As filed with the Securities and Exchange Commission on April 16, 1998
File No. 33-52784
File No. 811-7244
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 13 X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 14 X
REMBRANDT 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:
Julie A. Tedesco, 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) on [date] pursuant to
paragraph (b) 60 days after filing pursuant to paragraph (a)
on [date] pursuant to paragraph (a); or
X 75 days after filing pursuant to paragraph (a) of Rule 485
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REMBRANDT FUNDS
FORM N-1A
CROSS REFERENCE SHEET
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Part A
Item No. Prospectus Caption
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Highlights
Item 3. Condensed Financial Information [ ]
Item 4. General Description of Registrant Fund Highlight
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 Sub-
Advisor, The
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 Purchase of Shares
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings Not Applicable
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 Policies
Item 14. Management of the Registrant Trustees and Officers of
the Trust; The
Administrator
Item 15. Control Persons and Principal Holders Trustees and Officers of
the Trust of Securities
Item 16. Investment Advisory and Other Services The Advisor; The
Administrator; The
Distributor; Experts
Item 17. Brokerage Allocation and other Practices Fund 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 Distributor
Item 22. Calculation of Performance Data Computation of Yield;
Calculation of Total
Return
Item 23. Financial Statements Financial Statements
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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.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC is
effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
REMBRANDT FUNDS(R)
SMALL CAP VALUE FUND
INVESTOR SHARES
_______________, 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 _________, 1998, as
supplemented from time to time, which has been filed with the Securities and
Exchange Commission (the "SEC") and is available along with other related
materials in the SEC's Internet Website (http://www.sec.gov). The SAI is
incorporated into this Prospectus by reference and is available upon request and
without charge by calling 1-800-443-4725.
Investor Shares of Small Cap Value Fund (the "Fund") are offered to individuals
and institutional investors through financial intermediaries which have
established a dealer agreement with the Fund's distributor. Investors in the
Investor Shares are referred to hereinafter as "shareholders."
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 TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'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.
TABLE OF CONTENTS
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Fund Highlights...............................................................................
Portfolio Expenses............................................................................
Your Account and Doing Business with Us.......................................................
Investment Objective and Policies.............................................................
Certain Risk Factors..........................................................................
Investment Limitations........................................................................
The Advisor...................................................................................
The Administrator.............................................................................
The Transfer Agent............................................................................
Distribution and Shareholder Servicing........................................................
Performance...................................................................................
Taxes.........................................................................................
Additional Information About Doing Business with Us...........................................
General Information...........................................................................
Description of Permitted Investments and Risk Factors.........................................
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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. To find these helpful guides, look for
this symbol. [Symbol]
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 and Policies
The Fund seeks a high level of total return primarily through capital
appreciation. For more information, see "Investment Objective and Policies,"
"General Investment 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 issues. 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 "General Investment Policies", "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. First Data Investor Services
Group, Inc. (the "Administrator") serves as the Administrator and shareholder
servicing agent of the Rembrandt(R) Funds (the "Trust"). First Data Investor
Services Group, Inc. serves as transfer agent ("Transfer Agent") and dividend
disbursing agent for Rembrandt Funds(R) (the "Trust"). First Data Distributors,
Inc., an affiliate of the Administrator (the "Distributor"), serves as
distributor of the Trust's shares. See "The Advisor," "The Administrator" and
"Distribution and Shareholder Servicing."
Your Account and Doing Business with Us
You may generally open an Investor Shares account with a minimum investment of
$2,000 and make additional investments with as little as $100. However, please
contact your 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. Shares of the Fund will
be solicited during an initial offering period ending on ______________ at an
offering price of $[___] 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/Service Contacts
For more information, call 1-800-443-4725, or contact your financial
intermediary.
PORTFOLIO EXPENSES
The purpose of the following tables 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.
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Shareholder Transaction Expenses1 (As a percentage of offering price) None
Maximum Sales Charge Imposed on Purchases None
Redemption Fee (2) None
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(1) A charge, currently $10.00, is imposed on wires of redemption proceeds. (2)
Certain financial intermediaries may impose account fees or other charges
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Annual Operating Expenses (As a percentage of average net assets)
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Advisory Fees ___%
12b-1 Fees .25%
Other Expenses (after fee waivers) (1) ___%
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Total Operating Expenses (after fee waivers) (2) ___%
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(1) The Fund's Administrator is waiving, on a voluntary basis, a portion of its
fees from the Fund. The Administrator reserves the right to terminate its
waiver at any time in its sole discretion. Absent such waiver, "Other
Expenses" would be ___%. "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 ___%.
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Example
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1 Year 3 Years
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An investor would pay the following expenses on a $1,000 investment assuming (1)
5% annual return and (2) redemption at the end of each time
period: $ $
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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. 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.
("NASD"). If you purchase shares through a financial institution, you may be
charged separate fees by the financial institution. See "The Advisor," "The
Administrator" and "Distribution and Shareholder Servicing."
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 Buy, Redeem and Exchange Shares
Shares of the Fund may be purchased through Intermediaries which provide various
services to their customers on any day on which the New York Stock Exchange
("NYSE") is open for business (a "Business Day"). 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
calculated. However, an order may be canceled if the Custodian does not receive
Federal funds before 4:00 p.m., Eastern time on the next Business Day, and you
could be liable for any fees or expenses incurred by the Trust. The purchase
price of Investor Shares of the Fund is the net asset value next determined
after a purchase order is effective. 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 buy, 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 Information Regarding Purchases
Purchases of Investor Shares may be made by direct deposit or Automated Clearing
House transactions if your Intermediary offers such services. Please contact
your Intermediary to find out if these services are available to you and for
more information about direct deposit or Automated Clearing House transactions.
Your Intermediary also may impose a wire charge on purchases.
No certificates representing shares will be issued.
Automatic Investment Plan ("AIP")
You may systematically buy Investor Shares through deductions from your checking
account, provided these accounts are maintained through banks which are part of
the Automated Clearing House 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. 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. 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.
<PAGE>
Exchanging Shares
When Can You Exchange Shares?
Once payment for your shares has been received and accepted (i.e., an account
has been established), you may exchange some or all of your Investor Shares for
Investor Shares of other funds within the Trust. Exchanges are made at net asset
value.
Exchanges will be made only after instructions in writing or by telephone (an
"Exchange Request") are received in good order 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 Exchange of Shares
To exchange shares, you should contact your Intermediary, who will contact First
Data Investor Services Group, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581 and effect the exchange on your behalf.
If an 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, the
exchange usually will occur on that day. Your Intermediary may have earlier
cutoff times for Exchange Requests. Please contact your Intermediary for more
information about its exchange policies.
Redemption of Shares
You may redeem your shares on any Business Day. Redemption requests must be made
directly to your Intermediary. Redemption requests for the Fund must be received
prior to the time the net asset value is calculated. Your Intermediary may have
earlier cutoff times for redeeming shares. 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 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. A notary public
cannot provide a signature guarantee. 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 Proceeds
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. 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 with the Transfer Agent
Neither the Trust nor the Transfer Agent will be responsible with the for any
loss, liability, cost or expense for acting upon 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 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.
Other Information Regarding Redemptions
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid redemption request, as described above.
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 such shares.
See "Purchase and Redemption of Shares" in the SAI for examples of when your
right to redeem your shares may be suspended.
Systematic Withdrawal Plan
The Fund offers a Systematic Withdrawal Plan ("SWP") for shareholders who wish
to receive regular 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 Automated Clearing House 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.
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 are traded on a national securities exchange
or are actively traded in the over-the-counter market and that: (i) are below
average price to earnings, price to book value, price to sales, price to cash
below ratios and/or above average dividend yields; and (ii) are issued by
companies that the Advisor believes are financially sound and showing improving
fundamentals not yet reflected in the market. The Advisor's emphasis will be on
a diversified portfolio of common stocks of companies with market capitalization
of less than $[1.5] billion.
Any remaining assets of the Fund may be invested in: (i) warrants to purchase
common stocks; (ii) debt securities convertible into common stocks rated in the
highest four rating categories by a nationally recognized statistical rating
organization ("NRSRO") or determined by the Advisor to be of comparable quality
at the time of purchase; (iii) preferred stock convertible into common stocks;
and (iv) U.S. dollar denominated equity securities of foreign issuers (including
sponsored American Depositary Receipts ("ADRs")). The Fund will invest in
securities of foreign issuers only if (i) they are listed on national securities
exchanges or actively traded in the over-the-counter market and (ii) they
satisfy in substance the criteria for investing in smaller capitalization
companies set forth above. The Fund will invest in options and futures for
hedging purposes only.
