SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 under Rule 14a-12
FMI Common Stock Fund, Inc.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
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to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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[ ] 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.:
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4. Date Filed:
FMI COMMON STOCK FUND, INC.
225 EAST MASON STREET
MILWAUKEE, WISCONSIN 53202
NOTICE OF SPECIAL MEETING
OF SHAREHOLDERS
OF FMI COMMON STOCK FUND, INC. TO BE HELD JANUARY 21, 2003
TO SHAREHOLDERS OF FMI COMMON STOCK FUND, INC.:
We invite you to attend a special meeting of shareholders of FMI Common Stock
Fund, Inc., a Wisconsin corporation, on January 21, 2003, at 9:30 a.m. (Central
Time), at the Milwaukee Athletic Club, 758 North Broadway, Milwaukee, Wisconsin.
As we describe in the accompanying proxy statement, shareholders will vote on
(1) a proposal to elect seven directors, (2) a proposal to approve a new
investment advisory agreement with Fiduciary Management, Inc., and (3) any other
business that may properly come before the special meeting.
We have enclosed a proxy card with this proxy statement. YOUR VOTE IS
IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. EVEN IF YOU PLAN TO ATTEND THE
SPECIAL MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE PROXY CARD AND
MAIL IT AS SOON AS YOU CAN IN THE ENVELOPE WE HAVE PROVIDED. IF YOU ATTEND THE
SPECIAL MEETING, YOU CAN REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON IF YOU
CHOOSE.
We look forward to seeing you at the special meeting.
FMI COMMON STOCK FUND, INC.
/s/Donald S. Wilson
Donald S. Wilson
Secretary
Milwaukee, Wisconsin
December 9, 2002
FMI COMMON STOCK FUND, INC.
225 EAST MASON STREET
MILWAUKEE, WISCONSIN 53202
FREQUENTLY ASKED QUESTIONS
Q: WHY HAVE I RECEIVED THIS PROXY STATEMENT?
Our directors have sent you this proxy statement, starting around December
9, 2002 to ask for your vote as a shareholder of FMI Common Stock Fund,
Inc.
Q: WHAT AM I VOTING ON?
You will vote on the following proposals if you owned shares of the Fund on
the record date of the special meeting:
PROPOSAL NO. DESCRIPTION
----------- -----------
1 Election of seven directors.
2 Approval of a new investment advisory agreement.
Our directors are not aware of any other matter that will be presented to
you at the special meeting.
Q: WHO IS ENTITLED TO VOTE?
If you owned shares of the Fund as of the close of business on the record
date, November 29, 2002, then you are entitled to vote. You will be
entitled to one vote per share for each share you own on the record date.
Q: DO I NEED TO ATTEND THE SPECIAL MEETING IN ORDER TO VOTE?
No. You can vote either in person at the special meeting or by completing
and mailing the enclosed proxy card.
Q: HOW WILL PROXIES BE SOLICITED?
We (the Fund) will solicit proxies by mail. In addition, certain of our
officers and employees may solicit by telephone, telegraph and personally.
We will not pay these officers and employees specifically for soliciting
proxies. We will bear the cost of soliciting proxies, including preparing,
assembling and mailing the proxy material.
Q: HOW MANY SHARES OF THE FUND'S STOCK ARE ENTITLED TO VOTE?
As of the record date, the number of shares of the Fund that were entitled
to vote at the special meeting was 5,625,378.328.
Q: WHAT HAPPENS IF THE SPECIAL MEETING IS ADJOURNED?
The special meeting could be adjourned if, for example, a quorum does not
exist or if a quorum exists but sufficient votes to approve a proposal are
not received. For purposes of any adjournment, proxies will be voted "for"
adjournment unless you direct otherwise by writing anywhere on the enclosed
proxy that you will vote against any adjournments.
Q: WHAT CONSTITUTES A QUORUM?
A "quorum" refers to the number of shares that must be in attendance, in
person or by proxy, at a meeting to lawfully conduct business. With
respect to the proposals, a quorum is present if a majority of the votes of
the shares of the Fund entitled to be cast are present in person or by
proxy.
Q: WHAT HAPPENS IF I SIGN AND RETURN MY PROXY CARD BUT DO NOT MARK MY VOTE?
Ted D. Kellner and Donald S. Wilson, as proxies, will vote your shares to
elect seven directors and to approve the new investment advisory agreement.
Q: WHAT HAPPENS IF ONE OR MORE OF THE PROPOSALS IS NOT APPROVED BY
SHAREHOLDERS AT THE SPECIAL MEETING?
If no directors are elected, then the current directors will continue to
serve as directors. If the new investment advisory agreement is not
approved, then the Fund's current investment advisory agreement will remain
in effect.
Q: MAY I REVOKE MY PROXY?
