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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 Section 240.14a-12
ABN AMRO FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
_____________, 2006
ABN AMRO FUNDS
ABN AMRO BALANCED FUND
ABN AMRO BOND FUND
ABN AMRO GROWTH FUND
ABN AMRO HIGH YIELD BOND FUND
ABN AMRO INVESTMENT GRADE BOND FUND
ABN AMRO MID CAP FUND
ABN AMRO MID CAP GROWTH FUND
ABN AMRO MUNICIPAL BOND FUND
ABN AMRO REAL ESTATE FUND
ABN AMRO VALUE FUND
ABN AMRO/MONTAG & CALDWELL BALANCED FUND
ABN AMRO/MONTAG & CALDWELL GROWTH FUND
ABN AMRO/RIVER ROAD DYNAMIC EQUITY INCOME FUND
ABN AMRO/RIVER ROAD SMALL CAP VALUE FUND
ABN AMRO/TAMRO LARGE CAP VALUE FUND
ABN AMRO/TAMRO SMALL CAP FUND
ABN AMRO/VEREDUS AGGRESSIVE GROWTH FUND
ABN AMRO/VEREDUS SCITECH FUND
ABN AMRO/VEREDUS SELECT GROWTH FUND
161 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601
Dear Fellow Shareholder:
The ABN AMRO Funds listed above will jointly hold a Special Meeting of
Shareholders (the "Special Meeting") on August 25, 2006, at 9:00 a.m. Eastern
time, at the offices of PFPC, Inc., 4400 West Computer Drive, Westborough,
Massachusetts 01581. You are being asked to consider the proposals described in
the enclosed materials as a result of ABN AMRO's decision to exit the business
of sponsoring and operating proprietary mutual fund products in the United
States and to sell that business to Highbury Financial Inc. ("Highbury"). If you
are a shareholder of record as of the close of business on June 15, 2006, you
are entitled to vote on a proposal to appoint Aston Asset Management LLC
("Aston"), a subsidiary of Highbury, as the investment adviser to your Fund.
Under the arrangement, Aston will assume responsibility for the Fund's
day-to-day administrative and marketing operations and will delegate investment
management responsibility to a subadviser. In most cases, your current
investment adviser or subadviser will remain in place as a subadviser to Aston.
While we encourage you to read the Questions and Answers section and the
full text of the enclosed proxy statement, the proposals are summarized as
follows:
- To approve a new investment advisory agreement with Aston Asset Management
LLC;
- Except as noted below, to approve a new subadvisory agreement between
Aston and your current investment adviser or subadviser;
- For ABN AMRO Balanced Fund, to approve a new subadvisory agreement between
Aston and ABN AMRO Asset Management, Inc. for the equity component of the
portfolio and between Aston and Taplin, Canida & Habacht, Inc. for the
fixed income component of the portfolio.
- For ABN AMRO Municipal Bond Fund, to approve a new subadvisory agreement
between Aston and McDonnell Investment Management, LLC;
- For ABN AMRO Bond Fund and ABN AMRO Investment Grade Bond Fund, to approve
a new subadvisory agreement between Aston and Taplin, Canida & Habacht,
Inc.; and
- To approve a "manager of managers" structure for each Fund that, if
approved by the Board of Trustees in the future, would permit the
investment adviser to hire and replace subadvisers and to modify
subadvisory agreements without shareholder approval.
YOUR FUND'S BOARD OF TRUSTEES HAS APPROVED THE PROPOSALS AND URGES YOU TO
VOTE "FOR" EACH PROPOSAL.
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. You may also vote by telephone or
over the Internet using the toll-free telephone number or web address printed on
your proxy card. Thank you for your attention and your vote with regard to this
important proposal. Please call shareholder services at (800) 992-8151 if you
need more information.
Thank you for your response, and we look forward to serving your future
investment needs.
Sincerely,
/s/ Kenneth C. Anderson
Kenneth C. Anderson
President
2
___________, 2006
IMPORTANT NOTICE TO FUND SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement, here is a brief overview of the proposals that are being presented to
shareholders for a vote.
QUESTIONS AND ANSWERS
Q. WHY AM I RECEIVING THIS PROXY STATEMENT?
A. Currently, ABN AMRO Asset Management, Inc. and its affiliates
(collectively, "ABN AMRO") serve as the investment adviser to each series
of ABN AMRO Funds (the "Trust") pursuant to an investment advisory
agreement. For certain funds, ABN AMRO has entered into subadvisory
agreements pursuant to which a subadviser has been retained to furnish
investment advisory services to your fund. ABN AMRO also provides, or
arranges for the provision of, most of the services necessary to operate
the Funds, including administration, fund accounting, shareholder
services, and marketing and distribution-related services. On April 20,
2006, ABN AMRO entered into a definitive agreement with Highbury Financial
Inc. ("Highbury") to sell substantially all of its assets related to its
U.S. mutual fund business to Highbury and a newly formed subsidiary of
Highbury, Aston Asset Management LLC ("Aston"). The transactions
contemplated by the agreement are referred to as the Strategic
Transaction. As a result of the Strategic Transaction, Aston would become
the investment adviser and administrator of each series of the Trust
covered by this proxy statement (each, a "Fund" and collectively, the
"Funds"). The Trust and the Funds would change their names and be known as
the Aston Funds. ABN AMRO would continue to be responsible for the
day-to-day management of each Fund as subadviser to Aston, except as
described below.
This proxy statement seeks shareholder approval of a new investment
advisory agreement with Aston and new subadvisory agreements with respect
to each Fund. If shareholders approve these proposals and the Strategic
Transaction is consummated, the current investment advisory and
subadvisory agreements with each Fund will be terminated. The proxy
statement also seeks shareholder approval of a "manager of managers"
structure that would permit Aston to hire and replace subadvisers and to
modify subadvisory agreements without shareholder approval.
The enclosed Proxy Statement gives you additional information on the
proposed new investment advisory agreement and new subadvisory agreement
for your Fund. Please refer to the Proxy Statement for a detailed
explanation of the items you are being asked to vote on.
Q. WHY IS A VOTE ON THE PROPOSED NEW ADVISORY AGREEMENT AND SUBADVISORY
AGREEMENT REQUIRED?
A. The Strategic Transaction will result in the termination of the investment
advisory agreement between each Fund and ABN AMRO and (for Funds currently
managed by a subadviser) the subadvisory agreement between ABN AMRO and a
Fund's subadviser. The Investment Company Act of 1940, as amended ("1940
Act"), requires shareholders to approve the new investment advisory
agreement with Aston and the new subadvisory agreement between Aston and
the applicable subadviser for each Fund in order for them to become
effective.
Q. HOW WILL THE STRATEGIC TRANSACTION AFFECT THE MANAGEMENT OF MY FUND?
A. Upon completion of the Strategic Transaction, Aston will serve as
investment adviser to your Fund. Aston currently intends to manage your
Fund by delegating the day-to-day management responsibilities to one or
more subadvisers. Except for certain fixed-income Funds, your current
investment adviser or subadviser (including your current portfolio
manager) will continue to be responsible for the day-to-day management of
your Fund as a subadviser to Aston. Because ABN AMRO no longer intends to
offer taxable core, core plus and intermediate tax exempt fixed-income
investment strategies in the U.S., Aston has recommended new subadvisers
for ABN AMRO Bond Fund, ABN AMRO Investment Grade Bond Fund and ABN AMRO
Municipal Bond Fund. Aston has recommended a multi-manager approach for
ABN AMRO Balanced Fund, utilizing a new subadviser for the fixed income
component of the Fund and the existing manager for the equity component.
Q. WILL THE INVESTMENT ADVISORY FEE RATES BE THE SAME UPON THE APPROVAL OF
THE NEW ADVISORY AGREEMENT?
A. Yes. The investment advisory fee rate payable to Aston by each Fund will
be the same rate payable under the current investment advisory agreements
with ABN AMRO. Aston will, in turn, pay a portion of its advisory fee to
each subadviser. The subadvisory fees payable to ABN AMRO and each new
subadviser will be equal to 50% of the advisory fees payable to Aston,
less fee waivers, expense reimbursements and payments to third parties for
distribution-related services. The subadvisory fees payable to MFS
Institutional Advisers, Inc. for the ABN AMRO Value Fund and Optimum
Investment Advisors, LP for the ABN AMRO Mid Cap Fund will remain the same
as those under the current subadvisory agreement.
Q. WHAT OTHER CHANGES ARE EXPECTED AS A RESULT OF THE STRATEGIC TRANSACTION?
A. Your Fund will be renamed and become part of the Aston Funds. Aston or its
affiliates will provide, or arrange for the provision of, most of the
services necessary to operate your Fund, including administration, fund
accounting, shareholder services and marketing and distribution-related
services. Aston expects to retain all of the management personnel and
substantially all of the employees of ABN AMRO Investment Fund Services,
Inc., which currently provides, or arranges for the provision of, these
services to your Fund. Aston does not intend to change any of the service
providers to your Fund as part of the Strategic Transaction. It is
anticipated that the Aston Funds will have money market series and as a
result shareholders will continue to have the ability to exchange their
shares into a money market fund. Your Board of Trustees will remain the
same except that Julian Ide, an interested person because of his position
with ABN AMRO, will resign from the Board upon completion of the Strategic
Transaction.
Q. WHAT HAPPENS IF THE NEW INVESTMENT ADVISORY AGREEMENT AND SUBADVISORY
AGREEMENTS ARE NOT APPROVED?
A. Although shareholders of each Fund vote separately on the proposals that
relate to their Fund, the closing of the Strategic Transaction is
dependent on shareholders of substantially all of the Funds approving a
new investment advisory agreement with Aston and new subadvisory
agreements as described above. If the required approvals are not obtained,
ABN AMRO and Highbury are not obligated to consummate the Strategic
Transaction.
Q. WHY IS A "MANAGER OF MANAGERS" STRUCTURE BEING PROPOSED?
A. Because the Special Meeting has been called to obtain shareholder approval
of a new investment advisory agreement and new subadvisory agreements, the
Board of Trustees has deemed it advisable to recommend that shareholders
approve a "manager of managers" structure for the Funds at the same time.
The Board of Trustees believes that a "manager of managers" structure may
provide the Funds with a timely and cost-effective mechanism to replace
subadvisers without incurring the costs of obtaining shareholder approval
in the future. If the proposal is approved, the Funds may in the future
seek exemptive relief from the Securities and Exchange
2
Commission ("SEC") to implement a "manager of managers" structure, unless
the SEC shall by that time have adopted a general rule permitting such a
structure.
Q. WHAT HAPPENS IF THE "MANAGER OF MANAGERS" STRUCTURE IS NOT APPROVED?
A. If shareholders do not approve the "manager of managers" structure, then
the Funds will be required to hold a special meeting of shareholders and
solicit proxies to approve the structure at a later date if the Board
determines it is in the best interest of the Funds to implement the
structure.
Q. HOW DO THE TRUSTEES SUGGEST THAT I VOTE IN CONNECTION WITH THE PROPOSALS?
A. After careful consideration of the proposals, your Board of Trustees,
including all of the independent Trustees, approved the proposals and
recommends that you vote in favor of each proposal. The reasons for the
Board's recommendation are discussed in more detail in the enclosed Proxy
Statement.
Q. WHO WILL PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH
THIS SOLICITATION?
A. ABN AMRO will pay for the proxy solicitation and legal costs associated
with this solicitation. The Funds will not bear any of these costs.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Computershares, Shareholder Services toll free at (800)
390-7202.
3
ABN AMRO FUNDS
ABN AMRO BALANCED FUND
ABN AMRO BOND FUND
ABN AMRO GROWTH FUND
ABN AMRO HIGH YIELD BOND FUND
ABN AMRO INVESTMENT GRADE BOND FUND
ABN AMRO MID CAP FUND
ABN AMRO MID CAP GROWTH FUND
ABN AMRO MUNICIPAL BOND FUND
ABN AMRO REAL ESTATE FUND
ABN AMRO VALUE FUND
ABN AMRO/MONTAG & CALDWELL BALANCED FUND
ABN AMRO/MONTAG & CALDWELL GROWTH FUND
ABN AMRO/RIVER ROAD DYNAMIC EQUITY INCOME FUND
ABN AMRO/RIVER ROAD SMALL CAP VALUE FUND
ABN AMRO/TAMRO LARGE CAP VALUE FUND
ABN AMRO/TAMRO SMALL CAP FUND
ABN AMRO/VEREDUS AGGRESSIVE GROWTH FUND
ABN AMRO/VEREDUS SCITECH FUND
ABN AMRO/VEREDUS SELECT GROWTH FUND
161 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 25, 2006
To the Shareholders of the Above Funds:
A Special Meeting of the Shareholders of ABN AMRO Funds (the "Trust") on
behalf of its series ABN AMRO Balanced Fund, ABN AMRO Bond Fund, ABN AMRO Growth
Fund, ABN AMRO High Yield Bond Fund, ABN AMRO Investment Grade Bond Fund, ABN
AMRO Mid Cap Fund, ABN AMRO Mid Cap Growth Fund, ABN AMRO Municipal Bond Fund,
ABN AMRO Real Estate Fund, ABN AMRO Value Fund, ABN AMRO/Montag & Caldwell
Balanced Fund, ABN AMRO/Montag & Caldwell Growth Fund, ABN AMRO/River Road
Dynamic Equity Income Fund, ABN AMRO/River Road Small Cap Value Fund, ABN
AMRO/TAMRO Large Cap Value Fund, ABN AMRO/TAMRO Small Cap Fund, ABN AMRO/Veredus
Aggressive Growth Fund, ABN AMRO/Veredus SciTech Fund and ABN AMRO/Veredus
Select Growth Fund (each, a "Fund" and collectively, the "Funds"), will be held
at the offices of the Trust's subadministrator, PFPC Inc., 4400 Computer
Drive, Westborough, Massachusetts 01581, on August 25, 2006 at 9:00 a.m. Eastern
time (the "Special Meeting"), for the following purpose and to transact such
other business, if any, as may properly come before the Special Meeting:
1. To approve a new investment advisory agreement between each Fund and
Aston Asset Management LLC ("Aston"), the proposed investment adviser to the
Funds.
2. To approve a new subadvisory agreement between Aston and each
subadviser below:
(a) (For shareholders of ABN AMRO Growth Fund, ABN AMRO Mid Cap
Growth Fund, ABN AMRO Real Estate Fund and ABN AMRO High Yield Bond Fund) to
approve a new subadvisory agreement between Aston and ABN AMRO Asset Management,
Inc.;
(b) (For shareholders of ABN AMRO/Montag & Caldwell Growth Fund
and ABN AMRO/Montag & Caldwell Balanced Fund) to approve a new subadvisory
agreement between Aston and Montag & Caldwell, Inc.;
(c) (For shareholders of ABN AMRO/River Road Dynamic Equity Income
Fund and ABN AMRO/River Road Small Cap Value Fund) to approve a new subadvisory
agreement between Aston and River Road Asset Management LLC;
(d) (For shareholders of ABN AMRO/TAMRO Large Cap Value Fund and
ABN AMRO/TAMRO Small Cap Fund) to approve a new subadvisory agreement between
Aston and TAMRO Capital Partners LLC;
(e) (For shareholders of ABN AMRO/Veredus Select Growth Fund, ABN
AMRO/Veredus Aggressive Growth Fund and ABN AMRO/Veredus SciTech Fund) to
approve a new subadvisory agreement between Aston and Veredus Asset Management
LLC;
(f) (For shareholders of ABN AMRO Value Fund) to approve a new
subadvisory agreement between Aston and MFS Institutional Advisors, Inc.;
(g) (For shareholders of ABN AMRO Mid Cap Fund) to approve a new
subadvisory agreement between Aston and Optimum Investment Advisors, LP;
(h) (For shareholders of ABN AMRO Bond Fund and ABN AMRO
Investment Grade Bond Fund) to approve a new subadvisory agreement between Aston
and Taplin, Canida & Habacht, Inc.;
(i) (For shareholders of ABN AMRO Municipal Bond Fund) to approve
a new subadvisory agreement between Aston and McDonnell Investment Management,
LLC;
(j) (For shareholders of ABN AMRO Balanced Fund) to approve a new
subadvisory agreement between Aston and ABN AMRO Asset Management, Inc. for the
equity component of the portfolio and between Aston and Taplin, Canida &
Habacht, Inc. for the fixed income component of the portfolio; and
3. To approve a "manager of managers" structure for each Fund that, if
approved by the Board of Trustees in the future, would permit the investment
adviser to hire and replace subadvisers and to modify subadvisory agreements
without shareholder approval.
