimum amount
and will be allowed 60 days to make an
additional investment
in the Fund in an amount that will increase
the value of the
account to at least $2,000. See "Purchase and
17
<PAGE>
Redemption of Shares" in the SAI for examples
of when your
right of redemption may be suspended.
Your Intermediary also may have
requirements for
maintaining a minimum account balance. You
should contact
your Intermediary for information about any
such
requirements.
Net Asset Value The net asset value of the Fund is determined
as of the
close of regular trading on the NYSE
(normally 4:00 p.m.
Eastern time) each Business Day.
How the Net The net asset value per share of the Fund is
determined by
Asset Value dividing the total market value of the Fund's
investments
is Determined and other assets, less any liabilities, by
the total number
of outstanding shares of the Fund. The Fund
values its
portfolio securities at the last quoted sales
price for such
securities, or, if there is no such reported
sales price on
the valuation date, at the most recent quoted
bid price. The
Fund may use pricing services to provide
market quotations.
A pricing service may use a matrix system of
valuation to
value fixed income securities which considers
factors such
as securities prices, call features, ratings,
and
developments related to a specific security.
GENERALINFORMATION
_____________________________________________________________
The Trust The Trust was organized as a Massachusetts
business trust
under a Declaration of Trust dated September
17, 1992, and
amended September 28, 1992, October 20, 1992
and April 27,
1998. The Declaration of Trust permits the
Trust to offer
shares of separate funds and different
classes of each fund.
The Trust consists of the following funds:
Money Market
Fund, Government Money Market Fund, Treasury
Money Market
Fund, Tax-Exempt Money Market Fund, Fixed
Income Fund,
Intermediate Government Fixed Income Fund,
Tax-Exempt Fixed
Income Fund, International Fixed Income Fund,
Limited
Volatility Fixed Income Fund, Latin America
Equity Fund,
Real Estate Fund, Value Fund, Growth Fund,
Small Cap Growth
Fund (formerly, the "Small Cap Fund"),
International Equity
Fund, TransEurope Fund, Asian Tigers Fund,
Balanced Fund and
Small Cap Value Fund. All consideration
received by the
Trust for shares of any fund and all assets
of such fund
belong to that fund, and would be subject to
liabilities
related thereto. The Trust reserves the right
to create and
issue shares of additional funds. As of
December 31, 1997,
the Limited Volatility Fixed Income Fund,
TransEurope Fund
and Small Cap Value Fund had not commenced
operations.
Generally, each Fund offers two classes of
shares: Common
Shares and Investor Shares. Each class has
its own expense
structure and other characteristics. Common
Shares of the
Fund are offered through a separate
prospectus. The Latin
America Equity Fund is not available for
purchase in
Investor Shares.
The Trust pays its expenses, including
fees of its
service providers, audit and legal expenses,
expenses of
preparing prospectuses, proxy solicitation
material and
reports to
18
<PAGE>
shareholders, costs of custodial services and
registering
the shares under Federal and state securities
laws, pricing,
insurance expenses, litigation and other
extraordinary
expenses, brokerage costs, interest charges,
taxes and
organization expenses.
Trustees of the The management and affairs of the Trust are
supervised by
Trust the Trustees under the laws governing
business trusts in the
Commonwealth of Massachusetts. The Trustees
have approved
contracts under which, as described above,
certain companies
provide essential management, administrative
and other
services to the Trust.
Voting Rights Each share held entitles the shareholder of
record to one
vote. Shareholders of the Fund or class will
vote separately
on matters relating solely to the Fund or
class. As a
Massachusetts business trust, the Trust is
not required to
hold annual shareholder meetings but such
meetings will be
held from time to time to seek approval for
certain changes
in the operation of the Trust and for the
election of
Trustees under certain circumstances. In
addition, a Trustee
may be removed by the remaining Trustees or
by shareholders
at a special meeting called upon written
request of
shareholders owning at least 10% of the
outstanding shares
of the Trust. In the event that such a
meeting is requested,
the Trust will provide appropriate assistance
and
information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial
information semi-
annually and audited financial statements
annually. The
Trust furnishes periodic reports to
shareholders of record,
and, as necessary, proxy statements for
shareholder
meetings.
Shareholder Shareholder inquiries should be directed to
the Fund, P.O.
Inquiries Box 9765, Providence, Rhode Island
02940-5047, or 1-800-443-
4725.
Dividends Substantially all of the net investment
income (not
including net capital gains) of the Fund is
distributed on a
monthly basis. Shareholders who own shares at
the close of
business on the record date will be entitled
to receive the
distribution. Currently, net capital gains of
the Fund, if
any, will be distributed at least annually.
Shareholders automatically receive all
dividends and
distributions in additional shares at the net
asset value
next determined following the record date,
unless the
shareholder has elected to take such payment
in cash.
Shareholders may change their election by
providing written
notice to the Transfer Agent at least 15 days
prior to the
distribution.
Dividends and distributions of the Fund
are paid on a
per-share basis. The value of each share will
be reduced by
the amount of the payment. If shares are
purchased shortly
before the record date for a dividend or
distribution, a
shareholder will pay the full price for the
shares and
receive some portion of the price back as a
taxable dividend
or distribution.
19
<PAGE>
Counsel and Morgan, Lewis & Bockius LLP serves as counsel
to the Trust.
Auditors Ernst & Young LLP serves as independent
auditors of the
Trust.
Custodian The Chase Manhattan Bank, 270 Park Avenue,
New York, New
York 10017 acts as global custodian (the
"Custodian") of the
Trust. The Custodian holds cash securities
and other assets
of the Trust as required by the 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS AND
RISK FACTORS
_______________________________________________________________
____
The following is a description of certain of
the permitted
investments and risk factors for the Fund:
American The Fund may invest in depositary receipts
and other similar
Depositary instruments, such as ADRs, CDRs, EDRs & GDRs.
ADRs are
Receipts securities, typically issued by a U.S.
financial institution
("ADRs"), (a "depositary"), that evidence ownership
interests in a
Continental security or a pool of securities issued by a
foreign issuer
Depositary and deposited with the depositary. EDRs,
which are sometimes
Receipts referred to as CDRs, are securities,
typically issued by a
("CDRs"), non-U.S. financial institution, that evidence
ownership
European interests in a security or a pool of
securities issued by
Depositary either a U.S. or foreign issuer. GDRs are
issued globally
Receipts and evidence a similar ownership arrangement.
Generally,
("EDRs") and ADRs are designed for trading in the U.S.
securities market.
Global EDRs are designed for trading in European
Securities Markets
Depositary and GDRs are designed for trading in non-U.S.
securities
Receipts markets. Generally, depositary receipts may
be available
("GDRs") through "sponsored" or "unsponsored"
facilities. A sponsored
facility is established jointly by the issuer
of the
security underlying the receipt and a
depositary, whereas an
unsponsored facility may be established by a
depositary
without participation by the issuer of the
underlying
security. Holders of unsponsored depositary
receipts
generally bear all the costs of the
unsponsored facility.
The depositary of an unsponsored facility
frequently is
under no obligation to distribute shareholder
communications
received from the issuer of the deposited
security or to
pass through to the holders of the receipts
voting rights
with respect to the deposited securities.
Bankers' Bankers' acceptances are bills of exchange or
time drafts
Acceptances drawn on and accepted by a commercial bank.
Bankers'
acceptances are used by corporations to
finance the shipment
and storage of goods. Maturities are
generally six months or
less.
Certificates of Certificates of deposit are interest bearing
instruments
Deposit with a specific maturity. Certificates of
deposit are issued
by banks and savings and loan institutions in
exchange for
the deposit of funds and normally can be
traded in the
secondary market prior to maturity.
Certificates of deposit
with penalties for early withdrawal are
considered to be
illiquid.
20
<PAGE>
Commercial Commercial paper is a term used to describe
unsecured short-
Paper term promissory notes issued by banks,
municipalities,
corporations and other entities. Maturities
on these issues
vary from a few to 270 days.
Convertible Convertible securities are corporate
securities that are
Securities exchangeable for a set number of shares of
another security
at a prestated price. Convertible securities
have
characteristics similar to both fixed income
and equity
securities. Because of the conversion
feature, the market
value of convertible securities tends to move
together with
the market value of the underlying stock. The
value of
convertible securities is also affected by
prevailing
interest rates, the credit quality of the
issuer, and any
call provisions.
Equity Equity securities include common stocks,
common stock
Securities equivalents, preferred stocks, securities
convertible into
common stocks and securities having common
stock
characteristics, such as rights and warrants
to purchase
common stocks, sponsored and unsponsored
depositary receipts
(e.g., ADRs), REITs, and equity securities of
closed-end
investment companies.
Fixed Income Fixed income securities are debt obligations
issued by
Securities corporations, municipalities and other
borrowers.
Futures Futures contracts provide for the future sale
by one party
Contracts and and purchase by another party of a specified
amount of a
Options on specific security at a specified future time
and at a
Futures specified price. An option on a futures
contract gives the
Contracts purchaser the right, in exchange for a
premium, to assume a
position in a futures contract at a specified
exercise price
during the term of the option. The Fund may
use futures
contracts and related options for bona fide
hedging
purposes, to offset changes in the value of
securities held
or expected to be acquired or be disposed of,
to minimize
fluctuations in foreign currencies, or to
gain exposure to a
particular market or instrument. The Fund
will minimize the
risk that it will be unable to close out a
futures contract
by only entering into futures contracts which
are traded on
national futures exchanges. In addition, the
Fund will only
sell covered futures contracts and options on
futures
contracts.
Stock and bond index futures are futures
contracts for
various stock and bond indices that are
traded on registered
securities exchanges. Stock and bond index
futures contracts
obligate the seller to deliver (and the
purchaser to take)
an amount of cash equal to a specific dollar
amount times
the difference between the value of a
specific stock or bond
index at the close of the last trading day of
the contract
and the price at which the agreement is made.
Eurodollar futures are U.S.
dollar-denominated futures
contracts or options thereon which are linked
to the London
Interbank Offered Rate ("LIBOR"), although
foreign currency
denominated instruments are available from
time to time.
Eurodollar futures
21
<PAGE>
contracts enable purchasers to obtain a fixed
rate for the
lending of the funds and sellers to obtain a
fixed rate for
borrowings.
No price is paid upon entering into
futures contracts.
Instead, the Fund is required to deposit an
amount of cash
or liquid assets known as "initial margin."
Subsequent
payments, called "variation margin," to and
from the broker,
are made on a daily basis as the value of the
futures
position varies (a process known as "marking
to market").
The margin is in the nature of a performance
bond or good-
faith deposit on a futures contract.
In order to avoid leveraging and related
risks, when the
Fund purchases futures contracts, it will
collateralize its
position by depositing an amount of cash or
liquid assets,
equal to the market value of the futures
positions held,
less margin deposits, in a segregated account
with the
Trust's custodian. Collateral equal to the
current market
value of the futures position will be marked
to market on a
daily basis.
There are risks associated with these
activities,
including the following: (1) the success of a
hedging
strategy may depend on an ability to predict
movements in
the prices of individual securities,
fluctuations in markets
and movements in interest rates; (2) there
may be an
imperfect or no correlation between the
changes in market
value of the securities held by the Fund and
the prices of
futures and options on futures; (3) there may
not be a
liquid secondary market for a futures
contract or option;
(4) trading restrictions or limitations may
be imposed by an
exchange; and (5) government regulations may
restrict
trading in futures contracts and futures
options; and (6)
the loss from investing in futures
transactions is
potentially unlimited.
Illiquid Illiquid securities are securities that
cannot be disposed
Securities of within 7 days at approximately the price
at which they
are being carried on the Fund's books. An
illiquid security
includes a demand instrument with a demand
notice period
exceeding 7 days, if there is no secondary
market for such
security, and repurchase agreements with
durations (or
maturities) over 7 days in length.
Investment Investments in shares of open-end and
closed-end investment
Company Shares companies may result in the layering of
expenses. Since such
investment companies pay management fees and
other expenses,
shareholders of the Fund would indirectly pay
both Fund
expenses and the expenses of underlying
companies with
respect to Fund assets invested therein.
Money Market Money Market Instruments include certificates
of deposit,
Instruments commercial paper, bankers' acceptances,
Treasury bills, time
deposits, repurchase agreements and shares of
money market
funds.
Options A put option gives the purchaser the right to
sell, and the
writer the obligation to buy, the underlying
security at any
time during the option period. A call option
gives the
purchaser the right to buy, and the writer
the obligation to
sell, the underlying security at any time
22
<PAGE>
during the option period. The premium paid to
the writer is
the consideration for undertaking the
obligations under the
option contract.
The Fund may purchase put and call options
to protect
against a decline in the market value of the
securities in
its portfolio or to protect against an
increase in the cost
of securities that the Fund may seek to
purchase in the
future. In purchasing put and call options
the Fund pays a
premium therefor. If price movements in the
underlying
securities are such that exercise of the
options would not
be profitable for the Fund, loss of the
premium paid may be
offset by an increase in the value of the
Fund's securities
or by a decrease in the cost of acquisition
of securities by
the Fund.
The Fund may write covered put and call
options as a
means of increasing the yield on its
portfolio and as a
means of providing limited protection against
decreases in
its market value. When the Fund sells an
option, if the
underlying securities do not increase or
decrease to a price
level that would make the exercise of the
option profitable
to the holder thereof, the option generally
will expire
without being exercised and the Fund will
realize as profit
the premium received for such option. When a
call option of
which the Fund is the writer is exercised,
the Fund will be
required to sell the underlying securities to
the option
holder at the strike price, and will not
participate in any
increase in the price of such securities
above the strike
price. When a put option of which the Fund is
the writer is
exercised, the Fund will be required to
purchase the
underlying securities at the strike price,
which may be in
excess of the market value of such
securities.
The Fund may purchase and write options on
an exchange or
over-the-counter. Over-the-counter options
("OTC options")
differ from exchange-traded options in
several respects.
They are transacted directly with dealers and
not with a
clearing corporation, and therefore entail
the risk of non-
performance by the dealer. OTC options are
available for a
greater variety of securities and for a wider
range of
expiration dates and exercise prices than are
available for
exchange-traded options. Because OTC options
are not traded
on an exchange, pricing is done normally by
reference to
information from a market maker. It is the
position of the
SEC that OTC options are illiquid.
The Fund may purchase and write put and
call options on
indices and enter into related closing
transactions. Put and
call options on indices are similar to
options on securities
except that options on an index give the
holder the right to
receive, upon exercise of the option, an
amount of cash if
the closing level of the underlying index is
greater than
(or less than, in the case of puts) the
exercise price of
the option. This amount of cash is equal to
the difference
between the closing price of the index and
the exercise
price of the option, expressed in dollars
multiplied by a
specified number. Thus, unlike options on
individual
securities, all settlements are in cash, and
gain or loss
depends on price movements in the particular
market
represented by the index generally, rather
than the price
movements in individual securities. All
options written on
indices must be covered. When the Fund writes
an option on
an index, it will establish a segregated
account containing
cash or liquid assets with its custodian in
an amount at
least equal to
23
<PAGE>
the market value of the option and will
maintain the account
while the option is open or will otherwise
cover the
transaction.
Risks associated with options transactions
include: (1)
the success of a hedging strategy may depend
on an ability
to predict movements in the prices of
individual securities,
fluctuations in markets and movements in
interest rates; (2)
there may be an imperfect correlation between
the movement
in prices of options and the securities
underlying them; (3)
there may not be a liquid secondary market
for options; and
(4) while the Fund receives a premium when it
writes covered
call options, it may not participate fully in
a rise in the
market value of the underlying security. The
Fund may choose
to terminate an option position by entering
into a closing
transaction. The ability of the Fund to enter
into closing
transactions depends upon the existence of a
liquid
secondary market for such transactions.
REITs REITs pool investors' funds for investment
primarily in
income producing real estate or real estate
related loans or
interests. Generally, REITs can be classified
as Equity
REITs, Mortgage REITs and Hybrid REITs.
Equity REITs own
real estate itself, but primarily invest
their assets
directly in real estate and derive their
income mainly from
rent and capital gains from sale of property.
Mortgage REITs
make loans to provide capital to real estate
owners and
buyers, primarily invest their assets in real
estate
mortgages and derive their income from
interest payments.
Hybrid REITs combine the features of Equity
and Mortgage
REITs.
A REIT does not pay corporate income tax
if it meets
regulatory requirements relating to its
organization,
ownership, assets and income, and with a
regulatory
requirement that it distributes at least 95%
of its taxable
income for each taxable year.
Repurchase Repurchase agreements are agreements by which
the Fund
Agreements obtains a security and simultaneously commits
to return the
security to the seller at an agreed upon
price on an agreed
upon date within a number of days from the
date of purchase.
The Fund or its agent will have actual or
constructive
possession of the securities held as
collateral for the
repurchase agreement. Collateral must be
maintained at a
value at least equal to 100% of the purchase
price. The Fund
bears a risk of loss in the event the other
party defaults
on its obligations and the Fund is delayed or
prevented from
exercising its right to dispose of the
collateral securities
or if the Fund realizes a loss on the sale of
the collateral
securities. The Fund will enter into
repurchase agreements
only with financial institutions deemed to
present minimal
risk of bankruptcy during the term of the
agreement based on
established guidelines. Repurchase agreements
are considered
loans under the 1940 Act, as well as for
Federal and state
income tax purposes.
Restricted Restricted securities are securities that may
not be sold
Securities freely to the public absent registration
under the
Securities Act of 1933, as amended or an
exemption from
registration.
24
<PAGE>
Rights Rights are instruments giving shareholders
the right to
purchase shares of newly issued common stock
below the
public offering price before they are offered
to the public.
Securities In order to generate additional income, the
Fund may lend
Lending the securities in which it is invested
pursuant to
agreements requiring that the loan be
continuously secured
by collateral consisting of cash, or
securities of the U.S.
Government or its agencies equal at all times
to 100% of the
market value plus accrued interest of the
loaned securities.
Collateral is marked to market daily. The
Fund continues to
receive interest on the loaned securities
while
simultaneously earning interest on the
investment of cash
collateral in U.S. Government securities.
There may be risks
of delay in recovery of the securities or
even loss of
rights in the collateral should the borrower
of the
securities fail financially.
Securities of Foreign securities may be U.S. dollar
denominated equity
Foreign Issuers securities of foreign issuers, including
sponsored ADRs.
Standby Securities subject to standby commitments or
puts permit the
Commitments and holder thereof to sell the securities at a
fixed price prior
Puts to maturity. Securities subject to a standby
commitment or
put may be sold at any time at the current
market price.
However, unless the standby commitment or put
was an
integral part of the security as originally
issued, it may
not be marketable or assignable; therefore,
the standby
commitment or put would only have value to
the Fund owning
the security to which it relates. In certain
cases, a
premium may be paid for a standby commitment
or put, which
premium has the effect of reducing the yield
otherwise
payable on the underlying security.
Time Deposits Time deposits are non-negotiable receipts
issued by a bank
in exchange for the deposit of funds. Time
deposits with a
withdrawal penalty are considered to be
illiquid.
U.S. Government Obligations issued or guaranteed by agencies
of the U.S.
Agency Government, including, among others, the
Federal Farm Credit
Obligations Bank, the Federal Housing Administration and
the Small
Business Administration, and obligations
issued or
guaranteed by instrumentalities of the U.S.
Government,
including, among others, the Federal Home
Loan Mortgage
Corporation, the Federal Land Banks and the
U.S. Postal
Service. Some of these securities are
supported by the full
faith and credit of the U.S. Treasury (e.g.,
Ginnie Mae
("GNMA") (formerly known as Government
National Mortgage
Association) securities), others are
supported by the right
of the issuer to borrow from the Treasury (e.
g., Federal
Farm Credit Bank securities), while still
others are
supported only by the credit of the
instrumentality (e.g.,
Fannie Mae securities). Guarantees of
principal by agencies
or instrumentalities of the U.S. Government
may be a
guarantee of payment at the maturity of the
obligation so
that in the event of a default prior to
maturity there might
not be a market and thus no means of
realizing on the
obligation prior to maturity. Guarantees as
to the timely
payment of
25
<PAGE>
principal and interest do not extend to the
value or yield
of these securities nor to the value of the
Fund's shares.
U.S. Treasury U.S. Treasury obligations consist of bills,
notes and bonds
Obligations issued by the U.S. Treasury, as well as
separately traded
interest and principal component parts of
such obligations,
known as "Separately Traded Registered
Interest and
Principal Securities" ("STRIPS"), that are
transferable
through the Federal book-entry system.
