UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
ABN AMRO
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(Name of Registrant as Specified in its Charter)
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[Vedder Price Letterhead]
November 1, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Preliminary Proxy Materials for ABN AMRO Funds, on behalf of its
series ABN AMRO Value Fund ("Registrant")
File No.: 811-8004
To the Commission:
On behalf of the above Registrant, electronically transmitted herewith is a
preliminary proxy statement and form of proxy for the Registrant. It is intended
that definitive proxy materials will be mailed on or about November 14, 2001.
Please call the undersigned at (312) 609-7532 with any questions or comments
regarding this filing.
Very truly yours,
/s/Mark L. Winget
------------------
Mark L. Winget
MLW/rek
Enclosures
ABN AMRO FUNDS
ABN AMRO VALUE FUND
171 North Clark Street
Chicago, Illinois 60601
Dear Fellow Shareholder:
We are pleased to enclose a Notice, Proxy Statement and proxy card for a Special
Meeting of Shareholders of the ABN AMRO Value Fund (the "Fund") a series of the
ABN AMRO Funds (the "Trust"). The meeting is scheduled to be held at 10:00 a.m.,
Eastern Time, December 21, 2001 at the offices of PFPC Inc., 101 Federal Street,
Boston, Massachusetts.
We are asking shareholders of the Fund to approve a new sub-investment advisory
agreement with MFS Institutional Advisors, Inc. ("MFS"). Currently, the Fund is
subadvised by Mellon Equity Associates, LLP ("Mellon"). The new sub-investment
advisory agreement with MFS is substantially similar to the Fund's current
sub-investment advisory agreement with Mellon except for the entity serving as
sub-adviser, the dates of execution and termination and the fees charged at
higher asset levels. The change in fees, however, will be borne by the Fund's
investment adviser and not shareholders. Moreover, the investment adviser has
voluntarily agreed to lower the contractual total expense limitations currently
in place from 1.08% to .94% resulting in lower overall fees paid by fund
shareholders. To aid you in understanding the proposal, we have also enclosed a
Questions & Answers section regarding the proposal.
The Board of Trustees reviewed the new sub-adviser and new sub-investment
advisory agreement at a telephonic board meeting and tentatively approved the
new sub-investment advisory agreement. The Board tentatively concluded that the
shareholders will be better served by engaging MFS to serve as sub-adviser. The
new sub-investment advisory agreement is contingent upon shareholder approval
and further Board approval at an in-person meeting called for the purposes of
considering the new sub-investment advisory agreement, as required by the
Investment Company Act of 1940.
YOUR VOTE IS IMPORTANT! Please review the attached proxy statement carefully.
Enclosed is a proxy card that we ask you to complete, sign, date and return as
soon as possible in the postage-paid envelope. Thank you for your attention and
your vote with regard to these important proposals. Please call shareholder
services at (800) 992-8151 if you need more information.
Sincerely,
/S/ KENNETH C. ANDERSON
Kenneth C. Anderson
President
November __, 2001
IMPORTANT NEWS FOR SHAREHOLDERS OF ABN AMRO VALUE FUND
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of some matters affecting your fund which
will require a shareholder vote.
QUESTIONS AND ANSWERS
Q: WHAT IS HAPPENING?
A: On October 24, 2001, the Board of Trustees, at a telephonic meeting,
tentatively approved a new sub-investment advisory agreement between
the investment adviser for the ABN AMRO Value Fund (the "Fund"), ABN
AMRO Asset Management (USA) LLC (the "Adviser"), and MFS Institutional
Advisors, Inc. ("MFS"). Currently, Mellon Equity Associates, LLP
("Mellon") serves as the Fund's sub-adviser. Subject to shareholder
approval of the new sub-investment advisory agreement and further
Board approval of the new sub-investment advisory agreement at an
in-person meeting called for the purpose of considering the new
sub-investment advisory agreement, as required by the Investment
Company Act of 1940, as amended ("1940 Act"), MFS will become the
Fund's sub-adviser. The Board is expected to meet in-person on
December 20, 2001 to continue its evaluation of the proposal, at which
time it will meet with representatives of MFS.
The following pages give you additional information about the new
sub-investment advisory agreement and certain other matters.
Q: WHY THE PROPOSAL FOR A NEW SUB-ADVISER TO THE FUND?
A: The Board of Trustees tentatively concluded that shareholders will
benefit from a change in sub-adviser to MFS. As a result of its
monitoring of the performance of Mellon, combined with a determination
by a major shareholder of the Fund that it desired to have its assets
managed by MFS, the Adviser evaluated MFS and concluded that
shareholders would be better served by a change in sub-adviser.
Accordingly, the Adviser recommended to the Board that such change be
made. In addition, the Adviser has agreed to voluntarily lower the
contractual total expense limitations currently in place from 1.08% to
.94%.