4. To transact such other business as properly may come before the
Special Meeting or any adjournments or postponements thereof.
The Board of Trustees has fixed the close of business on June 15, 2006 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Special Meeting or any adjournment thereof.
By Order of the Board of Trustees,
Gerald F. Dillenburg
Senior Vice President, Secretary and Treasurer
___________, 2006
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY THE ACCOMPANYING PROXY
CARD, WHICH IS BEING SOLICITED BY THE BOARD OF
TRUSTEES OF THE TRUST. YOU MAY EXECUTE THE PROXY CARD USING THE METHODS
DESCRIBED IN THE PROXY CARD. EXECUTING THE PROXY CARD IS IMPORTANT TO ENSURE A
QUORUM AT THE SPECIAL MEETING. SHAREHOLDERS ALSO HAVE THE OPTION TO PROVIDE
THEIR VOTE BY TELEPHONE OR OVER THE INTERNET BY FOLLOWING THE INSTRUCTIONS
ACCOMPANYING THE PROXY CARD. PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY SUBMITTING A WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY
EXECUTED PROXY OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
INSTRUCTIONS FOR VOTING
The following general rules apply to voting by mail and 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 Jane B. Doe
u/t/d/ 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) Estate of John B. Smith John B. Smith, Jr., Executor
Rather than mailing in your proxy, you may vote by telephone or over the
Internet using the toll-free telephone number or web address printed on your
proxy card. These options require you to input the control number located on
your proxy card. After inputting the control number, you may enter your vote on
the proposal. You will have an opportunity to review your vote and make any
necessary changes before submitting your vote and terminating the telephone call
or Internet link.
_____________, 2006
ABN AMRO FUNDS
ABN AMRO BALANCED FUND
ABN AMRO BOND FUND
ABN AMRO GROWTH FUND
ABN AMRO HIGH YIELD BOND FUND
ABN AMRO INVESTMENT GRADE BOND FUND
ABN AMRO MID CAP FUND
ABN AMRO MID CAP GROWTH FUND
ABN AMRO MUNICIPAL BOND FUND
ABN AMRO REAL ESTATE FUND
ABN AMRO VALUE FUND
ABN AMRO/MONTAG & CALDWELL BALANCED FUND
ABN AMRO/MONTAG & CALDWELL GROWTH FUND
ABN AMRO/RIVER ROAD DYNAMIC EQUITY INCOME FUND
ABN AMRO/RIVER ROAD SMALL CAP VALUE FUND
ABN AMRO/TAMRO LARGE CAP VALUE FUND
ABN AMRO/TAMRO SMALL CAP FUND
ABN AMRO/VEREDUS AGGRESSIVE GROWTH FUND
ABN AMRO/VEREDUS SCITECH FUND
ABN AMRO/VEREDUS SELECT GROWTH FUND
161 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 25, 2006
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of ABN AMRO Funds, a Delaware statutory trust
(the "Trust"), on behalf of its series ABN AMRO Balanced Fund, ABN AMRO Bond
Fund, ABN AMRO Growth Fund, ABN AMRO High Yield Bond Fund, ABN AMRO Investment
Grade Bond Fund, ABN AMRO Mid Cap Fund, ABN AMRO Mid Cap Growth Fund, ABN AMRO
Municipal Bond Fund, ABN AMRO Real Estate Fund, ABN AMRO Value Fund, ABN
AMRO/Montag & Caldwell Balanced Fund, ABN AMRO/Montag & Caldwell Growth Fund,
ABN AMRO/River Road Dynamic Equity Income Fund, ABN AMRO/River Road Small Cap
Value Fund, ABN AMRO/TAMRO Large Cap Value Fund, ABN AMRO/TAMRO Small Cap Fund,
ABN AMRO/Veredus Aggressive Growth Fund, ABN AMRO/Veredus SciTech Fund and ABN
AMRO/Veredus Select Growth Fund (each, a "Fund" and collectively, the "Funds"),
for use at a Special Meeting of Shareholders of the Funds to be held at 9:00
a.m. Eastern time on August 25, 2006, at the offices of the Trust's
subadministrator, PFPC, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581, and any adjournments thereof (the "Special Meeting").
This Proxy Statement and the accompanying Notice of Special Meeting and
proxy card are expected to be mailed to shareholders on or about July ____, 2006
or as soon as practicable thereafter.
Shareholders of the Fund are entitled to one vote for each full share held
and fractional votes for fractional shares. One-third of the aggregate number of
shares entitled to vote, present in person or by
proxy, constitutes a quorum for the transaction of business. Abstentions and
broker "non-votes" (that is, proxies from brokers or nominees indicating that
such persons have not received instructions from the beneficial owner or other
persons entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary voting power) will be treated as
shares that are present but which have not been voted for purposes of
determining the presence of a quorum for transacting business at the Special
Meeting. 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 upon such
adjournment after consideration of all circumstances that may bear upon a
decision to adjourn the Special Meeting. Any business that might have been
transacted at the Special Meeting originally called may be transacted at any
such adjourned session(s) at which a quorum is present. ABN AMRO 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 securities represented at the Special
Meeting in person or by proxy.
Each proposal requires the affirmative vote of a "majority of the
outstanding voting securities" of a Fund. The term "majority of the outstanding
voting securities," under applicable law, means the affirmative vote of the
lesser of (i) 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 (ii) more than 50% of the outstanding voting securities of
the Fund. Abstentions and broker non-votes will have the effect of a "no" vote
for purposes of obtaining the requisite approval of the proposals.
If the enclosed proxy card is properly executed and returned in time to be
voted at the Special Meeting, the shares of beneficial interest represented by
the proxy will be voted in accordance with the instructions marked thereon. If
no specification is made, the shares will be voted FOR each proposal. 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.
The following table indicates which shareholders are solicited with
respect to each proposal:
PROPOSALS
--------------------------------------
APPROVE
APPROVE NEW APPROVE NEW MANAGER OF
ADVISORY SUBADVISORY MANAGERS
FUND AGREEMENT AGREEMENT STRUCTURE
---------------------------------------------- ----------- ----------- ----------
ABN AMRO Balanced Fund X X X
ABN AMRO Bond Fund X X X
ABN AMRO Growth Fund X X X
ABN AMRO High Yield Bond Fund X X X
ABN AMRO Investment Grade Bond Fund X X X
ABN AMRO Mid Cap Fund X X X
ABN AMRO Mid Cap Growth Fund X X X
ABN AMRO Municipal Bond Fund X X X
ABN AMRO Real Estate Fund X X X
ABN AMRO Value Fund X X X
ABN AMRO/Montag & Caldwell Balanced Fund X X X
ABN AMRO/Montag & Caldwell Growth Fund X X X
ABN AMRO/River Road Dynamic Equity Income Fund X X X
ABN AMRO/River Road Small Cap Value Fund X X X
ABN AMRO/TAMRO Large Cap Value Fund X X X
2
PROPOSALS
--------------------------------------
APPROVE
APPROVE NEW APPROVE NEW MANAGER OF
ADVISORY SUBADVISORY MANAGERS
FUND AGREEMENT AGREEMENT STRUCTURE
---------------------------------------------- ----------- ----------- ----------
ABN AMRO/TAMRO Small Cap Fund X X X
ABN AMRO/Veredus Aggressive Growth Fund X X X
ABN AMRO/Veredus SciTech Fund X X X
ABN AMRO/Veredus Select Growth Fund X X X
The Board of Trustees has fixed the close of business on June
15, 2006 as the record date (the "Record Date") for the determination of
shareholders of each Fund entitled to notice of, and to vote at, the Special
Meeting and all adjournments thereof. Those persons who were shareholders of
record at the close of business on June 15, 2006 will be entitled to one vote
for each full share held and fractional votes for fractional shares held. As of
June 15, 2006, the Funds have issued and outstanding shares as follows:
CLASS OF SHARES
------------------------------
FUND CLASS I CLASS N CLASS R
---------------------------------------------- ------- ------- --------
ABN AMRO Balanced Fund
ABN AMRO Bond Fund
ABN AMRO Growth Fund
ABN AMRO High Yield Bond Fund
ABN AMRO Investment Grade Bond Fund
ABN AMRO Mid Cap Fund
ABN AMRO Mid Cap Growth Fund
ABN AMRO Municipal Bond Fund
ABN AMRO Real Estate Fund
ABN AMRO Value Fund
ABN AMRO/Montag & Caldwell Balanced Fund
ABN AMRO/Montag & Caldwell Growth Fund
ABN AMRO/River Road Dynamic Equity Income Fund
ABN AMRO/River Road Small Cap Value Fund
ABN AMRO/TAMRO Large Cap Value Fund
ABN AMRO/TAMRO Small Cap Fund
ABN AMRO/Veredus Aggressive Growth Fund
ABN AMRO/Veredus SciTech Fund
ABN AMRO/Veredus Select Growth Fund
As of April 30, 2006, no shareholder beneficially owned more than 5% of
any class of shares of any Fund, except as shown in Appendix A. As of the record
date, the officers and Trustees of the Trust as a group beneficially owned less
than 1% of the shares of each Fund, except for the Class N shares of the ABN
AMRO/TAMRO Large Cap Value Fund. For that Fund, Stuart D. Bilton and Leonard F.
Amari each own [____]% and [____]%, respectively, and collectively they own
3.22% of the Fund. As of the record date, the shares of each Fund beneficially
owned by the Trustees and for the Trustees and officers as a group is shown in
Appendix I.
EACH FUND'S MOST RECENT ANNUAL REPORT AND SEMI-ANNUAL REPORT IS AVAILABLE
UPON REQUEST WITHOUT CHARGE BY WRITING THE TRUST AT P.O. BOX 9765, PROVIDENCE,
RHODE ISLAND 02940, OR BY CALLING TOLL-FREE 1-800-992-8151. TO HELP REDUCE FUND
EXPENSES AND ENVIRONMENTAL WASTE, THE FUNDS COMBINE MAILINGS FOR MULTIPLE
ACCOUNTS GOING TO A SINGLE ADDRESS BY DELIVERING THE FUNDS' REPORTS (ANNUAL AND
SEMI-ANNUAL REPORTS) AND PROXY STATEMENTS IN A SINGLE ENVELOPE. IF YOU DO NOT
WANT TO CONTINUE CONSOLIDATING YOUR FUND MAILINGS AND PREFER TO RECEIVE SEPARATE
MAILINGS WITH MULTIPLE COPIES OF FUND REPORTS AND PROXY STATEMENTS, OR IF YOU
CURRENTLY RECEIVE MULTIPLE COPIES AND WOULD LIKE TO REQUEST A SINGLE COPY,
PLEASE CALL ONE OF THE FUND'S REPRESENTATIVES AT 1-800-992-8151.
3
For your convenience, you may submit your vote by mail. If you are mailing
your proxy card, 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
9:00 a.m. Eastern time on August 25, 2006.
Instead of mailing your proxy, you may vote by telephone or over the
Internet using the toll-free telephone number or web address printed on your
proxy card. These options require you to input the control number located on
your proxy card. After inputting the control number, you may enter your vote on
the proposal. You will have an opportunity to review your vote and make any
necessary changes before submitting your vote and terminating the telephone call
or Internet link.
BACKGROUND
ABN AMRO Asset Management, Inc. ("AAAM") and its affiliates (collectively,
"ABN AMRO") currently provide investment management, administration services,
and marketing and distribution-related services to each series of the Trust.
Affiliates of AAAM that currently serve as investment adviser to the series of
the Trust are Montag & Caldwell, Inc. ("Montag"), River Road Asset Management,
LLC ("River Road"), TAMRO Capital Partners LLC ("TAMRO") and Veredus Asset
Management LLC ("Veredus"). Another AAAM affiliate, ABN AMRO Investment Fund
Services, Inc. ("AAIFS"), currently provides administration, marketing and
distribution-related services to each series of the Trust. In September 2005,
ABN AMRO informed the Board of Trustees of the Trust that it intended to engage
in discussions with unaffiliated third parties regarding the potential sale of
its U.S. mutual fund business. On April 20, 2006, ABN AMRO entered into a
definitive agreement with Highbury Financial Inc. ("Highbury") to sell
substantially all of its assets related to its U.S. mutual fund business to
Highbury. We refer to that sale, together with the related transactions
described below, as the "Strategic Transaction." Subject to the satisfaction or
waiver of all conditions under the definitive agreement, ABN AMRO would receive
$38.6 million in consideration upon closing of the Strategic Transaction.
Pursuant to the definitive agreement, the Trust and the Funds would be renamed
the Aston Funds. Aston Asset Management LLC ("Aston"), a newly formed subsidiary
of Highbury, would serve as investment adviser to the Funds. Aston or its
affiliates would provide, or arrange for the provision of, all services
necessary to operate the Funds, including administration, fund accounting,
shareholder services, and marketing and distribution-related services. Except as
described below, ABN AMRO would continue to be responsible for the day-to-day
investment management of each Fund that it currently manages as a subadviser to
Aston.
In connection with the Strategic Transaction, ABN AMRO presented a series
of proposals relating to the Funds to the Board of Trustees comprised of the
following components: (i) a marketing and co-branding strategy under the Aston
and ABN AMRO names; (ii) the retention by Aston of substantially all ABN AMRO
personnel, including senior management, responsible for fund operations,
administration and marketing and distribution-related services; (iii) a
strategic partnership with ABN AMRO to continue to provide day-to-day investment
management services to substantially all of the Funds in a subadvisory capacity;
and (iv) the retention of new subadvisers for the day-to-day management of
certain fixed income funds in light of ABN AMRO's decision to no longer offer
those strategies.
4
The Board of Trustees of ABN AMRO Funds met in person to consider the
proposals at special meetings held on April 17, 2006 and May 9, 2006 and
determined that the Strategic Transaction was in the best interests of each Fund
and its existing shareholders. Accordingly, the Board of Trustees, including the
Trustees who are not parties to the current advisory agreements and subadvisory
agreements, the proposed advisory agreement or any subadvisory agreement to be
entered into by ABN AMRO or Aston with respect to any Fund, or who are not
"interested persons" of the Funds, any current or proposed investment adviser or
subadviser as defined in the 1940 Act ("Independent Trustees"), recommended that
shareholders approve a new investment advisory agreement with Aston for each
Fund and a new subadvisory agreement for each Fund, as further described below.
In determining whether to approve the new advisory and subadvisory
agreements in connection with the Strategic Transaction and whether to recommend
approval of those agreements to shareholders, the Board of Trustees received
information and made inquiries into all matters deemed relevant and considered
the following, among other things:
- The desire of ABN AMRO to generally exit the mutual fund business in
the United States and the likely impact on the Funds absent approval
of the Strategic Transaction;
- The financial strength and resources of Highbury and Aston and the
background and reputation of their principals;
- The potential distribution and growth opportunities that may be
available to the Funds as a result of the relationship with Highbury
and its principals and their respective affiliates;
- The anticipated retention of ABN AMRO as subadviser to substantially
all of the Funds;
- The anticipated retention by Aston of substantially all of the ABN
AMRO personnel responsible for administration, fund accounting,
shareholder services, and marketing and distribution-related
services, including all members of the senior management team;
- The anticipated continuation of other service providers to the
Trust, including the subadministrator and transfer agent;
- The investment advisory fee rates for each Fund, which will remain
the same for all Funds after the Strategic Transaction; and
- The undertaking by ABN AMRO to bear all of the costs to the Funds of
the Strategic Transaction including the costs of preparing, printing
and mailing this Proxy Statement and related solicitation expenses.
The Strategic Transaction is subject to approval of the public
stockholders of Highbury and the shareholders of each Fund. Although
shareholders of each Fund vote separately on proposals affecting their Fund, the
proposals are dependent on each other. If approvals of shareholders of Funds
representing 90% of the aggregate assets of the Funds as of April 20, 2006 are
not obtained, ABN AMRO and Highbury are not obligated to consummate the
Strategic Transaction ("Requisite Shareholder Approval"). With respect to
shareholder approval of the subadvisory agreements, the 90% of aggregate assets
condition applies only to the new subadvisory agreements with ABN AMRO. As such,
the Strategic Transaction is not conditioned on obtaining shareholder approval
of subadvisory agreements with non-ABN AMRO entities. Subject to customary
closing conditions, the Strategic Transaction is expected to close in the third
quarter of 2006.
