SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant toss.240.14a-12
THE JENSEN PORTFOLIO, INC.
(Name of Registrant as Specified In Its Charter)
(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: Common
Stock, par value $.001 per share
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
The Jensen Portfolio, Inc.
2130 Pacwest Center
1211 SW Fifth Avenue
Portland, OR 97204-3721
June 22, 2001
Dear Fellow The Jensen Portfolio, Inc. Shareholder:
At The Jensen Portfolio, Inc., we continue to devise strategies and
implement changes to best serve our shareholders. Last month, for example, we
announced the implementation of a Shareholder Servicing Plan to ensure that your
needs as a shareholder of the Fund are adequately met. At the same time, we were
able to share with you some of the accolades received from The Wall Street
Journal, New York Times, Business Week, Mutual Funds, Morningstar.com, Black
Enterprise, and Investment Advisor regarding the performance of the Fund.
We continue to fashion an organization able to outsource critical tasks
such as marketing and shareholder services to established experts. The following
proposals are a continuation of these efforts. A special meeting of shareholders
will be held for the Fund at 3:00 p.m., Pacific Time, on Thursday, July 26,
2001, at the location noted on the enclosed proxy statement. To help you review
the issues you are being asked to consider and approve, I would like to
highlight the proposed changes.
Approving the Fund's Board of Directors
The Fund is asking you to approve its Board of Directors. Currently, the
Fund has six board members, three of whom work for Jensen Investment Management,
Inc.--the Fund's investment adviser. Recent law changes require certain mutual
fund boards to be comprised of a majority of directors who are independent from
the investment adviser by July 1, 2002. Federal law also requires that, at all
times, at least two-thirds of the board be comprised of directors elected by
shareholders. Currently, exactly two-thirds of the Fund's directors have been
elected by shareholders. In preparing to meet both of requirements, the Fund's
nomination committee (consisting of the Fund's three independent directors)
anticipates seeking out a fourth independent director; however, the addition of
such a director will reduce the percentage of directors approved by shareholders
below the required two-thirds. As a result of these requirements, you are being
asked to approve all six directors that would continue to serve on the Fund's
board after the shareholder meeting.
The Ability to Manage the Fund Effectively
The second proposal is to approve an amended investment advisory agreement
that will eliminate the guaranteed expense waiver or reimbursement currently
provided to the Fund. Currently, the investment adviser is contracted under the
investment advisory agreement to reimburse certain expenses of the Fund if the
expenses surpass certain thresholds. This requirement may hinder the investment
adviser's ability to effectively perform its duties of managing the Fund and
providing competent management staff. The proposed change removes the expense
reimbursement language from the investment advisory agreement. The removal of
the language does not change the rate of fees currently paid to the investment
adviser, but it may change the amount of overall expenses the Fund is subject to
pay. Keep in mind, however, that during the last four fiscal years, the Fund's
actual expenses have never exceeded the limits stated in the current investment
advisory agreement. Furthermore, the management fee rates for the Fund have not
been modified since the Fund was started in 1992, and the Fund is not proposing
an increase in management fees with this proxy. Management fees support the
compensation of portfolio managers and support staff, as well as the ever more
complex technology and research needs. The proposed investment advisory
agreement will ensure that the investment adviser can continue to meet these
needs while preserving its low management fee, which is below the average for
similar funds. Finally, the investment adviser has agreed to enter into a
separate Expense Waiver and Reimbursement Agreement under which it agrees to
limit the expenses of the Fund to 1.40% of the Fund's average daily net asset on
an annual basis, which is in line with the industry average. This agreement is a
one-year agreement and may be renewed by the Fund's Board of Directors. The
Expense Waiver and Reimbursement Agreement does not require shareholder
approval.
12b-1 Fees Will Serve You
The third proposal is designed to attract additional shareholders in order
to spread expenses across a larger asset base. In today's investing world,
mutual funds must be able to reach the broadest spectrum of investors. 12b-1
plans provide a method to reimburse financial intermediaries for their marketing
and distribution expenses. Therefore, a maximum 12b-1 fee of 0.10% of average
daily net assets for all shares of the Fund is being proposed.
Revisiting the Fund's Fundamental Investment Restrictions
The last proposal is a proposal to update the Fund's fundamental investment
restrictions to allow the Fund to invest in securities in accordance with the
Investment Company Act of 1940 and to provide the Fund with more flexibility
regarding its cash investments. Currently, the Fund follows a policy that allows
it to invest up to 10% of its total assets in cash investments. As the stock
market has indicated over the last few months, there are times when cash
investments would be more advisable than investing in stocks. The Fund is
proposing that the fundamental limitation for investments in cash be raised to
25% of its total assets and changed to a non-fundamental investment restriction.
Although changing a non-fundamental investment restriction requires approval
from the Fund's Board of Directors, it does not require approval from
shareholders before it is changed. The Fund is also proposing that the
definition of cash and cash equivalents be revised to include other possible
cash investments such as institutional grade paper. Finally, the Fund is
suggesting that three other investment restrictions be reworded to provide for
any exceptions permitted under the Investment Company Act of 1940.
YOUR VOTE IS IMPORTANT!
Please vote by completing, signing and returning the enclosed proxy ballot
to us immediately. Or if you choose, you may vote by telephone. Your prompt
response will help avoid the cost of additional mailings. If you have any
questions, please call your Customer Service Representative at 1-800-221-4384,
Monday through Friday, from 9:00 a.m. to 5:00 p.m., Pacific Time.
Sincerely,
/s/ VAL JENSEN
----------------------
Val Jensen, President
The Jensen Portfolio, Inc.
2130 Pacwest Center
1211 SW Fifth Avenue
Portland, OR 97204-3721
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held July 26, 2001
A Special Meeting of Shareholders (the "Meeting") of The Jensen Portfolio,
Inc. (the "Fund") will be held at the Multnomah Athletic Club, 1849 SW Salmon
Street, Portland, Oregon 97207-0390 on Thursday, July 26, 2001, at 3:00 p.m.,
Pacific Time, for the following purposes:
(1) To elect six Directors of the Fund to hold office until their respective
successors have been duly elected and qualified;
(2) To approve an amended Investment Advisory Agreement between the Fund and
Jensen Investment Management, Inc.;
(3) To approve the institution of a Distribution Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940;
(4) To approve revisions to six of the Fund's fundamental policies and to make
two of the Fund's fundamental policies non-fundamental policies;
(5) To transact such other business as may properly come before the Meeting or
any adjournments thereof.
The Board of Directors of the Fund recommends that you vote in favor of each
proposal.
The Board of Directors has fixed the close of business on June 15, 2001 as
the record date (the "Record Date") for determining the shareholders who are
entitled to receive notice of the Meeting and to vote their shares at the
Meeting or any adjournments or postponements thereof. You are entitled to cast
one vote for each full share and a fractional vote for each fractional share
that you own on the Record Date.
/s/ GARY HIBLER
----------------
Gary W. Hibler
Secretary
Portland, Oregon
June 22, 2001
Your vote is important. Whether or not you intend to attend the Meeting,
please fill in, date, sign and promptly return the enclosed proxy card in the
postage paid return envelope provided in order to avoid the additional expense
of further proxy solicitation and to ensure that a quorum will be present at the
meeting. Your proxy is revocable at any time before its use. You may also vote
by telephone by calling 1-800-690-6903.
Questions and Answers
What proposals am I being asked to vote on?
You are being asked to vote on the following proposals:
1. The election of six Directors of the Fund
2. To approve an amended Investment Advisory Agreement
3. To approve a Distribution Plan (12b-1 Plan)
4. To approve changes to six of the Fund's fundamental investment
restrictions
Has the Board of Directors approved the Proposals?
Yes. The Board of Directors unanimously approved these proposals on June
14, 2001 and June 21, 2001, and recommends that you vote to approve each
proposal.
Why is the Fund having a Shareholder Meeting?
Under federal law, the Fund, as an investment company, must elect directors
so that at least two-thirds of the directors have been elected by
shareholders. The Fund anticipates appointing a new independent director
within the next year, which would put the Fund out of compliance with this
law. The Fund must also obtain your approval to amend the Investment
Advisory Agreement, to implement a Distribution Plan under Rule 12b-1 and
to make certain changes to some of its fundamental investment restrictions.
When and where will the Shareholder Meeting be held?
The Shareholder Meeting will be held on July 26, 2001 at the Multnomah
Athletic Club, 1849 SW Salmon Street, Portland, Oregon 97207-0390.
Why does the Fund need to revise its investment advisory agreement?
The Investment Company Act of 1940 (the "1940 Act") requires that
shareholders approve any material changes to investment advisory
agreements. The directors of the Fund agree with the investment adviser
that the investment advisory agreement should provide the investment
adviser with more flexibility by removing specific reimbursement language
from the agreement and creating a separate one-year Expense Waiver and
Reimbursement Agreement that does not require shareholder approval. The
Expense Waiver and Reimbursement Agreement would have a different expense
"cap" or limitation than that in the original investment advisory
agreement. This change may enable the Fund's investment adviser to manage
the Fund more efficiently by allocating additional resources to technology
and research needs and compensating portfolio managers and support staff.
Will the Fund pay greater management fees to the adviser?
No. The proposed revised investment advisory agreement is identical to the
current investment advisory agreement, except that the expense waiver
language has been removed. Under the current investment advisory agreement,
the investment adviser must absorb a portion of the Fund's expenses if the
expenses exceed certain thresholds. Such requirements could potentially
restrict the investment adviser's ability to adequately service the Fund.
The proposed revised agreement will no longer require the investment
adviser to provide any waiver or reimbursement to the Fund. Similar
provisions will be enforced under a separate agreement; however, the waiver
or reimbursement requirements will be at different threshold levels than
those in the current investment advisory agreement and will only be in
effect for one year. Removing the expense waiver or reimbursement language
from the investment advisory agreement could require the Fund as a whole to
pay for more of its own expenses, but the management fee rates paid to the
investment adviser will remain unchanged. Furthermore, during the last four
fiscal years, the Fund's actual expenses have never exceeded the limits
provided for in the current investment advisory agreement and do not exceed
the limits provided for under the proposed Expense Waiver and Reimbursement
Agreement.
Why does the Fund need a Distribution Plan?
The directors are aware that attracting more shareholders to the Fund will
help spread the expenses of the Fund across a larger asset base.
Implementing a Distribution Plan will provide the Fund with a means to
actively market the Fund to potential new shareholders. With a Distribution
Plan in place, broker-dealers and other financial institutions can be
reimbursed directly from the Fund's assets for their marketing and
distribution expenses. The 1940 Act requires shareholder approval of a
Distribution Plan implemented in accordance with Rule 12b-1 under the 1940
Act.
Why should certain fundamental investment restrictions of the Fund's be changed?
The 1940 Act requires shareholder approval for any changes to policies
considered "fundamental." One of the Fund's policies limits the Fund's cash
and cash equivalent investments to 10 percent of its assets. This amount
prevents the investment adviser from being as flexible as it would like
when making investment decisions in your best interest. Increasing this
limit to 25% of Fund's assets will enhance the investment adviser's
flexibility in making investment decisions. Furthermore, the investment
adviser desires increased flexibility in its choices of cash vehicles. The
current definition of cash and cash equivalents is too exclusive, limiting
the Fund's options. The Fund's Board of Directors believes it would be in
the best interest of shareholders to expand the definition of cash and to
change this fundamental policy to a non-fundamental policy, allowing the
Board of Directors to monitor and make any changes to the amount of the
Fund's cash investments without shareholder approval.
The Board of Directors also agreed that three of the Fund's other
fundamental investment restrictions should be reworded to allow for any
exceptions available under the 1940 Act. Specifically, the Fund's
fundamental investment restrictions prohibit the Fund from (1) borrowing
money; (2) making loans; and (3) investing in other investment companies.
The Board of Directors would still like to generally prohibit these types
of investments practices; however, in the event the Fund would need to do
so, the Board would recommend that the Fund be permitted to engage in such
activities in accordance with the 1940 Act.
How do I vote my shares?
You can vote your shares by completing and signing the enclosed proxy card,
and mailing it in the enclosed postage paid envelope. You may also vote
your shares by phone at 1-800-690-6903. If you need assistance, or have any
questions regarding the proposals or how to vote your shares, please call
the Fund at 1-800-221-4384.