Variable and Certain obligations may carry variable or
floating rates of
Floating Rate interest, and may involve conditional or
unconditional
Instruments demand features. Such instruments bear
interest at rates
which are not fixed, but which vary with
changes in
specified market rates or indices. The
interest rates on
these securities may be reset daily, weekly,
quarterly or
some other reset period, and may have a floor
or ceiling on
interest rate changes. There is a risk that
the current
interest rate on such obligations may not
accurately reflect
existing market interest rates.
Warrants Warrants are instruments giving holders the
right, but not
the obligation, to buy shares of a company at
a given price
usually higher than the market price at the
time of issuance
during a specified period.
When-Issued and When-issued or delayed delivery basis
transactions involve
Delayed the purchase of an instrument with payment
and delivery
Delivery taking place in the future. Delivery of and
payment for
Securities these securities may occur a month or more
after the date of
the purchase commitment. The Fund will
maintain with the
custodian a separate account with cash or
liquid assets in
an amount at least equal to these
commitments. The interest
rate realized on these securities is fixed as
of the
purchase date and no interest accrues to the
Fund before
settlement. These securities are subject to
market
fluctuations due to changes in market
interest rates, and it
is possible that the market value at the time
of settlement
could be higher or lower than the purchase
price if the
general level of interest rates has changed.
Although the
Fund generally purchases securities on a
when-issued or
forward commitment basis with the intention
of actually
acquiring securities for its portfolio, the
Fund may dispose
of a when-issued security or forward
commitment prior to
settlement if it deems appropriate. When
investing in when-
issued securities, the Fund will not accrue
income until
delivery of the securities and will invest in
such
securities only for purposes of actually
acquiring the
securities and not for the purpose of
leveraging.
26
ABN AMRO
Funds
Prospectus
June 30, 1998
INVESTMENT ADVISOR
ABN AMRO Asset Management (USA) Inc.
208 South LaSalle Street
4th Floor
Chicago, IL 60604-1003
ADMINISTRATOR
ABN AMRO Fund Services, Inc.
208 South LaSalle Street, 4th Floor
Chicago, IL 60604-1003
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
AUDITORS
Ernst & Young LLP
Two Commerce Square
2001 Market Street
Suite 4000
Philadelphia, PA 19103
For more information, call 1-800-443-4725.
www.abnamrofunds-usa.com
[ABN-AMRO LOGO ON GRAPHIC]
ABN AMRO
Funds
Prospectus
Common Share Class
June 30, 1998
Small Cap Value Fund NOT FDIC INSURE NO BANK GUARANTEE MAY LOSE VALUE
ABN AMRO(r) is a registered service mark of ABN AMRO Holding N.V.,
the ultimate parent of ABN AMRO Asset Management (USA) Inc., the
investment advisor to the ABN AMRO Funds. All rights reserved
ABN AMRO Funds are distributed by First Data Distributors, Inc.
which is not a bank affiliate.
ABN AMRO FUNDS
(FORMERLY, THE "REMBRANDT FUNDS")
SMALL CAP VALUE FUND
COMMON SHARES--A NO-LOAD CLASS
JUNE 30, 1998
---------------------------------------------------------------
-----------------
Please read this Prospectus carefully before investing, and
keep it on file for
future reference. It concisely sets forth information that can
help you decide
if the Fund's investment goals match your own.
A Statement of Additional Information ("SAI") dated June 30,
1998 has been
filed with the Securities and Exchange Commission (the "SEC")
and is available
upon request and without charge by calling 1-800-443-4725. The
SAI is
incorporated into this Prospectus by reference.
The ABN AMRO Funds (formerly, the "Rembrandt Funds") (the
"Trust") is an open-
end investment company (a mutual fund) that currently offers a
selection of
investment portfolios. This Prospectus describes the Common
Shares of the Small
Cap Value Fund (the "Fund").
COMMON SHARES OF THE FUND ARE OFFERED TO INDIVIDUALS AND
INSTITUTIONAL
INVESTORS DIRECTLY AND THROUGH WRAP PROGRAMS, RETIREMENT PLANS,
DISCOUNT
BROKERAGE PROGRAMS, AND VARIOUS BROKERAGE FIRMS.
---------------------------------------------------------------
-----------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE
FUND'S SHARES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED
OR ENDORSED BY, ANY BANK. THE FUND'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN
THE
SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
<PAGE>
...............................................................
.................
TABLE OF CONTENTS
<TABLE>
<S>
<C>
Fund
Highlights.....................................................
.......... 2
Portfolio
Expenses.......................................................
..... 3
Your Account and Doing Business with
Us....................................... 4
Investment Objective and
Policies............................................. 8
Certain Risk
Factors........................................................
.. 10
Investment
Limitations....................................................
.... 11
The
Advisor........................................................
........... 12
The Administrator and
Sub-Administrator....................................... 13
The Transfer
Agent..........................................................
.. 14
The
Distributor....................................................
........... 14
Performance....................................................
............... 14
Taxes..........................................................
............... 15
Additional Information About Doing Business with
Us........................... 16
General
Information....................................................
....... 17
Description of Permitted Investments and Risk
Factors......................... 19
</TABLE>
...............................................................
.................
HOW TO READ THIS PROSPECTUS
____________________________________________________
This Prospectus gives you information that you should know
about the Fund
before investing. Brief descriptions are also provided
throughout the
Prospectus to better explain certain key points.
FUND HIGHLIGHTS
_______________________________________________________________
_
The following summary provides basic information about the
Common Shares of the
Small Cap Value Fund. This summary is qualified in its entirety
by reference to
the more detailed information provided elsewhere in this
Prospectus and in the
SAI.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks a high level of total return
primarily through
capital appreciation. For more information,
see "Investment
Objective and Policies" and "Description of
Permitted
Investments and Risk Factors."
UNDERSTANDING RISK
Values of equity securities in which the Fund
invests may be
affected by the financial markets as well as
by developments
impacting specific issuers. The Fund invests
primarily in small
capitalization companies which are typically
subject to a
greater degree of change in earnings and
business prospects
than larger, more established companies. See
"Certain Risk
Factors" and "Description of Permitted
Investments and Risk
Factors" in this Prospectus, and the SAI.
MANAGEMENT PROFILE
ABN AMRO Asset Management (USA) Inc. (the
"Advisor," formerly,
LaSalle Street Capital Management, Ltd.), 208
South LaSalle
Street, Chicago, Illinois 60604-1003, serves
as the Advisor to
the Fund. ABN AMRO Fund Services, Inc. (the
"Administrator")
serves as the Administrator of the Fund. First
Data Investor
Services Group, Inc. serves as the
Sub-Administrator of the
Fund (the "Sub-Administrator") as well as the
transfer agent
("Transfer Agent") and dividend disbursing
agent for the Fund.
First Data Distributors, Inc., an affiliate of
the Sub-
Administrator (the "Distributor"), serves as
distributor of the
Fund's shares. See "The Advisor,"
"The Administrator and Sub-Administrator," "The Transfer
Agent" and "The Distributor."
YOUR ACCOUNT AND DOING BUSINESS WITH US
You may open a Common Shares account with a
minimum
investment of $2,000 and make additional
investments with as
little as $100. A Common Shares account may be
opened by
contacting the Transfer Agent or your
financial intermediary.
See "Your Account and Doing Business With Us."
DIVIDENDS Substantially all of the Fund's net investment
income
(exclusive of net capital gains) is
distributed in the form
of periodic dividends. Any net capital gain is
distributed at
least annually. Distributions are paid in
additional shares
unless you elect to take the payment in cash.
See "General
Information--Dividends."
INFORMATION/SERVICE CONTACTS
For more information, call 1-800-443-4725, or
contact your
financial intermediary.
2
<PAGE>
PORTFOLIO EXPENSES
_____________________________________________________________
The purpose of the following table is to help you understand
the various costs
and expenses that you, as a shareholder, will bear directly or
indirectly in
connection with an investment in COMMON SHARES of the Fund. The
Fund's Annual
operating expenses are based on estimates for the current
fiscal year.
SHAREHOLDER TRANSACTION EXPENSES(1)(As a percentage of offering
price)
<TABLE>
-----------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases None
Redemption Fee(/2/) None
-----------------------------------------------
</TABLE>
(1) Certain financial intermediaries may impose account fees or
other charges.
An IRA Account may be charged separate account fees by its
custodian.
(2) A charge, currently $10.00, is imposed on wires of
redemption proceeds.
ANNUAL OPERATING EXPENSES (As a percentage of average net
assets)
<TABLE>
--------------------------------------------------------
<S> <C>
Advisory Fees 0.80%
12b-1 Fees None
Other Expenses (after fee waivers)(/1/) 0.37%
--------------------------------------------------------
Total Operating Expenses (after fee waivers)(/2/) 1.17%
--------------------------------------------------------
</TABLE>
(1) The Fund's Administrator is waiving, on a voluntary basis,
a portion of its
fee from the Fund. The Administrator reserves the right to
change the
amount of or terminate its waiver at any time in its sole
discretion.
Absent such fee waiver, "Other Expenses" would be 1.15%.
"Other Expenses"
for the Fund are based on estimated amounts for the current
fiscal year.
(2) Absent waivers, "Total Operating Expenses" would be 1.95%.
EXAMPLE
<TABLE>
---------------------------------------------------------------
-------------
<CAPTION>
1
YEAR 3 YEARS
------ -------
<S>
<C> <C>
An investor would pay the following expenses on a $1,000 in-
vestment assuming (1) 5% annual return and (2) redemption at
the end of each time period:
$12 $37
---------------------------------------------------------------
-------------
</TABLE>
THE EXAMPLE IS BASED UPON ESTIMATED EXPENSES FOR THE CURRENT
FISCAL YEAR. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
purpose of this
table is to assist you in understanding the various costs and
expenses that may
be directly or indirectly borne by investors in Common Shares
of the Fund. If
you purchase shares through a financial intermediary, you may
be charged
separate fees by the financial intermediary. An IRA Account may
be charged
separate fees by its custodian. See "The Advisor," "The
Administrator and Sub-
Administrator" and "The Distributor."
---------------------------------------------------------------
-----------------
3
<PAGE>
...............................................................
................
HOW DO I OBTAIN AN APPLICATION?
Account Application forms can be obtained by calling
1-800-443-4725 or at
www.abnamrofunds-usa.com
YOUR ACCOUNT AND DOING BUSINESS WITH US
Common Shares of the Fund are sold on a continuous basis and
may be purchased
directly from the ABN AMRO Funds, P.O. Box 9765, Providence,
Rhode Island
02940-5047, either by mail, telephone or wire. Shares may also
be purchased
through a variety of channels, including wrap programs,
retirement plans,
discount brokerage programs and through various brokerage firms
including Jack
White & Company, Discover Brokerage Direct, and Quick & Reilly.
Shares of the
Fund are offered only to residents of states and other
jurisdictions in which
the shares are eligible for purchase. For more information
about the following
topics, see "Additional Information About Doing Business with
Us."
---------------------------------------------------------------
-----------------
HOW TO OPENING AN ACCOUNT BY MAIL: You may purchase
Common Shares of
PURCHASE the Fund by completing and signing an Account
Application and
COMMON SHARES mailing it, along with a check (or other
negotiable bank
FROM THE FUND instrument) payable in U.S. dollars to "ABN
AMRO Funds, Small
Cap Value Fund," to ABN AMRO Funds, P. O. Box
9765, Providence,
Rhode Island 02940-5047. Subsequent purchases
of shares may be
made at any time by mailing a check (or other
negotiable bank
instrument) to the Fund.
Third party checks, credit cards, credit
card checks and
cash will not be accepted. When purchases are
made by check,
redemptions may be delayed until the
investment being redeemed
has been in the account for up to 15 days. BY
TELEPHONE: If an
Account Application has been previously
received, you also may
purchase shares over the telephone by calling
1-800-443-4725.
Orders by telephone will not be executed until
payment has been
received. If a check received for purchase of
Common Shares
does not clear, the purchase will be canceled
and you could be
liable for any losses or fees incurred.
BY WIRE: If you have an account with a
commercial bank that
is a member of the Federal Reserve System, you
may purchase
shares of a Fund by requesting your bank to
transmit funds by
wire to Boston Safe Deposit and Trust Company;
ABA # 01-10-
01234; for Account Number 142727; Further
Credit: Small Cap
Value Fund. Your name and account number must
be specified in
the wire. Your bank may impose a fee for
investments by wire.
Shares may not be purchased by Federal Reserve
wire on
Federal holidays restricting wire transfers.
Initial Purchases: Before making an initial
investment by
wire, you must first telephone 1-800-443-4725
to be assigned
an account number. Your name, account number,
taxpayer
identification number or Social Security
number, and address
must be specified in the wire. In addition, an
Account
Application should be promptly forwarded to:
ABN AMRO Funds,
P.O. Box 9765, Providence, Rhode Island
02940-5047.
Subsequent Purchases: Additional investments
may be made at
any time through the wire procedures described
above, which
must include your name and account number.
4
<PAGE>
...............................................................
.................
BUY, EXCHANGE AND SELL REQUESTS ARE IN "GOOD ORDER" WHEN:
. The account number and Fund name are shown.
. The amount of the transaction is specified in dollars or
shares.
. Signatures of all owners appear exactly as they are
registered on the
account.
. Any required signature guarantees (if applicable) are
included.
. Other supporting legal documents (as necessary) are
present.
...............................................................
.................
When Can You You may purchase shares on days that the New
York Stock
Purchase Exchange is open for business (a "Business
Day").
Shares? The purchase price of Common Shares of the
Fund is the net
asset value next determined after your
purchase request is
effective. A purchase request in good order
for Common Shares
of the Fund will be effective as of the
Business Day received
by the Transfer Agent if the Transfer Agent
receives your
request before net asset value is determined.
However, your
purchase request may be canceled if the
Custodian does not
receive federal funds before net asset value
is determined on
the next Business Day, and you could be liable
for any fees or
expenses incurred by the Fund.
If you purchased shares through an
intermediary, please
contact your intermediary for more information
about its order
requirements. Your intermediary may have
earlier cutoff times
for share transactions.
Other Shareholders who desire to transfer the
registration of their
Information shares should contact the Transfer Agent by
calling 1-800-
Regarding 443-4725.
Purchases
Purchases of Common Shares may be made by
direct deposit or
Automated Clearing House ("ACH") transactions.
However, if you
purchased shares through a financial
intermediary, contact your
intermediary to find if direct deposit and ACH
transactions are
available.
No certificates representing shares will be
issued.
Automatic You may systematically purchase Common
Shares through
Investment deductions from a checking account, provided
the account is
Plan("AIP") maintained through a bank which is part of the
ACH system. Upon
notice, the amount you commit to the AIP may
be changed or
canceled at any time. The minimum
pre-authorized investment
amount is $50 per month. You may obtain an AIP
application form
by calling 1-800-443-4725. If you purchased
shares through a
financial intermediary, contact your
intermediary to find out
if the AIP is available to you. See "Doing
Business Through
Intermediaries."
Employees of ABN AMRO North America, Inc.
or its
affiliates who have arranged to purchase
shares through the
AIP may open an account with no minimum
initial purchase
amount.
5
<PAGE>
...............................................................
.................
HOW DOES AN EXCHANGE TAKE PLACE?
When making an exchange, you authorize the sale of your shares
of the Fund in
order to purchase the shares of another fund offered by the
Trust. In other
words, you are executing a sell order and then a buy order.
This sale of your
shares is a taxable event which could result in taxable gain
or loss.
...............................................................
.................
WHAT IS A SIGNATURE GUARANTEE?
A signature guarantee verifies the authenticity of your
signature and may be
obtained from any of the following: banks, brokers, dealers,
certain credit
unions, securities exchange or association, clearing agency or
savings
association. A notary public cannot provide a signature
guarantee.
...............................................................
.................
HOW TO
EXCHANGE
SHARES
When Can You Once payment for your shares has been received
and accepted
Exchange (i.e., an account has been established), you
may exchange
Shares? some or all of your Common Shares for Common
Shares of other
funds within the Trust. For an established
account, exchanges
will be made only after instructions in
writing or by telephone
are received by the Transfer Agent. You may
exchange your
shares on any Business Day.
The Trust reserves the right to change the
terms and
conditions of the exchange privilege discussed
herein, or to
terminate the exchange privilege, upon 60
days' notice.
Requesting an To request an exchange, you must provide
proper written
Exchange of instructions to the Transfer Agent. Telephone
exchanges
Shares will also be accepted if you elected this
option on your
Account Application.
If your exchange request in good order is
received by the
Transfer Agent prior to the time the net asset
value is
calculated for the Fund on any Business Day,
your exchange
usually will occur on that day. Exchanges are
made at the net
asset value next determined after your request
is received by
the Transfer Agent.
If you purchased shares through a financial
intermediary,
contact your intermediary for more information
about
exchanging shares.
HOW TO REDEEM You may redeem your shares on any Business
Day, by mail or by
(SELL) SHARES telephone. If your redemption request in good
order is
received by the Transfer Agent prior to the
time net asset
value is determined for the Fund on any
Business Day, your
redemption usually will occur on that day.
Redemptions are made at the net asset value
next determined
after your request is received by the Transfer
Agent.
By Mail A redemption request submitted by mail must be
received by the
Transfer Agent in order to constitute a valid
request for
redemption. The Transfer Agent may require
that the signature
on the written request be guaranteed by a bank
which is a
member of the Federal Deposit Insurance
Corporation, a trust
company, broker, dealer, credit union (if
authorized under
state law), securities exchange or
association, clearing agency
or savings association. This signature
guarantee requirement
will be waived if all of the following
conditions apply: (1)
the redemption is for $5,000 worth of shares
or less, (2) the
redemption check is
6
<PAGE>
payable to the shareholder(s) of record, and
(3) the
redemption check is mailed to the
shareholder(s) at the
address of record or to a commercial bank
account previously
designated either on the Account Application
or by written
instruction to the Transfer Agent.
By Telephone Shares may be redeemed by telephone if you
elect that option
on your Account Application.
Redemption Payment to shareholders for shares redeemed
generally will
Proceeds be made within seven days after receipt by
the Transfer
Agent of the valid redemption request.
However, at various
times, the Fund may be asked to redeem shares
for which it
has not yet received good payment. In such
circumstances,
your redemption proceeds may be delayed for
up to 15 days
from the date of purchase or until payment
has been
collected for the purchase of your shares.
The Fund intends to pay cash for all
shares redeemed, but
under conditions which make payment in cash
unwise, payment
may be made wholly or partly in portfolio
securities with a
market value equal to the redemption price.
In such cases,
you may incur brokerage costs and taxes in
converting such
securities to cash.
You may have redemption proceeds mailed to
your address
or mailed or wired to a commercial bank
account previously
designated on your Account Application. There
is no charge
for having redemption proceeds mailed to a
designated bank
account. Under most circumstances, payments
will be wired on
the next Business Day following receipt of a
valid
redemption request. Wire transfer requests
may be made by
calling the Transfer Agent at 1-800-443-4725,
who will
deduct a wire charge of $10.00 from the
amount of the
redemption. Redemption proceeds may not be
transmitted by
Federal Reserve wire on Federal holidays
restricting wire
transfers.
Communicating Neither the Trust nor the Transfer Agent will
be responsible
with the for any loss, liability, cost or expense for
acting upon
Transfer Agent wire instructions or upon telephone
instructions that it
reasonably believes to be genuine. The Trust
and the Transfer
Agent will each employ reasonable procedures
to confirm that
instructions communicated by telephone are
genuine, including
requiring a form of personal identification
prior to acting
upon instructions received by telephone and
recording
telephone instructions. If market conditions
are
extraordinarily active, or other
extraordinary circumstances
exist, and you experience difficulties
placing redemption
orders by telephone, you may wish to consider
placing the
order by other means. You may not close your
account by
telephone.
Other If you purchased shares through a financial
intermediary,
Information contact your intermediary for more
information about
Regarding redemptions.
Redemptions
See "Purchase and Redemption of Shares" in
the SAI for
examples of when your right to redeem your
shares may be
suspended.
Systematic The Fund offers a Systematic Withdrawal Plan
("SWP") for
Withdrawal Plan shareholders who wish to receive regular
distributions from
their account. Upon commencement of the SWP,
your
7
<PAGE>
...............................................................
.................
WHAT ARE INVESTMENT OBJECTIVES AND POLICIES?
The Fund's investment objective is a statement of what it
seeks to achieve. It
is important to make sure that the investment objective
matches your own
financial needs and circumstances. The investment policies
section spells out
the types of securities in which the Fund invests.
