1
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec.
240.14a-12
LINDNER INVESTMENTS
(Name of Registrant as
Specified In Its Charter)
N/A
(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:
(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:
(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:
2
[LINDER FUNDS LOGO]
- --------------------------------------------------------------------------------
May 17, 2001
Dear Fellow Lindner Fund Shareholder:
At Lindner Funds, we continue to devise strategies and implement changes to best
serve our shareholders. Last year, for example, we announced important additions
to the portfolio teams managing several of the Funds. At the same time, we were
able to share with you the good news of our achieving "The Best Mutual Funds Web
Site" award from the prestigious Web Marketing Association. Just recently, we
announced the successful outsourcing of back-office services to Firstar, an
established and experienced financial services support specialist. All of these
decisions were designed to improve shareholder service and enhance portfolio
management.
We continue to fashion an organization able to outsource critical tasks, whether
investment management or shareholder servicing, to established experts. The
following proposals are a continuation of these efforts. A special meeting of
shareholders will be held for your Fund at 9:00 a.m., Eastern Time, on Friday,
July 6, 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.
THE ABILITY TO ATTRACT, SUPERVISE AND COMPENSATE QUALITY MANAGERS
The first change is a proposal to adopt a "manager-of-managers" style that will
allow the Adviser to hire, terminate or replace a Subadviser for a Fund with the
approval of your Board of Trustees but without incurring the time and cost of
seeking shareholder approval. The Adviser will be able to move quickly to hire
managers with demonstrated expertise in a particular asset class. In addition,
Subadvisers will be evaluated for investment performance and market appeal. This
is important during the interview and hiring process, as well as ongoing
throughout the year.
The second change is a proposal to approve a new investment management agreement
that will increase management fees payable to the Adviser for certain Funds (but
not the Market Neutral or Money Market Funds) in order to enable the Adviser to
provide quality portfolio management with Subadvisers. The management fees for
each of the Lindner Funds have not been modified since each Fund was started.
These fees support the compensation of portfolio managers and support staff, as
well as the ever more complex technology and research needs. The proposed new
fees will support these efforts, and more closely track the industry averages
for each Fund's respective peer group.
12b-1 FEES WILL SERVE YOU
A third change 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 0.25% of average daily
net assets for all shares of the Investor Class of Shares within the Lindner
Funds is being proposed. Please note: this fee already is in place within the
Institutional Share Class.
PROPOSED FEE INCREASES ARE MODEST
At current asset levels, the proposed management fee increases and the addition
of 12b-1 fees (for the Investor Class) are NO MORE THAN 5 TO 6 CENTS PER $1,000
INVESTED FOR EACH FUND. In the Adviser's opinion, the new fees are essential to
modernize the advisory and distribution functions supporting your investment.
Highlights of these changes (as a percentage of assets under management) are:
ESTIMATED ADDITIONAL
ADD INCREASE CHANGE TO COST TO A
12B-1 MANAGEMENT OTHER NET $1,000
FEE* FEE EXPENSES** CHANGE INVESTMENT
----- ---------- ---------- ------ ----------
Lindner Large-Cap Fund.......................... 0.25% 0.19% 0.09% 0.53% 5.3 cents
Lindner Small-Cap Fund.......................... 0.25% 0.25% 0.03% 0.53% 5.3 cents
Lindner Asset Allocation Fund................... 0.25% 0.16% 0.11% 0.52% 5.2 cents
Lindner Utility Fund............................ 0.25% 0.30% 0.07% 0.62% 6.2 cents
Lindner Market Neutral Fund..................... 0.25% 0.00% 0.12% 0.37% 3.7 cents
- ---------------
* Investor share class only. Institutional Shares already have a 12b-1 plan.
** These are estimated expenses and include a 0.10% administration fee.
3
FOR SPECIFIC FUNDS, WE ALSO PROPOSE THE FOLLOWING:
SHAREHOLDERS OF LINDNER LARGE-CAP FUND AND LINDNER SMALL-CAP FUND
Employ Current Managers Under a Sub-Advisory Relationship
I discussed above the proposed "manager-of-managers" style. Under this style,
management teams will be employed as subadvisers rather than direct employees of
Lindner Asset Management, as has been our past practice. The portfolio managers
for the Large-Cap and Small-Cap Funds, each an investment professional from
CastleArk Management, assumed these responsibilities with Lindner Asset
Management last November. This proxy proposal would now allow the Adviser to
employ the CastleArk Management firm as its subadviser, rather than employing
only certain individuals. Beyond this change of structure, it will not impact
the daily management or investment objectives and strategies of your Fund(s).
SHAREHOLDERS OF LINDNER GOVERNMENT MONEY MARKET FUND
Employ Current Manager Under a New Sub-Advisory Contract
As a result of the assignment on May 1, 2001 by Firstar Bank, N.A. of its rights
under the sub-advisory agreement then in effect with the Adviser to U.S. Bancorp
Piper Jaffray Asset Management, Inc., ("PJAM") the shareholders of the Money
Market Fund are being asked to approve a new sub-advisory agreement with PJAM.
The investment personnel involved in the day-to-day management of the Fund on
behalf of Firstar were also transferred to PJAM and are now employed by it. The
new sub-advisory agreement is on the same terms in all material respects as the
previous sub-advisory agreement with Firstar Bank.
SHAREHOLDERS OF LINDNER ASSET ALLOCATION FUND
Change the Asset Allocation Fund's Investment Objective
Since the Fund's inception in 1976 (known previously as the Lindner Dividend
Fund), an emphasis on current income rather than capital appreciation has been
pursued. From the perspective of 25 years later, this approach does not appear
to best serve shareholders looking for a core investment, nor does it aid
portfolio managers in their efforts to manage such a portfolio. Your Trustees
recommend a new investment objective for the Fund: "LONG TERM CAPITAL
APPRECIATION WITH INCOME AS A SECONDARY INVESTMENT OBJECTIVE." If this objective
is approved by you, the Asset Allocation Fund's name will change to "LINDNER
GROWTH AND INCOME FUND," so as to better communicate the Fund's orientation, and
possible role in an investor's portfolio. The Adviser believes these changes
will not only serve current shareholders but position the Fund to attract new
investors.
SHAREHOLDERS OF LINDNER UTILITY FUND
Change the Utility Fund's Investment Objective from Income (with a focus on
Utilities) to Long-Term Growth (with a focus on the broader Communications
sector)
Utility funds have traditionally been conservative offerings with an emphasis on
current income through dividends. In recent years the category has garnered less
and less interest from investors, and exhibits only a limited potential for
asset growth. Your Trustees recommend a new investment objective for the Fund:
"LONG-TERM CAPITAL APPRECIATION." If this objective is approved by you, the
Fund's name will change to "LINDNER COMMUNICATIONS FUND." The broad-based
communications industry represents a more contemporary sector of the equity
market, one to which both sophisticated investors and their investment
counselors typically look to make an appropriate allocation.
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 or through the
Internet. 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- - , Monday through Friday, from 9:00 a.m. to 5:00 p.m., Central
time.
Sincerely,
Doug T. Valassis, Chairman
4
LINDNER INVESTMENTS
7711 CARONDELET AVENUE, SUITE 700
ST. LOUIS, MISSOURI 63105
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 6, 2001
To the Shareholders of Lindner Asset Allocation Fund, Lindner Large-Cap Fund,
Lindner Small-Cap Fund, Lindner Utility Fund, Lindner Market Neutral Fund and
Lindner Government Money Market Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Meeting") of
each of Lindner Asset Allocation Fund, Lindner Large-Cap Fund, Lindner Small-Cap
Fund, Lindner Utility Fund, Lindner Market Neutral Fund and Lindner Government
Money Market Fund (each a "Fund" and collectively the "Funds"), each a series of
Lindner Investments, a Massachusetts business trust (the "Trust"), will be held
at the offices of Dykema Gossett PLLC, 400 Renaissance Center, 23rd Floor,
Detroit, Michigan 48243 on Friday, July 6, 2001, at 9:00 o'clock a.m., Eastern
Time.
The Meeting will be held with respect to the Funds to consider and act upon the
following proposals:
PROPOSAL 1
To approve or disapprove a proposal that would authorize Lindner Asset
Management, Inc. (the "Adviser") to employ a "manager-of-managers" style,
subject to supervision and approval of the Board of Trustees of the Trust, that
will enable the Adviser to hire, terminate or replace investment Subadvisers for
each Fund without shareholder approval (Investor and Institutional Shares of All
Funds);
PROPOSAL 2
To approve or disapprove a new Investment Management Agreement between the Trust
and the Adviser, that enables the Adviser to employ a "manager-of-managers"
style, increases the management fee payable to the Adviser for certain Funds and
eliminates the provision of administrative services by the Adviser for all Funds
(Investor and Institutional Shares of All Funds);
PROPOSAL 3
To approve or disapprove a Distribution Plan pursuant to Rule 12b-1 for Investor
Shares of certain Funds (Investor Shares only of All Funds except the Government
Money Market Fund);
PROPOSAL 4
To approve or disapprove a new portfolio management (sub-advisory) agreement
between Lindner Asset Management, Inc. and CastleArk Management, LLC, for the
Large-Cap Fund (Investor and Institutional Shares of the Large-Cap Fund);
PROPOSAL 5
To approve or disapprove a new portfolio management (sub-advisory) agreement
between Lindner Asset Management, Inc. and CastleArk Management, LLC, for the
Small-Cap Fund (Investor and Institutional Shares of the Small-Cap Fund);
PROPOSAL 6
To approve or disapprove a new portfolio management (sub-advisory) agreement
between Lindner Asset Management, Inc. and U.S. Bancorp Piper Jaffray Asset
Management, Inc. for the Government Money Market Fund (Shares of the Government
Money Market Fund);
PROPOSAL 7
To approve or disapprove an amendment to the investment objective of the Asset
Allocation Fund (Investor and Institutional Shares of the Asset Allocation
Fund);
PROPOSAL 8
To approve or disapprove three separate proposals -- (a) to amend the investment
objective of the Utility Fund, (b) to amend the investment subclassification of
the Utility Fund, and eliminate a fundamental investment policy of the Utility
Fund in order to permit it to be operated as a "non-diversified" mutual fund and
(c) to amend the fundamental investment policy of the Utility Fund regarding
concentration in particular industries to eliminate the requirement that the
Utility Fund invest at least 65% of its total assets in securities issued by
Utilities (Investor Shares and Institutional Shares of the Utility Fund).
The Proposals are discussed in detail in the accompanying Proxy Statement. Only
shareholders of record of the Funds at the close of business on May 1, 2001, the
record date for the Meeting, shall be entitled to notice of, and to vote at, the
Meeting and any adjournments thereof.
YOUR TRUSTEES HAVE UNANIMOUSLY RECOMMENDED THAT YOU VOTE FOR ALL PROPOSALS.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY SHAREHOLDER WHO
DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE VOTING INSTRUCTIONS
ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE
PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID UNNECESSARY EXPENSE, WE ASK YOU MAIL YOUR PROXY CARD PROMPTLY, NO MATTER
HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
By order of the Board of Trustees,
Robert L. Miller, Secretary
May 17, 2001
YOUR VOTE IS IMPORTANT -- PLEASE RETURN YOUR PROXY CARD PROMPTLY
5
PROXY VOTING INFORMATION
The enclosed proxy statement discusses important issues affecting your Lindner
Fund. To make voting faster and more convenient for you, we are offering you the
option of voting through the Internet or by telephone instead of completing and
mailing the enclosed proxy card. Either method is generally available 24 hours a
day, and your vote will be confirmed and posted immediately. If you choose to
vote via the Internet or by telephone, do not mail the proxy card.
To vote over the Internet:
1. Read the Proxy Statement.
2. Go to www.proxyvote.com
3. Enter the control number shown on your proxy card.
4. Follow the instructions on the website.
To vote by telephone:
1. Read the Proxy Statement.
2. Call the toll-free number shown on your proxy card.
3. Enter the control number shown on your proxy card.
4. Follow the recorded instructions.
Instructions for Executing the Proxy Card:
The following general rules for executing proxy cards may be of assistance to
you and help avoid the time and expense involved in validating your vote if you
fail to properly execute your proxy card.
1. INDIVIDUAL ACCOUNTS: Your name should be signed exactly as it appears in
the registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. ALL OTHER ACCOUNTS should show the capacity of the individual signing.
This can be shown either in the form of the account registration itself
or by the individual executing the proxy card. Here are examples:
REGISTRATION/NAME VALID SIGNATURE(S)
- ----------------- ------------------
1. ABC Corp. or John Smith, Treasurer
ABC Corp.
c/o John Smith, Treasurer John Smith, Treasurer
2. ABC Corp. Profit Sharing Plan Ann B. Collins, Trustee
ABC Trust Ann B. Collins, Trustee
Ann B. Collins, Trustee
u/t/d 12/28/78 Ann B. Collins, Trustee
3. Anthony B. Craft, Cust.
f/b/o Anthony B. Craft, Jr., UGMA Anthony B. Craft
6
LINDNER INVESTMENTS
7711 CARONDELET AVENUE, SUITE 700
ST. LOUIS, MISSOURI 63105
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
OF
LINDNER ASSET ALLOCATION FUND
LINDNER LARGE-CAP FUND
LINDNER SMALL-CAP FUND
LINDNER UTILITY FUND
LINDNER MARKET NEUTRAL FUND
AND
LINDNER GOVERNMENT MONEY MARKET FUND
TO BE HELD ON JULY 6, 2001
INTRODUCTION
GENERAL
This Proxy Statement is furnished in connection with a solicitation of proxies
made by, and on behalf of, the Board of Trustees of Lindner Investments, a
Massachusetts business trust (the "Trust"), to be used at a Special Meeting of
shareholders of each of Lindner Asset Allocation Fund ("Asset Allocation Fund"),
Lindner Large-Cap Fund ("Large-Cap Fund"), Lindner Small-Cap Fund ("Small-Cap
Fund"), Lindner Utility Fund ("Utility Fund"), Lindner Market Neutral Fund
("Market Neutral Fund") and Lindner Government Money Market Fund ("Money Market
Fund") (each a "Fund," and collectively the "Funds") and at any adjournments
(the "Meeting"), to be held on Friday, July 6, 2001, at 9:00 a.m., Eastern Time,
at the offices of Dykema Gossett PLLC, 400 Renaissance Center, 23rd Floor,
Detroit, Michigan 48243. Each Fund is a separate investment portfolio, or
series, of the Trust.
The purposes of the Meeting for each Fund are set forth in the accompanying
Notice of Special Meeting of Shareholders. This solicitation of proxies is being
made primarily by the mailing of this Proxy Statement and the accompanying proxy
card on or about May 17, 2001. Supplementary solicitations may be made by U.S.
mail, telephone, telegraph, facsimile, electronic means or by personal interview
by representatives of the Trust. In addition, may be paid on a per
call basis to solicit shareholders on behalf of the Trust at an anticipated cost
of approximately $ ,000. The Trust has also arranged to have votes recorded
by telephone and through the Internet. If the Trust records votes by telephone
or through the Internet, 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. The expenses in connection with preparing this Proxy
Statement and its enclosures, of all solicitations and any other expenses
relating to the matters to be presented to shareholders will be borne 50% by the
Trust and 50% by Lindner Asset Management, Inc. ("Lindner Asset Management" or
the "Adviser"), provided that the Trust will not be required to pay more than
$75,000 of such expenses. Brokerage firms and others will be reimbursed for
their reasonable expenses in forwarding solicitation materials to the beneficial
owners of shares.
If the enclosed proxy card is executed and returned, or if you cast your vote by
phone or through the Internet, it may nevertheless be revoked at any time prior
to its use by written notification received by the Trust, by the execution of a
later-dated proxy card, by the Trust's receipt of a subsequent valid telephonic
or Internet vote or by attending the Meeting and voting in person.
1
7
All shares represented by all valid proxies received by phone, by Internet or by
mail will be voted at the Meeting in the manner specified. Where specific
choices are not indicated, the shares represented by all valid proxies received
will be voted FOR approval of all Proposals. With respect to Fund shares held in
individual retirement accounts (including Traditional, Rollover, SEP, SARSEP,
Roth and SIMPLE IRAs), the IRA Custodian will vote those shares for which it has
received instructions from shareholders only in accordance with such
instructions.
FOR A FREE COPY OF THE TRUST'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30,
2000, AND THE TRUST'S SEMI-ANNUAL REPORT FOR THE SIX MONTHS ENDED DECEMBER 31,
2000, CALL 1-800-995-7777 OR WRITE TO LINDNER ASSET MANAGEMENT, INC., AT 7711
CARONDELET, SUITE 700, ST. LOUIS, MISSOURI 63105. THESE REPORTS ARE ALSO
AVAILABLE FROM THE TRUST'S INTERNET WEBSITE, WWW.LINDNERFUNDS.COM.
SUMMARY OF PROPOSALS REQUIRING A SHAREHOLDER VOTE
MATTER PRESENTED FOR VOTE AND PAGE FUNDS AND CLASSES OF SHARES VOTING
- ---------------------------------- ----------------------------------
Proposal 1 (page 3):
Approve a "Manager-of-Managers" style for Investor and Institutional Shares of All
the Adviser to employ and terminate Funds
Subadvisers without further shareholder
approval
Proposal 2 (page 7):
Approve a new Investment Management Investor and Institutional Shares of All
Agreement between the Trust and Lindner Funds
Asset Management, Inc. that enables the
Adviser to employ a "manager-of-managers"
style, increases the management fee payable
to the Adviser for certain Funds and
eliminates the provision of administrative
services by the Adviser for all Funds
Proposal 3 (page 19):
Approve a Distribution Plan pursuant to Investor Shares of All Funds other than the
Rule 12b-1 for Investor Shares of certain Money Market Fund
Funds
Proposal 4 (page 21):
Approve a Sub-Advisory Contract with Investor and Institutional Shares of the
CastleArk Management, LLC, for the Large-Cap Fund
Large-Cap Fund
Proposal 5 (page 21):
Approve a Sub-Advisory Contract with Investor and Institutional Shares of the
CastleArk Management, LLC, for the Small-Cap Fund
Small-Cap Fund
Proposal 6 (page 25):
Approve a Sub-Advisory Contract with U.S. Shares of the Government Money Market Fund
Bancorp Piper Jaffray Asset Management
Inc., for the Government Money Market Fund
Proposal 7 (page 28):
Approve the amendment of the investment Investor and Institutional Shares of the
objective of the Asset Allocation Fund Asset Allocation Fund
2
8
MATTER PRESENTED FOR VOTE AND PAGE FUNDS AND CLASSES OF SHARES VOTING
- ---------------------------------- ----------------------------------
Proposal 8 (page 29):
(A) Approve an amendment to the investment Investor and Institutional Shares of the
objective of the Utility Fund to change its Utility Fund
objective to long-term capital
appreciation,
(B) Approve an amendment to the investment
subclassification of the Utility Fund and
eliminate a fundamental investment policy
of the Utility Fund to permit it to operate
as a "non-diversified" fund, and
(C) Approve an amendment to the fundamental
investment policy of the Utility Fund
eliminating the requirement that it
concentrate its investments in securities
of "Utilities".
BACKGROUND AND REASONS FOR THE PROPOSALS
During 1998, management of the Adviser became convinced that the structure and
operations supporting the Lindner family of Funds could be enhanced for the
benefit of the Trust's shareholders. As a first step to reinvigorate the funds,
during the spring of 1999 the Adviser hired five experienced investment
professionals based in Virginia Beach, Virginia, and Boston, Massachusetts. This
group instituted new investment strategies and techniques, new portfolio
analyses, comprehensive trading controls and in-depth research techniques.
Indeed, management of the Adviser and the Board of Trustees of the Trust (the
"Board") are committed to fashioning an organization that is able to outsource
many of the most critical tasks, whether investment management or shareholder
servicing, to established experts. Earlier this year, the transfer agency and
fund accounting services were outsourced to an established third-party vendor in
order to improve the services available to Fund shareholders.
During the third and fourth quarters of 2000, a strategic re-evaluation of the
Lindner family of Funds was undertaken by outside consultants, which included
the product line and the distribution strategy, as well as implementation
recommendations. From December 2000 through March 2001, the Adviser's management
group, together with the Board and their independent counsel reviewed these
recommendations at regular and special meetings called specifically for that
purpose. At meetings of the Board of Trustees held on March 12 and April 30,
2001, the proposals described below were presented to the Trustees, and approved
by the Board, including a majority of the independent Trustees.
PROPOSAL 1
TO AUTHORIZE THE ADVISER, SUBJECT TO THE SUPERVISION AND
APPROVAL OF THE BOARD OF TRUSTEES OF THE TRUST, TO ADOPT A
"MANAGER-OF-MANAGERS" STYLE THAT WILL ENABLE THE ADVISER TO
HIRE, TERMINATE OR REPLACE INVESTMENT SUBADVISERS FOR A FUND,
AND TO MAKE MATERIAL CHANGES IN A SUB-ADVISORY CONTRACT
FOR A FUND, ALL WITHOUT SHAREHOLDER APPROVAL.
(TO BE VOTED ON BY HOLDERS OF INVESTOR AND INSTITUTIONAL SHARES OF ALL FUNDS)
WHAT AM I BEING ASKED TO APPROVE?
Proposal 1 would permit the Adviser to hire, terminate or replace investment
Subadvisers for each Fund, and make material changes to a Sub-Advisory Contract
for each Fund, without obtaining approval of the relevant
3
9
Fund's shareholders, but subject to the supervision and approval of the Board.
THIS IS CALLED A "MANAGER-OF-MANAGERS" STYLE AND THE ADVISER INTENDS TO USE THIS
MANAGEMENT STYLE IN THE FUTURE TO MANAGE EACH FUND. This proposal is being
submitted to the shareholders of each Fund for approval as required by the terms
of an exemptive application filed with the Securities and Exchange Commission
(the "SEC"), and will not become effective with respect to any particular Fund
unless and until (1) the SEC has granted the relief requested in the exemptive
application; (2) this proposal has been approved by the Fund's shareholders and
(3) Proposal 2 (relating to a new investment management agreement) has been
approved by the Fund's shareholders.
HOW ARE THE FUNDS CURRENTLY MANAGED AND HOW WILL THEY BE MANAGED?
Currently, portfolio managers for the Lindner Funds are employed directly by the
Adviser, and in that capacity they make the day-to-day investment decisions for
the Asset Allocation, Large-Cap, Small-Cap, Utility and Market Neutral Funds.
This management style has historically been the more common management style for
mutual funds. As the mutual fund business has grown, there has been an increased
willingness to separate fund distribution from fund portfolio management.
Moreover, advisory firms no longer feel compelled to manage all fund portfolios
using their own personnel. Rather, advisory firms are hiring other managers with
proven capabilities to assume the day-to-day investment operations of a fund as
a subadviser. These subadvisory relationships now are used to enhance product
lines, since fund families no longer have to try to add value and outperform
across every investment category on their own. The increasing popularity of
subadvisory relationships has allowed for the growth of "virtual" fund groups.
The Adviser currently uses U.S. Bancorp Piper Jaffray Asset Management, Inc., as
the interim Subadviser for the Government Money Market Fund and is proposing to
continue this arrangement, subject to approval by the shareholders of that Fund.
The Adviser is also proposing to use CastleArk Management, LLC, as a Subadviser
for both the Large-Cap Fund and the Small-Cap Fund, subject to approval of the
proposed Sub-Advisory Agreements for each Fund by the shareholders of that Fund
(See Proposals 4, 5 and 6 below).
Lindner Asset Management seeks the approval of shareholders for the operation of
their Fund in a "manager-of-managers" style. Although this style will be put
into place for each Fund whose shareholders approve this Proposal and Proposal 2
(but only after the SEC has issued the requested exemptive order), the Adviser
will not contract with new Subadvisers pursuant to this style unless and until
the Board determines that a change in subadvisory arrangements is appropriate.