The Jensen Portfolio, Inc.
2130 Pacwest Center
1211 SW Fifth Avenue
Portland, OR 97204-3721
PROXY STATEMENT
GENERAL INFORMATION:
The Board of Directors of The Jensen Portfolio, Inc., an Oregon corporation
(the "Fund"), are soliciting your proxy for use at a Special Meeting of
Shareholders or any adjournment thereof (the "Meeting"), to be held at the
Multnomah Athletic Club, 1849 SW Salmon Street, Portland, Oregon 97207-0390 on
Thursday, July 26, 2001, at 3:00 p.m., Pacific Time, to approve proposals that
have already been approved by the Fund's Board of Directors (the "Board"). For
your convenience, we have divided this proxy statement into four parts:
Part 1-- An Overview
Part 2-- The Proposals
Part 3-- More on Proxy Voting
Part 4-- Additional Information
Your vote is important! You should read the entire proxy statement before
voting. If you have any questions, please call the Fund at 1-800-221-4384. Even
if you sign and return the accompanying proxy card, you may revoke it by giving
written notice of such revocation to the Secretary of the Fund prior to the
Meeting or by delivering a subsequently dated proxy card or by attending and
voting at the Meeting in person. Management of the Fund ("Management") expects
to solicit proxies principally by mail, but Management, or agents appointed by
Management, may also solicit proxies by telephone or personal interview.
Automatic Data Processing, Inc. has been retained to serve as the Fund's proxy
solicitor. If solicitation is required, ADP will be paid proxy solicitation fees
of approximately $3,000. The costs of solicitation will be borne by the Fund. If
the Fund records votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that their instructions have been properly recorded. Proxies voted by telephone
may be revoked at any time before they are voted in the same manner that proxies
voted by mail may be revoked.
We began mailing this Notice of Annual Meeting, Proxy Statement and Proxy
Card to shareholders of record on or about June 26, 2001.
The Fund is required by federal law to file reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). The
SEC maintains a Website that contains information about the Fund (www.sec.gov).
Any such proxy material, reports and other information can be inspected and
copied at the public reference facilities of the SEC, 450 Fifth Street, N.W.,
Washington DC 20549. Copies of such materials can be obtained from the Public
Reference Branch, Office of Consumer Affairs and Information Services of the SEC
at 450 Fifth Street, N.W., Washington DC 20549, at prescribed rates.
A copy of the Fund's Annual Report for the fiscal year ended May 31, 2001
has been included with this mailing. For an additional free copy of the Fund's
Annual Report for the fiscal year ended May 31, 2001, and the Fund's Semi-Annual
Report for the six months ended November 30, 2000, call 1-800-221-4384 or write
to The Jensen Portfolio c/o Firstar Mutual Fund Services, LLC, P.O. Box 701,
Milwaukee, Wisconsin, 53201-0701. These reports are also available on the SEC's
Website, www.sec.gov.
PART 1 - AN OVERVIEW
This Proxy Statement is being furnished by the Board in connection with the
solicitation of proxies by the Board of Directors for use at the Special Meeting
of its shareholders, or any adjournment thereof, to be held at the Multnomah
Athletic Club, 1849 SW Salmon Street, Portland, Oregon 97207-0390 on Thursday,
July 26, 2001, at 3:00 p.m., Pacific Time.
The Board of Directors has fixed the close of business on June 15, 2001 as
the record date (the "Record Date") for determining the shareholders who are
entitled to notice of the Meeting and to vote their shares at the Meeting or any
adjournments or postponements thereof. Shareholders are entitled to cast one
vote for each full share and a fractional vote for each fractional share they
own on the Record Date.
The Fund is a registered investment company organized as an Oregon
corporation. The Fund's mailing address is The Jensen Portfolio c/o Firstar
Mutual Fund Services, LLC, P.O. Box 701, Milwaukee, Wisconsin, 53201-0701. The
Fund commenced operations on August 3, 1992.
PART 2 - THE PROPOSALS
PROPOSAL 1
THE ELECTION OF DIRECTORS
The persons named as proxies on the proxy card enclosed with this Proxy
Statement intend to vote at the Meeting for the election of the nominees named
below (the "Nominees") to serve as Directors of the Fund until the next annual
meeting or until their successors are duly elected and qualified. All of the
nominees are now serving on the Fund's Board.
Four of the Nominees--Norman Achen, Val Jensen, Gary Hibler and Robert
Zagunis--were previously elected as a director of the Fund by the Fund's
shareholders at a meeting of shareholders held on September 12, 1994. The other
two Nominees--Roger Cooke and Robert Harold-were elected by the Board on June
25, 1999 and September 19, 2000, respectively. Each Nominee has consented to be
named in this Proxy Statement and has agreed to serve if elected. If any Nominee
should be unable to serve, an event not now anticipated, the persons named as
proxies will vote for such other nominee as may be proposed by the Nominating
Committee and Management.
Information Concerning Nominees
The following tables set forth the ages, positions and offices with the
Fund, principal occupation or employment during the past five years and other
directorships, if any, of each Nominee. The first table provides the information
for the independent directors. The second table provides the information of the
interested directors as defined by the Investment Company Act of 1940 (the "1940
Act"). The Jensen Portfolio, Inc. only consists of one portfolio, which is
overseen by all of the directors.
Independent Directors
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Name Age Positions with the Principal Occupation or Employment; Other Directorships
Fund
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Norman W. Achen 79 Independent Director President of N.W. Achen Professional Corporation, a
since 1992 consulting firm, (1980 - present); Chairman and CEO of the
Achen Group, a healthcare investment and management
consulting firm, (1992 - 2001); Consultant of
Nichols Institute, Inc. (1981 - 1993); Director
of Nichols Institute, Inc. (1991 - 1993);
Founder and Chairman of Overland Bank in Temecula, California
(1982 - 1991).
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Roger A. Cooke 53 Independent Director Vice President - Regulatory and Legal Affairs of Precision
since 1999 Castparts Corp., a worldwide manufacturer of complex metal
components and products, (2000 - present); Executive Vice President
- Regulatory and Legal Affairs of Fred Meyer, Inc., a retail grocery
and general merchandise company, (1992 - 2000);
Deputy General Counsel and Secretary of Pan American World Airways,
Inc. (1981 - 1990); Senior Vice President and General Counsel of
Pan American World Airways, Inc. (1990 - 1992).
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Robert E. Harold 53 Independent Director Global Brand Controller for Nike, Inc. (shoes and apparel
since 2000 company), (1996, 1997, 2000 - present); CFO (interim) for
Nike, Inc. (1998, 1999); Director for StoriedLearning,
Inc., an electronic learning company, (2000 - present);
Director, St. Mary's Academy, a non-profit high school,
(2000 - present).
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Interested Directors*
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Name Age Positions with the Principal Occupation or Employment; Other Directorships
Fund
- ------------------------ ------ ----------------------- ------------------------------------------------------------
Gary W. Hibler, Ph.D. 57 Director and Secretary President of Jensen Investment Management (1994 -
present); Secretary of Jensen Investment Management (1994
- 1999); Director of Operations of Nichols Institute,
Inc., San Juan Capistrano, California, a publicly held
health care company (1987 - 1991); President, Chief
Executive Officer and a director of Medlab, Inc. of
Portland, Oregon, a clinical laboratory (1974 - 1986)
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Val E. Jensen 72 Director and Chairman and Director of Jensen Investment Management,
President Inc., (1988 - present); President and Director of The
Jensen Portfolio, Inc., (1992 - present); President of
Jensen Securities Co., a registered securities brokerage
firm, (1983 - 1990); President of Charter Investment
Group, a registered securities brokerage firm, (1977 -
1983).
- ----------------------- ------- ----------------------- ------------------------------------------------------------
Robert F. Zagunis 47 Director and Vice Principal of Jensen Investment Management, Inc., 1993 -
President present; Vice President of The Jensen Portfolio, 1993 -
Present; Director, WorldVoice.com, Inc. (an internet
telecommunications company), January 2001 - present; Director,
Audio & Media, Inc. (a digital audio service provider),
January 2001 - present; Vice President and Loan Officer of The Bank of
California (1987 - 1993).
- ----------------------- ------- ----------------------- ------------------------------------------------------------
*The individuals in this table are each "interested persons" of the Fund within
the meaning of the 1940 Act. None of these directors receives director fees,
salaries, pension or retirement benefits from the Fund.
The Fund's Board held five meetings during the fiscal year ended May 31,
2001 and each nominee attended at least 75% of these meetings.
The Bylaws of the Fund provide that the Fund will indemnify its officers
and Directors to the extent and subject to the conditions prescribed by the
Oregon Business Corporation Act, the 1940 Act, and the rules and regulations
thereunder, and subject to such other conditions as the Board of Directors may
in its discretion impose.
To the extent permitted by the Oregon Business Corporation Act, the 1940
Act, and the rules and regulations thereunder, the Fund may purchase and
maintain on behalf of any person who may be indemnified under the Bylaws,
insurance covering any risks in respect of which he may be indemnified by the
Fund.
Compensation of and Transactions with Executive Officers and Directors
The following tables describe the compensation paid from the Fund during
the last fiscal year to each director and Nominee.
Independent Directors
- ---------------------- -------------------- -------------------------------- -------------------------
Name of Person Total Compensation Pension or Retirement Benefits Estimated Annual
From Fund Accrued as Part of Fund Benefit Upon Retirement
Expenses
- ---------------------- -------------------- -------------------------------- -------------------------
Norman W. Achen $7,250 None None
- ---------------------- -------------------- -------------------------------- -------------------------
Roger A. Cooke $7,250 None None
- ---------------------- -------------------- -------------------------------- -------------------------
Robert E. Harold $6,750 None None
- ---------------------- -------------------- -------------------------------- -------------------------
Louis B. Perry* $4,500 None None
- ---------------------- -------------------- -------------------------------- -------------------------
* Louis Perry is a director emeritus as he resigned as a director of the Fund in
December 2000 and has not received compensation from the Fund since then. Mr.
Perry has no voting power as a director emeritus and as such is not considered
to be a "director" under the 1940 Act standards. Mr. Perry is not a Nominee.
Interested Directors
- ---------------------- -------------------- -------------------------------- -------------------------
Name of Person Total Compensation Pension or Retirement Benefits Estimated Annual
From Fund Accrued as Part of Fund Benefit Upon Retirement
Expenses
- ---------------------- -------------------- -------------------------------- -------------------------
Gary W. Hibler None None None
- ---------------------- -------------------- -------------------------------- -------------------------
Val E. Jensen None None None
- ---------------------- -------------------- -------------------------------- -------------------------
Robert F. Zagunis None None None
- ---------------------- -------------------- -------------------------------- -------------------------
Security Ownership of Officers and Directors and Nominees
The following tables set forth information as of May 31, 2001, with respect
to beneficial ownership of the Fund's Common Stock, par value $0.001 per share,
by directors individually and officers and directors as a group.
Independent Directors
- ----------------------------- ---------------------------- --------------------------- ----------------------------
Name of Director Dollar Amount of Equity Number of Shares and Percentage of Total
Securities in the Fund Nature of Beneficial Outstanding Shares of
Ownership Common Stock
- ----------------------------- ---------------------------- --------------------------- ----------------------------
Norman W. Achen $362,408 16,832.7 0.79%
- ----------------------------- ---------------------------- --------------------------- ----------------------------
Roger A. Cooke $257,634 11,966.3 0.56%
- ----------------------------- ---------------------------- --------------------------- ----------------------------
Robert E. Harold $ 49,091 2,280.1 0.11%
- ----------------------------- ---------------------------- --------------------------- ----------------------------
Interested Officers/Directors
- ----------------------------- --------------------------- -------------------------- --------------------------
Name of Director or Officer Dollar Amount of Equity Number of Shares and Percentage of Total
Securities in the Fund Nature of Beneficial Outstanding Shares of
Ownership Common Stock
- ----------------------------- --------------------------- -------------------------- --------------------------
Gary W. Hibler $768,755 35,706.2 1.68%
- ----------------------------- --------------------------- -------------------------- --------------------------
Val E. Jensen $ 96,957 4,503.4 0.21%
- ----------------------------- --------------------------- -------------------------- --------------------------
Robert F. Zagunis $ 2,801 130.1 0.01%
- ----------------------------- --------------------------- -------------------------- --------------------------
Total For All Officers and Directors as a Group
- ----------------------------- --------------------------- -------------------------- --------------------------
Dollar Amount of Equity Number of Shares and Percentage of Total
Securities in the Fund Nature of Beneficial Outstanding Shares of
Ownership Common Stock
- ----------------------------- --------------------------- -------------------------- --------------------------
Total (as a group) $1,537,646 71,418.8 3.35%
- ----------------------------- --------------------------- -------------------------- --------------------------
Directors are elected by the affirmative vote of a plurality of the shares
present in person or by proxy at the Meeting. A plurality of shares is the
number of votes cast for a winning Nominee if this number is less than a
majority, but more than that cast for any other Nominee.