...............................................................
.................
account must have a current value of $5,000 or
more. You may
elect to receive automatic payments by check
or ACH of $50 or
more on a monthly, quarterly, semi-annual or
annual basis. A
SWP Application may be obtained by calling
1-800-443-4725.
If SWP withdrawals exceed income dividends,
your invested
principal in your account will be depleted.
Thus, depending
on the frequency and amounts of the withdrawal
payments
and/or any fluctuations in the net asset value
per share,
your original investment could be exhausted
entirely. To
participate in the SWP, you must have your
dividends
automatically reinvested. To change or cancel
the SWP upon
written notice to the Transfer Agent.
If you purchased shares through a financial
intermediary,
contact your intermediary to find out if the
SWP is available
to you. See "Doing Business Through
Intermediaries."
Doing Business Common Shares of the Fund may be purchased
through financial
Through institutions or broker-dealers, which have
established a
Intermediaries dealer agreement with the Distributor
("Intermediaries").
Each Intermediary may impose its own rules
regarding
investing in the Fund, including procedures
for purchases,
redemptions, and exchanges. Contact your
Intermediary for
information about the services available to
you and for
specific instructions on how to purchase,
exchange and redeem
shares. Certain Intermediaries may charge
account fees.
Information concerning any charges will be
provided to you by
your Intermediary. Some Intermediaries may be
required to
register as broker-dealers under state law.
The shares you purchase through your
Intermediary may be
held "of record" by that Intermediary. If you
want to
transfer the registration of shares
beneficially owned by
you, but held "of record" by your
Intermediary, you should
call your Intermediary to request this change.
INVESTMENT
OBJECTIVE AND
POLICIES
_______________________________________________________________
_______
The Small Cap Value Fund seeks a high level of
total return
primarily through capital appreciation.
Under normal circumstances, the Fund will
invest at least
65% of its total assets in common stocks of
corporations with
small capitalization levels that the Advisor
believes are
undervalued and present the opportunity to
increase shareholder
value. The Fund will invest in common stocks
that: (i) have
below average price to earnings, price to book
value, price to
sales, and price to cash flow ratios; and (ii)
are issued by
companies that the Advisor believes are
financially sound. The
Advisor emphasizes a diversified portfolio of
common stocks of
companies with market capitalization of less
than $1.5 billion.
8
<PAGE>
Any remaining Fund assets may be invested
in: (i)
warrants to purchase common stocks; (ii) debt
securities
convertible into common stocks; (iii)
preferred stock
convertible into common stocks; (iv) U.S.
dollar denominated
equity securities of foreign issuers
(including sponsored
American Depositary Receipts ("ADRs")) and
(v) interests in
real estate investment trusts ("REITs"). The
Fund invests in
equity securities of foreign issuers only if
they satisfy in
substance the criteria for investing in
smaller
capitalization stocks set forth above.
The Fund may invest up to 15% of its total
assets in
restricted securities. The Fund invests no
more than 15% of
its net assets in illiquid securities. The
Fund may invest
in variable and floating rate obligations and
may purchase
securities on a when-issued basis, and may
enter into
repurchase agreements. The Fund may enter
into futures
contracts and options on futures for bona
fide hedging
purposes only.
In addition, the Fund may engage in
securities lending.
There is no limit to the percentage of
portfolio
securities that the Fund may purchase subject
to a standby
commitment, but the amount paid directly or
indirectly for a
standby commitment held by the Fund may not
exceed 1/2 of 1%
of the value of the total assets of the Fund.
For temporary defensive purposes, when the
Advisor
determines that market conditions warrant,
the Fund may
invest up to 100% of its assets in money
market instruments,
and may hold U.S. dollars and foreign
currencies, including
multinational currency units.
RATINGS Nationally recognized statistical rating
organizations
("NRSROs") provide ratings for certain
instruments in which
the Fund may invest. For example, bonds rated
in the fourth
highest rating category (investment grade
bonds) have an
adequate capacity to pay principal and
interest, but may
have speculative characteristics as well. The
quality
standards of debt securities and other
obligations as
described for the Fund must be satisfied at
the time an
investment is made. In the event that an
investment held by
the Fund is assigned a lower rating or ceases
to be rated,
the Advisor will promptly reassess whether
such security
presents suitable credit risks and whether
the Fund should
continue to hold the security or obligation
in its
portfolio. If a portfolio security or
obligation no longer
presents suitable credit risks or is in
default, the Fund
will dispose of the security or obligation as
soon as
reasonably practicable unless the Trustees of
the Trust
determine that to do so is not in the best
interest of the
Fund. The Fund may invest in unrated
securities that the
Advisor determines to be of comparable
quality at the time
of purchase.
9
<PAGE>
CERTAIN RISK FACTORS
___________________________________________________________
The investment policies of the Fund entail
certain risks and
considerations of which an investor should be
aware.
Equity Investments in equity securities are
generally subject to
Securities market risks that may cause their prices to
fluctuate over
time. The values of convertible equity
securities are also
affected by prevailing interest rates, the
credit quality of
the issuer and any call provision.
Fluctuations in the value
of equity securities in which the Fund
invests will cause
the net asset value of the Fund to fluctuate.
Securities of Investments in small capitalization companies
involve
Small greater risk than is customarily associated
with larger,
Capitalization more established companies due to the greater
business risks
Companies of small size, limited markets and financial
resources,
narrow product lines and frequent lack of
depth of
management. The securities of small-sized
companies are
often traded over-the-counter, and may not be
traded in
volumes typical of securities traded on a
national
securities exchange. Consequently, the
securities of smaller
companies may have limited market stability
and may be
subject to more abrupt or erratic market
movements than
securities of larger, more established
companies of the
market averages in general. Because the Fund
invests
primarily in common stocks of smaller
capitalization
companies, the Fund's shares may fluctuate
significantly in
value, and thus may be more suitable for
long-term investors
who can bear the risk of short-term
fluctuations.
Convertible The market value of fixed income investments
such as
Debt Securities convertible debt securities will change in
response to
interest rate changes and other factors.
During periods of
falling interest rates, the values of
convertible debt
securities generally rise. Conversely, during
periods of
rising interest rates, the values of such
securities
generally decline. Moreover, while securities
with longer
maturities tend to produce higher yields, the
prices of
securities with longer maturities are also
subject to
greater market fluctuations as a result of
changes in
interest rates. Changes by NRSROs in the
rating of any fixed
income security and in the ability of an
issuer to make
payments of interest and principal also
affect the value of
these investments. There is a risk that the
current interest
rate on floating and variable rate
instruments may not
accurately reflect existing market interest
rates. Fixed
income securities rated BBB by Standard &
Poor's Ratings
Service, a division of McGraw Hill Companies,
Inc., or Baa
by Moody's Investor Services, Inc. (the
lowest ratings of
investment grade bonds) are deemed by these
rating services
to have speculative characteristics.
Foreign Securities of foreign issuers are subject to
certain risks
Securities not typically associated with domestic
securities,
including, among other risks, limited
publicly available
information regarding foreign issuers, lack
of uniformity in
accounting, auditing and financial standards
and
requirements, greater securities market
volatility, less
liquidity of securities, less government
supervision and
regulations of securities markets,
withholding taxes and
10
<PAGE>
changes in taxes on income on securities, and
possible
seizure, nationalization or expropriation of
the foreign
issuer or foreign deposits.
REITs REITs may be affected by changes in the value
of their
underlying properties and by defaults by
borrowers or
tenants. Mortgage REITs may be affected by
the quality of
the credit extended. Furthermore, REITs are
dependent on
specialized management skills. Some REITs may
have limited
diversification and may be subject to risks
inherent in
investments in a limited number of
properties, in a narrow
geographic area, or in a single property
type. REITs depend
generally on their ability to generate cash
flow to make
distributions to shareholder or unitholders,
and may be
subject to defaults by borrowers and to
self-liquidations.
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 of 1986, as
amended (the
"Code"), or its failure to maintain exemption
from
registration under the Investment Company Act
of 1940, as
amended (the "1940 Act"). Rising interest
rates may cause
the value of the debt securities in which the
Fund may
invest to decline. Conversely, falling
interest rates may
cause their value to rise. Changes in the
value of portfolio
securities does not necessarily affect cash
income derived
from these securities but will effect the
Fund's net asset
value.
INVESTMENT LIMITATIONS
_________________________________________________________
The Fund may not:
1. Purchase securities of any issuer (except
securities
issued or guaranteed by the United States,
its agencies
or instrumentalities and repurchase
agreements involving
such securities) if as a result more than
5% of the total
assets of the Fund would be invested in
the securities of
such issuer or more than 10% of the
outstanding voting
securities of such issuer would be owned
by the Fund.
This restriction applies to 75% of the
Fund's assets.
2. Purchase securities of any issuer (other
than securities
issued or guaranteed by the U.S.
Government or any of its
agencies or instrumentalities; repurchase
agreements
involving such securities) if, as a
result, more than 25%
of the total assets of the Fund are
invested in the
securities of one or more issuers whose
principal
business activities are in the same
industry.
3. Make loans, except as permitted by the
1940 Act, and the
rules and regulations thereunder.
The foregoing percentages apply at the
time of purchase of
a security. Additional investment limitations
are set forth in
the SAI.
11
<PAGE>
...............................................................
.................
INVESTMENT ADVISOR
An investment advisor manages the investment activities and is
responsible for
the performance of the Fund. The advisor conducts investment
research, executes
investment strategies based on an assessment of economic and
market conditions,
and determines which securities to buy, hold or sell.
...............................................................
.................
THE ADVISOR
_______________________________________________________________
_____
The Trust and the Advisor, 208 South LaSalle
Street, Chicago,
Illinois 60604-1003, have entered into an
advisory agreement
(the "Advisory Agreement"). Under the Advisory
Agreement, the
Advisor makes the investment decisions for the
assets of the
Fund and continuously reviews, supervises and
administers the
Fund's investment program, subject to the
supervision of, and
policies established by, the Trustees of the
Trust.
Under the Advisory Agreement, the Advisor
is entitled to a
fee, which is calculated daily and paid
monthly, at an annual
rate of 0.80% of the average daily net assets
of the Fund. The
Advisor may voluntarily waive a portion of its
fee in order to
limit the total operating expenses of the
Fund. The Advisor
reserves the right, in its sole discretion, to
terminate this
voluntary fee waiver at any time. The Fund may
execute
brokerage or other agency transactions through
an affiliate of
the Advisor for which the affiliate may
receive compensation.
ABN AMRO Asset Management (USA) Inc. was
organized in March,
1991 under the laws of the State of Delaware.
The Advisor
manages assets for corporations, unions,
governments, insurance
companies and charitable organizations. As of
December 31,
1997, total assets under management by the
Advisor were
approximately $5.8 billion.
The Advisor is a direct, wholly-owned
subsidiary of ABN AMRO
Capital Markets Holding, Inc., which is an
indirect, wholly-
owned subsidiary of ABN AMRO Holding N.V., a
Netherlands
company.
Edwin Bruere, Senior Vice President and
Director of the
Equity Group of the Advisor, serves as lead
portfolio manager
of the Fund. As lead portfolio manager, he
makes investment
decisions on behalf of the Fund and formulates
the Fund's
investment strategy. Previously, he has served
as a portfolio
manager and a member of various equity
committees. Mr. Bruere
has been involved in investment management
since 1988 and has
been associated with the Advisor and an
affiliate of the
Advisor since January, 1997.
Jac A. Cerney, Senior Vice President of the
Advisor,
serves as co-portfolio manager of the Fund. As
co-portfolio
manager, he is primarily responsible for
implementing the
Fund's investment strategy under Mr. Bruere's
direction. Mr.
Cerney has been associated with the Advisor
and its
predecessor since April, 1990 as a portfolio
manager.
Prior The performance information on the following
page relates to
Performance of an account managed by Mr. Edwin Bruere, who
currently serves
a Managed as lead portfolio manager of the Fund. The
account has an
Account investment objective, policies, and
restrictions
substantially similar to that of the Fund. Mr.
Bruere has
also managed other accounts with a similar
investment
objective,
12
<PAGE>
policies and restrictions as that of the
Fund; however, the
performance information below reflects the
account with the
longest performance history.
This account was not subject to certain
investment
limitations, requirements, and other
restrictions imposed by
the 1940 Act and the Code. If these had been
imposed, the
account's performance would have been
adversely affected.
Furthermore, the account belongs to an
affiliate of the
Advisor and was funded with the affiliate's
own money. As a
proprietary account, it did not incur any
expenses, such as
the advisory, administrative, and other fees
to which the
Fund is subject. If the account had incurred
these expenses,
its performance would have been lower.
You should not rely on the following
performance
information as an indication of future
performance of the
Fund. The performance reflected below does
not represent the
historical performance of the Fund. The
performance
information relates to a period of time
before the effective
date of the Fund's registration with the SEC
as an open-end
investment company.
The performance information below
represents equity-only
returns and assumes reinvestment of net
income and capital
gain distributions. The Fund normally holds a
portion of its
assets in cash to meet redemptions and make
purchases.
Unlike the Fund, the account did not hold any
cash during
the period shown. If it had, the account's
performance would
have been lower. Since the period shown
occurred during a
rising market, the absence of cash in the
account results in
even higher returns. The performance
information is
calculated using the same methods for
valuation of portfolio
securities used by the Fund.
<TABLE>
<CAPTION>
PERIOD ENDED RUSSELL
2000
MAY 31, 1998 ACCOUNT VALUE
INDEX
--------------------------------- -------
------------
<S> <C> <C>
Since Inception (January 1, 1997) 44.06%
25.79%
12 Month 48.10%
26.66%
YEAR ENDED DECEMBER 31, 1997 52.67%
31.78%
</TABLE>
The Russell 2000 Value Index shows total
return assuming
the reinvestment of dividends but does not
reflect the
deduction of fees, expenses and taxes.
Source: Frank Russell
Company. The Russell 2000 Value Index is
comprised of
securities in the Russell 2000 Index with
less than average
growth orientation. Companies in this Index
generally have
low price-to-book and price-earnings ratios.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
________________________________________
ABN AMRO Fund Services, Inc. (the
"Administrator") serves as
the Administrator for the Trust. The
Administrator is an
affiliate of the Advisor and both are under
the common
control of ABN AMRO Holding N.V., a
Netherlands company. As
Administrator, it provides the Trust with
administrative
services, including oversight and monitoring
of the sub-
13
<PAGE>
administrator, transfer agent, distributor
and custodian.
The Administrator is entitled to a fee, which
is calculated
daily and paid monthly, at an annual rate of
0.15% of the
average daily net assets of the Fund.
First Data Investor Services Group, Inc.
serves as the
Sub-Administrator for the Trust. As
Sub-Administrator it
provides the Trust with sub-administrative
services,
including fund accounting, regulatory
reporting, necessary
office space, equipment, personnel and
facilities.
Compensation for these services is paid under
a sub-
administration and fund accounting agreement
with the
Administrator.
THE TRANSFER AGENT
First Data Investor Services Group, Inc.,
4400 Computer
Drive, Westborough, Massachusetts 01581,
serves as the
Transfer Agent and dividend disbursing agent
for the Trust.
Compensation for these services is paid under
a transfer
agency agreement with the Trust.
THE DISTRIBUTOR
_______________________________________________________________
First Data Distributors, Inc., 4400 Computer
Drive,
Westborough, Massachusetts 01581 and the
Trust are parties
to a distribution agreement (the
"Distribution Agreement").
It is possible that a financial
institution may offer
different classes of shares of the Fund to
its customers and
the shares of such customers may be assessed
for different
distribution expenses with respect to
different classes of
shares.
The Trust also offers Investor Shares,
which are sold
with a shareholder servicing fee and a 12b-1
fee, primarily
to institutions and individuals through
financial
intermediaries which have established a
dealer agreement
with the Distributor. For more information
about Investor
Shares, you may contact your Intermediary or
call 1-800-443-
4725.
PERFORMANCE
_______________________________________________________________
_____
From time to time, the Fund may advertise
yield and total
return. These figures will be based on
historical earnings
and are not intended to indicate future
performance. The
yield of the Fund refers to the annualized
income generated
by an investment in the Fund over a specified
30-day period.
The yield is calculated by assuming that the
same amount of
income generated by the investment during
that period is
generated in each 30-day period over one
year, and is shown
as a percentage of the investment.
The total return of the Fund refers to the
average
compounded rate of return on a hypothetical
investment for
designated time periods (including, but not
limited to, the
period from which the Fund commenced
operations through the
specified date), assuming that the entire
investment is
redeemed at the end of each period and
assuming the
reinvestment of all dividend and capital gain
distributions.
The total return of the Fund may also be
quoted as a dollar
amount, on an aggregate basis, or an actual
basis.
14
<PAGE>
...............................................................
.................
TAXES
You must pay taxes on your Fund earnings, whether you take
your payments in
cash or additional shares.
...............................................................
.................
The Fund may periodically compare its
performance to that
of other mutual funds tracked by mutual fund
rating services
(such as Lipper Analytical Securities Corp.)
or by financial
and business publications and periodicals,
broad groups of
comparable mutual funds or unmanaged indices
which may assume
investment of dividends but generally do not
reflect
deductions for administrative and management
costs. The Fund
may quote services such as Morningstar, Inc.,
a service that
ranks mutual funds on the basis of
risk-adjusted performance,
and Ibbotson Associates of Chicago, Illinois,
which provides
historical returns of the capital markets in
the U.S. The
Fund may use long-term performance of these
capital markets
to demonstrate general long-term risk versus
reward scenarios
and could include the value of a hypothetical
investment in
any of the capital markets. The Fund may also
quote financial
and business publications and periodicals as
they relate to
fund management, investment philosophy, and
investment
techniques.
The Fund may quote various measures of
volatility and
benchmark correlation in advertising, and may
compare these
measures to those of other funds. Measures of
volatility
attempt to compare historical share price
fluctuations or
total returns to a benchmark while measures of
benchmark
correlation indicate the validity of a
comparative benchmark.
Measures of volatility and correlation are
calculated using
averages of historical data and cannot be
precisely
calculated.
The portfolio turnover rate for the Fund is
expected not
to exceed 100%. A high turnover rate will
result in higher
transaction costs and may result in additional
tax
consequences for shareholders. The performance
of Common
Shares of the Fund normally will be higher
than that of
Investor Shares because of the additional
distribution and
shareholder services expenses charged to
Investor Shares.
TAXES
_______________________________________________________________
___________
The following summary of Federal income tax
consequences is
based on current tax laws and regulations,
which may be
changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed
explanation of
the Federal, state, or local income tax
treatment of the Fund
or its shareholders. In addition, state and
local tax
consequences on an investment in the Fund may
differ from the
Federal income tax consequences described
below. Accordingly,
you are urged to consult your tax advisor
regarding specific
questions as to federal, state, and local
income taxes.
Additional information concerning taxes is set
forth in the
SAI.
Tax Status of The Fund is treated as a separate entity for
Federal income tax
the Fund purposes and is not combined with the Trust's
other funds. The
Fund intends to qualify for the special tax
treatment afforded
regulated investment companies as defined
under Subchapter M of
the Code. As long as the Fund qualifies for
this special tax
treatment, it will be relieved of Federal
15
<PAGE>
...............................................................
.................
DISTRIBUTIONS
The Fund distributes income dividends and capital gains.
Income dividends
represent the earnings from the Fund's investments; capital
gains are generally
produced when investments are sold for more than the original
purchase price.
...............................................................
.................
income tax on that part of its net investment
income and net
capital gains (the excess of net long-term
capital gain over
net short-term capital loss) which is
distributed to
shareholders.
Tax Status of The Fund will distribute substantially all of
its net
Distributions investment income (including, for this
purpose, net short-term
capital gain) to shareholders. Distributions
from net
investment income will be taxable to you as
ordinary income
whether received in cash or in additional
shares. Any net
capital gains will be distributed annually as
capital gains
distributions and will be treated as gain from
the sale or
exchange of a capital asset held for more than
one year,
regardless of how long you have held shares
and regardless of
whether the distributions are received in cash
or in additional
shares. The Fund will notify you annually of
the Federal income
tax character of all distributions.
Dividends declared by the Fund in October,
November or
December of any year and payable to
shareholders of record on
a date in that month will be deemed to have
been paid by the
Fund and received by shareholders on December
31 of that
year, if paid by the Fund at any time during
the following
January.
The Fund intends to make sufficient capital
gains
distributions prior to the end of each
calendar year to avoid
liability for the Federal excise tax
applicable to regulated
investment companies.