In making this determination for a particular Fund, Lindner Asset Management
intends to evaluate rigorously potential Subadvisers according to objective and
disciplined standards that will be applied to evaluate a potential Subadviser's
performance results over time, its style-specific investment strategies and its
risk tolerance. Once selected, a Subadviser will be subject to on-going thorough
monitoring and oversight; a Subadviser's activities and performance will be
analyzed on a daily, weekly, monthly, quarterly and annual basis, and will
include a review of every aspect of the Subadviser's activities, from securities
trading to complete organizational reviews.
Under the "manager-of-managers" style, the Adviser will:
- continue to be responsible for analyzing economic and market trends;
- formulate and continue the assessment of investment policies and
recommend changes to the Board where appropriate;
- provide general investment services to the Funds and, subject to Board
and independent Trustees review and approval, will (i) set each
Subadviser's overall investment strategies, (ii) monitor and evaluate
Subadviser performance in light of selected benchmarks and the needs of
each Fund, and (iii) oversee Subadviser compliance with each Fund's
investment objectives, policies and restrictions, as well as with
applicable laws and regulations;
- evaluate potential new and replacement Subadvisers and recommend changes
to the Board where appropriate; and
- report to the Board and shareholders on the foregoing.
4
10
Under the supervision of the Adviser and the general oversight of the Board,
each Subadviser in turn will be responsible for continuously managing a
particular Fund's investment portfolio. It is anticipated that implementation of
Proposal 1 will enable the Trust to achieve a higher degree of management
efficiency and will reduce the need for costly shareholder meetings in the
future.
WHAT ROLE DOES THE SEC PLAY IN APPROVING PROPOSAL 1?
Section 15(a) of the Investment Company Act of 1940 (the "1940 Act") requires
that all contracts pursuant to which persons serve as investment advisers to
investment companies be approved by shareholders. As interpreted, this
requirement applies to the appointment of investment Subadvisers to any Fund for
which the Adviser acts or in the future will act as an investment adviser. The
SEC has previously granted exemptions from the shareholder approval requirements
under certain circumstances for mutual funds utilizing the "manager-of-managers"
style. The Trust and the Adviser have applied for such an exemptive order. If
the SEC approves the application of the Trust and the Adviser, and if
shareholders approve Proposal 1, the Board would, without further shareholder
approval, be able to appoint initial, additional or replacement Subadvisers. The
Board would not, however, be able to replace Lindner Asset Management as the
adviser without receiving shareholder approval, as required by the 1940 Act and
applicable SEC regulations governing investment company advisory contracts.
There can be no assurance that the requested SEC exemptive order will be
granted.
The SEC has in the past required mutual funds seeking relief similar to that
sought by the Trust and the Adviser to agree to the following conditions:
- before a Fund may rely on the SEC exemptive order, the operations of the
Fund under a "manager-of-managers" structure will be approved by that
Fund's shareholders (approval of Proposal 1 will satisfy this
requirement), and in the case of a new Fund whose public shareholders
purchase shares on the basis of a prospectus containing the disclosure
contemplated by the next condition below, the operation of that Fund
under a "manager-of-managers" structure will be approved by the sole
shareholder before offering shares of that Fund to the public;
- the prospectus of each "manager-of-managers" Fund must disclose the
existence, substance and effect of the SEC order, as well as contain
prominent disclosure that the Adviser has ultimate responsibility for the
investment performance of the "manager-of-managers" Fund due to its
responsibility to oversee the Subadvisers and recommend its hiring,
termination and replacement, and, in addition, each "manager-of-managers"
Fund must hold itself out to the public as employing the "manager-of-
managers" structure;
- within 90 days of the hiring of a new investment Subadviser for a Fund or
the implementation of any proposed change in a Sub-Advisory Contract, the
Adviser will provide shareholders of each Fund with information about the
new Subadviser that meets the applicable SEC proxy regulation
requirements;
- the Adviser will not enter into a Sub-Advisory Contract with any
affiliated Subadviser (as defined in Section 2(a)(3) of the 1940 Act)
without such agreement, including the compensation to be paid thereunder,
being approved by the shareholders of the particular Fund;
- at all times, at least a majority of the Trust's Board will not be
"interested persons" within the meaning of Section 2(a)(19) of the 1940
Act, and the nomination of new or additional independent Trustees will be
placed within the discretion of the then existing independent Trustees;
- when an investment Subadviser change is proposed for a Fund with an
affiliated Subadviser, the Board, including a majority of the independent
Trustees, must make a separate finding, reflected in the Board's minutes,
that such change is in the best interests of a Fund and its shareholders
and does not involve a conflict of interest from which the Adviser or the
affiliated Subadviser derives an inappropriate advantage;
5
11
- the Adviser will provide general investment services to each Fund and,
subject to Board and independent Trustees review and approval, will (i)
set each Subadviser's overall investment strategies, (ii) recommend
Subadvisers, (iii) monitor and evaluate Subadviser performance, and (iv)
oversee Subadviser compliance with a Fund's investment objectives,
policies and restrictions; and
- no Trustee, director or officer of the Trust or the Adviser will own
directly or indirectly (other than through a pooled investment vehicle
over which such person does not have control) any interest in an
investment Subadviser except for (i) ownership of interests in the
investment adviser or any entity that controls, is controlled by or is
under common control with the investment adviser; or (ii) ownership of
less than 1% of the outstanding securities of any class of equity or debt
of a publicly traded company that is either a Subadviser or an entity
that controls, is controlled by or is under common control with a
Subadviser.
If the SEC changes these conditions for granting the relief as requested by the
Trust and the Adviser, or if the Order is granted with materially different
conditions, the Trust will take appropriate action, which could include
soliciting shareholders for re-approval of Proposal 1 in light of the new
conditions.
WHAT DID THE TRUSTEES CONSIDER IN APPROVING THIS PROPOSAL?
The "manager-of-managers" proposal is intended to facilitate the efficient
operation of those Funds with investment Subadvisers, afford the Trust increased
management flexibility and allow the Adviser to perform to the fullest extent
the principal functions the Trust is paying it to perform with respect to
investment Subadvisers. Those functions typically include continuously
monitoring the performance of the Subadvisers and, when necessary, recommending
that the Board approve the replacement of a Subadviser or appoint an additional
Subadviser, depending on the investment adviser's assessment of a Subadviser's
performance and the probability of such investment Subadviser achieving a Fund's
investment objectives. Under the current structure, significant time may be lost
in securing the required shareholder votes to effect a manager change that has
previously been recommended by the Adviser and deemed to be appropriate by the
Board. In addition to the substantial time delay, there would also be
significant costs incurred in soliciting shareholder votes. Thus, the Board
believes that approval of Proposal 1 will benefit shareholders.
In determining to recommend approval of Proposal 1, the Board also took into
account the following factors:
- Subadvising in this style can quickly bring expertise in particular asset
classes or investment objectives without having to train or educate
existing portfolio managers of the Adviser;
- The "manager-of-managers" style allows the Board of Trustees and the
Adviser to change Subadvisers based on their evaluation of a Subadviser's
track record and its reputation as a money manager for a particular asset
class;
- A well-known Subadviser can favorably impact sales and marketing for a
particular Fund;
- This style is a cost-effective alternative to hiring a full-time
portfolio management team which typically includes researchers and traders
in addition to portfolio managers; and
- An underperforming Subadviser can be terminated with relative ease
compared with the process required to deal with full-time employees with
long-term contracts and other types of benefits.
At a special Board meeting held on March 12, 2001, the Board, including a
majority of the independent Trustees, approved the submission to shareholders of
the proposed "manager-of-managers" style. Prior to the meeting each Trustee
received materials discussing this type of management structure. At this meeting
and at a previous meeting held on February 19, 2001, the Trustees attended a
presentation on the proposed structure and had the opportunity to ask questions
and request further information in connection with such consideration. The
Trustees gave primary consideration to the fact that the new style would enable
the Adviser, with approval of the Board, to hire Subadvisers and amend
Sub-Advisory Contracts more efficiently and with less expense. The Board took
into account the fact that the Adviser could not, without the prior approval of
the Board, including approval by a majority of the independent Trustees, (1)
appoint a new
6
12
Subadviser, (2) terminate a Subadviser or (3) make material amendments to
existing Sub-Advisory Contracts. Finally, the Board also considered that any
selection of additional or replacement Subadvisers would have to comply with
conditions contained in the SEC exemptive order, if it is granted.
WHEN WILL THIS PROPOSAL BE IMPLEMENTED?
If approved, the "manager-of-managers" style will be implemented as soon as
practicable after receipt of the requested SEC exemptive order; however, as
noted above, the "manager-of-managers" style will only be implemented for a Fund
if the shareholders of that Fund have approved the Proposed Advisory Agreement
described under Proposal 2 below for that Fund. If Proposal 2 is not approved
for a particular Fund, the Adviser does not believe that it will have sufficient
resources (i.e., advisory fees) to seek out and employ the high quality of
Subadvisers that it intends to utilize under the "manager-of-managers" style. If
the "manager-of-managers" style is implemented, the Adviser will seek out
potential Subadviser candidates for the Asset Allocation, Utility and Market
Neutral Funds (and for the Large-Cap Fund, the Small-Cap Fund and/or the Money
Market Fund, if any or all of Proposals 4, 5 or 6 are not approved), and will
negotiate with such candidates an appropriate Sub-Advisory Contract that will
then be presented to the Board for approval. In the future, if Proposal 1 is
approved, Trust will utilize the "manager-of-managers" style when it offers new
funds that have a particular focus in terms of asset class, investment objective
or investment strategies.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE FOR THE
APPROVAL OF PROPOSAL 1.
VOTE REQUIRED
SHAREHOLDERS OF EACH FUND WILL VOTE SEPARATELY ON APPROVAL OF THIS PROPOSAL.
APPROVAL OF PROPOSAL 1 REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE
OUTSTANDING VOTING SECURITIES OF A FUND THAT ARE PRESENT AT THE MEETING IN
PERSON OR REPRESENTED BY PROXY.
PROPOSAL 2
TO APPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT
BETWEEN THE TRUST AND LINDNER ASSET MANAGEMENT, INC.
(TO BE VOTED ON BY HOLDERS OF INVESTOR AND INSTITUTIONAL SHARES OF ALL FUNDS)
WHAT AM I BEING ASKED TO APPROVE?
Proposal 2 asks the shareholders of each Fund to approve a new investment
management agreement (the "Proposed Advisory Agreement") between the Trust and
Lindner Asset Management, Inc. (the "Adviser") that will be applicable to each
Fund. The Proposed Advisory Agreement, if approved by shareholders, will replace
the separate advisory agreements (the "Current Advisory Contracts") currently in
place for each Fund. The Board is asking you to vote on the Proposed Advisory
Agreement because the Trust may enter into a new advisory agreement only with
shareholder approval. The Proposed Advisory Agreement is attached to this Proxy
Statement as Exhibit A.
WHO IS THE FUNDS' INVESTMENT ADVISER?
The Funds are currently managed pursuant to separate investment advisory
agreements for each Fund between the Trust and the Adviser. The Adviser became
the investment adviser for each Fund on the date indicated in the following
table. The table also sets forth the date that each Fund's shareholders last
voted on the Current Advisory Contract and the purpose for such a vote. The date
of each Current Advisory Contract for a Fund is the same date that the Adviser
became the investment adviser for that Fund. Aside from a change in the
7
13
performance benchmark for the Large-Cap Fund in 1998, none of the Current
Advisory Contracts has been updated or amended.
DATE ON WHICH THE CURRENT
DATE ON WHICH ADVISORY AGREEMENT WAS
LINDNER ASSET MANAGEMENT LAST SUBMITTED TO A VOTE OF
NAME OF FUND BECAME THE ADVISER SHAREHOLDERS AND PURPOSE OF VOTE
- ------------ ------------------------ ----------------------------------
Asset Allocation Fund June 28, 1995 June 28, 1995; initial approval of
contract.
Large-Cap Fund June 28, 1995 November 6, 1998; approval of a
change in the index used to
measure the Adviser's performance.
Small-Cap Fund September 23, 1993 September 23, 1993; initial
approval of contract.
Utility Fund September 23, 1993 September 23, 1993; initial
approval of contract.
Market Neutral Fund September 23, 1993 September 23, 1993; initial
approval of contract.
Money Market Fund May 20, 1996 May 20, 1996; initial approval of
contract.
The Adviser is controlled by Valassis Irrevocable Trusts established for the
benefit of Doug T. Valassis, D. Craig Valassis and their sister, Debra A.
Lyonnais. The Adviser's address is 7711 Carondelet Avenue, Suite 700, St. Louis,
MO 63105. As of April 10, 2001, these trusts together beneficially owned 65% of
the voting stock of the Adviser. The Trustees of these trusts are Doug T.
Valassis, D. Craig Valassis and Edward W. Elliott. Eric E. Ryback and trusts
established for his children own the remaining 35% of the common stock of the
Adviser. As shown below, Doug Valassis and Eric Ryback, who are Trustees and
officers of the Trust, are also directors and/or officers of the Adviser, and
Robert Miller, who is an officer of the Trust, is also an officer of the
Adviser. The following table sets forth the name, address and principal
occupation of each principal executive officer and director of the Adviser. The
only purchase or sale of securities of the Adviser which has occurred since July
1, 1999, by any Trustee or officer of the Trust was the sale by Doug T. Valassis
of 900 shares of common stock of the Adviser (6.5% of the outstanding shares of
such stock) to the three Valassis Irrevocable Trusts on March 30, 2001, for the
consideration of $1,250,520, which consideration was provided by the forgiveness
of indebtedness owing by Mr. Valassis to the Valassis Irrevocable Trusts.
NAME AND ADDRESS PRINCIPAL OCCUPATION POSITION(S) WITH THE ADVISER
- ---------------- -------------------- ----------------------------
Doug T. Valassis Chairman of the Adviser; Director and Chairman
520 Lake Cook Road Chairman of the Trust;
Suite 380 President of Franklin
Deerfield, IL 60015 Enterprises, Inc., a private
investment firm owned by
members of Mr. Valassis'
family
Robert L. Miller Vice President and Treasurer Director and Secretary
520 Lake Cook Road of Franklin Enterprises,
Suite 380 Inc.; Vice President,
Deerfield, IL 60015 Treasurer and Secretary of
the Trust
D. Craig Valassis Private investor and part Director
39400 Woodward Avenue owner of Franklin
Suite 270 Enterprises, Inc.
Bloomfield Hills, MI 48304
8
14
NAME AND ADDRESS PRINCIPAL OCCUPATION POSITION(S) WITH THE ADVISER
- ---------------- -------------------- ----------------------------
Eric E. Ryback Private investor Director and President
7343 Westmoreland
St. Louis, MO 63130
During the fiscal year ended June 30, 2000, and the six month period ended
December 31, 2000, certain of the Funds paid brokerage commissions of $21,517
and $7,645, respectively (0.6% and 0.4% of total brokerage commissions paid by
the Funds during such period, respectively), to Bemos Investments Advisers, LLC
("Bemos"), a broker that is an affiliated person of Doug T. Valassis, Chairman
of the Trust and the Adviser. Mr. Valassis controls certain investment entities
that own 85% of the voting securities of Bemos. All such payments were reviewed
by the Board of Trustees at regular quarterly meetings and were determined to be
in compliance with the requirements and conditions of Rule 17e-1 under the 1940
Act.
WHAT ARE THE TERMS OF THE CURRENT ADVISORY CONTRACTS?
Under the Current Advisory Contracts, the Adviser, subject to the supervision of
the Board and in conformance with the stated policies of the Funds, manages the
investment and reinvestment of the assets of each Fund. The Current Advisory
Contracts provide that, in fulfilling its responsibilities, the Adviser may hire
a Subadviser with respect to any Fund. At present, the only Subadvisers that
have been hired by the Adviser to provide investment management services are
Firstar Bank, N.A., which acted as Subadviser for the Money Market Fund from May
20, 1996, until May 2, 2001, and U.S. Bancorp Piper Jaffray Asset Management,
Inc., which is currently acting as interim Subadviser for the Money Market Fund.
The final Sub-Advisory Contract for this Fund is being submitted for approval by
shareholders of the Money Market Fund as Proposal 6 below.
Under each Current Advisory Contract, the Adviser provides each Fund with
investment advisory services, office space, and personnel, and pays the salaries
and fees of the Trust's officers and trustees who are "interested persons" of
the Trust and all personnel rendering clerical services relating to the
investments of each Fund. The Adviser also pays all promotional expenses of the
Trust, including the printing and mailing of the prospectus to people who are
not current shareholders. The Trust pays all other costs and expenses including
interest, taxes, fees of trustees who are not "interested persons" of the Trust,
other fees and commissions, expenses directly related to the issuance and
redemption of shares (including expenses of registering or qualifying shares for
sale in each state), charges of custodians, transfer agents, and registrars, the
costs of printing and mailing annual and semi-annual reports and notices to
shareholders, auditing services and legal services, and other expenses not
expressly assumed by the Adviser.
The Current Advisory Contracts are renewable annually only if such continuance
is specifically approved at least annually (i) by the Board of Trustees or the
vote of a majority of the outstanding voting securities of that Fund (as defined
in the 1940 Act), and (ii) by the affirmative vote of a majority of independent
Trustees by votes cast in person at a meeting called for such purpose. Each
Current Advisory Contract provides that the Board or a majority of the
outstanding voting securities of a Fund, or the Adviser may terminate the
agreement upon 60 days' written notice without penalty. Each Current Advisory
Contract terminates automatically in the event of its assignment.
HOW DOES THE PROPOSED ADVISORY AGREEMENT DIFFER FROM THE CURRENT ADVISORY
CONTRACTS?
The Proposed Advisory Agreement differs from the Current Advisory Contracts
primarily by:
- Granting authority for the Adviser to manage each Fund in a
"manager-of-managers" style, as described in greater detail above;
- Eliminating the provision of administrative services by the Adviser;
- Establishing a contractual agreement by the Adviser to waive a portion of
its management fee in order to limit Total Operating Expenses for each
Fund to pre-determined maximums;
9
15
- Setting new advisory fees for each Fund other than the Market Neutral
Fund and the Money Market Fund; and
- Eliminating the performance bonus/penalty fee for the Large-Cap Fund.
Each of these changes is discussed more fully below. Except for these changes,
the terms of the Current Advisory Contracts and the Proposed Advisory Agreement
are substantially similar, except for the effective date and the renewal date.
ADMINISTRATIVE SERVICES
The Current Advisory Contracts require the Adviser to provide or arrange for the
provision of certain administrative services to each Fund. The Board proposes to
separate the advisory services and the administrative services that the Adviser
provides to each Fund, so that the provision of all administrative services is
dealt with separately in an Administration Agreement. As a result, the Proposed
Advisory Agreement eliminates the requirement that the Adviser provide
administrative services. Instead, the administrative services to be provided by
the Adviser are set forth in a new Administration Agreement, which you are not
being asked to vote on. The Adviser recommended this separation of services to
modernize and simplify each Fund's organization and operations and to create a
structure that is in line with current industry practices.
The new Administration Agreement will provide that the Adviser will provide the
following services in exchange for an annual fee (calculated daily and paid
monthly) equal to 0.10% of the average net assets of each Fund to which the
Administration Agreement applies:
- Develop the Funds' expense budgets, determine the daily expense accruals
and administer expense payments to vendors;
- Calculate dividend distributions, administer the payment of dividends
through the transfer agent and review year end tax reporting;
- Assist auditors is preparation and filing of tax returns and in assuring
compliance with applicable provisions of the Internal Revenue Code to
qualify each Fund as a regulated investment company;
- Develop valuation policies for the Trustees' approval and facilitate
communication between portfolio managers and Fund accountants regarding
pricing issues;
- Prepare the Funds' financial statements and coordinate printing and
distribution of reports, newsletters, proxy materials and other
communications to shareholders;
- Prepare financial information for inclusion in the Trust's registration
statements, proxy statements and other shareholder reports;
- Calculate, manage and monitor the use of Fund performance data;
- Monitor trading compliance by employees and Subadvisers;
- Monitor compliance with the 1940 Act and applicable SEC regulations;
- Negotiate fees and contracts with service providers and vendors and
monitor the performance of all service providers;
- Assist independent accountants in the annual audit of the Trust's
operations;
- Prepare regular reports to the Board of Trustees and prepare materials
for board meetings; and
- Provide officers for the Trust and attend meetings and report to the
Board as needed.
The initial term of the Administration Agreement will be two years, unless
terminated prior to that date. The agreement is renewable year to year
thereafter with respect to the Funds, but only as long as such continuance is
specifically approved for the Funds by the Board at least annually.
10
16
During the fiscal year ended June 30, 2000, and the six month period ended
December 31, 2000, the Trust paid the Adviser $90,808 and $31,687, respectively,
as fees for administrative services to the Lindner Opportunities Fund and the
Money Market Fund pursuant to separate Administration Agreements that the Trust
has with the Adviser for such Funds. In addition, until February 19, 2001, the
Adviser also served as transfer agent for all of the Lindner Funds, and the
Trust paid the Adviser $556,935 and $287,719 in transfer agent fees for the
fiscal year ended June 30, 2000, and for the six months ended December 31, 2000,
respectively. Effective on February 19, 2001, Lindner Asset Management ceased to
serve in this capacity, and the transfer agent function was assumed by Firstar
Mutual Fund Services, LLC, which provides shareholders with access to a broader
array of services.
EXPENSE REIMBURSEMENT AND FEE WAIVERS
The Proposed Advisory Agreement provides that for the fiscal years of the Trust
ending June 30, 2002 and 2003, the Adviser will waive a portion of its annual
advisory fee in order to assure that the Total Operating Expenses of each Fund
(which include administrative expenses, transfer agent fees, fund accounting
fees, shareholder servicing fees, Trustees' meeting fees, legal and accounting
fees, postage, printing and mailing expenses and other types of office overhead,
but do not include brokerage commissions) will not exceed the maximum amount
(expressed as percentage of the Fund's average net assets) set forth in the
table below. After July 1, 2003, the Adviser will be permitted to terminate this
fee waiver, unless the Board decides to require that the Adviser agree to
continue this fee waiver as a condition to the Board's approval of the extension
of the Proposed Advisory Agreement beyond its initial two-year period (Board
approval of any extension is required under the 1940 Act).
In addition to the fee waiver that is intended to control Total Operating
Expenses of each Fund, because the Proposed Advisory Agreement is primarily
intended to facilitate the implementation of the "manager-of-managers" style,
the Advisor has also contractually agreed that it will waive that portion of its
advisory fee for each Fund in excess of the management fee payable under the
Current Advisory Contract for that Fund until such time as a qualified
Subadviser has been engaged for that Fund and approved by the Board of Trustees.
The following chart sets forth the actual annual advisory fees paid by each Fund
during the fiscal year ended June 30, 2000, the annual advisory fees proposed
under the Proposed Advisory Agreement and the maximum amount of Total Operating
Expenses that the Adviser has agreed to permit each Fund to incur, in each case
as a percentage of average net assets of the Fund:
CURRENT FEE -- PROPOSED
FISCAL YEAR ENDED MAXIMUM TOTAL
NAME OF FUND JUNE 30, 2000 PROPOSED FEE OPERATING EXPENSE*
- ------------ ----------------- ------------ ------------------
Asset Allocation Fund........................... 0.54% 0.70% 1.25%
Large-Cap Fund.................................. 0.61% 0.80% 1.35%
Small-Cap Fund.................................. 0.70% 0.95% 1.50%
Utility Fund.................................... 0.70% 1.00% 1.55%
Market Neutral Fund............................. 1.00% 1.00% 2.18%
Money Market Fund............................... 0.15% 0.15% 0.50%
- ---------------
* As noted above, under the Proposed Advisory Agreement, the Adviser will
contractually agree to limit operating expenses, including waiving a portion
of its management fee that it would otherwise be entitled to if the Total
Operating Expenses of any Fund exceed, on an annual basis, the maximums
stated.