The Board of Directors recommends that you vote FOR
election of each of the Nominees under Proposal 1.
PROPOSAL 2
THE APPROVAL OF A REVISED INVESTMENT ADVISORY AGREEMENT
General Information
The Board, including a majority of the independent directors, none of whom
has any direct or indirect financial interest in the Advisory Agreement, is
asking shareholders of the Fund to approve an amended Advisory Agreement (the
"Proposed Advisory Agreement") with the Fund's investment adviser, Jensen
Investment Management, Inc. (the "Adviser"). As explained in more detail below,
the primary change to the Advisory Agreement is to remove the Adviser's
guarantee that operating expenses will not exceed certain limits. This change is
intended to give the Adviser the financial ability to serve the Fund better. The
Adviser, located at 2130 Pacwest Center, 1211 SW Fifth Avenue, Portland, Oregon
97204-3721, serves as the Fund's investment adviser pursuant to a Restated
Investment Advisory and Service Contract dated July 13, 1993, (the "Current
Advisory Agreement"). The Adviser is registered with the SEC under the
Investment Advisers Act of 1940. As of May 31, 2001, the Adviser managed assets
totaling approximately $200 million. The Current Advisory Agreement was last
submitted to the Fund's public shareholders for approval at the 1993 annual
shareholder meeting. The purpose of the 1993 shareholder vote on the Current
Advisory Agreement was to approve a change to the agreement, which reflected the
termination of an affiliated distributor. The agreement was changed at that time
to reflect the Adviser as providing distribution services on behalf of the Fund.
The Current Advisory Agreement continues in effect from year to year if
such continuance is specifically approved at least annually either (i) by the
Board of Directors of the Fund, or (ii) by vote of a majority of the outstanding
voting securities of the Fund; provided that, in either event, continuance is
also approved by a majority of the Fund's directors who are not parties to the
Current Advisory Agreement, or "interested persons" of the parties to the
Current Advisory Agreement, at a meeting called for the purpose of voting on
such approval.
As of May 31, 2001, the officers and directors of the Adviser, which are
all located at 2130 Pacwest Center, 1211 SW Fifth Avenue, Portland, Oregon
97204-3721, are listed below with their ownership interest in the Adviser:
- ----------------------------- --------------------------- -------------------------- --------------------------
Name Position with Adviser Principal Occupation Percent Ownership of
Total Outstanding Stock
- ----------------------------- --------------------------- -------------------------- --------------------------
Val E. Jensen Chairman, Principal and Chairman and Principal 36.64%
Director of the Adviser
- ----------------------------- --------------------------- -------------------------- --------------------------
Gary W. Hibler President, Principal and President and Principal 24.61%
Director of the Adviser
- ----------------------------- --------------------------- -------------------------- --------------------------
Robert F. Zagunis Vice President, Principal Vice President and 18.93%
and Director Principal of the Adviser
- ----------------------------- --------------------------- -------------------------- --------------------------
Robert G. Millen Principal and Director Principal of the Adviser 15.00%
- ----------------------------- --------------------------- -------------------------- --------------------------
David S. Davies Principal, Treasurer and Principal of the Adviser 1.67%
Secretary
- ----------------------------- --------------------------- -------------------------- --------------------------
Shareholders must approve any material change to the Current Advisory
Agreement. Accordingly, at the Meeting, shareholders are being asked to approve
a Proposed Advisory Agreement between the Fund and the Adviser. The Board,
including a majority of the independent directors, approved the Proposed
Advisory Agreement at a meeting held on June 14, 2001. A form of the Proposed
Advisory Agreement is attached as Appendix A. The Fund will not pay any
additional advisory or management fees under the Proposed Advisory Agreement. If
approved, the Adviser will have the same duties and responsibilities and will
receive the same compensation under the Proposed Advisory Agreement as it does
under the Fund's current investment advisory agreement. If the Proposed Advisory
Agreement is approved, however, the Fund may pay more in expenses (although in
each of the last four fiscal years, the Fund's expenses have not exceeded the
expense levels set forth in the Current Advisory Agreement).
The Current Advisory Agreement
Under the Current Advisory Agreement, the Adviser provides research, advice
and supervision with respect to the management of the Fund's portfolio of
investments, determines which securities are to be purchased and sold, and
places orders for the purchase and sale of portfolio securities. The Adviser
furnishes, for the use of the Fund, office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Fund,
maintaining its organization and assisting in providing shareholder
communications and information services. The Adviser pays the salaries and
expenses of officers and directors of the Fund who are "interested persons" of
the Fund. The Adviser also pays the marketing expenses of the Fund, including
the cost of printing and delivering prospectuses to prospective shareholders.
Messrs. Val Jensen, Gary Hibler and Robert Zagunis who are all officers of the
Adviser are also officers of the Fund and, subject to the authority of the Board
of Directors, are responsible for the overall management of the Fund's business.
All other expenses incurred in the operation of the Fund are paid by the
Fund. These expenses include taxes; interest; brokerage fees and commissions;
fees and expenses of directors who are not "interested persons" of the Fund; SEC
filing and qualification fees and state securities law qualification fees; fees
of the Adviser and of the transfer agent; certain insurance premiums; outside
auditing and legal expenses; and costs of corporate existence, providing
investor services and corporate reports, and holding corporate meetings; costs
of preparing, printing and distributing prospectuses for regulatory purposes and
for distribution to existing shareholders of the Fund; dues and fees for trade
organizations; administrative expenses; and any extraordinary expenses.
For the services provided by the Adviser under the Current Advisory
Agreement, the Adviser receives a monthly fee at the annual rate of 0.50 % of
the Fund's average daily net assets. The investment advisory fee is calculated
and accrued daily, and the amounts of the daily accruals are paid monthly. The
aggregate amount of fees paid to the Adviser during the fiscal year ended May
31, 2001 was $186,250.
The Current Advisory Agreement provides that, in the absence of willful
misfeasance, bad faith, gross negligence or general disregard for its
obligations thereunder, the Adviser is not liable for any act or omission in the
course of or in connection with the rendering of services under the Current
Advisory Agreement. The Current Advisory Agreement does not restrict the ability
of the Adviser to act as investment adviser for any other person, firm or
corporation, including other investment companies. (The Adviser does not advise
any other mutual fund at this time.)
The Current Advisory Agreement is terminable without penalty, on not less
than 60 days' written notice, by the Board of Directors of the Fund or by vote
of the holders of a majority of the Fund's shares, or upon not less than 60
days' written notice by the Adviser. The Current Advisory Agreement terminates
automatically upon "assignment" (as defined in the 1940 Act). In addition, the
Current Advisory Agreement provides that in the event of a material change in
the management or ownership of the Adviser, whether caused by death, disability
or otherwise, the Fund's Board is required to meet as soon as practicable after
such event to consider whether another investment adviser should be selected for
the Fund. In such event, the Current Advisory Agreement may be terminated
without any prior notice. The Current Advisory Agreement also requires that the
Adviser notify the board of Directors of the Fund in the event the Adviser
learns that it or any of its officers or directors has taken any action that
results in a breach of the Adviser's covenants set forth in the Current Advisory
Agreement. In such event the Fund's Board may terminate the Current Advisory
Agreement without any prior notice.
Under the Current Advisory Agreement, the Adviser has guaranteed that
operating expenses payable by the Fund will not exceed specified levels in any
fiscal year. If the Fund's regular operating expenses exceed the limit
referenced in the Current Advisory Agreement and reprinted below, the Adviser
will reduce its management fee, or reimburse the Fund for expenses payable to
third parties, in an amount equal to the excess. In addition, at its discretion,
the Adviser may voluntarily reduce its management fee or reimburse the Fund, in
order to maintain the Fund's expenses at lower levels.
Specifically, the Current Advisory Agreement reads in pertinent part as
follows:
For purposes of the first paragraph of this Section 4, should any
such applicable expense limitation be based upon the gross income
of the Fund, such gross income shall include, but not be limited
to, interest on debt securities in the Fund's portfolio accrued
to and including the last day of the Fund's fiscal year, the
record dates for which fall on or prior to the last day of such
fiscal year, and dividends from common and preferred stock in the
Fund's portfolio including all dividends paid or receivable up to
and including the last day of the Fund's fiscal year, but shall
not include gains from the sales of securities.
If the Fund's regular operating expenses in any fiscal year
exceed the applicable limit specified below (expressed as a
percentage of average daily net assets of the Fund on an annual
basis), the Adviser will reduce its management fee or reimburse
the Fund in an amount equal to the amount of the excess:
Average Daily Net Annual
Assets for the Year Expense Limit
---------------------------------- -------------------------
$ 100,000 - $ 10,000,000 2.00%
$ 10,000,001 - $ 15,000,000 1.75%
$ 15,000,001 - $ 25,000,000 1.50%
$ 25,000,001 - $ 50,000,000 1.25%
$ 50,000,001 - $ 100,000,000 1.00%
$ 100,000,001 and above 0.75%
Any reduction in management fees or reimbursement of expenses by
the Adviser required by this Section 4 shall be computed and
accrued daily, paid monthly and adjusted annually on the basis of
the Fund's average daily net assets for the year. Should two or
more such expense limitations be applicable as of the end of the
last business day of the fiscal year, that expense limitation
which results in the largest reduction in the Adviser's fee shall
be applicable.
The Adviser has not waived any of its management fees or voluntarily
reimbursed the Fund for any expenses during the last four fiscal years because
the Fund's expenses fell below the annual expense limit noted above. For
example, for the fiscal year ended May 31, 2001, the Fund's net assets at the
end of the period were $46,119,413 and the Fund's actual expenses were 0.95%.
(See Annual Fund Operating Expenses fee table in Proposal 3.)
Portfolio Transactions
The Adviser determines which brokers will execute purchases and sales of
portfolio securities. When placing purchase and sale orders, the Adviser seeks
to obtain the best net results for the Fund, taking into account all factors it
deems relevant, including, by way of illustration, price (including the
applicable brokerage commission or dealer spread); the size of the transaction;
the nature of the market for the security; the difficulty of execution; the
timing of the transaction, taking into account market prices and trends; the
reputation, experience and financial stability of the broker involved; and the
quality of service rendered by the broker in other transactions. The Fund does
not have any obligation to deal with any broker or group of brokers in the
execution of portfolio transactions. However, the Adviser has selected a broker
through which most of its transactions are effected. No director or officer of
the Fund has any material direct or indirect interest in any broker that effects
portfolio securities on behalf of the Fund. During the fiscal year ended May 31,
2001, the Fund paid brokerage commissions of $7,538.
Although the Adviser may place brokerage business with firms that provide
research, market and statistical services to the Adviser, the Fund does not pay
any such broker an amount of commission for effecting a securities transaction
in excess of the amount of commission that such broker would have received if
such research services had not been provided. Similarly, the Fund does not
"pay-up" for research services in principal transactions. In other words, the
Adviser does not engage in any "soft-dollar" arrangements.
Description of the Proposed Advisory Agreement
The terms of the Proposed Advisory Agreement (including the investment
advisory fee) are identical to the terms of the Current Advisory Agreement,
except the Proposed Advisory Agreement will not require expense reimbursement
from the Adviser.
A copy of the Proposed Advisory Agreement is attached to the Proxy
Statement as Appendix A. The description of the Proposed Advisory Agreement that
follows is qualified in its entirety by reference to Appendix A.