Investments in small capitalization companies involve greater risk than is
customarily associated with larger, more established companies due to the
greater business risks of small size, limited markets and financial resources,
narrow product lines and frequent lack of debth 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.
The Fund will invest in equity securities only if they are listed on national
securities exchanges or actively traded in the over-the-counter market. The Fund
may invest in convertible securities whether or not they are listed on national
securities exchanges.
The Fund will not invest more than 10% of its total assets in restricted
securities. In addition, the Fund may invest up to 5% of its assets in
restricted securities that the Advisor determines are liquid. The Fund will not
invest 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. The Fund may enter into futures contracts and options on
futures for bona fide hedging purposes only. The Fund may enter into futures
contract transactions only to the extent that obligations under such contracts
represent less than 20% of the Fund's assets. The aggregate value of option
positions may not exceed 10% of the Fund's net assets as of the time such
options are entered into by the Fund.
In addition, the Fund may engage in securities lending. There will be 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 will 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, U.S. dollars and foreign currencies, including multinational
currency units. To the extent the Fund is investing for temporary defensive
purposes, the Fund will not be pursuing its investment objective.
NRSROs provide ratings for certain instruments in which the Fund may invest. For
example, convertible securities rated in the fourth highest category have an
adequate capacity to pay principal, but may have speculative characteristics as
well.
CERTAIN RISK FACTORS
The investment policies of the Fund entail certain risks and considerations of
which an investor should be aware.
Equity Securities
Investments in equity securities are generally subject to 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.
Fixed Income Securities
The market value of fixed income investments will change in response to interest
rate changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income 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. Changes in the value of portfolio securities will not affect cash
income derived from these securities but will affect the Fund's net asset value.
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
The Fund may invest in securities of foreign issuers. Securities of foreign
issuers are subject to certain risks not typically associated with domestic
securities, including, among other risks, changes in currency rates and in
exchange control regulations, costs in connection with conversions between
various currencies, 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 changes in taxes on income on securities, and possible
seizure, nationalization or expropriation of the foreign issuer or foreign
deposits.
Investments in securities of foreign issuers are frequently denominated in
foreign currencies and the value of the Fund's assets measured in U.S. dollars
may be affected favorably or unfavorably by changes in currency rates and in
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund may enter into forward foreign
currency contracts as a hedge against possible variations in foreign exchange
rates or to hedge a specific security transaction or portfolio position.
Currently, only a limited market, if any, exists for hedging transactions
relating to currencies in emerging markets. This may limit the Fund's ability to
effectively hedge its investments in such markets.
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 Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations thereunder.
THE ADVISOR
The Trust and the Advisor 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.
The Advisor is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of ___% 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.
<PAGE>
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.
Ed Bruere, Senior Vice President and Manager of Equity Investing of the Advisor,
serves as lead portfolio manager for the Fund. Mr. Bruere has been associated
with the Advisor and an affiliate of the Advisor for over 10 years.
Jac A. Cerney, Senior Vice President of the Advisor, serves as co-portfolio
manager for the Fund. Mr. Cerney has been associated with the Advisor and its
predecessor since April, 1990.
Prior Performance of a Private Account
The performance information below relates to an account managed by Mr. Edward
Bruere, who currently co-manages the Fund. The account has an investment
objective, policies, and restrictions [the same as] that of the Fund. [This
account is the only account managed by Mr. Bruere that has a similar investment
objective, policies and restrictions as that of the Fund.]
This account was not subject to certain investment limitations, requirements,
and other restrictions imposed by the 1940 Act and the Internal Revenue Code. If
these had been imposed, the account's performance would have been adversely
affected. The account did not incur expenses that correspond to the advisory,
administrative, and other fees to which the Fund is subject. If the account had
incurred these expenses, the account's 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 figures are average annual total return figures and assume
reinvestment of net income and capital gain distributions. The account returns
are calculated using the same methods for valuation of portfolio securities as
the Fund uses.
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Period Ended Russell 2000
December 31, 1997 Account Value Index
1 Year [52-11%] [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: __________________. 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 Funds may execute brokerage or other agency transactions through an
affiliate of the Advisor for which the affiliate may receive compensation.
<PAGE>
THE ADMINISTRATOR
First Data Investor Services Group, Inc. provides the Trust with administrative
services, including fund accounting, regulatory reporting, necessary office
space, equipment, personnel and facilities. The Administrator is entitled to a
fee, which is calculated daily and paid monthly, at an annual rate of .15% of
the average daily net assets of the Fund.
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.
DISTRIBUTION AND SHAREHOLDER SERVICING
First Data Distributors, Inc., (the "Distributor"), 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 the 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 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 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 [may 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.
The performance of Common Shares will normally be higher than that of Investor
Shares because of the additional distribution and administrative 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.
<PAGE>
Tax Status of the Fund
The Fund is treated as a separate entity for Federal income 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 Distributions
The Fund will distribute all of its net 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. It is possible that the Fund may make a
distribution in excess of the Fund's current and accumulated earnings and
profits. You will treat such a distribution as a return of capital which is
applied against and reduces your basis in your shares. You will treat the excess
of any such distribution over your basis in your shares, as gain from a sale or
exchange of the shares. The Fund will notify you annually of the Federal income
tax character of all distributions.
Because the Fund distributes all of its net investment income to shareholders,
the Fund may have to sell portfolio securities to distribute such income, which
may occur at a time when the Advisor would not have chosen to sell such
securities and which may result in a taxable gain or loss.
Income received on U.S. obligations is exempt from tax at the state level when
received directly by the Fund and may be exempt, depending on the state, when
received by you as income dividends from the Fund, provided certain
state-specific conditions are satisfied. The Fund will inform you annually of
the percentage of income and distributions derived from U.S. obligations. You
should consult your tax advisor to determine whether any portion of the income
dividends received from the Fund is considered tax exempt in your particular
state.
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 of Fund shares is a taxable event to you.
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH US
Minimum Investment
The minimum initial investment in the Investor Shares is $2,000; however, the
minimum investment may be waived at the Distributor's discretion. All subsequent
purchases 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.
Maintaining a Minimum Account Balance
Due to the relatively high cost of handling small investments, the Fund reserves
the right to redeem your 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 to 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 may impose its own minimum initial and subsequent investment
requirements. You should contact your Intermediary for information about any
such requirements.
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 purchase price of a share of the Fund is the net asset value per share next
computed after the order is received and accepted in good order by the Trust.
The selling price of a share of the Fund is the net asset value per share next
determined after receipt of the request for redemption in good order. 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 Asset Value is Determined
The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments 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 and October 20,
1992. 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, 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 and TransEurope 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 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 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 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.
<PAGE>
Shareholder Inquiries
Shareholder inquiries should be directed to the Administrator, 4400 Computer
Drive, Westborough, Massachusetts, 01581, at 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.
Counsel and Auditors
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. 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 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 Depositary Receipts, Continental Depositary Receipts ("CDRs"),
European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
The Fund may invest in depositary receipts and other similar instruments, such
as ADRs, CDRs, EDRs & GDRs. ADRs are securities, typically issued by a U.S.
financial institution (a "depositary"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary. EDRs, which are sometimes referred to as CDRs, are securities,
typically issued by a non-U.S. financial institution, that evidence ownership
interests in a security or a pool of securities issued by either a U.S. or
foreign issuer. GDRs are issued globally and evidence a similar ownership
arrangement. Generally, ADRs are designed for trading in the U.S. securities
market. EDRs are designed for trading in European Securities Markets and GDRs
are designed for trading in non-U.S. securities markets. Generally, despositary
receipts may be available 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' Acceptances
Bankers' acceptances are bills of exchange or time drafts 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 Deposit
Certificates of deposit are interest bearing instruments 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 Paper
Commercial paper is a term used to describe unsecured short-term promissory
notes issued by banks, municipalities, corporations and other entities.
Maturities on these issues vary from a few to 270 days.
Convertible Securities
Convertible securities are corporate securities that are 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 Securities
Equity securities are common stocks and common stock equivalents consisting of
securities convertible into common stocks and securities having common stock
characteristics (i.e., rights and warrants to purchase common stocks, sponsored
and unsponsored ADRs, REITs, and equity securities of closed-end investment
companies). Investments in common stocks are subject to market risks which may
cause their prices to fluctuate over time. Changes in the value of portfolio
securities will not necessarily affect cash income derived from these securities
but will not affect the Fund's net asset value.
Fixed Income Securities
Fixed income securities are debt obligations issued by corporations,
municipalities and other borrowers.
Forward Foreign Currency Contracts
A forward contract involves an obligation to purchase or sell a specific
currency amount at a future date, agreed upon by the parties, at a price set at
the time of the contract.