Investment income received by the Fund from
sources within
foreign countries may be subject to foreign
income taxes
withheld at the source.
As a general rule, income dividends (not
capital gain
distributions) paid by the Fund, to the extent
the dividend
is derived from dividends received from
domestic
corporations, may, if certain conditions are
met, qualify for
the dividends received deduction for corporate
shareholders.
Distributions of net capital gains from the
Fund do not
qualify for the dividends received deduction.
Each exchange or redemption (sale) of Fund
shares is a
taxable event to you.
ADDITIONAL
INFORMATION
ABOUT DOING
BUSINESS WITH
US
_______________________________________________________________
______________
Minimum The minimum initial investment is $2,000,
which may be waived
Investment at the Distributor's discretion. All
subsequent investments
must be at least $100. Employees of ABN AMRO
North America,
Inc. or its affiliates who have arranged to
purchase shares
through the AIP may open an account with no
minimum initial
purchase amount. The Fund is intended to
16
<PAGE>
be a long-term investment vehicle and is not
designed to
provide investors with a means of speculating
on short-term
movements. Consequently, the Trust reserves
the right to
reject a purchase order for Common Shares
when the Trust or
the Transfer Agent determines that it is not
in the best
interest of the Trust or its shareholders to
accept such
order. Your Intermediary may impose its own
minimum initial
and subsequent investment requirements. If
you purchased
shares through an Intermediary, you should
contact your
Intermediary for information about any such
requirements.
Maintaining a Due to the relatively high cost of handling
small
Minimum Account investments, the Fund reserves the right to
redeem your
Balance shares, at net asset value if, because of
redemptions of
shares by or on your behalf, your account in
the Fund has a
value of less than $2,000, the minimum
initial purchase
amount. Accordingly, if you purchase shares
of the Fund in
only the minimum investment amount you may be
subject to
such involuntary redemption if you thereafter
redeem any of
these shares. Before the Fund exercises its
right to redeem
such shares and send the proceeds to you, you
will be given
notice that the value of the shares in your
account is less
than the minimum amount and will be allowed
60 days to make
an additional investment in the Fund in an
amount that will
increase the value of the account to at least
$2,000. See
"Purchase and Redemption of Shares" in the
SAI for examples
of when your right of redemption may be
suspended.
Your Intermediary also may have
requirements for
maintaining a minimum account balance. If you
purchased shares
through an Intermediary you should contact
your Intermediary
for information about any such requirements.
Net Asset Value The net asset value of the fund is determined
as of the
close of regular trading on the NYSE
(normally 4:00 p.m.
Eastern time) each Business Day.
How the Net The net asset value per share of the Fund is
determined by
Asset Value dividing the total market value of the Fund's
investments
is Determined and other assets, less any liabilities, by
the total number
of outstanding shares of the Fund. The Fund
values its
portfolio securities at the last quoted sales
price for such
securities, or, if there is no such reported
sales price on
the valuation date, at the most recent quoted
bid price. The
Fund may use pricing services to provide
market quotations.
A pricing service may use a matrix system of
valuation to
value fixed income securities which considers
factors such
as securities prices, call features, ratings,
and
developments related to a specific security.
GENERAL
INFORMATION____________________________________________________
_________
The Trust The Trust was organized as a Massachusetts
business trust
under a Declaration of Trust dated September
17, 1992, and
amended September 28, 1992, October 20, 1992
and April 27,
1998. The Declaration of Trust permits the
Trust to offer
shares of separate funds and different
classes of each fund.
The Trust consists of the following funds:
Money Market
Fund, Government Money Market Fund, Treasury
Money Market
Fund, Tax-Exempt Money Market Fund, Fixed
Income Fund,
Intermediate Government Fixed Income Fund,
17
<PAGE>
Tax-Exempt Fixed Income Fund, International
Fixed Income
Fund, Limited Volatility Fixed Income Fund,
Latin America
Equity Fund, Real Estate Fund, Value Fund,
Growth Fund,
Small Cap Growth Fund (formerly, the "Small
Cap Fund"),
International Equity Fund, TransEurope Fund,
Asian Tigers
Fund, Balanced Fund and Small Cap Value Fund.
All
consideration received by the Trust for
shares of any fund
and all assets of such fund belong to that
fund, and would
be subject to liabilities related thereto.
The Trust
reserves the right to create and issue shares
of additional
funds. As of December 31, 1997, the Limited
Volatility Fixed
Income Fund, TransEurope Fund and Small Cap
Value Fund had
not commenced operations. Generally, each
Fund offers two
classes of shares: Common Shares and Investor
Shares. Each
class has its own expense structure and other
characteristics. Investor Shares of the Fund
are offered
through a separate prospectus.
The Trust pays its expenses, including
fees of its
service providers, audit and legal expenses,
expenses of
preparing prospectuses, proxy solicitation
material and
reports to shareholders, costs of custodial
services and
registering the shares under Federal and
state securities
laws, pricing, insurance expenses, litigation
and other
extraordinary expenses, brokerage costs,
interest charges,
taxes and organization expenses.
Trustees of the The management and affairs of the Trust are
supervised by
Trust the Trustees under the laws governing
business trusts in the
Commonwealth of Massachusetts. The Trustees
have approved
contracts under which, as described above,
certain companies
provide essential management, administrative
and other
services to the Trust.
Voting Rights Each share held entitles the shareholder of
record to one
vote. Shareholders of the Fund or class will
vote separately
on matters relating solely to the Fund or
class. As a
Massachusetts business trust, the Trust is
not required to
hold annual shareholder meetings but such
meetings will be
held from time to time to seek approval for
certain changes
in the operation of the Trust and for the
election of
Trustees under certain circumstances. In
addition, a Trustee
may be removed by the remaining Trustees or
by shareholders
at a special meeting called upon written
request of
shareholders owning at least 10% of the
outstanding shares
of the Trust. In the event that such a
meeting is requested,
the Trust will provide appropriate assistance
and
information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial
information semi-
annually and audited financial statements
annually. The
Trust furnishes periodic reports to
shareholders of record,
and, as necessary, proxy statements for
shareholder
meetings.
Shareholder Shareholder inquiries should be directed to
the Fund, P.O.
Inquiries Box 9765, Providence, Rhode Island
02940-5047, or 1-800-443-
4725.
Dividends Substantially all of the net investment
income (not
including net capital gains) of the Fund is
distributed on a
monthly basis. Shareholders who own shares at
the close of
business on the record date will be entitled
to receive the
distribution. Currently, net capital gains of
the Fund, if
any, will be distributed at least annually.
18
<PAGE>
Shareholders automatically receive all
dividends and
distributions in additional shares at the net
asset value
next determined following the record date,
unless the
shareholder has elected to take such payment
in cash.
Shareholders may change their election by
providing written
notice to the Transfer Agent at least 15 days
prior to the
distribution.
Dividends and distributions of the Fund
are paid on a
per-share basis. The value of each share will
be reduced by
the amount of the payment. If shares are
purchased shortly
before the record date for a dividend or
distribution, a
shareholder will pay the full price for the
shares and
receive some portion of the price back as a
taxable dividend
or distribution.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel
to the Trust.
Auditors Ernst & Young LLP serves as independent
auditors of the
Trust.
Custodian The Chase Manhattan Bank, 270 Park Avenue,
New York, New
York 10017 acts as global custodian (the
"Custodian") of the
Trust. The Custodian holds cash securities
and other assets
of the Trust as required by the 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS AND
RISK FACTORS
_______________________________________________________________
___
The following is a description of certain of
the permitted
investments and risk factors for the Fund:
American The Fund may invest in depositary receipts
and other similar
Depositary instruments, such as ADRs, CDRs, EDRs and
GDRs. ADRs are
Receipts securities, typically issued by a U.S.
financial institution
("ADRs"), (a "depositary"), that evidence ownership
interests in a
Continental security or a pool of securities issued by a
foreign issuer
Depositary and deposited with the depositary. EDRs,
which are sometimes
Receipts referred to as CDRs, are securities,
typically issued by a
("CDRs"), non-U.S. financial institution, that evidence
ownership
European interests in a security or a pool of
securities issued by
Depositary either a U.S. or foreign issuer. GDRs are
issued globally
Receipts and evidence a similar ownership arrangement.
Generally,
("EDRs") and ADRs are designed for trading in the U.S.
securities market.
Global EDRs are designed for trading in European
Securities Markets
Depositary and GDRs are designed for trading in non-U.S.
securities
Receipts markets. Generally, depositary receipts may
be available
("GDRs") through "sponsored" or "unsponsored"
facilities. A sponsored
facility is established jointly by the issuer
of the
security underlying the receipt and a
depositary, whereas an
unsponsored facility may be established by a
depositary
without participation by the issuer of the
underlying
security. Holders of unsponsored depositary
receipts
generally bear all the costs of the
unsponsored facility.
The depositary of an unsponsored facility
frequently is
under no obligation to distribute shareholder
communications
received from the issuer of the deposited
security
19
<PAGE>
or to pass through to the holders of the
receipts voting
rights with respect to the deposited
securities.
Bankers' Bankers' acceptances are bills of exchange or
time drafts
Acceptances drawn on and accepted by a commercial bank.
Bankers'
acceptances are used by corporations to
finance the shipment
and storage of goods. Maturities are
generally six months or
less.
Certificates of Certificates of deposit are interest bearing
instruments
Deposit with a specific maturity. Certificates of
deposit are issued
by banks and savings and loan institutions in
exchange for
the deposit of funds and normally can be
traded in the
secondary market prior to maturity.
Certificates of deposit
with penalties for early withdrawal are
considered to be
illiquid.
Commercial Commercial paper is a term used to describe
unsecured short-
Paper term promissory notes issued by banks,
municipalities,
corporations and other entities. Maturities
on these issues
vary from a few to 270 days.
Convertible Convertible securities are corporate
securities that are
Securities exchangeable for a set number of shares of
another security
at a prestated price. Convertible securities
have
characteristics similar to both fixed income
and equity
securities. Because of the conversion
feature, the market
value of convertible securities tends to move
together with
the market value of the underlying stock. The
value of
convertible securities is also affected by
prevailing
interest rates, the credit quality of the
issuer, and any
call provisions.
Equity Equity securities include common stocks,
common stock
Securities equivalents, preferred stocks, securities
convertible into
common stocks and securities having common
stock
characteristics, such as rights and warrants
to purchase
common stocks, sponsored and unsponsored
depositary receipts
(e.g., ADRs), REITs, and equity securities of
closed-end
investment companies.
Fixed Income Fixed income securities are debt obligations
issued by
Securities corporations, municipalities and other
borrowers.
Futures Futures contracts provide for the future sale
by one party
Contracts and and purchase by another party of a specified
amount of a
Options on specific security at a specified future time
and at a
Futures specified price. An option on a futures
contract gives the
Contracts purchaser the right, in exchange for a
premium, to assume a
position in a futures contract at a specified
exercise price
during the term of the option. The Fund may
use futures
contracts and related options for bona fide
hedging
purposes, to offset changes in the value of
securities held
or expected to be acquired or be disposed of,
to minimize
fluctuations in foreign currencies, or to
gain exposure to a
particular market or instrument. The Fund
will minimize the
risk that it will be unable to close out a
futures contract
by only entering into futures contracts which
are traded on
national futures exchanges. In addition, the
Fund will only
sell covered futures contracts and options on
futures
contracts.
Stock and bond index futures are futures
contracts for
various stock and bond indices that are
traded on registered
securities exchanges. Stock and bond index
futures contracts
obligate the seller to deliver (and the
purchaser to take)
an amount of cash equal
20
<PAGE>
to a specific dollar amount times the
difference between the
value of a specific stock or bond index at
the close of the
last trading day of the contract and the
price at which the
agreement is made.
Eurodollar futures are U.S.
dollar-denominated futures
contracts or options thereon which are linked
to the London
Interbank Offered Rate ("LIBOR"), although
foreign currency
denominated instruments are available from
time to time.
Eurodollar futures contracts enable
purchasers to obtain a
fixed rate for the lending of the funds and
sellers to
obtain a fixed rate for borrowings.
No price is paid upon entering into
futures contracts.
Instead, the Fund is required to deposit an
amount of cash
or liquid assets known as "initial margin."
Subsequent
payments, called "variation margin," to and
from the broker,
are made on a daily basis as the value of the
futures
position varies (a process known as "marking
to market").
The margin is in the nature of a performance
bond or good-
faith deposit on a futures contract.
In order to avoid leveraging and related
risks, when the
Fund purchases futures contracts, it will
collateralize its
position by depositing an amount of cash or
liquid assets,
equal to the market value of the futures
positions held,
less margin deposits, in a segregated account
with the
Trust's custodian. Collateral equal to the
current market
value of the futures position will be marked
to market on a
daily basis.
There are risks associated with these
activities,
including the following: (1) the success of a
hedging
strategy may depend on an ability to predict
movements in
the prices of individual securities,
fluctuations in markets
and movements in interest rates; (2) there
may be an
imperfect or no correlation between the
changes in market
value of the securities held by the Fund and
the prices of
futures and options on futures; (3) there may
not be a
liquid secondary market for a futures
contract or option;
(4) trading restrictions or limitations may
be imposed by an
exchange; (5) government regulations may
restrict trading in
futures contracts and futures options; and
(6) the loss from
investing in futures transactions is
potentially unlimited.
Illiquid Illiquid securities are securities that
cannot be disposed
Securities of within 7 days at approximately the price
at which they
are being carried on the Fund's books. An
illiquid security
includes a demand instrument with a demand
notice period
exceeding 7 days, if there is no secondary
market for such
security, and repurchase agreements with
durations (or
maturities) over 7 days in length.
Investment Investments in shares of open-end and
closed-end investment
Company Shares companies may result in the layering of
expenses. Since such
investment companies pay management fees and
other expenses,
shareholders of the Fund would indirectly pay
both Fund
expenses and the expenses of underlying
companies with
respect to Fund assets invested therein.
Money Market Money Market Instruments include certificates
of deposit,
Instruments commercial paper, bankers' acceptances,
Treasury bills, time
deposits, repurchase agreements and shares of
money market
funds.
21
<PAGE>
Options A put option gives the purchaser the right to
sell, and the
writer the obligation to buy, the underlying
security at any
time during the option period. A call option
gives the
purchaser the right to buy, and the writer
the obligation to
sell, the underlying security at any time
during the option
period. The premium paid to the writer is the
consideration
for undertaking the obligations under the
option contract.
The Fund may purchase put and call options
to protect
against a decline in the market value of the
securities in
its portfolio or to protect against an
increase in the cost
of securities that the Fund may seek to
purchase in the
future. In purchasing put and call options
the Fund pays a
premium therefor. If price movements in the
underlying
securities are such that exercise of the
options would not
be profitable for the Fund, loss of the
premium paid may be
offset by an increase in the value of the
Fund's securities
or by a decrease in the cost of acquisition
of securities by
the Fund.
The Fund may write covered put and call
options as a
means of increasing the yield on its
portfolio and as a
means of providing limited protection against
decreases in
its market value. When the Fund sells an
option, if the
underlying securities do not increase or
decrease to a price
level that would make the exercise of the
option profitable
to the holder thereof, the option generally
will expire
without being exercised and the Fund will
realize as profit
the premium received for such option. When a
call option of
which the Fund is the writer is exercised,
the Fund will be
required to sell the underlying securities to
the option
holder at the strike price, and will not
participate in any
increase in the price of such securities
above the strike
price. When a put option of which the Fund is
the writer is
exercised, the Fund will be required to
purchase the
underlying securities at the strike price,
which may be in
excess of the market value of such
securities.
The Fund may purchase and write options on
an exchange or
over-the-counter. Over-the-counter options
("OTC options")
differ from exchange-traded options in
several respects.
They are transacted directly with dealers and
not with a
clearing corporation, and therefore entail
the risk of non-
performance by the dealer. OTC options are
available for a
greater variety of securities and for a wider
range of
expiration dates and exercise prices than are
available for
exchange-traded options. Because OTC options
are not traded
on an exchange, pricing is done normally by
reference to
information from a market maker. It is the
position of the
SEC that OTC options are illiquid.
The Fund may purchase and write put and
call options on
indices and enter into related closing
transactions. Put and
call options on indices are similar to
options on securities
except that options on an index give the
holder the right to
receive, upon exercise of the option, an
amount of cash if
the closing level of the underlying index is
greater than
(or less than, in the case of puts) the
exercise price of
the option. This amount of cash is equal to
the difference
between the closing price of the index and
the exercise
price of the option, expressed in dollars
multiplied by a
specified number. Thus, unlike options on
individual
securities, all settlements are in cash, and
gain or loss
depends on price movements in the particular
market
represented by the index generally, rather
22
<PAGE>
than the price movements in individual
securities. All
options written on indices must be covered.
When the Fund
writes an option on an index, it will
establish a segregated
account containing cash or liquid assets with
its custodian
in an amount at least equal to the market
value of the
option and will maintain the account while
the option is
open or will otherwise cover the transaction.
Risks associated with options transactions
include: (1)
the success of a hedging strategy may depend
on an ability
to predict movements in the prices of
individual securities,
fluctuations in markets and movements in
interest rates; (2)
there may be an imperfect correlation between
the movement
in prices of options and the securities
underlying them; (3)
there may not be a liquid secondary market
for options; and
(4) while the Fund receives a premium when it
writes covered
call options, it may not participate fully in
a rise in the
market value of the underlying security. The
Fund may choose
to terminate an option position by entering
into a closing
transaction. The ability of the Fund to enter
into closing
transactions depends upon the existence of a
liquid
secondary market for such transactions.
REITs REITs pool investors' funds for investment
primarily in
income producing real estate or real estate
related loans or
interests. Generally, REITs can be classified
as Equity
REITs, Mortgage REITs and Hybrid REITs.
Equity REITs own
real estate itself, but primarily invest
their assets
directly in real estate and derive their
income mainly from
rent and capital gains from sale of property.
Mortgage REITs
make loans to provide capital to real estate
owners and
buyers, primarily invest their assets in real
estate
mortgages and derive their income from
interest payments.
Hybrid REITs combine the features of Equity
and Mortgage
REITs.
A REIT does not pay corporate income tax
if it meets
regulatory requirements relating to its
organization,
ownership, assets and income, and with a
regulatory
requirement that it distributes at least 95%
of its taxable
income for each taxable year.
Repurchase Repurchase agreements are agreements by which
the Fund
Agreements obtains a security and simultaneously commits
to return the
security to the seller at an agreed upon
price on an agreed
upon date within a number of days from the
date of purchase.
The Fund or its agent will have actual or
constructive
possession of the securities held as
collateral for the
repurchase agreement. Collateral must be
maintained at a
value at least equal to 100% of the purchase
price. The Fund
bears a risk of loss in the event the other
party defaults
on its obligations and the Fund is delayed or
prevented from
exercising its right to dispose of the
collateral securities
or if the Fund realizes a loss on the sale of
the collateral
securities. The Fund will enter into
repurchase agreements
only with financial institutions deemed to
present minimal
risk of bankruptcy during the term of the
agreement based on
established guidelines. Repurchase agreements
are considered
loans under the 1940 Act, as well as for
Federal and state
income tax purposes.
23
<PAGE>
Restricted Restricted securities are securities that may
not be sold
Securities freely to the public absent registration
under the
Securities Act of 1933, as amended or an
exemption from
registration.
Rights Rights are instruments giving shareholders
the right to
purchase shares of newly issued common stock
below the
public offering price before they are offered
to the public.
Securities In order to generate additional income, the
Fund may lend
Lending the securities in which it is invested
pursuant to
agreements requiring that the loan be
continuously secured
by collateral consisting of cash, or
securities of the U.S.
Government or its agencies equal at all times
to 100% of the
market value plus accrued interest of the
loaned securities.
Collateral is marked to market daily. The
Fund continues to
receive interest on the loaned securities
while
simultaneously earning interest on the
investment of cash
collateral in U.S. Government securities.
There may be risks
of delay in recovery of the securities or
even loss of
rights in the collateral should the borrower
of the
securities fail financially.
Securities of Foreign securities may be U.S. dollar
denominated equity
Foreign Issuers securities of foreign issuers, including
sponsored ADRs.
Standby Securities subject to standby commitments or
puts permit the
Commitments and holder thereof to sell the securities at a
fixed price prior
Puts to maturity. Securities subject to a standby
commitment or
put may be sold at any time at the current
market price.