Under the Proposed Advisory Agreement, the Adviser would continue to
provide research, advice and supervision with respect to the management of the
Fund's portfolio of investments, determine which securities are to be purchased
and sold, and place orders for the purchase and sale of portfolio securities.
The Adviser would also pay the marketing expenses of the Fund, including the
cost of printing and delivering prospectuses to prospective shareholders to the
extent not covered by the Distribution Plan (12b-1 Plan) discussed below in
Proposal 3. All other expenses incurred in the operation of the Fund would
continue to be paid by the Fund.
Under the Proposed Advisory Agreement, the Adviser would still be entitled
to receive a monthly fee at the annual rate of 0.50% of the Fund's average daily
net assets. The investment advisory fee would continue to be calculated and
accrued daily, and the amounts of the daily accruals are paid monthly.
The primary difference between the Proposed Advisory Agreement and the
Current Advisory Agreement, is that the Adviser would no longer guarantee in the
Proposed Advisory Agreement that certain expenses payable by the Fund will not
exceed specified levels in any fiscal year. The Fund will be responsible for
paying all expenses it incurs throughout the year, which could potentially cause
the Fund to pay more expenses than it has grown accustomed to paying.
To address this potential effect of more expenses being paid by the Fund,
the Adviser has agreed to enter into a separate Expense Waiver and Reimbursement
Agreement with the Fund. Under such an agreement, if the Fund's regular
operating expenses exceed 1.40% of the Fund's average daily net asset on an
annual basis, the Adviser will reduce its management fee, or reimburse the Fund
for expenses payable to third parties, in an amount equal to the excess. In
addition, at its discretion, the Adviser may voluntarily reduce its management
fee or reimburse the Fund, in order to maintain the Fund's expenses at lower
levels. If the Proposed Advisory Agreement is approved, this separate Expense
Waiver and Reimbursement Agreement will take effect for one year from August 1,
2001 through July 31, 2002. Although there is no assurance that this agreement
will continue past July 31, 2002, the Board of Directors presently intends to
request renewal of the Expense Waiver and Reimbursement Agreement from the
Adviser. This agreement does not require approval of shareholders.
The Proposed Advisory Agreement will be dated August 1, 2001 (or as soon as
practicable thereafter). The Proposed Advisory Agreement would continue in
effect for one year from August 1, 2001 and thereafter would continue from year
to year provided such continuance is specifically approved at least annually (i)
by the vote of a majority of the Fund's outstanding voting securities, as
defined in the 1940 Act, entitled to vote at the Annual Meeting or by its Board
or (ii) by the vote of a majority of the Directors of the Fund who are not
parties to the contract or "interested persons" (as defined in the 1940 Act) of
the Fund or the Adviser. The Proposed Advisory Agreement is terminable on 60
days' written notice by any party thereto and will terminate automatically if
assigned.
The Proposed Advisory Agreement also expressly permits the directors to
approve an amendment to the Proposed Advisory Agreement unless shareholder
approval is required under the 1940 Act. This change to the Proposed Advisory
Agreement is permitted by current law.
The Evaluation by the Board of Directors
At a meeting held on June 14, 2001, the directors of the Fund considered
information with respect to whether the Proposed Advisory Agreement with the
Adviser was in the best interests of the Fund and its shareholders. After
consideration, the directors decided to recommend that the Fund's shareholders
vote to approve the Proposed Advisory Agreement. In coming to this
recommendation, the Directors considered a wide range of information about the
Adviser and the Fund, of the type normally considered when determining whether
to continue a Fund's advisory agreement as in effect from year to year.
The Directors considered information about, among other things:
o the Adviser, its business organization, financial resources, personnel
(including particularly those personnel with responsibilities for providing
services to the Funds), and investment process;
o the terms of the Proposed Advisory Agreement;
o the scope and quality of the services that the Adviser provides to the
Fund;
o the Fund's investment performance and the performance of similar funds
managed by other advisers;
o the advisory fee rates payable to the Adviser by the Fund and by other
client accounts managed by the Adviser, and payable by similar funds
managed by other advisers;
o the total expense ratio of the Fund and of similar funds managed by other
advisers;
o the Adviser's practices regarding the selection and compensation of
broker-dealers that execute portfolio transactions for the Fund, and the
allocation of transactions among the Fund and other investment accounts
managed by the Adviser;
In addition to reviewing these kinds of information, which the directors
regularly consider on an annual or more frequent basis, the directors gave
particular consideration to matters relating to certain aspects of the Fund,
including:
o the fact that the advisory fee rates have not been modified since the Fund
was started in 1992 and the Adviser was not requesting an increase in fees
at this time;
o the need of the Adviser to continue to support the compensation of
portfolio managers and support staff, as well as the ever more complex
technology and research needs;
o that the Adviser has entered into a one-year Expense Waiver and
Reimbursement Agreement with the Fund agreeing to reduce its management fee
or reimburse the Fund for expenses that exceed 1.40% of the Fund's average
daily net asset on an annual basis in an amount equal to the excess, which
is in line with the industry average; and
o that the Fund generally seeks to maintain low portfolio turnover.
Based upon its review, the Board of the Fund concluded that the Proposed
Advisory Agreement with the Adviser is reasonable, fair and in the best
interests of the Fund and its shareholders, and that the fees provided in the
Proposed Advisory Agreement are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and quality.
Approval of the Proposed Advisory Agreement requires the affirmative vote
of the holders of (i) 67% of the Fund's voting securities, as defined in the
1940 Act, present and entitled to vote at the Meeting, if the holders of more
than 50% of the Fund's outstanding voting securities are present or represented
by proxy at the Meeting or (ii) a majority of the Fund's outstanding voting
securities, whichever is less.
The Board of Directors of the Fund recommends that you vote FOR approval of the
amended investment advisory agreement under Proposal 2.
PROPOSAL 3
TO APPROVE A DISTRIBUTION PLAN PURSUANT TO RULE 12B-1
General Information
The Board, including a majority of the independent directors, none of whom
has any direct or indirect financial interest in the proposed Plan, is asking
shareholders of the Fund to approve a Distribution Plan (the "Rule 12b-1 Plan")
for the Fund pursuant to Rule 12b-1 under the 1940 Act. The SEC has interpreted
the 1940 Act as providing that the Fund may not finance, directly or indirectly,
activities that are primarily intended to result in the sale of its own shares,
unless a plan under Rule 12b-1 for that financing has been approved by the
independent directors and the shareholders of the Fund. A copy of the proposed
Rule 12b-1 Plan is attached to this Proxy Statement as Appendix B.
Proposed Rule 12b-1 Plan
The proposed Rule 12b-1 Plan provides for payment of marketing expenses of
up to 0.10% of net assets of the Fund. Payments to the Fund's distributor (the
"Distributor"), in accordance with the Rule 12b-1 Plan would be made pursuant to
a distribution agreement to be entered into by the Fund and the Distributor. Any
payments made by the Distributor to other brokers or administrators with funds
received as compensation under the Rule 12b-1 Plan would be made pursuant to
sub-agreements entered into by the Distributor and each such broker or
administrator. The Distributor would have the right to select, in its sole
discretion, the brokers and administrators to participate in the Rule 12b-1 Plan
and to terminate without cause and in its sole discretion any agreement entered
into by the Distributor and a broker or administrator.
The purpose of the Rule 12b-1 Plan is to attract additional shareholders
into the Fund and thereby help increase the asset levels the Fund. This in turn
helps to reduce the expense ratios of the Fund to the extent that such expense
ratios are affected by costs that are not tied to asset levels. This is
accomplished by attracting the interest of the broadest spectrum of financial
intermediaries in marketing shares of the Fund to the public. A Rule 12b-1 Plan
provides a method of reimbursing such firms for their marketing and distribution
expenses, including selling commissions that they offer to their financial
consultants.
Other Provisions of the Proposed Rule 12b-1 Plan
All material amendments to the proposed Rule 12b-1 Plan must be approved by
a vote of the Board and the independent directors, cast in person at a meeting
called for the purpose of voting on such amendment. The Rule 12b-1 Plan may not
be amended in order to materially increase the costs that the Fund may bear for
distribution pursuant to the Rule 12b-1 Plan without being approved by the
affirmative vote of a majority of the shareholders of the Fund. The proposed
Rule 12b-1 Plan may be terminated at any time by: (a) a majority vote of the
independent Directors; or (b) affirmative vote of the holders of (i) 67% of the
Fund's voting securities, as defined in the 1940 Act, present and entitled to
vote at the Meeting, if the holders of more than 50% of the Fund's outstanding
voting securities are present or represented by proxy at the Meeting or (ii) a
majority of the Fund's outstanding voting securities, whichever is less.
Effectiveness of the Proposed Rule 12b-1 Plan
If approved by shareholders, the Rule 12b-1 Plan will become effective on
or about August 1, 2001, or as soon as practicable thereafter, and will remain
in effect for a period of one year from its effective date. It may be continued
thereafter if it is approved at least annually by a majority of the Fund's Board
and a majority of the independent Directors, cast in person at a meeting called
for the purpose of voting on the continuance of the Rule 12b-1 Plan.
Evaluating the Distributor
For so long as the Rule 12b-1 Plan remains in effect, the Distributor must
prepare and furnish to the Board on a quarterly basis, and the Board will
review, a written report of the amounts expended under the Rule 12b-1 Plan and
the purpose for which such expenditures were made. In addition, while the Rule
12b-1 Plan is in effect, the selection and nomination of independent Directors
will be at the discretion of the independent Directors then in office.
Comparison of Fees
The table below shows the actual operating expenses, as a percentage of
average net assets of the Fund, incurred by the shares of the Fund during the
fiscal year ended May 31, 2001, and the estimated pro forma expenses that would
have been incurred if the Proposed Rule 12b-1 Plan, the Proposed Advisory
Agreement and Expense Waiver and Reimbursement Agreement described in Proposal
2, and the recently added shareholder servicing plan were in effect during the
year.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
- ----------------------------------------------------------------------------
Fiscal Year Ended
May 31, 2001
- ----------------------------------------------------------------------------
(Actual) Annual
Estimated (Pro
Forma)
Management Fees 0.50% 0.50%
Distribution or Service (12b-1) Fees None 0.10%
Other Expenses 0.45%(1) 0.58%(2)
-------- ---------
Total Annual Fund Operating Expenses 0.95% 1.18%
======== =========
Less Waivers and Reimbursements -0.00% -0.00%
-------- ---------
Net Annual Fund Operating Expenses 0.95% 1.18%
======== =========
- ----------------------------------------------------------- --------------------
(1) Other Expenses include: (a) custodian, transfer agency, and other customary
Fund expenses not listed above which totaled 0.43% of average daily net
assets for the fiscal year ended May 31, 2001; and (b) a shareholder
servicing fee of 0.02% of average daily net assets. Under the Shareholder
Servicing Plan, implemented in April 2001, the Fund can pay annual fees up
to 0.15% of average daily net assets for services provided to shareholders.
(2) Other Expenses under the pro forma calculations reflect the maximum annual
amount of 0.15% of average daily net assets that could be charged for
shareholder servicing fees.
Example
The following expense example illustrates the expenses on a $10,000
investment in the Fund assuming that the Proposed Advisory Agreement (with the
separate Expense Waiver and Reimbursement Agreement) and the Rule 12b-1 is
approved and that you invest for the time periods indicated and then redeem all
of your shares at the end of each period. This example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your costs would be:
- -------------------------- -------- ---------- ---------- -----------
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
- -------------------------- -------- ---------- ---------- -----------
Current Expenses $97 $303 $525 $1,166
Pro Forma Expenses $120 $375 $649 $1,432
- -------------------------- -------- ---------- ---------- -----------
The Evaluation by the Board of Directors
In determining to recommend the adoption of the Rule 12b-1 Plan, the
independent Directors considered a variety of factors, including:
o The nature of the circumstances making a Rule 12b-1 Plan appropriate;
o The nature and amount of expenditures, the relationship of the expenditures
to the overall cost structure of a Fund, the nature of the anticipated
benefits and the time it will take for the benefits to be achieved;
o The relationship between the Rule 12b-1 Plan and the activities of any
person who finances or has financed distribution of the Fund's shares,
including whether any payments by a Fund to such other person are made in
such a manner as to constitute the indirect financing of the distribution
by the Fund;
o The possible benefits of the plan to any other person relative to those
expected to inure to the Fund;
o The effect of the Rule 12b-1 Plan on existing shareholders; and
o Whether the Rule 12b-1 Plan will produce the anticipated benefits for the
Funds and their shareholders.