At the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader,
obligating it to purchase, on the same maturity date, the same amount of foreign
currency.
The Fund may realize a gain or loss from currency transactions.
Futures Contracts and Options on Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
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 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.
Illiquid Securities
Illiquid securities are securities that cannot be disposed 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 Company Securities
The Fund's purchase of investment company securities will result in the layering
of expenses. The Fund is prohibited from acquiring the securities of other
investment companies, if, as a result of such acquisition, the Fund owns in the
aggregate (1) more than 3% of the total outstanding voting stock of the acquired
company, (2) securities issued by the acquired company having an aggregate value
of 5% of the value of the total assets of the Fund, or (3) securities issued by
the acquired company and all other investment companies having an aggregate
value in excess of 10% of the value of the total assets of the Fund.
Money Market Instruments
Money Market Instruments include certificates of deposit, 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 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. The Fund purchasing put and call options 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 foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by the Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by the Fund, the Fund will establish a segregated account with its
custodian bank consisting of cash or liquid assets in an amount equal to the
amount the Fund would be required to pay upon exercise of the put.
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 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.
Repurchase Agreements
Repurchase agreements are agreements by which the Fund 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 Securities
Restricted securities are securities that may not be sold freely to the
public absent registration under the Securities Act of 1933 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 Lending
In order to generate additional income, the Fund may lend 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.
<PAGE>
Securities of Foreign Issuers
Foreign securities may be U.S. dollar denominated or non-U.S. dollar denominated
obligations or securities of foreign issuers, including obligations of foreign
branches of U.S. banks and of foreign banks, including European time deposits,
Canadian time deposits, Yankee certificates of deposit, depositary receipts, and
investments in Canadian commercial paper, foreign securities, and Europaper.
Standby Commitments and Puts
Securities subject to standby commitments or puts permit the holder thereof to
sell the securities at a fixed price prior 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 Agency Obligations
Obligations issued or guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit 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
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 Obligations
U.S. Treasury obligations consist of bills, notes and bonds 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 Floating Rate Instruments
Certain obligations may carry variable or floating rates of interest, and may
involve conditional or unconditional 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 Delayed Delivery Securities
When-issued or delayed delivery basis transactions involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of and
payment for 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.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the SEC is
effective. This prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
REMBRANDT FUNDS
SMALL CAP VALUE FUND
COMMON SHARES - A No-Load Class
______________, 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 _________, 1998, as
supplemented from time to time, which has been filed with the Securities and
Exchange Commission (the "SEC") and is available along with other related
materials in the SEC's Internet Website (http://www.sec.gov). The SAI is
incorporated into this Prospectus by reference and is available upon request and
without charge by calling 1-800-443-4725.
Common Shares of Small Cap Value Fund (the "Fund") are offered to individuals
and institutional investors directly and through wrap programs, retirement
plans, discount brokerage programs and various brokerage firms. Investors in the
Common Shares are referred to hereinafter as "shareholders."
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 TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'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>
<CAPTION>
<S> <C>
Fund Highlights................................................................................................2
Portfolio Expenses.............................................................................................3
Your Account and Doing Business with Us........................................................................3
Investment Objective and Policies..............................................................................7
Certain Risk Factors...........................................................................................8
Investment Limitations.........................................................................................9
The Advisor....................................................................................................9
The Administrator.............................................................................................10
The Transfer Agent............................................................................................11
The Distributor...............................................................................................11
Performance...................................................................................................11
Taxes.........................................................................................................12
Additional Information About Doing Business with Us...........................................................13
General Information...........................................................................................14
Description of Permitted Investments and Risk Factors.........................................................16
</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. To find these helpful guides, look for
this symbol. [Symbol]
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,"
"General Investment 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 issues. 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 "General Investment Policies," "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. First Data Investor Services
Group, Inc. (the "Administrator") serves as the Administrator and shareholder
servicing agent of Rembrandt Funds (the "Trust"). First Data Investor
Services Group, Inc. serves as transfer agent ("Transfer Agent") and dividend
disbursing agent for the Trust. First Data Distributors, Inc., an affiliate of
the Administrator (the "Distributor"), serves as distributor of the Trust's
shares. See "The Advisor," "The Administrator" 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.
Purchases and redemptions of the Fund's shares are made at net asset value per
share. Shares of the Fund will be solicited during an initial offering period
ending on _________, 1998 at an offering price of $[10] 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/Service Contacts
For more information, call 1-800-443-4725, or contact your financial
intermediary.
PORTFOLIO EXPENSES
The purpose of the following tables 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.
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses
(1) (As a percentage of offering price) None
Maximum Sales Change Imposed on Purchases None
Redemption Fee(2)
<FN>
None
(1) Certain financial intermediaries may impose account
fees or other charges.
(2) A charge, currently $10.00, is imposed on wires of redemption proceeds.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Annual Operating Expenses (As a percentage of average net assets)
- ---------------------------------------------------------------------------------------------------------------------
Advisory Fees ___%
12b-1 Fees None
Other Expenses (after fee waivers) (1) ___%
- --------------------------------------------------------------------------- -----------------------------------------
Total Operating Expenses (after fee waivers) (2) ___%
- --------------------------------------------------------------------------- -----------------------------------------
<FN>
(1) The Fund's Administrator is waiving, on a voluntary basis, a portion of its
fees from the Fund. The Administrator reserves the right to terminate its
waiver at any time in its sole discretion. Absent such waiver, "Other
Expenses" would be ___%. "Other Expenses" for the Fund are based on
estimated amounts for the current fiscal year.
(2) Absent waivers, "Total Operating Expenses" would be ___%.
</FN>
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Example
- ---------------------------------------------------------------------------------------------------------------------
1 Year 3 Years
------ -------
An investor would pay the following expenses on a $1,000 investment assuming (1)
5% annual return and (2) redemption at the end of each time
period: $ $
- --------------------------------------------------------------------------- -------------------- --------------------
</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. If you purchase shares
through a financial institution, you may be charged separate fees by the
financial institution.
See "The Advisor," "The Administrator" and "The Distributor."
YOUR ACCOUNT AND DOING BUSINESS WITH US
Beginning on or about ___________, 1998 Common Shares of the Fund will be sold
on a continuous basis. Common Shares may be purchased directly from the Fund's
Transfer Agent, 4400 Computer Drive, Westborough Massachusetts 01581, either by
mail, telephone or wire. Shares may also be purchased through a variety of
channels, including wrap programs, retirement plans, discount brokerage
programs, retirement plans, 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 Buy Common Shares from the Transfer Agent
You may purchase Common Shares of the Fund by completing and signing an
Account Application and mailing it, along with a check (or other negotiable bank
instrument) payable in U.S. dollars to "Rembrandt Funds, Small Cap Value Fund,"
to 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 Transfer Agent.
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.
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.
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 # [ ] for
Account Number [ ]; Further Credit: [Name of Fund]. Your name and account number
must be specified in the wire. Your bank may impose a fee for investments by
wire.
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: Rembrandt 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.
How Do I Obtain an Application?
Account Applications can be obtained by calling 1-800-443-4725.
Business Days
A purchase order for Common Shares will be effective as of the Business Day
received by the Transfer Agent in good order if the Transfer Agent in good order
receives the order and payment before net asset value is calculated. However, an
order may be canceled if the custodian does not receive Federal funds before
4:00 p.m., Eastern time on the next Business Day, and you could be liable for
any fees or expenses incurred by the Trust. The purchase price of Common Shares
of the Fund is the net asset value next determined after a purchase order is
effective.
Your intermediary may have earlier cutoff times for share transactions. If you
purchased shares through an Intermediary, please contact your Intermediary for
more information about its order requirements.
Other Information Regarding Purchases
Other shareholders who desire to transfer the registration of their shares
should contact the Administrator by calling 1-800-443-4725.
Purchases of Common Shares may be made by direct deposit or Automated Clearing
House transactions.
No certificates representing shares will be issued.
Automatic Investment Plan ("AIP")
You may systematically buy Common Shares through deductions from your checking
account, provided these accounts are maintained through banks which are part of
the Automated Clearing House 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.
Exchanging Shares
When Can You Exchange Shares?
Once payment for your shares has been received and accepted (i.e., an account
has been established), you may exchange some or all of your Common Shares for
Common Shares of other funds within the Trust. Exchanges are made at net asset
value. For an established account, exchanges will be made only after
instructions in writing or by telephone (an "Exchange Request") are received, in
good order by the Transfer Agent.
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 Exchange of Shares
To exchange shares, you must provide proper written instructions to the Transfer
Agent. Telephone exchanges will also be accepted if you elected this option on
your Account Application.
If an 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, the
exchange usually will occur on that day.