5
PROPOSAL 1: APPROVAL OF NEW ADVISORY AGREEMENT
INTRODUCTION
Under an investment advisory agreement between ABN AMRO and each Fund
(each, a "Current Advisory Agreement" and collectively, the "Current Advisory
Agreements"), ABN AMRO currently serves as the investment adviser to each Fund
and has been responsible for each Fund's overall investment strategy and its
implementation. The date of each Fund's Current Advisory Agreement and the date
on which it was last approved by shareholders and approved for continuance by
the Board is provided in Appendix B.
The 1940 Act requires an investment advisory agreement to be approved
by the Board of Trustees ("Board"), including the Independent Trustees, and the
Fund's shareholders in order for it to become effective. In anticipation of the
Strategic Transaction, the Board met in person on May 9, 2006 for purposes of,
among other things, considering whether it would be in the best interests of
each Fund and its shareholders to approve a new investment advisory agreement
between the Trust with respect to each Fund and Aston (the "New Advisory
Agreement"). At the Board meeting, and for the reasons discussed below, the
Board, including a majority of the Independent Trustees, approved the New
Advisory Agreement with respect to each Fund and recommended its approval by
shareholders. The Current Advisory Agreements will be terminated as of the
effective date of the New Advisory Agreement.
In the event shareholders of a Fund do not approve the New Advisory
Agreement, the Board will take such action as it deems to be in the best
interests of the Fund and its shareholders. Although shareholders of each Fund
vote separately on the proposal for their Fund, the proposals are dependent on
each other. If Requisite Shareholder Approval (as defined above) is not
obtained, ABN AMRO and Highbury are not obligated to consummate the Strategic
Transaction. The form of the New Advisory Agreement is attached hereto as
Appendix C.
COMPARISON OF CURRENT ADVISORY AGREEMENTS AND NEW ADVISORY AGREEMENT
The terms of the New Advisory Agreement are substantially the same as
those of the Current Advisory Agreements, except for the date of effectiveness
and except as described below. There is no change in the advisory fee rate
payable by each Fund. If approved by shareholders and assuming the Strategic
Transaction is consummated, the New Advisory Agreement will be effective as of
the closing date and will have an initial term, with respect to each Fund,
ending on December 31, 2007 (if the Strategic Transaction closes before December
31, 2006) or December 31, 2008 (if the Strategic Transaction closes on or after
December 31, 2006). The New Advisory Agreement will continue in effect from year
to year thereafter if such continuance is approved on behalf of a Fund at least
annually in the manner required by the 1940 Act and the rules and regulations
thereunder. Below is a comparison of certain terms of the Current Advisory
Agreements to the terms of the New Advisory Agreement.
Investment Management Services. The investment management services to
be provided by Aston to each Fund under the New Advisory Agreement will be
substantially the same as the services currently provided by ABN AMRO to each
Fund under the Current Advisory Agreements. Both the Current Advisory Agreements
and New Advisory Agreement provide that the investment adviser shall manage the
investment and reinvestment of each Fund's assets in accordance with the Fund's
investment objective and policies and limitations and administer the Fund's
affairs to the extent requested by and subject to the oversight of the Fund's
Board. The New Advisory Agreement would permit the investment adviser to
delegate its responsibilities to one or more subadvisers, whether affiliated or
unaffiliated, and would allow the investment adviser to engage subadvisers
without shareholder approval to the extent permitted by applicable law.
Accordingly, the New Advisory Agreement would allow Aston to
6
implement a "manager of managers" structure in the future, subject to Aston
obtaining appropriate exemptive relief from the Securities and Exchange
Commission ("SEC") or the SEC adopting a rule permitting a "manager of managers"
structure. Under current law, shareholders must specifically approve the
"manager of managers" structure. Approval to implement this structure in the
future is being sought in Proposal 3 below.
Brokerage. Both the Current Advisory Agreements and the New Advisory
Agreement authorize the investment adviser to select brokers or dealers that
will execute the purchases and sales of portfolio securities for the Funds,
subject to its obligation to obtain best execution under the circumstances,
which may take account of the overall quality of brokerage and research services
provided to the investment adviser. Both agreements permit the investment
adviser to rely on Section 28(e) of the Securities Exchange Act of 1934 in
placing brokerage transactions. Under that Section, a commission paid to a
broker may be higher than that which another qualified broker would have charged
for effecting the same transaction, provided the investment adviser determines
in good faith that the commission is reasonable in terms of either the
transaction or the overall responsibility of the investment adviser to the Funds
and its other clients and that the total commissions paid by each Fund will be
reasonable in relation to the benefits to the Fund over the long term.
Expenses. The Current Advisory Agreements and the New Advisory
Agreement provide that the investment adviser shall pay all its own costs and
expenses incurred in fulfilling its obligations under the Agreement, as well as
pay for all necessary services, facilities and personnel. The Current Advisory
Agreements are silent with respect to payment of the expenses of the Fund. The
New Advisory Agreement provides that a Fund shall pay all expenses incidental to
its operation and business not specifically assumed or agreed to be paid by the
investment adviser and sets forth a non-exclusive list of such expenses.
Although this policy is not stated in the Current Advisory Agreements, the Funds
currently pay such expenses.
Compensation. In return for the services provided under each Current
Advisory Agreement, each Fund pays ABN AMRO an advisory fee, which is accrued
daily and payable monthly. Under the New Advisory Agreement, each Fund will pay
the same advisory fee rate to Aston. The advisory fee rates under the Current
Advisory Agreements and the New Advisory Agreement, the fees paid by each Fund
to ABN AMRO during each Fund's last fiscal year and the Funds' net assets as of
______, 2006 are set forth in Appendix D to this Proxy Statement.
Limitation on Liability. Under the Current Advisory Agreements and New
Advisory Agreement, the investment adviser and its directors, officers,
stockholders, employees and agents will not be liable for any error of judgment
or mistake of law or for any loss suffered by the investment adviser or the
Funds in connection with any matters to which the advisory agreement relates or
for any other act or omission in the performance by the investment adviser of
its duties under the advisory agreement, except that nothing in the advisory
agreement shall be construed to protect the investment adviser against any
liability by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties or for its reckless disregard of its obligations
or duties under the advisory agreement.
Continuance. The Current Advisory Agreement of each Fund originally was
in effect for an initial term and was eligible to be continued thereafter for
successive one-year periods if such continuance was specifically approved at
least annually in the manner required by the 1940 Act. If the shareholders of a
Fund approve the New Advisory Agreement for a Fund and assuming the consummation
of the Strategic Transaction, the New Advisory Agreement with respect to a Fund
will be effective as of the closing of the Strategic Transaction date and have
an initial term, with respect to each Fund, ending on December 31, 2007 (if the
Strategic Transaction closes before December 31, 2006) or December 31, 2008 (if
the Strategic Transaction closes on or after December 31, 2006). Thereafter the
New Advisory
7
Agreement may be continued for successive one-year periods if approved at least
annually in the manner required by the 1940 Act.
Termination. The Current Advisory Agreements and New Advisory Agreement
provide that the advisory agreement may be terminated at any time without the
payment of any penalty by the Fund or investment adviser on sixty (60) days'
written notice to the other party. A Fund may terminate the advisory agreement
by action of the Board or by vote of a majority of the outstanding voting
securities of the Fund, accompanied by appropriate notice.
INFORMATION ABOUT THE INVESTMENT ADVISER
Aston Asset Management LLC, 161 N. Clark Street, 12th floor, Chicago,
Illinois 60601, will be the investment adviser to nineteen series of the Aston
Funds (formerly ABN AMRO Funds) with total assets of approximately $6 billion
after the close of the Strategic Transaction. Aston also will have approximately
$120 million in assets under management in a separately managed account business
acquired from ABN AMRO in connection with the Strategic Transaction. Aston
currently is a wholly owned subsidiary of Highbury. Upon the close of the
Strategic Transaction, Highbury will own 65% of the outstanding voting shares of
Aston and officers of Aston will own the remaining 35%.
Highbury was formed on July 13, 2005 as a blank-check company for the
purpose of acquiring one or more financial services businesses. Highbury's
registration statement for its initial public offering of its common stock was
declared effective by the SEC on January 25, 2006, and the offering generated
net proceeds of approximately $43.8 million. Prior to the closing of the
Strategic Transaction, Highbury has not engaged in any operations except for
organizational and offering activities. Highbury has a limited operating
history, and its principals have not previously owned or operated a mutual fund
or investment advisory business. The common stock of Highbury is publicly traded
in the over-the-counter market under the symbol HBRF.
After the completion of the Strategic Transaction, Highbury will be the
managing member and majority owner of Aston, but it intends to delegate
day-to-day operating authority to the Aston management team. Aston was formed
for the purpose of acquiring ABN AMRO's U.S. mutual fund business and will not
have any operating history before the close of the Strategic Transaction. The
Aston management team will be comprised of ABN AMRO personnel who currently
manage the acquired business. Aston intends to employ thirty-six (36) former ABN
AMRO employees initially and has put in place incentive compensation,
non-competition agreements and other employment and compensation terms designed
to retain the senior management team and key members of the sales and marketing
team on a long-term basis. Aston intends to manage the Funds by selecting other
investment advisers to handle the day-to-day investment management of the Funds
on a subadvisory basis. Aston's research and capabilities are focused on the
identification and selection of high-quality investment managers and the
monitoring of the performance of such managers. The selection, retention and
oversight of subadvisers will be the responsibility of Aston's Investment
Committee comprised of Stuart D. Bilton, Kenneth C. Anderson and Michael Mayhew.
Stuart D. Bilton, CFA, will serve as Chairman and Chief Executive
Officer of Aston Asset Management LLC. Mr. Bilton is Chairman of the Board of
Trustees of ABN AMRO Funds. In 1993, while Mr. Bilton was President and CEO of
Alleghany Asset Management, he founded the Alleghany Funds with Kenneth
Anderson. Mr. Bilton has been associated with ABN AMRO and its predecessors
and/or affiliates since 1972. He served as President and Chief Executive Officer
of ABN AMRO Asset Management Holdings, Inc. from 2001 to 2003 and as Vice
Chairman of AAAM from 2003 to the present. Prior to its acquisition by ABN AMRO,
Mr. Bilton was President and Chief Executive Officer of Alleghany Asset
Management, the parent company of Blairlogie Capital Management, Chicago Capital
8
Management, Chicago Deferred Exchange Corporation, The Chicago Trust Company,
Montag & Caldwell, TAMRO and Veredus. He is a Director of Veredus, TAMRO, River
Road Asset Management, and Baldwin & Lyons, Inc. He earned a B.Sc.(Econ) from
the London School of Economics in 1967 and an M.S. from the University of
Wisconsin in 1970.
Kenneth C. Anderson, CPA, will serve as President of Aston Asset
Management LLC and will be responsible for the overall management of Aston's
business, including sales, marketing, operations, client service and financial
profitability. Mr. Anderson is President of ABN AMRO Funds and Executive Vice
President and Director of Mutual Funds for AAAM. Mr. Anderson serves on the
boards of Veredus and TAMRO. He is a member of the Investment Company
Institute's International and Sales Force Committees and a past Chairman of the
Board of Governors for the Mutual Fund Education Alliance. Prior to launching
the Alleghany Funds in 1993, Mr. Anderson specialized in the Financial Services
Practice at KPMG. He received a B.B.A. in Accounting from Loyola University of
Chicago. He holds a series 6 and 63 license with the NASD.
Gerald F. Dillenburg, CPA, will be Chief Financial Officer and Chief
Compliance Officer of Aston. Mr. Dillenburg is the Chief Compliance Officer,
Chief Financial Officer, Secretary and Treasurer of the ABN AMRO Funds. Mr.
Dillenburg has been with ABN AMRO Investment Fund Services, Inc. and its
predecessors since 1996, where he has been the Compliance Officer and Director
of Operations of the ABN AMRO Funds. Currently, Mr. Dillenburg is a Senior
Managing Director of AAIFS as well as a Senior Managing Director of ABN AMRO
Asset Management Holdings, Inc. and AAAM. Prior to joining ABN AMRO in 1996, he
spent approximately seven years at KPMG LLP in the audit division specializing
in investment companies and mutual funds. He is a member of the Investment
Company Institute's Operations and Chief Compliance Officer Committees. He is a
graduate with high honors from the University of Illinois at Champaign with a
B.S. in Accountancy.
Michael Mayhew, CFA, will be a Managing Director of Aston in charge of
its separately managed account business. Mr. Mayhew has been associated with ABN
AMRO Investment Fund Services, Inc. since May 2003. He is the Managing Director
of Managed Accounts and oversees all operations and sales of the separately
managed account wrap business. Previously he spent three years consulting on
operations, infrastructure and business development for APL Consulting Services
to sponsors and money managers entering the managed account marketplace. His
investment career began in 1994 at Centurion Counsel where he was vice president
of operations and an analyst of the wrap management business for high-net-worth
individuals. Mike received a B.S. in Finance from San Diego State University.
In connection with the Strategic Transaction, members of the Aston
management team will resign from their respective positions with ABN AMRO,
including all directorships with the entities that currently serve as investment
advisers to your Funds. Following the Strategic Transaction, Aston will not be
affiliated with ABN AMRO, but will maintain a strategic partnership with ABN
AMRO pursuant to the terms of the definitive agreement between the parties.
As part of the Strategic Transaction, eight employees of AAIFS,
including Stuart D. Bilton, Kenneth C. Anderson and Gerald F. Dillenburg,
entered into non-competition agreements with ABN AMRO. Such persons will receive
compensation from ABN AMRO as consideration for entering into such agreements
and the agreements will be assigned to Highbury upon closing of the Strategic
Transaction.
9
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES IN APPROVING THE INVESTMENT ADVISORY
AGREEMENT
The 1940 Act requires the investment advisory agreement between the
investment adviser and the Trust, on behalf of each Fund, to be approved by both
the Board of Trustees and a majority of the Independent Trustees voting
separately. At an in-person meeting on May 9, 2006, the Board of Trustees,
including all the Independent Trustees, determined that the terms of the New
Advisory Agreement with Aston with respect to each Fund are fair and reasonable
and approved the New Advisory Agreement as being in the best interests of each
Fund The Board of Trustees, including all of the Independent Trustees, believes
that the New Advisory Agreement will enable the Funds to obtain high-quality
investment advisory services at costs that the Board believes are appropriate,
reasonable and in the best interests of the Funds and their shareholders. In
making such determinations, the Board of Trustees, including all of the
Independent Trustees, considered materials received and discussions held
specifically relating to the approval of the New Advisory Agreement in
connection with the Strategic Transaction at special meetings held on May 9,
2006 and April 17, 2006. The Board also received extensive information
throughout the year regarding performance and operating results of the Funds.
The Independent Trustees met separately from the "interested" Trustees of the
Trust and any officers of the current and proposed investment adviser or their
affiliates to consider approval of the New Advisory Agreement and were assisted
by independent legal counsel in their deliberations.
In evaluating the New Investment Advisory Agreement on behalf of each
Fund, the Board of Trustees reviewed materials furnished by ABN AMRO and
Highbury, including information regarding Highbury and Aston, their affiliates
and the management teams and personnel that will be in place following the
Strategic Transaction. Among other information, the Board of Trustees reviewed
information regarding: (1) the nature, extent and quality of the services to be
provided to the Funds, including information regarding the personnel involved in
the investment oversight process; (2) the advisory fees to be charged and
estimated total expense ratios of the Funds compared to a peer group of funds
compiled by Lipper; (3) fee waivers or expenses to be reimbursed by the
investment adviser; (4) potential benefits to be received by affiliates of the
investment adviser from its relationship with the Funds; and (5) information
regarding the impact of the Strategic Transaction on the Funds.
In considering the New Advisory Agreement on behalf of each Fund, the
Board, including the Independent Trustees, did not identify any single factor or
group of factors as all-important or controlling, but considered all factors
together. The following summary does not detail all the matters considered. In
connection with its consideration of the New Advisory Agreement, the Board
received detailed information regarding Highbury and its long-term strategic
plans with respect to the mutual fund business that would be established through
Aston as a result of the Strategic Transaction. Among the matters considered by
the Board of Trustees, including the Independent Trustees, in connection with
its approval of the New Advisory Agreement on behalf of each Fund were the
following:
- The desire of ABN AMRO to generally exit the mutual fund
business in the United States and the likely impact on the
Funds absent approval of the Strategic Transaction;
- The financial strength and resources of Highbury and Aston and
the background and reputation of their principals;
- The potential distribution and growth opportunities that may
be available to the Funds as a result of the relationship with
Highbury and its principals and their respective affiliates;
- The anticipated retention of ABN AMRO as subadviser to a
significant number of the Funds;
10
- The anticipated retention by Aston of substantially all of the
ABN AMRO personnel responsible for administration, fund
accounting, shareholder services, and marketing and
distribution-related services, including all members of the
senior management team;
- The anticipated continuation of other service providers to the
Trust, including the subadministrator and transfer agent;
- The investment advisory fee rates for each Fund, which will
remain the same after the Strategic Transaction; and
- The undertaking by ABN AMRO to bear all of the costs to the
Funds of the Strategic Transaction, including the costs of
preparing, printing and mailing the Proxy Statement and
related solicitation expenses.