However, unless the standby commitment or put
was an
integral part of the security as originally
issued, it may
not be marketable or assignable; therefore,
the standby
commitment or put would only have value to
the Fund owning
the security to which it relates. In certain
cases, a
premium may be paid for a standby commitment
or put, which
premium has the effect of reducing the yield
otherwise
payable on the underlying security.
Time Deposits Time deposits are non-negotiable receipts
issued by a bank
in exchange for the deposit of funds. Time
deposits with a
withdrawal penalty are considered to be
illiquid.
U.S. Government Obligations issued or guaranteed by agencies
of the U.S.
Agency Government, including, among others, the
Federal Farm Credit
Obligations Bank, the Federal Housing Administration and
the Small
Business Administration, and obligations
issued or
guaranteed by instrumentalities of the U.S.
Government,
including, among others, the Federal Home
Loan Mortgage
Corporation, the Federal Land Banks and the
U.S. Postal
Service. Some of these securities are
supported by the full
faith and credit of the U.S. Treasury (e.g.,
Ginnie Mae
("GNMA") (formerly known as the Government
National Mortgage
Association) securities), others are
supported by the right
of the issuer to borrow from the Treasury (e.
g., Federal
Farm Credit Bank securities), while still
others are
supported only by the credit of the
instrumentality (e.g.,
Fannie Mae securities). Guarantees of
principal by agencies
or instrumentalities of the U.S. Government
may be a
guarantee of payment at the maturity of the
obligation so
that in the event of a default prior to
maturity there might
not be a market and thus no means of
realizing on the
obligation prior to maturity. Guarantees as
to the timely
payment of principal and interest do not
extend to the value
or yield of these securities nor to the value
of the Fund's
shares.
24
<PAGE>
U.S. Treasury U.S. Treasury obligations consist of bills,
notes and bonds
Obligations issued by the U.S. Treasury, as well as
separately traded
interest and principal component parts of
such obligations,
known as "Separately Traded Registered
Interest and
Principal Securities" ("STRIPS"), that are
transferable
through the Federal book-entry system.
Variable and Certain obligations may carry variable or
floating rates of
Floating Rate interest, and may involve conditional or
unconditional
Instruments demand features. Such instruments bear
interest at rates
which are not fixed, but which vary with
changes in
specified market rates or indices. The
interest rates on
these securities may be reset daily, weekly,
quarterly or
some other reset period, and may have a floor
or ceiling on
interest rate changes. There is a risk that
the current
interest rate on such obligations may not
accurately reflect
existing market interest rates.
Warrants Warrants are instruments giving holders the
right, but not
the obligation, to buy shares of a company at
a given price
usually higher than the market price at the
time of issuance
during a specified period.
When-Issued and When-issued or delayed delivery basis
transactions involve
Delayed the purchase of an instrument with payment
and delivery
Delivery taking place in the future. Delivery of and
payment for
Securities these securities may occur a month or more
after the date of
the purchase commitment. The Fund will
maintain with the
Custodian a separate account with cash or
liquid assets in
an amount at least equal to these
commitments. The interest
rate realized on these securities is fixed as
of the
purchase date and no interest accrues to the
Fund before
settlement. These securities are subject to
market
fluctuations due to changes in market
interest rates, and it
is possible that the market value at the time
of settlement
could be higher or lower than the purchase
price if the
general level of interest rates has changed.
Although the
Fund generally purchases securities on a
when-issued or
forward commitment basis with the intention
of actually
acquiring securities for its portfolio, the
Fund may dispose
of a when-issued security or forward
commitment prior to
settlement if it deems appropriate. When
investing in when-
issued securities, the Fund will not accrue
income until
delivery of the securities and will invest in
such
securities only for purposes of actually
acquiring the
securities and not for the purpose of
leveraging.
25
ABN AMRO
Funds
Prospectus
June 30, 1998
INVESTMENT ADVISOR
ABN AMRO Asset Management (USA) Inc.
208 South LaSalle Street
4th Floor
Chicago, IL 60604-1003
ADMINISTRATOR
ABN AMRO Fund Services, Inc.
208 South LaSalle Street, 4th Floor
Chicago, IL 60604-1003
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
AUDITORS
Ernst & Young LLP
Two Commerce Square
2001 Market Street
Suite 4000
Philadelphia, PA 19103
For more information, call 1-800-443-4725.
www.abnamrofunds-usa.com
ABN AMRO Funds (formerly, the "Rembrandt(R) Funds")
Investment Advisor:
ABN AMRO Asset Management (USA) Inc.
This Statement of Additional Information ("SAI") is not a prospectus. It is
intended to provide additional information regarding the activities and
operations of the Small Cap Value Fund (the "Fund") of ABN AMRO Funds (the
"Trust") and should be read in conjunction with the appropriate prospectus. The
Fund has two prospectuses dated June 30, 1998. One prospectus relates to Common
Shares of the Fund and the other relates to Investor Shares of the Fund.
Prospectuses may be obtained by writing to ABN AMRO Funds, P.O. Box 9765,
Providence, Rhode Island 02940-5047, or by calling 1-800-443-4725.
TABLE OF CONTENTS
THE TRUST..................................................... 2
DESCRIPTION OF PERMITTED INVESTMENTS.......................... 2
INVESTMENT LIMITATIONS........................................ 8
NON-FUNDAMENTAL POLICY........................................ 9
THE ADVISOR................................................... 9
THE ADMINISTRATOR AND SUB-ADMINISTRATOR....................... 9
DISTRIBUTION AND SHAREHOLDER SERVICING........................ 10
TRUSTEES AND OFFICERS OF THE TRUST............................ 12
COMPUTATION OF YIELD.......................................... 15
CALCULATION OF TOTAL RETURN................................... 15
PURCHASE AND REDEMPTION OF SHARES............................. 16
DETERMINATION OF NET ASSET VALUE.............................. 16
TAXES......................................................... 16
PORTFOLIO TRANSACTIONS........................................ 18
TRADING PRACTICES AND BROKERAGE............................... 19
DESCRIPTION OF SHARES......................................... 21
SHAREHOLDER LIABILITY......................................... 21
LIMITATION OF TRUSTEES' LIABILITY............................. 21
YEAR 2000..................................................... 22
June 30, 1998
<PAGE>
THE TRUST
ABN AMRO Funds is an open-end management investment company established as a
Massachusetts business trust pursuant to a Declaration of Trust dated September
17, 1992. On April 29, 1998, the Trust changed its name from the "Rembrandt(R)
Funds" to the "ABN AMRO Funds." The Declaration of Trust permits the Trust to
offer separate series ("funds") of units of beneficial interest ("shares") and
different classes of shares of each fund. Generally, investors may purchase
shares through two separate classes, Common Shares and Investor Shares, which
provide for variations in distribution costs and other expenses. Except for
these differences between Common Shares and Investor Shares, each share of the
Fund represents an equal proportionate interest in the Fund. This SAI relates
solely to the Small Cap Value Fund. See "Description of Shares."
DESCRIPTION OF PERMITTED INVESTMENTS Borrowing
Borrowing may exaggerate changes in the net asset value of the Fund's shares and
in the return on the Fund's portfolio. Although the principal of any borrowing
will be fixed, the Fund's assets may change in value during the time the
borrowing is outstanding. The Fund may be required to liquidate portfolio
securities at a time when it would be disadvantageous to do so in order to make
payments with respect to an outstanding borrowing resulting in additional
transaction costs. In addition, liquidating portfolio securities may generate
capital gains, which will be distributed to shareholders as taxable income or
capital gains. The Fund may be required to segregate liquid assets in an amount
sufficient to meet its obligations in connection with such borrowings.
Foreign Securities
Foreign securities may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include costs in connection with limited publicly available
information regarding foreign issuers, lack of uniformity in accounting,
auditing and financial standards and requirements, greater securities market
volatility, less liquidity of securities, less government supervision and
regulations of securities markets, future adverse political and economic
developments, the possible imposition of withholding taxes on interest or other
income, possible seizure, nationalization, or expropriation of foreign deposits,
the possible establishment of exchange controls or taxation at the source,
greater fluctuations in value due to changes in exchange rates, or the adoption
of other foreign governmental restrictions which might adversely affect the
payment of principal and interest on such obligations. Such investments may also
entail higher custodial fees and sales commissions than domestic investments.
Foreign issuers of securities or obligations are often subject to accounting
treatment and engage in business practices different from those respecting
domestic issuers of similar securities or obligations. Foreign branches of U.S.
banks and foreign banks may be subject to less stringent reserve requirements
than those applicable to domestic branches of U.S. banks. Government regulation
in many of the countries of interest to the Fund may limit the extent of the
Fund's investment in companies in those countries. Further, it may be more
difficult for the Fund's agents to keep currently informed about corporate
actions which may affect the prices of portfolio securities. Communications
between the U.S. and foreign countries may be less reliable than within the
U.S., increasing the risk of delayed settlements of portfolio securities.
Certain markets may require payment for securities before delivery. The Fund's
ability and decisions to purchase and sell portfolio securities may be affected
by laws or regulations relating to the repatriation of assets. Some countries
restrict the extent to which foreigners may invest in their securities markets.
Investment Company Securities
Investments in shares of open-end funds and closed-end funds, as described in
the prospectus, will result in the layering of expenses. Since such funds pay
management fees and other expenses, shareholders of the Fund would indirectly
pay both Fund expenses and the expenses of underlying funds with respect to Fund
assets invested therein. Under applicable regulations, the Fund is generally
prohibited from acquiring the securities of other investment companies if, as a
result of such acquisition, the Fund owns more than 3% of the total voting stock
of the company; securities issued by any one investment company represent more
than 5% of the Fund's total assets; or securities (other than treasury stock)
issued by all investment companies represent more than 10% of the total assets
of the Fund. See also "Investment Limitations."
The Trust has received an exemptive order from the Securities and Exchange
Commission ("SEC") to permit the Fund to invest in shares of the money market
funds of the Trust (the "Money Market Funds"). Pursuant to this order, the Fund
is permitted to invest in shares of the Money Market Funds for cash management
purposes, provided that the Advisor and any of its affiliates waive management
fees and other expenses with respect to Fund assets invested therein. It is
the position of the staff of the SEC that certain non-governmental issuers of
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") constitute investment companies pursuant to the Investment
Company Act of 1940, as amended ("1940 Act"), and either (a) investments in such
instruments are subject to the limitations set forth above or (b) the issuers of
such instruments have been granted orders from the SEC exempting such
instruments from the definition of investment company. Options Put and
call options may be used by the Fund from time to time as the Advisor deems to
be appropriate, except as limited by the Fund's investment restrictions. Options
are not used for speculative purposes. Among the strategies the Advisor may use
are: protective puts on stocks owned by the Fund, buying calls on stocks the
Fund is attempting to buy and writing covered calls on stocks the Fund owns.
A put option gives the purchaser of the option the right to sell, and the
writer the obligation to buy, the underlying security at any time during the
option period. A call option gives the purchaser of the option the right to buy,
and the writer of the option the obligation to sell, the underlying security at
any time during the option period. The premium paid to the writer is the
consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, the Fund may enter into a "closing
transaction" -- the sale (purchase) of an option contract on the same security
with the same exercise price and expiration date as the option contract
originally opened.
The Fund may buy protective put options from time to time on such portion of its
assets as the Advisor determines is appropriate in seeking the Fund's investment
objective. The advantage to the Fund of buying the protective put is that if the
price of the stock falls during the option period, the Fund may exercise the put
and receive the higher exercise price for the stock. However, if the security
rises in value, the Fund will have paid a premium for the put which will expire
unexercised.
The Fund may buy call options from time to time as the Advisor determines is
appropriate in seeking the Fund's investment objective. The Fund may elect to
buy calls on stocks that the Fund is trying to buy. The advantage of the Fund
buying the fiduciary call is that if the price of the stock rises during the
option period, the Fund may exercise the call and buy the stock for the lower
exercise price. If the security falls in value, the Fund will have paid a
premium for the call (which will expire worthless) but will be able to buy the
stock at a lower price.
The Fund may write covered call options from time to time on such portion of its
assets as the Advisor determines is appropriate in seeking the Fund's investment
objective. The advantage to the Fund of writing covered call options is that the
Fund receives a premium which is additional income. However, if the security
rises in value, the Fund may not fully participate in the market appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold
requiring the writer to deliver the under- lying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing purchase
transaction. A closing purchase transaction is one in which the Fund, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written. A closing purchase
transaction cannot be effected with respect to an option once the option writer
has received an exercise notice for such option. The Fund may write covered
put and call options as a means of increasing the yield on its portfolio and as
a means of providing limited protection against decreases in its market value.
When the Fund sells an option, if the underlying securities do not increase or
decrease to a price level that would make the exercise of the option profitable
to the holder thereof, the option generally will expire without being exercised
and the Fund will realize as profit the premium
<PAGE>
received for such option. When a call option of which the Fund is the writer is
exercised, the Fund will be required to sell the underlying securities to the
option holder at the strike price, and will not participate in any increase in
the price of such securities above the strike price. When a put option of which
the Fund is the writer is exercised, the Fund will be required to purchase the
underlying securities at the strike price, which may be in excess of the market
value of such securities. The market value of an option generally reflects
the market price of an underlying security. Other principal factors affecting
market value include supply and demand, interest rates, the pricing volatility
of the underlying security and the time remaining until the expiration date.
Repurchase Agreements
Repurchase agreements are agreements by which a person (e.g., the Fund) obtains
a security and simultaneously commits to return the security to the seller
(primary securities dealer recognized by the Federal Reserve Bank of New York or
a national member bank as defined in Section 3(d)(1) of the Federal Deposit
Insurance Act, as amended) at an agreed upon price (including principal and
interest) on an agreed upon date within a number of days (usually not more than
seven) from the date of purchase. 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 underlying security. A repurchase agreement 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.
Repurchase agreements are considered to be loans by the Fund for purposes of its
investment limitations. The repurchase agreements entered into by the Fund will
provide that the underlying security at all times shall have a value at least
equal to 100% of the resale price stated in the agreement (the Advisor monitors
compliance with this requirement). Under all repurchase agreements entered into
by the Fund, the custodian or its agent must take possession of the underlying
collateral. However, if the seller defaults, the Fund could realize a loss on
the sale of the underlying security to the extent that the proceeds of sale
including accrued interest are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, the Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and required to return
the underlying securities to the seller's estate.
Restricted Securities
Restricted securities are securities (including those of foreign issuers) that
may not be sold to the public without registration under the Securities Act of
1933, as amended (the "1993 Act"), absent an exemption from registration. The
Fund may invest up to 15% of its total assets in restricted securities. The Fund
invests no more than 15% of its net assets in illiquid securities. The Board of
Trustees will periodically review restricted security procedures and guidelines
and will monitor the Advisor's implementation of such procedures and guidelines.
Under these procedures and guidelines, the Advisor considers the frequency of
trades and quotes for the security, the number of dealers in, and potential
purchasers for, the securities, dealer undertakings to make a market in the
security and the nature of the security and of the marketplace trades.
Securities Lending
Securities loaned by the Fund pursuant to an agreement which requires collateral
to secure the loan are not made if, as a result, the aggregate amount of all
outstanding securities loans for the Fund exceed one-third of the value of the
Fund's total assets (including the value of the collateral) taken at fair market
value. The Fund continues to receive interest on the loaned securities while
simultaneously earning interest on the investment of the cash collateral in U.S.
Government securities. However, the Fund normally pays lending fees to such
broker-dealers and related expenses from the interest earned on invested
collateral. Loans are made only to borrowers deemed by the Advisor to be of good
standing and when, in the judgment of the Advisor, the consideration which can
be earned currently from such securities loans justifies the attendant risk. Any
loan may be terminated by either party upon reasonable notice to the other
party. The Fund may use an affiliate of the Advisor as a broker in these
transactions. Short Sales Selling securities short involves selling
securities the seller (e.g., the Fund) does not own (but has borrowed) in
anticipation of a decline in the market price of such securities. To deliver the
securities to the buyer, the seller must arrange through a broker to borrow the
securities and, in so doing, the seller becomes obligated to replace the
securities borrowed at their market price at the time of the replacement. In a
short sale, the proceeds the seller receives from the sale are retained by a
broker until the seller replaces the borrowed securities. The seller may have to
pay a premium to borrow the securities and must pay any dividends or interest
payable on the securities until they are replaced. The Fund may sell
securities short "against the box." A short sale is "against the box" if, at all
times during which the short position is open, the Fund owns at least an equal
amount of the securities or securities convertible into, or exchangeable without
further consideration for, securities of the same issuer as the securities that
are sold short.
Standby Commitments, or Puts
The Advisor has the authority to purchase securities at a price which would
result in a yield to maturity lower than that generally offered by the seller at
the time of purchase when they can simultaneously acquire the right to sell the
securities back to the seller, the issuer, or a third party (the "writer") at an
agreed-upon price at any time during a stated period or on a certain date. Such
a right is generally called a "standby commitment" or a "put." The purpose of
engaging in transactions involving puts is to maintain flexibility and liquidity
to permit the Fund to meet redemptions and remain as fully invested as possible
in municipal securities. The Fund reserves the right to engage in put
transactions. The right to put the securities depends on the writer's ability to
pay for the securities at the time the put is exercised. The Fund will limit its
put transactions to institutions which the Advisor believes present minimal
credit risks, and the Advisor will use its best efforts to initially determine
and continue to monitor the financial strength of the sellers of the options by
evaluating their financial statements and such other information as is available
in the marketplace. It may, however, be difficult to monitor the financial
strength of the writers because adequate current financial information may not
be available. In the event that any writer is unable to honor a put for
financial reasons, the Fund would be a general creditor (i.e., on a parity with
all other unsecured creditors) of the writer. Furthermore, particular provisions
of the contract between the Fund and the writer may excuse the writer from
repurchasing the securities; for example, a change in the published rating of
the underlying municipal securities or any similar event that has an adverse
effect on the issuer's credit or a provision in the contract that the put will
not be exercised except in certain special cases, for example, to maintain
portfolio liquidity. The Fund could, however, at any time sell the underlying
portfolio security in the open market or wait until the portfolio security
matures, at which time it should realize the full par value of the security.
Securities purchased subject to a put may be sold to third persons at any time,
even though the put is outstanding, but the put itself, unless it is an integral
part of the security as originally issued, may not be marketable or otherwise
assignable. Therefore, the put would have value only to the Fund. Sale of the
securities to third parties or lapse of time with the put unexercised may
terminate the right to put the securities. Prior to the expiration of any put
option, the Fund could seek to negotiate terms for the extension of such an
option. If such a renewal cannot be negotiated on terms satisfactory to the
Fund, the Fund could sell the portfolio security. The maturity of the underlying
security will generally be different from that of the put. There will be no
limit to the percentage of portfolio securities that the Fund may purchase
subject to a put, but the amount paid directly or indirectly for puts which are
not integral parts of the security as originally issued which are held by the
Fund will not exceed 1/2 of 1% of the value of the total assets of the Fund
calculated immediately after any such put is acquired. For the purpose of
determining the "maturity" of securities purchased subject to an option to put,
and for the purpose of determining the dollar-weighted average maturity of the
Fund including such securities, the Trust will consider "maturity" to be the
first date on which it has the right to demand payment from the writer of the
put although the final maturity of the security is later than such date.
When-Issued Securities
The Fund will only make commitments to purchase obligations on a when-issued
basis with the intention of actually acquiring the securities, but may sell them
before the settlement date. The when-issued securities are subject to market
fluctuation, and the purchaser accrues no interest on the security during this
period. The payment obligation and the interest rate that will be received on
the securities are each fixed at the time the purchaser enters into the
commitment. Purchasing obligations on a when-issued basis may be used as a form
of leveraging because the purchaser may accept the market risk prior to payment
for the securities. The Fund segregates cash or liquid assets in an amount at
least equal in value to the Fund's commitments to purchase when-issued
securities. If the value of these assets declines, the Fund will place
additional liquid assets aside on a daily basis so that the value of the assets
set aside is equal to the amount of such commitments. Consequently, the Fund
will not use such purchases for leveraging.
INVESTMENT LIMITATIONS
The Fund has adopted certain investment limitations which, in addition to those
limitations in the prospectuses, are fundamental and may not be changed without
approval by a majority vote of the Fund's outstanding shares. The term "majority
of the Fund's outstanding shares" means the vote of (i) 67% or more of the
Fund's shares present at a meeting, if more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of the
Fund's outstanding shares, whichever is less.
The Fund may not:
1. Underwrite securities issued by others, except to the extent that the
Fund may be considered an underwriter within the meaning of the 1933
Act in the disposition of shares of the Fund.