You may revoke your proxy at any time before it is exercised by giving
notice of your revocation to us in writing (by subsequent proxy or
otherwise). Your presence at the special meeting does not itself revoke
your proxy.
Q: WHO WILL COUNT THE VOTES?
Management Information Services Corp., 60 Research Road, Hingham,
Massachusetts 02043, will count the votes and act as inspector of
elections.
Q: HOW CAN I OBTAIN A COPY OF THE ANNUAL REPORT?
You may request a copy of our latest annual report and semi-annual report
succeeding the annual report by writing to FMI Common Stock Fund, Inc., 225
East Mason Street, Milwaukee, Wisconsin 53202, Attention Corporate
Secretary, or by calling 1-800-811-5311. We will furnish these copies free
of charge.
OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of shares of the Fund as of October 31, 2002 by: (a) each named
executive officer and director; (b) all of the named executive officers and
directors as a group; and (c) each person or entity known by the Fund to own
beneficially more than 5% of the shares of the Fund:
NAME AND (FOR 5% HOLDERS) NUMBER OF SHARES PERCENTAGE
ADDRESS OF OWNER OWNED OWNERSHIP
- ------------------------- ---------------- ----------
Charles Schwab & Co., Inc.(1)<F1> 1,216,722 22.03%
101 Montgomery Street
San Francisco, California 94104
Fidelity Investments 323,060 5.85%
Institutional Operations Co. Inc.,
as agent for certain employee
benefit plans(1)<F1>
100 Magellan Way
Covington, KY 41015
Barry K. Allen 5,920 (2)<F2>
George D. Dalton 11,979 (2)<F2>
Patrick J. English 22,205 (2)<F2>
Gordon H. Gunnlaugsson 13,430 (2)<F2>
Ted D. Kellner 632,862(3)<F3> 11.46%
Paul S. Shain -0- -0-
Donald S. Wilson 487,511(3)<F3> 8.83%
Officers, directors and nominees
as a group (9 persons) 677,392(3)<F3> 12.26%
(1)<F1> The shares owned by Charles Schwab & Co., Inc. and Fidelity
Investments Institutional Operations Co. Inc. were owned of record
only.
(2)<F2> Less than 1%.
(3)<F3> Includes 486,280 shares owned by Fiduciary Management, Inc. and
retirement plans for the benefit of its employees. Mr. Kellner and
Mr. Wilson beneficially own the same 486,280 shares.
DOLLAR RANGE OF FUND SHARES
The following table describes the dollar range of shares of the Fund
beneficially owned by each director and nominee as of October 31, 2002:
AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL FUNDS
OVERSEEN OR TO BE OVERSEEN BY
DOLLAR RANGE OF EQUITY DIRECTOR OR NOMINEE IN FAMILY
NAME OF DIRECTOR OR NOMINEE SECURITIES IN THE FUND OF INVESTMENT COMPANIES(1)<F4>
- --------------------------- ----------------------- ------------------------------
Barry K. Allen Over $100,000 Over $100,000
George D. Dalton Over $100,000 Over $100,000
Patrick J. English Over $100,000 Over $100,000
Gordon H. Gunnlaugsson Over $100,000 Over $100,000
Ted D. Kellner Over $100,000 Over $100,000
Paul S. Shain None None
Donald S. Wilson $10,001 - $50,000 Over $100,000
(1)<F4> The funds included are FMI Common Stock Fund, FMI Focus Fund, FMI
Large Cap Fund, FMI Provident Trust Strategy Fund, FMI Winslow Growth
Fund, FMI Knappenberger Bayer Emerging Growth Fund, FMI Woodland Small
Capitalization Value Fund and FMI Sasco Contrarian Value Funds.
PROPOSAL NO. 1: ELECTION OF SEVEN DIRECTORS
DIRECTOR NOMINEES. At the special meeting, we will elect seven directors to
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hold office until their respective successors are chosen and qualified. The
current directors have nominated seven people for election. As proxies, Ted D.
Kellner and Donald S. Wilson intend to vote for the election of all of the
directors' nominees. They will also vote proxies for any other person that the
directors may recommend in place of a nominee if that nominee becomes unable to
serve as a director before the special meeting.
Each of the nominees is currently a director. Each nominee has consented to
being named as a nominee and to serve as a director if elected.