Q: WHY AM I BEING ASKED TO VOTE ON A NEW SUB-INVESTMENT ADVISORY AGREEMENT?
A: The 1940 Act, which regulates investment companies such as your Fund,
requires a shareholder vote to approve such a new sub-investment
advisory agreement. The new sub-investment advisory agreement is
substantially identical to the existing sub-investment advisory
agreement, except for the entity serving as sub-adviser, the dates of
execution and termination and fees paid by the investment adviser to
the sub-adviser. Advisory fees paid by the Fund to the Adviser will
remain the same. Shareholders will benefit from lower overall fees due
to the lower contractual total expense limitations.
Q: WHOM DO I CALL FOR MORE INFORMATION?
A: Please call shareholder services at (800) 992-8151.
ABN AMRO FUNDS
171 North Clark Street
Chicago, Illinois 60601
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
OF ABN AMRO VALUE FUND
To be held on December 21, 2001
To the Shareholders of ABN AMRO VALUE FUND:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders of ABN
AMRO Value Fund (the "Fund"), a series of ABN AMRO Funds (the "Trust"), a
Delaware business trust, will be held at the offices of PFPC Inc., 101 Federal
Street, Boston, Massachusetts on December 21, 2001 at 10:00 a.m. Eastern Time
(the "Special Meeting") for the following purposes:
1. To approve or disapprove a new sub-investment advisory agreement for the
Fund with MFS Institutional Advisors, Inc.
2. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on October 31, 2001
as the record date for the determination of shareholders entitled to notice of
and to vote at the Special Meeting.
By order of the Board of Trustees
Gerald Dillenburg
Senior Vice President, Secretary and Treasurer
November __, 2001
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. INSTRUCTIONS
FOR THE PROPER EXECUTION OF THE PROXY CARD ARE SET FORTH ON THE INSIDE COVER OF
THIS NOTICE. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
INSTRUCTIONS FOR VOTING
If you plan to vote by mail, the following general rules will help you to
properly sign your proxy card. Please read carefully because if you do not sign
your proxy card properly your vote will be invalidated.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Both parties must sign and the name of each party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration. For
example:
REGISTRATION VALID SIGNATURE
CORPORATE ACCOUNTS
(1) ABC Corp. ABC Corp. by
John Doe, Treasurer
(2) ABC Corp. John Doe
John Doe, Treasurer
(3) ABC Corp. Profit Sharing Plan John Doe
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d/ 12/28/78 Jane B. Doe
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) Estate of John B. Smith John B. Smith, Jr., Executor
ABN AMRO FUNDS
171 North Clark Street
Chicago, Illinois 60601
SPECIAL MEETING OF SHAREHOLDERS
OF ABN AMRO VALUE FUND
November ___, 2001
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of the ABN AMRO Funds (the "Trust") for the ABN
AMRO Value Fund (the "Fund"), for use at a Special Meeting of Shareholders of
the Fund to be held at 10:00 a.m. Eastern Time on December 21, 2001 at the
offices of PFPC Inc., 101 Federal Street, Boston Massachusetts, and any
adjournments thereof (the "Special Meeting"). A Notice of Special Meeting and
proxy card accompany this Proxy Statement. This Proxy Statement and the
accompanying Notice of Special Meeting and proxy card are first being mailed to
shareholders on or about November 14, 2001. In addition to solicitations of
proxies by mail, proxy solicitations may also be made by telephone, telegraph or
personal interviews conducted by officers and employees of the Trust, PFPC Inc.,
the Trust's transfer agent, or other representatives of the Trust. The cost of
preparing, printing and mailing the enclosed proxy card and Proxy Statement and
all other costs incurred in connection with the solicitation of proxies,
including any additional solicitation made by letter, telephone or telegraph,
will be paid by the Fund. The Fund's most recent annual report is available upon
request without charge by writing the Trust at P.O. Box 5164, Westborough, MA
01581 or calling 800 992-8151.
If each enclosed proxy card is properly executed and returned in time to be
voted at the Special Meeting, the shares of beneficial interest ("Shares")
represented by the proxy will be voted in accordance with the instructions
marked thereon. If no direction is indicated, it will be voted FOR the proposal
listed in the accompanying Notice of Special Meeting of Shareholders. Any
shareholder who has given a proxy has the right to revoke it at any time prior
to its exercise either by attending the Special Meeting and voting his or her
Shares in person, or by submitting a letter of revocation or a later-dated proxy
to the Trust at the above address prior to the date of the Special Meeting.