Nature, Quality and Extent of Services. The Board of Trustees met with
representatives of Highbury and received detailed information regarding Highbury
and Aston, their related companies, and the expected management teams of both
entities upon the close of the Strategic Transaction. The Board also received
information regarding the long-term strategies for organic growth and
acquisition-related growth of Highbury and Aston, the adequacy of financial and
other resources available to Aston, and the potential benefits to the Funds as a
result of their relationship with Aston, Highbury and their related companies.
The Board considered that Aston intends to manage the Funds by delegating the
day-to-day investment responsibility for managing the Funds to other investment
advisers. The Board considered that, as part of the Strategic Transaction,
Highbury and Aston have established a strategic partnership with ABN AMRO that
will result in a significant number of the existing investment advisers for the
Funds remaining in place in a subadvisory capacity. The Board considered Aston's
ability and procedures to monitor the performance of subadvisers, business
practices and compliance policies and procedures. In this regard, the Board
members noted the responsibilities and experience of ABN AMRO personnel that are
expected to join Aston. The Board also noted the quality of administration
services that historically have been provided pursuant to a separate
Administration Agreement with AAIFS and that such services are expected to
continue with Aston.
The Board of Trustees considered the anticipated retention by Aston of
subadvisers for each Fund. In this regard, the Board noted, in particular, the
anticipated retention of each existing ABN AMRO entity as a subadviser for each
Fund that it currently manages, except for the ABN AMRO Bond Fund, ABN AMRO
Investment Grade Bond Fund, ABN AMRO Municipal Bond Fund and the fixed income
component of ABN AMRO Balanced Fund. The Board considered the nature, quality
and extent of services, including performance, of each proposed subadviser. See
"Factors Considered by the Board of Trustees in Approving the ABN AMRO
Subadvisory Agreements" and "Factors Considered by the Board of Trustees in
Approving the Subadvisory Agreements for MFS, McDonnell, Optimum and Taplin"
beginning at pages _______.
On the basis of this evaluation and the ongoing review of investment
and operating results of the Funds by the Board of Trustees, the Board concluded
that the nature, quality and extent of services to be provided by Aston are
expected to be satisfactory.
Expenses. The Board of Trustees considered each Fund's management fee
rate, estimated operating fees and total expense ratio following the Strategic
Transaction. The Board noted that Aston does not propose any changes in the fee
rates for the investment advisory agreements or Administration Agreement, which
will be assigned by AAIFS to Aston in connection with the Strategic Transaction.
As a part of this analysis, the Board of Trustees considered the investment
advisory fee to be paid by each Fund to Aston as well as fee waivers or expenses
to be reimbursed by Aston and compared the gross and net advisory fees and
estimated total expenses to those of a relevant peer group based on information
and data supplied by Lipper Inc. Because the impact of the Strategic Transaction
on the money market funds was not known, the Board received expense information
based on complex-wide assets
11
including the money market funds as part of Aston Funds and excluding the money
market funds. The Board considered that the total expense ratio of certain Funds
may increase as a result of lower complex-wide asset levels if the money market
funds do not become part of Aston Funds, but that the net change is estimated at
one basis point or less for all Funds except ABN AMRO/Montag & Caldwell Balanced
Fund, where it is estimated not to exceed two basis points.
Costs and Profitability. With respect to the costs of services to be
provided and profits to be realized by the investment adviser, the Board of
Trustees considered the resources involved in managing the Funds in light of
Aston's business model as well as fee waivers or expenses to be reimbursed by
the investment adviser. The Board noted that, with respect to Funds subadvised
by ABN AMRO, the subadviser will bear 50% of any fee waivers or expense
reimbursements. The Board of Trustees received information regarding the
expected profitability of Aston following the Strategic Transaction. Based upon
anticipated asset size and the impact of fee waivers or expenses to be
reimbursed by the investment adviser, the Board of Trustees concluded that
profitability was expected to be reasonable.
Economies of Scale. The Board of Trustees considered the extent to
which economies of scale would be realized as the Funds grow. The Board of
Trustees reviewed the Funds' estimated expense ratios giving effect to fee
waivers or expenses to be reimbursed by the investment adviser, and considered
the asset size of the Funds. The Board of Trustees concluded that at this time,
the potential for economies of scale are limited for most Funds and that, where
appropriate, the advisory fee schedules include breakpoints designed to share
economies of scale with shareholders.
Other Benefits to the Investment Adviser. The Board of Trustees also
considered the nature and amount of fees to be paid by each Fund for services to
be provided by Aston for administration services. The Board of Trustees also
considered payments under the Rule 12b-1 distribution plan and noted that Aston
currently does not intend to manage any Funds directly and therefore will not
benefit from the use of "soft" commission dollars to pay for research and
brokerage services.
Conclusion. Based upon its evaluation of all material factors and
assisted by the advice of independent legal counsel, the Board of Trustees,
including all of the Independent Trustees, concluded that the terms of the New
Advisory Agreement, including the proposed advisory fees, were fair and
reasonable and that the New Advisory Agreement on behalf of each Fund should be
approved.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE
FOR APPROVAL OF THE NEW ADVISORY AGREEMENT FOR EACH 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 on
page ___ above.
PROPOSAL 2: APPROVAL OF THE NEW SUBADVISORY AGREEMENTS
INTRODUCTION
ABN AMRO Asset Management, Inc. ("AAAM") currently has entered into an
investment subadvisory agreement with respect to certain Funds (each, a "Current
Subadvisory Agreement" and collectively, the "Current Subadvisory Agreements"),
as set forth below:
12
CURRENT SUBADVISED
FUNDS CURRENT SUBADVISER
----- ------------------
ABN AMRO Value Fund MFS Institutional Advisors, Inc. ("MFS")
ABN AMRO Mid Cap Fund Optimum Investment Advisors, LP ("Optimum")
The date of each Current Subadvisory Agreement and the date it was last
approved by shareholders and approved for continuance by the Board is provided
in Appendix E.
In connection with the Strategic Transaction and Proposal 1 of this
Proxy Statement, the Board met in person on May 9, 2006 for purposes of
considering whether it would be in the best interests of each Current Subadvised
Fund and its shareholders to approve a new subadvisory agreement between Aston
and the Current Subadvisers (each, a "New Subadvisory Agreement"). Additionally,
the Board met for the purposes of considering whether it would be in the best
interests of each Fund to engage ABN AMRO or additional subadvisers (Taplin,
Canida and Habacht, Inc. ("Taplin") and McDonnell Investment Management, LLC
("McDonnell")) with respect to the remaining Funds (each also a "New Subadvisory
Agreement" and collectively, the "New Subadvisory Agreements"). At the Board
meeting, and for the reasons discussed below, the Board of Trustees, including
all of the Independent Trustees, determined that a New Subadvisory Agreement was
in the best interests of each Fund and its shareholders and approved a New
Subadvisory Agreement for each Fund, subject to approval by shareholders. The
Current Subadvisory Agreements will be terminated upon the effectiveness of the
New Subadvisory Agreements.
The proposed subadviser(s) to each Fund are as follows:
CURRENT ADVISER OR
SUBADVISER NEW SUBADVISER
AAAM (Equity)
ABN AMRO Balanced Fund AAAM Taplin (Fixed Income)
ABN AMRO Bond Fund AAAM Taplin
ABN AMRO Growth Fund AAAM AAAM
ABN AMRO High Yield Bond Fund AAAM AAAM
ABN AMRO Investment Grade Bond Fund AAAM Taplin
ABN AMRO Mid Cap Fund Optimum Optimum
ABN AMRO Mid Cap Growth Fund AAAM AAAM
ABN AMRO Municipal Bond Fund AAAM McDonnell
ABN AMRO Real Estate Fund AAAM AAAM
ABN AMRO Value Fund MFS MFS
ABN AMRO/Montag & Caldwell Balanced Fund Montag Montag
ABN AMRO/Montag & Caldwell Growth Fund Montag Montag
ABN AMRO/River Road Dynamic Equity Income Fund River Road River Road
ABN AMRO/River Road Small Cap Value Fund River Road River Road
ABN AMRO/TAMRO Large Cap Value Fund TAMRO TAMRO
ABN AMRO/TAMRO Small Cap Fund TAMRO TAMRO
ABN AMRO/Veredus Aggressive Growth Fund Veredus Veredus
ABN AMRO/Veredus SciTech Fund Veredus Veredus
ABN AMRO/Veredus Select Growth Fund Veredus Veredus
The 1940 Act requires the New Subadvisory Agreement for each Fund to be
approved by the shareholders of that Fund in order for it to become effective.
The Board of Trustees recommends that shareholders approve the New Subadvisory
Agreement(s) for each Fund. In the event shareholders of a Fund do not approve
the New Subadvisory Agreement, the Board will take such action as it deems to be
in the best interests of the Fund and its shareholders. If shareholders of a
Fund do not approve the New
13
Advisory Agreement with Aston, then the New Subadvisory Agreement will not take
effect and the Board will take such action as it deems to be in the best
interests of the Fund and its shareholders. Although shareholders of each Fund
vote separately with respect to proposals affecting their Fund, the proposals
are dependent on each other. If the Requisite Shareholder Approval (as defined
above) is not obtained, then ABN AMRO and Highbury are not obligated to
consummate the Strategic Transaction. The form of the New Subadvisory Agreement
is attached hereto as Appendix F.
COMPARISON OF CURRENT SUBADVISORY AGREEMENTS AND NEW SUBADVISORY AGREEMENTS
The terms of the New Subadvisory Agreements are the same in all
material respects as the terms of the Current Subadvisory Agreements, except for
the date of effectiveness and except as described below. With respect to each
Fund currently managed by ABN AMRO as investment adviser, it is proposed that
Aston will enter into a New Subadvisory Agreement with ABN AMRO or another
subadviser as described above.
If approved by shareholders of a Fund and assuming the Strategic
Transaction is consummated, the New Subadvisory Agreement for the Fund will be
effective as of the closing date and will have an initial term ending on
December 31, 2007 (if the Strategic Transaction closes before December 31, 2006)
or December 31, 2008 (if the Strategic Transaction closes on or after December
31, 2006). Each New Subadvisory Agreement will continue in effect from year to
year thereafter if such continuance is approved on behalf of the Fund at least
annually in the manner required by the 1940 Act and the rules and regulations
thereunder. Below is a comparison of certain terms of the Current Subadvisory
Agreements to the terms of the New Subadvisory Agreements.
Subadvisory Services. The advisory services to be provided by the
subadviser to each Fund under the New Subadvisory Agreement will be identical to
the advisory services provided under the Current Subadvisory Agreements. Both
the Current Subadvisory Agreements and New Subadvisory Agreements provide that
the subadviser will furnish an investment program in respect of, make investment
decisions for and place all orders for the purchase and sale of securities for
the portion of the Fund's investment portfolio allocated by the investment
adviser to the subadviser, all on behalf of the Fund and subject to oversight of
the Trust's Board and the supervision of the investment adviser. In performing
its duties under both the Current Subadvisory Agreements and the New Subadvisory
Agreements, the subadviser will monitor the Fund's investments and will comply
with the provisions of the Trust's Declaration of Trust and By-Laws and the
stated investment objectives, policies and restrictions of the Fund.
The New Subadvisory Agreement includes several provisions designed to
accommodate the use of multiple managers and/or a "manager of managers"
structure. The New Subadvisory Agreement (i) permits the investment adviser to
allocate portions of the portfolio to different investment managers; (ii)
prohibits each subadviser from consulting with other subadvisers engaged by the
investment adviser, except for affiliates; and (iii) requires shareholder
approval for amendments to the Agreement only if required by law. The current
Subadvisory Agreements do not include these provisions.
Compensation. Under both the Current Subadvisory Agreements and the New
Subadvisory Agreements, the investment adviser pays the subadviser a management
fee out of the investment advisory fee it receives from the Fund. The
subadvisory fee rate payable by the investment adviser to MFS with respect to
ABN AMRO Value Fund and Optimum with respect to ABN AMRO Mid Cap Fund under the
New Subadvisory Agreements is identical to the subadvisory fee paid under the
Current Subadvisory Agreements. For all other Funds, Aston will pay the
subadviser an advisory fee rate equal to fifty percent (50%) of the investment
advisory fee payable to Aston less fee waivers, expense reimbursements and
payments to third parties for distribution-related services.
14
The annual rate of portfolio management fees payable to each Subadviser
under the Current Subadvisory Agreements and the New Subadvisory Agreements and
the fees paid by ABN AMRO to each Subadviser with respect to each Fund that is
currently subadvised during each Fund's last fiscal year are set forth in
Appendix G to this Proxy Statement. Appendix G also includes the advisory fee
rates and net assets of funds not included in this Proxy Statement advised by
each Subadviser with similar investment objectives and policies as the Funds.
Brokerage. Both the Current Subadvisory Agreements and New Subadvisory
Agreements authorize the subadviser to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for the Funds, subject
to its obligation to obtain best execution under the circumstances, which may
take account of the overall quality of brokerage and research services provided
to the subadviser. Both agreements permit the subadviser to rely on Section
28(e) of the Securities Exchange Act of 1934 in placing brokerage transactions.
Under that Section, a commission paid to a broker may be higher that which
another qualified broker would have charged for effecting the same transaction,
provided that the subadviser determines in good faith that the commission is
reasonable in terms of either the transaction or the overall responsibility of
the subadviser to the Funds and its other clients and that the total commissions
paid by each Fund will be reasonable in relation to the benefits to the Fund
over the long term.
Payment of Expenses. Under each Current Subadvisory Agreement and New
Subadvisory Agreement, the subadviser agrees to pay all expenses it incurs in
connection with its activities under the Agreement other than the cost of
securities (including brokerage commissions and other related expenses)
purchased for the Fund.
Limitation on Liability. Under the Current Subadvisory Agreement and
New Subadvisory Agreement, the subadviser and its directors, officers,
stockholders, employees and agents will not be liable for any error of judgment
or mistake of law or for any loss suffered by the subadviser or the Trust in
connection with any matters to which the subadviser relates or for any other act
or omission in the performance by subadviser of its duties under the Agreement,
except that nothing in the Agreement shall be construed to protect the
subadviser against any liability by reason of the subadviser's willful
misfeasance, bad faith or gross negligence in the performance of its duties or
for its reckless disregard of its obligations or duties under the Agreement.
Continuance. The Current Subadvisory Agreement of each Fund originally
was in effect for an initial term and was eligible to be continued thereafter
for successive one-year periods if such continuance was specifically approved at
least annually in the manner required by the 1940 Act. If the shareholders of a
Fund approve a New Subadvisory Agreement for that Fund and assuming consummation
of the Strategic Transaction, the New Subadvisory Agreement will be effective as
of the closing date and will have an initial term ending on December 31, 2007
(if the Strategic Transaction closes before December 31, 2006) or December 31,
2008 (if the Strategic Transaction closes on or after December 31, 2006).
Thereafter, each Fund's New Subadvisory Agreement may be continued for
successive one-year periods if such continuance is approved on behalf of the
Fund at least annually in the manner required by the 1940 Act.
Termination. The Current Subadvisory Agreement and New Subadvisory
Agreement for each Subadvised Fund provide that the agreement may be terminated
at any time without the payment of any penalty by the investment adviser on
sixty (60) days' written notice to the subadviser. The Current Subadvisory
Agreement and New Subadvisory Agreement may also be terminated by a Subadvised
Fund with respect to that Fund by action of the Board or by a vote of a majority
of the outstanding voting securities of that Fund, accompanied by 60 days'
written notice.
15
ADDITIONAL INFORMATION
Under the terms of the definitive agreement between Highbury and ABN
AMRO, ABN AMRO has agreed not to terminate any New Subadvisory Agreement for a
period of five (5) years following the closing of the Strategic Transaction.