2. Issue senior securities (as defined in the 1940 Act) except in
connection with permitted borrowings as described below or as permitted
by rule, regulation or order of the SEC.
3. Borrow money, except that the Fund (a) may borrow money for temporary
or emergency purposes in an amount not exceeding 5% of the Fund's total
assets determined at the time of the borrowing and (b) may borrow money
from banks or by engaging in reverse repurchase agreements. Asset
coverage of at least 300% is required for all borrowings, except where
the Fund has borrowed money for temporary purposes in amounts not
exceeding 5% of its total assets.
4. Purchase or sell real estate or physical commodities, unless acquired
as a result of ownership of securities or other instruments (but this
shall not prevent the Fund from investing in securities or other
instruments either issued by companies that invest in real estate,
backed by real estate or securities of companies engaged in the real
estate business).
5. Make loans, except as permitted by the 1940 Act, and the rules and
regulations thereunder.
6. Purchase securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities; and repurchase agreements involving such securities)
if, as a result, more than 25% of the total assets of the Fund are
invested in the securities of one or more issuers whose principal
business activities are in the same industry.
The foregoing percentages (except for the limitation on illiquid securities
below) will apply at the time of the purchase of a security and shall not be
considered violated unless an excess occurs or exists immediately after and as a
result of a purchase of such security.
NON-FUNDAMENTAL POLICY
The Fund may not invest in illiquid securities in an amount exceeding, in
the aggregate, 15% of the Fund's net assets. Generally, an illiquid security
cannot be disposed of within 7 days in the ordinary course of business at its
full value.
THE ADVISOR
The Trust and ABN AMRO Asset Management (USA) Inc. (formerly LaSalle Street
Capital Management, Ltd.), 208 South LaSalle Street, Chicago, Illinois 60604
(the "Advisor"), have entered into an advisory agreement (the "Advisory
Agreement"). The Advisory Agreement provides that the Advisor shall not be
protected against any liability to the Trust or its shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.
The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Fund by a majority of the outstanding shares of the Fund, on not
less than 30 days' nor more than 60 days' written notice to the Advisor, or by
the Advisor on 90 days' written notice to the Trust.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The Trust and ABN AMRO Fund Services, Inc. (the "Administrator"), a direct
wholly-owned subsidiary of ABN AMRO Capital Markets Holding, Inc., which is an
indirect, wholly-owned subsidiary of ABN AMRO Holding N.V., a Netherlands
company, have entered into an administration agreement (the "Agreement") dated
July 1, 1998. Under the Administration Agreement: (i) the Administrator is
entitled to receive a fee at an annual rate of 0.15% of the average daily net
assets of the Fund; (ii) the Trust may withhold a portion of this fee in the
event that the Administrator fails to perform its duties according to the
performance standards as set forth in the Agreement; and (iii) the Trust agreed
to pay the Administrator $1,500,000 if the Trust terminates the Agreement within
the first year and $750,000 if the Trust terminates the Agreement in the second
year.
The Administrator is an affiliate of the Advisor and both are under the common
control of ABN AMRO Holding N.V. The Administrator, a Delaware corporation, has
its principal business offices at 208 South LaSalle Street, Chicago, Illinois
60604. ABN AMRO Holding N.V. and its subsidiaries and affiliates, including the
Administrator, are global providers of financial services, including banking and
investment management.
First Data Investor Services Group, Inc. ("Investor Services Group") serves as
the Trust's sub-administrator pursuant to a Sub-Administration and Fund
Accounting Agreement dated July 1, 1998 between Investor Services Group and the
Administrator. DISTRIBUTION AND SHAREHOLDER SERVICING First Data
Distributors, Inc. (the "Distributor"), 4400 Computer Drive, Westborough,
Massachusetts 01581, a wholly-owned subsidiary of First Data Corporation, and
the Trust are parties to a distribution agreement (the "Distribution Agreement")
dated February 26, 1998, under which the Distributor, as agent, sells shares of
the Fund on a continuous basis, although the Distributor is not obligated to
sell any particular amount of shares. The Distribution Agreement shall be
reviewed and ratified at least annually (i) by the Trustees or by the vote of a
majority of the outstanding shares of the Trust, and (ii) by the vote of a
majority of the Trustees of the Trust who are not parties to the Distribution
Agreement or "interested persons" (as defined in the 1940 Act) of any party to
the Distribution Agreement, cast in person at a meeting called for the purpose
of voting on such approval. The Distribution Agreement will terminate in the
event of any assignment, as defined in the 1940 Act, and is terminable with
respect to the Fund on not less than 60 days' notice by the Trustees, by vote of
a majority of the outstanding shares of the Fund or by the Distributor.
Rule 12b-1 Plan
The Trust has adopted a distribution plan for the Investor Shares of the Fund
(the "Distribution Plan") in accordance with the provisions of Rule 12b-1 under
the 1940 Act. Rule 12b-1 regulates the circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares. Continuance of the Distribution Plan must be approved annually by a
majority of the Trustees of the Trust and by a majority of the Trustees who are
not "interested persons" of the Trust or the Distributor, as that term is
defined in the 1940 Act ("Disinterested Trustees"). The Distribution Plan
requires that quarterly written reports of amounts spent under the Distribution
Plan and the purposes of such expenditures be furnished to and reviewed by the
Trustees. In accordance with Rule 12b-1, the Distribution Plan may be terminated
with respect to the Fund by a vote of a majority of the Disinterested Trustees,
or by a vote of a majority of the outstanding shares of the Investor Shares of
the Fund. The Distribution Plan may be amended by vote of the Trust's Board of
Trustees, including a majority of the Disinterested Trustees, cast in person at
a meeting called for such purpose, except that any change that would effect a
material increase in any distribution fee with respect to the Fund requires the
approval of the Fund's shareholders. All material amendments of the Distribution
Plan will require approval by a majority of the Trustees of the Trust and of the
Disinterested Trustees.
The Distribution Plan provides for payments to the Distributor at an annual rate
of 0.25% of the Investor Shares average daily net assets. This ongoing
distribution fee is calculated on the Fund's aggregate average daily net assets
attributable to its Investor Shares. The Distribution Plan is characterized as a
compensation plan and is not directly tied to expenses incurred by the
Distributor; the payments the Distributor receives during any year may therefore
be higher or lower than its actual expenses.
Prior to February 28, 1998, Rembrandt Financial Services Company ("RFS") served
as the Trust's distributor. RFS has its principal offices at Oaks, Pennsylvania
19456. RFS is a wholly-owned subsidiary of SEI Financial Services Company.
The distribution-related services that may be provided under the Distribution
Plan include incremental printing costs for reports, prospectuses, notices and
similar materials; advertising; costs of preparing, printing, and distributing
literature used in connection with the offering of shares; and expenses incurred
in the promotion and sale of shares. Certain state securities laws may require
those financial institutions providing such distribution services to register as
dealers pursuant to state law. Except to the extent that the
Sub-Administrator or Advisor benefited through increased fees from an increase
in the net assets of the Trust which may have resulted in part from the
expenditures, no "interested person" of the Trust or any Trustee of the Trust
who is not an "interested person" of the Trust had a direct or indirect
financial interest in the operation of the Distribution Plan or related
agreements.
Shareholder Servicing Plan
The Trust has adopted a shareholder servicing plan for the Investor Shares of
the Fund (the "Shareholder Servicing Plan"). Under the Shareholder Servicing
Plan, the Distributor may perform, or may compensate other service providers for
performing, the following shareholder services: maintaining client accounts;
arranging for bank wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing dividend options, account
designations and addresses; sub-accounting; providing information on share
positions to clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and processing dividend
payments.
Transfer Agent
The Trust and First Data Investor Services Group, Inc. (the "Transfer Agent"), a
wholly-owned subsidiary of First Data Corporation, have entered into a transfer
agency agreement (the "Transfer Agency Agreement") dated February 26, 1998.
Under the Transfer Agency Agreement, the Transfer Agent is entitled to receive
fees for its services, which may be reduced in the event that the Transfer Agent
fails to meet certain performance standards set forth in the Agreement. Under
the Agreement, the Trust agreed to pay the Transfer Agent $1,500,000 if the
Trust terminates the Agreement within the first year and $750,000 if it
terminates the Agreement during the second year.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees and executive officers of the Trust and their principal occupations for
the last five years are set forth below.
ARNOLD F. BROOKSTONE (4/8/30) -- Trustee -- 950 N. Michigan Avenue,
Chicago, Illinois 60611. Retired. Executive Vice President, Chief Financial and
Planning Officer of Stone Container Corporation, 1991-1996. Senior Vice
President, Chief Financial and Planning Officer of Stone Container Corporation
since 1981. Prior thereto, Mr. Brookstone held various other executive positions
with Stone Container Corporation since 1973.
WILLIAM T. SIMPSON (7/26/27) -- Trustee -- 1318 Navajo Court, Louisville,
Kentucky. Consultant, PNC Bank of Kentucky (formerly Citizens Fidelity Bank and
Trust company) (a state chartered bank) since 1992. Senior Vice President, PNC
Bank of Kentucky 1973-1992.
ROBERT FEITLER (11/19/30) -- Trustee -- 179 East Lake Shore Drive, #16E,
Chicago, Illinois 60601. Chairman of Executive Committee, Board of Directors,
Weyco Group, Inc., since 1996. President and Director, Weyco Group, Inc.,
1968-1996.
JOHN A. WING (11/9/35) -- Trustee and Chairman -- 440 South LaSalle
Street, Chicago,Illinois 60605. Professor of Law and Finance, Illinois
Institute of Technology -
July 1998. Executive Director, Center for the Study of Law and Financial
Markets, a joint program of the Chicago-Kent College of Law and the Stuart
School of Business - July 1998. Chairman, ABN AMRO Sage Corporation - July 1998.
Chairman, Investment Committee of ABN AMRO Private Partnerships - July 1998.
Member, ABN AMRO NA Risk Management Committee - July 1998. Prior thereto, Chief
Executive Officer, ABN AMRO Chicago Corp. January 1997 - July 1998. Chief
Executive Officer, Chicago Corporation 1981 - 1998.
TIMOTHY J. LEACH (2/28/55) -- President and Chief Executive Officer* -- ABN AMRO
Asset Management (USA) Inc., 208 South LaSalle Street, Chicago, Illinois 60604.
Since February 1998, President, Chief Executive Officer and Director. President
and Chief Investment Officer of Qualivest Capital Management, Inc., March 1994 -
February 1998. Vice President, Manager of Wells Fargo Bank, N.A., April 1987 -
February 1994.
RICHARD A. FRODSHAM (3/23/40) -- Executive Vice President* -- ABN AMRO Asset
Management (USA) Inc., 208 South LaSalle Street, Chicago, Illinois 60604. Since
October 1997, Executive Vice President and Director of Marketing and
Administration. President of LaSalle Capital Management, Ltd., January 1997 -
September 1997. Senior Vice President of ABN AMRO Incorporated (formerly, ABN
AMRO Chicago Corporation, formerly, The Chicago Corporation), January 1994 -
Present. Vice President of Certus Financial Corporation, June 1993 - December
1993. Self-employed as a broker/owner in real estate and property management,
March 1992 - May 1993.
MICHAEL T. CASTINO (12/9/64) -- Vice President* -- ABN AMRO Asset Management
(USA) Inc., 208 South LaSalle Street, Chicago, Illinois 60604. Since July 1997,
Vice President, Fund Marketing. Assistant Vice President, Rembrandt Product
Manager of LaSalle National Bank (formerly, LaSalle National Trust, N.A.),
mid-1995 - July 1997.
Director of Fund Marketing, Kemper Financial Services, Inc., 1991 - mid-1995.
CHARLES KLIMKOWSKI (9/15/35) -- Vice President* -- ABN AMRO Asset Management
(USA) Inc., 208 South LaSalle Street, Chicago, Illinois 60604. Since October
1997, Executive Vice President. Senior Vice President of ABN AMRO Incorporated
(formerly, ABN AMRO Chicago Corporation, formerly, The Chicago Corporation),
October 1980 - Present.
LAURIE LYNCH (8/3/61) -- Vice President* -- ABN AMRO Asset Management (USA)
Inc., 208 South LaSalle Street, Chicago, Illinois 60604. Since August 1997,
Marketing Associate, Fund Marketing (formerly, LaSalle Street Capital
Management, Ltd.). Executive Assistant, LaSalle Street Capital Management, Ltd.,
April 1996 - August 1997. Municipal Underwriting Assistant, Fidelity Capital
Markets, August 1994 - April 1996. Office Administrator, The Choice for
Staffing, mid-1992 - August 1994. KATHRYN L. MARTIN (10/23/57) -- Vice
President* -- ABN AMRO Asset Management (USA) Inc., 208 South LaSalle Street,
Chicago, Illinois 60604. Since March 1998, Senior Vice President, Director of
Compliance. Vice President, ABN AMRO Asset Management (USA) Inc. (formerly,
LaSalle Street Capital Management, Ltd.), June 1995 - March 1998. Assistant Vice
President, LaSalle Street Capital Management, Ltd. (formerly, Chemical
Investment Group), October 1989 - June 1995. ANN WEIS (2/5/62) -- Vice
President* -- ABN AMRO Asset Management (USA) Inc., 208 South LaSalle Street,
Chicago, Illinois 60604. Since December 1997, Vice President, Chief of
Administration. Assistant Vice President, ABN AMRO Asset Management (USA) Inc.,
(formerly, LaSalle Street Capital Management, Ltd.), February 1997 - December
1997. From September 1981 to February 1997, she held accounting and operations
positions at LaSalle Street Capital Management, Ltd. (formerly, Chemical
Investment Group and Investment and Capital Management). MARTHA CLEMONS
(8/10/62) -- Vice President and Secretary* -- ABN AMRO Asset Management (USA)
Inc., 208 South LaSalle Street, Chicago, Illinois 60604. Since February 1998,
Vice President, Chief Counsel. Attorney, Securities and Exchange Commission,
August 1991 - January 1998.
TERESA M. R. HAMLIN (12/9/63) -- Vice President and Assistant Secretary --
First Data Investor Services Group, Inc., 53 State Street, Boston, Massachusetts
02109. Since 1995, Counsel to Investor Services Group. Prior to that time, she
was a paralegal manager with The Boston Company Advisors, Inc.
THERESE M. HOGAN (2/27/62) -- Vice President and Assistant Secretary -- First
Data Investor Services Group, Inc., 53 State Street, Boston, Massachusetts
02109. Since June 1994, Manager (State Regulation) of Investor Services Group.
From October 1993 to June 1994, Senior Legal Assistant at Palmer & Dodge,
Boston, Massachusetts. For more than eight years prior thereto, a paralegal at
Robinson & Cole in Hartford, Connecticut.
JULIE A. TEDESCO (4/30/57) -- Vice President and Assistant Secretary --
First Data Investor Services Group, Inc., 53 State Street, Boston, Massachusetts
02109. Since May 1994, Counsel to Investor Services Group. From July 1992 to May
1994, Assistant Vice President and Counsel of The Boston Company Advisors, Inc.
COLEEN DOWNS DINNEEN (12/16/60) -- Assistant Secretary -- First Data
Investor Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
Since 1997, Counsel to Investor Services Group. From 1989-1996, Vice President
of Scudder, Stevens & Clark, Inc.
JOHN H. GRADY, JR. (6/1/61) -- Assistant Secretary -- 1800 M Street, N.W.,
Washington, DC 20036. Partner, Morgan, Lewis & Bockius LLP (law firm) since
1995; Associate, Morgan, Lewis & Bockius LLP, 1993-1995; Associate, Ropes & Gray
(law firm), 1988-1993.
RICHARD W. GRANT (10/25/45) -- Assistant Secretary -- 2000 One Logan
Square, Philadelphia, Pennsylvania 19103. Partner, Morgan, Lewis & Bockius LLP
(law firm) since 1989.
JOHN J. BURKE, III (9/11/64) -- Vice President and Treasurer -- Since 1991,
Vice President of Fund Accounting and Portfolio Valuation Group. Prior to 1991,
Mr. Burke was a management associate with Fidelity Investments.
JYLANNE DUNNE (5/22/60) -- Vice President and Assistant Treasurer -- First
Data Investor Services Group, Inc. 53 State Street, Boston, Massachusetts 02109.
Since 1994, Vice President of Client Services.
DIANA TARNOW (11/16/62) -- Vice President and Assistant Treasurer -- First Data
Investor Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
Since 1997, Vice President of Investor Services Group's Treasury Department.
Prior to that time, she was Vice President of Financial Reporting and Tax. From
1989 to 1994, Ms. Tarnow served as Vice President of Financial Reporting and Tax
with The Boston Company Advisors, Inc.
KAREN DEPOUTOT (10/7/66) -- Assistant Treasurer -- Director of Mutual Fund
Treasury and Assistant Treasurer for First Data Investor Services Group, Inc. -
June 1994. Prior to June 1994, Ms. Depoutot was a Senior Treasury Analyst at The
New England and an Assistant Vice President in the Mutual Fund Accounting
Department at The Boston Company Advisors, Inc. * This person is an
"affiliated person" of both the Advisor and the Trust, as the term is defined in
the 1940
Act.
The Trust pays the fees for unaffiliated Trustees. Compensation of officers and
affiliated Trustees of the Trust is paid by the Administrator.
For the fiscal year ended December 31, 1997, the Trustees received the
following compensation:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
<C>
============================== ------------------- ------------------- ------
- ------------ ======================
Total Compensation
from Registrant and
Pension or
Fund Complex Paid
Aggregate Retirement
to Trustees
Compensation from Benefits Accrued
Estimated Annual for Fiscal Year
Registrant for as Part of
Benefits Upon Ended 1997
- ----------
Fiscal Year Ended Fund Expenses
Retirement
Name of Person 1997
============================== ------------------- ------------------- ------
- ------------ ======================
Arnold F. Brookstone, Trustee $14,000 N/A N/A
$14,000 for service
on one board
- ------------------------------ ------------------- ------------------- ------
- ------------ ======================
Robert Feitler,* Trustee N/A N/A N/A
N/A
- ------------------------------ ------------------- ------------------- ------
- ------------ ======================
William T. Simpson, Trustee $14,000 N/A N/A
$14,000 for service
on one board
============================== =================== ===================
================== ======================
John A. Wing,* Trustee N/A N/A N/A
N/A
============================== =================== ===================
================== ======================
<FN>
* Messrs. Wing and Feitler did not serve as Trustees during 1997.
</FN>
</TABLE>
COMPUTATION OF YIELD
The Fund may advertise a 30-day yield figure. These figures will be based on
historical earnings and are not intended to indicate future performance. The
yield of the Fund refers to the annualized income generated by an investment in
the Fund over a specified 30-day period. The yield is calculated by assuming
that the income generated by the investment during that 30-day period is
generated over one year and is shown as a percentage of the investment.
CALCULATION OF TOTAL RETURN
From time to time, the Fund may advertise total return. The total return of the
Fund refers to the average compounded rate of return to a hypothetical
investment for designated time periods (including but not limited to, the period
from which the Fund commenced operations through the specified date), assuming
that the entire investment is redeemed at the end of each period. In particular,
total return will be calculated according to the following formula: P (1 + T)n =
ERV, where P = a hypothetical initial payment of $1,000; T = average annual
total return; n = number of years; and ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the designated time period
as of the end of such period.
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
It is currently the Trust's policy to pay for all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in-kind of securities held by the Fund in
lieu of cash. Shareholders may incur brokerage charges and taxes on the sale of
any such securities so received in payment of redemptions. However, a
shareholder will at all times be entitled to aggregate cash redemptions from all
funds of the Trust during any 90-day period of up to the lesser of $250,000 or
1% of the Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
disposal or valuation of the Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of the Fund for any period during
which the New York Stock Exchange, the Advisor, the Administrator, the
Sub-Administrator and/or the Custodian are not open for business. Currently, the
following holidays are observed by the Trust: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas Day.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Fund is calculated by adding the value of
securities and other assets, subtracting liabilities and dividing by the total
number of outstanding shares. Although the methodology and procedures are
identical, the net asset value per share of Common Shares and Investor Shares
within the Fund may differ because of the distribution and shareholder servicing
expenses charged to Investor Shares.
The securities of the Fund are valued by the Sub-Administrator pursuant to
valuations provided by one or more independent pricing services. The pricing
service relies primarily on prices of actual market transactions as well as
trader quotations. However, the service may also use a matrix system to
determine valuations of fixed income securities, which system considers such
factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.
TAXES
The following is only a summary of certain income tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisors with
specific reference to their own tax situations, including their state and local
income tax liabilities.