Under the Company's Trust Instrument dated September 8, 1993, a quorum of
shareholders is constituted by the presence in person or by proxy of the holders
of one third (33 1/3%) of the outstanding shares of the Fund entitled to vote at
the Special Meeting. For purposes of determining the presence of a quorum for
transacting business at the Special Meeting, abstentions and broker "non-votes"
will be treated as shares that are present but which have not been voted. Broker
non-votes are proxies received by the Trust from brokers or nominees when the
broker or nominee has neither received instructions from the beneficial owner or
other persons entitled to vote nor has discretionary power to vote on a
particular matter. In the event that a quorum is not present at the Special
Meeting, or in the event that a quorum is present but sufficient votes to
approve the proposal are not received, the persons named as proxies on the
enclosed proxy card may propose one or more adjournments of the Special Meeting
to permit further solicitation of proxies. The persons named as proxies will
vote in favor of adjournment if they determine that such adjournment and
additional solicitation are reasonable and in the best interests of the Fund.
The Fund will pay the costs of preparing and distributing to shareholders
additional proxy materials, if required in connection with any adjournment. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Special Meeting in person or by proxy.
The proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of a Fund. The term "majority of the outstanding
voting securities," as defined in the Investment Company Act of 1940, as amended
(the "1940 Act") and as used in this Proxy Statement, means: the affirmative
vote of the lesser of (1) 67% of the voting securities of the Fund present at
the meeting if more than 50% of the outstanding voting securities of the Fund
are present in person or by proxy or (2) more than 50% of the outstanding voting
securities of the Fund. Abstentions and broker non-votes will have the effect of
a "no" vote on the proposal.
The Board of Trustees has fixed the close of business on October 31, 2001,
as the record date (the "Record Date") for the determination of shareholders of
the Fund entitled to notice of and to vote at the Special Meeting and all
adjournments thereof. At the close of business on the Record Date there were
_____________ Class N Shares of the Fund outstanding. As of the Record Date, to
the best knowledge of the management of the Fund, the shareholders shown on
Appendix 1 to this Proxy Statement owned of record or beneficially 5% or more of
the shares of any class of the Fund. As of October 31, 2001, the officers and
Trustees of the Trust as a group beneficially owned less than 1% of the shares
of the Fund.
In order that your shares may be represented at the Special Meeting, you
are requested to:
--indicate your instructions on the enclosed proxy card;
--date and sign the proxy card;
--mail the proxy card promptly in the enclosed envelope, which requires no
postage if mailed in the United States; and
--allow sufficient time for the proxy card to be received on or before
10:00 a.m. Eastern Time on December 21, 2001.
PROPOSAL NO. 1
TO APPROVE OR DISAPPROVE A NEW SUB-INVESTMENT
ADVISORY AGREEMENT FOR THE FUND
INTRODUCTION
As part of its oversight of sub-advisers, ABN AMRO Asset Management (USA)
LLC (the "Adviser"), the Fund's investment adviser, has been monitoring the
performance of Mellon Equity Associates, LLP ("Mellon"), the Fund's
sub-investment adviser. Mellon has served as sub-adviser to the Fund since
December 6, 1999. As of September 30, 2001, the Fund's investment performance
has been -17.45% and -5.39% for the one and two year periods, respectively.
During this same period, the Fund has ranked in the 4th Quartile based upon its
Lipper peer group (Multi-cap category), and has received an overall rating of
three stars by Morningstar in the large cap value category.
Independent of the Adviser's analysis, the Fund's largest shareholder, the
ABN AMRO Group Profit Sharing and Savings Plan (the "Plan"), hired a third-party
consultant who recommended that MFS Institutional Advisors, Inc. ("MFS") manage
the Plan's assets held in the Fund. The Plan owns approximately 41% of the Fund
as of September 30, 2001 and indicated its intention to redeem its shares.
2
MFS has a significantly better performance record for a comparable fund
over the same one and two year periods ending September 30, 2001, as compared to
the Fund. The MFS Value Fund had investment performance of -7.01% and ___% for
the one and two year periods, respectively ended September 30, 2001. In its
Lipper category (Large cap value), the MFS Value Fund ranked in the 1st Quartile
for the same periods and received a Morningstar overall rating of five stars in
the large cap value category.
Based upon these factors, the Adviser determined to recommend to the Board
that the sub-adviser for the Fund be changed from Mellon to MFS. [The Adviser
believes that the Plan will remain in the Fund if the new sub-investment
advisory agreement is approved.] In negotiating a proposed sub-investment
advisory agreement with MFS, at the current asset level, the Adviser would pay
the same fee to MFS as it currently would pay to Mellon. However, at larger
asset levels, the Adviser would pay a higher fee to MFS than it currently would
pay to Mellon because of different breakpoints and fees at those breakpoints.
The increased cost to the Adviser, however, would not be borne by shareholders.
Any differences would be borne solely by the Adviser. Shareholders will see a
reduction in overall fees, however, because the Adviser has agreed to lower the
contractual total expense limitations currently in place from 1.08% to .94%.
On October 24, 2001, the Board of Trustees held a meeting by telephone to
consider changing the sub-adviser to MFS. Based upon the information provided at
that meeting, the Board tentatively concluded that it was in the best interests
of all shareholders to enter into a sub-investment advisory agreement with MFS.