<PAGE>
Redemption of Shares
You may redeem your shares on any Business Day, by mail or by telephone.
Redemption requests for the Fund must be received prior to the time the net
asset value is calculated.
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. A notary public
cannot provide a signature guarantee. 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.
By Telephone
Shares may be redeemed by telephone if you elect that option on your Account
Application.
Redemption Proceeds
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. 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.
Communications with the Transfer Agent
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon 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.
<PAGE>
Other Information Regarding Redemptions
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid redemption request, as described above.
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 such shares.
If you purchased shares through a financial intermediary, contact your
intermediary for more information about redemptions.
See "Purchase and Redemption of Shares" in the SAI for examples of when your
right to redeem your shares may be suspended.
Systematic Withdrawal Plan
The Fund offers a Systematic Withdrawal Plan ("SWP") for shareholders who wish
to receive regular 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 Automated Clearing House of $50 or more
on a monthly, quarterly, semi-annual or annual basis. A SWP Application Form 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 Through Intermediaries
Common Shares of the Fund may be purchased through financial institutions or
broker-dealers, which have established a 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 buy, sell and exchange
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.
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 are traded on a national securities exchange
or are actively traded in the over-the-counter market and that: (i) are below
average price to earnings, price to book value, price to sales, price to cash
below ratios and/or above average dividend yields; and (ii) are issued by
companies that the Advisor believes are financially sound and showing improving
fundamentals not yet reflected in the market. The Advisor's emphasis will be on
a diversified portfolio of common stocks of companies with market capitalization
of less than $[1.5] billion.
Any remaining assets of the Fund may be invested in: (i) warrants to purchase
common stocks; (ii) debt securities convertible into common stocks rated in the
highest four rating categories by a nationally recognized statistical rating
organization ("NRSRO") or determined by the Advisor to be of comparable quality
at the time of purchase; (iii) preferred stock convertible into common stocks;
and (iv) U.S. dollar denominated equity securities of foreign issuers (including
sponsored American Depositary Receipts ("ADRs")). The Fund will invest in
securities of foreign issuers only if (i) they are listed on national securities
exchanges or actively traded in the over-the-counter market and (ii) they
satisfy in substance the criteria for investing in smaller capitalization
companies set forth above. The Fund will invest in options and futures for
hedging purposes only.
Investments in small capitalization companies involve greater risk than is
customarily associated with larger, more established companies due to the
greater business risks 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.
The Fund will invest in equity securities only if they are listed on national
securities exchanges or actively traded in the over-the-counter market. The Fund
may invest in convertible securities whether or not they are listed on national
securities exchanges.
The Fund will not invest more than 10% of its total assets in restricted
securities. In addition, the Fund may invest up to 5% of its assets in
restricted securities that the Advisor determines are liquid. The Fund will not
invest 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. The Fund may enter into futures contracts and options on
futures for bona fide hedging purposes only. The Fund may enter into futures
contract transactions only to the extent that obligations under such contracts
represent less than 20% of the Fund's assets. The aggregate value of option
positions may not exceed 10% of the Fund's net assets as of the time such
options are entered into by the Fund.
In addition, the Fund may engage in securities lending. There will be 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 will 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, U.S. dollars and foreign currencies, including multinational
currency units. To the extent the Fund is investing for temporary defensive
purposes, the Fund will not be pursuing its investment objective.
NRSROs provide ratings for certain instruments in which the Fund may invest. For
example, convertible securities rated in the fourth highest category have an
adequate capacity to pay principal, but may have speculative characteristics as
well.
CERTAIN RISK FACTORS
The investment policies of the Fund entail certain risks and considerations of
which an investor should be aware.
Equity Securities
Investments in equity securities are generally subject to 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.
Fixed Income Securities
The market value of fixed income investments will change in response to interest
rate changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income 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.
The market value of fixed income investments will change in response to interest
rate changes and other factors. During periods of falling interest rates, the
values of outstanding fixed income 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 longer maturity securities are also subject to
greater market fluctuations as a result of changes in interest rates. Changes by
recognized agencies in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and principal will also affect
the value of these investments. Changes in the value of portfolio securities
will not affect cash income derived from these securities but will affect the
Fund's net asset value.
Foreign Securities
The Fund may invest in securities of foreign issuers. Securities of foreign
issuers are subject to certain risks not typically associated with domestic
securities, including, among other risks, changes in currency rates and in
exchange control regulations, costs in connection with conversions between
various currencies, 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 changes in taxes on income on securities, and possible
seizure, nationalization or expropriation of the foreign issuer or foreign
deposits.
Investments in securities of foreign issuers are frequently denominated in
foreign currencies and the value of the Fund's assets measured in U.S. dollars
may be affected favorably or unfavorably by changes in currency rates and in
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund may enter into forward foreign
currency contracts as a hedge against possible variations in foreign exchange
rates or to hedge a specific security transaction or portfolio position.
Currently, only a limited market, if any, exists for hedging transactions
relating to currencies in emerging markets. This may limit the Fund's ability to
effectively hedge its investments in such markets.
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 Investment Company Act of 1940, as
amended (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.
THE ADVISOR
The Trust and the Advisor 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.
The Advisor is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of ___% 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 Funds. The Advisor reserves the right, in its sole discretion,
to terminate this voluntary fee waiver at any time.
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.
Ed Bruere, Senior Vice President and Manager of Equity Investing of the Advisor,
serves as lead portfolio manager for the Fund. Mr. Bruere has been associated
with the Advisor and an affiliate of the Advisor for over 10 years.
Jac A. Cerney, Senior Vice President of the Advisor, serves as co-portfolio
manager for the Fund. Mr. Cerney has been associated with the Advisor and its
predecessor since April, 1990.
Prior Performance of a Private Account
The performance information below relates to an account managed by Mr. Edward
Bruere, who currently co-manages the Fund. The account has an investment
objective, policies, and restrictions [the same as] that of the Fund. [This
account is the only account managed by Mr. Bruere that has a similar investment
objective, policies and restrictions as that of the Fund.]
This account was not subject to certain investment limitations, requirements,
and other restrictions imposed by the 1940 Act and the Internal Revenue Code. If
these had been imposed, the account's performance would have been adversely
affected. The account did not incur expenses that correspond to the advisory,
administrative, and other fees to which the Fund is subject. If the account had
incurred these expenses, the account's 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 figures are average annual total return figures and assume
reinvestment of net income and capital gain distributions. The account returns
are calculated using the same methods for valuation of portfolio securities as
the Fund uses.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Period Ended Russell 2000
December 31, 1997 Account Value Index
1 Year [52.11]% [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: __________________. 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 Funds may execute brokerage or other agency transactions through an
affiliate of the Advisor for which the affiliate may receive compensation.
<PAGE>
THE ADMINISTRATOR
First Data Investor Services Group, Inc. provides the Trust with administrative
services, including fund accounting, regulatory reporting, necessary office
space, equipment, personnel and facilities. The Administrator is entitled to a
fee, which is calculated daily and paid monthly, at an annual rate of .15% of
the average daily net assets of the Fund.
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 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.
The Fund may execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.
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 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 [may 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
The Fund is treated as a separate entity for Federal income 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 Distributions
The Fund will distribute all of its net 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. It is possible that the Fund may make a
distribution in excess of the Fund's current and accumulated earnings and
profits. You will treat such a distribution as a return of capital which is
applied against and reduces your basis in your shares. You will treat the excess
of any such distribution over your basis in your shares, as gain from a sale or
exchange of the 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 of Fund shares is a taxable event to you.
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH US
Minimum Investment
The minimum initial investment is $2,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent purchases 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 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 Minimum Account Balance
Due to the relatively high cost of handling small investments, the Fund reserves
the right to redeem your 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 to 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 purchase price of a share of the Fund is the net asset value per share next
computed after the order is received and accepted in good order by the Trust.
The selling price of a share of the Fund is the net asset value per share next
determined after receipt of the request for redemption in good order. 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 Asset Value is Determined
The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments 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 and October 20,
1992. 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, 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 and TransEurope 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 Latin America Equity Fund is not
available for purchase in Common 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 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 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 have approved contracts under which, as described above, certain
companies provide essential management, administrative and other services to the
Trust.
<PAGE>
Variable and Floating Rate Instruments 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 Inquiries
Shareholder inquiries should be directed to the Administrator, 4400 Computer
Drive, Westborough, Massachusetts, 01581, at 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.