Certain important information regarding our directors (including their
principal occupations for at least the last five years) is as follows:
INTERESTED NOMINEES (as defined in the Investment Company Act of 1940 (the
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"1940 Act")):
TERM OF OFFICE,
LENGTH OF TIME
SERVED AND NUMBER OTHER
OF PORTFOLIOS PRINCIPAL DIRECTORSHIPS
IN FUND COMPLEX OCCUPATION(S) HELD BY
NAME, ADDRESS, AGE OVERSEEN BY DIRECTOR DURING DIRECTOR
AND POSITION OR NOMINEE PAST 5 YEARS OR NOMINEE
- ------------------ -------------------- ------------ -------------
Ted D. Kellner, age 56(1)<F5> Director since 1981 Chairman of the Board and Chief Marshall &
225 East Mason Street (Indefinite term); Executive Officer of Fiduciary Ilsley
Milwaukee, Wisconsin 53202 President and Management, Inc. Corporation
Director, President and Treasurer since 1981 and FMI
Treasurer (One year term for Funds, Inc.
each office);
3 Portfolios
Patrick J. English, age 42(1)<F5> Director since 1998 President of Fiduciary FMI Funds,
225 East Mason Street (Indefinite term); Management, Inc. Inc.
Milwaukee, Wisconsin 53202 Vice President
Director and Vice President since 1996
(One year term);
3 Portfolios
Donald S. Wilson, age 59(1)<F5> Director since 1981 Vice Chairman and Treasurer of FMI Mutual
225 East Mason Street (Indefinite term); Fiduciary Management, Inc. Funds, Inc.
Milwaukee, Wisconsin 53202 Vice President and
Director, Vice President, Secretary since 1981
and Secretary (One year term for
each office);
6 Portfolios
(1)<F5> Messrs. Kellner, English and Wilson are directors who are "interested
persons" of the Fund as that term is defined in the 1940 Act because
they are officers of the Fund and the Adviser.
NON-INTERESTED NOMINEES:
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TERM OF OFFICE,
LENGTH OF TIME
SERVED AND NUMBER OTHER
OF PORTFOLIOS PRINCIPAL DIRECTORSHIPS
IN FUND COMPLEX OCCUPATION(S) HELD BY
NAME, ADDRESS, AGE OVERSEEN BY DIRECTOR DURING DIRECTOR
AND POSITION OR NOMINEE PAST 5 YEARS OR NOMINEE
- ------------------ -------------------- ------------- --------------
Barry K. Allen, age 54 Director since 1996 Executive Vice President of Qwest Harley-
1801 California Street (Indefinite term); Communications International, Inc., Davidson,
Denver, Colorado 80202 8 Portfolios a global communications company, Inc., Cobalt
Director since September 2002. From July Corporation,
2000 to September 2002, Mr. FMI Funds,
Allen was President of Allen Inc. and FMI
Enterprises, LLC (Brookfield, WI), Mutual
a private equity investments Funds, Inc.
management company he founded
after retiring from Ameritech (Chicago,
IL) in July 2000. Mr. Allen had served
as an officer of Ameritech since 1995,
most recently as President.
George D. Dalton, age 74 Director since 1998 Chairman and Chief Executive Clark/Bardes
20825 Swenson Drive (Indefinite term); Officer, Call_Solutions.com, Inc., Inc., FMI
Waukesha, Wisconsin 53186 8 Portfolios (Waukesha, WI) a privately held Funds, Inc.
Director company specializing in teleservices and FMI
call centers. From 1984 to January Mutual
2000, Mr. Dalton was Chairman Funds, Inc.
of the Board of Fiserv, Inc.
(Brookfield, WI), a provider of
financial data processing services
to financial institutions.
Gordon H. Director since 2001 Retired; from 1970 to December 31, Renaissance
Gunnlaugsson, age 58 (Indefinite term); 2000, employed by M&I Corp- Learning,
c/o Fiduciary 8 Portfolios oration (Milwaukee, WI), most Inc., FMI
Management, Inc. recently as Executive Vice President Funds, Inc.
225 East Mason Street and Chief Financial Officer. and FMI
Milwaukee, Wisconsin 53202 Mutual
Director Funds, Inc.
Paul S. Shain, age 39 Director since 2001 President and Chief Operating FMI Funds,
5520 Research Park Drive (Indefinite term); Officer of Berbee Information Inc. and
Madison, Wisconsin 53711 8 Portfolios Networks, a leading provider FMI Mutual
Director of e-business development, Funds, Inc.
infrastructure integration and
application hosting services, since
January 2000. Previously employed
by Robert W. Baird & Co. Incorporated,
most recently as Managing Director
and Director of Equity Research.
INVESTMENT ADVISER. The investment adviser to the Fund is Fiduciary
--------------------
Management, Inc. (the "Adviser"). The Advisor's address is 225 East Mason
Street, Milwaukee, Wisconsin 53202. The Adviser is controlled by Ted D.
Kellner. Pursuant to an investment advisory agreement between the Fund and the
Adviser, the Adviser furnishes continuous investment advisory services and
management to the Fund. Ted D. Kellner is the Chairman of the Board and Chief
Executive Officer of the Adviser. Mr. Kellner is also a director of the Fund.