INFORMATION ABOUT THE SUBADVISERS
AAAM. ABN AMRO Asset Management, Inc., located at 161 N. Clark Street,
9th floor, Chicago, Illinois 60601, is the investment adviser to several ABN
AMRO Funds. Under Proposal 2 of this Proxy Statement, it is proposed that AAAM
would serve as subadviser to ABN AMRO Growth Fund, ABN AMRO Mid Cap Growth Fund,
ABN AMRO Real Estate Fund, ABN AMRO High Yield Bond Fund and the equity
component of the ABN AMRO Balanced Fund. As of March 31, 2006, AAAM managed
approximately $___ billion in assets, consisting primarily of institutional
accounts, including insurance, pension and profit sharing accounts. Effective
January 1, 2006, ABN AMRO Asset Management (USA) LLC merged into AAAM. Prior to
the merger, AAAM LLC was the investment adviser to ABN AMRO Value Fund, ABN AMRO
Real Estate Fund and ABN AMRO High Yield Bond Fund. As of the date of the
merger, AAAM assumed AAAM LLC's responsibilities under AAAM LLC's investment
advisory agreements with those Funds and related subadvisory agreements and
became the Funds' investment adviser. AAAM is a subsidiary of ABN AMRO Asset
Management Holdings Inc. and is an indirect and wholly owned subsidiary of ABN
AMRO Holding N.V.
Montag. Montag & Caldwell, Inc. currently serves as investment adviser
to ABN AMRO/Montag & Caldwell Balanced Fund and ABN AMRO/Montag & Caldwell
Growth Fund, and under Proposal 2 of this Proxy Statement it is proposed that
Montag would serve as the subadviser to those Funds. Montag is located at 3455
Peachtree Road NE, Suite 1200, Atlanta, Georgia 30326. The firm was founded in
1945 and is a wholly owned subsidiary of ABN AMRO Asset Management Holdings,
Inc. ABN AMRO Asset Management Holdings, Inc. is an indirect and wholly owned
subsidiary of ABN AMRO Holding, N.V. As of March 31, 2006, Montag managed
approximately $___ billion in assets.
TAMRO. TAMRO Capital Partners LLC currently serves as the investment
adviser to ABN AMRO/TAMRO Large Cap Value Fund and ABN AMRO/TAMRO Small Cap Fund
and under Proposal 2 of this Proxy Statement it is proposed that TAMRO would
serve as subadviser to those Funds. TAMRO is located at 1660 Duke Street,
Alexandria, VA 22314. TAMRO was founded in 2000 and is a subsidiary of ABN AMRO
Asset Management Holdings, Inc. ABN AMRO Asset Management Holdings, Inc. is an
indirect and wholly owned subsidiary of ABN AMRO Holding, N.V. As of March 31,
2006, TAMRO managed approximately $435 million in assets.
Veredus. Veredus Asset Management LLC currently serves as the
investment adviser to ABN AMRO/Veredus Aggressive Growth Fund, ABN AMRO/Veredus
SciTech Fund and ABN AMRO/Veredus Select Growth Fund and under Proposal 2 of
this Proxy Statement it is proposed that Veredus would serve as subadviser to
those Funds. Veredus is located at One Paragon Center, 6060 Dutchmans Lane,
Suite 330, Louisville, Kentucky 40205. Veredus was founded in 1998 and is
partially owned by ABN AMRO Asset Management Holdings, Inc. ABN AMRO Asset
Management Holdings, Inc. is an indirect and wholly owned subsidiary of ABN AMRO
Holding, N.V. As of March 31, 2006, Veredus managed approximately $2.8 billion
in assets.
River Road. River Road Asset Management, LLC currently serves as
investment adviser to ABN AMRO/River Road Dynamic Equity Income Fund and ABN
AMRO/River Road Small Cap Value Fund, and under Proposal 2 of this Proxy
Statement it is proposed that River Road would serve as subadviser to
16
those Funds. River Road is located at Meidinger Tower, Suite 1600, 462 South
Fourth Street, Louisville, Kentucky 40202. River Road was founded in 2005 and is
partially owned by ABN AMRO Asset Management Holdings, Inc. ABN AMRO Asset
Management Holdings, Inc. is an indirect and wholly owned subsidiary of ABN AMRO
Holding, N.V. As of March 31, 2006, River Road managed approximately $696
million in assets.
MFS. MFS Institutional Advisors, Inc., 500 Boylston Street, Boston,
Massachusetts 02116, currently serves as the subadviser of ABN AMRO Value Fund,
pursuant to a subadvisory agreement with AAAM. Under Proposal 2 of this Proxy
Statement, it is proposed that MFS will continue to serve as subadviser to ABN
AMRO Value Fund. MFS is a wholly owned subsidiary of Massachusetts Financial
Services Company. MFS, a Delaware corporation, is a majority 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 Sun
Life 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 Financial Corp., 150 King Street West, 14th Floor, Toronto, Canada M5H
IJ9, which in turn is a wholly owned subsidiary of Sun Life Financial at the
same address. As of March 31, 2006, MFS managed approximately $170 billion in
assets.
McDonnell. McDonnell Investment Management, LLC, 1515 West 22nd Street,
11th Floor, Oak Brook, Illinois 60523, provides investment management services
to institutional investors as well as mutual funds. Under Proposal 2 of this
Proxy Statement, it is proposed that McDonnell will serve as subadviser for ABN
AMRO Municipal Bond Fund. McDonnell was founded in 1987. McDonnell has
approximately $10 billion in assets under management as of March 31, 2006.
Optimum. Optimum Investment Advisors, LP, 100 South Wacker Drive, Suite
2100, Chicago, Illinois 60606, currently serves as subadviser to ABN AMRO Mid
Cap Fund pursuant to a subadvisory agreement with AAAM and is located at 100
South Wacker Drive, Suite 2100, Chicago, Illinois 60606. Under Proposal 2 of
this Proxy Statement, it is proposed that Optimum will continue to serve as
subadviser to ABN AMRO Mid Cap Fund. As of March 31, 2006, Optimum managed more
than $1.4 billion in assets for institutional and high-net-worth clients.
Taplin. Taplin, Canida & Habacht, Inc., 1001 Brickell Bay Drive, Suite
2100 Miami, Florida 33131, provides investment management services to
high-net-worth individuals and institutional accounts. Under Proposal 2 of this
Proxy Statement, it is proposed that Taplin will serve as subadviser with
respect to ABN AMRO Bond Fund, ABN AMRO Investment Grade Bond Fund and the fixed
income component of ABN AMRO Balanced Fund. Taplin was founded in 1985 and has
approximately $6.5 billion in assets under management as of March 31, 2006.
Information regarding the officers and directors of each subadviser is
shown in Appendix H.
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES IN APPROVING THE ABN AMRO
SUBADVISORY AGREEMENTS
The 1940 Act requires each New Subadvisory Agreement between Aston and
a proposed subadviser with respect to a Fund to be approved by both the Board of
Trustees and a majority of the Independent Trustees voting separately. At a
special meeting on May 9, 2006, the Board of Trustees, including all the
Independent Trustees, determined that the terms of the New Subadvisory Agreement
with each proposed subadviser are fair and reasonable and approved each New
Subadvisory Agreement as being in the best interests of each Fund and its
shareholders. The Board of Trustees, including all of the Independent Trustees,
believes that the New Subadvisory Agreements with ABN AMRO will enable the
17
Funds to continue to enjoy high-quality investment advisory services at costs
that the Board believes are appropriate, reasonable and in the best interests of
the Funds and their shareholders. In making such determinations, the Board of
Trustees, including all of the Independent Trustees, considered materials
received specifically relating to the approval of the New Subadvisory Agreements
in connection with the Strategic Transaction. The Board also received extensive
information throughout the year regarding performance results of the Funds and
their past experience with ABN AMRO. The Independent Trustees met separately
from the "interested" Trustees of the Trust and any officers of the current and
proposed investment adviser and subadvisers or their affiliates to consider
approval of the New Subadvisory Agreements with ABN AMRO and were assisted by
independent legal counsel in their deliberations.
In evaluating the New Subadvisory Agreement with respect to each Fund,
the Board of Trustees reviewed materials furnished by Aston and ABN AMRO. The
Board considered information received at its December 2005 meeting regarding the
annual continuance of the Current Investment Advisory Agreements and Current
Subadvisory Agreements and received updates to such information, as appropriate,
to reflect the impact of the Strategic Transaction and events specific to each
subadviser. Among other information, the Board of Trustees received information
regarding: (1) the nature, extent and quality of the services provided to the
Funds, including information regarding the personnel involved in the investment
process; (2) the subadvisory fees to be charged and estimated total expense
ratios of the Funds compared to a relevant peer group of funds based on
information provided by Lipper Inc.; (3) fee waivers or expenses to be
reimbursed by the investment adviser and subadviser; and (4) benefits to be
received by the subadvisers and their affiliates from their relationship with
the Funds. The Board also considered the terms of the strategic partnership
between Highbury and ABN AMRO contained in the definitive agreement between the
parties, including ABN AMRO's commitment not to terminate any New Subadvisory
Agreement for a period of five (5) years following the closing of the Strategic
Transaction.
In considering the New Subadvisory Agreements, the Board of Trustees,
including the Independent Trustees, did not identify any single factor or group
of factors as all-important or controlling, but considered all factors together.
The following summary does not detail all the matters considered. Among the
matters considered by the Board of Trustees, including the Independent Trustees,
in connection with its approval of the New Subadvisory Agreements with ABN AMRO
were the following:
Nature, Quality and Extent of Services. The Board of Trustees
considered the nature and quality of services currently provided by ABN AMRO and
expected to be provided following the Strategic Transaction, including
investment performance. The Board of Trustees considered the past performance of
each Fund as well as separate accounts managed by each proposed subadviser with
substantially the same objectives, policies and strategies as the Funds and
compared such performance to that of a peer group of funds based on information
provided by Lipper Inc. With respect to AAAM, the Board received information
regarding interim and long-term plans to address recent turnover of certain
management and compliance personnel. The Board of Trustees concluded that AAAM,
Montag & Caldwell, Veredus, TAMRO and River Road each continue to be well
qualified to manage the Funds for which they will serve as subadviser to Aston.
The Board of Trustees received information regarding the impact of the
Strategic Transaction on ABN AMRO, including the terms of the strategic
partnership with Highbury. The Board noted that ABN AMRO does not anticipate any
changes in portfolio management in connection with the Strategic Transaction.
The Board noted that the subadvisory agreements are essentially
agreements for portfolio management services only and the subadvisers were not
expected to supply any significant administrative services to the Funds. The
Board determined that the nature, quality and extent of services historically
have been, and would continue to be, of high quality following the Strategic
Transaction.
18
Fees, Profitability and Economies of Scale. The Board considered the
subadvisory fee rate under the New Subadvisory Agreements as well as the overall
management fee structure of the Funds. The Board considered that the advisory
fee rate paid by each Fund would not change as a result of the Strategic
Transaction and that the subadvisory fee rate was negotiated at arm's length
between Aston and ABN AMRO and that Aston will compensate the subadviser from
its fees. The Board received information regarding the expected impact of the
Strategic Transaction on the profitability of ABN AMRO.
As part of its review of the New Advisory Agreement with Aston, the
Board considered whether there will be economies of scale with respect to the
overall fee structure of the Fund and whether the Fund will benefit from any
economies of scale. The Board of Trustees reviewed the Funds' estimated expense
ratios giving effect to fee waivers or expenses to be reimbursed by the
investment adviser and ABN AMRO, and considered the asset size of the Funds. The
Board of Trustees concluded that at this time, the potential for economies of
scale are limited for most Funds and that, where appropriate, the advisory fee
schedules include breakpoints designed to share economies of scale with
shareholders.
Other Benefits to the Subadviser. The Board also considered the
character and amount of other incidental benefits received by ABN AMRO,
including the benefits arising from the strategic partnership with Highbury and
Aston in connection with the Strategic Transaction. The Board considered
potential benefits from the use of "soft dollars," including the use of
portfolio brokerage transactions to pay for research services generated by
parties other than the executing broker-dealer. The Board concluded that any
incidental benefits to be received by the subadviser from their relationship
with the Funds were reasonable.
Conclusion. Based upon its evaluation of all material factors and
assisted by the advice of independent legal counsel, the Board of Trustees,
including all of the Independent Trustees, concluded that the terms of the New
Subadvisory Agreements were fair and reasonable and that the New Subadvisory
Agreements with ABN AMRO should be approved.
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES IN APPROVING THE SUBADVISORY
AGREEMENTS FOR MFS, MCDONNELL, OPTIMUM AND TAPLIN
The Board of Trustees approved a New Subadvisory Agreement with respect
to ABN Bond Fund, ABN Investment Bond Fund and the fixed income component of ABN
AMRO Balanced Fund between Aston and Taplin, Canida & Habacht, Inc. and a New
Subadvisory Agreement for ABN AMRO Municipal Bond Fund between Aston and
McDonnell Investment Management LLC at a special meeting on May 9, 2006. The
Board of Trustees also approved New Subadvisory Agreements with Optimum
Investment Advisors, LP for Aston/Optimum Mid Cap Fund and MFS Institutional
Advisors, Inc. for Aston Value Fund. As part of its review process, the Board
requested and evaluated all information it deemed reasonably necessary to
evaluate the New Subadvisory Agreement for each Fund. Among the matters
considered by the Board of Trustees, including the Independent Trustees, in
connection with its approval of the New Subadvisory Agreements were the
following:
Nature, Quality and Extent of Services. The Board considered the
nature, extent and quality of services expected to be provided under the New
Subadvisory Agreements. The Board considered the reputation, qualifications and
background of the proposed subadvisers, the investment approach of each
subadviser, the experience and skills of investment personnel responsible for
the day-to-day management of the Fund, and the resources made available to such
personnel. The Board considered performance of mutual funds and separately
managed accounts with similar investment objectives and policies as those of the
Funds. On the basis of this evaluation, the Board concluded that the nature,
quality and extent of services expected to be provided by each subadviser are
expected to be satisfactory.
19
Fees, Profitability and Economies of Scale. The Board considered the
subadvisory fee rate under the New Subadvisory Agreement as well as the overall
management fee structure of the Funds. The Board considered that the subadvisory
fee rate was negotiated at arm's length between Aston and the subadviser, each
an unaffiliated third party, and that Aston will compensate each subadviser from
its fees. Accordingly, the Board considered the estimated profitability of Aston
but concluded that the estimated profitability of the subadvisers was not
relevant to its evaluation.
As part of its review of the investment advisory agreement with Aston,
the Board considered whether there will be economies of scale with respect to
the overall fee structure of the Funds and whether the Funds will benefit from
any economies of scale. The Board concluded that the economies of scale were not
available at this time.
Other Benefits to the Subadviser. The Board also considered the
character and amount of other incidental benefits received by each subadviser.
The Board considered potential benefits from the use of "soft dollars," noting
that the subadvisers generally do use portfolio brokerage transactions to pay
for research services generated by parties other than the executing
broker-dealer. The Board concluded that any incidental benefits to be received
by the subadvisers from its relationship with the Funds are expected to be
reasonable.
Conclusion. Based on all of the information considered and the
conclusions reached, the Board determined that the terms of each New Subadvisory
Agreement are fair and reasonable and that the approval of each New Subadvisory
Agreement is in the best interests of the Fund. No single factor was
determinative in the Board's analysis.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE FOR
APPROVAL OF THE NEW SUBADVISORY AGREEMENT FOR THEIR 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 on
page ___ above.
PROPOSAL 3: APPROVAL OF PROPOSAL TO PERMIT THE FUNDS' INVESTMENT
ADVISER TO HIRE AND REPLACE SUBADVISERS OR TO MODIFY
SUBADVISORY AGREEMENTS WITHOUT SHAREHOLDER APPROVAL
Under Section 15(a) of the 1940 Act, an investment adviser to a mutual
fund cannot select subadvisers and enter into a subadvisory agreement without
obtaining shareholder approval of the agreement. Shareholders must also approve
any material amendments to an existing subadvisory agreement between an adviser
and a subadviser. Accordingly, the Board of Trustees has called the Special
Meeting to seek shareholder approval of the Subadvisory Agreements as described
in Proposal 2. Similarly, a shareholder vote would be required in the future
should the Funds' Board of Trustees and/or Aston determine that it is in the
best interests of a Fund to employ a subadviser other than a Fund's current
subadviser.