Based on its review and consideration of the factors listed above, in
particular the minimal costs under the Distribution Plan compared to the
expected benefits to the Fund from having more assets, the Board concluded that
there is a reasonable likelihood that the proposed Distribution Plan will
benefit the Fund and its shareholders.
Approval of the Rule 12b-1 Plan requires the affirmative vote of the
holders of (i) 67% of the Fund's voting securities, as defined in the 1940 Act,
present and entitled to vote at the Meeting, if the holders of more than 50% of
the Fund's outstanding voting securities are present or represented by proxy at
the Meeting or (ii) a majority of the Fund's outstanding voting securities,
whichever is less.
The Board of Directors of the Fund recommends that you vote FOR the approval
of the Distribution Plan under Proposal 3.
PROPOSAL 4
THE APPROVAL OF CHANGES TO CERTAIN OF THE FUND'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Board is asking shareholders of the Fund to approve revisions to six of
the Fund's fifteen fundamental investment restrictions. Fundamental investment
restrictions are those investment policies that may not be changed without the
approval of the shareholders. The Board believes that it is in shareholders'
best interests to approve the suggested revisions to the fundamental policies to
avoid costly shareholder proxies in the future requesting changes to the Fund's
investment policies.
Current Listing of Fundamental Restrictions
The Fund's fundamental investment restrictions appear in its Statement of
Additional Information and are attached hereto as Appendix C. The following
discussion contemplates each of the fundamental investment restrictions in
numerical order as listed in Appendix C. The Board did not recommend any changes
to Fundamental Investment Restrictions 1, 4, 6, 7, 8, 10, 11, 12 or 14.
Current Fundamental Restrictions 2 and 3
2. The Fund may not...retain more than 10 percent of its assets
in "Cash or Cash Equivalents" (as defined in the Fund's Bylaws
and described in the prospectus under "Investment Objective
Principal Investment Strategies and Primary Risks --Fundamental
Investment Policies"), except that the proceeds of any newly
issued shares of the Fund may remain in Cash or Cash Equivalents
for up to 30 days after receipt.
3. The Fund may not...invest in any assets that are not either
(a) "Cash or Cash Equivalents" or (b) "Eligible Equity
Securities" (as those terms are defined in the Fund's Bylaws and
described in the Fund's prospectus under "Investment Objective,
Principal Investment Strategies, and Primary Risks").
The Board of Directors recommends that Fundamental Investment Restrictions
2 and 3 be changed to non-fundamental investment restrictions. Non-fundamental
restrictions are those restrictions that may be changed by the Board of
Directors without shareholder approval. The Board of Directors believes that
this flexibility will save the Fund the costs of expensive proxy solicitations
seeking shareholder votes to change policies such as the type of investment
vehicle in which the Fund can temporarily hold cash.
Fundamental Restriction 3 proscribes the Fund from investing in any
investment other than "Eligible Equity Securities" as defined in the Fund's
prospectus. Although the Fund has no intention of investing in any security
other than those described in the prospectus, the Adviser believes that
investment opportunities may come and go during the time it takes to organize a
shareholder meeting requesting a change to the definition of "Eligible Equity
Securities." The Board of Directors is recommending that the Fund's investments
in Eligible Equity Securities become a non-fundamental policy, which would
require the Adviser to obtain the Board's approval (but not shareholder
approval) before investing in any other security not described in the
Prospectus. It is possible that investments in securities other than the
"Eligible Equity Securities" could expose shareholders to increased risks. The
Fund would notify shareholders 30 days ahead of any change to its
non-fundamental investment policies.
While changing Fundamental Investment Restrictions 2 and 3 to
non-fundamental investment restrictions, the Board of Directors also believes
that it would be in the best interest of the shareholders to change Fundamental
Investment Restriction 2 to (1) increase the Fund's limitation of investments in
cash and cash equivalents from 10% of Fund assets to 25% of Fund assets and (2)
to broaden the definition of "Cash and Cash Equivalents." The purpose of these
changes is to allow the Fund to invest more of its assets in different types of
cash vehicles when the Adviser determines such investments are more advisable.
Currently, the Bylaws and the Prospectus define "Cash or Cash Equivalents"
as follows:
o cash held by the Fund's custodian, Firstar Bank, N.A.
o FDIC-insured bank deposits
o United States Treasury bills with a maturity of less than 90 days
o commercial paper with a maturity of less than 30 days and is rated A-1 by
Standard and Poor's Corporation or Prime-1 by Moody's Investor Services,
Inc. and
o demand notes of companies whose commercial paper receives the same ratings
listed above by Moody's or S & P.
The Board of Directors is proposing that the definition of "Cash or Cash
Equivalents" be revised to read:
The term "Cash or Cash Equivalents" includes, but is not limited, to:
o cash held by the Fund's custodian, Firstar Bank, N.A.
o FDIC-insured bank deposits
o United States Treasury bills
o commercial paper rated A-1 by Standard and Poor's Corporation or Prime-1 by
Moody's Investor Services, Inc.;
o demand notes of companies whose commercial paper receives the same ratings
listed above by Moody's or S & P; and
o institutional grade paper maturing at 13 months or less.
Current Fundamental Restriction 5
5. The Fund may not...borrow money to invest in securities or for
any other purpose, except that the investment adviser may advance
funds to the Fund to pay organizational expenses and certain
other expenses of the Fund, as disclosed in the prospectus.
The Board of Directors recommends that Fundamental Investment Restriction 5
be revised to delete any reference to organizational expenses because the Fund
is now nearly 10 years old and "organizational" expenses are no longer
applicable.
The 1940 Act allows the Fund to borrow money if, immediately after any such
borrowing, the value of the Fund's assets, including all borrowings then
outstanding less its liabilities, is equal to at least 300% of the aggregate
amount of borrowings then outstanding (for the purpose of determining the 300%
asset coverage, the Fund's liabilities will not include amounts borrowed).
If the recommended change to Fundamental Investment Restriction 5 is
approved, the Fund may borrow from banks to increase its portfolio holdings of
securities. Such borrowings may be on a secured or unsecured basis at fixed or
variable rates of interest. The 1940 Act requires the Fund to maintain
continuous asset coverage of not less than 300% with respect to all borrowings.
This allows the Fund to borrow for such purposes an amount (when taken together
with any borrowings for temporary or emergency purposes as described below)
equal to as much as 50% of the value of its net assets (not including such
borrowings). If such asset coverage should decline to less than 300% due to
market fluctuations or other reasons, the Fund may be required to dispose of
some of its portfolio holdings within three days in order to reduce the Fund's
debt and restore the 300% asset coverage, even though it may be disadvantageous
from an investment standpoint to dispose of assets at that time.
The use of borrowing by the Fund involves special risk considerations that
may not be associated with other funds having similar policies. Since
substantially all of the Fund's assets fluctuate in value, whereas the interest
obligation resulting from a borrowing may be fixed by the terms of the Fund's
agreement with their lender, the asset value per share of the Fund will tend to
increase more when its portfolio securities increase in value and decrease more
when its portfolio securities decrease in value than would otherwise be the case
if the Fund did not borrow funds. In addition, interest costs on borrowings may
fluctuate with changing market rates of interest and may partially offset or
exceed the return earned on borrowed funds. Under adverse market conditions, the
Fund might have to sell portfolio securities to meet interest or principal
payments at a time when fundamental investment considerations would not favor
such sales. The interest which the Fund must pay on borrowed money, together
with any additional fees to maintain a line of credit or any minimum average
balances required to be maintained, are additional costs which will reduce or
eliminate any net investment income and may also offset any potential capital
gains. Unless the appreciation and income, if any, on assets acquired with
borrowed funds exceed the costs of borrowing, the use of leverage will diminish
the investment performance of the Fund compared with what it would have been
without leverage.
Although the Fund has no intention of borrowing any money, the Board of
Directors believes that in the extreme instance that the Fund might need to
borrow money, it should be allowed to do so as permitted under the 1940 Act
without seeking shareholder approval.
Therefore, Fundamental Investment Restriction 5 would be changed to read as
follows:
The Fund may not...borrow money, except as permitted under
the 1940 Act.
Current Fundamental Restriction 9
9. The Fund may not...make loans to any person or entity,
except that the Fund may, consistent with its investment
objectives and policies, invest in: (a) publicly traded debt
securities that qualify as Eligible Equity Securities; (b)
commercial paper of less than 30 days' maturity that is
rated P-1 by Moody's Investment Services, Inc. ("Moody's")
or A-1 by Standard & Poor's Corporation ("S&P"); and (c)
demand notes that are issued by corporations whose
commercial paper receives such ratings, even though the
investment in such obligations may be deemed to be the
making of loans.
The Board of Directors recommends that Fundamental Investment Restriction 9
be changed in accordance with its recommended changes to Fundamental Investment
Restrictions 2 and 3 (i.e., to broaden the definition of "Cash and Cash
Equivalent"). To avoid inconsistencies, the Board recommends that Fundamental
Investment Restriction 9 be revised to generally prohibit the Fund from making
loans, but allow the Fund to still invest in publicly traded debt securities,
commercial paper, and demand notes in accordance with its investment objectives
and policies (including non-fundamental policies) even though such investments
may be deemed to be the making of loans. This change to the restriction could
possibly allow the Fund to invest in debt securities, commercial paper and
demand notes that have lower ratings than P-1 by Moody's or A-1 by S&P, and such
investments could expose shareholders to increased risks. However, the Fund has
no intention of investing in any security that is inconsistent with its
investment objectives and policies (including non-fundamental policies). As
stated above, the Fund would still include highly rated securities in its
non-fundamental definition of Cash and Cash Equivalents (i.e., commercial paper
rated A-1 by Standard and Poor's Corporation or Prime-1 by Moody's Investor
Services, Inc. and demand notes of companies whose commercial paper receives the
same ratings listed above by Moody's or S & P).
Therefore, Fundamental Investment Restriction 9 would be changed to read as
follows:
The Fund may not...make loans to any person or entity,
except that the Fund may, consistent with its investment
objectives and policies, invest in: (a) publicly traded debt
securities, (b) commercial paper, and (c) demand notes, even
though the investment in such obligations may be deemed to
be the making of loans.
Current Fundamental Restriction Number 13
Invest in securities of other investment companies.
The Board of Directors recommends that Fundamental Investment Restriction
13 be changed in accordance with its recommended changes to Fundamental
Investment Restrictions 2 and 3 (i.e., to broaden the definition of "Cash and
Cash Equivalent" and to change the requirements of "Cash and Cash Equivalent"
and "Eligible Equity Securities" to non-fundamental investment restrictions). To
allow the Adviser with the flexibility it needs to make appropriate investment
decisions, the Board of Directors acknowledged that there is a possibility that
one of the "Cash or Cash Equivalents" that the Fund may choose to use as an
investment vehicle is money market funds. Money market funds are investment
companies as defined under the 1940 Act and according to the current Fundamental
Investment Restriction 13, the Fund would be prohibited from using that type of
investment vehicle to temporarily invest its cash. The Fund could also decide
that investing in other investment companies could provide the Fund with an
efficient means of carrying out its investment policies and so may choose to
invest in other investment companies besides money market funds.
Section 12(d)(1) under the 1940 Act outlines the requirements and
guidelines of investing in other mutual funds. Generally, the Fund would not be
permitted to own more than 3% of the total outstanding voting stock of the
acquired investment company; the securities the Fund purchased of any one
investment company could not total more than 5% of the Fund's total assets; and
the securities the Fund purchased of all other investment companies could not
total more than 10% of the Fund's total assets.
A disadvantage to investing in other investment companies is that they also
carry certain expenses such as management fees. As a result, any investment by a
Fund in shares of other investment companies may duplicate shareholder expenses.