The Board did not take final action at that meeting because Section 15 of the
1940 Act requires that any new advisory contract be approved by a vote of a
majority of trustees, who are not parties to the contract to interested persons
(as defined under the 1940 Act) of the adviser or sub-adviser ("Disinterested
Trustees"), at an in-person meeting called for the purpose of voting on such
contract. However, because the Board felt that it was important to make a change
by the end of the year, it tentatively approved the sub-investment advisory
agreement and authorized other actions, such as the calling of a shareholders
meeting, the preparation of this proxy statement, and the providing of notice of
the termination of the existing subadvisory agreement with Mellon. The Board is
scheduled to meet in-person on December 20, 2001, at which time it will formally
consider the new sub-investment advisory agreement with MFS after meeting with
representatives of MFS. The proxies being solicited are contingent upon final
Board approval at its in-person meeting.
Aside from the differences in fees noted above, the new sub-investment
advisory agreement is substantially identical to the existing sub-investment
advisory agreement, except for the entity serving as sub-adviser and the dates
of execution and termination. The description of the New Sub-Investment Advisory
Agreement, which is set forth below, is qualified in its entirety by reference
to the Form of New Sub-Investment Advisory Agreement, a copy of which is
attached to this Proxy Statement as Exhibit A.
BOARD EVALUATION
At its October 24, 2001 meeting, the Board of Trustees had the assistance
of legal counsel who provided advice on, among other things, the Board's
fiduciary obligation in considering the proposed New Sub-Investment Advisory
Agreement. At least 75% of the Trustees are Disinterested Trustees.
In evaluating the proposed new sub-adviser, the Board of Trustees reviewed
materials furnished by management and Fund counsel. The Board of Trustees
reviewed information about MFS, including its personnel, operations, and
financial condition. The Board of Trustees reviewed information regarding the
investment performance of MFS on an absolute basis and compared to other
investment advisers (the "peer group").
The Board of Trustees specifically considered the following as relevant to
its recommendation: (1) that the terms of the New Sub-Investment Advisory
Agreement are substantially identical to the Existing Sub-Investment Advisory
Agreement except for the entity serving as sub-adviser and different dates of
execution and termination; (2) the change in sub-adviser will not result in any
decrease in the level of services provided to the Fund; (3) the financial
strength and investment advisory resources of MFS; (4) the favorable reputation,
qualifications and background of MFS, as well as the qualifications of its
personnel; (5) the experience of MFS with other U.S. registered investment
companies; (6) MFS' ability to provide quality investment advisory and other
services; (7) the impact on the Fund of the redemption by the Plan of all its
shares; (8) the change in the contractual expense limitation from 1.08% to .94%;
(9) the relative performance of the Fund since commencement of operations to
comparable mutual funds and unmanaged indices; and (10) other factors deemed
relevant by the Trustees.
Based upon its evaluation of all relevant factors, the Board of Trustees
tentatively concluded that shareholders should benefit from the change to MFS as
sub-adviser and that the proposed New Sub-Investment Advisory Agreement was in
the best interests of the Fund and its shareholders. Based on its review, the
Board called the Special Meeting and authorized the solicitation of proxies
seeking shareholder approval of the New Sub-Investment Advisory Agreement,
subject to the Board's final approval at its in-person meeting.
DESCRIPTION OF EXISTING SUB-INVESTMENT ADVISORY AGREEMENT
Pursuant to the Existing Sub-Investment Advisory Agreement, Mellon serves
as the sub-adviser for the Fund. Mellon provides an investment program for the
Fund in accordance with the Fund's investment policies, limitations and
restrictions.
For the subadvisory services provided to the Fund, Mellon receives a
monthly fee based on the Fund's average daily net assets. Mellon was paid by the
Fund $537,689 in aggregate subadvisory fees during the fiscal year ended
December 31, 2000.
Under the terms of the Existing Sub-Investment Advisory Agreement, the
sub-adviser is not liable to the Adviser or the Trust for any error of judgment,
mistake of law or any loss suffered in connection with any matters to which the
agreement relates or any other act or omission in the performance of its duties
under the agreement, except in the case of its willful misfeasance, bad faith,
gross negligence in the performance of its duties or reckless disregard of its
obligations and duties under the agreement.
The Existing Investment Advisory Agreement may be terminated without
penalty upon sixty (60) days' written notice by the Fund, upon the vote of a
majority of Trustees or by a vote of the majority of the Fund's outstanding
voting securities, and by Mellon. The Existing Sub-Investment Advisory Agreement
also terminates upon the termination of the Investment Advisory Agreement
between the Fund and the Adviser.
The Existing Sub-Investment Advisory Agreement is dated September 27, 2001.
The most recent action taken by the Board with respect to the Existing
Sub-Investment Advisory Agreement was March 15, 2001 in connection with the
reorganization of the Fund.