Counsel and Auditors
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. 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 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 Depositary Receipts, Continental Depositary Receipts ("CDRs"),
European Depositary Receipts ("EDRs") and Global Depositary Receipts ("GDRs")
The Fund may invest in depositary receipts and other similar instruments, such
as ADRs, CDRs, EDRs and GDRs. ADRs are securities, typically issued by a U.S.
financial institution (a "depositary"), that evidence ownership interests in a
security or a pool of securities issued by a foreign issuer and deposited with
the depositary. EDRs, which are sometimes referred to as CDRs, are securities,
typically issued by a non-U.S. financial institution, that evidence ownership
interests in a security or a pool of securities issued by either a U.S. or
foreign issuer. GDRs are issued globally and evidence a similar ownership
arrangement. Generally, ADRs are designed for trading in the U.S. securities
market. EDRs are designed for trading in European Securities Markets and GDRs
are designed for trading in non-U.S. securities markets. Generally depositary
receipts may be available 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' Acceptances
Bankers' acceptances are bills of exchange or time drafts 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 Deposit
Certificates of deposit are interest bearing instruments 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 Paper
Commercial paper is a term used to describe unsecured short-term promissory
notes issued by banks, municipalities, corporations and other entities.
Maturities on these issues vary from a few to 270 days.
Convertible Securities
Convertible securities are corporate securities that are 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 Securities
Equity securities are common stocks and common stock equivalents consisting of
securities convertible into common stocks and securities having common stock
characteristics (i.e., rights and warrants to purchase common stocks, sponsored
and unsponsored ADRs, REITs, and equity securities of closed-end investment
companies). Investments in common stocks are subject to market risks which may
cause their prices to fluctuate over time. Changes in the value of portfolio
securities will not necessarily affect cash income derived from these securities
but will not affect the Fund's net asset value.
Fixed Income Securities
Fixed income securities are debt obligations issued by corporations,
municipalities and other borrowers.
Forward Foreign Currency Contracts
A forward contract involves an obligation to purchase or sell a specific
currency amount at a future date, agreed upon by the parties, at a price set at
the time of the contract. At the maturity of a forward contract, the Fund may
either sell a portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate its contractual obligation to deliver
the foreign currency by purchasing an "offsetting" contract with the same
currency trader, obligating it to purchase, on the same maturity date, the same
amount of the foreign currency. The Fund may realize a gain or loss from
currency transactions.
Futures Contracts and Options on Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
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 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.
Illiquid Securities
Illiquid securities are securities that cannot be disposed 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 Company Securities
The Fund's purchase of investment company securities will result in the layering
of expenses. The Fund is prohibited from acquiring the securities of other
investment companies, if, as a result of such acquisition, the Fund owns in the
aggregate (1) more than 3% of the total outstanding voting stock of the acquired
company, (2) securities issued by the acquired company having an aggregate value
of 5% of the value of the total assets of the Fund, or (3) securities issued by
the acquired company and all other investment companies having an aggregate
value in excess of 10% of the value of the total assets of the Fund.
Money Market Instruments
Money Market Instruments include certificates of deposit, 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 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. The Fund purchasing put and call options 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 foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by the Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by the Fund, the Fund will establish a segregated account with its
custodian bank consisting of cash or liquid assets in an amount equal to the
amount the Fund would be required to pay upon exercise of the put.
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 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.
Repurchase Agreements
Repurchase agreements are agreements by which the Fund 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.
<PAGE>
Restricted Securities
Restricted securities are securities that may not be sold freely to the
public absent registration under the Securities Act of 1933 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 Lending
In order to generate additional income, the Fund may lend 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 Issuers
Foreign securities may be U.S. dollar denominated or non-U.S. dollar denominated
obligations or securities of foreign issuers, including obligations of foreign
branches of U.S. banks and of foreign banks, including European time deposits,
Canadian time deposits, Yankee certificates of deposit, depositary receipts, and
investments in Canadian commercial paper, foreign securities, and Europaper.
Standby Commitments and Puts
Securities subject to standby commitments or puts permit the holder thereof to
sell the securities at a fixed price prior 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 Agency Obligations
Obligations issued or guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit 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.
U.S. Treasury Obligations
U.S. Treasury obligations consist of bills, notes and bonds 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 Floating Rate Instruments
Certain obligations may carry variable or floating rates of interest, and may
involve conditional or unconditional 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 Delayed Delivery Securities
When-issued or delayed delivery basis transactions involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of and
payment for 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.
The information in this SAI is not complete and may be changed. We may not sell
these securities until the registration statement filed with the SEC is
effective. This SAI is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
Rembrandt Funds(R)
Investment Advisor:
ABN AMRO Asset Management (USA) Inc.
This SAI ("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 Rembrandt Funds(R) (the "Trust") and should be read in
conjunction with the appropriate prospectus. The Trust has two prospectuses
dated _______, 1998 relating to the Fund. 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 the Distributor, First Data
Distributors, Inc., 4400 Computer Drive, Westborough, Massachusetts 01581, or by
calling 1-800-443-4725.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE TRUST 2
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DESCRIPTION OF PERMITTED INVESTMENTS 2
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INVESTMENT LIMITATIONS 10
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NON-FUNDAMENTAL POLICY 11
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THE ADVISOR 11
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THE ADMINISTRATOR 12
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DISTRIBUTION AND SHAREHOLDER SERVICING 12
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TRUSTEES AND OFFICERS OF THE TRUST 14
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COMPUTATION OF YIELD 16
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CALCULATION OF TOTAL RETURN 16
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PURCHASE AND REDEMPTION OF SHARES 17
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DETERMINATION OF NET ASSET VALUE 18
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TAXES 18
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PORTFOLIO TRANSACTIONS 20
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TRADING PRACTICES AND BROKERAGE 20
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DESCRIPTION OF SHARES 22
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SHAREHOLDER LIABILITY 22
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LIMITATION OF TRUSTEES' LIABILITY 23
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FINANCIAL STATEMENTS 23
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</TABLE>
___, 1998
THE TRUST
Rembrandt Funds is an open-end management investment company established as a
Massachusetts business trust pursuant to a Declaration of Trust dated September
17, 1992. 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. This SAI relates solely to the Small Cap Value Fund. The
Fund has two authorized classes of shares, Common Shares and the 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. As of
the date of this SAI, investors may purchase only the Common Shares of the Fund.
See "Description of Shares."
DESCRIPTION OF PERMITTED INVESTMENTS
Euro-Denominated Securities
On January 1, 1999, the European Monetary Union ("EMU") plans to implement a new
currency unit, the Euro, which is expected to reshape financial markets, banking
systems and monetary policies in Europe and other parts of the world. The
countries initially expected to convert to the Euro include Austria, Belgium,
France, Germany, Luxembourg, the Netherlands, Ireland, Finland, Italy, Portugal
and Spain.
Beginning January 1, 1999, financial transactions and market information
including share quotations and company accounts, in participating countries will
be in Euros. Approximately 46% of the stock exchange capitalization of the total
European market may be reflected Euros, and participating governments will issue
their bonds in Euros. Monetary policy for participating countries will be
uniformly managed by a new central bank, the European Central Bank ("ECB").
Although it is not possible to predict the impact of the Euro on the Fund, the
transition may change the economic environment and behavior of investors,
particularly in European markets. In addition, investors may begin to view those
countries participating in the EMU as a single entity. The Advisor may need to
adapt investment strategies accordingly. The process of implementing the Euro
also may adversely affect financial markets world-wide and may result in changes
in the relative strength and value of the U.S. dollar or other major currencies,
as well as possible adverse tax consequences as a result of currency conversions
to the Euro. Until the Euro develops its reputation and the ECB gains experience
in managing monetary policy, it will be difficult to predict the strengths and
weaknesses of the Euro.
Foreign Securities
Foreign securities may be U.S. dollar denominated or non-U.S. dollar denominated
obligations or securities of foreign issuers, including obligations of foreign
branches of U.S. banks and of foreign banks, including European certificates of
deposit, European time deposits, Canadian time deposits and Yankee certificates
of deposit, and investments in Canadian commercial paper, foreign securities and
Europaper. In addition, the Fund may invest in American Depositary Receipts
("ADRs"). 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 conversions
between various currencies, 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.
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 convertibility
of currencies and repatriation of assets. Some countries restrict the extent to
which foreigners may invest in their securities markets.
Investments in securities of foreign issuers are frequently denominated in
foreign currencies (including the Euro and multinational currency units) and the
value of the Fund's assets measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and the Fund may incur costs in connection with conversions between various
currencies.
Investment Company Shares
Investments in shares of open-end funds and closed-end funds, as described in
the prospectus, may 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 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 CMOs and 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,
but will not be 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 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.
There are risks associated with option transactions, including the following:
(i) the success of a hedging strategy may depend on the ability of the Advisor
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be imperfect correlation
between the movement in prices of securities held by the Fund; (iii) there may
not be a liquid secondary market for options; and (iv) while the Fund will
receive a premium when it writes covered call options, it may not participate
fully in a rise in the market value of the underlying security.