Federal Income Tax
This discussion of Federal income tax consequences is based on the Internal
Revenue Code of 1986 (the "Code"), and the regulations issued thereunder, in
effect on the date of this SAI. New legislation, as well as administrative
changes or court decisions, may change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.
The Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Sub-chapter M of the Code.
In order to qualify for treatment as a RIC under the Code, the Fund must
distribute annually to its shareholders at least the sum of 90% of its net
investment income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) (the "Distribution Requirement") and also must meet several
additional requirements. Among these requirements are the following: (a) at
least 90% of the Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, or certain other income;
and (b) diversify its holdings so that: (i) at the close of each quarter of the
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities, with such other securities limited, in respect
to any one issuer, to an amount that does not exceed 5% of the value of the
Fund's assets and that does not represent more than 10% of the outstanding
voting securities of such issuer; and (ii) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S. Government securities or the securities
of other RICs) of any one issuer or of two or more issuers which are engaged in
the same, similar or related trades or businesses if the Fund owns at least 20%
of the voting power of such issuers.
Notwithstanding the Distribution Requirement described above, which only
requires the Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short- term capital loss),
the Fund will be subject to a nondeductible 4% excise tax to the extent it fails
to distribute by the end of any calendar year 98% of its ordinary income for
that year and 98% of its capital gain net income for the one-year period ending
on October 31 of that year, plus certain other amounts. The Fund intends to make
sufficient distributions to avoid liability for the 4% federal excise tax.
It is possible that the Fund may make a distribution in excess of its current
and accumulated earnings and profits. Such a "return of capital" distribution is
applied against and reduces the tax basis of your shares. The excess of a return
of capital distribution over the tax basis of your shares is treated as gain
from a sale of exchange of the shares.
Any gain or loss recognized on a sale or redemption of shares of the Fund by a
shareholder who is not a dealer in securities will generally be treated as
long-term capital gain or loss if the shares have been held for more than
eighteen months, mid-term if the shares have been held for over one year but not
for over eighteen months, and short-term if for a year or less. If shares on
which a net capital gain distribution has been received are subsequently sold or
redeemed, and such shares have been held for six months or less, any loss
recognized by a shareholder will be treated as long-term capital loss to the
extent of the long-term capital gain distributions.
If for any taxable year the Fund does not qualify as a RIC, all of its taxable
income will be subject to tax at regular corporate rates without any deduction
for distributions to shareholders. In such case, distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits. Such distributions
generally will be eligible for the dividends-received deduction in the case of
corporate shareholders.
The Fund may sell securities short "against the box." Under certain
circumstances, these transactions may be treated as constructive sales,
resulting in the recognition of gain to the Fund.
A dividends-received deduction is available to corporations that receive
dividends from domestic corporations. Dividends paid by the Fund will be
eligible for the dividends-received deduction for corporate shareholders to the
extent they are derived from dividends from domestic corporations and to the
extent that the respective security has been held for at least three months.
Shareholders will be advised each year of the portion of ordinary income
dividends eligible for the deduction. Individual shareholders are not entitled
to the dividends received deduction.
State Taxes
The Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Fund to
shareholders and the ownership of shares may be subject to state and local
taxes. Shareholders should verify their state and local tax liability with their
tax advisors.
Foreign Taxes
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on the Fund's securities. Tax conventions between
certain countries and the United States may reduce or eliminate these taxes.
Foreign countries generally do not impose taxes on capital gains with respect to
investments by foreign investors.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Advisor is responsible for placing the orders
to execute transactions for the Fund. In placing orders, it is the policy of the
Trust to seek to obtain the best net results taking into account such factors as
price (including the applicable dealer spread), the size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities, and the firm's risk in positioning the securities involved. While
the Advisor generally seeks reasonably competitive spreads or commissions, the
Trust will not necessarily be paying the lowest spread or commission available.
The money market securities in which the Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Advisor
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of the Trust will primarily consist of dealer spreads
and underwriting commissions.
TRADING PRACTICES AND BROKERAGE
The Advisor selects brokers or dealers to execute transactions for the purchase
or sale of portfolio securities on the basis of its judgment of the professional
capability of the brokers or dealers to provide the service. The primary
consideration is to have brokers or dealers execute transactions at best price
and execution. Best price and execution refer to many factors, including the
price paid or received for a security, the commission charged, the promptness
and reliability of execution, the confidentiality and placement accorded the
order and other factors affecting the overall benefit obtained by the account on
the transaction. The Trust's determination of what are reasonably competitive
rates is based upon the professional knowledge of its trading department as to
rates paid and charged for similar transactions throughout the securities
industry. In some instances, the Trust pays a minimal share transaction cost
when the transaction presents no difficulty. Some trades are made on a net basis
where the Trust either buys securities directly from the dealer or sells them to
the dealer. In these instances, there is no direct commission charged but there
is a spread (the difference between the buy and sell price) which is the
equivalent of a commission.
The Trust may allocate out of all commission business generated by the Fund (and
any other accounts under management by the Advisor), brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include advice, either directly or through publications or writings, as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends; assisting
in determining portfolio strategy; providing computer software used in security
analyses; and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Advisor in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage business.
As provided in the Securities Exchange Act of 1934, as amended (the "1934 Act"),
higher commissions may be paid to broker-dealers who provide brokerage and
research services than to broker-dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed to
broker-dealers who provide such brokerage and research services, the Trust
believes that the commissions paid to such broker-dealers are not, in general,
higher than commissions that would be paid to broker-dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
broker-dealers who provide daily portfolio pricing services to the Trust.
Subject to best price and execution, commissions used for pricing may or may not
be generated by the Fund receiving the pricing service.
The Advisor may place a combined order for two or more accounts or separate
funds engaged in the purchase or sale of the same security if, in their
judgment, joint execution is in the best interest of each participant and will
result in best price and execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. It is believed
that an ability to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or fund may obtain, it is the opinion
of the Advisor and the Trust's Board of Trustees that the advantages of combined
orders outweigh the possible disadvantages of separate transactions.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Fund may
place orders with broker-dealers which have agreed to defray certain Trust
expenses such as custodian fees, and may, at the request of the Distributor,
give consideration to sales of shares of the Trust as a factor in the selection
of brokers and dealers to execute Trust portfolio transactions.
It is expected that the Trust may execute brokerage or other agency transactions
through an affiliate of the Advisor, which is a registered broker-dealer, for
commissions in conformity with the 1940 Act, the 1934 Act and rules promulgated
by the SEC. Under these provisions, an affiliate of the Advisor is permitted to
receive and retain compensation for effecting portfolio transactions for the
Trust on an exchange. These rules further require that commissions paid to the
Distributor by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." In addition, the Trust may direct commission business to one or more
designated broker-dealers in connection with such broker-dealers' provision of
services to the Trust or payment of certain Trust expenses (e.g., custody,
pricing and professional fees). The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures periodically.
The broker-dealers who execute transactions on behalf of the Fund and who are
affiliates of the Fund's Advisor are brokers in the ABN AMRO International
brokerage network.
The Fund expects that the portfolio turnover rate will not generally exceed
100%. A portfolio turnover rate would exceed 100% if all of its securities,
exclusive of U.S. Government securities and other securities whose maturities at
the time of acquisition are one year or less, are replaced in the period of one
year. Turnover rates may vary from year to year and may be affected by cash
requirements for redemptions and by requirements which enable the Fund to
receive favorable tax treatment. A portfolio turnover rate of 100% or more may
result in higher transaction costs and additional taxes.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of the Fund each of which represents an equal proportionate interest in
the Fund with each other share. Shares are entitled upon liquidation to a pro
rata share in the net assets of the Fund. Share holders have no preemptive
rights. The Declaration of Trust provides that the Trustees of the Trust may
create additional series of shares. All consideration received by the Trust for
shares of any additional series and all assets in which such consideration is
invested would belong to that series and would be subject to the liabilities
related thereto.
Share certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust, under certain
circumstances, could be held personally liable as partners for the obligations
of the Trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders incurring financial loss for that reason appears
remote because the Trust's Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisors, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
YEAR 2000
The Trust depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its service providers do not properly process the date January 1, 2000
and distinguish between the year 2000 and the year 1900. The Trust has asked its
service providers whether they expect to have their computer systems adjusted
for the year 2000 transition, and received assurances from each that its system
is expected to accommodate the year 2000 without material adverse consequences
to the Trust. The Fund and its shareholders may experience losses if these
assurances prove to be incorrect or as a result of year 2000 computer
difficulties experienced by issuers of portfolio securities or third parties,
such as custodians, banks, broker-dealers or others with which the Fund does
business.
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A--Prospectus: Not applicable.
Part B--Statement of Additional Information: Not applicable.
(b) Additional Exhibits
Exhibit
Number Description
1 Agreement and Declaration of Trust and
Amendment thereto as originally filed as
Exhibit 1 to Registrant's initial
Registration Statement on October 2, 1992
and incorporated by reference to Exhibit 1
of Post-Effective Amendment No. 11, filed
April 29, 1997.
1(a) Amendment dated October 20, 1992 to
Registrant's Agreement and Declaration of
Trust as originally filed as Exhibit 1(b) of
Registrant's Pre- Effective Amendment No. 1
filed on December 3, 1992 and incorporated
by reference to Exhibit 1(a) of Post-
Effective Amendment No. 11, filed April
291997.
1(b) Amendment dated April 27, 1998 to
Registrant's Agreement and Declaration of
Trust is incorporated by reference to
Exhibit 1(b) of Post-Effective Amendment No.
15, filed April 28, 1998.
2 Registrant's By-Laws as originally filed as
Exhibit 2 with Registrant's initial
Registration Statement on October 2, 1992
and incorporated by reference to Exhibit 2
of Post-Effective Amendment No. 11, filed
April 29, 1997.
2(a) Amendment to Registrant's By-Laws is filed herewith.
3 Not applicable.
4 Not applicable.
5 Investment Advisory Agreement with LaSalle
Street Capital Management, Ltd. as
originally filed as Exhibit 5(b) of
Registrant's initial Registration Statement
on October 2, 1992 and incorporated by
reference to Exhibit 5 of Post-Effective
Amendment No. 11, filed April 29, 1997.
5(a) Form of Amendment to Schedule A to the
Investment Advisory Agreement dated December
31, 1992 is filed herewith.
5(b) Investment Sub-Advisory Agreement between
LaSalle Street Capital Management Ltd., on
behalf of the Registrant, and ABN AMRO-NSM
International Funds Management B.V.as
originally filed as Exhibit 5(c) of
Registrant's Pre-Effective Amendment No. 1
and incorporated by reference to Exhibit
5(a) of Post-Effective Amendment No.
11, filed April 29, 1997.
6 Distribution Agreement dated February 26,
1998 between Registrant and First Data
Distributors, Inc. is incorporated by
reference to Exhibit 6(a) of Post-Effective
Amendment No. 15, filed April 28, 1998.
6(a) Form of Amendment to Schedule A to the
Distribution Agreement dated February 26,
1998 is filed herewith.
7 Not applicable.
8 Custodian Agreement as originally filed as
Exhibit 8(a) with Registrant's Pre-Effective
Amendment No. 1 and incorporated by
reference to Exhibit 8 of Post-Effective
Amendment No. 11, filed April 29, 1997.
8(a) Sub-Custodian Agreement between CoreStates
Bank, N.A. and Barclays Bank PLC
incorporated herein by reference to Exhibit
8(a)(1) of Post-Effective Amendment No. 6
to Registrant's Registration Statement on
Form N-1A (File No. 33-52784), filed with
the Securities and Exchange Commission
on January 13, 1995.
8(b) Transfer Agency and Services Agreement
dated February 26, 1998 between the
Registrant and First Data Investor Services
Group, Inc. is filed herewith.
8(c) Form of Amendment to Exhibit 1 the Transfer
Agency and Services Agreement dated February
26, 1998 is filed herewith.
9 Form of Administration and Fund Accounting
Agreement between the Registrant and ABN
AMRO Fund Services, Inc. is filed herewith.
9(a) Form of Shareholder Servicing Agent
Agreement between the Registrant and First
Data Distributors, Inc. is filed herewith.
9(b) Shareholder Service Plan is filed herewith.
10 Opinion and Consent of Counsel as originally
filed as Exhibit 10 with Registrant's
Post-Effective Amendment No. 2 and
incorporated by reference to Exhibit 10 of
Post-Effective Amendment No. 11, filed April
29, 1997.
11 Not applicable.
12 Not applicable.
13 Form of Purchase Agreement between the
Registrant and First Data
Distributors, Inc. is filed herewith.
14 Not applicable.
15 Distribution Plan - Investor Class as
originally filed as Exhibit 15 with
Registrant's Pre-Effective Amendment No. 1
and incorporated by reference to
Exhibit 15 Post- Effective Amendment No. 11,
filed April 29, 1997.
15(a) Distribution Plan - Investor Class between
the Registrant and First Data Distributors,
Inc. as of February 26, 1998 is
incorporated by reference to Exhibit 15(a)
of Post-Effective Amendment No. 15,
filed April 26, 1998.
16 Not applicable.
17 Not applicable.
18 Rule 18f-3 Plan as originally filed as
Exhibit 18 with Registrant's Post-Effective
Amendment No. 8 and incorporated by
reference to Exhibit 18 of Post-Effective
Amendment No. 11, filed April 29, 1997.
24 Power of Attorney incorporated by reference
to Exhibit 24 of Post-Effective Amendment
No. 14, filed June 30, 1998.
Item 25. Persons Controlled by or under Common Control with Registrant
See the Prospectuses and the Statement of Additional Information regarding the
Trust's control relationships.
Item 26. Number of Holders of Securities
As of May 29, 1998
Number of
Title of Class
Record Holders
Units of beneficial interest, without par value -
COMMON SHARES
Value Fund 62
Growth Fund 72
Small Cap Growth Fund 27
Small Cap Value Fund 0
International Equity Fund 43
TransEurope Fund 0
Asian Tigers Fund 44
Fixed Income Fund 20
Intermediate Government Fixed Income Fund 9
Tax-Exempt Fixed Income Fund 11
International Fixed Income Fund 14
Limited Volatility Fixed Income Fund 0
Money Market Fund 14
Government Money Market Fund 12
Treasury Money Market Fund 6
Tax-Exempt Money Market Fund 17
Real Estate 27
Balanced Fund 42
Latin America Equity Fund 30
INVESTOR SHARES
Value Fund 248
Growth Fund 391
Small Cap Growth Fund 101
International Equity Fund 269
TransEurope Fund 0
Asian Tigers Fund 159
Fixed Income Fund 49
Intermediate Government Fixed Income Fund 21
Tax-Exempt Fixed Income Fund 39
International Fixed Income Fund 40
Limited Volatility Fixed Income 0
Money Market Fund 116
Government Money Market Fund 15
Treasury Money Market Fund 9
Tax Exempt Money Market Fund 36
Balanced Fund 369
Real Estate 0
Item 27. Indemnification
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to the
Registration Statement is incorporated by reference. Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended (the "Act")
may be permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
<PAGE>
Item 28. Business and Other Connections of Investment Advisor and
Investment Sub-Advisor
<TABLE>
<CAPTION>
<S> <C>
<C>
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
Timothy J. Leach None
Chairman of the Board
President, CEO
John M. Kramer ABN AMRO Incorporated
Secretary,
Director
General Counsel,
Senior Vice President
ABN AMRO Capital Markets Holding, Inc.
Secretary
ABN AMRO Acceptance Corporation
Director & Secretary
ABN AMRO Commodity Finance, Inc.
Director & Secretary
ABN AMRO Funding Corporation
Secretary
ABN AMRO Fund Services, Inc.
Director
ABN AMRO Investment Services, Inc.
Secretary
ABN AMRO Mezzanine Management, Inc.
Director & Secretary
ABN AMRO Mezzanine Management II, Inc.
Director & Secretary
ABN AMRO Mortgage Corporation
Secretary
ABN AMRO Sage Corporation
Secretary
Bluestone Private Equity Management, Inc.
Director & Secretary
Jackson LaSalle Investment Services, Inc.
Director & Secretary
Wilbert Thiel ABN AMRO Incorporated
President, CEO,
Director
Director
Securities Industry Association
Director
SIA-Central States District
Chairman
Executive Committee
Lutheran Social Services of Illinois
Director & Officer
Chicago Area Council of the Boy Scouts
Director
of America
Jon T. Ender None
Executive Vice President
Richard A. Frodsham ABN AMRO Incorporated
Senior Vice President
Executive Vice President
Charles R. Klimkowski Theregenics, Inc.
Director
Executive Vice President
George J. Baxter None
Senior Vice President
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
Gregory D. Boal LaSalle National Bank
Vice President
Senior Vice President
Lawrence J. Brottman None
Senior Vice President
Edwin M. Bruere None
Senior Vice President
A. Wade Buckles LaSalle National Bank
First Vice President
Senior Vice President
& Assistant Secretary
Brian L. Burda None
Senior Vice President
Richard C. Butler None
Senior Vice President
Annette C. Calderwood None
Senior Vice President
Jac A. Cerney LaSalle National Bank
Vice President
Senior Vice President
& Assistant Secretary
A. Keith Dibble LaSalle National Bank
Vice President & Assistant
Senior Vice President
Secretary
Nancy J. Droppelman None
Senior Vice President
Mark Karstrom LaSalle National Bank
Vice President & Assistant
Senior Vice President
Secretary
Steven P. Klimkowski None
Senior Vice President
Susan E. Lorsch None
Senior Vice President
Kathryn L. Martin None
Senior Vice President
George S. McElroy, Jr. None
Senior Vice President
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
Thomas F. McGrath LaSalle National Bank
Senior Vice President
Senior Vice President
& Assistant Secretary
Johannes N.A. Specker ABN AMRO Bank N.V.
Senior Vice President
Senior Vice President
A. Richard Taft None
Senior Vice President
Karen L. Van Cleave LaSalle National Bank
Vice President
Senior Vice President
& Assistant Secretary
Peter Williams None
Senior Vice President
James J. Baudendistel None
Vice President
Marc G. Borghans LaSalle National Bank
Vice President
Vice President
& Assistant Secretary
Alisa L. Castillo ABN AMRO Incorporated
Vice President
Vice President
Michael T. Castino None
Vice President
Martha M. Clemons None
Vice President
Corporate Secretary
Brett M. Detterbeck ABN AMRO Incorporated
Vice President
Vice President
Martin L. Eisenberg ABN AMRO Bank N.V.
Vice President
Vice President ABN AMRO Capital Markets Holding, Inc.
Vice President
ABN AMRO Incorporated
Vice President
Netherlands Trading Society East, Inc.
Vice President
Pine Tree Capital Holdings, Inc.
Vice President
AMRO Securities, Inc.
Vice President
ABN AMRO North America Finance, Inc.
Vice President
DBI Holdings, Inc.
Vice President
ABN AMRO North America, Inc.
Senior Vice President
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
ABN AMRO Mortgage Corp.
Vice President
ABN AMRO Resource Management, Inc.
Vice President
Danic Asset Management Corp.
Vice President
National Asset Management
Vice President
SFH, Inc.
Vice President
ABN AMRO Acceptance Corp.
Vice President
ABN AMRO Credit Corp.
Vice President
ABN AMRO Investment Services, Inc.
Vice President
ABN AMRO Leasing, Inc.
Vice President
Cragin Financial Corp.
Vice President
Cragin Service Corp.
Vice President
Cumberland & Higgins, Inc.
Vice President
LaSalle Bank, F.S.B.
Vice President
Lease Plan Illinois, Inc.
Vice President
LaSalle Financial Services, Inc.
Vice President
LaSalle Home Mortgage Corporation
Vice President
LaSalle National Corporation
Vice President
ABN AMRO Capital (USA) Inc.
Vice President
Lease Plan North America, Inc.
Vice President
ABN AMRO Information Technology Services
Company Vice President
Lisle Corporation
Vice President
ABN AMRO Services Company, Inc.
Vice President
LaSalle Bank National Association
Vice President
LaSalle National Bancorp, Inc.
Vice President
Amsterdam Pacific Corporation
Vice President
LaSalle Trade Services Limited
Vice President
CNBC Bancorp, Inc.
Vice President
ChiCorp. Commodity Finance, Inc.
Vice President
ChiCorp. Commodities, Inc.
Vice President
Bluestone Private Equity Management, Inc.
Vice President
Columbia Financial Services, Inc.