If a Fund were to apply for and receive an exemption from the
requirements under Section 15(a) of the 1940 Act from the SEC (a "SEC Order"),
then that Fund would not be required to seek shareholder approval of proposed
changes in subadvisers or subadvisory agreements. In 2003, the SEC proposed a
new rule, Rule 15a-5 under the 1940 Act ("Rule 15a-5"), that would permit one or
more advisers to act as subadvisers to a mutual fund without shareholder
approval. If adopted, the proposed rule would eliminate the need for a fund to
obtain an SEC Order before its investment adviser may engage subadvisers or
amend subadvisory arrangements without shareholder approval. Rule 15a-5, as
proposed,
20
would require that the subadvisers retained to manage a fund be unaffiliated
with the investment adviser, directors, trustees and officers of the investment
adviser and the fund.
This structure is commonly known as a "manager of managers" structure.
The Board of Trustees believes that the "manager of managers" structure may
benefit shareholders by allowing Aston to terminate poorly performing
subadvisers and hire new subadvisers without shareholder approval, which would
eliminate the need for the Funds to hold a shareholder meeting, which can be
costly and time consuming.
If Rule 15a-5 is adopted as proposed, Aston will comply with the
conditions of the rule prior to engaging a new subadviser or modifying
subadvisory agreements without shareholder approval. If Rule 15a-5 is not
adopted in the near future, the Funds may consider seeking a SEC Order. In
either case, a fund must obtain shareholder approval before it may implement the
"manager of managers" structure. Because a Special Meeting has been called for
purposes of obtaining shareholder approval of the New Advisory Agreement and New
Subadvisory Agreements, the Board of Trustees of the Funds deemed it advisable
to recommend that shareholders approve the "manager of managers" arrangement at
the same time, to avoid the time and expense of holding another shareholder
meeting in the future.
Even if shareholders of each Fund approve this proposal, such a
structure would not become effective unless a Fund applies for and obtains an
exemption from the requirements under Section 15(a) of the Investment Company
Act of 1940, as amended, or the SEC adopts proposed Rule 15a-5. There is no
guarantee that a Fund will apply for, or obtain, a SEC Order or that the SEC
will adopt Rule 15a-5 as currently proposed permitting the "manager of managers"
structure described above.
Any engagement or termination of a subadviser or any change in a
subadvisory agreement would require approval of the Board of Trustees of the
Funds, including the Independent Trustees, even if this "manager of managers"
proposal is approved by the shareholders. The "manager of managers" structure
would not permit Aston to increase the investment advisory fees paid by each
Fund without shareholder approval. Aston could retain only unaffiliated
subadvisers to manage the Funds under current law and would comply with any
other conditions required by Rule 15a-5 or a SEC Order, as applicable. The Board
of Trustees believes that each Fund may benefit from a "manager of managers"
structure in the future because it would allow Aston to retain or replace
subadvisers without the delay and cost associated with holding a shareholder
meeting and soliciting proxies.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE FOR
APPROVAL OF THE PROPOSAL TO PERMIT ASTON TO HIRE AND REPLACE SUBADVISERS OR
MODIFY SUBADVISORY AGREEMENTS WITHOUT SHAREHOLDER APPROVAL.
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 on
page __ 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
entitled to vote. Because 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
21
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 SPECIAL MEETING
The Board 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, it is intended that the proxies
that do not contain specific instructions to the contrary will be voted in
accordance with the judgment of the persons named in the enclosed form of proxy.
DISTRIBUTOR AND ADMINISTRATOR
Set forth below are the names and addresses of the Trust's
administrator and distributor.
ADMINISTRATOR DISTRIBUTOR
------------- -----------
ABN AMRO Investment Fund Services, Inc. ABN AMRO Distribution Services (USA) Inc.
161 N. Clark Street 760 Moore Road
Chicago, IL 60601 King of Prussia, PA 19406
During the fiscal year ended October 31, 2005, the Fund paid ABN AMRO
Investment Fund Services, Inc. $5,725,403 for providing administrative services
to the Fund, of which $3,225,854 was paid to PFPC, Inc., as subadministrator. If
shareholders approve the proposals described in this Proxy Statement, the
administrative services will be provided by Aston under a separate
administrative agreement with the Funds.
EXPENSES OF PROXY SOLICITATION
It is expected that the solicitation of proxies will be primarily by
mail. Officers and service contractors of the Trust may also solicit proxies by
telephone, telegraph, facsimile or Internet or in person. 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 will be paid ABN
AMRO, and not by the Funds. The Fund has engaged Computershare Fund Services to
assist in the solicitation of proxies at an estimated cost of $100,000, plus
reasonable expenses.
22
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
Gerald F. Dillenburg
Senior Vice President, Secretary and Treasurer
23
INDEX OF APPENDICES
APPENDIX A: BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
APPENDIX B: DATES RELATING TO CURRENT ADVISORY AGREEMENTS
APPENDIX C: FORM OF NEW ADVISORY AGREEMENT
APPENDIX D: ADVISORY FEE RATES AND AGGREGATE ADVISORY FEES PAID DURING
LAST FISCAL YEAR
APPENDIX E: DATES RELATING TO CURRENT SUBADVISORY AGREEMENTS
APPENDIX F: FORM OF NEW SUBADVISORY AGREEMENT
APPENDIX G: SUBADVISORY FEE RATES AND AGGREGATE SUBADVISORY FEES PAID
APPENDIX H: PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF SUBADVISERS
APPENDIX I: FUND SHARES OWNED BY TRUSTEES AND OFFICERS
APPENDIX A
BENEFICIAL OWNERS OF 5% OR MORE OF FUND SHARES
NAME AND
ADDRESS OF
BENEFICIAL NUMBER OF PERCENT OF
FUND TITLE OF CLASS OWNER SHARES OWNED CLASS
---- -------------- ----- ------------ -----
A-1
APPENDIX B
DATES RELATING TO CURRENT ADVISORY AGREEMENTS
DATE CURRENT DATE CURRENT
ADVISORY AGREEMENT ADVISORY AGREEMENT
DATE OF CURRENT WAS LAST APPROVED WAS LAST APPROVED
FUND ADVISORY AGREEMENT BY SHAREHOLDERS BY BOARD
---- ------------------ --------------- --------
ABN AMRO Balanced Fund May 11, 2001 January 17, 2001 December 15, 2005
ABN AMRO Bond Fund May 11, 2001 January 17, 2001 December 15, 2005
ABN AMRO Growth Fund May 11, 2001 January 17, 2001 December 15, 2005
ABN AMRO High Yield Bond Fund June 30, 2003 June 26, 2003 December 15, 2005
ABN AMRO Investment Grade Bond
Fund June 17, 2002 June 14, 2002 December 15, 2005
ABN AMRO Mid Cap Fund May 11, 2001 January 17, 2001 December 15, 2005
ABN AMRO Mid Cap Growth Fund August 24, 2005 December 28, 2005 June 16, 2005
ABN AMRO Municipal Bond Fund May 11, 2001 January 17, 2001 December 15, 2005
ABN AMRO Real Estate Fund September 27, 2001 September 26, 2001 December 15, 2005
ABN AMRO Value Fund September 27, 2001 September 26, 2001 December 15, 2005
ABN AMRO/Montag & Caldwell
Balanced Fund February 1, 2001 January 17, 2001 December 15, 2005
ABN AMRO/Montag & Caldwell Growth
Fund February 1, 2001 January 17, 2001 December 15, 2005
ABN AMRO/River Road Dynamic
Equity Income Fund June 27, 2005 June 27, 2005 June 16, 2005
ABN AMRO/River Road Small Cap
Value Fund June 23, 2005 June 27, 2005 June 16, 2005
ABN AMRO/TAMRO Large Cap Value
Fund February 1, 2001 January 17, 2001 December 15, 2005
ABN AMRO/TAMRO Small Cap Fund February 1, 2001 January 17, 2001 December 15, 2005
ABN AMRO/Veredus Aggressive
Growth Fund February 1, 2001 January 17, 2001 December 15, 2005
ABN AMRO/Veredus SciTech Fund February 1, 2001 January 17, 2001 December 15, 2005
ABN AMRO/Veredus Select Growth
Fund December 28, 2001 December 30, 2001 December 15, 2005
B-1
APPENDIX C
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of ________, 2006 by and between ASTON
FUNDS, a Delaware statutory trust (the "Trust"), on behalf of each series of the
Trust set forth on Schedule A hereto as may be amended from time to time (each,
a "Fund" and collectively, the "Funds") and ASTON ASSET MANAGEMENT LLC, a
Delaware limited liability company (the "Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
and
WHEREAS, the Trust wishes to retain the Adviser to render investment
advisory services to each Fund, and the Adviser is willing to furnish such
services to each Fund.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the Trust and the Adviser as follows:
1. APPOINTMENT. The Trust hereby appoints the Adviser to act as
investment adviser to each Fund for the periods and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth, for the compensation herein provided.
2. DUTIES OF ADVISER. As investment adviser, the Adviser shall: (i)
manage the investment and reinvestment of the assets of each Fund, (ii)
continuously review, supervise and administer the investment program of each
Fund, (iii) determine in its discretion, the assets to be held uninvested, (iv)
provide the Trust with records concerning the Adviser's activities which are
required to be maintained by the Trust and (v) render regular reports to the
Trust's officers and Board of Trustees concerning the Adviser's discharge of the
foregoing responsibilities. The Adviser shall discharge the foregoing
responsibilities subject to the oversight of the officers and the Board of
Trustees of the Trust and in compliance with the objectives, policies and
limitations
C-1
set forth in each Fund's then effective prospectus and statement of additional
information. The Adviser shall determine from time to time what securities and
other investments will be purchased, retained, sold or exchanged by each Fund
and what portion of the assets of the Fund's portfolio will be held in the
various securities and other investments in which the Fund invests, and shall
implement those decisions, all subject to the provisions of the Trust's
Declaration of Trust and By-Laws, as amended from time to time, the 1940 Act,
and the applicable rules and regulations promulgated thereunder by the
Securities and Exchange Commission (the "SEC") and interpretive guidance issued
thereunder by the SEC staff and any other applicable federal and state law, as
well as the investment objectives, policies and restrictions of the Fund
referred to above, and any other specific policies adopted by the Board and
communicated to the Adviser. Subject to applicable provisions of the 1940 Act
and direction from the Board, the investment program to be provided hereunder
may entail the investment of all or substantially all of the assets of a Fund in
one or more investment companies. The Adviser shall also provide advice and
recommendations with respect to other aspects of the business and affairs of the
Funds, shall exercise voting rights, rights to consent to corporate action and
any other rights pertaining to a Fund's portfolio securities subject to such
direction as the Board may provide, and shall perform such other functions of
investment management and supervision as may be directed by the Board.
3. DELEGATION OF DUTIES. Subject to the Board's approval, the Adviser
and/or a Fund may enter into contracts with one or more investment subadvisers,
including without limitation, affiliates of the Adviser, in which the Adviser
delegates to such investment subadvisers any or all its duties specified
hereunder, on such terms as the Adviser will determine to be necessary,
desirable or appropriate, provided that in each case the Adviser shall supervise
the activities of
C-2
each such subadviser and further provided that such contracts are entered into
in accordance with and meet all applicable requirements of the 1940 Act and
rules thereunder. Any such delegation shall not relieve the Adviser of any of
its duties hereunder.
4. MANAGER OF MANAGERS STRUCTURE. The Adviser shall also have the
authority, upon the approval of the Board and subject to applicable provisions
of the 1940 Act and the regulations thereunder, to select one or more
subadvisers to provide day-to-day portfolio management with respect to all or a
portion of the assets of any of the Funds and to allocate and reallocate the
assets of a Fund between and among any subadvisers so selected pursuant to a
"manager of managers" structure. The Fund acknowledges that the Adviser would
have the authority to retain and terminate subadvisers, engage new subadvisers
and make material revisions to the terms of the subadvisory agreements subject
to approval of the Board of Trustees, but not shareholder approval, under this
structure.
5. PORTFOLIO TRANSACTIONS. The Adviser shall select and monitor the
selection of the brokers or dealers that will execute the purchases and sales of
securities for the Funds and is directed to use its best efforts to ensure that
the best available price and most favorable execution of securities transactions
for the Funds is obtained. Subject to policies established by the Board of
Trustees of the Trust and communicated to the Adviser, it is understood that the
Adviser will not be deemed to have acted unlawfully, or to have breached a
fiduciary duty to the Trust or in respect of a Fund, or be in breach of any
obligation owing to the Trust or in respect of a Fund under this Agreement, or
otherwise, solely by reason of its having caused a 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
Adviser determines in good faith that the commission
C-3
paid was reasonable in relation to the brokerage or research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of 1934 and
interpretive guidance issued by the SEC thereunder) provided by such member,
broker or dealer, viewed in terms of that particular transaction or the
Adviser's overall responsibilities with respect to the accounts, including the
Funds, as to which it exercises investment discretion. The Adviser will promptly
communicate to the officers and Trustees of the Trust such information relating
to Fund transactions as they may reasonably request.
6. EXPENSES. The Adviser shall bear all expenses, and shall furnish all
necessary services, facilities and personnel, in connection with its
responsibilities under this Agreement. Other than as herein specifically
indicated, the Adviser shall not be responsible for a Fund's expenses,
including, without limitation: advisory fees; distribution fees; interest;
taxes; governmental fees; voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; organizational
costs of the Fund; the cost (including brokerage commissions, transaction fees
or charges, if any) in connection with the purchase or sale of the Fund's
securities and other investments and any losses in connection therewith; fees
and expenses of custodians, transfer agents, administrators, registrars,
independent pricing vendors or other agents; legal expenses; loan commitment
fees; expenses relating to share certificates; expenses relating to the issuing
and redemption or repurchase of the Fund's shares and servicing shareholder
accounts; expenses of registering and qualifying the Fund's shares for sale
under applicable federal and state law; expenses of preparing, setting in print,
printing and distributing prospectuses and statements of additional information
and any supplements thereto, reports, proxy statements, notices and dividends to
the Fund's shareholders; costs of stationery; website costs; costs of meetings
of the Board or any committee thereof,
C-4
meetings of shareholders and other meetings of the Fund except as otherwise
determined by the Trustees; Board fees; audit fees; travel expenses of officers,
Trustees and employees of the Trust who are not officers, employees or directors
of the Adviser or its affiliates, if any; and the Trust's pro rata portion of
premiums on any fidelity bond and other insurance covering the Trust and its
officers, Trustees and employees; litigation expenses and any non-recurring or
extraordinary expenses as may arise, including, without limitation, those
relating to actions, suits or proceedings to which the Fund is a party and the
legal obligation which the Fund may have to indemnify the Trust's Trustees and
officers with respect thereto.
The Adviser shall authorize and permit any of its directors, officers
and employees, who may be elected as Trustees or officers of the Trust, to serve
in the capacities in which they are elected. No officer or employee of the Trust
or a Fund shall receive from the Trust or a Fund any salary or other
compensation as such Trustee, officer or employee while he is at the same time a
director, officer, or employee of the Adviser or any affiliated company of the
Adviser, except as the Board may decide.
7. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in this Agreement, each Fund shall pay to the Adviser within
five business days after the end of each calendar month a monthly fee of
one-twelfth the annual rate set forth opposite the Fund's name on Schedule B
hereto based on the Fund's average daily net assets for that month. For the
purposes of this Agreement, each Fund's "net assets" shall be determined as
provided in the Fund's then-current Prospectus and Statement of Additional
Information.
In the event of termination of this Agreement, the fee provided in this
Section 6 shall be paid on a pro-rata basis, based on the number of days during
which this Agreement was in effect.
C-5
8. REPORTS. The Trust, on behalf of each Fund, and the Adviser agree to
furnish to each other such information regarding their operations with regard to
their affairs as each may reasonably request. Information and reports furnished
by the Adviser to the Board and the officers of the Trust shall be at the
Adviser's expense. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Adviser hereby agrees that any records that it maintains for a
Fund are the property of the Fund, and further agrees to surrender promptly to
the Fund any of such records upon the Fund's request; provided, however, that
the Adviser may retain for its records copies of the records so surrendered. The
Adviser further agrees to arrange for the preservation of any such records for
the periods prescribed by Rule 31a-2 under the 1940 Act.
9. STATUS OF ADVISER. The services of the Adviser to the Funds are not
to be deemed exclusive, and the Adviser shall be free to render similar services
to others so long as its services to the Funds are not impaired thereby. In
addition, nothing in this Agreement shall limit or restrict the right of any
director, officer or employee of the Adviser who may also be a Trustee, officer
or employee of the Trust or a Fund, to engage in any other business or to devote
his or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
10. LIABILITY OF ADVISER. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard by the Adviser of its obligations
and duties hereunder, the Adviser shall not be subject to any liability
whatsoever to a Fund, or to any shareholder of a Fund, for any error of
judgment, mistake of law or any other act or omission in the course of, or
connected with, rendering services hereunder including, without limitation, for
any losses that may be sustained in connection with the purchase, holding,
redemption or sale of any security on behalf of the Fund.