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 under lying
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 creditors and required to return
the underlying securities to the seller's estate.
Restricted Securities
Restricted securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1993 Act") absent an
exemption from registration. Up to 10% of the Fund's assets may consist of
restricted securities that are illiquid and the Advisor may invest up to an
additional 5% of the total assets of the Fund in restricted securities, provided
it determines that at the time of investment such securities are not illiquid
(generally, an illiquid security cannot be disposed of within 7 days in the
ordinary course of business at its full value), based on guidelines and
procedures developed and established by the Board of Trustees of the Trust. The
Board of Trustees will periodically review such procedures and guidelines and
will monitor the Advisor's implementation of such procedures and guidelines.
Under these procedures and guidelines, the Advisor will consider 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. In
purchasing such restricted securities, the Advisor intends to rely upon the
exemption from registration provided by Rule 144A under the 1933 Act.
Securities Lending
Securities loaned by the Fund pursuant to an agreement which requires collateral
to secure the loan will not be 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 will continue 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 will normally pay 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 the Distributor or a broker-dealer affiliate of the
Advisor as a broker in these transactions.
Short Sales
Selling securities short involves selling securities the seller 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.
The Fund may also maintain short positions in forward currency exchange
transactions, which involve the Fund's agreeing to exchange currency that it
does not own at that time for another currency at a future date and specified
price in anticipation of a decline in the value of the currency sold short
relative to the currency that the Fund has contracted to receive in the
exchange. To ensure that any short position of the Fund is not used to achieve
leverage, the Fund establishes with its custodian a segregated account
consisting of cash or liquid assets equal to the fluctuating market value of the
currency as to which any short position is being maintained.
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 denoted as 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 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 will segregate 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 Prospectus, 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
Securities Act of 1933 in the disposition of shares of the Fund.
2. 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).
3. Make loans, except as permitted by the 1940 Act, and the rules and
regulations thereunder.
4. 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.
5. 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.
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.
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
The Trust and First Data Investor Services Group (the "Administrator"), a
wholly-owned subsidiary of First Data Corporation, have entered into an
administration agreement (the "Administration Agreement") dated March 2, 1998.
Under the Administration Agreement, the Administrator is entitled to receive a
fee at an annual rate of .15% of the average daily net assets of the Funds.
Under the Administration Agreement, 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. Under the Agreement, 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, a Massachusetts corporation has its principal business
offices at 4400 Computer Drive, Westborough, Massachusetts 01581. First Data
Corporation and its subsidiaries and affiliates, including the Administrator,
are leading providers of funds evaluation services, trust accounting systems,
and brokerage and information services to financial institutions, institutional
investors, and money managers.
Prior to March 2, 1998, SEI Fund Resources ("SEI") served as the Trust's
administrator. SEI, a Delaware business trust, has its principal offices at
Oaks, Pennsylvania 19456. SEI Investments Management Corporation, a wholly-owned
subsidiary of SEI Investments Company, is the owner of all beneficial interest
in SEI.
DISTRIBUTION AND SHAREHOLDER SERVICING
First Data Distributors, Inc., 4400 Computer Drive, Westborough, Massachusetts
01581 (the "Distributor"), a wholly-owned subsidiary of First Data Corporation,
and the Trust are parties to a distribution agreement (the "Distribution
Agreement") dated February 26, 1998. 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 "Investor Shares Plan") in accordance with the provisions of Rule 12b-1
under the 1940 Act, which regulates circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares. Continuance of the Distributor 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 Distribution, 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 under the 1940 Act, the Investor Shares
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 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 Plan will
require approval by a majority of the Trustees of the Trust and of the
Disinterested Trustees.
Pursuant to the Distribution Agreement and the Distribution Plan, Investor
Shares are subject to an ongoing distribution fee calculated on the Fund's
aggregate average daily net assets attributable to its Investor Shares.
The Distribution Plan provides for payments to the Distributor at an annual rate
of .25% of the Investor Shares average daily net assets. 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.
The distribution-related services that may be provided under the Distribution
Plan include establishing and maintaining customer accounts and records;
aggregating and processing purchase and redemption requests from customers;
placing net purchase and redemption orders with the Distributor; automatically
investing customer account cash balances; providing periodic statements to
customers; arranging for wires; answering customer inquiries concerning their
investments; assisting customers in changing dividend options, account
designations, and addresses; performing sub-accounting functions; processing
dividend payments from the Trust on behalf of customers; and forwarding
shareholder communications from the Trust (such as proxies, shareholder reports,
and dividend distribution, and tax notices) to these customers with respect to
investments in the Trust. 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 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 nor
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 Investor Shares
Plan or related agreements.
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.
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 (the "Transfer Agent"), a
wholly-owned subsidiary of First Data Corporation, have entered into a transfer
agency agreement (the "Transfer Agency Agreement") dated May 11, 1998. Under the
Transfer Agency Agreement, 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 and Chairman -- 950 N. Michigan Avenue,
Chicago, Illinois 60611. Retired. Executive Vice President, Chief Financial
Officer and Planning Officer of Stone Container Corporation, 1991-1995. Senior
Vice President, Chief Financial Officer 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, President and Chief Executive Officer
- -- 208 South LaSalle Street, Chicago, Illinois 60604. Chief Executive Officer,
ABN AMRO Chicago Corp. since January 1, 1997. Prior thereto, Chief Executive
Officer, Chicago Corporation since 1981.
TIMOTHY J. LEACH ( )-- President and Chief Executive Officer
RICHARD A. FRODSHAM ( ) -- Executive Vice President
CHARLES KLIMKOWSKI ( ) -- Vice President
MARTHA CLEMONS ( ) -- Vice President and Secretary
MICHAEL T. CASTINO ( ) -- Vice President
KATHRYN L. MARTIN ( ) -- Vice President
LAURIE LYNCH ( ) -- Vice President
ANN WEIS ( ) -- Vice President
JULIE A. TEDESCO (40) -- 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.
THERESE M. HOGAN (35) -- 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.
TERESA M. R. HAMLIN (34) -- 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.
DIANA TARNOW (35) -- Vice President and Assistant Treasurer -- First Data
Investor Services Group, Inc., 53 State Street, Boston, Massachusetts 02109.
Since 1997, Vice President for 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.
JOHN J. BURKE, III (33) -- Vice President and Assistant 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 ( )-- Vice President and Assistant Treasurer-- [WORK HISTORY].
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.
* Mr. Wing is a Trustee who may be deemed to be an "interested person" of
the Trust as the term is defined in the 1940 Act. Mr. Wing is also an
"affiliate" of the Trust's Advisor, as the term is defined in the 1940 Act.
The Trustees and officers of the Fund own, in the aggregate, less than 1% of the
outstanding shares of the Fund. The Trust pays the fees for unaffiliated
Trustees. Compensation of officers and affiliated Trustees of the Trust is paid
by the Administrator.
RICHARD W. GRANT (10/25/45) -- Assistant Secretary --
For the fiscal year ended December 31, 1997, the Trustees received the following
compensation:
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============================== ------------------- ------------------- ------------------ ======================
Total Compensation
from Registrant and
Pension or Fund Complex Paid
Aggregate Retirement to Directors
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 $14,000 N/A N/A $14,000 for service
on one board
============================== ------------------- ------------------- ------------------ ======================
Robert Feitler** N/A N/A N/A N/A
============================== ------------------- ------------------- ------------------ ======================
Robert A. Nesher* $0 N/A N/A $0 for service on
one board
- ------------------------------ ------------------- ------------------- ------------------ ======================
William T. Simpson $14,000 N/A N/A $14,000 for service
on one board
- ------------------------------ ------------------- ------------------- ------------------ ======================
- ------------------------------ ------------------- ------------------- ------------------ ======================
John A. Wing** N/A N/A N/A N/A
- ------------------------------ ------------------- ------------------- ------------------ ======================
</TABLE>
* Mr. Nesher was a Trustee and was deemed to be an "interested person" of
the Trust as that term is defined in the 1940 Act. Mr. Nesher tendered his
resignation as Trustee on February 27, 1998. ** Messrs. Wing and Feitler did not
serve as Trustees during 1997.
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.
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 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 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, 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.
The securities of the Fund are valued by the Administrator pursuant to
valuations provided by an independent pricing service. 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. 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 expenses
charged to Investor Shares.
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, as amended (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;
(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.
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.
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.