COMPENSATION. The Fund's standard method of compensating directors is to pay
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each director who is not an officer of the Fund a fee of $500 for each meeting
of the directors attended, and each member of the audit committee a fee of $250
for each meeting of the audit committee attended. During the fiscal year ended
September 30, 2002, the Fund paid a total of $6,500 in fees to directors who
were not officers of the Fund. The table below sets forth the compensation paid
by the Fund to each of the current directors during the fiscal year ended
September 30, 2002:
COMPENSATION TABLE
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PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
BENEFITS ANNUAL FROM THE FUND
AGGREGATE ACCRUED AS BENEFITS AND COMPLEX
COMPENSATION PART OF UPON PAID TO
NAME OF PERSON FROM FUND FUND EXPENSES RETIREMENT DIRECTORS
- -------------- ------------ ------------- ---------- ---------
Barry K. Allen $1,750 $0 $0 $10,700
George D. Dalton $1,500 $0 $0 $9,900
Patrick J. English $0 $0 $0 $0
Gordon H. Gunnlaugsson $1,750 $0 $0 $10,900
Ted D. Kellner $0 $0 $0 $0
Paul S. Shain $1,500 $0 $0 $9,900
Donald S. Wilson $0 $0 $0 $0
DIRECTOR MEETINGS AND COMMITTEES. The Fund's Board of Directors has created
---------------------------------
an Audit Committee whose members are Messrs. Allen, Dalton, Gunnlaugsson and
Shain. The primary functions of the Audit Committee are to recommend to the
Board of Directors the independent accountants to be retained to perform the
annual audit of the Fund, to review the results of the audit, to review the
Fund's internal controls and to review certain other matters relating to the
Fund's accountants and financial records. The Fund's Board of Directors has no
other committees. The Fund's Board of Directors met three times during the
fiscal year ended September 30, 2002 and all of the directors attended each of
those meetings. The audit committee met once during the fiscal year ended
September 30, 2002.
OTHER EXECUTIVE OFFICERS. The executive officers of the Fund, besides
--------------------------
Messrs. Kellner, English and Wilson, are as follows:
PRINCIPAL OCCUPATION(S)
NAME AND AGE POSITION(S) HELD DURING PAST FIVE YEARS
- ------------ ---------------- -----------------------
Gary G. Wagner, age 59 Vice President and Executive Vice President of
225 East Mason Street Assistant Secretary Fiduciary Management, Inc.
Milwaukee, Wisconsin 53202
Camille F. Wildes, age 50 Vice President and Vice President of
225 East Mason Street Assistant Treasurer Fiduciary Management, Inc.
Milwaukee, Wisconsin 53202
REQUIRED VOTE. Shareholders elect directors by a plurality of the votes cast
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by shares which are entitled to vote in the election, assuming a quorum is
present. For this purpose, "plurality" means that the nominees receiving the
largest number of votes from the shareholders will be elected as directors.
Abstentions and broker non-votes (if any) will be counted as votes present for
purposes of determining whether a quorum is present. Assuming a quorum is
present, any shares which do not vote, whether by abstention or otherwise, will
not affect the election of directors.
RECOMMENDATION. The directors recommend a vote "FOR" all the nominees.
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PROPOSAL NO. 2: APPROVAL OF INVESTMENT ADVISORY AGREEMENT INCREASING THE
ADVISORY FEE
INTRODUCTION. The Fund presently has an investment advisory agreement (the
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"Current Advisory Agreement"), dated December 15, 1981, with Fiduciary
Management, Inc., 225 East Mason Street, Milwaukee, Wisconsin 53202 (the
"Adviser"), pursuant to which the Adviser furnishes continuous investment
advisory services to the Fund. The Current Advisory Agreement was last
submitted to a vote of the Fund's shareholders on December 17, 1990. Prior to
1991, the Fund had annual meetings of shareholders and the shareholders of the
Fund approved the continuation of the investment advisory agreement at each
annual meeting.
In addition, the Fund and the Adviser have an administration agreement (the
"Administration Agreement"), pursuant to which the Adviser supervises all
aspects of the Fund's operations except those performed by it as investment
adviser.
Proposal 2 asks the shareholders to approve a new Advisory Agreement (the
"Proposed Advisory Agreement") with the Adviser. The Proposed Advisory
Agreement was approved by the Fund's Board of Directors, including a majority of
those Directors who were not "interested persons" of the Fund, at a meeting of
the Board of Directors held on November 25, 2002. The Proposed Advisory
Agreement will take effect on February 1, 2003, assuming it is approved by the
shareholders of the Fund at the special meeting. If the Proposed Advisory
Agreement is not approved by the shareholders of the Fund at the special
meeting, the Current Advisory Agreement will remain in effect.