CURRENT COMPENSATION
The current fee structure for each Fund under the Current Advisory Contracts is
as follows:
Asset Allocation Fund. The current advisory agreement for the Asset
Allocation Fund requires payment of a quarterly fee to the Adviser at the
annualized rate of 0.7% of the average net assets of the Asset Allocation
Fund not in excess of $50 million, 0.6% of the Asset Allocation Fund's
average net assets in
11
17
excess of $50 million and up to $200 million and 0.5% of the Asset
Allocation Fund's average net assets in excess of $200 million. For
purposes of computing the quarterly fee, the Asset Allocation Fund's
average net assets are calculated by dividing the sum of the Asset
Allocation Fund's net assets at the beginning and end of each month in the
fiscal quarter by six.
Large-Cap Fund. The current advisory agreement for the Large-Cap Fund
requires payment of a basic fee to the Adviser of 0.7% per annum of the
first $50 million of average net assets of the Large-Cap Fund, plus 0.6% of
the next $350 million and 0.5% of the excess over $400 million, subject to
increase or decrease (performance bonus or penalty) depending on the
Large-Cap Fund's investment performance compared with the investment record
of the Russell 2000 Index (the "Index"). Investment performance of the
Large-Cap Fund means the sum of the change in its net asset value during
the fiscal year and the value of dividends and capital gains distributions
per share accumulated to the end of the fiscal year, expressed as a
percentage of net asset value per share at the beginning of the fiscal
year. In computing the investment performance of the Large-Cap Fund and the
investment record of the Index, distributions of realized capital gains by
the Large-Cap Fund, dividends paid by the Large-Cap Fund out of its
investment income, and all cash distributions of the Companies whose stocks
comprise the Index, are treated as reinvested.
FEE SCHEDULE FOR LARGE-CAP FUND
EXCESS
FIRST $50 NEXT $350 OVER $400
MILLION MILLION OF MILLION OF
OF ASSETS ASSETS ASSETS
--------- ---------- ----------
IF THE LARGE-CAP FUND'S PERFORMANCE EXCEEDS THE
INDEX BY:
more than 12%................................ 0.9% 0.8% 0.7%
more than 6% but less than 12%............... 0.8% 0.7% 0.6%
less than 6%................................. 0.7% 0.6% 0.5%
IF THE LARGE-CAP FUND'S PERFORMANCE FALLS BELOW
THE INDEX BY:
less than 6%................................. 0.7% 0.6% 0.5%
more than 6% but less than 12%............... 0.6% 0.5% 0.4%
more than 12%................................ 0.5% 0.4% 0.3%
The maximum fee possible, assuming maximum performance, is 0.9% of the
first $50 million of average net assets, 0.8% of the next $350 million, and
0.7% of the excess over $400 million. The smallest fee possible, assuming
poorest performance, is 0.5% of the first $50 million of average net
assets, 0.4% of the next $350 million, and 0.3% of the excess over $400
million. The basic fee may be increased or decreased, in accordance with
the foregoing formula, during a particular year despite the fact that (1)
there may be no change in the Index, if there is an increase or decrease in
the net asset value per share of the Large-Cap Fund of at least 6%, or (2)
there may be no change in the net asset value per share of the Large-Cap
Fund, if there is an increase or decrease in the Index of at least 6%. The
Large-Cap Fund's average net assets is the sum of the net assets exclusive
of any accrued performance bonus or penalty at the beginning and end of
each month of the fiscal year, divided by 24. In partial payment of amounts
so accrued, the Adviser is entitled to receive quarterly installments of
1/10 of 1% of average net assets toward the annual fee, subject to the
foregoing expense limitation applied on a quarterly basis; the excess, if
any, of the annual fee over the quarterly installments is payable annually,
within thirty days after receipt of the Accountant's Report for the
Large-Cap Fund's fiscal year.
For both the Asset Allocation Fund and the Large-Cap Fund, the Adviser is
required to reimburse the Fund for any excess of annual operating and
management expenses, exclusive of taxes and interest but including the
Adviser's compensation, over 1.5% of the first $30,000,000 of the Fund's
average net assets plus 1% of average net assets in excess of $30,000,000
for any fiscal year. Any excess over the expense limitation is paid by the
Adviser monthly.
12
18
Small-Cap and Utility Funds. The current advisory agreements for the
Small-Cap Fund and the Utility Fund require payment of a monthly fee to the
Adviser equal to 1/12th of the sum of the products obtained by multiplying
(i) the average daily net assets of each Fund not in excess of $50,000,000
by 0.7%; the average daily net assets of the applicable Fund in excess of
$50,000,000 but not in excess of $200,000,000 by 0.6%; and the average
daily net assets of the applicable Fund in excess of $200,000,000 by 0.5%.
For purposes of these calculations, daily net assets of each Fund are
averaged for each calendar month.
Market Neutral Fund. The current advisory agreement for the Market Neutral
Fund requires payment of a fee to the Adviser at the annual rate of 1.0% of
the average daily net assets of this Fund, calculated and paid on a monthly
basis.
Money Market Fund. The current advisory agreement for the Money Market
Fund requires payment of a fee to the Adviser that is computed daily and
payable monthly at the annual rate of 0.15% of the Money Market Fund's
average daily net assets.
PROPOSED COMPENSATION
The Proposed Advisory Agreement increases the fees paid to the Adviser over
those fees payable under the Current Advisory Contracts for the Asset
Allocation, Large-Cap, Small-Cap and Utility Funds. There is no increase in the
advisory fee payable by the Market Neutral Fund or the Money Market Fund. The
Proposed Advisory Agreement also eliminates the performance based fee in the
Large-Cap Fund. The Board believes that a performance based fee is inconsistent
with the proposed "manager-of-managers" style and the revised fee structure. The
current performance based fee arrangement might encourage inappropriate
investment risk taking.
The annual advisory fees payable under the Proposed Advisory Agreement (as a
percentage of average net assets of the Fund) would be as follows:
NAME OF FUND FEE
- ------------ ----
Asset Allocation Fund --
First $500 million of assets.............................. 0.70%
Assets between $500 million and $1 billion................ 0.65%
Assets over $1 billion.................................... 0.60%
Large-Cap Fund --
First $500 million of assets.............................. 0.80%
Assets between $500 million and $1 billion................ 0.75%
Assets over $1 billion.................................... 0.70%
Small-Cap Fund --
First $500 million of assets.............................. 0.95%
Assets between $500 million and $1 billion................ 0.90%
Assets over $1 billion.................................... 0.85%
Utility Fund --
First $500 million of assets.............................. 1.00%
Assets between $500 million and $1 billion................ 0.90%
Assets over $1 billion.................................... 0.85%
Market Neutral Fund --...................................... 1.00%
Money Market Fund --........................................ 0.15%
13
19
The following table sets forth (A) the actual advisory fees paid by the Funds
during the fiscal year ended June 30, 2000, and the six-month period ended
December 31, 2000 (before deducting any fee waivers or expense reimbursements
noted in the footnotes), (B) the advisory fees that would have been paid by the
Funds if the Proposed Advisory Agreement had been in place throughout those
periods and (C) the difference between (A) and (B) as a percentage of (A).
(A) (B) (C)
NAME OF FUND ACTUAL FEE PRO FORMA FEE % CHANGE
- ------------ ---------- ------------- --------
Asset Allocation Fund
Fiscal year ended 6/30/2000............................ $2,336,767 $2,678,091 +15%
Six months ended 12/31/2001............................ 1,114,970 1,402,740 +26%
Large-Cap Fund
Fiscal year ended 6/30/2000............................ 3,286,518 4,900,391 +49%
Six months ended 12/31/2001............................ 782,850 1,229,434 +57%
Small-Cap Fund
Fiscal year ended 6/30/2000............................ 209,334 284,215 +36%
Six months ended 12/31/2001............................ 100,680 138,057 +37%
Utility Fund
Fiscal year ended 6/30/2000............................ 244,769 349,266 +43%
Six months ended 12/31/2001............................ 141,531 204,118 +44%
Market Neutral Fund
Fiscal year ended 6/30/2000............................ 178,317 178,317 0%
Six months ended 12/31/2001............................ 132,884 132,884 0%
Money Market Fund
Fiscal year ended 6/30/2000............................ 65,825 61,437(a) -7%
Six months ended 12/31/2000............................ 28,095 22,476(a) -8%
- ---------------
(a) Fee waiver would be required to maintain Total Operating Expenses at the
agreed-upon maximum.
The Trust does not charge any fees to shareholders to buy or hold shares of any
of the Funds. Specifically, the Trust does not charge any "front end" sales load
(selling commission or fee) on initial purchases or reinvested dividends, any
"back end" (deferred or contingent) sales load, any redemption fees, any
exchange fees. The only shareholder fees that you may be required to pay are a
wire transfer fee of $10 per transaction and a $15 fee for overnight delivery of
checks, if you request such form of delivery.
The next table shows the actual operating expenses, as a percentage of average
net assets of each Fund, incurred by the Investor Class of shares of each Fund
during the fiscal year ended June 30, 2000, and the estimated pro forma expenses
that would have been incurred had the Proposed Advisory Agreement, the new
Administration Agreement, the new shareholder servicing plan described in
Proposal 3, and the proposed Rule 12b-1 Plan described in Proposal 3 been in
place throughout those periods (note that Proposal 3 does not affect the Money
Market Fund):
FISCAL YEAR
ENDED JUNE 30, ANNUAL
NAME OF FUND 2000 ESTIMATED
- ------------ -------------- -----------
(ACTUAL) (PRO FORMA)
-------------- -----------
Asset Allocation Fund --
Investor Shares:
Management fee......................................... 0.54% 0.70%
12b-1 fee.............................................. 0.00% 0.25%
Other expenses*........................................ 0.19% 0.30%
---- ----
Total operating expenses.......................... 0.73% 1.25%
14
20
FISCAL YEAR
ENDED JUNE 30, ANNUAL
NAME OF FUND 2000 ESTIMATED
- ------------ -------------- -----------
(ACTUAL) (PRO FORMA)
-------------- -----------
Institutional Shares:
Management fee......................................... 0.54% 0.70%
12b-1 fee.............................................. 0.25% 0.25%
Other expenses*........................................ 0.19% 0.30%
---- ----
Total operating expenses.......................... 0.98% 1.25%
Large-Cap Fund --
Investor Shares:
Management fee......................................... 0.61% 0.80%
12b-1 fee.............................................. 0.00% 0.25%
Other expenses*........................................ 0.21% 0.30%
---- ----
Total Operating Expenses.......................... 0.82% 1.35%
Institutional Shares:
Management fee......................................... 0.61% 0.80%
12b-1 fee.............................................. 0.25% 0.25%
Other expenses*........................................ 0.21% 0.30%
---- ----
Total Operating Expenses.......................... 1.07% 1.35%
Small-Cap Fund --
Investor Shares:
Management fee......................................... 0.70% 0.95%
12b-1 fee.............................................. 0.00% 0.25%
Other expenses*........................................ 0.27% 0.30%
---- ----
Total Operating Expenses.......................... 0.97% 1.50%
Institutional Shares:
Management fee......................................... 0.70% 0.95%
12b-1 fee.............................................. 0.25% 0.25%
Other expenses*........................................ 0.27% 0.30%
---- ----
Total Operating Expenses.......................... 1.22% 1.50%
Utility Fund --
Investor Shares:
Management fee......................................... 0.70% 1.00%
12b-1 fee.............................................. 0.00% 0.25%
Other expenses*........................................ 0.23% 0.30%
---- ----
Total Operating Expenses.......................... 0.93% 1.55%
Institutional Shares:
Management fee(a)...................................... 0.70% 1.00%
12b-1 fee.............................................. 0.25% 0.25%
Other expenses*........................................ 0.23% 0.30%
---- ----
Total Operating Expenses.......................... 1.18% 1.55%
Market Neutral Fund --
Investor Shares:
Management fee......................................... 1.00% 1.00%
12b-1 fee.............................................. 0.00% 0.25%
Other expenses*........................................ 0.93% 0.93%
---- ----
Total Operating Expenses.......................... 1.93% 2.18%
15
21
FISCAL YEAR
ENDED JUNE 30, ANNUAL
NAME OF FUND 2000 ESTIMATED
- ------------ -------------- -----------
(ACTUAL) (PRO FORMA)
-------------- -----------
Institutional Shares:
Management fee......................................... 1.00% 1.00%
12b-1 fee.............................................. 0.25% 0.25%
Other expenses*........................................ 0.93% 0.93%
---- ----
Total Operating Expenses.......................... 2.18% 2.18%
Money Market Fund --
Management fee......................................... 0.15% 0.14%(a)
12b-1 fee.............................................. 0.00% 0.00%
Other expenses*........................................ 0.36% 0.36%
---- ----
Total Operating Expenses.......................... 0.51% 0.50%
- ---------------
* Pro forma operating expenses include estimated expenses to be incurred under
the new Administration Agreement and the new Shareholder Servicing Plan
described under Proposal 3 below.
(a) Fee waiver would be required to keep Total Operating Expenses at the
agreed-upon maximum.
The following expense example illustrates the expenses on a $10,000 investment
in the Funds, assuming that the Proposed Advisory Agreement (with the
agreed-upon total expense limitations) is approved and that you invest for the
time periods indicated and then redeem all your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that a Fund's Total Operating Expenses remain the same:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Asset Allocation Fund --
Investor Shares:
Current expenses....................................... $ 75 $233 $ 406 $ 906
Pro forma expenses..................................... $127 $397 $ 686 $1,511
Institutional Shares:
Current expenses....................................... $100 $312 $ 542 $1,201
Pro forma expenses..................................... $127 $397 $ 686 $1,511
Large-Cap Fund --
Investor Shares:
Current expenses....................................... $ 84 $262 $ 455 $1,014
Pro forma expenses..................................... $137 $428 $ 739 $1,624
Institutional Shares:
Current expenses....................................... $109 $340 $ 590 $1,306
Pro forma expenses..................................... $137 $428 $ 739 $1,624
Small-Cap Fund --
Investor Shares:
Current expenses....................................... $ 99 $309 $ 536 $1,190
Pro forma expenses..................................... $153 $474 $ 818 $1,791
Institutional Shares:
Current expenses....................................... $124 $387 $ 670 $1,477
Pro forma expenses..................................... $153 $474 $ 818 $1,791
16
22
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Utility Fund --
Investor Shares:
Current expenses....................................... $ 95 $296 $ 515 $1,143
Pro forma expenses..................................... $158 $490 $ 845 $1,845
Institutional Shares:
Current expenses....................................... $120 $375 $ 649 $1,432
Pro forma expenses..................................... $158 $490 $ 845 $1,845
Market Neutral Fund --
Investor Shares:
Current expenses....................................... $196 $606 $1,042 $2,254
Pro forma expenses..................................... $221 $682 $1,169 $2,513
Institutional Shares:
Current expenses....................................... $221 $682 $1,169 $2,513
Pro forma expenses..................................... $221 $682 $1,169 $2,513
Money Market Fund --
Current expenses....................................... $ 52 $164 $ 285 $ 640
Pro forma expenses..................................... $ 52 $164 $ 285 $ 640
The purpose of these examples is to assist you in understanding how various
costs and expenses on investing in shares of the Funds will change as a result
of the proposed new fees, Administration Agreement and proposed Rule 12b-1 Plan
(See Proposal 3). The Funds' actual expenses and investment performance will
vary from year to year and will result in expenses that may be higher or lower
than those shown in the table above.
The Board is recommending an increase in the advisory fee rates so that each
Fund's advisory fee better reflects the costs of managing the Funds. Since the
inception of the Funds, the advisory fees had not been re-evaluated, and had not
been adjusted to support the expertise and breadth of services required of a
mutual fund today. Among other things, management fees cover the technology
costs of portfolio management as well as the costs of research and analysis.
They support the compensation of portfolio, research and support staff and the
travel and other costs associated with securities research. The current advisory
fees do not reflect these costs as borne out by an analysis of competitive fee
levels. The proposed new fees will more closely track the industry averages for
each Fund's respective peer group. Finally, when appropriate, the Adviser has
agreed to waive a portion of its advisory fee that it would otherwise be
entitled to if the Total Operating Expenses of any Fund exceed the designated
maximum percentage.
OTHER CHANGES
If shareholders approve the Proposed Advisory Agreement, the agreement would
also differ from the Current Advisory Contracts in the following ways:
- Liability of the Adviser: The Proposed Advisory Agreement limits the
Adviser's liability to the Fund so that no Fund shall be liable for the
obligations of another Fund, and the liability of the Adviser to one Fund
shall not automatically render the Adviser liable to any other Fund. The
Board believes that this provision provides better protection of the
Funds.
- Use of Name: The Proposed Advisory Agreement provides that the Trust has
the non-exclusive right to use the name "Lindner" to designate any
current or future series of shares so long as the Adviser serves as
investment manager or adviser to the Trust with respect to such series of
Shares. The Current Advisory Contracts for the Utility, Small-Cap and the
Market Neutral Funds contain similar provisions, but state that the
Adviser reserves the right to require the Trust to (1) change the name of
any of these Funds within 120 days following termination of the Current
Advisory Contract for that Fund and (2) grant the use of the name
"Lindner" as part of its name to any other investment company. Such
provisions are eliminated in the Proposed Advisory Agreement.
17
23
WHAT DID THE TRUSTEES CONSIDER IN APPROVING THIS PROPOSAL?
At the request of the Adviser, the Board considered the Proposed Advisory
Agreement at meetings held in person on February 19, 2001 and March 12, 2001.
The independent Trustees also discussed approval of the Proposed Advisory
Agreement with independent legal counsel at these meetings. In evaluating the
Proposed Advisory Agreement, the Board of Trustees requested and received
information from the Adviser to assist in its deliberations.
The Board considered the following factors in determining the reasonableness and
fairness of the terms of the Proposed Advisory Agreement:
- The nature, extent and quality of services provided to the Funds and
their shareholders and the qualifications of the Adviser to provide
investment management services;
- The investment performance of each Fund was reviewed in comparison to
appropriate broad-based market indices, benchmarks and a peer group of
funds selected by the independent consulting firm. The Board also
considered the costs of providing competitive advisory services in the
current environment and compared the proposed management fees to be
charged to each Fund with those charged by managers of comparable Funds
within the peer group selected by the independent consulting firm based
on Lipper Analytical Services data and historic peer funds;
- The Board reviewed information concerning the profitability of the
Adviser's investment advisory and other activities and its financial
condition;
- The terms of the Proposed Advisory Agreement were reviewed in detail, and
as a result of their review, the Board required that the Adviser
contractually agree to waive a portion of the management fee it would
otherwise be entitled to if the Total Operating Expenses of any Fund
exceed, on an annual basis, the designated maximum percentages set forth
above. The Board determined that the terms of the Proposed Advisory
Agreement reflect the current environment in which competitive mutual
funds operate, and that the Adviser should be given the best opportunity
to operate in that environment.
After considering the above factors, the Board concluded that it is in the best
interests of the Funds and their shareholders to approve the Proposed Advisory
Agreement. The Board reached its conclusion after careful discussion and
analysis. In recommending that you approve the Proposed Advisory Agreement, the
independent Trustees have considered what they believe to be in your best
interests. In so doing, they were advised by independent legal counsel that has
been retained by the independent Trustees and paid for by the Trust, as to the
nature of the matters to be considered and the standards to be used in reaching
their decision.
WHEN WILL THIS PROPOSAL BE IMPLEMENTED?
If approved, the Proposed Advisory Agreement will be effective on or about
August 1, 2001, or as soon as practicable thereafter; however, as noted above,
the Adviser has agreed to waive that portion of its advisory fee for each Fund
in excess of the management fee payable under the Current Advisory Contract for
that Fund until such time as a qualified Subadviser has been engaged for that
Fund and approved by the Board of Trustees. If the "manager-of-managers" style
is approved for each Fund and implemented, the Adviser will seek out potential
Subadviser candidates for the Asset Allocation, Utility and Market Neutral Funds
(and for the Large-Cap Fund, the Small-Cap Fund and/or the Money Market Fund, if
any or all of Proposals 4, 5 and 6 are not approved), and will negotiate with
such candidates an appropriate Sub-Advisory Contract that will then be presented
to the Board for approval. If Proposal 1 is approved, in the future, if the
Trust decides to offer new funds that have a particular focus in terms of asset
class, investment objective or investment strategies, it is expected that the
"manager-of-managers" style will be utilized for these new funds as well.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF EACH FUND VOTE FOR THE
APPROVAL OF PROPOSAL 2.
18
24
VOTE REQUIRED
SHAREHOLDERS OF EACH FUND WILL VOTE SEPARATELY ON APPROVAL OF THIS PROPOSAL.
APPROVAL OF PROPOSAL 2 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE
OUTSTANDING VOTING SECURITIES" OF THAT FUND, AS DEFINED IN THE 1940 ACT (A "1940
ACT MAJORITY"). A 1940 ACT MAJORITY MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF
(A) AT LEAST 67% OF THE VOTING SECURITIES PRESENT AT THE MEETING OR REPRESENTED
BY PROXY IF THE HOLDERS OF MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES
ARE PRESENT OR REPRESENTED BY PROXY OR (B) MORE THAN 50% OF THE OUTSTANDING
VOTING SECURITIES OF THE FUND. BROKER NON-VOTES ARE CONSIDERED "PRESENT" WHEN
DETERMINING WHETHER 50% OF THE SHARES ARE "PRESENT" FOR PURPOSES OF CALCULATING
IF A 1940 ACT MAJORITY HAS BEEN ACHIEVED.
PROPOSAL 3
TO APPROVE A DISTRIBUTION PLAN PURSUANT TO RULE
12B-1 FOR INVESTOR SHARES OF ALL FUNDS OTHER THAN THE MONEY MARKET FUND
(TO BE VOTED ON BY HOLDERS OF INVESTOR SHARES OF ASSET ALLOCATION, LARGE-CAP,
SMALL-CAP, UTILITY AND MARKET NEUTRAL FUNDS)
WHAT AM I BEING ASKED TO APPROVE?
The Board, including a majority of the independent Trustees, none of which has
any direct or indirect financial interest in the proposed Plan, is asking
holders of Investor Shares of the Asset Allocation, Large-Cap, Small-Cap, Market
Neutral and Utility Funds to approve a Distribution Plan (the "Rule 12b-1 Plan")
for the Investor Shares pursuant to Rule 12b-1 under the 1940 Act. The SEC has
interpreted the 1940 Act as providing that a Fund or a class of shares within a
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 Trustees and the
shareholders of that Fund or class. A copy of the proposed Rule 12b-1 Plan is
attached to this Proxy Statement as Exhibit B.
WHAT ARE THE TERMS OF THE PROPOSED RULE 12B-1 PLAN?
The proposed Rule 12b-1 Plan provides for payment of marketing expenses of up to
0.25% of net assets of this class of each Fund other than the Money Market Fund.
Payments to the distributor in accordance with the Rule 12b-1 Plan would be made
pursuant to a distribution agreement to be entered into by the Trust and the
distributor. Any payments made by the distributor to other brokers or
administrators with monies 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 a
Fund and thereby help increase the asset levels of each Fund. This in turn helps
to reduce the expense ratios of a 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 Funds 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.
In addition, if the proposed Rule 12b-1 Plan is approved by holders of Investor
Shares, the Board has approved a shareholder servicing plan that will permit
each Fund to pay additional compensation of up to 0.10% of a Fund's average net
assets held in accounts of certain brokers or administrators who sell shares of
a Fund and who also agree to provide certain administrative support services to
a Fund and its shareholders, such as maintaining an "omnibus" shareholder
account and separate shareholder sub-accounts on the transfer agent's
record-keeping system, distributing prospectuses, annual and semi-annual reports
and proxy statements, processing shareholder purchase and redemption requests
through the omnibus shareholder account, providing shareholders with necessary
tax information for their personal tax returns, and similar activities. This
shareholder servicing plan will be offered by the distributor only to those
brokers and
19
25
administrators that require this additional payment before they will agree to
offer a Fund's shares to their clients. Your approval of this shareholder
servicing plan is not required, and is not being requested.
HOW CAN THE RULE 12B-1 PLAN BE AMENDED OR TERMINATED?