As a shareholder of another investment company, the Fund would bear, along with
other shareholders, its pro rata portion of the other investment company's
expenses, including advisory fees, and such fees and other expenses will be
borne indirectly by the Fund's shareholders. These expenses would be in addition
to the advisory and other expenses that the Fund bears directly in connection
with its own operations.
Although the Fund has no current intention of investing in other investment
companies, the Board of Directors believes that in the rare instance that the
Fund might choose to do so, it should be allowed to do so as permitted under the
1940 Act without seeking shareholder approval.
Therefore, Fundamental Investment Restriction 13 would be changed to read
as follows:
The Fund may not...invest in securities of other investment
companies, except as permitted under the 1940 Act.
Current Fundamental Restriction 15
15. The Fund may not...change the investment policies set
forth in the Fund's then current prospectus and Statement of
Additional Information, unless at least 30 days' prior
written notice is provided to each shareholder describing
each policy change and the reasons for the change. However,
the restrictions set forth in paragraphs 1 through 14 above
may only be changed with shareholder approval.
The Board of Directors recommends that Fundamental Investment Restriction
15 be changed to reflect the recommended changes of the preceding paragraphs.
Specifically, the Board recommends that the last sentence be stricken as the
preceding paragraphs are fundamental restrictions and as such can only be
changed with shareholder approval. Furthermore, the preceding paragraphs will be
renumbered with the changes recommended.
Therefore, Fundamental Investment Restriction 15 would be changed to read
as follows:
The Fund may not...change the investment policies set forth
in the Fund's then current prospectus and Statement of
Additional Information, unless at least 30 days' prior
written notice is provided to each shareholder describing
each policy change and the reasons for the change.
New Listing of Fundamental Restrictions
If the above recommendations are approved, the Fund's listing of
Fundamental Investment Restrictions will read in full as set forth in Appendix D
hereto, and will also appear in the Fund's Statement of Additional Information.
The Evaluation by the Board of Directors
In determining to recommend revisions to certain of the Fund's fundamental
investment restrictions, the Board of Directors considered a variety of factors,
including:
o the Adviser's management expertise;
o the Fund's investment performance and fluctuating market conditions;
o potential cost savings in avoiding expensive future shareholder meetings
for inconsequential changes to the Fund's investment policies
o the absence of other temporary defensive measures used by the Fund; and
o the provisions and guidance of the 1940 Act.
Based upon its review and consideration of these factors, the Board of
Directors of the Fund concluded that the proposed changes to certain of the
Fund's fundamental investment restrictions are in the best interests of the Fund
and its shareholders. If approved by shareholders, the proposed changes to the
fundamental investment restrictions will become effective on or about August 1,
2001, or as soon as practicable thereafter.
Approval of the proposed increase to the investment limitation in cash and
cash equivalents from 10% of Fund assets to 25% of Fund assets requires the
affirmative vote of the holders of (i) 67% of the Fund's voting securities, as
defined in the 1940 Act, present and entitled to vote at the Meeting, if the
holders of more than 50% of the Fund's outstanding voting securities are present
or represented by proxy at the Meeting or (ii) a majority of the Fund's
outstanding voting securities, whichever is less.
The Board of Directors of the Fund recommends that you vote FOR
approval of each of the revisions to the Fund's
fundamental investment restrictions under Proposal 4.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
Meeting other than those set forth in this Proxy Statement. If, however, any
other business should properly come before the Meeting, the persons named on the
accompanying proxy card will vote on such matters in accordance with their best
judgment.
Part 3 - More on Proxy Voting:
Record Date
Only shareholders of record of the Fund at the close of business on the
Record Date, June 15, 2001, are entitled to receive notice of the Meeting and
may vote at the Meeting. As of the close of business on June 15, 2001,
2,173,229.068 shares of Common Stock, par value $.001 per share, of the Fund
were issued and outstanding. Each share is entitled to one vote at the Meeting
and each fractional share is entitled to a fractional vote. To the knowledge of
the Fund, no person is the beneficial owner of more than 5% of the Fund's
outstanding shares, except as follows:
- ---------------------------------------------- --------------------------- -------------------------------------------
Fund Name and No. of Shares Owned Percent of Outstanding Shares Owned
Shareholder Name and Address
- ---------------------------------------------- --------------------------- -------------------------------------------
Donaldson Lufkin & Jenrette 1,149,591.322 52.90%
Pershing Division
Attn: Wing Lian
Mutual Fund Trading Manager
P.O. Box 2052
Jersey City, NJ 07303-2052
- ---------------------------------------------- --------------------------- -------------------------------------------
Charles Schwab & Co., Inc. 196,238.736 9.03%
Reinvest Account
Special Custody Account for the Benefit of
Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
- ---------------------------------------------- --------------------------- -------------------------------------------
Quorum
Under the Fund's Bylaws, a quorum of shares will be present at the Meeting
if more than 50% of the outstanding shares of the Fund are present in person or
by proxy. All proxies that are duly signed by a shareholder will be counted
towards establishing a quorum, regardless of whether the shareholder has
instructed the proxy as to how to vote, including proxies returned by brokers
for shares held by brokers as to which no voting instructions are indicated
("Broker non-votes"). Broker non-votes and abstentions will have the effect of a
"No" vote on any particular proposal being presented.
If a quorum is not present at the Meeting for the Fund, or if a quorum is
present at the Meeting but sufficient votes to approve one or more of the
proposed items are not received, or if other matters arise requiring shareholder
attention, the persons named as proxy agents may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares
present at the Meeting or represented by proxy. When voting on a proposed
adjournment, the persons named as proxy agents will vote FOR the proposed
adjournment all shares that they are entitled to vote with respect to each item,
unless directed to vote AGAINST the item, in which case such shares will be
voted AGAINST the proposed adjournment with respect to that item. A shareholder
vote may be taken on one or more of the items in this Proxy Statement prior to
such adjournment if sufficient votes have been received and it is otherwise
appropriate.
If you do not expect to attend the Meeting,
please sign your Proxy Card promptly and return it in the
enclosed envelope to avoid unnecessary expense and delay.
No postage is necessary.
PART 4 - ADDITIONAL INFORMATION
Submission of Certain Shareholder Proposals
The Fund is not required to hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to Gary W. Hibler,
Secretary of the Fund, c/o Firstar Mutual Fund Services, LLC, 615 East Michigan
Avenue, Milwaukee, Wisconsin 53202.
Notice to Banks, Broker-Dealers and Voting Trustees and Their Nominees
Please advise the Fund, in care of Gary W. Hibler, Secretary of the Fund,
c/o Firstar Mutual Fund Services, LLC, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, whether other persons are beneficial owners of shares for which
proxies are being solicited and, if so, the number of copies of the Proxy
Statement and Annual and/or Semi-Annual Reports you wish to receive in order to
supply copies to the beneficial owners of the respective shares.
Your vote is important. Whether or not you intend to attend the Meeting, please
fill in, date, sign and promptly return the enclosed proxy card in the postage
paid return envelope provided in order to avoid the additional expense of
further proxy solicitation and to ensure that a quorum will be present at the
meeting. Your proxy is revocable at any time before its use. You may also vote
by phone by calling 1-800-690-6903.
By Order of the Board of Directors,
Gary W. Hibler, Secretary
June 22, 2001
APPENDIX A
INVESTMENT ADVISORY AGREEMENT
AMENDED & RESTATED
INVESTMENT ADVISORY AND SERVICE CONTRACT
between
THE JENSEN PORTFOLIO, INC.
and
JENSEN INVESTMENT MANAGEMENT, INC.
This Agreement is entered into, effective August 1, 2001, as an amended and
restated Investment Advisory and Service Contract of the Restated Investment
Advisory and Service Contract previously dated July 13, 1993, which was
previously dated July 31, 1992, by and between THE JENSEN PORTFOLIO, INC., an
Oregon corporation (the "Fund"), and JENSEN INVESTMENT MANAGEMENT, INC., an
Oregon corporation (the "Adviser").
In consideration of the mutual covenants contained in this Agreement, it is
hereby agreed as follows:
1. The Fund hereby employs the Adviser to act as its investment adviser
and, as such, to manage the investment and reinvestment of the assets of the
Fund in accordance with the Fund's investment objectives, policies and
limitations, and to administer the Fund's affairs to the extent requested by the
Fund, subject to the supervision of the Board of Directors of the Fund, for the
period and upon the terms set forth in this Agreement. Investment of funds shall
be subject to all applicable restrictions of the Articles of Incorporation and
Bylaws of the Fund as may, from time to time, be in force and all applicable
provisions of the Investment Company Act of 1940, or any successor statute, as
amended from time to time (the "1940 Act").
The Adviser agrees to: (a) furnish the investment advisory services
specified above; (b) furnish, for the use of the Fund, office space and all
necessary office facilities, equipment and personnel for servicing the
investments of the Fund; and (c) permit any of its officers and employees to
serve, without compensation, as directors or officers of the Fund if elected to
such positions. The Adviser shall pay the salaries and fees, if any, of all
officers of the Fund and of all directors of the Fund who are "interested
persons" (as defined in the 1940 Act) of the Fund or of the Adviser and of all
personnel of the Fund or Adviser performing services relating to research,
statistical and investment activities.
The Adviser shall, on behalf of the Fund, maintain the Fund's records and
books of account (other than those maintained by the Fund's transfer agent,
registrar, custodian and shareholder servicing agent). All books and records so
maintained shall be the property of the Fund and, upon request, the Adviser
shall surrender to the Fund any of such books and records requested.
The investment policies and all other actions of the Fund are, and shall at
all times be, subject to the control and direction of the Board of Directors of
the Fund. In acting under this Agreement, the Adviser shall be an independent
contractor and shall not be an agent of the Fund.
With respect to services performed in connection with the purchase and sale
of portfolio securities on behalf of the Fund, the Adviser may place transaction
orders for the Fund's account with brokers or dealers selected by the Adviser.
In connection with the selection of such brokers or dealers and the placing of
such orders, the Adviser shall not be deemed to have acted unlawfully or to have
breached any duty, created by this Agreement or otherwise, solely by reason of
its having caused the Fund to pay a broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Adviser has determined in good faith that the net price to the Fund of such
transaction was reasonable in relation to the net price for comparable
transactions engaged in by similarly situated investors.
2. For the services and facilities to be furnished, the Fund shall pay to
the Adviser monthly compensation equal to an annual rate of 0.50 percent of the
Fund's average daily net assets. The daily net asset value of the Fund shall be
computed in the manner and at the times set forth in the Fund's Articles of
Incorporation. On any day that the Fund's net asset value is not calculated, the
net asset value for such day shall be deemed to be the net asset value as of the
close of business on the last day on which such calculation was made for the
purposes of the foregoing computations. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily, and the
amounts of the daily accruals shall be paid monthly. Such calculations shall be
made by applying 1/365th of the annual rate to the Fund's net asset value each
day determined as of the close of business on that day.
For the month and year in which this Agreement becomes effective or
terminates, there shall be an appropriate proration on the basis of the number
of days that the Agreement is in effect during the month and year, respectively.
The services of the Adviser under this Agreement are not to be deemed
exclusive, and the Adviser shall be free to render similar services or other
services to others, including other investment companies, so long as its
services under this Agreement are not impaired by the delivery of such services.
3. The Fund shall pay all of its expenses other than those expressly stated
to be payable by the Adviser. The expenses payable by the Fund shall include,
without limitation: (a) interest and taxes; (b) brokerage fees and commissions
and other costs in connection with the purchase or sale of portfolio securities;
(c) fees and expenses of its directors other than those who are "interested
persons" (as defined in the 1940 Act) of the Fund or the Adviser; (d) legal and
audit expenses; (e) transfer agent expenses and expenses for servicing
shareholder accounts; (f) expenses of computing the net asset value of the
shares of the Fund and the amount of its dividends; (g) custodian fees and
expenses; (h) administrative fees and expenses; (i) fees and expenses related to
the registration and qualification of the Fund and its shares for distribution
under state and federal securities laws; (j) expenses of printing and mailing
reports, notices and proxy materials to shareholders of the Fund; (k) the cost
of issuing share certificates, if certificates are issued; (l) expenses for
reports, membership dues and other dues in the Investment Company Institute or
any similar trade organization; (m) expenses of preparing and typesetting
prospectuses; (n) expenses of printing and mailing prospectuses sent to existing
shareholders; (o) such nonrecurring expenses as may arise, including expenses
incurred in actions, suits or proceedings to which the Fund is a party and the
legal obligation that the Fund may have to indemnify its officers and directors
in respect thereto; (p) the organizational costs of the Fund and other Fund
expenses that are capitalized; (q) insurance premiums; (r) expenses of
maintaining the Fund's corporate existence, providing investor services and
corporate reports, and holding corporate meetings; and (s) such other expenses
as the directors of the Fund may, from time to time, determine to be properly
payable by the Fund.