C-6
11. DURATION AND TERMINATION. The term of this Agreement shall commence
with respect to a Fund on the date set forth opposite the Fund's name as set
forth on Schedule A hereto (the "Effective Date"), provided that first it is
approved by the Board of Trustees of the Trust, including a majority of those
Trustees who are not parties to this Agreement or interested persons of any
party hereto, in the manner provided in Section 15(c) of the 1940 Act, and by
the holders of a majority of the outstanding voting securities of the Fund, and
shall continue in effect for the initial term set forth in Schedule A. This
Agreement shall continue in effect with respect to a Fund after its initial
term, provided such continuance is approved at least annually by (i) the Trust's
Board of Trustees or (ii) the vote of a majority of the outstanding voting
securities of the Fund; and in either event by a vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party in the manner provided in Section 15(c) of the 1940
Act. Notwithstanding the foregoing, this Agreement may be terminated with
respect to a Fund: (a) at any time without penalty by the Fund upon the vote of
a majority of the Trustees or by vote of the majority of the Fund's outstanding
voting securities, upon sixty (60) days' written notice to the Adviser or (b) by
the Adviser at any time without penalty, upon sixty (60) days' written notice to
the Fund. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act). Any notice under this Agreement shall
be given in writing, addressed and delivered or mailed postpaid, to the other
party at the principal office of such party.
As used in this Section 10, the terms "assignment," "interested person"
and "a vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act and Rule 18f-2
C-7
thereunder, subject to such exemptions as may be granted by the SEC by any rule,
regulation, order or interpretive guidance.
12. DECLARATION OF TRUST. The Adviser agrees that for services rendered
to a Fund, or for any claim by it in connection with services rendered to a
Fund, it shall look only to assets of that Fund for satisfaction and that it
shall have no claim against the assets of any other portfolios of the Trust.
13. GOVERNING LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the of the State of __________.
14. SEVERABILITY. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
15. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and with such approvals as required by applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATTEST ASTON FUNDS ON BEHALF OF THE SERIES SET
FORTH IN SCHEDULE A
By:
-------------------------------------
Title:
----------------------------------
-----------------------
C-8
ATTEST ASTON ASSET MANAGEMENT LLC
By:
-------------------------------------
Title:
----------------------------------
-----------------------
C-9
SCHEDULE A
<Table>
<Caption>
FUND EFFECTIVE DATE INITIAL TERM
---- -------------- ------------
</Table>
C-10
SCHEDULE B
FUND ANNUAL FEE RATE
---- ---------------
</Table>
C-11
APPENDIX D
ADVISORY FEE RATES AND AGGREGATE ADVISORY FEES PAID DURING LAST FISCAL YEAR
FEES PAID TO
ANNUAL THE ADVISER
ADVISORY DURING LAST NET ASSETS AS
FUND FEE RATE FISCAL YEAR OF 4/30/06
---- -------- ----------- ----------
ABN AMRO Balanced Fund 0.70% of the $1,469,749 $76,835,603
fund's average
daily net assets
ABN AMRO Bond Fund 0.55% of the $924,258 $160,094,753
fund's average
daily net assets
ABN AMRO Growth Fund 0.70% of the $9,706,417 $1,035,918,274
fund's average
daily net assets
ABN AMRO High Yield Bond Fund 0.45% of the $0 $21,094,978
fund's average
daily net assets
ABN AMRO Investment Grade Bond 0.50% of the $114,172 $31,126,318
Fund fund's average
daily net assets
ABN AMRO Mid Cap Fund 0.80% for the $4,232,895 $680,243,815
first $100 million
0.75% for next
$300 million
0.70% over $400
million
ABN AMRO Mid Cap Growth(1) Fund 0.80% of the N/A $1,136,616
fund's average
daily net assets
ABN AMRO Municipal Bond Fund 0.60% of the $50,023 $66,510,814
fund's average
daily net assets
ABN AMRO Real Estate Fund 1.00% of the $748,901 $103,899,769
fund's average
daily net assets
ABN AMRO Value Fund 0.80% of the
fund's average
daily net assets $1,548,299 $330,746,787
ABN AMRO/Montag & Caldwell 0.75% of the $921,213 $52,771,701
Balanced Fund fund's average
daily net assets
ABN AMRO/Montag & Caldwell Growth 0.80% for the $19,497,356 $2,360,102,159
Fund first $800 million
0.60% over $800
million
ABN AMRO/River Road Dynamic 0.70% of the $0 $6,563,931
Equity Income Fund(2) fund's average
daily net assets
D-1
FEES PAID TO
ANNUAL THE ADVISER
ADVISORY DURING LAST NET ASSETS AS
FUND FEE RATE FISCAL YEAR OF 4/30/06
---- -------- ----------- ----------
ABN AMRO/River Road Small Cap 0.90% of the $0 $201,381,239
Value Fund(2) fund's average
daily net assets
ABN AMRO/TAMRO Large Cap Value 0.80% of the $99,609 $18,908,574
Fund fund's average
daily net assets
ABN AMRO/TAMRO Small Cap Fund 0.90% of the $1,252,244 $201,391,239
fund's average
daily net assets
ABN AMRO/Veredus Aggressive 1.00% of the $7,028,390 $758,856,920
Growth Fund fund's average
daily net assets
ABN AMRO/Veredus SciTech Fund 1.00% of the $0 $4,678,703
fund's average
daily net assets
ABN AMRO/Veredus Select Growth 0.80% of the $0 $29,784,753
Fund fund's average
daily net assets
(1) ABN AMRO Mid Cap Growth Fund commercial operations on December 29,
2005.
(2) ABN AMRO/River Road Dynamic Equity Income Fund and ABN AMRO/River Road
Small Cap Value Fund commenced operations on June 28, 2005.
D-2
APPENDIX E
DATES RELATING TO CURRENT SUBADVISORY AGREEMENTS
DATE CURRENT
DATE CURRENT SUBADVISORY
SUBADVISORY AGREEMENT WAS
DATE OF CURRENT AGREEMENT WAS LAST APPROVED
SUBADVISORY LAST APPROVED BY FOR CONTINUANCE
FUND SUBADVISER AGREEMENT SHAREHOLDERS BY BOARD
--------------------- --------------------------------- ----------------- ----------------- -----------------
ABN AMRO Value Fund MFS Institutional Advisors, Inc. January 1, 2002 December 21, 2001 December 15, 2005
ABN AMRO Mid Cap Fund Optimum Investment Advisors, L.P. December 22, 2003 December 22, 2003 December 15, 2005
E-1
APPENDIX F
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
BETWEEN ASTON ASSET MANAGEMENT LLC
AND [SUBADVISER]
SUB-INVESTMENT ADVISORY AGREEMENT (the "Agreement") made this __ day of
_______, 2006 by and between ASTON ASSET MANAGEMENT LLC(hereinafter referred to
as the "Investment Adviser") and _______________________ (hereinafter referred
to as the "Subadviser"), 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 S E T H:
- - - - - - - - - -
WHEREAS, the Investment Adviser has been retained by Aston Funds, a
Delaware statutory trust (the "Trust"), a registered management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act") to
provide investment advisory services to the Trust with respect to certain series
of the Trust set forth in Schedule A hereto as may be amended from time to time
(hereinafter referred to as a "Fund" and collectively, the "Funds" of the
Trust);
WHEREAS, the Investment Adviser wishes to enter into a contract with
the Subadviser to provide research, analysis, advice and recommendations with
respect to the purchase and sale of securities, and make investment commitments
with respect to such portion of the Funds' assets as shall be allocated to the
Subadviser by the Investment Adviser from time to time (the "Allocated Assets"),
subject to oversight by the Trustees of the Trust and the supervision of the
Investment Adviser.
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and intending to be bound, the parties agree as follows:
1. In accordance with the Investment Advisory Agreement between the Trust and
the Investment Adviser ("Investment Advisory Agreement") with respect to the
Funds, the Investment Adviser hereby appoints the Subadviser to act as
Subadviser with respect to the Allocated Assets for the period and on the terms
set forth in this Agreement. The Subadviser accepts such appointment and agrees
to render the services set forth herein, for the compensation provided herein.
2. As compensation for the services enumerated herein, the Investment
Adviser will pay the Subadviser a fee with respect to the Allocated Assets,
which shall be calculated and payable monthly in arrears based on the average
daily net assets of the Fund, in an amount equal to 50% of the positive
difference , if any, of (x) the advisory fee payable to the Investment Adviser
with respect to the Allocated Assets of the Fund (before reduction of the fee
payable to Subadviser) minus (y) the sum of: (i) any investment advisory fees
waived by the Investment Adviser pursuant to an Expense Limitation Agreement
with the Fund, (ii) any reimbursement of expenses by the Investment Adviser
pursuant to an Expense Limitation Agreement with the Fund, and (iii) any
payments made by the Investment Adviser to third parties that provide
distribution, shareholder services or similar services on behalf of the Fund. If
the foregoing
F-1
calculation results in a negative difference, such amount shall be payable by
the Subadviser within _______________ days of receipt of notice from the
Investment Adviser, which notice shall include the basis for the calculation.
For the purposes of this Agreement, a Fund's "net assets" shall be
determined as provided in the Fund's then-current Prospectus (as used herein
this term includes the related Statement of Additional Information).
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 Subadviser's
compensation for such fraction of the month shall be prorated based on the
number of calendar days of such month during which the Agreement is effective.
3. This Agreement shall become effective with respect to a Fund as of
the date set forth opposite the Fund's name as set forth on Schedule A hereto
(the "Effective Date"), provided that it has been approved by the Trustees of
the Trust in accordance with the provisions of the 1940 Act and the rules
thereunder and, if so required by the 1940 Act and the rules thereunder, by the
shareholders of the Fund in accordance with the requirements of the 1940 Act and
the rules thereunder.
4. This Agreement shall continue in effect for the initial term set
forth in Schedule A. It shall be renewed automatically thereafter with respect
to a Fund by the Investment Adviser and the Subadviser for successive periods
not exceeding one year, if and only if 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 1940 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 with respect to a Fund
without the payment of any penalty upon termination of the Investment Advisory
Agreement relating to a Fund (accompanied by simultaneous notice to the
Subadviser) or upon sixty days' written notice to the Subadviser that the
Trustees of the Trust, the Investment Adviser or the shareholders by vote of a
majority of the outstanding voting securities of the Fund, as provided by the
1940 Act, have terminated this Agreement. This Agreement may also be terminated
by the Subadviser with respect to a Fund without penalty upon sixty days'
written notice to the Investment Adviser and the Trust.
This Agreement shall terminate automatically with respect to a Fund in
the event of its assignment or, upon notice thereof to the Subadviser, 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 if so required by the 1940 Act (in each case as the
term "assignment" is defined in Section 2(a)(4) of the 1940 Act, subject to such
exemptions as may be granted by the SEC by any rule, regulation, order or
interpretive guidance).
5. Subject to the supervision of the Board of Trustees of the Trust and
the Investment Adviser, the Subadviser will provide an investment program for
the Allocated Assets, including investment research and management with respect
to securities and investments,
F-2
including cash and cash equivalents, and will determine from time to time what
securities and other investments will be purchased, retained or sold. The
Subadviser will provide the services under this Agreement in accordance with
each Fund's investment objective, policies and restrictions as stated in the
Prospectus, as provided to the Subadviser by the Investment Adviser. The
Subadviser further agrees that, in all matters relating to the performance of
this Agreement, it:
(a) shall act in conformity with the Trust's Declaration of
Trust, By-Laws and currently effective registration statements under the 1940
Act and the Securities Act of 1933 and any amendments or supplements thereto
(the "Registration Statements") and with the written policies, procedures and
guidelines of each Fund, and written instructions and directions of the Trustees
of the Trust and shall comply with the requirements of the 1940 Act and the
Investment Advisers Act of 1940 and the rules thereunder, and all other
applicable federal and state laws and regulations. The Trust agrees to provide
Subadviser with copies of the Trust's Declaration of Trust, By-Laws,
Registration Statements, written policies, procedures and guidelines, and
written instructions and directions of the Trustees, and any amendments or
supplements to any of them at, or, if practicable, before the time such
materials, instructions or directives become effective.
(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 each Fund, provided that the Subadviser will not pay for or
provide a credit with respect to any research provided to it in accordance with
Section 5(c);
(c) will place orders pursuant to its investment
determinations for each Fund either directly with any broker or dealer, or with
the issuer. In placing orders with brokers or dealers, the Subadviser will
attempt to obtain the best overall price and the most favorable execution of its
orders. Subject to policies established by the Trustees of the Trust and
communicated to the Subadviser, it is understood that the Subadviser will not be
deemed to have acted unlawfully, or to have breached a fiduciary duty to the
Trust or in respect of a Fund, or be in breach of any obligation owing to the
Investment Adviser or the Trust or in respect of a 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
Subadviser determines in good faith that the commission paid was reasonable in
relation to the brokerage or research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934 and interpretive guidance
issued by the SEC thereunder) provided by such member, broker or dealer, viewed
in terms of that particular transaction or the Subadviser's overall
responsibilities with respect to the accounts, including the Fund, as to which
it exercises investment discretion.
(d) will review the daily valuation of securities owned by the
Allocated Assets of each Fund as obtained on a daily basis by the Fund's
administrator and furnished by it to Subadviser, and will promptly notify the
Trust and the Investment Adviser if the Subadviser believes that any such
valuations may not properly reflect the market value of any securities owned by
the Fund, provided, however, that the Subadviser is not required by this
sub-paragraph
F-3
to obtain valuations of any such securities from brokers or dealers or
otherwise, or to otherwise independently verify valuations of any such
securities.
(e) unless otherwise instructed, will be responsible for
voting all proxies of each Fund in accordance with the Proxy Voting Policies and
Guidelines of Subadviser (the "Proxy Policy"), provided that such Proxy Policy
and any amendments thereto are furnished to the Trust.
(f) will attend regular business and investment-related
meetings with the Trust's Board of Trustees and the Investment Adviser if
requested to do so by the Trust and/or the Investment Adviser, and at its
expense, shall supply the Board, the officers of the Trust, and the Investment
Adviser with all information and reports reasonably required by them and
reasonably available to the Subadviser relating to the services provided by the
Subadviser hereunder.
(g) will maintain books and records with respect to the
securities transactions for the Allocated Assets of each Fund and proxy voting
record for the Allocated Assets of the Fund, furnish to the Investment Adviser
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
Adviser all of the Subadviser's reports to the Trust's Board of Trustees for
examination and review within a reasonable time prior to the Trust's Board
meetings.
6. The Investment Adviser or its affiliates may, from time to time,
engage other subadvisers to advise other series of the Trust (or portions
thereof) or other registered investment companies (or series or portions
thereof) that may be deemed to be under common control (each a "Sub-Advised
Fund"). The Subadviser agrees that it will not consult with any other
unaffiliated subadviser engaged by the Investment Adviser or its affiliates with
respect to transactions in securities or other assets concerning a Fund or
another Sub-Advised Fund, except to the extent permitted by the rules under the
1940 Act that permit certain transactions with a subadviser or its affiliates.
7. Subadviser agrees with respect to the services provided to each Fund
that it:
(a) will promptly communicate to the Investment Adviser such
information relating to Fund transactions as the officers and Trustees of the
Trust may reasonably request and as communicated to the Subadviser; and
(b) will treat confidentially and as proprietary information
of the Trust all records and other information relative to each 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 Subadviser is advised by
counsel that the Subadviser may be exposed to civil or criminal contempt or
other proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust).
8. In compliance with the requirements of Rule 31a-3 under the 1940
Act, Subadviser acknowledges that all records which it maintains for the Trust
are the property of the
F-4
Trust and agrees to surrender promptly to the Trust any of such records upon the
Trust's request, provided, that Subadviser may retain copies thereof at its own
expense. Subadviser further agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under the 1940 Act relating to transactions placed by Subadviser for the
Fund. Subadviser further agrees to maintain each Fund's proxy voting record with
respect to the Allocated Assets in a form mutually agreeable between the parties
and which contains the information required by Form N-PX under the 1940 Act.