All material amendments to the proposed Rule 12b-1 Plan must be approved by a
vote of the Board and the independent Trustees, 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 a Fund may bear for
distribution pursuant to the Rule 12b-1 Plan without being approved by the
affirmative vote of a 1940 Act Majority of the shareholders that Fund. The
proposed Rule 12b-1 Plan may be terminated with respect to a particular Fund at
any time by: (a) a majority vote of the independent Trustees; or (b) the
affirmative vote of a 1940 Act Majority of the shareholders of that Fund; or (c)
by the distributor on 60 days' notice to a Fund.
WHEN WILL THE RULE 12B-1 PLAN GO INTO EFFECT AND HOW LONG WILL IT LAST? HOW IS
THE DISTRIBUTOR EVALUATED?
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 with respect to each Fund for a period of one year from its effective
date. It may be continued thereafter if it is approved with respect to each Fund
at least annually by a majority of the Trust's Board and a majority of the
independent Trustees, cast in person at a meeting called for the purpose of
voting on the continuance of the Rule 12b-1 Plan.
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 Trustees
will be at the discretion of the independent Trustees then in office.
WHAT DID THE TRUSTEES CONSIDER IN APPROVING THIS PROPOSAL?
In determining to recommend the adoption of the Rule 12b-1 Plan, the independent
Trustees were advised by independent counsel and considered a variety of
factors, including:
- The nature of the circumstances making a Rule 12b-1 Plan appropriate;
- 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;
- 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;
- The possible benefits of the plan to any other person relative to those
expected to inure to the Fund;
- The effect of the Rule 12b-1 Plan on existing shareholders; and
- Whether the Rule 12b-1 Plan will produce the anticipated benefits for the
Funds and their shareholders.
THE BOARD OF TRUSTEES RECOMMENDS THAT HOLDERS OF INVESTOR SHARES OF EACH FUND
OTHER THAN THE MONEY MARKET FUND VOTE FOR THE APPROVAL OF PROPOSAL 3.
VOTE REQUIRED
SHAREHOLDERS OF EACH FUND WILL VOTE SEPARATELY ON APPROVAL OF THIS PROPOSAL.
APPROVAL OF THIS PROPOSAL FOR EACH FUND REQUIRES THE AFFIRMATIVE VOTE OF A 1940
ACT MAJORITY.
20
26
PROPOSALS 4 AND 5
TO APPROVE A SUB-ADVISORY CONTRACT WITH CASTLEARK MANAGEMENT, LLC,
FOR THE LARGE-CAP AND SMALL-CAP FUNDS
(TO BE VOTED ON BY HOLDERS OF INVESTOR
AND INSTITUTIONAL SHARES OF THE LARGE-CAP FUND AND THE SMALL-CAP FUND)
WHAT AM I BEING ASKED TO APPROVE AND WHY?
The Trustees, including a majority of the independent Trustees, have approved,
and recommend that the shareholders of the Large-Cap Fund and the Small-Cap Fund
approve, a Sub-Advisory Contract for their particular Fund that will be entered
into between Lindner Asset Management and CastleArk Management, LLC
("CastleArk"). Since November 20, 2000, several of the investment professionals
of CastleArk have also been employed by the Adviser as portfolio managers for
the Large-Cap Fund and the Small-Cap Fund. As a result of the management
restructuring within the Adviser, and the proposed shift to a "manager-of-
managers" style as described above in Proposal 1, the Trust and the Adviser
desire to terminate the employment relationships with these individuals and
establish a Subadvisory relationship in its place, for the reasons described
under Proposal 1.
You are being asked to vote on Proposals 4 and 5 because Section 15(a) of the
Investment Company Act of 1940 (the "1940 Act") requires that all contracts
pursuant to which persons serve as investment advisers to investment companies
be approved by shareholders. As interpreted, this requirement also applies to
the appointment of investment Subadvisers to any Fund.
This change will essentially move personnel from being employed by the Adviser
to the status of employees of only the Subadviser. While it will not result in
any material changes in the day-to-day operations of your Fund or the investment
process used in managing your Fund, it will afford shareholders the benefit of
the range of resources of the Subadviser in the day-to-day management of the
Fund's investment activities. In addition, the transition will not cause any
change to your Fund's investment objective or investment restrictions and
policies.
WHO IS CASTLEARK AND WHO ARE ITS OWNERS AND INVESTMENT PROFESSIONALS?
CastleArk is an independent, employee-owned investment management company
founded in January 1999 that is registered as an investment adviser under the
Investment Advisers Act of 1940. CastleArk is owned primarily by Jerome A.
Castellini and Edward A. Clark. Two of the directors of Lindner Asset Management
(Doug T. Valassis and D. Craig Valassis) beneficially own 6.67% of the equity
interests of CastleArk, and their sister beneficially owns an additional 3.33%
of the equity interests of CastleArk. The offices of CastleArk are located at
101 North Wacker Drive, Chicago, Illinois 60606.
The primary business of CastleArk is the management of small to large-cap equity
portfolios and investment grade bonds for institutions and individuals. Messrs.
Castellini and Clark had previously spent the past 10 and 9 years, respectively,
at the money management firm of Loomis Sayles Inc. Mr. Castellini was the
Managing Partner of the Chicago Loomis Sayles office and was a member of that
firm's Board of Directors. He was responsible for the firm's institutional
growth products, and the Loomis Sayles Growth and Mid-Cap Growth mutual funds.
Mr. Clark managed the Loomis Sayles Core Bond effort and served as the Chicago
office manager. By the end of 1999, CastleArk's investment management team had
expanded to include two other former Loomis Sayles managers and two small-cap
growth managers formerly with First of America Bancorporation (which is now part
of National City Corporation).
The investment process employed by CastleArk's managers has proven successful
for over 15 years. The key to their approach is the identification of a
company's maturity with respect to its business cycle. CastleArk managers
believe that at different stages of development companies respond differently to
fundamental change. The "Life Cycle" investment process offers insight into the
relationship between that change and the value of the stock.
21
27
The CastleArk Large Cap Growth Product is the successor to the Loomis Sayles
large cap product that Jerome Castellini managed since 1989. Driven by the "Life
Cycle" investment philosophy, the CastleArk team believes that all companies'
earnings trends follow four distinct Life Cycle phases: Emerging, Consistent,
Cyclical Growth and a Mature Phase. As growth investors, CastleArk managers
believe that the phase a company is in plays the dominant role in the stock's
current and future valuation. For example, companies in the Emerging Phase tend
to be valued with price/earnings ratios that are at or below the expected future
growth of the companies' earnings. In the Consistent Phase, the price/earnings
ratio trades at a significant premium to the company's underlying growth. The
Life Cycle approach provides a more accurate means of matching a company's
fundamentals to its stock price behavior.
As fundamental investors, CastleArk managers build a universe of roughly 200
companies that they believe can sustain or accelerate their earnings growth over
a 3- to 5-year period. It is important to them that companies demonstrate an
ability to dominate their business. To accomplish this, companies are expected
to be well managed and to have either a proprietary product or asset, or to have
a particularly advantageous market position in their industry.
Once a growth company passes the dominant company test, it must prove itself
attractive in CastleArk's proprietary valuation model. The valuation model
utilizes the characteristics of each stock in their respective Life Cycle phase
to determine a target price/earnings ratio. Stocks selling below their target
price/earnings ratio are purchase candidates, stocks selling above this level
are sale candidates.
Before a portfolio is assembled, the investment team screens the list of buy
candidates to assess the aggregate risk of the stocks. In this phase CastleArk
managers look at the Barra factor analysis for total and individual stock
parameters so that the ideal position size can be established. With this in
mind, a portfolio of roughly 50 stocks is built. Thereafter, the stocks are
monitored daily for fundamental changes in earnings outlook, volatility, and
valuation. If significant, adjustments are made to the positions.
The Small Cap growth investment process was developed by current CastleArk
managers while they managed the First of America's Parkstone Small-Cap growth
fund from 1989 to 1998. In this investment process, the universe of companies is
typically confined to those in their earlier, "Emerging" growth phase. As a
specialist in emerging growth companies, CastleArk's small-cap investment
managers look for signs that the company can mature into a more consistent
earnings growth phase. The keys to success for these companies are services or
products with clear advantages over their competition, company management that
can exploit those advantages, and growing markets for the products.
The table below lists the name, addresses, ages and principal occupations during
the past five years for each of the executive officers and investment
professionals of CastleArk.
NAME, ADDRESS AND AGE PRINCIPAL OCCUPATION (PAST 5 YEARS)
- --------------------- -----------------------------------
Jerome A. Castellini, 43 Managing Member of CastleArk, January 1999 to present;
101 North Wacker Drive previously employed as a director and managing partner of
Chicago, Illinois 60606 Loomis Sayles & Co. a money management firm located in
Chicago, Illinois for more than five years.
Edward A. Clark, 43 Managing Member of CastleArk, January 1999 to present;
101 North Wacker Drive previously employed as a director and managing partner of
Chicago, Illinois 60606 Loomis Sayles & Co. a money management firm located in
Chicago, Illinois for more than five years.
James H. Castellini, 42 Chief Operating Officer of CastleArk, June 1999 to present;
101 North Wacker Drive previously employed as a certified public accountant with
Chicago, Illinois 60606 the firm of Smith & Just a public accounting firm located in
Seattle, Washington. Mr. Castellini is a certified public
accountant and an attorney. He is the brother of Jerome
Castellini.
22
28
NAME, ADDRESS AND AGE PRINCIPAL OCCUPATION (PAST 5 YEARS)
- --------------------- -----------------------------------
Scott S. Pape, 45 Vice President of CastleArk, March 1999 to present;
101 North Wacker Drive previously employed as a Vice President of Loomis Sayles &
Chicago, Illinois 60606 Co., a money management firm located in Chicago, Illinois
for more than five years. Mr. Pape is a Chartered Financial
Analyst.
Robert S. Takazawa, Jr., 49 Vice President of CastleArk, August 1999 to present;
101 North Wacker Drive previously employed as a Vice President of Loomis Sayles &
Chicago, Illinois 60606 Co., a money management firm located in Chicago, Illinois
for more than five years. Mr. Takazawa is a Chartered
Financial Analyst and a Chartered Investment Counselor.
Roger H. Stamper, 42 Vice President of CastleArk, November 1999 to present;
5136 Lovers Lane, Ste. 102 previously employed as President of Spyglass Asset
Portage, Michigan 49002 Management, a money management firm located in Portage,
Michigan, from May 1998 until October 1999, and as a
Managing Director of First of America Investment Corp., a
money management subsidiary of First of America
Bancorporation, Inc., for more than five years. Mr. Stamper
is a Chartered Financial Analyst.
Stephen J. Wisneski, 50 Vice President of CastleArk, November 1999 to present;
5136 Lovers Lane, Ste. 102 previously employed as Chief Operating Officer of Spyglass
Portage, Michigan 49002 Asset Management, a money management firm located in
Portage, Michigan, from June 1998 until October 1999, and as
a Managing Director of First of America Investment Corp., a
money management subsidiary of First of America
Bancorporation, Inc., for more than five years. Mr. Wisneski
is a Chartered Financial Analyst.
WHAT ARE THE TERMS OF THE PROPOSED SUB-ADVISORY CONTRACTS?
The Sub-Advisory Contracts for each of the Large-Cap Fund and the Small-Cap Fund
are attached to this Proxy Statement as Exhibits C and D, respectively. Each
Sub-Advisory Contract provides that:
- CastleArk, as Subadviser, will supervise and direct the investments of
each Fund in accordance with the Fund's investment objective, including
the selection of securities for the Funds to purchase, sell, convert or
lend, and the selection of brokers through whom the Funds' portfolio
transactions are executed;
- CastleArk will not be liable for any error of judgment or for any loss
suffered by the Fund in connection with matters to which the Sub-Advisory
Contract relates, except a loss resulting from willful misfeasance, bad
faith, gross negligence, or reckless disregard of duties;
- The Sub-Advisory Contract will terminate in the event of its assignment
(as defined in the 1940 Act) or upon the termination of the Investment
Management Agreement between the Fund and Lindner Asset Management as
described in Proposal 2 above;
- The Sub-Advisory Contract may be terminated by the Fund, Lindner Asset
Management or CastleArk on not more than 60 days' nor less than 30 days'
written notice;
- CastleArk will render periodic reports as the Board or Lindner Asset
Management may request.
Under the terms of each Sub-Advisory Contract, CastleArk is free to render
investment advisory and other services to others, including other investment
companies, and to engage in other activities, so long as its services to the
Funds are not impaired or adversely affected.
Following the expiration of its initial two-year term, each Sub-Advisory
Contract will continue in force and effect from year to year, provided that such
continuance is approved at least annually by the Board or by the vote of a
majority of the outstanding voting securities of each Fund, and by the
affirmative vote of a majority of the independent Trustees who are not parties
to the agreement or "interested persons" of a party to the
23
29
agreement (other than as Trustees of the Fund), by votes cast in person at a
meeting specifically called for such purpose.
Under each Sub-Advisory Contract, as compensation for its services, the Adviser
will pay CastleArk 50% of the fees paid to the Adviser by the Trust under the
Proposed Advisory Agreement described in Proposal 2 above with respect to the
Large-Cap Fund and the Small-Cap Fund.
WHAT DID THE TRUSTEES CONSIDER IN APPROVING THIS PROPOSAL?
At a meeting held on March 12, 2001, a majority of the Board, including a
majority of the Trustees who are not parties to the Sub-Advisory Contracts or
interested persons of any such party, approved the Sub-Advisory Contracts. The
Board is recommending approval of both Sub-Advisory Contracts with CastleArk
primarily for the purpose of obtaining quality investment management services.
In deciding to approve the Sub-Advisory Contracts with CastleArk, the Trustees
received materials relating to the proposed agreements in advance of the
meeting, had the opportunity to ask questions and request further information in
connection with such consideration. The Trustees gave strong consideration to
CastleArk's experienced and well-regarded management team and CastleArk's growth
investing style.
In evaluating the Sub-Advisory Contracts, the Board took into account that under
the "manager-of-managers" style, the Adviser will continue to be responsible for
analyzing economic and market trends, formulating and continuing assessment of
investment policies and recommending changes to the Board where appropriate,
supervising compliance by CastleArk with each Fund's investment objective,
policies and restrictions, as well as with laws and regulations applicable to
the Funds, evaluating the performance of CastleArk as compared to certain
selected benchmarks, pre-determined peer groups, evaluating potential additional
or replacement Subadvisers and recommending changes to the Board where
appropriate, and reporting to the Board and shareholders on the foregoing.
WHEN WILL THE SUB-ADVISORY CONTRACT TAKE EFFECT AND WHAT HAPPENS IF PROPOSALS 4
OR 5 ARE NOT APPROVED?
If approved, the Sub-Advisory Contracts for the Large-Cap Fund and the Small-Cap
Fund will become effective on or about August 1, 2001, or as soon as practicable
thereafter, and will expire on the second anniversary of their effective dates,
unless renewed for an additional one year period prior to that date by the
Board, including a majority of the independent Trustees, voting in person at a
meeting duly called specifically for such purpose. In addition, if Proposals 4
and/or 5 are approved, the Adviser has recommended that Trust change the name of
the Large-Cap Fund to "Large-Cap Growth Fund" and to change the name of the
Small-Cap Fund to "Small-Cap Growth Fund" in order to reflect the management
style of CastleArk. The Adviser does not anticipate that there will be any
material changes in the investment strategies or policies of the either the
Large-Cap Fund or the Small-Cap Fund.
In the event that the shareholders of either of the Large-Cap or Small-Cap Funds
do not approve the proposed Sub-Advisory Contract for their Fund, the Adviser
will continue to employ those individuals who are presently serving as portfolio
managers for the Fund, and it will seek out another prospective Subadviser for
that Fund and will attempt to negotiate an acceptable Sub-Advisory Contract with
such alternative Subadviser. If Proposal 1 is approved by the shareholders of
the Large-Cap or the Small-Cap Fund, any other Sub-Advisory Contract may be
entered into without further shareholder approval, subject only to approval by
the Board. If Proposal 1 is not approved by the shareholders of the Large-Cap or
the Small-Cap Fund, the Board and shareholders of these Funds will be required
to approve any alternative Sub-Advisory Contract.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF THE LARGE-CAP FUND VOTE
FOR THE APPROVAL OF PROPOSAL 4 AND THAT SHAREHOLDERS OF THE SMALL-CAP FUND VOTE
FOR THE APPROVAL OF PROPOSAL 5.
VOTE REQUIRED
SHAREHOLDERS OF EACH FUND WILL VOTE SEPARATELY ON APPROVAL OF THESE PROPOSALS.
APPROVAL OF THIS PROPOSAL FOR EACH FUND REQUIRES THE AFFIRMATIVE VOTE OF A 1940
ACT MAJORITY.
24
30
PROPOSAL 6
TO APPROVE A SUB-ADVISORY CONTRACT WITH U.S. BANCORP PIPER
JAFFRAY ASSET MANAGEMENT, INC., FOR THE MONEY MARKET FUND
(TO BE VOTED ON BY HOLDERS OF SHARES OF THE MONEY MARKET FUND)
WHAT AM I BEING ASKED TO APPROVE AND WHY?
The Trustees, including a majority of the independent Trustees, have approved,
and recommend that the shareholders of the Money Market Fund approve, a
Sub-Advisory Contract for the Money Market Fund that will be entered into
between Lindner Asset Management and U.S. Bancorp Piper Jaffray Asset
Management, Inc. ("PJAM"), an indirect wholly-owned subsidiary of U.S. Bancorp,
if approved by shareholders.
Until May 2, 2001, Firstar Bank, N.A. ("Firstar Bank"), a national bank with
offices in Cincinnati, Ohio, was the Subadviser for the Money Market Fund. On
that date, Firstar Bank assigned its rights under the subadvisory agreement then
in effect with the Adviser to PJAM. The personnel involved in the day-to-day
management of the Money Market Fund on behalf of Firstar Bank were also
transferred to PJAM and are now employed by it. This assignment of Lindner's
previous subadvisory agreement and the related transfer of personnel was a part
of the overall strategy of U.S. Bancorp to comply with amendments to the federal
securities laws governing investment advisers by transferring the advisory
activities of all of its banking and non-banking subsidiaries (such as Firstar
Bank) to a company that is registered as an investment adviser under the federal
Investment Advisers Act of 1940, as amended. This assignment of the previous
subadvisory agreement with Firstar Bank caused an automatic termination of that
agreement. To preserve the continuity of management for this Fund, which has
enjoyed better-than-average performance results (when compared to money market
funds of comparable size and quality of management), on April 30, 2001, the
Trustees approved an interim advisory agreement between the Adviser and PJAM
that will remain in effect until the earlier of 150 days after the date of
automatic termination of the previous sub-advisory contract with Firstar Bank or
the date on which shareholders of the Money Market Fund approve the proposed
Sub-Advisory Contract with PJAM. A copy of the proposed Sub-Advisory Contract is
attached hereto as Exhibit E. THE NEW SUB-ADVISORY CONTRACT FOR THE MONEY MARKET
FUND IS ON THE SAME TERMS IN ALL MATERIAL RESPECTS AS THE PREVIOUS SUB-ADVISORY
CONTRACT WITH FIRSTAR BANK AND THE INTERIM SUB-ADVISORY CONTRACT NOW IN EFFECT
FOR UP TO 150 DAYS.
WHO IS PJAM AND WHO ARE ITS OWNERS AND INVESTMENT PROFESSIONALS?
U.S. Bancorp Piper Jaffray Asset Management, Inc. ("PJAM"), is a Delaware
corporation that is wholly-owned by U.S. Bank, N.A., which in turn is
wholly-owned by U.S. Bancorp. U.S. Bancorp is a widely-held bank holding company
with total assets in excess of $ billion as of March 31, 2001. Its shares
of common stock are listed on the New York Stock Exchange and trade under the
symbol "USB". The offices of PJAM are located at 601 Second Avenue South,
Minneapolis, Minnesota 55402.
The interim Sub-Advisory Contract provides, and the proposed final Sub-Advisory
Contract will provide, that the Fund's investment Subadviser will manage the
Fund's investments on a day-to-day basis, subject to the supervision of the
Adviser and the Board of Trustees and that the management fee of the subadviser
will be paid by the Adviser. As compensation for its services, the Adviser has
agreed to pay a fee to the Subadviser that is computed daily and payable
monthly, at an annual rate of 0.10% of the first $250 million of the Money
Market Fund's average net assets and at an annual rate of 0.08% of the Money
Market Fund's assets in excess of $250 million. This is the same fee rate as was
paid to Firstar Bank under the previous subadvisory contract that was terminated
on May 1, 2001.
PJAM is a newly-formed subsidiary of U.S. Bancorp, and as such does not have a
history of managing any other mutual funds with investment objectives similar to
that of the Money Market Fund. However, during the year ended December 31, 2000,
the other affiliates of U.S. Bancorp whose advisory businesses have been
transferred to PJAM have served as the principal investment adviser for four
other money market funds, that have similar investment objectives to those of
the Money Market Fund.
25
31
These four other money market funds, the amount on net assets each had under
management as of March 31, 2001, and the annual investment management fees that
charged by the U.S. Bancorp affiliates and which will continue to be charged by
PJAM (expressed as a percentage of average assets under management) are as
follows:
ASSETS UNDER ADVISORY
NAME OF FUND MANAGEMENT FEE
------------ ------------ --------
Firstar Stellar Treasury Fund............................... $ billion 0.50%
First American Prime Obligations Fund....................... $ billion 0.40%
First American Treasury Obligations Fund.................... $ billion 0.40%
First American Government Obligations Fund.................. $ billion 0.40%
The U.S. Bancorp affiliates that previously served as investment advisers for
these funds have never waived, reduced or agreed to reduce their compensation
under any applicable contract.
Firstar Bank and its predecessor, Star Bank, N.A., have acted as the subadviser
for the Money Market Fund since the commencement of its operations in 1996. The
date of the previous sub-advisory contract with Firstar Bank was May 20, 1996,
and this is the date when such subadvisory contract was last approved by the
shareholders of the Money Market Funds (it did not need to be approved by
shareholders of the Fund at any time after that date). The subadvisory fees paid
by the Adviser to Firstar Bank during the Fund's most recently completed fiscal
year ended June 30, 2000 were $ .
The table below lists the name, ages and principal occupations during the past
five years for each of the directors, executive officers and investment
professionals of PJAM. The business address of all of these individuals is 601
Second Avenue South, Minneapolis, Minnesota 55402.
NAME AND AGE PRINCIPAL OCCUPATION (PAST 5 YEARS)
------------ -----------------------------------
[NAMES OF DIRECTORS AND OTHER OFFICERS TO
COME]................................... [BIOGRAPHICAL INFORMATION TO COME]
Joseph Ulrey, .......................... Managing Director of PJAM since April 2001. Previously
employed as by First American Asset
Management, Inc., from 19 to April 2001, a subsidiary
of U.S. Bank, N.A.
Jeffrey M. Plotnik, .................... Portfolio Manager of PJAM since April 2001. Previously
employed as for taxable funds by First
American Asset Management, Inc., from 19 to April 2001,
a subsidiary of U.S. Bank, N.A.
Under the proposed Sub-Advisory Contract with PJAM, all compensation payable to
PJAM is to be paid by the Adviser and not by the Money Market Fund, and
therefore the change in subadvisers from Firstar Bank to PJAM will have no
effect on the amount of fees paid by the Money Market Fund for advisory
services. The proposed Sub-Advisory Contract with PJAM is also identical to the
previous sub-advisory contract with Firstar Bank in all other respects. If
approved by shareholders, the proposed Sub-Advisory Contract will continue in
effect for an initial two-year term and will continue thereafter from year to
year if specifically approved at least annually by a vote of a "majority of the
outstanding voting securities" of the Fund, as defined under the 1940 Act, or by
the Board of Trustees, and, in either event, the vote of a majority of the
Trustees who are not parties to the contract or interested parties of any such
party, cast in person at a meeting called for such purpose.