THE NEW SUB-INVESTMENT ADVISORY AGREEMENT
The New Sub-Investment Advisory Agreement for the Fund will be dated as of
December 31, 2001. The New Sub-Investment Advisory Agreement will be in effect
for an initial term ending on December 31, 2002 and to be continued thereafter
from year to year if specifically approved by a vote of a majority of the
outstanding voting securities of the Fund, or by the Board of Trustees and, in
either
event, by a vote of a majority of Disinterested Trustees, cast in person at a
meeting called for such purpose. In the event that shareholders do not approve
the New Sub-Investment Advisory Agreement or the Board does not formally approve
the New Sub-Investment Advisory Agreement at its in-person meeting, the Board
will take such action as it deems to be in the best interests of the Fund and
its shareholders.
DIFFERENCES BETWEEN THE EXISTING AND NEW SUB-INVESTMENT ADVISORY AGREEMENTS
The New Sub-Investment Advisory Agreement is substantially identical to the
Existing Sub-Investment Advisory Agreement, except for the sub-adviser, the
dates of execution and termination and fees.
The fee schedule for the New Sub-Investment Advisory Agreement will be 0.40
of 1% per annum on the first $250 million of the Fund's average daily net
assets; 0.35 of 1% per annum on the next $250 million of the Fund's average
daily net assets; and 0.325 of 1% per annum on the Fund's average daily net
assets over $500 million. The fee schedule for the Existing Sub-Investment
Advisory Agreement is 0.40 of 1% per annum on the first $100 million of the
Fund's average daily net assets; 0.35 of 1% per annum on the next $150 million
of the Fund's average daily net assets; 0.30 of 1% per annum on the next $250
million of the Fund's average daily net assets; and 0.25 of 1% per annum on the
Fund's average daily net assets over $500 million. The subadvisory fees are paid
to the sub-adviser by the Adviser. The advisory fees borne by the Fund remain
unchanged.
DESCRIPTION OF NEW ADVISER
MFS is a Delaware corporation with offices at 500 Boylston Street, Boston,
Massachusetts 02116. MFS is an 81.8%-owned subsidiary of Sun Life of Canada
(U.S.) Financial Services Holdings, Inc., 500 Boylston Street, Boston,
Massachusetts 02116, which is in turn a wholly owned subsidiary of Sun Life
Assurance Company of Canada-U.S. Operations Holdings, Inc., One SunLife
Executive Park, Wellesley Hills, Massachusetts 02481. Sun Life Assurance Company
of Canada-U.S. Operations Holdings, Inc. is a wholly owned subsidiary of Sun
Life Assurance Company of Canada, 150 King Street West, 14th Floor, Toronto,
Canada M5H 1J9, which in turn is a wholly owned subsidiary of Sun Life Financial
Services of Canada, Inc. at the same address.
Exhibit B contains tables listing the directors and principal executive
officers of MFS and their principal occupations. Unless otherwise noted, the
business address of each person is the same as the principal business address of
MFS. None of the trustees or officers of the Trust are employees, officers,
directors or shareholders of MFS. Exhibit C sets forth the fees and other
information regarding investment companies advised by MFS that have similar
investment objectives to the Fund.
REQUIRED VOTE
Approval of this proposal requires the affirmative vote of a "majority of
the outstanding voting securities" of the Fund, as more fully described above.
SUBMISSION OF SHAREHOLDER PROPOSALS
Under Delaware law, the Trust is not required to hold annual shareholders'
meetings, but it will hold special meetings as required or deemed desirable, or
upon the request of holders of at least 10% of the Trust's shares. Since the
Trust does not hold regular meetings of shareholders, the anticipated date of
the next special shareholder meeting cannot be provided. Any shareholder who
wishes to submit a proposal for consideration at a subsequent shareholders'
meeting should mail the proposal promptly to the Trust. Any proposal to be
considered for submission to shareholders must comply with Rule 14a-8 under the
Securities Exchange Act of 1934 and must be received by the Trust within a
reasonable time before
the solicitation of proxies for that meeting. The timely submission of a
proposal does not guarantee its inclusion.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Trustees is not aware of any matters that will be presented
for action at the Special Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or persons entitled to vote
the shares represented by such proxy the discretionary authority to vote matters
in accordance with their best judgment.
DISTRIBUTOR AND ADMINISTRATOR
Set forth below are the names and addresses of the Trust's distributor and
administrator:
ADMINISTRATOR DISTRIBUTOR
ABN AMRO Investment ABN AMRO Distribution
Fund Services, Inc. Services (USA) Inc.
171 North Clark Street, 12MD 3200 Horizon Drive
Chicago, IL 60601-3294 King of Prussia, PA 19406
During the fiscal year ended October 31, 2000, the Trust paid Alleghany
Investment Services, Inc., predecessor of ABN AMRO Investment Fund Services,
Inc., $2.76 million for providing administrative services to the Trust, of which
$2.18 million was paid to PFPC Inc., as sub-administrator.