DESCRIPTION OF FIDUCIARY MANAGEMENT, INC. The Adviser is a registered
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investment adviser organized in 1980. The Adviser's address is 225 East Mason
Street, Milwaukee, Wisconsin 53202. The Adviser is an investment adviser to
individuals and institutional clients (including investment companies) with
substantial investment portfolios. It is controlled by Ted D. Kellner. The
Adviser's executive officers include Messrs. Kellner, Wilson, English, Wagner,
Ms. Wildes, Mr. John Brandser, Vice President and Secretary, Ms. Jody Reckard,
Vice President, Mr. Bladen J. Burns, Vice President, and Mr. Cyril M. Arsac,
Vice President. The directors of the Adviser are Messrs. Kellner and Wilson.
As of October 31, 2002, the Adviser managed approximately $1.1 billion in
assets.
The Adviser acts as the investment adviser to the FMI Large Cap Fund, which
has a similar investment objective to the Fund. The table below sets forth
certain information about the relationship between the Adviser and the FMI Large
Cap Fund as of September 30, 2002:
HAS THE ADVISER WAIVED,
REDUCED, OR OTHERWISE AGREED
TOTAL NET RATE OF ADVISER'S TO REDUCE ITS COMPENSATION
FUND ASSETS OF FUND COMPENSATION UNDER ANY APPLICABLE CONTRACT?
- ---- -------------- ----------------- ------------------------------
FMI Large Cap Fund $3,236,274 1% of average Yes*<F6>
daily net assets
*<F6> The investment advisory agreement for FMI Large Cap Fund obligates the
Adviser to reimburse FMI Large Cap Fund to the extent that FMI Large
Cap Fund's aggregate annual operating expenses, excluding interest,
reimbursement payments to securities lenders for dividend and interest
payments on securities sold short, taxes, brokerage commissions and
extraordinary items, exceed 1.75%.
DESCRIPTION OF CURRENT AND PROPOSED ADVISORY AGREEMENTS AND THE
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ADMINISTRATION AGREEMENT. The terms of the Current Advisory Agreement and the
- -------------------------
Proposed Advisory Agreement are substantially identical except for the fees
payable to the Adviser and the Adviser's obligation to reimburse the Fund if the
Fund's expenses exceed certain levels. Under the Current Advisory Agreement,
the Adviser furnishes continuous investment advisory services to the Fund. The
Adviser supervises and manages the investment portfolio of the Fund and subject
to such policies as the Board of Directors may determine, directs the purchase
or sale of investment securities in the day-to-day management of the Fund's
investment portfolio. Under the Advisory Agreement, the Adviser, at its own
expense and without reimbursement from the Fund, furnishes office space, and all
necessary office facilities, equipment and executive personnel for managing the
Fund's investments, and bears all sales and promotional expenses of the Fund,
other than expenses incurred in complying with laws regulating the issue or role
of securities. For the foregoing, under the Current Advisory Agreement, the
Fund pays the Adviser an annual fee of 1% on the first $30,000,000 of the
average daily net assets of the Fund and an annual fee of 0.75% on the average
daily net assets of the Fund in excess of $30,000,000. During the fiscal year
ended September 30, 2002, the Fund paid the Adviser a fee of $637,447 under the
Current Advisory Agreement.
The Proposed Advisory Agreement provides for an increase in the annual fee
payable to the Adviser for the services it provides to the Fund to 1% of the
average daily net assets of the Fund, irrespective of the amount of the average
daily net assets of the Fund. If the Proposed Advisory Agreement had been in
effect during the fiscal year ended September 30, 2002, the Fund would have paid
the Advisor a fee of $749,852, a 17.63% increase over the fee which was paid
under the Current Advisory Agreement.
The Fund pays (and, under the Proposed Advisory Agreement, will continue to
pay) all of its expenses not assumed by the Adviser pursuant to the Current
Advisory Agreement or the Administration Agreement described below including,
but not limited to, the professional costs of preparing and the costs of
printing its registration statements required under the Securities Act of 1933
and the Act and any amendments thereto, the expense of registering its shares
with the Securities and Exchange Commission and in the various states, the
printing and distribution cost of prospectuses mailed to existing shareholders,
the cost of stock certificates, director and officer liability insurance,
reports to shareholders, reports to government authorities and proxy statements,
interest charges, and brokerage commissions and expenses in connection with
portfolio transactions. The Fund also pays (and, under the Proposed Advisory
Agreement, will continue to pay) the fees of directors who are not interested
persons of the Adviser or officers or employees of the Fund, salaries of
administrative and clerical personnel, association membership dues, auditing and
accounting services, fees and expenses of any custodian or trustees having
custody of Fund assets, expenses of repurchasing and redeeming shares, printing
and mailing expenses, charges and expenses of dividend disbursing agents,
registrars and stock transfer agents, including the cost of keeping all
necessary shareholder records and accounts and handling any problems related
thereto.