If the proposed new Sub-Advisory Contract is not approved by shareholders of the
Money Market Fund, PJAM will not be permitted to receive any advisory fees while
it serves as Subadviser for that Fund, and the Board of Trustees will be
required to determine whether to engage another subadviser or attempt to obtain
the required shareholder vote by means of a subsequent proxy solicitation.
26
32
WHAT DID THE TRUSTEES CONSIDER IN APPROVING THIS PROPOSAL?
At a meeting held on April 30, 2001, the Board of Trustees unanimously voted to
approve an interim Sub-Advisory Contract and the proposed Sub-Advisory Contract
for the Money Market Fund and to recommend to shareholders of the Fund that they
approve the new Sub-Advisory Contract. During its deliberations, the Board of
Trustees had the assistance of legal counsel and was furnished with information
regarding PJAM and its predecessors with respect to their performance as the
investment adviser for other mutual funds with similar investment objectives to
that of the Money Market Fund. In connection with its deliberations, the Board
of Trustees considered the following:
- That the transfer of subadvisory responsibilities to PJAM from Firstar
Bank is not expected to result in any material change in the investment
management style, investment personnel managing the Money Market Fund or
the operations of the Money Market Fund.
- That PJAM, as a wholly-owned subsidiary of U.S. Bancorp, is the successor
to several related investment advisory businesses formerly operated by the
banking and non-banking subsidiaries of U.S. Bancorp and its affiliates,
and as such PJAM will be providing investment advisory services for
corporate, charitable, governmental, institutional, personal trust and
other clients and for mutual funds sponsored by the banking subsidiaries
of U.S. Bancorp, which had in excess of $116 billion of assets under
management as of March 31, 2001.
- That PJAM and its predecessors have served as investment adviser to the
Firstar Stellar Funds since 1988 and as adviser to the First American
Funds since 1981, and they have over 75 years of experience providing
investment advisory services to fiduciary accounts, including two money
market mutual funds with investment objectives similar to those of the
Money Market Fund.
- That the proposed Sub-Advisory Contract for the Money Market Fund,
including the terms relating to the services to be provided and the fees
and expenses payable by the Money Market Fund, is on the same terms as
Firstar Bank's previous sub-advisory contract. The Board of Trustees noted
that, in approving the continuation of the previous sub-advisory contract,
it had considered a number of factors, including the nature and quality of
services provided by Firstar Bank, the investment performance of the Money
Market Fund itself and relative to that of competitive mutual funds, the
investment management fees and expense ratios of the Money Market Fund and
of competitive mutual funds and Firstar Bank's profitability from managing
the Money Market Fund.
- That U.S. Bancorp is a large, well-established financial institution with
substantial resources and, as noted above, has committed to the
continuance, without interruption, of services of the type and quality
currently provided by Firstar Bank.
WHEN WILL THIS PROPOSAL BE IMPLEMENTED?
If approved, the new Sub-Advisory Contract with U.S. Piper Jaffray Asset
Management, Inc., will become effective immediately, and the interim
sub-advisory contract currently in effect will be terminated. As indicated
above, the proposed new Sub-Advisory Contract is identical in all material
respects to the interim sub-advisory contract.
THE BOARD OF TRUSTEES RECOMMENDS THAT HOLDERS OF SHARES OF THE MONEY MARKET FUND
VOTE FOR THE APPROVAL OF PROPOSAL 6.
VOTE REQUIRED
APPROVAL OF THIS PROPOSAL REQUIRES THE AFFIRMATIVE VOTE OF A 1940 ACT MAJORITY.
27
33
PROPOSAL 7
TO AMEND THE INVESTMENT OBJECTIVE OF THE ASSET ALLOCATION FUND
(TO BE VOTED ON BY HOLDERS OF INVESTOR AND INSTITUTIONAL
SHARES OF THE ASSET ALLOCATION FUND)
WHAT AM I BEING ASKED TO APPROVE?
The Trustees recommend that you approve a change in the Asset Allocation Fund's
investment objective. Shareholders must approve any change to the Fund's
investment objective because the investment objective has been designated as
"fundamental" under the 1940 Act. Pursuant to the 1940 Act, the Asset Allocation
Fund operates pursuant to a stated investment objective. This objective guides
the investment policies, restrictions, strategies and activities of the Asset
Allocation Fund and limits its ability to invest in certain types of securities
or engage in certain types of transactions. The Board and the Adviser want to
change the investment objective of the Asset Allocation Fund to allow the
Adviser to manage this Fund with an investment objective that the Adviser
believes is more attractive to contemporary investors seeking wealth
accumulation through long term capital appreciation, as opposed to current
income. The Adviser believes that with a new investment objective it will be
able to attract more investors through new distribution channels, thereby
increasing the assets of the Fund. The proposed change in investment objective
would mean that income would no longer be the primary component of the Asset
Allocation Fund's objective, and that the Asset Allocation Fund would focus
primarily on growth of capital over the long term.
WHAT ARE THE CURRENT AND PROPOSED INVESTMENT OBJECTIVE OF THE ASSET ALLOCATION
FUND?
The current investment objective of the Asset Allocation Fund (which has not
been amended since the inception of this Fund in 1976) is:
"To produce current income through investments in common stocks,
convertible and non-convertible preferred stocks, corporate bonds and
debt securities issued or guaranteed by the U.S. government that provide
a yield higher than that paid on either the Standard & Poor's 500 Stock
Index or on passbook savings accounts, with capital appreciation as a
secondary investment objective."
The Adviser believes that this investment objective is outmoded and unattractive
to investors. Stocks in the Standard & Poor's 500 Stock Index provide a yield
that is usually lower than that paid on passbook savings accounts, and such
accounts also typically pay yields that are not attractive to modern investors.
The Adviser would like to manage a mutual fund product with an objective that it
believes is of greater interest to the more sophisticated investor who is
interested primarily in growth of capital over a longer investment cycle.
The Trustees recommend that shareholders of the Asset Allocation Fund vote to
replace this investment objective with the following investment objective:
"Long term capital appreciation with income as a secondary investment
objective."
Any future amendments to the investment objective of the Fund will continue to
require shareholder approval. The proposed changes in investment objective for
the Asset Allocation Fund are expected to result in a greater amount of capital
gains income (both long-term and short-term) than has been experienced by the
Fund in the past, and a lesser amount of income from dividends and interest paid
on its portfolio securities. This in turn may result in greater amounts of
capital gains distributions to shareholders of the Fund, which are taxed at
capital gains rates, and a smaller amount of dividends, which are taxed at
ordinary income tax rates.
WHEN WILL THIS CHANGE IN INVESTMENT OBJECTIVE BE EFFECTIVE AND WHAT OTHER
ACTIONS WILL BE TAKEN?
If approved, the changes in the Asset Allocation Fund's investment objective
will become effective on or about August 1, 2001, or as soon as practicable
thereafter, and in addition, the Adviser has recommended that the Trust change
the name of the Asset Allocation Fund to "Lindner Growth and Income Fund" in
order to reflect the Fund's management style and better express the Fund's role
as a core holding for a wide spectrum
28
34
of investors. If this Proposal is approved, the Adviser anticipates that the
investment strategies or policies of the Lindner Growth and Income Fund, will
continue to emphasize investments in common stocks, fixed income securities,
securities convertible into common stocks (such as warrants and preferred
stocks) and cash equivalent securities, but that the mix of investments will
change to focus more on growth oriented stocks and fixed income investments that
also have potential for growth in capital due to changes in interest rate
markets, with less emphasis on stocks and bonds that produce relatively higher
levels of dividends and interest payments. As a result, the yield on an
investment in this Fund can be expected to become lower than has been realized
by the Fund in prior years.
If Proposal 7 is not approved, there will be no change in the investment
objective or name of the Asset Allocation Fund.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF THE ASSET ALLOCATION FUND
VOTE FOR THE APPROVAL OF PROPOSAL 7.
VOTE REQUIRED
APPROVAL OF THIS PROPOSAL FOR EACH FUND REQUIRES THE AFFIRMATIVE VOTE OF A 1940
ACT MAJORITY.
PROPOSALS 8 (A), (B) AND (C)
(A) TO AMEND THE INVESTMENT OBJECTIVE OF THE UTILITY FUND,
(B) TO AMEND THE INVESTMENT SUBCLASSIFICATION AND TO ELIMINATE A FUNDAMENTAL
INVESTMENT POLICY OF THE UTILITY FUND TO ALLOW IT
TO BE MANAGED AS A NON-DIVERSIFIED MUTUAL FUND, AND (C) TO
AMEND THE FUNDAMENTAL INVESTMENT POLICY OF THE UTILITY
FUND ON CONCENTRATING ITS INVESTMENTS IN UTILITIES
(THREE SEPARATE PROPOSALS TO BE VOTED ON BY HOLDERS OF INVESTOR AND
INSTITUTIONAL SHARES OF THE UTILITY FUND)
WHAT AM I BEING ASKED TO APPROVE?
The Board recommends that you approve three separate matters: (A) a change in
the Utility Fund's investment objective, (B) a change in the Utility Fund's
investment subclassification from "diversified" to "non-diversified" and the
elimination of the Utility Fund's fundamental investment policy regarding
diversification of its investments and (C) a change in the Utility Fund's
fundamental investment policy that requires the Fund to concentrate its
investments in Utilities. Shareholders must vote on these actions because under
the 1940 Act any change in the investment objective, investment
subclassification, or fundamental investment policies of a mutual fund must be
approved by shareholders.
Proposals 8(A), 8(B) and 8(C) will be voted upon separately by shareholders of
the Utility Fund. However, unless all three of these proposals are approved by
shareholders of the Utility Fund, none of them will be implemented. The three
proposals are --
PROPOSAL 8(A): TO AMEND THE INVESTMENT OBJECTIVE OF THE UTILITY FUND TO PERMIT
IT TO FOCUS ON LONG-TERM CAPITAL APPRECIATION.
WHAT IS THE PROPOSED CHANGE IN INVESTMENT OBJECTIVE?
As is the case with all mutual funds, pursuant to the 1940 Act, the Utility Fund
operates pursuant to a stated investment objective. This objective guides the
investment policies, restrictions, strategies and activities of the Utility Fund
and limits its ability to invest in certain types of securities or engage in
certain types of transactions. The Board and the Adviser want to change the
investment objective of the Utility Fund. The Adviser believes that this
investment objective is outmoded and unattractive to investors. The Adviser
would like to manage a mutual fund product with an objective that it believes is
of more interest to a sophisticated investor who is interested primarily in
growth of capital over a longer investment cycle. Note that the proposed change
in investment objective would mean that income would no longer be the primary
component
29
35
of the Utility Fund's objective, and that the Utility would focus primarily on
growth of capital over the long term. The proposed changes in investment
objective for the Utility Fund are expected to result in a greater amount of
capital gains income (both long-term and short-term) than has been experienced
by the Fund in the past, and a lesser amount of income from dividends and
interest paid on its portfolio securities. This in turn may result in greater
amounts of capital gains distributions to shareholders of the Fund, which are
taxed at capital gains rates, and a smaller amount of dividends, which are taxed
at ordinary income tax rates.
The current investment objective of the Utility Fund is:
"To produce current income through investments in securities of domestic
and foreign public utility companies, with capital appreciation as a
secondary investment objective."
The Trustees recommend that shareholders of the Utility Fund vote to replace its
current investment objective with the following investment objective:
"Long term capital appreciation."
Any future amendments to the investment objective of the Utility Fund will
continue to require shareholder approval.
PROPOSAL 8(B): TO AMEND THE INVESTMENT SUBCLASSIFICATION OF THE UTILITY FUND AND
TO ELIMINATE A FUNDAMENTAL INVESTMENT POLICY REGARDING DIVERSIFICATION TO PERMIT
THE UTILITY FUND TO BE MANAGED AS A "NON-DIVERSIFIED" MUTUAL FUND.
WHAT ARE THESE PROPOSED CHANGES?
A "diversified" mutual fund is one that has at least 75% of the value of its
total assets represented by cash and cash items (including receivables),
Government securities, securities of other investment companies and other
securities limited in respect of any one company to an amount not greater in
value than 5% of the Fund's total assets and to not more than 10% of a company's
outstanding voting securities. A "non-diversified" mutual fund does not have to
follow these limitations on how much of its assets can be invested in any one
company.
In addition to being classified as a "diversified" mutual fund, the Utility Fund
also currently has adopted as a fundamental investment policy that it may not
"purchase securities of any issuer if immediately thereafter more than 5% of its
total assets at market would be invested in the securities of any one issuer,
other than the U.S. Government, its agencies or instrumentalities".
The Board and the Adviser want to change the subclassification of the Utility
Fund and its investment policy on diversification in order to allow the Utility
Fund to invest more than 5% of its total assets in any one company in
appropriate situations. This is intended to provide the Adviser (and any
Subadviser) with greater flexibility in making investment decisions in order to
achieve its proposed new investment objective of long-term capital appreciation.
During times when the Adviser (or any Subadviser) invests a higher percentage of
the Fund's assets in one or more companies, the value of the Fund's shares may
fluctuate more widely than the value of shares of a portfolio investing in a
larger number of companies, and the Fund will be exposed to a greater degree of
market risk due to its investment in a fewer number of companies. If Proposal
8(B) is approved and the Utility Fund has an investment subclassification as
"non-diversified," under SEC interpretations the Adviser would be allowed to
manage the Fund as a "diversified" fund for a temporary period of time without
shareholder approval.
Even if Proposal 8(B) is approved, the Utility Fund will continue to comply with
the Internal Revenue Code restrictions on diversification in order to continue
to qualify as a regulated investment company under Subchapter M of the Code;
these restrictions require that at the end of each calendar quarter, with
respect to 50% of the Fund's total assets, it may not have more than 5% of its
total assets invested in any one company. The remaining 50% of the Fund's total
assets are not subject to this 5% limitation, although with respect to that
portion of its total assets the Fund may not invest more than 25% of its total
assets in the securities of any one company (other than the U.S. Government or
any other mutual fund).
30
36
If Proposal 8(B) is not approved, the Fund will continue to be managed as a
"diversified" mutual fund. Any future amendments to the investment objective,
subclassification or investment policies of the Utility Fund will continue to
require shareholder approval.
PROPOSAL 8(C): TO AMEND THE FUNDAMENTAL INVESTMENT POLICIES FOR THE UTILITY FUND
TO ELIMINATE THE REQUIREMENT THAT THE UTILITY FUND CONCENTRATE ITS INVESTMENT IN
SECURITIES ISSUED BY "UTILITIES".
WHAT IS THE PROPOSED CHANGE IN THIS FUNDAMENTAL INVESTMENT POLICY?
Fundamental investment policies of a mutual fund are those policies that are
designated by the Fund as being so important to achieving the Fund's investment
objective that they cannot be changed without approval by the Fund's
shareholders. Currently, one of the fundamental investment policies of the Trust
to which the Utility Fund is subject is one that relates to the Utility Fund's
"concentration" of its investments in any one or more particular industries:
"None of the Funds will invest more than 25% of its total assets in
securities issued by companies in the same industry, except that the
Utility Fund under normal circumstances will invest at least 65% of its
total assets in securities issued by Utilities."
This policy uses the word "Utilities" to include domestic and foreign regulated
public utility companies, including gas, electric, telecommunications, cable
television, water and energy companies, and companies that are in related
businesses, such as suppliers of raw materials. As an integral part of the
Adviser's plan to re-focus and improve performance of the Utility Fund, as
described above, the Adviser is proposing to change this Fund's investment
objective, its fund name and its ability to become "non-diversified" with
respect to its investments in any one company. It is proposed that this Fund
would change its investment strategy to that of investing in securities of
companies involved in providing goods and services that assist in furthering
communications activities. While the Adviser does believe that such companies
would constitute an "industry" for purposes of the current fundamental
investment policy, it will be necessary to amend the above policy to eliminate
the requirement that this Fund invest at least 65% of total assets in securities
issued by Utilities. Accordingly, Proposal 8(C) would amend this policy to read
as follows:
"None of the Funds will invest more than 25% of its total assets in
securities issued by companies in the same industry."
Any future amendment to this investment policy will continue to require approval
by the shareholders of the Fund affected by the amendment.
WHEN WILL THESE CHANGES BE EFFECTIVE AND WHAT OTHER ACTIONS WILL BE TAKEN?
If approved, the changes in the Utility Fund's investment objective,
subclassification and fundamental investment policies will become effective on
or about August 1, 2001, or as soon thereafter as is practicable.
If Proposal 8(A) and 8(C) are approved, the Adviser will request that the
Trustees change the name of the Utility Fund to "Lindner Communications Fund" in
order to reflect its new focus on the more contemporary broad-based
communications sector. Utility funds have demonstrated very modest appeal and
thus offer the potential for only limited asset growth.
In this regard, the Lindner Communications Fund will adopt a new investment
strategy under which it will normally invest at least 65% of its net assets in
securities of companies (domestic or foreign) that the Adviser considers to be
best positioned to benefit significantly from their involvement in or support of
the broad-based communications industries, regardless of the size of their
market capitalization. Such companies may include those that are involved in
communications equipment and support, electronic components and equipment,
broadcasting, publishing and information dissemination in any available media
(including mobile and wireless communications), computer equipment and computer
support systems (including software, fiber optics, internet development and
related activities). The different communications industries may experience
greater market risk (fluctuations in value due to factors affecting equity
markets generally or particular industries in those markets), greater small
company risk (due to lower trading volumes or limited liquidity) and growth
31
37
securities risk (fluctuations in value due to greater sensitivity to changes in
current or expected earnings). In addition, securities of companies involved in
the communications industries frequently experienced higher price volatility
than securities of seasoned large-cap companies with dominant market positions
in traditional industries.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS OF THE UTILITY FUND VOTE FOR
THE APPROVAL OF PROPOSALS 8(A), 8(B) AND 8(C).
VOTE REQUIRED
APPROVAL OF EACH OF PROPOSALS 8(A), 8(B) AND 8(C) REQUIRES THE AFFIRMATIVE VOTE
OF A 1940 ACT MAJORITY.
VOTING; QUORUM
Shareholders of record at the close of business on May 1, 2001 (the "Record
Date"), will be entitled to vote at the Meeting. Each shareholder will be
entitled to one vote for each share held on the Record Date. On the Record Date,
the aggregate number of Investor Shares and Institutional Shares of each Fund
issued and outstanding, and entitled to vote at the Meeting, was as follows:
INVESTOR INSTITUTIONAL COMBINED
FUND SHARES SHARES SHARES
- ---- --------- ------------- ---------
Asset Allocation Fund..............................
Large-Cap Fund.....................................
Small-Cap Fund.....................................
Utility Fund.......................................
Market Neutral Fund................................
Money Market Fund..................................
To the knowledge of the Trust, on the Record Date no shareholder owned of record
or beneficially more than 5% of the outstanding shares of the Investor Shares of
any Fund, and no shareholder owned of record or beneficially more than 5% of the
outstanding shares of the Institutional Shares of the Asset Allocation, Large-
Cap, Small-Cap, Utility or Market Neutral Funds (the Money Market Fund does not
have any Institutional Shares outstanding), except as follows:
PERCENT OF
OUTSTANDING
FUND NAME AND NO. OF INSTITUTIONAL INSTITUTIONAL
SHAREHOLDER NAME AND ADDRESS SHARES OWNED SHARES OWNED
- ---------------------------- -------------------- -------------
Small-Cap Fund --
Utility Fund --
Market Neutral Fund --
On the Record Date, none of the Trustees owned of record or beneficially any
Institutional Shares of any Fund, and the Trustees owned of record or
beneficially the following amounts of outstanding Investor Shares of each Fund
(rounded to the nearest whole share):
FUND NAME AND NO. OF PERCENT OF OUTSTANDING
NAME OF TRUSTEE INVESTOR SHARES OWNED INVESTOR SHARES OWNED
- --------------- --------------------- ----------------------
Robert L. Byman.................... Asset Allocation Fund -- 276 shares *
Large-Cap Fund -- 479 shares *
Small-Cap Fund -- 1,442 shares *
Utility Fund -- 479 shares *
Market Neutral Fund -- 1,467 shares *
Money Market Fund -- 190,033 shares *
32
38
FUND NAME AND NO. OF PERCENT OF OUTSTANDING
NAME OF TRUSTEE INVESTOR SHARES OWNED INVESTOR SHARES OWNED
- --------------- --------------------- ----------------------
Terrence P. Fitzgerald............. Asset Allocation Fund -- 2,925 shares *
Large-Cap Fund -- 4,524 shares *
Utility Fund -- 1,486 shares *
Marc. P. Hartstein................. Asset Allocation Fund -- 2,366 shares *
Large-Cap Fund -- 4,626 shares *
Small-Cap Fund -- 839 shares *
Utility Fund -- 699 shares *
Market Neutral Fund -- 1,054 shares *
Money Market Fund -- 25,046 shares *
Peter S. Horos..................... Utility Fund -- 398 shares *
Money Market Fund -- 20,598 shares *
Donald J. Murphy................... Money Market Fund -- 287,312 shares *
Dennis P. Nash..................... Utility Fund -- 1,511 shares *
Eric E. Ryback..................... Money Market Fund -- shares *
Doug T. Valassis................... Asset Allocation Fund -- 102,013 shares *
Large-Cap Fund -- 154,935 shares *
Small-Cap Fund -- 115,360 shares 3.8%
Utility Fund -- 5,486 shares *
Market Neutral Fund -- 5,433 shares *
- ---------------
* = less than 1% of outstanding shares.
Under the Trust's Declaration of Trust and Bylaws, a quorum of shares will be
present at the Meeting if more than 50% of the outstanding shares of a 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 a particular 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.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting. However,
if any other matters properly come before the Meeting, it is the intention that
proxies that do not contain specific instructions to the contrary will be voted
on such matters in accordance with the judgment of the persons therein
designated.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The Trust 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 Robert L. Miller,
Secretary of the Trust, at 7711 Carondelet Avenue, Suite 700, St. Louis,
Missouri 63105.
33
39
NOTICE TO BANKS, BROKER-DEALERS AND VOTING
TRUSTEES AND THEIR NOMINEES
Please advise the Trust, in care of Robert L. Miller, Secretary of the Trust, at
7711 Carondelet Avenue, Suite 700, St. Louis, Missouri 63105, 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.
34
40
EXHIBIT A
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of August 1, 2001, by and between LINDNER INVESTMENTS,
a Massachusetts business trust (the "Trust"), with respect to its series of
shares shown on Schedule A attached hereto, as the same may be amended from time
to time, and LINDNER ASSET MANAGEMENT, INC., a Michigan corporation (the
"Adviser").
The Trust is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a diversified, open-end management investment company. The
Adviser is registered under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), as an investment adviser and engages in the business of acting
as an investment adviser. The Trust's Agreement and Declaration of Trust (the
"Declaration of Trust") authorizes the Board of Trustees of the Trust (the
"Board of Trustees") to create separate series of shares of beneficial interest
in the Trust (such portfolios and any other portfolios hereafter added to the
Trust being referred to collectively herein as the "Funds"). The Trust desires
to retain the Adviser to render or contract to obtain as hereinafter provided
investment advisory services to the Funds listed on Schedule A (as it may be
amended from time to time), and the Adviser is willing to render such investment
advisory services upon the terms and conditions hereinafter set forth.
In consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:
1. Appointment as Adviser. The Trust hereby appoints the Adviser to act as
Adviser of the Funds for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to render the
services herein described, for the compensation herein provided. Subject to the
approval of the Board of Trustees, the Adviser is authorized to enter into a
subadvisory agreement (a "Subadvisory Agreement") with any other registered
investment adviser, whether or not affiliated with the Adviser (a "Subadviser"),
pursuant to which such Subadviser shall furnish to one or more of the Funds
continuous portfolio management services in connection with the management of
such Funds. The Adviser will continue to have responsibility for all investment
advisory services furnished pursuant to any Subadvisory Agreement. The Trust and
Adviser understand and agree that the Adviser may manage the Funds in a
"manager-of-managers" style with either a single or multiple Subadvisers, which
contemplates that the Adviser will, among other things and pursuant to an Order
issued by the Securities and Exchange Commission (SEC):
(a) continually evaluate the performance of each Subadviser to the Funds
through quantitative and qualitative analysis and consultations with each
Subadviser;
(b) periodically make recommendations to the Board of Trustees as to
whether the contract with one or more Subadvisers should be renewed,
modified, or terminated; and
(c) periodically report to the Board of Trustees regarding the results of
its evaluation and monitoring functions.