The Adviser may, but has no obligation to, pay any or all of the expenses
of the Fund that are payable by the Fund. In such event, the Fund shall promptly
reimburse the Adviser for all such expenses so paid by the Adviser. With respect
to organizational expenses of the Fund paid or advanced by the Adviser, the Fund
shall reimburse the Adviser such amounts in equal monthly payments over 60
months beginning on the date the registration statement filed by the Fund with
the Securities and Exchange Commission was first declared effective; provided,
however, that all such organizational expenses then remaining unreimbursed shall
be reimbursed in full at the end of the first month in which the Fund's average
daily net assets exceed $50,000,000.
4. In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the Fund or to any
shareholder of the Fund for any act or omission in the course of, or connected
with, rendering services under this Agreement or for any losses that may be
sustained by the Fund or its shareholders in the purchase, holding or sale of
any security.
5. Subject to all applicable statutes and regulations, it is understood
that directors, officers or agents of the Fund are or may be interested in the
Adviser as officers, directors, agents, shareholders or otherwise and that the
officers, directors, shareholders and agents of the Adviser may be interested in
the Fund as officers, directors, agents, shareholders or otherwise.
6. The Adviser shall have the right to grant the use of a name similar to
the Fund's name to another investment company or business enterprise without the
approval of the Fund's shareholders and shall have the right to withdraw from
the Fund the use of the Fund's name. However, the Adviser may not withdraw from
the Fund the use of the Fund's name without submitting to the Fund's
shareholders the question of whether the shareholders wish the Fund to continue
this Agreement.
7. This Amended and Restated Agreement became effective on August 1, 2001
and shall continue in force from year to year thereafter, but only as long as
such continuance is specifically approved at least annually in the manner
required by the 1940 Act.
This Agreement shall automatically terminate in the event of its
assignment, and may be terminated at any time without payment of any penalty by
the Fund or by the Adviser on 60 days' written notice to the other party. The
Fund may effect termination by action of its Board of Directors or by vote of a
majority of the outstanding shares of the common stock of the Fund (as defined
in the 1940 Act), accompanied by the appropriate notice. In the event of the
death or disability of any of the principal officers of the Adviser, or if, for
any other reason, there is a material change in the management or ownership of
the Adviser, the Board of Directors of the Fund shall be required to meet as
soon as practicable after such event to consider whether another investment
adviser should be selected for the Fund. If the Fund's Board determines, at such
meeting, that this Agreement should be terminated, this Agreement may be
terminated without the payment of any penalty and without any required prior
notice; provided, however, that any change in the ownership of the Adviser that
constitutes an assignment (within the meaning of the 1940 Act) shall require the
automatic termination of this Agreement.
This Agreement may be terminated at any time by the Board of Directors of
the Fund or by vote of a majority of the outstanding shares of common stock of
the Fund, and such termination shall be without the payment of any penalty and
without any required prior notice, if it shall have been established by a court
of competent jurisdiction that the Adviser or any officer or director of the
Adviser has taken any action that results in a breach of the covenants of the
Adviser set forth in this Agreement. In addition, the Adviser agrees to inform
the Board of Directors of the Fund if the Adviser learns that it or any of its
officers or directors has taken any action that results in a breach of the
Adviser's covenants set forth in this Agreement. The Board of Directors of the
Fund shall meet as soon as practicable after it receives such notification to
consider whether another investment adviser should be selected for the Fund. If
the Fund's Board determines, at such meeting, that this Agreement should be
terminated, this Agreement may be terminated without the payment of any penalty
and without any required prior notice.
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in Section
2 earned prior to such termination.
8. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not thereby be affected.
9. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
10. If any action or suit is instituted to enforce or interpret this
Agreement, the prevailing party shall be entitled to recover from the other
party, in addition to all other rights and remedies, the prevailing party's
reasonable attorney fees at trial and on appeal.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed as of the date first written above.
THE JENSEN PORTFOLIO, INC. JENSEN INVESTMENT MANAGEMENT, INC.
By ____________________________________ By _____________________________
President President
APPENDIX B
DISTRIBUTION PLAN
(Rule 12b-1 Plan)
THE JENSEN PORTFOLIO, INC.
DISTRIBUTION PLAN
(12b-1 Plan)
The following Distribution Plan (the "Plan") has been adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act"), by
the Jensen Portfolio, Inc. (the "Fund"), an Oregon corporation. The Plan has
been approved by a majority of the Fund's Board of Directors, including a
majority of the Directors who are not interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the Plan or in
any Rule 12b-1 Agreement (as defined below) (the "Disinterested Directors"),
cast in person at a meeting called for the purpose of voting on such Plan.
In approving the Plan, the Board of Directors determined that adoption of
the Plan would be prudent and in the best interests of the Fund and its
shareholders. Such approval by the Board of Directors included a determination,
in the exercise of its reasonable business judgment and in light of its
fiduciary duties, that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders.
The provisions of the Plan are as follows:
1. PAYMENTS BY THE FUND TO PROMOTE THE SALE OF FUND SHARES
The Fund will pay Quasar Distributors, LLC (the "Distributor"), as a
principal underwriter of the Fund's shares, and/or any Recipient (as defined
below) a distribution fee of up to 0.10% of the average daily net assets of the
Fund in connection with the promotion and distribution of Fund shares and the
provision of personal services to shareholders, including, but not necessarily
limited to, advertising, compensation to underwriters, dealers and selling
personnel, the printing and mailing of prospectuses to other than current Fund
shareholders, and the printing and mailing of sales literature. The Fund or
Distributor may pay all or a portion of these fees to any registered securities
dealer, financial institution or any other person (the "Recipient") who renders
assistance in distributing or promoting the sale of shares, or who provides
certain shareholder services, pursuant to a written agreement (the "Rule 12b-1
Agreement"), a form of which is attached hereto as Appendix A with respect to
the Fund. Payment of these fees shall be made monthly promptly following the
close of the month. If the Distributor and/or any Recipient is due more monies
for its services rendered than are immediately payable because of the expense
limitation under Section 1 of this Plan, the unpaid amount shall be carried
forward from period to period while the Plan is in effect until such time as it
is paid. The Distributor and/or any Recipient shall not, however, be entitled to
charge the Fund(s) any interest, carrying or finance fees in connection with
such carried forward amounts.
2. RULE 12B-1 AGREEMENTS
(a) No Rule 12b-1 Agreement shall be entered into with respect to the Fund
and no payments shall be made pursuant to any Rule 12b-1 Agreement, unless such
Rule 12b-1 Agreement is in writing and the form of which has first been
delivered to and approved by a vote of a majority of the Fund's Board of
Directors, and of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such Rule 12b-1 Agreement. The form of Rule
12b-1 Agreement relating to the Fund attached hereto as Appendix A has been
approved by the Fund's Board of Directors as specified above.
(b) Any Rule 12b-1 Agreement shall describe the services to be performed by
the Recipient and shall specify the amount of, or the method for determining,
the compensation to the Recipient.
(c) No Rule 12b-1 Agreement may be entered into unless it provides (i) that
it may be terminated with respect to the Fund at any time, without the payment
of any penalty, by vote of a majority of the shareholders of such Fund, or by
vote of a majority of the Disinterested Directors, on not more than 60 days'
written notice to the other party to the Rule 12b-1 Agreement, and (ii) that it
shall automatically terminate in the event of its assignment.
(d) Any Rule 12b-1 Agreement shall continue in effect for a period of more
than one year from the date of its execution only if such continuance is
specifically approved at least annually by a vote of a majority of the Board of
Directors, and of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such Rule 12b-1 Agreement.
3. QUARTERLY REPORTS
The Distributor shall provide to the Board of Directors, and the Directors
shall review at least quarterly, a written report of all amounts expended
pursuant to the Plan. This report shall include the identity of the Recipient of
each payment and the purpose for which the amounts were expended and such other
information as the Board of Directors may reasonably request.
4. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective on August 1, 2001 or as determined by the
Board of Directors immediately upon approval by the vote of a majority of the
Board of Directors, the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on the approval of the Plan, and by vote of a
majority of the shareholders of the Fund. The Plan shall continue in effect with
respect to the Fund for a period of one year from its effective date unless
terminated pursuant to its terms. Thereafter, the Plan shall continue with
respect to the Fund from year to year, provided that such continuance is
approved at least annually by a vote of a majority of the Board of Directors,
and of the Disinterested Directors, cast in person at a meeting called for the
purpose of voting on such continuance. The Plan, or any Rule 12b-1 Agreement,
may be terminated with respect to the Fund at any time, without penalty, on not
more than sixty (60) days' written notice by a majority vote of shareholders of
such Fund, or by vote of a majority of the Disinterested Directors.
5. SELECTION OF DISINTERESTED DIRECTORS
During the period in which the Plan is effective, the selection and
nomination of those Directors who are Disinterested Directors of the Fund shall
be committed to the discretion of the Disinterested Directors.
6. AMENDMENTS
All material amendments of the Plan shall be in writing and shall be
approved by a vote of a majority of the Board of Directors, and of the
Disinterested Directors, cast in person at a meeting called for the purpose of
voting on such amendment. In addition, the Plan may not be amended to increase
materially the amount to be expended by the Fund hereunder without the approval
by a majority vote of shareholders of the Fund affected thereby.
7. RECORDKEEPING
The Fund shall preserve copies of the Plan, any Rule 12b-1 Agreement and
all reports made pursuant to Section 3 for a period of not less than six years
from the date of this Plan, any such Rule 12b-1 Agreement or such reports, as
the case may be, the first two years in an easily accessible place.
Appendix A
Rule 12b-1 Related Agreement
Quasar Distributors, LLC
615 East Michigan Street
Suite 200
Milwaukee, WI 53202
[DATE]
[Recipient's Name and Address]
Ladies and Gentlemen:
This letter will confirm our understanding and agreement with respect to
payments to be made to you pursuant to a Distribution Plan (the "Plan") adopted
by The Jensen Portfolio, Inc. (the "Fund") pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act"). The Plan and this
related agreement (the "Rule 12b-1 Agreement") have been approved by a majority
of the Board of Directors of the Fund, including a majority of the Board of
Directors who are not "interested persons" of the Fund, as defined in the Act,
and who have no direct or indirect financial interest in the operation of the
Plan or in this or any other Rule 12b-1 Agreement (the "Disinterested
Directors"), cast in person at a meeting called for the purpose of voting
thereon. Such approval included a determination by the Board of Directors that,
in the exercise of its reasonable business judgment and in light of its
fiduciary duties, there is a reasonable likelihood that the Plan will benefit
the Fund's shareholders.
1. To the extent you provide distribution and marketing services in the
promotion of the Fund's shares and/or services to Fund shareholders, including
furnishing services and assistance to your customers who invest in and own
shares, including, but not limited to, answering routine inquiries regarding the
Fund and assisting in changing account designations and addresses, we shall pay
you a fee as described on Schedule A. We reserve the right to increase, decrease
or discontinue the fee at any time in our sole discretion upon written notice to
you.
You agree that all activities conducted under this Rule 12b-1 Agreement
will be conducted in accordance with the Plan, as well as all applicable state
and federal laws, including the Act, the Securities Exchange Act of 1934, the
Securities Act of 1933 and any applicable rules of the National Association of
Securities Dealers, Inc.
2. At the end of each month, you shall furnish us with a written report or
invoice detailing all amounts payable to you pursuant to this Rule 12b-1
Agreement and the purpose for which such amounts were expended. In addition, you
shall furnish us with such other information as shall reasonably be requested by
the Board of Directors, on behalf of the Fund, with respect to the fees paid to
you pursuant to this Rule 12b-1 Agreement.