Under the Current Advisory Agreement, the Adviser has undertaken to reimburse
the Fund to the extent that the aggregate annual operating expenses, including
the investment advisory fee and the administration fee but excluding interest,
taxes, brokerage commissions and extraordinary items, exceed 2% of the daily net
assets of the Fund for such year, as determined by valuations made as of the
close of each business day of the year. Under the Proposed Advisory Agreement,
the Adviser would undertake to reimburse the Fund to the extent that the
aggregate annual operating expenses, including the investment advisory fee and
the administration fee but excluding interest, taxes, brokerage commissions and
extraordinary items, exceed 1.3% of the daily net assets of the Fund for such
year, as determined by valuations made as of the close of each business day of
the year. The Fund monitors its expense ratio on a monthly basis. If the
accrued amount of the expenses of the Fund exceeds the expense limitation, the
Fund creates an account receivable from the Adviser for the amount of such
excess. In such a situation the monthly payment of the Adviser's fee will be
reduced by the amount of such excess, subject to adjustment month by month
during the balance of the Fund's fiscal year if accrued expenses thereafter fall
below this limit. No expense reimbursement was required during the fiscal year
ended September 30, 2002. If the Proposed Advisory Agreement had been in effect
during the fiscal year ended September 30, 2002, no expense reimbursement would
have been required.
Both the Current Advisory Agreement and the Proposed Advisory Agreement
permit the Adviser to cause the Fund to pay a broker which provides brokerage
and research services to the Adviser a commission for effecting a securities
transaction in excess of the amount another broker would have charged for
effecting the transaction, if the Adviser determines in good faith the amount of
such commission is reasonable in relation to the value of brokerage and research
services provided by the executing broker viewed in terms of either the
particular transaction or the Adviser's overall responsibilities with respect to
the Fund and the other accounts as to which it exercises investment discretion.
During the fiscal year ended September 30, 2002, the Fund paid brokerage
commissions of $170,425 on transactions having a total market value of
$63,398,450 to brokers who provided research services to the Adviser.
Pursuant to the Administration Agreement, the Adviser supervises all aspects
of the Fund's operations except those performed by it pursuant to the Current
Advisory Agreement. Under the Administration Agreement, the Adviser, at its own
expense and without reimbursement from the Fund, furnishes office space, and all
necessary office facilities, equipment and executive personnel for supervising
the Fund's operations. For its services, the Adviser receives an annual fee of
0.1% on the first $30,000,000 of the average daily net assets of the Fund and an
annual fee of 0.05% on the average daily net assets of the Fund in excess of
$30,000,000. During the fiscal year ended September 30, 2002, the Fund paid the
Adviser a fee of $59,346 pursuant to the Administration Agreement.
FEES AND EXPENSES. The table below describes the fees you may pay if you buy
------------------
and hold shares of the Fund while the Current Advisory Agreement is in effect,
and the fees you may pay if you buy and hold shares of the Fund if the Proposed
Advisory Agreement is approved.
ACTUAL PRO FORMA
------ ---------
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on No Sales No Sales
Purchases (as a percentage of offering price) Charge Charge
Maximum Deferred Sales Charge (Load) No Deferred No Deferred
Sales Charge Sales Charge
Maximum Sales Charge (Load) Imposed on No Sales No Sales
Reinvested Dividends and Distributions Charge Charge
Redemption Fee None*<F7> None*<F7>
Exchange Fee None None
*<F7> Our transfer agent charges a fee of $15.00 for each wire redemption.
The following table shows the actual operating expenses incurred by the Fund
expressed as a percentage of average net assets during the fiscal year ended
September 30, 2002, and the expenses expressed as a percentage of average net
assets that would have been incurred had the Proposed Advisory Agreement been in
effect for such period:
ACTUAL PRO FORMA
------ ---------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees 0.85% 1.00%
Distribution and/or Service (12b-1) Fees None None
Other Expenses 0.29% 0.29%
Total Annual Fund Operating Expenses 1.14% 1.29%
EXAMPLE. The following example is intended to help you compare the cost of
--------
investing in the Fund under the Current Advisory Agreement to the cost of
investing in the Fund under the Proposed Advisory Agreement. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. The 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
----------------------- ----------------------- ----------------------- -----------------------
ACTUAL PRO FORMA ACTUAL PRO FORMA ACTUAL PRO FORMA ACTUAL PRO FORMA
------ --------- ------ --------- ------ --------- ------ ---------
$116 $131 $362 $409 $628 $708 $1,386 $1,556
The purpose of the above example and table is to assist you in understanding
how the various costs and expenses of the Fund will change as a result of the
Proposed Advisory Agreement. The example should not be considered a
representation of past or future expenses. The Fund's actual expenses and
investment performance vary from year to year and will result in expenses that
may be higher or lower than those shown above.