Fund 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. If the Fund meets the Distribution Requirement
and if more than 50% of the value of the Fund's total assets at the close of its
taxable year consists of stock or securities of foreign corporations, the Fund
will be eligible to file an election with the Internal Revenue Service that will
enable shareholders, in effect, to receive the benefit of the foreign tax credit
with respect to any foreign and U.S. possessions income taxes paid by the Fund.
Pursuant to the election, the Fund will treat those taxes as dividends paid to
its shareholders. Each shareholder will be required to include a proportionate
share of those taxes in gross income as income received from a foreign source
and must treat the amount so included as if the shareholder had paid the foreign
tax directly. The shareholder may then either deduct the taxes deemed paid by
him or her in computing his or her taxable income or, alternatively, use the
foregoing information in calculating the foreign tax credit against the
shareholder's federal income tax. If the Fund makes the election, it will report
annually to its shareholders the respective amounts per share of the Fund's
income from sources within, and taxes paid to, foreign countries and U.S.
possessions.
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 treated 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 all of the
Trust's separate funds 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.
As provided in the Securities Exchange Act of 1934 (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 the ability of the accounts 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 the Distributor or 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, the Distributor or 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 may 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.
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.
The Fund 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 Fund 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 Fund 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 Fund. 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.
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended December 31, 1997,
including notes thereto and the report of Ernst & Young LLP are herein
incorporated by reference from the Trust's Annual Report. A copy of the 1997
Annual Report to Shareholders must accompany the delivery of this SAI.
PART C: OTHER INFORMATION
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Item 24. Financial Statements and Exhibits
(a) Financial Statements
Part A--Prospectus: N/A
Part B--Statement of Additional Information: N/A
(b) Additional Exhibits
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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 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) with Registrant's Pre-
Effective Amendment No. 1 filed on December 3, 1992 and incorporated by
reference to Exhibit 1(a) Post- Effective Amendment No. 11, filed April 29,
1997.
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 Post-Effective Amendment No. 11, filed April 29, 1997.
3 Not applicable.
4 Not applicable.
5 Investment Advisory Agreement with LaSalle Street Capital Management,
Ltd. as originally filed as Exhibit 5(b) with Registrant's initial Registration
Statement on October 2, 1992 and incorporated by reference to Exhibit 5
Post-Effective Amendment No. 11, filed April 29, 1997.
5(a) 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) with Registrant's
Pre-Effective Amendment No. 1 and incorporated by reference to Exhibit 5(a)
Post-Effective Amendment No. 11, filed April 29, 1997.
6 Distribution Agreement between Registrant and First Data Distributors,
Inc., to be filed by Amendment.
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 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) to 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 Registrar Agreement between the Registrant and
First Data Investor Services Group, Inc., to be filed by Amendment.
9 Administration Agreement between the Registrant and First Data Investor
Services Group, Inc., to be filed by Amendment.
9(a) Shareholder Service Plan and Agreement between Registrant and First
Data Distributors, Inc., to be filed by Amendment.
10 Opinion and Consent of Counsel; to be filed by Amendment.
11 Not applicable.
12 Not applicable.
13 Not applicable.
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.
16 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
Post- Effective Amendment No. 11, filed April 29, 1997.
24 Powers of Attorney; filed herewith.
27 Not applicable.
</TABLE>
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 April ___, 1998
<TABLE>
<CAPTION>
<S> <C>
Number of
Title of Class Record Holders
Units of beneficial interest, without par value -
COMMON SHARES
Value Fund 8
Growth Fund 8
Small Cap Fund 5
International Equity Fund 7
TransEurope Fund 0
Asian Tigers Fund 8
Fixed Income Fund 7
Intermediate Government Fixed Income Fund 4
Tax-Exempt Fixed Income Fund 5
International Fixed Income Fund 6
Limited Volatility Fixed Income Fund 0
Money Market Fund 0
Government Money Market Fund 5
Treasury Money Market Fund 5
Tax-Exempt Money Market Fund
Balanced Fund 5
Latin America Equity Fund 11
INVESTOR SHARES
Value Fund 221
Growth Fund 374
Small Cap Fund 93
International Equity Fund 255
TransEurope Fund 0
Asian Tigers Fund 152
Fixed Income Fund 42
Intermediate Government Fixed Income Fund 15
Tax-Exempt Fixed Income Fund 36
International Fixed Income Fund 37
Limited Volatility Fixed Income 1
Money Market Fund 97
Government Money Market Fund 13
Treasury Money Market Fund 6
Tax Exempt Money Market Fund 34
Balanced Fund
355
</TABLE>
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.
Item 28. Business and Other Connections of Investment Advisor and
Investment Sub-Advisor
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
Robert T. Brehm ABN AMRO Chicago Corporation Executive Vice President,
Chairman Director
ABN AMRO Asset Management (USA) Inc. President, Director
Richard A. Frodsham ABN AMRO Chicago Corporation Senior Vice President
President
Chief Executive Officer
Director
John A. Wing ABN AMRO Chicago Corporation Chairman, CEO
Vice Chairman Amerus Life Director
Chicago Board Options Exchange Director
Perry L. Taylor, Jr. ABN AMRO Chicago Corporation Executive Vice President &
Director, Secretary Director
Erikson Institute Trustee
Daniel J. Shannon Catholic Charities Board of Advisors,
Director Board of Directors
Notre Dame National Monogram Club President
Dental Benefit Services of Illinois Vice Chairman
Total Travel, Inc. Director
BioSafe International Director
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
Charles R. Klimkowski ABN AMRO Chicago Corporation Senior Vice President
Director Director
Theregenics, Inc. Director
Charles H. Self III LaSalle National Bank Senior Vice President & Assistant
Director Secretary
Senior Vice President Government Insurance Managers, Inc. Director
Keith Dibble LaSalle National Bank Senior Vice President & Assistant
Senior Vice President Secretary
Thomas F. McGrath LaSalle National Bank Senior Vice President & Assistant
Senior Vice President Secretary
ABN AMRO Chicago Corporation Senior Vice President
John F. Bonetti LaSalle National Bank Senior Vice President & Assistant
Vice President Secretary
Marc G. Borghans LaSalle National Bank Vice President & Assistant Secretary
Vice President
James J. Baudendistel None
Vice President
Gregory D. Boal LaSalle National Bank Vice President & Assistant Secretary
Vice President
A. Wade Buckles LaSalle National Bank First Vice President & Assistant
First Vice President Secretary
ABN AMRO Chicago Corporation Senior Vice President
Jac A. Cerney LaSalle National Bank Vice President & Assistant Secretary
Senior Vice President
Martin L. Eisenberg ABN AMRO Bank N.V. Vice President
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
ABN AMRO Mortgage Corp. Vice President
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
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 Asset Management (USA) Inc. Vice President
ABN AMRO Credit Corp. Vice President
ABN AMRO Investment Services, Inc. Vice President
LaSalle Management Company, 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. Tax Officer
LaSalle Home Mortgage Corporation Tax Officer
LaSalle National Corporation Vice President
ABN AMRO Capital (USA) Inc. Vice President
Lease Plan North America, Inc. Vice President
ABN AMRO Information Technology
Services Vice President
Company
Lisle Corporation Vice President
ABN AMRO Services Company, Inc. Vice President
LaSalle Bank Vice President
LaSalle Bank NI Vice President
LaSalle Northwest National Bank Vice President
LaSalle National Bancorp, Inc. Vice President
LaSalle Bank Illinois Vice President
Amsterdam Pacific Corporation Vice President
LaSalle Trade Services Limited Vice President
Heigl Mortgage and Financial
Corporation Vice President
CNBC Bancorp, Inc. Vice President
Columbia Financial Services, Inc. Vice President
Columbia National Bank of Chicago 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
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
Leonard Voila Corporation Vice President
LaSalle National Bank Vice President
Monroe Corporation of Delaware Vice President
LaSalle National Safe Deposit
Corporation Vice President
Rob-Wal Investment Co. Vice President
ENB Realty Co., Inc. Vice President
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
32A Realty 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
Mamaroneck Point Realty, Inc. Vice President
East River 52 Corp. Vice President
Huntington Bay Development Corp. Vice President