November __, 2001
6
EXHIBIT A
FORM OF NEW SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN ABN AMRO ASSET MANAGEMENT (USA) LLC
AND MFS INSTITUTIONAL ADVISORS, INC.
SUB-INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this ___ day of
____________, 2001, by and between ABN AMRO Asset Management (USA) LLC
(hereinafter referred to as the "Investment Advisor") and MFS Institutional
Advisors, Inc. (hereinafter referred to as the "Sub-Advisor"), which Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute but one instrument.
W I T N E S E T H:
WHEREAS, the Investment Advisor wishes to enter into a contract with the
Sub-Advisor to render the Investment Advisor the following services:
Provide research, analysis, advice and recommendations with respect to the
purchase and sale of securities, and make investment commitments regarding
assets of the ABN AMRO Value Fund (hereinafter referred to as the "Fund"; the
Fund is a series of the ABN AMRO Funds, hereinafter referred to as the "Trust"),
subject to oversight by the Board of Trustees of the Trust and the supervision
of the Investment Advisor.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and intending to be bound, the parties agree as follows:
1. As compensation for the services enumerated herein, the Investment
Advisor will pay the Sub-Advisor a fee, which shall be calculated monthly and
payable monthly, as set forth in Schedule A hereto.
If this Agreement shall become effective subsequent to the first day of a
month, or shall terminate before the last day of a month, the Sub-Advisor's
compensation for such fraction of the month shall be determined by applying the
foregoing percentages to the average daily net asset value of the Fund during
such fraction of a month and in the proportion that such fraction of a month
bears to the entire month.
2. This Agreement shall become effective as of the date first above
written, subject to the approval of the Trustees of the Trust in accordance with
the provisions of the Investment Company Act of 1940 (the "Act"). The Investment
Advisor will promptly advise the Sub-Advisor as to the giving of such approval.
The Investment Advisor represents that it is the investment advisor of the Fund,
with the authority as such to enter into this Agreement.
3. This Agreement shall continue for a period ending one year from its
effective date. It may be renewed thereafter by the Investment Advisor and the
Sub-Advisor for successive periods not exceeding one year only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees of the Trust or by a vote of the majority of the outstanding voting
securities of the Fund as prescribed by the Act and provided further that such
continuance is approved at least annually thereafter by a vote of a majority of
the Trust's Trustees, who are not parties to such Agreement or interested
persons of such a party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement will terminate automatically without the
payment of any penalty upon termination of the Investment Advisory Agreement
("Investment Advisory Agreement") relating to the Fund between the Trust and the
Investment Advisor (accompanied by simultaneous notice
A-1
to the Sub-Advisor) or upon sixty days' written notice by the Trust to the
Sub-Advisor that the Trustees of the Trust or the shareholders by vote of a
majority of the outstanding voting securities of the Fund, as provided by the
Act, have terminated this Agreement. This Agreement may also be terminated by
the Sub-Advisor without penalty upon sixty days' written notice to Investment
Advisor and the Trust.
This Agreement shall terminate automatically in the event of its assignment
or (upon notice thereof to the Sub-Advisor) the assignment of the Investment
Advisory Agreement, unless its continuation thereafter is approved by the Board
of Trustees of the Trust and the shareholders of the Fund as required by the Act
(in each case as the term "assignment" is defined in Section 2(a)(4) of the
Act).
4. Subject to the supervision of the Board of Trustees of the Trust and the
Investment Advisor, the Sub-Advisor will provide an investment program for the
Fund, including investment research and management with respect to securities
and investments, including cash and cash equivalents in the Fund, and will
determine from time to time what securities and other investments will be
purchased, retained or sold by the Fund. The Sub-Advisor will provide the
services under this Agreement in accordance with the Fund's investment objective
policies and restrictions as stated in the Prospectus (as used herein this term
includes the related Statement of Additional Information). The Sub-Advisor
further agrees that it:
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will, in addition, conduct its activities
under this Agreement in accordance with regulations of any other Federal or
State agencies which now have or in the future will have jurisdiction over its
activities;
(b) will pay expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities and other investments
(including brokerage commissions and other transaction changes, if any)
purchased for the Fund, provided that the Sub-Advisor will not pay for or
provide a credit with respect to any research provided to it in accordance with
Section 4(c);
(c) will place orders pursuant to its investment determinations for
the Fund either directly with any broker or dealer, or with the issuer. In
placing orders with brokers or dealers, the Sub-Advisor will attempt to obtain
the best overall price and the most favorable execution of its orders, except as
provided below. Consistent with this obligation, when the execution and price
offered by two or more brokers or dealers are comparable, the Sub-Advisor has
been advised by the Investment Advisor that the Trust has authorized the
Investment Advisor to authorize the Sub-Advisor, in its discretion, to purchase
and sell securities to and from brokers and dealers who promote the sale of Fund
shares and the Investment Advisor hereby so authorizes the Sub-Advisor. In no
instance will securities be purchased from or sold to the Sub-Advisor or any
affiliated person of the Sub-Advisor as principal. Notwithstanding the foregoing
sentence, the Sub-Advisor may arrange for the execution of brokered transactions
through an affiliated broker dealer in conformity with policies and procedures
for such purpose if, when, and as established by the Trustees of the Fund.