If approved by the requisite shareholder vote, the Proposed Advisory
Agreement will become effective on February 1, 2003. The Proposed Advisory
Agreement provides that it will continue in effect for an initial two year
period beginning on February 1, 2003 and ending January 31, 2005 and thereafter
will remain in effect as long as its continuance is specifically approved at
least annually by (i) the Fund's Board of Directors, or by the vote of a
majority (as defined in the 1940 Act) of the outstanding shares of the Fund; and
(ii) by the vote of a majority of the directors of the Fund who are not
interested persons, cast in person at a meeting called for the purpose of voting
on such approval. The Proposed Advisory Agreement provides that it may be
terminated at any time without the payment of any penalty by the Board of
Directors of the Fund or by a vote of a majority of the outstanding shares of
the Fund on sixty days written notice to the Adviser, and by the Adviser on the
same notice to the Fund, and that it shall be automatically terminated if it is
assigned.
THE EVALUATION BY THE BOARD OF DIRECTORS AND DIRECTORS' RECOMMENDATION. The
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Fund's Board of Directors has determined that approving the Proposed Advisory
Agreement with Fiduciary Management, Inc. will enable the Fund to obtain
services of high quality at costs deemed appropriate, reasonable and in the best
interests of the Fund and its shareholders.
In making its determinations, the Fund's Board of Directors took into
consideration the fact that the Adviser has demonstrated its abilities as an
investment adviser while serving as the investment adviser to the Fund and that
the terms of the Current Advisory Agreement are identical to the terms of the
Proposed Advisory Agreement except for the fees payable to the Adviser and the
Adviser's obligation to reimburse the Fund if the Fund's expenses exceed certain
levels. In considering the fee increase contemplated by the Proposed Advisory
Agreement, the Board of Directors considered the performance of the Fund and the
investment advisory fees payable by, and the expense ratios of, other mutual
funds of similar size and having a similar investment strategy. The Adviser
represented to the Board of Directors that it would use a portion of the
increase in advisory fees to purchase third party investment research. The
Board of Directors also took into consideration that the fee schedule of the
Current Advisory Agreement included the break point at $30 million of average
daily net assets to address a state securities law requirement that was in
effect in 1981 when the Fund was organized but which has since been repealed.
The Board of Directors noted that (i) in the absence of that state securities
law requirement, there would have been no reason to have included a breakpoint
at $30 million of average daily net assets; (ii) the state securities law
requirement had never been adjusted for inflation; and (iii) a break point in
the advisory fee schedule at $30 million of average daily net assets is not a
typical feature of an investment advisory agreement for an investment company
having investment objectives and policies similar to those of the Fund.
Finally, the Board of Directors noted that while the increased investment
advisory fee would benefit the Adviser if the Fund's net assets remained at the
same level or increased, the change in the Adviser's obligation to reimburse the
Fund would benefit the Fund's shareholders if the Fund's net assets declined
significantly.
Based upon its review, the Fund's Board of Directors concluded that the
Proposed Advisory Agreement with the Adviser is reasonable, fair and in the best
interests of the Fund and its shareholders, and the fees provided in the
Proposed Advisory Agreement are fair and reasonable. In the Board's view,
retaining the Adviser to serve as investment adviser of the Fund, under the
terms of the Proposed Advisory Agreement, is desirable and in the best interests
of the Fund and its shareholders. Accordingly, after consideration of the above
factors, and such other facts and information as it deemed relevant, the Fund's
Board of Directors, including a majority of the directors who are not parties to
the Proposed Advisory Agreement or interested persons (as defined in the 1940
Act) of any such party, approved the Proposed Advisory Agreement with the
Adviser and voted to recommend its approval by the shareholders of the Fund.
VOTE REQUIRED. The favorable vote of the holders of a "majority" (as defined
--------------
in the 1940 Act) of the outstanding shares of the Fund is required for the
approval of the Proposed Advisory Agreement. Under the 1940 Act, the vote of
the holders of a "majority" of the outstanding shares of the Fund means the vote
of the holders of the lesser of (a) 67% or more of its shares present at the
special meeting or represented by proxy if the holders of 50% or more of its
shares are so present or represented; or (b) more than 50% of its outstanding
shares. Abstentions and broker non-votes (if any) will be counted as votes
present for purposes of determining whether a quorum is present. The failure to
vote (other than by broker non-votes or abstentions), assuming more than 50% of
the outstanding shares of the Fund are present, has no effect if (a) above is
applicable and has the same effect as a vote against the proposal if (b) above
is applicable. Abstentions and broker non-votes have the same effect as a vote
against the approval of the Proposed Advisory Agreement.
ADMINISTRATOR
The administrator for the Fund is Fiduciary Management, Inc. Its principal
office is located at 225 East Mason Street, Milwaukee, Wisconsin 53202. The
Fund has no principal underwriter.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202, currently serves as the independent accountants for the Fund and has so
served since the fiscal year ended September 30, 1989. Representatives of
PricewaterhouseCoopers LLP are not expected to attend the special meeting.