Plaza Homes Inc. (Metrofund) Vice President
Tower East 147 Inc. Vice President
LSR Realty Inc. Vice President
Beckman Hospitality Corp. Vice President
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
Atlantic Avenue Development Corp. Vice President
Bald Hills Park at Farmingville Inc. Vice President
Bennett 143 Corp. Vice President
Birch Locust Valley Corp. Vice President
Broadhollow 532 Melville Corporation Vice President
CK at Manorville Inc. 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
Edison Townhouse Corp. Vice President
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
Hunt Club at Middletown 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 and Pulaski at Greenlawn Inc. Vice President
Lake Front Land Corp. Vice President
Lattingtown Mansion, Inc. Vice President
Long Beach Breeze Corp. Vice President
Lowell Acquisition Corp. Vice President
Ludlow Development Corp. Vice President
MPE at St. James Inc. Vice President
Manor Homes at Aberdeen Corp. Vice President
Maspeth 56-25 58th Street Corp. Vice President
Metro Case Corp. Vice President
Mills Pond Estates at St. James Inc. Vice President
Montauk Hospitality Corp. Vice President
Montauk YC Corp. Vice President
Moreland Hauppauge Corp. Vice President
Nineteenth Street Development Corp. Vice President
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
North Hills Links Corp. Vice President
Old Country Road at Wyandanch Inc. Vice President
Omni General Realty Corp. Vice President
Omni Realty Corp. Vice President
Orchards at Mt. Sinai Inc. "(The)" Vice President
Parkway Plaza 1400 Corp. Vice President
Plaza Boulevard Equities Corp. Vice President
Plaza Boulevard Properties Corp. Vice President
Plaza Uniondale Equities 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
Shoreham North Country Corp. Vice President
Showcase Estates at Dix Hills Inc. Vice President
Smith Island at Everett Corp. Vice President
Soho 350 Corp. 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
TE at Dix Hills III Inc. Vice President
TO at Mt. Sinai Inc. Vice President
Tara II at Hauppauge Inc. Vice President
Thornwood Estates at Dix Hills Inc. Vice President
Vermilyea 119 Corp. Vice President
Veterans 4320 Bohemia Corp. Vice President
Village 185 Corp. 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
Windsor 37th Corp. Vice President
Z161 Corp. Vice President
Z174 Corp. Vice President
Ziegfeld Villas Corp. Vice President
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
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
Mark Karstrom LaSalle National Bank Vice President & Assistant Secretary
Vice President
Kathryn L. Martin ABN AMRO Asset Management (USA) Inc. Compliance Officer
Vice President
Ronald C. Scheuer LaSalle National Bank Vice President & Assistant Secretary
Vice President
Roger R. Sullivan LaSalle National Bank Vice President & Assistant Secretary
Vice President
Karen Van Cleave LaSalle National Bank Vice President & Assistant Secretary
Vice President
Nancy A. Ellefson LaSalle National Bank Assistant Vice President & Assistant
Vice President Secretary
Mark T. Morgan LaSalle National Bank Assistant Vice President & Assistant
Assistant Vice President Secretary
ABN AMRO Chicago Corporation Vice President
Phillip P. Mierzwa LaSalle National Bank Trust Officer & Assistant Secretary
Assistant Vice President
Susan M. Wiemeler None
Officer
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
Christine R. Dragon LaSalle National Bank Employee
Officer
</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 Name of Other Connection with
Investment Sub-Advisor Company Other Company
Hendrik Stienstra ABN AMRO Investment Management B.V. Director
Director ABN AMRO Beheer Beleggingsfondsen B.V. Director
B.V. Hollandsche Belegging en Beheer Maatshchappij Director
ABN AMRO Bank N.V. Senior Vice President
Diederik Wermolder ABN AMRO Investment Management B.V. Director
Director ABN AMRO Beheer Beleggingsfondsen B.V. Director
B.V. Hollandsche Belegging en Beheer Maatshchappij Director
ABN AMRO Luxembourg Investment Management S.A. Director
ABN AMRO Funds Investment Advisory (Luxembourg) S.A. Director
ABN AMRO Interest Growth Fund Investment Advisory Director
(Luxembourg) S.A.
ABN AMRO Valurente Investment Adviosry (Luxembourg) S.A. Director
ABN AMRO Bank N.V.
Vice President
Wypke Postma ABN AMRO Investment Management B.V. Officer
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 George Banque NSM, Paris Vice President
Director
Rogier Crijns ABN AMRO Bank N.V. Vice President
Portfolio Manager
Jan-Wim Derks ABN AMRO Bank N.V. Vice President
Portfolio Manager
Gijs Dooresteijn ABN AMRO Bank N.V. Vice President
Portfolio Manager
Name and Position with Name of Other Connection with
Investment Sub-Advisor Company Other Company
Alex Ng ABN AMRO Asset Management (Asia) Ltd. Director
Portfolio Manager P.T. ABN AMRO Manajemen Investasl Director
George Theodoridis ABN AMRO Investment Management B.V. Officer
Officer ABN AMRO Beheer Beleggingsfondsen B.V. Officer
B.V. Hollandsche Belegging en Beheer Maatshchappij Officer
ABN AMRO Bank N.V. Vice President
Erik Eleveld ABN AMRO Bank N.V. Assistant Vice President
Trader
John Vaartjes ABN AMRO Investment Management B.V. Officer
Compliance Officer ABN AMRO Beheer Beleggingsfondsen B.V. Officer
B.V. Hollandsche Belegging en Beheer Maatshchapij Officer
ABN AMRO Bank N.V. Assistant Vice President
</TABLE>
Item 29. Principal Underwriters
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
FirstData Distributors, Inc., a wholly-owned subsidiary of First Data
Corporation, acts as distributor for Rembrandt Funds pursuant to a
distribution agreement dated February 26, 1998. First Data Distributors,
Inc. also acts as underwriter for [INSERT A].
[(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in
the answer to Item 21 of Part B. Unless otherwise noted, the business
address of each director or officer is Oaks, PA 19456.]
Position and Office Positions and Offices Name with Underwriter with
Registrant
Item 30. Location of Accounts and Records
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b);
(3); (6); (8); (12); and 31a- 1(d), the required books and records are
maintained at the offices of Registrant's Custodian:
[CoreStates Bank, N.A. [Morgan Stanley Trust Company
Broad and Chestnut Streets One Pierrepont Plaza
P.O. Box 7618 Brooklyn, NY 11201]
Philadelphia, PA 19101]
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C)
and (D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:
First Data Investor Services Group, Inc.First Data Investor Services Group, Inc.
One Exchange Place, 8th Floor and First Data Distributors, Inc.
Boston, Massachusetts 02109 4400 Computer Drive
Westborough, Massachusetts 02109
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and
31a-1(f), the required books and records are maintained at
the principal offices of the Registrant's Advisor:
ABN AMRO Asset Management (USA) Inc. ABN AMRO-NSM International Funds
208 South LaSalle Street Management B.V.
Chicago, IL 60604-1003 Hoogoorddreef 66-68
P.O. Box 283, 1000 E.A.
Amsterdam, The Netherlands ZU100GST
Item 31. Management Services
None
Item 32. Undertakings
Registrant hereby undertakes that whenever shareholders meeting the requirements
of Section 16(c) of the Investment Company Act of 1940 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.
NOTICE
A copy of the Agreement and Declaration of Trust for Rembrandt Funds (formerly
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.
Signatures
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Post-Effective Amendment No. 13 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 16th day of April, 1998.
REMBRANDT FUNDS(R)
By: /s/ Timothy Leach
Timothy 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.
<TABLE>
<CAPTION>
<S> <C> <C>
* Trustee April 16, 1998
- --------------------------------------------------------------
Arnold F. Brookstone
* Trustee April 16, 1998
- --------------------------------------------------------------
William T. Simpson
* Trustee April 16, 1998
- --------------------------------------------------------------
John A. Wing
Trustee April 16, 1998
Robert Feitler
</TABLE>
*By: /s/Julie A. Tedesco
Julie A. Tedesco, Attorney-in-Fact
EXHIBIT INDEX
Name Exhibit No.
Powers of Attorney 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, being a
Trustee of Rembrandt Funds, a business trust organized under the laws of The
Commonwealth of Massachusetts (the "Trust"), does hereby make, constitute and
appoint Julie A. Tedesco and Coleen Downs Dinneen, and each of them,
attorneys-in-fact and agents of the undersigned with full power and authority of
substitution and resubstitution, in any and all capacities, to execute for and
on behalf of the undersigned any and all amendments to the Registration
Statement on Form N-1A relating to the shares of the Trust and any other
documents and instruments incidental thereto, and to deliver and file the same,
with all exhibits thereto, and all documents and instruments in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in- fact and agents, and each of them, full power and authority to do
and perform each and every act and thing that said attorneys-in-fact and agents,
and each of them, deem advisable or necessary to enable the Trust to effectuate
the intents and purposes hereof, and the undersigned hereby fully ratifies and
confirms all that said attorneys-in-fact and agents, of any of them, or their or
his or her substitute or substitutes, shall do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has subscribed his name this 2nd
day of April, 1998.
/s/ Arnold F. Brookstone
Arnold F. Brookstone
/s/ Robert Feitler
Robert Feitler
/s/ William T. Simpson
William T. Simpson
/s/ John A. Wing
John A. Wing