The Trust recognizes that, subject to the approval of the Board of Trustees, a
Subadviser's services may be terminated or modified pursuant to the
"manager-of-managers" process and that the Adviser may appoint a new Subadviser
for a Subadviser that is so removed.
2. Management of Assets. Subject to the supervision of the Board of Trustees
and subject to Section 1 hereof and any Subadvisory Agreement, the Adviser shall
manage the investment operations of the Funds and the composition of the Funds'
portfolios including the purchase, retention and disposition thereof, in
accordance with each Fund's investment objectives, policies and restrictions as
stated in each Fund's SEC registration statement, and subject to the following
understandings:
(a) The Adviser (or a Subadviser under the Adviser's supervision) shall
provide supervision of each Fund's investments, and shall determine from
time to time what investments or securities will be
A-1
41
purchased, retained, sold, or loaned by each Fund, and what portion of the
assets will be invested or held uninvested as cash;
(b) The Adviser, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Declaration of Trust and
By-Laws of the Trust and each Fund's SEC registration statement and with
the instructions and directions of the Board of Trustees, and will conform
to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations. In connection therewith,
the Adviser shall, among other things, prepare and file (or cause to be
prepared and filed) such reports as are, or may in the future be, required
by the SEC.
(c) The Adviser (or the Subadviser under the Adviser's supervision) shall
determine the securities to be purchased or sold by each Fund, and will
place orders pursuant to its determinations with or through such persons,
brokers or dealers (including but not limited to any broker or dealer
affiliated with the Subadviser) to carry out the policy with respect to
brokerage as set forth in each Fund's registration statement or as the
Board of Trustees may direct from time to time. In providing the Funds with
investment supervision, it is recognized that the Adviser (or the
Subadviser under the Adviser's supervision) will give primary consideration
to securing the most favorable price and efficient execution. Consistent
with this policy, the Adviser (or a Subadviser under the Adviser's
supervision) may consider the financial responsibility, research and
investment information and other services provided by brokers or dealers
who may effect or be a party to any such transaction or other transactions
to which other clients of the Adviser (or Subadviser) may be a party. It is
understood that any broker or dealer affiliated with the Adviser (or
Subadviser) may be used as principal broker for securities transactions,
but that no formula has been adopted for allocation of the Funds'
investment transaction business. It is also understood that it is desirable
for each Fund that the Adviser (or Subadviser) have access to supplemental
investment and market research and security and economic analysis provided
by brokers, and that such brokers may execute brokerage transactions at a
higher cost to the Funds than may result when allocating brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the Adviser (or the Subadviser under the Adviser's
supervision) is authorized to pay higher brokerage commissions for the
purchase and sale of securities for the Funds to brokers who provide such
research and analysis, subject to review by the Board of Trustees from time
to time with respect to the extent and continuation of this practice. It is
understood that the services provided by such broker may be useful to the
Adviser (or the Subadviser) in connection with its services to other
clients. On occasions when the Adviser (or a Subadviser under the Adviser's
supervision) deems the purchase or sale of a security to be in the best
interest of the Funds as well as other clients of the Adviser (or the
Subadviser), the Adviser (or Subadviser), to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be so sold or purchased in order to obtain the
most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by
the Adviser (or the Subadviser) in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Funds and to
such other clients.
(d) The Adviser (or the Subadviser under the Adviser's supervision) shall
maintain all books and records with respect to the each Fund's portfolio
transactions and shall render to the Board of Trustees such periodic and
special reports as the Board may reasonably request.
(e) The Adviser (or the Subadviser under the Adviser's supervision) shall
be responsible for the financial and accounting records maintained by the
Funds (including those being maintained by the Funds' Custodian).
(f) The Adviser (or the Subadviser under the Adviser's supervision) shall
provide the Funds' Custodian on each business day information relating to
all transactions concerning each Fund's assets.
(g) The investment management services of the Adviser to the Funds under
this Agreement are not to be deemed exclusive, and the Adviser shall be
free to render similar services to others.
A-2
42
(h) The Adviser shall make reasonably available its employees and officers
for consultation with any of the Trustees or officers or employees of the
Trust with respect to any matter discussed herein, including, without
limitation, the valuation of each Fund's securities.
3. Delivery of Documents. The Trust has delivered to the Adviser copies of each
of the following documents and will deliver to it all future amendments and
supplements, if any:
(a) Declaration of Trust;
(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof and
as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Trustees authorizing the
appointment of the Adviser and approving the form of this Agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-1A (the "Registration Statement"), as filed
with the SEC relating to each Fund and its shares of beneficial interest
and all amendments thereto; and
(e) Prospectus and Statement of Additional Information of each Fund.
4. Service as Officers of Trust. The Adviser shall authorize and permit any of
its officers and employees who may be elected as Trustees or officers of the
Trust to serve in the capacities in which they are elected. All services to be
furnished by the Adviser under this Agreement may be furnished through the
medium of any such officers or employees of the Adviser.
5. Maintenance of Books and Records. The Adviser shall keep the Funds' books
and records required to be maintained by it pursuant to Section 2 hereof. The
Adviser agrees that all records which it maintains for the Funds are the
property of the respective Fund, and it will surrender promptly to the Funds any
such records upon the respective Fund's request, provided however that the
Adviser may retain a copy of such records. The Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by the Adviser pursuant to Section 2
hereof.
6. Expenses.
(a) During the term of this Agreement, the Adviser shall pay the following
expenses:
(i) the salaries and expenses of all employees of the Funds and the
Adviser, except the fees and expenses of Trustees who are not affiliated
persons of the Adviser or any Subadviser.
(ii) all expenses incurred by the Adviser in connection with managing
the ordinary course of the Funds' business, other than those assumed by
the Funds herein; and
(iii) the fees, costs and expenses payable to a Subadviser pursuant to a
Subadvisory Agreement.
(b) During the term of this agreement, the Trust shall pay the following
expenses:
(i) the fees and expenses incurred by the Trust in connection with the
management of the investment and reinvestment of the Funds' assets,
(ii) the fees and expenses of the Board of Trustees who are not
"interested persons" of the Trust within the meaning of the 1940 Act,
(iii) the fees and expenses of the Custodian that relate to the
custodial function and the recordkeeping connected therewith, preparing
and maintaining the general accounting records of the Funds and the
provision of any such records to the Adviser useful to the Adviser in
connection with the Adviser's responsibility for the accounting records
of the Funds pursuant to Section 31 of the 1940 Act and the rules
promulgated thereunder, the pricing or valuation of the shares of the
Funds, including the cost of any pricing or valuation service or
services which may be retained pursuant to
A-3
43
the authorization of the Board of Trustees, and for both mail and wire
orders, the cashiering function in connection with the issuance and
redemption of the Funds' securities,
(iv) the fees and expenses of the Funds' Transfer and Dividend
Disbursing Agent that relate to the maintenance of each shareholder
account,
(v) the charges and expenses of legal counsel and independent
accountants for the Trust and any counsel retained by the independent
Trustees,
(vi) brokers' commissions and any issue or transfer taxes chargeable to
the Funds in connection with their securities transactions,
(vii) all taxes and corporate fees payable by the Funds to federal,
state or other governmental agencies,
(viii) the fees of any trade association of which the Trust may be a
member,
(ix) the cost of share certificates representing, and/or non-negotiable
share deposit receipts evidencing, shares of the Funds.
(x) the cost of fidelity, directors' and officers' and errors and
omissions insurance,
(xi) the fees and expenses involved in registering and maintaining
registration of the each Fund and its shares with the Securities and
Exchange Commission, and paying notice filing fees under state
securities laws, including the preparation and printing of the Funds'
registration statements and the Funds' prospectuses and statements of
additional information for filing under federal and state securities
laws for such purposes,
(xii) allocable communications expenses with respect to investor
services and all expenses of shareholders' and Trustees' meetings and of
preparing, printing and mailing reports and notices to shareholders in
the amount necessary for distribution to the shareholders.
(xiii) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of each Fund's business,
and
(xiv) any expenses assumed by the Funds pursuant to a Distribution and
Service Plan adopted in a manner that is consistent with Rule 12b-1
under the 1940 Act.
7. Compensation of Adviser. For the services provided and the expenses assumed
pursuant to this Agreement on and after the Effective Date, each Fund will pay
to the Adviser as full compensation therefor a fee at the annual rates described
on Schedule A with respect to the average daily net assets of each Fund. This
fee will be computed daily, and will be paid to the Adviser monthly. Such fee
shall be calculated by applying the annual rates set forth on Schedule A to the
average daily net assets of each Fund for the calendar year computed in the
manner used for the determination of the net asset value of shares of such Fund.
For the fiscal years of the Trust ending June 30, 2002 and 2003, the Adviser
agrees to waive a portion of its annual advisory fee in order to assure that the
Total Operating Expenses of each Fund will not exceed the maximum amount
(expressed as a percentage of the Fund's average daily net assets) set forth on
Schedule A. In addition, until such time as the Adviser enters into a
Subadvisory Agreement for a particular Fund that has been approved by the Board
of Trustees, the Adviser also agrees to waive a portion of its annual advisory
fee so that the annual advisory fees will not exceed the maximum amount
(expressed as a percentage of a Fund's average daily net assets) set forth on
Schedule B.
8. Limitation on Liability of Adviser. The Adviser shall not be liable for any
error of judgment or for any loss suffered by a Fund in connection with the
matters to which this Agreement relates, except a loss resulting from a breach
of fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the 1940 Act) or loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
A-4
44
Any liability of the Adviser to one Fund shall not automatically impart
liability on the part of the Adviser to any other Fund. No Fund shall be liable
for the obligations of any other Fund.
9. Effective Date; Term; Termination. This Agreement becomes effective (i) on
August 1, 2001, for each Fund whose shareholders have approved this Agreement
prior to such date by a vote of a majority of the outstanding voting securities
as defined in Section 2(a)(42) of the 1940 Act and (ii) on such later date, for
each Fund whose shareholders shall have approved this Agreement after August 1,
2001 by a vote of a majority of the outstanding voting securities as defined in
Section 2(a)(42) of the 1940 Act and shall continue in effect until July 31,
2003 and from year-to-year thereafter, but only so long as such continuance is
specifically approved at least annually in conformity with the requirements of
the 1940 Act. This Agreement may be terminated with respect to the Trust or as
to one or more of the Funds at any time, without payment of any penalty, by the
Board of Trustees or by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the applicable Fund, or by the Adviser at any
time, without payment of any penalty, on not more than 60 days' nor less than 30
days' written notice to the other party. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 1940 Act).
10. No Restriction on Adviser. Nothing in this Agreement shall limit or
restrict the right of any officer or employee of the Adviser who may also be a
Trustee, officer, or employee of the Trust to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any business, whether of a similar or dissimilar nature, nor limit or
restrict the right of the Adviser to engage in any other business or to render
services of any kind to any other corporation, firm, individual or association.
11. Service for Other Clients. The Trust understands that the Adviser now acts,
will continue to act and may act in the future as investment adviser to
fiduciary and other managed accounts, and as investment manager or adviser to
other investment companies or accounts, provided that whenever the Trust and one
or more other investment companies or accounts managed or advised by the Manager
have available funds for investment, investments suitable and appropriate for
each will be allocated in accordance with a formula believed to be equitable to
each company and account. The Trust recognizes that in some cases this procedure
may adversely affect the size of the positions obtainable and the prices
realized for the Funds.
12. Independent Contractor Status. Except as otherwise provided herein or
authorized by the Board of Trustees from time to time, the Adviser shall for all
purposes herein be deemed to be an independent contractor, and shall have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
13. Provision of Materials. During the term of this Agreement, the Trust agrees
to furnish the Adviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to shareholders of the Funds or the public, which
refer in any way to the Adviser, prior to use thereof and not to use such
material if the Adviser reasonably objects in writing within five business days
(or such other time as may be mutually agreed) after receipt thereof. In the
event of termination of this Agreement, the Trust will continue to furnish to
the Adviser copies of any of the above-mentioned materials which refer in any
way to the Adviser. Sales literature may be furnished to the Adviser hereunder
by first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Trust shall furnish or otherwise make available to the Adviser
such other information relating to the business affairs of the Trust as the
Adviser at any time, or from time to time, reasonably requests in order to
discharge its obligations hereunder.
14. Amendment. No amendment of this Agreement shall be effective unless it is
in writing and signed by the party against which enforcement of the amendment is
sought.
15. Notices. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Adviser at 520 Lake Cook Road, Suite 380,
Deerfield, Illinois 60015, Attention: Doug T. Valassis, Chairman; or (2) to the
Trust at 7711 Carondelet Avenue, Suite 700, St. Louis, Missouri 63105,
Attention: John R. Elder, Vice President. Either party may change its address
for notices hereunder by giving written notice of such change to the other party
in the manner provided in this Section 15.
A-5
45
16. Governing Law. Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act or the Advisers Act shall be resolved by reference to
such term or provision of the 1940 Act or the Advisers Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said Acts. In addition, where the effect of a
requirement of the 1940 Act or the Advisers Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
Subject to the foregoing, this Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the Commonwealth of Massachusetts.
17. Limitation of Trust Liability. The Declaration of Trust establishing
Lindner Investments, dated July 19, 1993, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the office of the
Secretary of the Commonwealth of Massachusetts, provides that the name "Lindner
Investments" refers to the Trustees under the Declaration collectively as
Trustees, but not as individuals or personally; and no Trustee, shareholder,
officer, employee or agent of Lindner Investments, shall be held to any personal
liability, nor shall result be had to their private property for the
satisfaction of any obligation or claim or otherwise in connection with the
affairs of said Lindner Investments, but the Trust Estate only shall be liable.
18. Use of Name "Lindner". The Trust shall have the non-exclusive right to use
the name "Lindner" to designate any current or future series of shares only so
long as the Adviser serves as investment manager or adviser to the Trust with
respect to such series of shares.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the day and year first written
above.
LINDNER INVESTMENTS LINDNER ASSET MANAGEMENT, INC.
By: By:
------------------------------------------------- -----------------------------------------------------
Title: Title:
----------------------------------------------- -----------------------------------------------------
A-6
46
SCHEDULE A
TO
INVESTMENT MANAGEMENT AGREEMENT
The Trust shall pay the Adviser, out of the assets of a Fund, as full
compensation for all services rendered, a management fee for such Fund set forth
below, based on the net assets of each Fund:
ANNUAL RATE
--------------------------------------
FIRST $500 TO OVER
$500 MILLION $1 BILLION $1 BILLION
------------ ---------- ----------
Lindner Growth and Income Fund (formerly Lindner Asset
Allocation Fund)...................................... 0.70% 0.65% 0.60%
Lindner Large-Cap Growth Fund......................... 0.80 0.75 0.70
Lindner Small-Cap Growth Fund......................... 0.95 0.90 0.85
Lindner Communications Funds (formerly Lindner Utility
Fund)................................................. 1.00 0.90 0.85
Lindner Market Neutral Fund........................... 1.00 1.00 1.00
Lindner Government Money Market Fund.................. 0.15 0.15 0.15
The following chart sets forth the maximum amount of Total Operating Expenses
that the Adviser has agreed to permit each Fund to incur, in each case as a
percentage of average daily net assets of each Fund:
MAXIMUM TOTAL
OPERATING EXPENSE
-----------------
Lindner Growth and Income Fund (formerly Lindner Asset
Allocation Fund)............................................ 1.25%
Lindner Large-Cap Growth Fund............................... 1.35%
Lindner Small-Cap Growth Fund............................... 1.50%
Lindner Communications Funds (formerly Lindner Utility
Fund)....................................................... 1.55%
Lindner Market Neutral Fund................................. 2.18%
Lindner Government Money Market Fund........................ 0.50%
The above schedule may be amended from time to time, as evidenced by the
signatures of the officers of the Trust and the Adviser indicated below.
LINDNER INVESTMENTS LINDNER ASSET MANAGEMENT, INC.
By: ----------------------------------------------- By: -----------------------------------------------
Its: ----------------------------------------------- Its: -----------------------------------------------
Effective Date: -----------------------------------
A-7
47
SCHEDULE B
TO
INVESTMENT MANAGEMENT AGREEMENT
As set forth in Section 7 of the Agreement, until such time as the Adviser
enters into a Subadvisory Agreement with a particular Fund that has been
approved by the Board of Trustees, the Adviser agrees to waive that portion of
its annual advisory fee set forth in Schedule A such that the annual advisory
fees will not exceed the maximum amount (expressed as a percentage of the Fund's
average daily net assets) set forth below:
LINDNER GROWTH AND INCOME FUND (FORMERLY LINDNER ASSET ALLOCATION FUND)
NET ASSETS ANNUAL RATE
- ---------- -----------
First $50 million........................................... 0.70%
Next $150 million........................................... 0.60%
Over $200 million........................................... 0.50%
LINDNER LARGE-CAP GROWTH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $50 million........................................... 0.70%
Next $350 million........................................... 0.60%
Over $400 million........................................... 0.50%
LINDNER SMALL-CAP GROWTH FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
First $50 million........................................... 0.70%
Next $150 million........................................... 0.60%
Over $200 million........................................... 0.50%
LINDNER COMMUNICATIONS FUND (FORMERLY LINDNER UTILITY FUND)
NET ASSETS ANNUAL RATE
- ---------- -----------
First $50 million........................................... 0.70%
Next $150 million........................................... 0.60%
Over $200 million........................................... 0.50%
LINDNER MARKET NEUTRAL FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
All Assets.................................................. 1.00%
LINDNER GOVERNMENT MONEY MARKET FUND
NET ASSETS ANNUAL RATE
- ---------- -----------
All Assets.................................................. 0.15%
A-8
48
EXHIBIT B
LINDNER INVESTMENTS
DISTRIBUTION PLAN
This Plan constitutes the Distribution Plan (the "Plan") of LINDNER INVESTMENTS
(the "Trust"), a Massachusetts business trust, with respect to the class of its
shares presently designated as Investor Shares ("Shares") of those series (the
"Funds") of the Trust (the "Trust") listed on Annex A hereto, as such exhibit
may be amended from time to time hereafter to add additional Funds or eliminate
a Fund or Funds. This Plan was adopted by the Board of Trustees of the Trust on
March 12, 2001.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940 ("Act"), to allow the Trust to make payments as contemplated herein, in
conjunction with the distribution of Shares and providing shareholder services
for holders of Shares.
2. This Plan is designed to finance activities of the Trust and any registered
broker-dealer who shall hereafter become a distributor of the Shares (the
"Distributor") with respect to those activities an services that are principally
intended to result in the sale of Shares, which include: (a) providing
incentives to other broker-dealers ("Brokers") and sales agents or
representatives of the Distributor or any such Broker to sell Shares, (b)
providing administrative support services to the Funds and their shareholders;
(c) compensating other participating financial institutions and other persons
("Administrators") for providing administrative support services to the Funds
and their shareholders; (d) paying for costs incurred in conjunction with
advertising and marketing of Shares, including the expenses of preparing,
printing and distributing prospectuses and sales literature to prospective
shareholders, Brokers or Administrators; and (d) other costs incurred in the
implementation and operation of the Plan. As compensation for services provided
pursuant to this Plan, the Distributor will be paid fees out of the net asset
value of the Funds with respect to the Shares as set forth on Exhibit A hereto.
3. Any payment to the Distributor in accordance with this Plan will be made
pursuant to a Distribution Agreement to be entered into by the Trust and the
Distributor substantially in the form of Annex B hereto. Any payments made by
the Distributor to Brokers or Administrators with monies received as
compensation under this Plan will be made pursuant to agreements entered into by
the Distributor and each such Broker or Administrator.
4. The Distributor has the right (i) to select, in its sole discretion, the
Brokers and Administrators to participate in the Plan and (ii) to terminate
without cause and in its sole discretion any agreement entered into by the
Distributor and a Broker or Administrator.
5. Quarterly in each year that this Plan remains in effect, the Distributor
shall prepare and furnish to the Board of Trustees of the Trust, and the Board
of Trustees shall review, a written report of the amounts expended under the
Plan and the purpose for which such expenditures were made.
6. This Plan shall become effective with respect to each Fund as of the dates
indicated in the exhibit hereto, provided that, as of that date, the Plan shall
have been approved with respect to that Fund by majority votes of (a) the
Trust's Board of Trustees, including the Trustees who are not "interested
persons" of the Trust, as defined in the Act ("Disinterested Trustees") of the
Trust, cast in person at a meeting called for the purpose of voting on the Plan;
and (b) any outstanding voting securities as defined in Section 2(a)(42) of the
Act.
7. This Plan shall remain in effect with respect to each Fund for a period of
one year from the effective date of shareholder approval, and may be continued
thereafter if this Plan is approved with respect to each Fund at least annually
by a majority of the Trust's Board of Trustees and a majority of the
Disinterested Trustees, cast in person at a meeting called for the purpose of
voting on this Plan.
8. All material amendments to this Plan must be approved by a vote of the Board
of Trustees of the Trust and of the Disinterested Trustees, cast in person at a
meeting called for the purpose of voting on such amendment.
B-1
49
9. This Plan may not be amended in order to increase materially the costs which
a Fund may bear for distribution pursuant to the Plan without being approved by
a majority vote of the outstanding voting securities of that Fund, as defined in
Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Fund at any time
by: (a) a majority vote of the Disinterested Trustees; or (b) a vote of a
majority of the outstanding voting securities of the particular Fund as defined
in Section 2(a)(42) of the Act; or (c) by the Distributor on 60 days notice to
the particular Fund.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the discretion of the
Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of this Plan
shall be in writing and any agreement related to this Plan shall be subject to
termination, without penalty, pursuant to the provisions of Section 10 herein.
13. "Lindner Investments" and the phrase "Trustees of Lindner Investments"
refer, respectively, to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated July 19, 1993, as amended, to which reference is hereby made and a
copy of which is on file at the office of the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law, and to any and all amendments
thereto so filed or hereafter filed. The obligations of the Trust entered into
in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, Shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series and/or class of Shares of the Trust must look solely to the assets of
the Trust belonging to such series and/or class for the enforcement of any
claims against the Trust.
14. This Plan shall be construed in accordance with and governed by the laws of
the Commonwealth of Massachusetts.
B-2
50
ANNEX A
TO
LINDNER INVESTMENTS
DISTRIBUTION PLAN
1. Investor Shares of the following Series of Lindner Investments (the "Trust")
(as defined under the Plan) shall participate in the Plan effective as of the
dates set forth below:
COMPENSATION
(AS A PERCENTAGE OF AVERAGE DAILY NET
NAME DATE ASSET VALUE OF SHARES OF THE CLASS)
- ---- ---- -------------------------------------
Lindner Large-Cap Growth Fund
(formerly Lindner Large-Cap Fund)................ 0.25%
Lindner Small-Cap Growth Fund
(formerly Lindner Small-Cap Fund)................ 0.25%
Lindner Growth and Income Fund
(formerly Lindner Asset Allocation Fund)......... 0.25%
Lindner Communications Fund
(formerly Lindner Utility Fund).................. 0.25%
Lindner Market Neutral Fund...................... 0.25%
2. The Funds shall pay to the Distributor a fee with respect to Shares, computed
at the annual rate specified above. Such fee shall be accrued daily and paid
quarterly.
3. Pursuant to Section 6 of the Plan, the undersigned has executed this Annex A
as of , 2001.
------------------------------------
Robert L. Miller, Vice President
B-3
51
ANNEX B
TO
LINDNER INVESTMENTS
DISTRIBUTION PLAN
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into as of this day of
, 2001, by and among LINDNER INVESTMENTS, a Massachusetts
business trust (the "Trust"), LINDNER ASSET MANAGEMENT, INC., a Michigan
corporation (the "Adviser") and QUASAR DISTRIBUTORS, LLC, a Delaware limited
liability company ("Distributor").