3. We shall furnish to the Board of Directors, for its review, on a
quarterly basis, a written report of the amounts expended under the Plan by us
and the purposes for which such expenditures were made.
4. This Rule 12b-1 Agreement may be terminated by the vote of (a) a
majority of shareholders, or (b) a majority of the Disinterested Directors, on
60 days' written notice, without payment of any penalty. In addition, this Rule
12b-1 Agreement will be terminated by any act which terminates the Plan or the
Distribution Agreement between the Fund and us and shall terminate immediately
in the event of its assignment. This Rule 12b-1 Agreement may be amended by us
upon written notice to you, and you shall be deemed to have consented to such
amendment upon effecting any purchases of shares for your own account or on
behalf of any of your customer's accounts following your receipt of such notice.
5. This Rule 12b-1 Agreement shall become effective on the date accepted by
you and shall continue in full force and effect so long as the continuance of
the Plan and this Rule 12b-1 Agreement are approved at least annually by a vote
of the Board of Directors of the Fund and of the Disinterested Directors, cast
in person at a meeting called for the purpose of voting thereon. All
communications to us should be sent to the above address. Any notice to you
shall be duly given if mailed or faxed to you at the address specified by you
below.
Quasar Distributors, LLC Accepted:
on behalf of The Jensen Portfolio, Inc.
(Dealer or Service Provider Name)
By:
James Schoenike, President
(Street Address)
(City)(State)(ZIP)
(Telephone No.)
(Facsimile No.)
By:
(Name and Title)
Schedule A
to the
Rule 12b-1 Related Agreement
For all services rendered pursuant to the Rule 12b-1 Agreement, we shall
pay you a fee calculated as follows:
Fee of ___% [which shall not exceed ___%] of the average daily net assets of the
Fund (computed on an annual basis) which are owned of record by your firm as
nominee for your customers or which are owned by those customers of your firm
whose records, as maintained by the Fund or its agent, designate your firm as
the customer's dealer or service provider of record.
We shall make the determination of the net asset value, which determination
shall be made in the manner specified in the Fund's current prospectus, and pay
to you, on the basis of such determination, the fee specified above, to the
extent permitted under the Plan.
APPENDIX C
FUNDAMENTAL INVESTMENT RESTRICTIONS
(as listed in the Fund's Current Statement of Additional Information
dated September 22, 2000)
The Fund may not:
1. At the close of any fiscal quarter, have less than 50 percent of its total
assets represented by (i) cash and cash equivalents permitted by Section
851 of the Internal Revenue Code of 1986, as amended (the "Code"), and
government securities and (ii) other securities limited, in respect of any
one issuer, to an amount not greater in value than 5 percent of the value
of the total assets of the Fund and to not more than 10 percent of the
outstanding voting securities of such issuer.
Compliance with the Fund's policy limiting to 5% the amount of assets that
may be invested in any one issuer is measured at the close of each fiscal
quarter. The percentage of Fund assets in any one issuer could amount to
more than 5% due to market appreciation of the Fund's investment. Changes
to valuations between measurement dates will not necessarily affect
compliance with this policy. The Fund's investment in any one issuer will
not, however, exceed 25 percent of the value of the Fund's total assets at
the close of any fiscal quarter.
2. Retain more than 10 percent of its assets in "Cash or Cash Equivalents" (as
defined in the Fund's Bylaws and described in the prospectus under
"Investment Objective Principal Investment Strategies and Primary Risks
--Fundamental Investment Policies"), except that the proceeds of any newly
issued shares of the Fund may remain in Cash or Cash Equivalents for up to
30 days after receipt.
3. Invest in any assets that are not either (a) "Cash or Cash Equivalents" or
(b) "Eligible Equity Securities" (as those terms are defined in the Fund's
Bylaws and described in the Fund's prospectus under "Investment Objective,
Principal Investment Strategies, and Primary Risks").
4. Retain 25 percent or more of the Fund's total assets in any one industry.
(The Fund generally will use the industry classifications provided by Value
Line in determining an issuer's industry. However, when a Value Line
classification is not available for an issuer, the Fund will use the
Directory of Companies Filing Annual Reports with the Securities and
Exchange Commission, published by the Securities and Exchange Commission
(the "SEC"), to determine the appropriate industry for that issuer.)
5. Borrow money to invest in securities or for any other purpose, except that
the investment adviser may advance funds to the Fund to pay organizational
expenses and certain other expenses of the Fund, as disclosed in the
prospectus.
6. Purchase securities on margin, except such short-term credits as are
standard in the industry for the clearance of transactions.
7. Make short sales of securities or maintain a short position.
8. Lend portfolio securities.
9. Make loans to any person or entity, except that the Fund may, consistent
with its investment objectives and policies, invest in: (a) publicly traded
debt securities that qualify as Eligible Equity Securities; (b) commercial
paper of less than 30 days' maturity that is rated P-1 by Moody's
Investment Services, Inc. ("Moody's") or A-1 by Standard & Poor's
Corporation ("S & P"); and (c) demand notes that are issued by corporations
whose commercial paper receives such ratings, even though the investment in
such obligations may be deemed to be the making of loans. See "Investment
Strategies and Risks--Commercial Paper Ratings" in this Statement of
Additional Information.
10. Invest in, or engage in transactions involving, real estate or real estate
mortgage loans; commodities or commodities contracts, including futures
contracts; oil, gas or other mineral exploration or development programs,
or option contracts.
11. Invest in any security that would expose the Fund to unlimited liability.
12. Underwrite the securities of other issuers, or invest in restricted or
illiquid securities.
13. Invest in securities of other investment companies.
14. Issue any senior securities.
15. Change the investment policies set forth in the Fund's then current
prospectus and Statement of Additional Information, unless at least 30
days' prior written notice is provided to each shareholder describing each
policy change and the reasons for the change. However, the restrictions set
forth in paragraphs 1 through 14 above may only be changed with shareholder
approval.
APPENDIX D
PROPOSED LISTING OF FUNDAMENTAL
INVESTMENT RESTRICTIONS (to appear in the Fund's
next updated Statement of Additional Information)
1. At the close of any fiscal quarter, have less than 50 percent of its total
assets represented by (i) cash and cash equivalents permitted by Section
851 of the Internal Revenue Code of 1986, as amended (the "Code"), and
government securities and (ii) other securities limited, in respect of any
one issuer, to an amount not greater in value than 5 percent of the value
of the total assets of the Fund and to not more than 10 percent of the
outstanding voting securities of such issuer.
Compliance with the Fund's policy limiting to 5% the amount of assets that
may be invested in any one issuer is measured at the close of each fiscal
quarter. The percentage of Fund assets in any one issuer could amount to
more than 5% due to market appreciation of the Fund's investment. Changes
to valuations between measurement dates will not necessarily affect
compliance with this policy. The Fund's investment in any one issuer will
not, however, exceed 25 percent of the value of the Fund's total assets at
the close of any fiscal quarter.
2. Retain 25 percent or more of the Fund's total assets in any one industry.
(The Fund generally will use the industry classifications provided by Value
Line in determining an issuer's industry. However, when a Value Line
classification is not available for an issuer, the Fund will use the
Directory of Companies Filing Annual Reports with the Securities and
Exchange Commission, published by the Securities and Exchange Commission
(the "SEC"), to determine the appropriate industry for that issuer.)
3. Borrow money, except as permitted under the 1940 Act.
4. Purchase securities on margin, except such short-term credits as are
standard in the industry for the clearance of transactions.
5. Make short sales of securities or maintain a short position.
6. Lend portfolio securities.
7. Make loans to any person or entity, except that the Fund may, consistent
with its investment objectives and policies, invest in: (a) publicly traded
debt securities, (b) commercial paper, and (c) demand notes, even though
the investment in such obligations may be deemed to be the making of loans.
8. Invest in, or engage in transactions involving, real estate or real estate
mortgage loans; commodities or commodities contracts, including futures
contracts; oil, gas or other mineral exploration or development programs,
or option contracts.
9. Invest in any security that would expose the Fund to unlimited liability.
10. Underwrite the securities of other issuers, or invest in restricted or
illiquid securities.
11. Invest in securities of other investment companies, except as permitted
under the 1940 Act.
12. Issue any senior securities.
13. Change the investment policies set forth in the Fund's then current
prospectus and Statement of Additional Information, unless at least 30
days' prior written notice is provided to each shareholder describing each
policy change and the reasons for the change.
The Jensen Portfolio, Inc.
2130 Pacwest Center
1211 SW Fifth Avenue
Portland, OR 97204-3721
PROXY CARD
Thursday, July 26, 2001, at
3:00 p.m., Pacific Time.
VOTE THIS PROXY CARD TODAY!
OR VOTE BY TELEPHONE - CALL 1-800-690-6903
REMINDER: If you vote by telephone, DO NOT mail this card.
This proxy is solicited by the Board of Directors of The Jensen Portfolio, Inc.
(the "Fund"). The undersigned holder of shares of the Fund hereby appoints Gary
W. Hibler and Robert F. Zagunis, attorneys with full powers of substitution and
revocation, to represent the undersigned and to vote on behalf of the
undersigned all shares of the Fund that the undersigned is entitled to vote at
the Special Meeting of Shareholders of the Fund to be held at the Multnomah
Athletic Club, 1849 SW Salmon Street, Portland, Oregon 97207-0390 at the date
and time indicated above and at any postponements or adjournments thereof. The
undersigned hereby acknowledges receipt of the enclosed Notice of Annual Meeting
and Proxy Statement and hereby instructs said attorneys and proxies to vote said
shares as indicated herein. Every properly signed proxy will be voted in the
manner specified thereon and, in the absence of specification, will be treated
as GRANTING authority to vote FOR all of the items. In their discretion, the
proxies are authorized to vote on such other business as may properly come
before the Annual Meeting. A majority of the proxies present and acting at the
Annual Meeting in person or by substitute (or, if only one shall be so present,
then that one) shall have and may exercise all of the power and authority of
said attorneys or proxies hereunder. The undersigned hereby revokes any proxy
previously given.
FOLD AND DETACH HERE
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
- --------------------------------------------------------------------------------
THIS PROXY IS VALID ONLY WHEN SIGNED AND DATED.
PROPOSAL 1
To elect Directors to hold office until the next Annual Meeting.
01) Norman W. Achen 03) Robert E. Harold 05) Val E. Jensen
(Independent Director) (Independent Director) (Interested Director)
02) Roger A. Cooke 04) Gary W. Hibler 06) Robert F. Zagunis
(Independent Director) (Interested Director) (Interested Director)
FOR ALL AGAINST ALL FOR ALL EXCEPT
|_| |_| |_|
To withhold authority to vote, mark "For All Except" and write the Nominee's
number on the line below:
- -----------------------------------
PROPOSAL 2
To approve a revised Investment Advisory Agreement between the Fund and Jensen Investment Management, Inc.
FOR AGAINST ABSTAIN
|_| |_| |_|
PROPOSAL 3
To approve a Distribution Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940.
FOR AGAINST ABSTAIN
|_| |_| |_|
PROPOSAL 4
To approve revisions to six fundamental investment restrictions.
01) Make Restriction #2 regarding 03) Make Restriction #5 regarding 05) Make Restriction #9 regarding
amount and type of Cash and Cash borrowing money prohibited except as investing in other investment
Equivalents a Non-Fundamental permitted under the 1940 Act. companies prohibited except as
Investment Restriction. permitted under the 1940 Act.
02) Make Restriction #3 regarding 04) Revise Restriction #9 regarding 06) Make Restriction #15 consistent
investments in only Cash and Cash making loans to permit commercial with above-mentioned changes by
Equivalents and Eligible Equity paper, demand notes and publicly removing last sentence.
Securities a Non-Fundamental traded debt securities.
Investment Restriction.
FOR ALL AGAINST ALL FOR ALL EXCEPT
|_| |_| |_|
To withhold authority to vote, mark "For All Except" and write the restriction
change number on the line below:
- -----------------------------------
PLEASE SIGN IN THE BOX BELOW
Please sign exactly as your name appears on this Proxy. If Joint owners, EITHER
may sign this Proxy. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give title.
X______________________________________________
Signature (PLEASE SIGN WITHIN BOX) (Date)
X______________________________________________
Signature (JOINT OWNERS) (Date)