Vice President
CNBC Development Corporation
Vice President
CNBC Investment Corporation
Vice President
CNBC Leasing Corporation
Vice President
Sky Mortgage Company
Vice President
Sky Finance Company
Vice President
CNB Property Corporation
Vice President
Union Realty Mortgage Co., Inc.
Vice President
ABN AMRO Fund Services
Vice President
LaSalle National Bank
Vice President
LaSalle Distributors, Inc.
Vice President
LaSalle Community Development Corporation
Vice President
Rob-Wal Investment Co.
Vice President
ENB Realty Co., Inc.
Vice President
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
LaSalle Trade Services Corporation
Vice President
LaSalle National Leasing Corporation
Vice President
LaSalle Business Credit, Inc.
Vice President
European American Bank
Vice President
Cityspire Realty Corp.
Vice President
EA Debt Corp.
Vice President
EA Land Corp.
Vice President
EAB Land Company, Inc.
Vice President
EAB Mortgage Company, Inc.
Vice President
EAB Realty Corp.
Vice President
EAB Realty of Florida, Inc.
Vice President
EAB Securities, Inc.
Vice President
Ashland Properties, Inc.
Vice President
Discount Brokers International, Inc.
Vice President
Kany Long Island City Corp.
Vice President
Cragin Service Development Corp.
Vice President
Wasco Funding Corp.
Vice President
Island Abodes Corp.
Vice President
Lyric Holdings, Inc.
Vice President
EAB Credit Corp.
Vice President
ORE Realty, Inc.
Vice President
Texas Holdings, Inc.
Vice President
Twelve Polo Realty Inc.
Vice President
Vail at North Salem Inc.
Vice President
81 Lee Avenue Corp.
Vice President
169 East Flagler Corp.
Vice President
EAB Plaza, Inc.
Vice President
117 Seaman Realty, Inc.
Vice President
Garden City Marble Corp.
Vice President
Huntington Bay Development Corp.
Vice President
Plaza Homes Inc. (Metrofund)
Vice President
LSR Realty Inc.
Vice President
Beckman Hospitality Corp.
Vice President
Bennett 143 Corp.
Vice President
Birch Locust Valley Corp.
Vice President
Broadhollow 532 Melville Corporation
Vice President
Colony at Sayerville, Corp.
Vice President
Corners Estates at Hauppauge Inc.
Vice President
Corona 114 Apartments Inc.
Vice President
Country Knolls at Manorville Inc.
Vice President
Cove Townhouses at Southold Inc.
Vice President
Crystal Domiciles Inc.
Vice President
Eastern Shores at Northampton Corp.
Vice President
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
Forestwood at North Hills Inc.
Vice President
Garden State Convention Center at
Vice President
Somerest County, Inc.
Half Acre on 347 at Nesoonset Inc.
Vice President
Horse Race Lane at Nissequogue Inc.
Vice President
Jericho 969 Turnpike Inc.
Vice President
Fairfield Avenue Corp.
Vice President
Amsterdam Development Corp.
Vice President
Brownstone Apts. Inc.
Vice President
Central Cedarhurst Corp.
Vice President
GSC Land Corp.
Vice President
East 91st Street Development Corp.
Vice President
East 92nd Street Development Corp.
Vice President
LLPA Corporation
Vice President
Lake Front Land Corp.
Vice President
Lattingtown Mansion, Inc.
Vice President
Lowell Acquisition Corp.
Vice President
Ludlow Development Corp.
Vice President
Maspeth 56-25 58th Street Corp.
Vice President
Metro Case Corp.
Vice President
Montauk Hospitality Corp.
Vice President
Montauk YC Corp.
Vice President
Moreland Hauppauge Corp.
Vice President
North Hills Links Corp.
Vice President
Parkway Plaza 1400 Corp.
Vice President
Plaza Boulevard Equities Corp.
Vice President
Plaza Boulevard Properties Corp.
Vice President
Plaza Uniondale Properties, Corp.
Vice President
Remington Ronkonkoma Corp.
Vice President
Rendezvous Realty Corp.
Vice President
SE at Commack Inc.
Vice President
SE at Commack II Inc.
Vice President
SE at Commack III Inc.
Vice President
SE at Commack IV Inc.
Vice President
Scholar Estates at Commack Inc.
Vice President
Seaman Shares at Inwood Corp.
Vice President
Showcase Estates at Dix Hills Inc.
Vice President
Southampton Settlers Corporation
Vice President
Southeast Ridgefield Land Corp.
Vice President
Steinway 18-50 Astoria Corp.
Vice President
Sterling DTVA Corp.
Vice President
TE at Dix Hills Inc.
Vice President
TE at Dix Hills II Inc.
Vice President
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
TE at Dix Hills III Inc.
Vice President
Thornwood Estates at Dix Hills Inc.
Vice President
W.M. Seaman at Inwood Corp.
Vice President
Welcome Center at Manorville Inc.
Vice President
West End 700 Inc.
Vice President
Westminster Downs at Dix Hills, Inc.
Vice President
Westwood Hills at Middletown, Inc.
Vice President
Ziegfeld Villas Corp.
Vice President
41 East Sunrise Highway Corporation
Vice President
55 Commerce, Inc. (Sold to EMI 1/20/92)
Vice President
Seventh Street Development Corp.
Vice President
Fourteenth Street Development Corp.
Vice President
West 51st Street Development Corp.
Vice President
West 73rd Street Development Corp.
Vice President
Lemark Land in Setauket, Inc.
Vice President
Ludlow Street Development Corp.
Vice President
Milestone Square Corp.
Vice President
Oceanside 35-05 Hampton Road Inc.
Vice President
Oceanside 35-39 Hampton Road Inc.
Vice President
Sangeo 709 Merrick Road Corp.
Vice President
Sherwood Plaza Corp.
Vice President
Syosset 240 Jericho, Inc.
Vice President
Nancy A. Ellefson LaSalle National Bank
Assistant Vice President &
Vice President
Assistant Secretary
Frank Germack None
Vice President
Ann H. Heffron None
Vice President
Brian R. Keeley None
Vice President
Tom Lennox None
Vice President
Phillip P. Mierzwa LaSalle National Bank
Trust Officer
Vice President
& Assistant Secretary
Mark T. Morgan LaSalle National Bank
Assistant Vice President &
Vice President
Assistant Secretary
Name and Position
Connection with
with Investment Advisor Name of Other Company
Other Company
Mary E. Ras None
Vice President
Ronald C. Scheuer LaSalle National Bank
Vice President
Vice President
& Assistant Secretary
Kenneth Tyszko None
Vice President
Bridget Vogenthaler None
Vice President
Ann Weis None
Vice President
Robert Bennett None
Assistant Vice President
Anthony P. Ford None
Assistant Vice President
Frank J. Haggerty None
Assistant Vice President
Timothy Kelly None
Assistant Vice President
Michelle Kline None
Assistant Vice President
Alan Mason LaSalle National Bank
Trust Officer
Assistant Vice President
& Assistant Secretary
Patrick O'Hara None
Assistant Vice President
Monica Kim Phillips None
Assistant Vice President
Marcia Roth
Assistant Vice President None
Susan M. Wiemeler None
Assistant Vice President
</TABLE>
Other business, profession, vocation, or employment of a substantial nature in
which each director or principal officer of the Sub-Advisor is or has been, at
any time during the last two fiscal years, engaged for his/her own account or in
the capacity of director, officer, employee, partner or trustee are as follows:
ABN AMRO-NSM International Funds Management B.V., a registered investment
advisor, serves as the investment sub-advisor of the Latin America Equity Fund,
International Equity Fund, TransEurope Fund, Asian Tigers Fund and International
Fixed Income Fund.
<TABLE>
<CAPTION>
<S> <C>
<C>
Name and Position with
Connection with
Investment Sub-Advisor Name of Other Company
Other Company
Hendrik Stienstra ABN AMRO Investment Management B.V.
Director
Director ABN AMRO Investment Management Funds B.V.
Director
ABN AMRO Beheer Beleggingsfondsen B.V.
Director
B.V. Hollandsche Belegging en Beheer
Director
Maatshchappij
ABN AMRO Bank N.V.
Senior Vice President
Diederik Wermolder ABN AMRO Investment Management B.V.
Director
Director ABN AMRO Investment Management Funds B.V.
Director
ABN AMRO Beheer Beleggingsfodsen B.V.
Director
B.V. Hollandsche Belegging en Beheer
Director
Maatshchappij
ABN AMRO Luxembourg Investment Management S.A.
Director
ABN AMRO Funds Investment Advisory
Director
(Luxembourg) S.A.
ABN AMRO Interest Growth Fund Investment
Director
Advisory (Luxembourg) S.A.
ABN AMRO Valurente Investment Advisory
Director
(Luxembourg) S.A.
ABN AMRO Bank N.V.
Vice President
Wypke Postma ABN AMRO Investment Management B.V.
Officer
Director ABN AMRO Investment Management Funds B.V.
Director
ABN AMRO Beheer Beleggingsfondsen B.V.
Officer
B.V. Hollandsche Belegging en Beheer
Maatschappij Officer
ABN AMRO Bank N.V.
Vice President
Mathilde de la Serviere Banque NSM, Paris
Vice President
Director
Anne-Marie Georges Banque NSM, Paris
Vice President
Director
Alex Ng ABN AMRO Asset Management (Asia) Ltd.
Director
Portfolio Manager
Name and Position with
Connection with
Investment Sub-Advisor Name of Other Company
Other Company
George Theodoridis ABN AMRO Investment Management B.V.
Officer
Officer ABN AMRO Investment Management Funds B.V.
Officer
ABN AMRO Beheer Beleggingsfondsen B.V.
Officer
B.V. Hollandsche Belegging en Beheer
Officer
Maatshchappij
ABN AMRO Bank N.V.
Vice President
Wouter Weijand ABN AMRO Bank N.V.
Vice President
Officer
Luiz Rubiero, Jr. ABN AMRO Bank N.V.
Assistant Vice President
Officer
John Vaartjes ABN AMRO Investment Management B.V.
Officer
Compliance Officer ABN AMRO Investment Management Funds B.V.
Officer
ABN AMRO Beheer Beleggingsfondsen B.V.
Officer
B.V. Hollandsche Belegging en Beheer
Maatshchapij Officer
ABN AMRO Bank N.V.
</TABLE>
Assistant Vice President
Item 29. Principal Underwriters
(a) First Data Distributors, Inc. (the "Distributor"),
a wholly-owned subsidiary of First Data Investor
Services Group, Inc. and an indirect wholly-owned
subsidiary of First Data Corporation, acts as
Distributor for ABN AMRO Funds pursuant to a
distribution agreement dated February 26,
1998.
The Distributor also acts as underwriter for
Alleghany Funds, BT Insurance Funds Trust,
First Choice Funds Trust, Forward Funds, Inc.,
The Galaxy Fund, Galaxy VIP Fund, Galaxy Fund
II, IBJ Funds Trust, Light Index Fund, Inc.,
Panorama Trust, Undiscovered Managers Funds, and
Wilshire Target Funds, Inc. The Distributor is
registered with the Securities and Exchange
Commission as a broker-dealer and is a member of
the National Association of Securities Dealers,
Inc.
(b) The information required by this Item 29(b) with
respect to each director, officer, or partner of
First Data Distributors, Inc. is incorporated by
reference to Schedule A of Form BD filed by First
Data Distributors, Inc. with the Securities and
Exchange Commission pursuant to the Securities Act of
1934 (file no. 8-45467).
(c) Not applicable.
<PAGE>
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by the
Registrant by Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained by the offices of:
The Chase Manhattan Bank First Data Investor Services Group, Inc.
270 Park Avenue One Exchange Place, 8th Floor
New York, New York 10017 Boston, Massachusetts 02109
ABN AMRO Asset Management (USA) Inc. ABN AMRO-NSM International Funds
208 South LaSalle Street Management B.V.
Chicago, Illinois 60604-1003 Hoogoorddreef 66-68
P.O. Box 283, 1000 E.A.
Amsterdam, The Netherlands ZU100GST
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant hereby undertakes that whenever Shareholders meeting the requirements
of Section 16(c) of the Investment Company Act of 1940, as amended, inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant undertakes to call a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus is delivered
with a copy of the Registrant's latest annual report to Shareholders, upon
request and without charge.
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust for ABN AMRO Funds (formerly,
The Rembrandt(R) Funds, The LSNT Funds and The Passport Funds) is on file with
the Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Registration Statement has been executed on behalf of the Trust
by an officer of the Trust as an officer and by its Trustees as trustees and not
individually and the obligations of or arising out of this Registration
Statement are not binding upon any of the Trustees, officers, or Shareholders
individually but are binding only upon the assets and property of the Trust.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all of
the requirements for the effectiveness of this Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 16 to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Commonwealth of
Boston, State of Massachusetts, on the 30th day of June, 1998.
ABN AMRO FUNDS
By: /s/ Timothy J. Leach
Timothy J. Leach, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
* Trustee June 30, 1998
Arnold F. Brookstone
* Trustee June 30, 1998
William T. Simpson
* Trustee June 30, 1998
Robert Feitler
* Trustee June 30, 1998
John A. Wing
/s/ Timothy J. Leach President & Chief
Executive Officer June 30, 1998
- -----------------------
Timothy J. Leach
/s/John J. Burke, III Vice President &
Treasurer June 30, 1998
- -----------------------
John J. Burke, III
*By: /s/Coleen D. Dinneen
Coleen D. Dinneen, Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Name Exhibit No.
Amendment to By-Laws 2(a)
Form of Amendment to Schedule A to Investment Advisory Agreement 5(a)
Form of Amendment to Schedule A to Distribution Agreement 6(a)
Transfer Agency and Services Agreement 8(b)
Form of Amendment to Exhibit 1 to Transfer Agency and Services Agreement 8(c)
Form of Administration Agreement 9
Form of Shareholder Servicing Agent Agreement 9(a)
Shareholder Service Plan 9(b)
Form of Purchase Agreement 13
<PAGE>
AMENDMENT TO
BY-LAWS
OF
ABN AMRO FUNDS
The Bylaws of ABN AMRO Funds are amended as follows:
Section 1. Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of ABN AMRO Funds, the Massachusetts business trust
established by the Declaration of Trust (the "Trust").
1.2 Principal Office of the Trust. The principal office of the Trust shall be
located in Providence, Rhode Island.
FORM OF
AMENDMENT DATED ___________, 1998
TO SCHEDULE A
TO THE ADVISORY AGREEMENT
DATED DECEMBER 31, 1992
BETWEEN
ABN AMRO FUNDS
AND
ABN AMRO ASSET MANAGEMENT (USA) INC.
Pursuant to Section 3, the Trust shall pay the Adviser compensation for services
rendered which is calculated daily and paid monthly at an annual rate as
follows:
0.80% for the Small Cap Value Fund
ABN AMRO FUNDS ABN AMRO ASSET
MANAGEMENT (USA) INC.
By: _________________ By: _____________________
Title: ________________ Title: ____________________
FORM OF
AMENDMENT DATED ____________, 1998
TO SCHEDULE A
TO THE DISTRIBUTION AGREEMENT
DATED FEBRUARY 26, 1998
BETWEEN
ABN AMRO FUNDS
AND
FIRST DATA DISTRIBUTORS, INC.
Pursuant to the Introduction, Paragraph 4, Schedule A to the Distribution
Agreement is amended to include Small Cap Value Fund under the heading Equity
Funds.
ABN AMRO FUNDS FIRST DATA DISTRIBUTORS, INC.
By: ________________ By: __________________________
Title: _______________ Title: _______________________
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS TRANSFER AGENCY AND SERVICES AGREEMENT, dated as of this 26th day
of February, 1998 (the "Agreement") by and between REMBRANDT FUNDS (the "Fund"),
a Massachusetts business trust having its principal place of business at
Chicago, IL and FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor Services
Group"), a Massachusetts corporation registered with the Securities and Exchange
Commission as a transfer agent with principal offices at 4400 Computer Drive,
Westborough, Massachusetts 01581.
WITNESSETH
WHEREAS, the Fund is authorized to issue shares ("Shares") in separate
series, with each such series representing interests in a separate portfolio of
securities or other assets.
WHEREAS, the Fund intends to offer Shares in those Portfolios
identified in the attached Exhibit 1 (each a "Portfolio" and collectively, the
"Portfolios"), which may be amended from time to time by the parties hereto;
WHEREAS, the Fund on behalf of the Portfolios, desires to appoint
Investor Services Group as its transfer agent, dividend disbursing agent and
agent in connection with certain other activities to perform certain transfer
agency services as set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the Fund and Investor Services Group agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not such
person is an officer or employee of the Fund, duly authorized to give
Oral Instructions or Written Instructions on behalf of the Fund as
indicated in writing to Investor Services Group from time to time.
(c) "Board of Trustees" shall mean the Board of Trustees of
the Fund.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(g) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by Investor Services Group from
a person reasonably believed by Investor Services Group to be an
Authorized Person.
(i) "Portfolio" shall mean each separate series of shares
offered by the Fund representing interests in a separate portfolio of
securities and other assets.
(j) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(k) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
each respective Portfolio of the Fund as may be issued from time to
time.
(l) "Shareholder" shall mean a record owner of Shares of each
respective Portfolio of the Fund.
(m) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by Investor Services Group to be
an Authorized Person and actually received by Investor Services Group.
Written Instructions shall include manually executed originals and
authorized electronic transmissions, including telefacsimile of a
manually executed original or other process.
Other words and phrases not defined herein shall have the meanings set
forth in the 1940 Act.
Article 2 Effective Date and Appointment of Investor Services Group.
This Agreement shall be effective on the date first written above. The
Fund, on behalf of the Portfolios, hereby appoints Investor Services Group as
transfer agent and dividend disbursing agent for Shares of each respective
Portfolio of the Fund and as shareholder servicing agent for the Fund and
Investor Services Group hereby accepts such appointments and agrees to perform
the duties hereinafter set forth.
Article 3 Duties of Investor Services Group.
3.1 Investor Services Group shall be responsible for:
(a) Administering and performing the customary services of a
transfer agent; acting as service agent in connection with dividend and
distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of each Portfolio, as more fully described in the
written schedule of Duties of Investor Services Group annexed hereto as
Schedule A and incorporated herein, and in accordance with the terms of
the Prospectus of the Fund on behalf of the applicable Portfolio,
applicable law, the procedures of, and established from time to time
by, the Fund and the procedures established from time to time between
Investor Services Group and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant
to Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of each Portfolio which are authorized, based upon data provided
to it by the Fund, and issued and outstanding. Investor Services Group
shall provide the Fund on a regular basis with the total number of
Shares of each Portfolio which are authorized and issued and
outstanding and shall have no obligation, when recording the issuance
of Shares, to monitor the issuance of such Shares or to take cognizance
of any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Fund.
(c) In addition to providing the foregoing services, the Fund
hereby engages Investor Services Group as its exclusive service
provider with respect to the Print/Mail Services as set forth in
Schedule B for the fees also identified in Schedule B. Investor
Services Group agrees to perform the services and its obligations
subject to the terms and conditions of this Agreement.
(d) Notwithstanding any of the foregoing provisions of this
Agreement, Investor Services Group shall be under no duty or obligation
to inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares,
or the propriety of the amount to be paid therefor; (iii) the legality
of the declaration of any dividend by the Board of Trustees, or the
legality of the issuance of any Shares in payment of any dividend; or
(iv) the legality of any recapitalization or readjustment of the
Shares.
3.2 In addition, the Fund shall (i) identify to Investor Services Group
in writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of Investor Services Group for the
Fund's blue sky State qualification status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above, except to the
extent of any liability Investor Services Group may have as the administrator of
the Fund.
3.3 Investor Services Group agrees to provide the services set forth
herein in accordance with the Performance Standards annexed hereto as Exhibit 1
of Schedule A and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time by the parties.
3.4 In addition to the duties set forth herein, Investor Services Group
shall perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and Investor Services Group.
Article 4 Recordkeeping and Other Information.
4.1 Investor Services Group shall create and maintain all records
required of it pursuant to its duties hereunder and as set forth in Schedule A
in accordance with all applicable laws, rules and regulations, including records
required by Section 31(a) of the 1940 Act and the rules thereunder. Where
applicable, such records shall be maintained by Investor Services Group for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act and the rules
thereunder, Investor Servicesr fund of the
Trust and shall not be binding upon any Trustee, officer or shareholder of the
New Fund or the Trust individually.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the _______ day of ________, 1998.
Attest: ABN AMRO FUNDS
By:
Name:
Title:
Attest: FIRST DATA DISTRIBUTORS, INC.
By:
Name:
Title:
<PAGE>