WHEREAS, the Trust is registered under the Investment Company Act of 1940, as
amended ("1940 Act"), as an open-end management investment company, and is
authorized to issue shares of beneficial interests ("Shares") in separate series
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Adviser is duly registered under the Investment Advisers Act of
1940, as amended, and any applicable state securities laws, as an investment
adviser;
WHEREAS, the Trust desires to retain the Distributor as principal underwriter in
connection with the offering and sale of the Shares of each series listed on
Schedule A (as amended from time to time) (the "Funds") to this Agreement;
WHEREAS, the Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and is a member of the
National Association of Securities Dealers, Inc. (the "NASD");
WHEREAS, this Agreement has been approved by a vote of the Trust's Board of
Trustees ("Board") and its disinterested trustees in conformity with Section
15(c) of the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter for the
Trust on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
The Trust hereby appoints the Distributor as its agent for the sale and
distribution of Shares of the Funds, subject to the terms and for the period set
forth in this Agreement. The Distributor hereby accepts such appointment and
agrees to act hereunder.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
(a) The Distributor agrees to sell Shares of the Funds on a best efforts
basis as agent for the Trust during the term of this Agreement, upon the terms
and at the current offering price (plus sales charge, if any) described in the
Prospectus. As used in this Agreement, the term "Prospectus" shall mean the
current prospectus, including the statement of additional information, as
amended or supplemented, relating to the Funds and included in the currently
effective registration statement or post-effective amendment thereto (the
"Registration Statement") of the Trust under the Securities Act of 1933 (the
"1933 Act") and the 1940 Act.
(b) During the continuous public offering of Shares of the Funds, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of Shares of the Funds and will accept such orders
on behalf of the Trust. Such purchase orders shall be deemed effective at the
time and in the manner set forth in the Prospectus.
B-4
52
(c) The Distributor, with the operational assistance of the Trust's
transfer agent, shall make Shares available for sale and redemption through the
National Securities Clearing Corporation's Fund/SERV System.
(d) In connection with all matters relating to this Agreement, the
Distributor agrees to act in conformity with the Trust's Declaration of Trust
and By-Laws and with the instructions of the Board and to comply with the
requirements of the 1933 Act, the 1934 Act, the 1940 Act, the regulations of the
NASD and all other applicable federal or state laws and regulations. The
Distributor acknowledges and agrees that it is not authorized to provide any
information or make any representations other than as contained in the
Prospectus and any sales literature specifically approved by the Trust and the
Distributor.
(e) The Distributor agrees to cooperate with the Trust in the development
of all proposed advertisements and sales literature relating to the Funds. The
Distributor agrees to review all proposed advertisements and sales literature
for compliance with applicable laws and regulations, and shall file with
appropriate regulators those advertisements and sales literature it believes are
in compliance with such laws and regulations. The Distributor agrees to furnish
to the Trust any comments provided by regulators with respect to such materials
and to use its best efforts to obtain the approval of the regulators to such
materials.
(f) The Distributor at its sole discretion may repurchase Shares offered
for sale by shareholders of the Funds. Repurchase of Shares by the Distributor
shall be at the price determined in accordance with, and in the manner set forth
in, the current Prospectus. At the end of each business day, the Distributor
shall notify, by any appropriate means, the Trust and its transfer agent of the
orders for repurchase of Shares received by the Distributor since the last
report, the amount to be paid for such Shares, and the identity of the
shareholders offering Shares for repurchase. The Trust reserves the right to
suspend such repurchase right upon written notice to the Distributor. The
Distributor further agrees to act as agent for the Trust to receive and transmit
promptly to the Trust's transfer agent shareholder requests for redemption of
Shares.
(g) The Distributor may, in its discretion, enter into agreements with
such qualified broker-dealers as it may select, in order that such
broker-dealers also may sell Shares of the Funds. The form of any dealer
agreement shall be mutually agreed upon and approved by the Trust and the
Distributor. The Distributor may pay a portion of any applicable sales charge,
or allow a discount, to a selling broker-dealer, as described in the Prospectus
or, if not described, as agreed upon with the broker-dealer. The Distributor
shall include in the forms of agreement with selling broker-dealers a provision
for the forfeiture by them of their sales charge or discount with respect to
Shares sold by them and redeemed, repurchased or tendered for redemption within
seven business days after the date of confirmation of such purchases.
(h) The Distributor shall devote its best efforts to effect sales of
Shares of the Funds but shall not be obligated to sell any certain number of
Shares.
(i) The Distributor shall prepare reports for the Board regarding its
activities under this Agreement as from time to time shall be reasonably
requested by the Board, including the regarding the use of Rule 12b-1 payments
received by the Distributor, if any.
(j) The services furnished by the Distributor hereunder are not to be
deemed exclusive and the Distributor shall be free to furnish similar services
to others so long as its services under this Agreement are not impaired thereby.
The Trust recognizes that from time to time officers and employees of the
Distributor may serve as directors, trustees, officers and employees of other
entities (including investment companies), that such other entities may include
the name of the Distributor as part of their name and that the Distributor or
its affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
3. DUTIES AND REPRESENTATIONS OF THE TRUST.
(a) The Trust represents that it is duly organized and in good standing
under the law of its jurisdiction of incorporation and registered as an open-end
management investment company under the 1940 Act. The Trust agrees that it will
act in material conformity with its Declaration of Trust, By-Laws, its
Registration Statement as may be amended from time to time and resolutions and
other instructions of its Board. The Trust agrees to comply in all material
respects with the 1933 Act, the 1940 Act, and all other applicable
B-5
53
federal and state laws and regulations. The Trust represents and warrants that
this Agreement has been duly authorized by all necessary action by the Trust
under the 1940 Act, state law and the Trust's Declaration of Trust and By-Laws.
(b) The Trust, or its agent, shall take or cause to be taken all necessary
action to register Shares of the Funds under the 1933 Act and to maintain an
effective Registration Statement for such Shares in order to permit the sale of
Shares as herein contemplated. The Trust authorizes the Distributor to use the
Prospectus, in the form furnished to the Distributor from time to time, in
connection with the sale of Shares.
(c) The Trust represents and agrees that all Shares to be sold by it,
including those offered under this Agreement, are validly authorized and, when
issued in accordance with the description in the Prospectus, will be fully paid
and nonassessable. The Trust further agrees that it shall have the right to
suspend the sale of Shares of any Fund at any time in response to conditions in
the securities markets or otherwise, and to suspend the redemption of Shares of
any Fund at any time permitted by the 1940 Act or the rules of the Securities
and Exchange Commission ("SEC"). The Trust shall advise the Distributor promptly
of any such determination.
(d) The Trust agrees to advise the Distributor promptly in writing:
(i) of any correspondence or other communication by the SEC or its
staff relating to the Funds, including requests by the SEC for
amendments to the Registration Statement or Prospectus;
(ii) in the event of the issuance by the SEC of any stop-order
suspending the effectiveness of the Registration Statement then in
effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement of
a material fact made in the Prospectus or which requires the making of a
change in such Prospectus in order to make the statements therein not
misleading; and
(iv) of all actions taken by the SEC with respect to any amendments to
any Registration Statement or Prospectus which may from time to time be
filed with the SEC.
(e) The Trust shall file such reports and other documents as may be
required under applicable federal and state laws and regulations. The Trust
shall notify the Distributor in writing of the states in which the Shares may be
sold and shall notify the Distributor in writing of any changes to such
information.
(f) The Trust agrees to file from time to time such amendments to its
Registration Statement and Prospectus as may be necessary in order that its
Registration Statement and Prospectus will not contain any untrue statement of
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(g) The Trust shall fully cooperate in the efforts of the Distributor to
sell and arrange for the sale of Shares and shall make available to the
Distributor a statement of each computation of net asset value. In addition, the
Trust shall keep the Distributor fully informed of its affairs and shall provide
to the Distributor from time to time copies of all information, financial
statements, and other papers that the Distributor may reasonably request for use
in connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Trust by its
independent public accountants and such reasonable number of copies of the most
current Prospectus, statement of additional information and annual and interim
reports to shareholders as the Distributor may request. The Trust shall forward
a copy of any SEC filings, including the Registration Statement, to the
Distributor within one business day of any such filings. The Trust represents
that it will not use or authorize the use of any advertising or sales material
unless and until such materials have been approved and authorized for use by the
Distributor.
(h) The Trust represents and warrants that its Registration Statement and
any advertisements and sales literature of the Trust (excluding statements
relating to the Distributor and the services it provides that are based upon
written information furnished by the Distributor expressly for inclusion
therein) shall not contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or
B-6
54
necessary to make the statements therein not misleading, and that all statements
or information furnished to the Distributor pursuant to this Agreement shall be
true and correct in all material respects.
4. COMPENSATION.
As compensation for the services performed and the expenses assumed by
Distributor under this Agreement including, but not limited to, any commissions
paid for sales of Shares, Distributor shall be entitled to the fees and expenses
set forth in Schedule B to this Agreement which are payable promptly after the
last day of each month. Such fees shall be paid to Distributor by the Trust
pursuant to its Rule 12b-1 plan or, if Rule 12b-1 payments are not sufficient to
pay such fees and expenses, or if the Rule 12b-1 plan is discontinued, or if the
Fund's sponsor, the Adviser, otherwise determines that Rule 12b-1 fees shall
not, in whole or in part, be used to pay Distributor, the Adviser shall be
responsible for the payment of the amount of such fees not covered by Rule 12b-1
payments.
5. EXPENSES.
(a) The Trust shall bear all costs and expenses in connection with
registration of the Shares with the SEC and related compliance with state
securities laws, as well as all costs and expenses in connection with the
offering of the Shares and communications with shareholders of its Funds,
including but not limited to (i) fees and disbursements of its counsel and
independent public accountants; (ii) costs and expenses of the preparation,
filing, printing and mailing of Registration Statements and Prospectuses and
amendments thereto, as well as related advertising and sales literature, (iii)
costs and expenses of the preparation, printing and mailing of annual and
interim reports, proxy materials and other communications to shareholders of the
Funds; and (iv) fees required in connection with the offer and sale of Shares in
such jurisdictions as shall be selected by the Trust pursuant to Section 3(e)
hereof.
(b) The Distributor shall bear the expenses of registration or
qualification of the Distributor as a dealer or broker under federal or state
laws and the expenses of continuing such registration or qualification. The
Distributor does not assume responsibility for any expenses not expressly
assumed hereunder.
6. INDEMNIFICATION.
(a) The Trust shall indemnify, defend and hold the Distributor, and each
of its present or former members, officers, employees, representatives and any
person who controls or previously controlled the Distributor within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses and any reasonable counsel fee incurred in connection
therewith) which the Distributor, each of its present and former members,
officers, employees or representatives or any such controlling person, may incur
under the 1933 Act, the 1934 Act, any other statute (including Blue Sky laws) or
any rule or regulation thereunder, or under common law or otherwise, arising out
of or based upon any untrue statement, or alleged untrue statement of a material
fact contained in the Registration Statement or any Prospectus, as from time to
time amended or supplemented, or in any annual or interim report to
shareholders, or in any advertisement or sales literature, or arising out of or
based upon any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Trust's obligation to indemnify the
Distributor and any of the foregoing indemnitees shall not be deemed to cover
any losses, claims, demands, liabilities, damages or expenses arising out of any
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, Prospectus, annual or interim report, or any
such advertisement or sales literature in reliance upon and in conformity with
information relating to the Distributor and furnished to the Trust or its
counsel by the Distributor in writing and acknowledging the purpose of its use
for the purpose of, and used in, the preparation thereof. The Trust's agreement
to indemnify the Distributor, and any of the foregoing indemnitees, as the case
may be, with respect to any action, is expressly conditioned upon the Trust
being notified of such action brought against the Distributor, or any of the
foregoing indemnitees, within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor, or
B-7
55
such person, unless the failure to give notice does not prejudice the Trust.
Such notification shall be given by letter or by telegram addressed to the
Trust's President, but the failure so to notify the Trust of any such action
shall not relieve the Trust from any liability which the Trust may have to the
person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Trust's indemnity agreement contained in this Section 6(a).
(b) The Trust shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense shall be conducted by counsel
chosen by the Trust and approved by the Distributor, which approval shall not be
unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain such counsel, the indemnified defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of any such suit, or
in case the Distributor does not, in the exercise of reasonable judgment,
approve of counsel chosen by the Trust or, if under prevailing law or legal
codes of ethics, the same counsel cannot effectively represent the interests of
both the Trust and the Distributor, and each of its present or former members,
officers, employees, representatives or any controlling person, the Trust will
reimburse the indemnified person or persons named as defendant or defendants in
such suit, for the fees and expenses of any counsel retained by Distributor and
them. The Trust's indemnification agreement contained in Sections 6(a) and 6(b)
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Distributor, and each of its present
or former members, officers, employees, representatives or any controlling
person, and shall survive the delivery of any Shares and the termination of this
Agreement. This agreement of indemnity will inure exclusively to the
Distributor's benefit, to the benefit of each of its present or former members,
officers, employees or representatives or to the benefit of any controlling
persons and their successors. The Trust agrees promptly to notify the
Distributor of the commencement of any litigation or proceedings against the
Trust or any of its officers or directors in connection with the issue and sale
of any of the Shares.
(c) The Trust shall advance attorney's fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this Section 6 to the maximum extent
permissible under applicable law.
(d) The Distributor shall indemnify, defend and hold the Trust, and each
of its present or former trustees, officers, employees, representatives, and any
person who controls or previously controlled the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigation or defending any alleged losses, claims, demands, liabilities,
damages or expenses, and any reasonable counsel fee incurred in connection
therewith) which the Trust, and each of its present or former trustees,
officers, employees, representatives, or any such controlling person, may incur
under the 1933 Act, the 1934 Act, any other statute (including Blue Sky laws) or
any rule or regulation thereunder, or under common law or otherwise, arising out
of or based upon any untrue, or alleged untrue, statement of a material fact
contained in the Trust's Registration Statement or any Prospectus, as from time
to time amended or supplemented, or arising out of or based upon the omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statement not misleading, but only if such
statement or omission was made in reliance upon, and in conformity with, written
information relating to the Distributor and furnished to the Trust or its
counsel by the Distributor for the purpose of, and used in, the preparation
thereof. The Distributor's agreement to indemnify the Trust, and any of the
foregoing indemnitees, is expressly conditioned upon the Distributor's being
notified of any action brought against the Trust, and any of the foregoing
indemnitees, such notification to be given by letter or telegram addressed to
the Distributor's President, within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Trust or such person unless the failure to give notice does
not prejudice the Distributor, but the failure so to notify the Distributor of
any such action shall not relieve the Distributor from any liability which the
Distributor may have to the person against whom such action is brought by reason
of any such untrue, or alleged untrue, statement or omission, otherwise than on
account of the Distributor's indemnity agreement contained in this Section 6(d).
B-8
56
(e) The Distributor shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by the Distributor and approved by the Trust, which approval
shall not be unreasonably withheld. In the event the Distributor elects to
assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to assume
the defense of any such suit, or in case the Trust does not, in the exercise of
reasonable judgment, approve of counsel chosen by the Distributor or, if under
prevailing law or legal codes of ethics, the same counsel cannot effectively
represent the interests of both the Trust and the Distributor, and each of its
present or former members, officers, employees, representatives or any
controlling person, the Distributor will reimburse the indemnified person or
persons named as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by the Trust and them. The Distributor's indemnification
agreement contained in Sections 6(d) and (e) shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Trust, and each of its present or former directors, officers, employees,
representatives or any controlling person, and shall survive the delivery of any
Shares and the termination of this Agreement. This Agreement of indemnity will
inure exclusively to the Trust's benefit, to the benefit of each of its present
or former directors, officers, employees or representatives or to the benefit of
any controlling persons and their successors. The Distributor agrees promptly to
notify the Trust of the commencement of any litigation or proceedings against
the Distributor or any of its officers or directors in connection with the issue
and sale of any of the Shares.
(f) No person shall be obligated to provide indemnification under this
Section 6 if such indemnification would be impermissible under the 1940 Act, the
1933 Act, the 1934 Act or the rules of the NASD; provided, however, in such
event indemnification shall be provided under this Section 6 to the maximum
extent so permissible.
7. OBLIGATIONS OF TRUST.
This Agreement is executed by and on behalf of the Trust and the obligations of
the Trust hereunder are not binding upon any of the trustees, officers or
shareholders of the Trust individually but are binding only upon the Trust and
with respect to the Funds to which such obligations pertain.
8. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original agreement but all of which counterparts shall
together constitute but one and the same instrument.
9. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State of
Wisconsin, without regard to conflicts of law principles. To the extent that the
applicable laws of the State of Wisconsin, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control, and nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or order of the SEC thereunder.
10. DURATION AND TERMINATION.
(a) This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect for two years from the date hereof.
Thereafter, if not terminated, this Agreement shall continue automatically in
effect as to each Fund for successive one-year periods, provided such
continuance is specifically approved at least annually by (i) the Trust's Board
or (ii) the vote of a "majority of the outstanding voting securities" of a Fund,
and provided that in either event the continuance
B-9
57
is also approved by a majority of the Trust's Board who are not "interested
persons" of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
(b) Notwithstanding the foregoing, this Agreement may be terminated,
without the payment of any penalty, with respect to a particular Fund (i)
through a failure to renew this Agreement at the end of a term, (ii) upon mutual
consent of the parties, or (iii) upon no less than 60 days' written notice, by
either the Trust through a vote of a majority of the members of the Board who
are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Agreement or by vote of a "majority
of the outstanding voting securities" of a Fund, or by the Distributor. The
terms of this Agreement shall not be waived, altered, modified, amended or
supplemented in any manner whatsoever except by a written instrument signed by
the Distributor and the Trust. If required under the 1940 Act, any such
amendment must be approved by the Trust's Board, including a majority of the
Trust's Board who are not "interested persons" of any party to this Agreement,
by vote cast in person at a meeting for the purpose of voting on such amendment.
In the event that such amendment affects the Adviser, the written instrument
shall also be signed by the Adviser. This Agreement will automatically terminate
in the event of its assignment.
11. CONFIDENTIALITY.
The Distributor agrees on behalf of its employees to treat all records relative
to the Trust and prior, present or potential shareholders of the Trust as
confidential, and not to use such records for any purpose other than performance
of the Distributor's responsibilities and duties under this Agreement, except
after notification and prior approval by the Trust, which approval shall not be
unreasonably withheld, and may not be withheld where the Distributor may be
exposed to civil or criminal proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, when subject to
governmental or regulatory audit or investigation, or when so requested by the
Trust. Records and information which have become known to the public through no
wrongful act of the Distributor or any of its employees, agents or
representatives shall not be subject to this paragraph.
12. MISCELLANEOUS.
The captions in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
13. NOTICE.
Any notice required or permitted to be given by any party to the others shall be
in writing and shall be deemed to have been given on the date delivered
personally or by courier service or 3 days after sent by registered or certified
mail, postage prepaid, return receipt requested or on the date sent and
confirmed received by facsimile transmission to the other parties' respective
addresses set forth below:
Notice to the Distributor shall be sent to:
Quasar Distributors, LLC
Attn: President
615 East Michigan Street
Milwaukee, WI 53202
B-10
58
notice to the Trust or the Adviser shall be sent to:
Lindner Investments
Attention: Vice President
520 Lake Cook Road, Suite 38
Deerfield, IL 60015
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated as of the day and year first above written.
LINDNER INVESTMENTS
By:
-----------------------------------------------------
Robert L. Miller, Vice President
LINDNER ASSET MANAGEMENT, INC.
By:
-----------------------------------------------------
Doug T. Valassis, Chairman
QUASAR DISTRIBUTORS, LLC
By:
-----------------------------------------------------
James Schoenike, President
B-11
59
SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BY AND AMONG
LINDNER INVESTMENTS,
LINDNER ASSET MANAGEMENT, INC.
AND
QUASAR DISTRIBUTORS, LLC
NAMES OF FUNDS
60
SCHEDULE B
TO THE
DISTRIBUTION AGREEMENT
BY AND AMONG
LINDNER INVESTMENTS,
LINDNER ASSET MANAGEMENT, INC.
AND
QUASAR DISTRIBUTORS, LLC
FEES
Basic Distribution Services
TBD
Advertising Compliance Review/NASD Filings
- $150 per job for the first 10 pages (minutes if tape or video); $20 per
page (minutes if tape or video) thereafter
- NASDR Expedited Service for 3 day turnaround:
- $1000 for the first 10 pages (minutes if audio or video) $25 per page
(minutes if audio or video) thereafter (Comments are faxed. NASDR may
not accept expedited request.)
Licensing of Investment Advisor's Staff (if desired)
- $900 per year per Series 7 representative
- All associated NASD and State fees for Registered Representatives,
including license and renewal fees.
Out-of-Pocket Expenses
Reasonable out-of-pocket expenses incurred by the Distributor in connection with
activities primarily intended to result in the sale of Shares, including,
without limitation:
- typesetting, printing and distribution of Prospectuses and shareholder
reports
- production, printing, distribution and placement of advertising and sales
literature and materials
- engagement of designers, free-lance writers and public relations firms
- long-distance telephone lines, services and charges
- postage
- overnight delivery charges
- NASD filing fees
- record retention
- travel, lodging and meals
61
EXHIBIT C
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of August 1, 2001, between Lindner Asset Management,
Inc., a Michigan corporation ("LAMI" or the "Adviser"), and CastleArk
Management, LLC, an Illinois limited liability company ("CastleArk" or the
"Sub-Adviser").
WHEREAS, the Adviser has entered into an Investment Management Agreement, dated
as of August 1, 2001 (the "Management Agreement"), with Lindner Investments (the
"Trust"), a Massachusetts business trust and a diversified, open-end management
investment company registered under the Investment Company Act of 1940 (the 1940
Act), pursuant to which LAMI acts as Adviser of the Trust's separate series of
shares of beneficial interest one of which is the Lindner Large-Cap Growth Fund
(the "Fund"); and
WHEREAS, LAMI desires to retain the Sub-Adviser to provide investment advisory
services to the Fund and to manage such portion of the Fund as the Adviser shall
from time to time direct, and the Sub-Adviser is willing to render such
investment advisory services;
NOW, THEREFORE, the Parties agree as follows:
1. Subject to the supervision of the Adviser and the Board of Trustees of
the Trust, the Sub-Adviser shall manage such portion of the investment
operations of the Fund as the Adviser shall direct and shall manage the
composition of the Fund's portfolio, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in the Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information as currently in effect and as amended or supplemented from time
to time, being herein called the Prospectus), and subject to the following
understandings:
(a) The Sub-Adviser shall provide supervision of such portion of the
Fund's investments as the Adviser shall direct and shall determine from
time to time what investments and securities will be purchased,
retained, sold or loaned by the Fund, and what portion of the assets
will be invested or held uninvested as cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Declaration
of Trust, By-Laws and Prospectus of the Fund and with the instructions
and directions of the Adviser and of the Board of Trustees of the Trust,
co-operate with the Adviser's (or its designee's) personnel responsible
for monitoring the Fund's compliance, and will conform to and comply
with the requirements of the 1940 Act, the Internal Revenue Code of 1986
and all other applicable federal and state laws and regulations. In
connection therewith, the Sub-Adviser shall, among other things, prepare
and file such reports as are, or may in the future be, required by the
Securities and Exchange Commission.