Subject to policies established by the Board of Trustees of the Trust and
communicated to the Sub-Advisor, it is understood that the Sub-Advisor will not
be deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust or in respect of the Fund, or be in breach of any obligation owing to the
Investment Advisor or the Trust or in respect of the Fund under this Agreement,
or otherwise, solely by reason of its having caused the Fund to pay a member of
a securities exchange, a broker or a dealer a commission for effecting a
securities transaction for the Fund in excess of the amount of commission
another member of an exchange, broker or dealer would have charged if the
Sub-Advisor determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services provided by such member, broker
or dealer, viewed in terms of that particular transaction or the Sub-Advisor's
overall responsibilities with respect to the accounts, including the Fund, as to
which it exercises investment discretion.
A-2
(d) will review the daily valuation of securities owned by the Fund as
obtained on a daily basis by the Fund's administrator and furnished by it to
Sub-Advisor, and will promptly notify the Trust and the Investment Advisor if
the Sub-Advisor believes that any such valuations may not properly reflect the
market value of any securities owned by the Fund, provided, however, that the
Sub-Advisor is not required by this sub-paragraph to obtain valuations of any
such securities from brokers or dealers or otherwise, or to otherwise
independently verify valuations of any such securities.
(e) will attend regular business and investment-related meetings with
the Trust's Board of Trustees and the Investment Advisor if requested to do so
by the Trust and/or the Investment Advisor.
(f) maintain books and records with respect to the securities
transactions for the Fund, furnish to the Investment Advisor and the Trust's
Board of Trustees such periodic and special reports as they may request with
respect to the Fund, and provide in advance to the Investment Advisor all of the
Sub-Advisor's reports to the Trust's Board of Trustees for examination and
review within a reasonable time prior to the Trust's Board meetings.
5. Sub-Advisor agrees with respect to the services provided to the Fund
that it:
(a) will upon request telecopy trade information to the investment
adviser on the first business day following the day of the trade and cause
broker confirmations to be sent directly to the Investment Advisor; and
(b) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Fund and its prior,
present or potential shareholders, and will not use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder (except after prior notification to and approval in writing by the
Trust, which approval may not be withheld where Sub-Advisor is advised by
counsel that the Sub-Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust).
6. In compliance with the requirements of Rule 31a-3 under the Act,
Sub-Advisor acknowledges that all records which it maintains for the Trust are
the property of the Trust and agrees to surrender promptly to the Trust any of
such records upon the Trust's request, provided, that Sub-Advisor may retain
copies thereof at its own expense. Sub-Advisor further agrees to preserve for
the periods prescribed by Rule 31a-2 under the Act the records required to be
maintained by Rule 31a-1 under the Act relating to transactions placed by
Sub-Advisor for the Fund.
7. It is expressly understood and agreed that the services to be rendered
by the Sub-Advisor to the Investment Advisor under the provisions of this
Agreement are not to be deemed to be exclusive, and the Sub-Advisor shall be
free to provide similar or different services to others so long as its ability
to provide the services provided for in this Agreement shall not be materially
impaired thereby.
8. The Investment Advisor agrees that it will furnish currently to the
Sub-Advisor all information with reference to the Fund and the Trust that is
reasonably necessary to permit the Sub-Advisor to carry out its responsibilities
under this Agreement, and the parties agree that they will from time to time
consult and make appropriate arrangements as to specific information that is
required under this paragraph and the frequency and manner with which it shall
be supplied. Without limiting the generality of the foregoing, Investment
Advisor will furnish to Sub-Advisor procedures consistent with the Trust's
contract with the Fund's custodian from time to time (the "Custodian"), and
reasonably satisfactory to Sub-Advisor, for consummation of portfolio
transactions for the Fund by payment to or
delivery by the Custodian of all cash and/or securities or other investments due
to or from the Fund, and Sub-Advisor shall not have possession or custody
thereof or any responsibility or liability with respect to such custody. Upon
giving proper instructions to the Custodian, Sub-Advisor shall have no
responsibility or liability with respect to custodial arrangements or the acts,
omissions or other conduct of the Custodian.
9. The Sub-Advisor and its directors, officers, stockholders, employees and
agents shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Investment Advisor or the Trust in connection with any
matters to which this Agreement relates or for any other act or omission in the
performance by the Sub-Advisor of its duties under this agreement except that
nothing herein contained shall be construed to protect the Sub-Advisor against
any liability by reason of the Sub-Advisor's willful misfeasance, bad faith, or
gross negligence in the performance of its duties or by reckless disregard of
its obligations or duties under this Agreement.
10. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby. Except to the extent governed by federal law including
the Act, this Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, without applying the principles of conflicts
of law thereunder.
11. No provision of this Agreement may be changed, discharged or terminated
orally, but only by an instrument in writing signed by the party against which
enforcement of the change, discharge or termination is sought. No amendment of
this Agreement shall be effective with respect to the Trust until approved in
accordance with the Act.
12. Any notice to be given hereunder may be given by personal notification
or by facsimile transmission, to the party specified at the address stated
below:
To the Investment Advisor at: ABN AMRO Asset Management (USA) LLC
171 North Clark Street
Chicago, Illinois 60601
Attn: Stuart D. Bilton
Facsimile: (312) 223-5143
To the Sub-Advisor at:
Attn:
Facsimile:
To the Fund or the Trust at: The ABN AMRO Funds
161 North Clark Street
Chicago, Illinois 60601
Attn: Gerald F. Dillenburg
Facsimile: (312) 223-5608
With copies to: _________________________________
_________________________________
_________________________________
_________________________________
A-4
or addressed as such party may from time to time designate by notice to other
parties in accordance herewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
ATTEST: ABN AMRO ASSET MANAGEMENT (USA) LLC
_________________________________ By:_______________________________
ATTEST: MFS INSTITUTIONAL ADVISORS, INC.
_________________________________ By:_______________________________
A-5
EXHIBIT B
DIRECTORS AND OFFICERS ASSOCIATED WITH MFS
NAME TITLE/POSITION OTHER BUSINESS
Arnold D. Scott Director and Senior
Executive Vice President
James C. Baillie Director and President
Kevin R. Parke Director and Executive Vice
President and CEO
Thomas J. Cashman, Jr. Director and Executive Vice
President
Joseph W. Dello Russo Director, Executive Vice President
and CFO and CAO
William W. Scott Director and Vice Chairman
Donald A. Stewart Director
C. James Prieur Director
William W. Stinson Director
Jeffrey L. Shames Chairman and CEO
B-1
EXHIBIT C
COMPARABLE INVESTMENT COMPANIES ADVISED BY MFS
The following are investment companies with investment objectives similar
to the Fund, for which MFS provides advisory services:
Advisory Compensation
Total Net Assets as of on an Annual Basis
September 30, 2001 on the Value of Average
Name of Investment Company (in Thousands) Daily Net Assets
-------------------------- -------------- ----------------
MFS Value Fund
C-1
APPENDIX 1
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
(AS OF OCTOBER 31, 2001)
ABN AMRO VALUE FUND
SHAREHOLDERS SHARES OWNED PERCENTAGE OWNED
------------ ------------ ----------------
SAMPLE PROXY
ABN AMRO
A SERIES OF ABN AMRO FUNDS
THE UNDERSIGNED HEREBY APPOINTS DAVID WHITAKER AND TINA PAINE, AND EACH OF THEM,
AS PROXIES, EACH WITH THE POWER TO APPOINT HIS OR HER SUBSTITUTE, AND HEREBY
AUTHORIZES THEM TO REPRESENT AND TO VOTE, ALL SHARES OF ABN AMRO VALUE FUND OF
ABN AMRO FUNDS HELD OF RECORD BY THE UNDERSIGNED ON OCTOBER 31, 2001, AT THE
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 21, 2001 AND ANY
ADJOURNMENT THEREOF.
BY SIGNING AND DATING THE LOWER PORTION OF THIS CARD, YOU AUTHORIZE THE PROXIES
TO VOTE EACH PROPOSAL AS MARKED, OR IF NOT MARKED TO "APPROVE" THE PROPOSAL, AND
TO USE THEIR DISCRETION TO VOTE ANY OTHER MATTER AS MAY PROPERLY COME BEFORE THE
MEETING. IF YOU DO NOT INTEND TO PERSONALLY ATTEND THE MEETING PLEASE COMPLETE
AND MAIL THIS CARD AT ONCE IN THE ENCLOSED ENVELOPE. THE UNDERSIGNED HEREBY
REVOKES ANY PROXY PREVIOUSLY GIVEN.
Date
Please sign name or names as printed on proxy to authorize the voting of your
shares as indicated. Where shares are registered with joint owners all joint
owners should sign. Persons signing as executors, administrators, trustees, etc.
should so indicate.
Signature(s) (Capacity, if applicable)
PROXY
ABN AMRO FUNDS
Special Meeting of Shareholders to be held on December 21, 2001
ABN AMRO Value Fund
161 North Clark Street, Chicago, Illinois 60601
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholders. If no direction is made this proxy will be voted
to "APPROVE" the proposal.
Please vote by filling in the box(es) below
1. To approve or disapprove a new investment advisory agreement for the
Fund with MFS Institutional Advisors, Inc.
()Approve ()Disapprove ()Abstain