AUDIT FEES. For the Fund's fiscal year ended September 30, 2002, the
------------
aggregate fees paid to PricewaterhouseCoopers LLP for professional services
rendered for the audit of the Fund's annual financial statements and review of
the Fund's quarterly financial statements were $12,138.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The Fund did
--------------------------------------------------------------
not pay PricewaterhouseCoopers LLP any fees for services related to financial
information systems design and implementation during fiscal 2002.
ALL OTHER FEES. For the Fund's fiscal year ended September 30, 2002, the
----------------
aggregate fees paid to PricewaterhouseCoopers LLP for all other professional
services rendered for the Fund, the Adviser and any entity controlling,
controlled by or under common control with the Adviser, were $6,394. These fees
were for tax advice and related services.
The Fund's audit committee does not consider non-audit services rendered by
PricewaterhouseCoopers LLP to be incompatible with maintaining the independence
of PricewaterhouseCoopers LLP.
RECEIPT OF SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission, shareholder
proposals meeting tests contained in those rules may, under certain conditions,
be included in our proxy materials for a particular meeting of shareholders.
One of these conditions relates to the timely receipt by us of any such
proposal. Since we do not have regular annual meetings of shareholders, under
these rules, proposals submitted for inclusion in the proxy materials for a
particular meeting must be received by us a reasonable time before the
solicitation of proxies for the meeting is made. The fact that we receive a
shareholder proposal in a timely manner does not ensure its inclusion in our
proxy materials since there are other requirements in the proxy rules relating
to such inclusion.
OTHER MATTERS
The directors know of no other matters that may come before the special
meeting. If any other matters properly come before the special meeting, it is
the intention of the persons acting pursuant to the enclosed form of proxy to
vote the shares represented by said proxies in accordance with their best
judgment with respect to such matters.
SOLICITATION
We will bear the cost of soliciting proxies. We expect to solicit proxies
mainly by mail. Some of our employees may also solicit proxies personally and
by telephone. Also, we will reimburse brokers and other nominees for their
reasonable expenses in communicating with the persons for whom they hold shares
of the Fund.
YOU MAY REQUEST A COPY OF OUR LATEST ANNUAL REPORT AND SEMI-ANNUAL REPORT
SUCCEEDING THE ANNUAL REPORT BY WRITING TO FMI COMMON STOCK FUND, INC., 225 EAST
MASON STREET, MILWAUKEE, WISCONSIN 53202, ATTENTION CORPORATE SECRETARY, OR BY
CALLING 1-800-811-5311. WE WILL FURNISH THESE COPIES FREE OF CHARGE.
FMI COMMON STOCK FUND, INC.
/s/Donald S. Wilson
Donald S. Wilson
Secretary
Milwaukee, Wisconsin
December 9, 2002
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
OF FMI COMMON STOCK FUND, INC.
The undersigned constitutes and appoints Ted D. Kellner and Donald S. Wilson,
and each of them singly, with power of substitution, attorneys and proxies for
and in the name and place of the undersigned to appear and vote with the same
effect as the undersigned at the special meeting of shareholders of FMI Common
Stock Fund, Inc., on January 21, 2003, at 9:30 a.m. (Central Time), at the
Milwaukee Athletic Club, 758 North Broadway, Milwaukee, Wisconsin, and at any
adjournments or postponements thereof, all shares of stock of FMI Common Stock
Fund, Inc. that the undersigned is entitled to vote as follows:
1. To elect seven directors. FOR all WITHHOLD
(01) Barry K. Allen nominees AUTHORITY to
(02) George D. Dalton listed vote for all
(03) Patrick J. English (except as nominees
(04) Gordon H. Gunnlaugsson marked to listed at left
(05) Ted D. Kellner the contrary
(06) Paul S. Shain at left)
(07) Donald S. Wilson
o o
(Instruction: to withhold authority to
vote for any individual nominee, write
that nominee(s) name(s) in the space
provided below.)
FOR AGAINST ABSTAIN
To approve a new investment advisory o o o
agreement, increasing the advisory fee
In their discretion upon such other business as may properly come before the
meeting.
This proxy will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH PROPOSAL.
The signature on this proxy should correspond
exactly with the name of the shareholder as it
appears on the proxy. If stock is issued in the
name of two or more persons, each should sign the
proxy. If a proxy is signed by an administrator,
trustee, guardian, attorney or other fiduciary,
please indicate full title as such.
Dated --------------------, 200_
Signed
-------------------------------------------
Signed
-------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF
THE DIRECTORS OF FMI COMMON STOCK FUND, INC.
o Please check here if you WILL be attending the meeting.