9. It is expressly understood and agreed that the services to be
rendered by the Subadviser to the Investment Adviser under the provisions of
this Agreement are not to be deemed to be exclusive, and the Subadviser 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. In addition, but without limiting any separate agreement
between the Subadviser and the Investment Adviser to the contrary, nothing in
this Agreement shall limit or restrict the right of any director, officer, or
employee of the Subadviser who may also be a Trustee, officer, or employee of
the Trust, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
10. The Investment Adviser agrees that it will furnish currently to the
Subadviser all information with reference to each Fund and the Trust that is
reasonably necessary to permit the Subadviser 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
Adviser will furnish to Subadviser procedures consistent with the Trust's
contract with each Fund's custodian from time to time (the "Custodian"), and
reasonably satisfactory to Subadviser, for consummation of portfolio
transactions for each 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
Subadviser shall not have possession or custody thereof or any responsibility or
liability with respect to such custody. Upon giving proper instructions to the
Custodian, Subadviser shall have no responsibility or liability with respect to
custodial arrangements or the acts, omissions or other conduct of the Custodian.
11. The Subadviser 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 Adviser 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 Subadviser of its duties under this agreement except that
nothing herein contained shall be construed to protect the Subadviser against
any liability by reason of the Subadviser'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.
12. 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 1940 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.
F-5
13. 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 as required by applicable law.
14. 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 Adviser at:
Aston Asset Management LLC
--------------------------
--------------------------
Attn:
--------------------
Facsimile:
---------------
To the Subadviser at:
--------------------------
--------------------------
Attn:
--------------------
Facsimile:
---------------
To a Fund or the Trust at:
Funds
-----------
--------------------------
--------------------------
Attn:
Facsimile:
or addressed as such party may from time to time designate by notice to other
parties in accordance herewith.
15. The Subadviser agrees that for any claim by it against a Fund in
connection with this Agreement or the services rendered under this Agreement, it
shall look only to assets of a Fund for satisfaction and that it shall have no
claim against the assets of any other portfolios of the Trust.
[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
F-6
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: ASTON ASSET MANAGEMENT LLC
By:
--------------------------------- --------------------------------
ATTEST: [Subadviser]
By:
--------------------------------- --------------------------------
F-7
SCHEDULE A
FUND EFFECTIVE DATE INITIAL TERM
---- -------------- ------------
APPENDIX G
SUBADVISORY FEE RATES AND AGGREGATE SUBADVISORY FEES PAID
FEES PAID TO
THE
SUBADVISER NET ASSETS AS
SUBADVISORY DURING LAST OF
FUND FEE RATE FISCAL YEAR 4/30/2006
--------------------- -------------------------- ------------ -------------
ABN AMRO Value Fund 0.40% of 1st $250 million $1,054,028 $330,746,782
0.35% of next $250 million
0.325% over $500 million
ABN AMRO Mid Cap Fund 0.30% of 1st $100 million $1,387,970 $680,243,815
0.25% of next $300 million
0.20% over $400 million
FEE RATES AND NET ASSETS OF FUNDS ADVISED BY SUBADVISERS
WITH INVESTMENT OBJECTIVES SIMILAR TO THOSE OF THE SUBADVISED FUNDS
NET ASSETS
SUBADVISER SIMILAR FUND FEE RATE AS OF 4/30/06
----------------------- ---------------------- --------------------------- ---------------
AAAM Penn Series Large Cap [____] [____]
Growth Fund
McDonnell SEI California Fund 0.18% of first $100 million $192, 315, 734
0.15% over $100 million
McDonnell SEI New Jersey Fund 0.18% of first $100 million $88,479,945
0.15% over $100 million
MFS MFS Institutional 0.60% of the fund's $122,400,000
Large Cap Fund average daily net assets
MFS MFS Value Fund 0.75% of the fund's $8,300,000,000
average daily net assets
MFS MFS Sun Life Series 0.75% of the fund's $456,600,000
Trust average daily net assets
MFS MFS VIT Value Series 0.75% of the fund's $228,200,000
average daily net assets
Montag & Caldwell SEI Institutional 0.20% of the fund's $49,840,119
Investment Trust average daily net assets
Large Cap Fund
Montag & Caldwell SEI Institutional 0.20% of the fund's $603,965,197
Managed Trust Large average daily net assets
Cap Growth Fund
Montag & Caldwell SEI Institutional 0.20% of the fund's $205,982,549
Managed Trust Tax- average daily net assets
Managed Large Cap
Fund
Montag & Caldwell SEI Global Master 0.20% of the fund's $149,325,176
Fund PLC - US Equity average daily net assets
Large Companies
Montag & Caldwell SEI Global Investments [____] [____]
Funds PLC - US Equity
Large Companies
G-1
NET ASSETS
SUBADVISER SIMILAR FUND FEE RATE AS OF 4/30/06
----------------------- ---------------------- --------------------------- ---------------
Montag & Caldwell SEI 0.20% of the fund's $68,212,578
Canada US Equity Fund average daily net assets
Montag & Caldwell Enterprise Growth 0.21% of the fund's $1,261,436,026
Fund average daily net assets
Montag & Caldwell WT Investment Trust - 0.33% of the fund's $24,744,359
Large Cap Multi-Manager average daily net assets
Series
Montag & Caldwell FRIC Diversified 0.21% of the fund's $320,613,316
Equity Fund average daily net assets
Montag & Caldwell FRIC Equity I Fund 0.21% of the fund's $139,284,737
average daily net assets
Montag & Caldwell RIF Multi-Style 0.21% of the fund's $50,396,634
Equity Fund average daily net assets
Montag & Caldwell FR (Canada) Sovereign 0.21% of the fund's $38,868,843
US Equity Fund average daily net assets
Montag & Caldwell FRCL Mutli-Style 0.21% of the fund's $102,848,491
Multi-Manager US average daily net assets
Equity Fund
Montag & Caldwell FRIC PLC (Ireland) US 0.21% of the fund's $166,455,442
Equity Fund average daily net assets
Montag & Caldwell FRAM (Cayman) US 0.21% of the fund's $44,916,332
Equity Fund LP average daily net assets
Montag & Caldwell FR (Canada) Russell 0.21% of the fund's $77,105,331
US Equity Fund average daily net assets
River Road HDE Fund 0.15% of the fund's $18,625,745
average daily net assets
River Road HIE Fund 0.15% of the fund's $631,133,416
average daily net assets
TAMRO Laudus Small-Cap Assets below or equal to $47,167,162
MarketMasters Fund $80 million - 0.70%
Assets over $80 million -
0.60%
Veredus Laudus Small-Cap Asset base below $25 [ ]
MarketMasters Fund million - 1.00%
Asset base between $25-$50
million - 0.85%
Asset base between
$50-$100 million - 0.75%
Asset base over $100
million - 0.75% on first
$100 million and 0.65%
over $100 million
Veredus Managers Special 0.50% of the fund's $706,139,122
Equity Fund average daily net assets
G-2
APPENDIX H
PRINCIPAL EXECUTIVE OFFICERS AND DIRECTORS OF SUBADVISERS
H-1
APPENDIX I
FUND SHARES OWNED BY TRUSTEES AND OFFICERS
The following table sets forth for each Trustee and for the Trustees and
officers as a group, the amount of shares beneficially owned in each Fund as of
the record date.
FUND SHARES OWNED BY TRUSTEES AND OFFICERS
-------------------------------------------------------------------------------------------------------------------
ABN AMRO
ABN AMRO INVESTMENT ABN AMRO
ABN AMRO ABN AMRO ABN AMRO HIGH YIELD GRADE BOND MID CAP
TRUSTEES BALANCED FUND BOND FUND GROWTH FUND BOND FUND FUND FUND
--------------------- ------------- --------- ----------- ---------- ---------- ---------
Leonard F. Amari..... 0 0 11,924 0 0 6,835
Robert A. Kushner.... 0 0 0 0 0 1,012
Gregory T. Mutz...... 0 0 0 0 0 0
Robert B. Scherer.... 0 0 0 2,830 0 1,600
Nathan Shapiro....... 0 0 0 0 0 0
Denis Springer....... 0 0 0 0 0 0
Stuart D. Bilton..... 0 0 15,733 0 0 0
Julian Ide........... 0 0 0 0 0 0
ALL TRUSTEES AND 688 522 33,165 3,451 0 11,036
OFFICERS AS A GROUP..
FUND SHARES OWNED BY TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------------------------------------------
ABN AMRO/
MONTAG & ABN AMRO/
ABN AMRO MID ABN AMRO ABN AMRO CALDWELL MONTAG &
CAP GROWTH MUNICIPAL REAL ESTATE ABN AMRO BALANCED CALDWELL
TRUSTEES FUND BOND FUND FUND VALUE FUND FUND GROWTH FUND
--------------------- ------------- --------- ----------- ---------- ---------- -----------
Leonard F. Amari..... 0 0 0 0 0 0
Robert A. Kushner.... 0 0 0 0 0 1,685
Gregory T. Mutz...... 0 0 0 0 0 0
Robert B. Scherer.... 0 0 0 0 0 0
Nathan Shapiro....... 0 0 0 0 0 0
Denis Springer....... 0 0 0 0 0 0
Stuart D. Bilton..... 0 75,799 0 0 0 34,482
Julian Ide........... 0 0 0 0 0 0
ALL TRUSTEES AND 0 76,794 2,186 0 79 39,278
OFFICERS AS A GROUP..
I-1
FUND SHARES OWNED BY TRUSTEES AND OFFICERS
-------------------------------------------------------------------------------------------------------------------
ABN ABN
AMRO/RIVER AMRO/RIVER ABN AMRO/ ABN AMRO/ ABN AMRO/ ABN AMRO/
ROAD DYNAMIC ROAD SMALL TAMRO TAMRO VEREDUS VEREDUS
EQUITY CAP VALUE LARGE CAP SMALL CAP AGGRESSIVE SCITECH
TRUSTEES INCOME FUND FUND VALUE FUND FUND GROWTH FUND FUND
--------------------- ------------ ---------- ----------- --------- ----------- ---------
Leonard F. Amari..... 0 0 19,731 7,081 5,843 0
Robert A. Kushner.... 0 0 0 0 0 0
Gregory T. Mutz...... 0 0 0 0 0 0
Robert B. Scherer.... 0 1,953 0 874 939 0
Nathan Shapiro....... 0 0 0 0 0 0
Denis Springer....... 0 0 0 0 0 0
Stuart D. Bilton..... 0 0 19,427 7,612 0 0
Julian Ide........... 0 0 0 0 0 0
ALL TRUSTEES AND 0 3,299 41,202 17,872 14,022 764
OFFICERS AS A GROUP..
FUND SHARES OWNED BY TRUSTEES AND
OFFICERS
---------------------------------------
ABN AMRO/
VEREDUS
SELECT
TRUSTEES GROWTH FUND
--------------------- -----------
Leonard F. Amari..... 0
Robert A. Kushner.... 0
Gregory T. Mutz...... 0
Robert B. Scherer.... 0
Nathan Shapiro....... 0
Denis Springer....... 0
Stuart D. Bilton..... 0
Julian Ide........... 0
ALL TRUSTEES AND 2,034
OFFICERS AS A GROUP..
I-2
PROXY
ABN AMRO FUNDS
ABN AMRO BALANCED FUND
ABN AMRO BOND FUND
ABN AMRO GROWTH FUND
ABN AMRO HIGH YIELD BOND FUND
ABN AMRO INVESTMENT GRADE BOND FUND
ABN AMRO MID CAP FUND
ABN AMRO MID CAP GROWTH FUND
ABN AMRO MUNICIPAL BOND FUND
ABN AMRO REAL ESTATE FUND
ABN AMRO VALUE FUND
ABN AMRO/MONTAG & CALDWELL BALANCED FUND
ABN AMRO/MONTAG & CALDWELL GROWTH FUND
ABN AMRO/RIVER ROAD DYNAMIC EQUITY INCOME FUND
ABN AMRO/RIVER ROAD SMALL CAP VALUE FUND
ABN AMRO/TAMRO LARGE CAP VALUE FUND
ABN AMRO/TAMRO SMALL CAP FUND
ABN AMRO/VEREDUS AGGRESSIVE GROWTH FUND
ABN AMRO/VEREDUS SCITECH FUND
ABN AMRO/VEREDUS SELECT GROWTH FUND
THIS PROXY IS BEING SOLICITED BY THE BOARD OF TRUSTEES OF ABN AMRO FUNDS.
The undersigned hereby appoints Teresa Hamlin and Aaron Remorenko, 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 Balanced
Fund, ABN AMRO Bond Fund, ABN AMRO Growth Fund, ABN AMRO High Yield Bond Fund,
ABN AMRO Investment Grade Bond Fund, ABN AMRO Mid Cap Fund, ABN AMRO Mid Cap
Growth Fund, ABN AMRO Municipal Bond Fund, ABN AMRO Real Estate Fund, ABN AMRO
Value Fund, ABN AMRO/Montag & Caldwell Balanced Fund, ABN AMRO/Montag & Caldwell
Growth Fund, ABN AMRO/River Road Dynamic Equity Income Fund, ABN AMRO/River Road
Small Cap Value Fund, ABN AMRO/TAMRO Large Cap Value Fund, ABN AMRO/TAMRO Small
Cap Fund, ABN AMRO/Veredus Aggressive Growth Fund, ABN AMRO/Veredus SciTech
Fund, and ABN AMRO/Veredus Select Growth Fund held of record by the undersigned
on June 15, 2006, at the special meeting of shareholders to be held on August
25, 2006, and any postponement or adjournments thereof.
By signing and dating the lower portion of this card, you authorize the proxies
to vote the proposal as marked, or, if not marked, to vote "For" 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.
Please sign name or names as printed on the 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.
Rather than mailing in your proxy, you may vote by telephone or over the
Internet using the toll-free telephone number or web address printed on this
proxy card. These options require you to input the control number located on
your proxy card. After inputting the control number, you may enter your vote
on the proposal. You will have an opportunity to review your vote and make any
necessary changes before submitting your vote and terminating the telephone call
or Internet link.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSAL.
THE BOARD OF TRUSTEES OF ABN AMRO FUNDS RECOMMENDS THAT YOU VOTE "FOR" THE
PROPOSAL.
Please vote by filling in the box below:
[SEPARATE CARD BY FUND]
1. To approve a new investment advisory agreement between each Fund and
Aston Asset Management LLC ("Aston").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To approve a new subadvisory agreement between Aston and each
subadviser below:
(a) (For shareholders of ABN AMRO Growth Fund, ABN AMRO Mid Cap
Growth Fund, ABN AMRO Real Estate Fund and ABN AMRO High Yield Bond Fund) to
approve a new subadvisory agreement between Aston and ABN AMRO Asset Management,
Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) (For shareholders of ABN AMRO/Montag & Caldwell Growth Fund and
ABN AMRO/Montag & Caldwell Balanced Fund) to approve a new subadvisory agreement
between Aston and Montag & Caldwell, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) (For shareholders of ABN AMRO/River Road Dynamic Equity Income
Fund and ABN AMRO/River Road Small Cap Value Fund) to approve a new subadvisory
agreement between Aston and River Road Asset Management LLC;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(d) (For shareholders of ABN AMRO/TAMRO Large Cap Value Fund and ABN
AMRO/TAMRO Small Cap Fund) to approve a new subadvisory agreement between Aston
and TAMRO Capital Partners LLC;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(e) (For shareholders of ABN AMRO/Veredus Select Growth Fund, ABN
AMRO/Veredus Aggressive Growth Fund and ABN AMRO/Veredus SciTech Fund) to
approve a new subadvisory agreement between Aston and Veredus Asset Management
LLC;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(f) (For shareholders of ABN AMRO Value Fund) to approve a new
subadvisory agreement between Aston and MFS Institutional Advisors, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(g) (For shareholders of ABN AMRO Mid Cap Fund) to approve a new
subadvisory agreement between Aston and Optimum Investment Advisors, LP;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(h) (For shareholders of ABN AMRO Bond Fund and ABN AMRO Investment
Grade Bond Fund) to approve a new subadvisory agreement between Aston and
Taplin, Canida & Habacht, Inc.;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(i) (For shareholders of ABN AMRO Municipal Bond Fund) to approve a
new subadvisory agreement between Aston and McDonnell Investment Management,
LLC;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(j) (For shareholders of ABN AMRO Balanced Fund) to approve a new
subadvisory agreement between Aston and ABN AMRO Asset Management, Inc. for the
equity component of the portfolio and between Aston and Taplin, Canida &
Habacht, Inc. for the fixed income component of the portfolio; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To approve a "manager of managers" structure for each Fund that, if
approved by the Board of Trustees in the future, would permit the investment
adviser to hire and replace subadvisers and to modify subadvisory agreements
without shareholder approval.
[ ] FOR [ ] AGAINST [ ] ABSTAIN