(c) The Sub-Adviser shall determine the securities to be purchased or
sold by such portion of the Fund, and will place orders with or through
such persons, brokers or dealers (including but not limited to any
broker or dealer affiliated with the Sub-Adviser) to carry out the
policy with respect to brokerage as set forth in the Fund's Prospectus
or as the Board of Trustees may direct from time to time. In providing
the Fund with investment supervision, it is recognized that the
Sub-Adviser will give primary consideration to securing the most
favorable price and efficient execution. Within the framework of this
policy, the Sub-Adviser may consider the financial responsibility,
research and investment information and other services provided by
brokers or dealers who may effect or be a party to any such transaction
or other transactions to which the Sub-Adviser's other clients may be a
party. It is understood that any broker or dealer affiliated with the
Sub-Adviser may be used as principal broker for securities transactions,
but that no formula has been adopted for allocation of the Fund's
investment transaction business. It is also understood that it is
desirable for the Fund that the Sub-Adviser have access to supplemental
investment and market research and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher
cost to
C-1
62
the Fund than may result when allocating brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers, subject
to review by the Trust's Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to
the Sub-Adviser in connection with the Sub-Adviser's services to other
clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients
of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligations
to, aggregate the securities to be sold or purchased in order to obtain
the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made
by the Sub-Adviser in the manner the Sub-Adviser considers to be the
most equitable and consistent with its fiduciary obligations to the Fund
and to such other clients.
(d) The Sub-Adviser shall maintain all books and records with respect to
the Fund's portfolio transactions required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act, and shall render to the Trust's Board of Trustees such periodic and
special reports as the Trustees may reasonably request. The Sub-Adviser
shall make reasonably available its employees and officers for
consultation with any of the Trustees or officers or employees of the
Fund with respect to any matter discussed herein, including, without
limitation, the valuation of the Fund's securities.
(e) The Sub-Adviser shall provide the Fund's Custodian on each business
day with information relating to all transactions concerning the portion
of the Fund's assets it manages, and shall provide the Adviser with such
information upon request of the Adviser.
(f) The investment management services provided by the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be
free to render similar services to others. Conversely, the Sub-Adviser
and Adviser understand and agree that if the Adviser manages the Fund in
a "manager-of-managers" style, the Adviser will, among other things, (i)
continually evaluate the performance of the Sub-Adviser to the Fund
through quantitative and qualitative analysis and consultations with the
Sub-Adviser, (ii) periodically make recommendations to the Trust's Board
of Trustees as to whether the contract with the Sub-Adviser should be
renewed, modified, or terminated and (iii) periodically report to the
Trust's Board of Trustees regarding the results of its evaluation and
monitoring functions. The Sub-Adviser recognizes that its services may
be terminated or modified pursuant to this process.
2. The Sub-Adviser may authorize and permit any of its directors, officers
and employees who may be elected as Trustees or officers of the Fund to
serve in the capacities in which they are elected. Services to be furnished
by the Sub-Adviser under this Agreement may be furnished through the medium
of any of such directors, officers or employees.
3. The Sub-Adviser shall keep the Fund's books and records required to be
maintained by the Sub-Adviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services hereunder needed by the Adviser to keep the other books and
records of the Fund required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser agrees that all records which it maintains for the Fund are the
property of the Fund and the Sub-Adviser will surrender promptly to the
Fund any of such records upon the Fund's request, provided, however, that
the Sub-Adviser may retain a copy of such records. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
C-2
63
4. The Sub-Adviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 (the "Advisers Act") and other applicable state and federal
regulations.
5. The Sub-Adviser shall furnish to the Adviser copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the maintenance of compliance procedures pursuant to paragraph 1(d) hereof
as the Adviser may reasonably request.
6. The Adviser shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Management Agreement and, as more
particularly discussed above, shall oversee and review the Sub-Adviser's
performance of its duties under this Agreement.
7. For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser shall pay the Sub-Adviser as full compensation
therefor, a fee equal to 50% of the monthly management fee paid to the
Adviser.
8. The Sub-Adviser shall not be liable for any error of judgment or for any
loss suffered by the Fund or the Adviser in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Sub-Adviser's part in the
performance of its duties or from its reckless disregard of its obligations
and duties under this Agreement.
9. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated by the Fund
at any time, without the payment of any penalty, by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund, or by the Adviser or the
Sub-Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days written notice to the other party. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act) or upon the termination of the Management
Agreement.
10. Nothing in this Agreement shall limit or restrict the right of any of
the Sub-Adviser's directors, officers or employees who may also be a
Trustee, officer or employee of the Fund to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any business, whether of a similar or dissimilar nature, nor
limit or restrict the Sub-Adviser's right to engage in any other business
or to render services of any kind to any other corporation, firm,
individual or association.
11. During the term of this Agreement, the Adviser agrees to furnish the
Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Sub-Adviser in any way, prior to use thereof and not to use material if the
Sub-Adviser reasonably objects in writing five business days (or such other
time as may be mutually agreed) after receipt thereof. Sales literature may
be furnished to the Sub-Adviser hereunder by first-class or overnight mail,
facsimile transmission equipment or hand delivery.
12. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.
13. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to said Acts. In addition,
where the effect of a requirement of the 1940 Act or the Advisers Act
reflected in any provision of the Agreement is revised by rule, regulation
or order of the SEC, such provision shall be deemed to incorporate the
effect of such rule, regulation or order. Subject to the foregoing, this
Agreement shall be governed by and construed in
C-3
64
accordance with the laws (without reference to conflicts of law provisions)
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designed below as of the day and year first above
written.
LINDNER ASSET MANAGEMENT, INC.
By:
------------------------------------
Doug T. Valassis
Chairman
CASTLEARK MANAGEMENT, LLC
By:
------------------------------------
Jerome A. Castellini
C-4
65
EXHIBIT D
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made as of August 1, 2001, between Lindner Asset Management,
Inc., a Michigan corporation ("LAMI" or the "Adviser"), and CastleArk
Management, LLC, an Illinois limited liability company ("CastleArk" or the
"Sub-Adviser").
WHEREAS, the Adviser has entered into an Investment Management Agreement, dated
as of August 1, 2001 (the "Management Agreement"), with Lindner Investments (the
"Trust"), a Massachusetts business trust and a diversified, open-end management
investment company registered under the Investment Company Act of 1940 (the 1940
Act), pursuant to which LAMI acts as Adviser of the Trust's separate series of
shares of beneficial interest one of which is the Lindner Small-Cap Growth Fund
(the "Fund"); and
WHEREAS, LAMI desires to retain the Sub-Adviser to provide investment advisory
services to the Fund and to manage such portion of the Fund as the Adviser shall
from time to time direct, and the Sub-Adviser is willing to render such
investment advisory services;
NOW, THEREFORE, the Parties agree as follows:
1. Subject to the supervision of the Adviser and the Board of Trustees of
the Trust, the Sub-Adviser shall manage such portion of the investment
operations of the Fund as the Adviser shall direct and shall manage the
composition of the Fund's portfolio, including the purchase, retention and
disposition thereof, in accordance with the Fund's investment objectives,
policies and restrictions as stated in the Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional
Information as currently in effect and as amended or supplemented from time
to time, being herein called the Prospectus), and subject to the following
understandings:
(a) The Sub-Adviser shall provide supervision of such portion of the
Fund's investments as the Adviser shall direct and shall determine from
time to time what investments and securities will be purchased,
retained, sold or loaned by the Fund, and what portion of the assets
will be invested or held uninvested as cash.
(b) In the performance of its duties and obligations under this
Agreement, the Sub-Adviser shall act in conformity with the Declaration
of Trust, By-Laws and Prospectus of the Fund and with the instructions
and directions of the Adviser and of the Board of Trustees of the Trust,
co-operate with the Adviser's (or its designee's) personnel responsible
for monitoring the Fund's compliance, and will conform to and comply
with the requirements of the 1940 Act, the Internal Revenue Code of 1986
and all other applicable federal and state laws and regulations. In
connection therewith, the Sub-Adviser shall, among other things, prepare
and file such reports as are, or may in the future be, required by the
Securities and Exchange Commission.
(c) The Sub-Adviser shall determine the securities to be purchased or
sold by such portion of the Fund, and will place orders with or through
such persons, brokers or dealers (including but not limited to any
broker or dealer affiliated with the Sub-Adviser) to carry out the
policy with respect to brokerage as set forth in the Fund's Prospectus
or as the Board of Trustees may direct from time to time. In providing
the Fund with investment supervision, it is recognized that the
Sub-Adviser will give primary consideration to securing the most
favorable price and efficient execution. Within the framework of this
policy, the Sub-Adviser may consider the financial responsibility,
research and investment information and other services provided by
brokers or dealers who may effect or be a party to any such transaction
or other transactions to which the Sub-Adviser's other clients may be a
party. It is understood that any broker or dealer affiliated with the
Sub-Adviser may be used as principal broker for securities transactions,
but that no formula has been adopted for allocation of the Fund's
investment transaction business. It is also understood that it is
desirable for the Fund that the Sub-Adviser have access to supplemental
investment and market research and security and economic analysis
provided by brokers who may execute brokerage transactions at a higher
cost to
D-1
66
the Fund than may result when allocating brokerage to other brokers on
the basis of seeking the most favorable price and efficient execution.
Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities for the Fund with such brokers, subject
to review by the Trust's Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to
the Sub-Adviser in connection with the Sub-Adviser's services to other
clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients
of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligations
to, aggregate the securities to be sold or purchased in order to obtain
the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made
by the Sub-Adviser in the manner the Sub-Adviser considers to be the
most equitable and consistent with its fiduciary obligations to the Fund
and to such other clients.
(d) The Sub-Adviser shall maintain all books and records with respect to
the Fund's portfolio transactions required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act, and shall render to the Trust's Board of Trustees such periodic and
special reports as the Trustees may reasonably request. The Sub-Adviser
shall make reasonably available its employees and officers for
consultation with any of the Trustees or officers or employees of the
Fund with respect to any matter discussed herein, including, without
limitation, the valuation of the Fund's securities.
(e) The Sub-Adviser shall provide the Fund's Custodian on each business
day with information relating to all transactions concerning the portion
of the Fund's assets it manages, and shall provide the Adviser with such
information upon request of the Adviser.
(f) The investment management services provided by the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be
free to render similar services to others. Conversely, the Sub-Adviser
and Adviser understand and agree that if the Adviser manages the Fund in
a "manager-of-managers" style, the Adviser will, among other things, (i)
continually evaluate the performance of the Sub-Adviser to the Fund
through quantitative and qualitative analysis and consultations with the
Sub-Adviser, (ii) periodically make recommendations to the Trust's Board
of Trustees as to whether the contract with the Sub-Adviser should be
renewed, modified, or terminated and (iii) periodically report to the
Trust's Board of Trustees regarding the results of its evaluation and
monitoring functions. The Sub-Adviser recognizes that its services may
be terminated or modified pursuant to this process.
2. The Sub-Adviser may authorize and permit any of its directors, officers
and employees who may be elected as Trustees or officers of the Fund to
serve in the capacities in which they are elected. Services to be furnished
by the Sub-Adviser under this Agreement may be furnished through the medium
of any of such directors, officers or employees.
3. The Sub-Adviser shall keep the Fund's books and records required to be
maintained by the Sub-Adviser pursuant to paragraph 1(a) hereof and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services hereunder needed by the Adviser to keep the other books and
records of the Fund required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser agrees that all records which it maintains for the Fund are the
property of the Fund and the Sub-Adviser will surrender promptly to the
Fund any of such records upon the Fund's request, provided, however, that
the Sub-Adviser may retain a copy of such records. The Sub-Adviser further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records as are required to be maintained by it pursuant to
paragraph 1(a) hereof.
D-2
67
4. The Sub-Adviser agrees to maintain adequate compliance procedures to
ensure its compliance with the 1940 Act, the Investment Advisers Act of
1940 (the "Advisers Act") and other applicable state and federal
regulations.
5. The Sub-Adviser shall furnish to the Adviser copies of all records
prepared in connection with (i) the performance of this Agreement and (ii)
the maintenance of compliance procedures pursuant to paragraph 1(d) hereof
as the Adviser may reasonably request.
6. The Adviser shall continue to have responsibility for all services to be
provided to the Fund pursuant to the Management Agreement and, as more
particularly discussed above, shall oversee and review the Sub-Adviser's
performance of its duties under this Agreement.
7. For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser shall pay the Sub-Adviser as full compensation
therefor, a fee equal to 50% of the monthly management fee paid to the
Adviser.
8. The Sub-Adviser shall not be liable for any error of judgment or for any
loss suffered by the Fund or the Adviser in connection with the matters to
which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the Sub-Adviser's part in the
performance of its duties or from its reckless disregard of its obligations
and duties under this Agreement.
9. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated by the Fund
at any time, without the payment of any penalty, by the Board of Trustees
of the Trust or by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund, or by the Adviser or the
Sub-Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days written notice to the other party. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the 1940 Act) or upon the termination of the Management
Agreement.
10. Nothing in this Agreement shall limit or restrict the right of any of
the Sub-Adviser's directors, officers or employees who may also be a
Trustee, officer or employee of the Fund to engage in any other business or
to devote his or her time and attention in part to the management or other
aspects of any business, whether of a similar or dissimilar nature, nor
limit or restrict the Sub-Adviser's right to engage in any other business
or to render services of any kind to any other corporation, firm,
individual or association.
11. During the term of this Agreement, the Adviser agrees to furnish the
Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature or other material prepared for
distribution to shareholders of the Fund or the public, which refer to the
Sub-Adviser in any way, prior to use thereof and not to use material if the
Sub-Adviser reasonably objects in writing five business days (or such other
time as may be mutually agreed) after receipt thereof. Sales literature may
be furnished to the Sub-Adviser hereunder by first-class or overnight mail,
facsimile transmission equipment or hand delivery.
12. This Agreement may be amended by mutual consent, but the consent of the
Fund must be obtained in conformity with the requirements of the 1940 Act.
13. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act or the Advisers Act shall be resolved by
reference to such term or provision of the 1940 Act or the Advisers Act and
to interpretations thereof, if any, by the United States Courts or in the
absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to said Acts. In addition,
where the effect of a requirement of the 1940 Act or the Advisers Act
reflected in any provision of the Agreement is revised by rule, regulation
or order of the SEC, such provision shall be deemed to incorporate the
effect of such rule, regulation or order. Subject to the foregoing, this
Agreement shall be governed by and construed in
D-3
68
accordance with the laws (without reference to conflicts of law provisions)
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be
executed by their officers designed below as of the day and year first above
written.
LINDNER ASSET MANAGEMENT, INC.
By:
------------------------------------
Doug T. Valassis
Chairman
CASTLEARK MANAGEMENT, LLC
By:
------------------------------------
Jerome A. Castellini
D-4
69
EXHIBIT E
SUB-ADVISORY CONTRACT
This SUB-ADVISORY CONTRACT (the "Agreement") is made as of ,
2001, between U.S. BANCORP PIPER JAFFRAY ASSET MANAGEMENT, INC., a Delaware
corporation that is registered with the Securities and Exchange Commission
("SEC") as an investment adviser under the Investment Advisers Act of 1940, as
amended (the "Subadviser"), and LINDNER ASSET MANAGEMENT, INC., a Michigan
corporation and registered investment adviser under the Investment Advisers Act
of 1940, as amended (the "Adviser").
RECITALS:
A. Lindner Investments, a Massachusetts business trust (the "Trust"), an
open-end management investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"), has registered shares of beneficial
interest in its series known as the "Lindner Government Money Market Fund" (the
"Money Market Fund") under the Securities Act of 1933 amended ("1933 Act").
B. The Trust has retained the Adviser to render investment advisory and
portfolio management services to the Money Market Fund pursuant to an Advisory
Agreement, dated May 20, 1996 (the "Management Agreement").
C. The Adviser desires at this time to retain the Subadviser to render
investment advisory and portfolio management services for the Money Market Fund,
and the Subadviser is willing to provide such services.
In consideration of the foregoing and the mutual promises and covenants
contained herein, the parties agree as follows:
1. Appointment. The Adviser hereby appoints the Subadviser, and the
Subadviser accepts the appointment, to manage the investment and
reinvestment of the assets of the Money Market Fund for the period and on
the terms set forth herein.
2. Delivery of Documents. The Adviser has furnished Subadviser with copies
of each of the following
(a) the Trust's Declaration of Trust, as filed with the Secretary of
State of the Commonwealth of Massachusetts on July 20, 1993, and all
amendments thereto;
(b) the Trust's Bylaws and all amendments thereto;
(c) the resolutions of the Trust's Board of Trustees and the
shareholders of the Fund authorizing the appointment of Subadviser and
approving this Agreement;
(d) the most recent Post-Effective Amendment to the Trust's Registration
Statement on Form N-1A pursuant to which the Trust has registered the
shares of the Fund under the 1933 Act, including the Prospectus and the
Statement of Additional Information relating to the Fund (which are
collectively referred to herein as the "Prospectus"); and
(e) the Trust's Notification of Registration under the 1940 Act as filed
with the SEC.
The Adviser will furnish Subadviser from time to time with copies of all
amendments of or supplements to the foregoing.
3. Management. The Subadviser will: (i) manage the investment and
reinvestment of the Fund's assets in accordance with the applicable
investment objectives, policies and limitations set forth in the Fund's
Prospectus; (ii) be subject to the supervision of the Adviser and the
Trust's Board of Trustees; (iii) place orders for the purchase or sale of
securities for the Fund's account with brokers or dealers selected by the
Subadviser; and (iv) provide compliance monitoring with respect to Rule
2a-7 of the 1940 Act and Subchapter M of the Internal Revenue Code of 1986,
as amended. The Subadviser is authorized as the agent of the Fund to give
instructions to the Custodian of the Fund as to the deliveries of
securities and
E-1
70
payments of cash for the account of the Fund. The Subadviser shall have
access to such reports and records of the Fund it deems necessary to
perform it services hereunder.
Except as specifically stated in this Section 3, the Subadviser shall not
be responsible for providing (i) compliance monitoring, reporting or
testing; (ii) record maintenance or preparation; or (iii) accounting, tax
or other services to the Fund.
In connection with the selection of brokers or dealers and the placing of
orders, the Subadviser will seek for the Fund best execution of orders. The
Subadviser 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 Subadviser determined in good faith that the charges
are reasonable in view of any research or other services provided to the
Subadviser by such broker or dealer.
4. Compensation of the Subadviser. For the services to be provided by the
Subadviser hereunder, the Adviser will pay to the Subadviser at the end of
each calendar month, an investment advisory and management fee, computed
daily and payable monthly, at an annual rate of 0.10% of the first
$250,000,000 of average net assets of the Fund, and at an annual rate of
0.08% of the average net assets of the Fund in excess of $250,000,000. 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 Subadviser under this Agreement are not to be deemed
exclusive, and the Subadviser shall be free to render similar services or
other services to others.
5. Calculation of Net Asset Value. The Subadviser shall assist the Adviser
in calculating the market value of all portfolio securities held on behalf
of the Fund as of 3:00 p.m., Central Time, on each day that the New York
Stock Exchange and the Federal Reserve Bank of Chicago are open for
business, and as of such other time or times as the Adviser may determine
in accordance with the provisions of the 1940 Act and the policies and
procedures established from time to time by the Board of Trustees of the
Trust. On each day when net asset value is not calculated, the net asset
value of a share of any class of the Fund's shares shall be deemed to be
the net asset value of such a share as of the last day on which such
calculation was made for the purpose of the foregoing computations.
6. Limitation on Subadviser Liability. The Subadviser shall not be liable
for any error of judgment or of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except loss
resulting from willful misfeasance, bad faith or gross negligence on the
part of the Subadviser in the performance of its obligations and duties or
by reason of its reckless disregard of its obligations and duties under
this Agreement.
7. Duration and Termination. This Agreement shall become effective with
respect to the Fund on the date that it is approved by the shareholders of
the Money Market Fund following its approval by the Board of Trustees of
the Trust in accordance with the 1940 Act and the rules and regulations of
the SEC thereunder, and shall remain in full force until the second
anniversary of such effective date, unless sooner terminated as hereinafter
provided. This Agreement shall continue in force from year-to-year
thereafter with respect to the Money Market Fund, but only as long as such
continuance is specifically approved at least annually in the manner
required by the 1940 Act and the rules and regulations of the SEC
thereunder; provided, however, that if the continuation of this Agreement
is not approved for the Money Market Fund, the Subadviser may continue to
serve in such capacity in the manner and to the extent permitted by the
1940 Act and the rules and regulations thereunder.
This Agreement shall automatically terminate in the event of its assignment
or in the event that the Management Agreement is terminated for any reason.
In addition, this Agreement may be terminated at any time with respect to
the Money Market Fund or any other series of the Trust which hereafter
become subject to this Agreement without the payment of any penalty by the
Adviser or by the Subadviser on not less than sixty (60) days' prior
written notice by one party to the other party. The
E-2
71
Trust may effect termination with respect to the Money Market Fund or any
other series, without payment of any penalty, by action of the Board of
Trustees or by vote of majority of the outstanding voting securities of the
Money Market Fund or any such other series on sixty (60) days' written
notice to the Adviser and the Subadviser.
This Agreement may be terminated with respect to the Money Market Fund or
any such other series at any time, without prior written notice and without
the payment of any penalty, by the Board of Trustees of the Trust, by vote
of a majority of the outstanding voting securities of the Money Market Fund
or such other series, or by the Adviser, in the event that it shall have
been established by a court of competent jurisdiction that the Subadviser
or any officer or director of the Subadviser has taken any action which
results in a breach of the covenants of the Subadviser set forth herein.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the 1940 Act and the rules
and regulations thereunder.
Termination of this Agreement shall not affect the right of the Subadviser
to receive payments on any unpaid balance of the compensation described in
Section 4 earned prior to such termination.
8. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
shall not be thereby affected.
9. Notices. 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. Governing Law. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Illinois.
11. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by a written instrument signed on
behalf of each of the parties.
12. Entire Agreement. This Agreement is the entire contract between the
parties relating to the subject matter hereof and supersedes all prior
agreements between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the Adviser and the Subadviser have caused this
Agreement to be executed as of the day and year first above written.
LINDNER ASSET MANAGEMENT, INC.
By
--------------------------------------
Doug T. Valassis, Chairman,
President
U.S. BANCORP PIPER JAFFRAY ASSET
MANAGEMENT, INC.
By:
--------------------------------------
Its:
--------------------------------------
E-3
72
PROXY CARD
VOTE THIS PROXY CARD TODAY!
This proxy is solicited by the Board of Trustees of Lindner Investments (the
"Trust") for use at a Special Meeting of Shareholders of each of Lindner Assets
Allocation Fund, Lindner Large-Cap Fund, Lindner Small-Cap Fund, Lindner Utility
Fund, Lindner Market Neutral Fund and Lindner Government Money Market Fund (each
a "Fund" and collectively the "Funds"), to be held at the offices of Dykema
Gossett PLLC, 400 Renaissance Center, 23rd Floor, Detroit, Michigan 48243, on
Friday, July 6, 2001, at 9:00 o'clock a.m., Eastern Time.
The undersigned hereby appoints Doug T. Valassis and Robert L. Miller, and each
of them, attorney-in-fact and proxy for the undersigned, each with the power of
substitution and resubstitution, to attend, vote and act for the undersigned at
the Special Meeting of Shareholders of the Lindner Fund identified below,
("Fund"), and at any adjournments thereof, casting votes of the Fund which the
undersigned may be entitled to vote, with all the powers which the undersigned
would possess if personally present, as follows:
PROPOSAL 1
To approve (a) a proposal that would authorize the Adviser, subject to
supervision and approval of the Board of Trustees of the Trust, to hire,
terminate or replace investment Subadvisers for each Fund without shareholder
approval --INVESTOR AND INSTITUTIONAL SHARES OF THE ALL FUNDS
[ ] For [ ] Against [ ] Abstain
PROPOSAL 2
To approve a new Investment Management Agreement between the Trust and Lindner
Asset Management, Inc. with respect to all Funds--INVESTOR AND INSTITUTIONAL
SHARES OF ALL THE FUNDS
[ ] For [ ] Against [ ] Abstain
PROPOSAL 3
To approve a Distribution Plan pursuant to Rule 12b-1 for Investor Shares of all
Funds other than the Money Market Fund--INVESTOR SHARES ONLY OF THE ASSET
ALLOCATION, LARGE-CAP, SMALL-CAP, UTILITY AND MARKET NEUTRAL FUNDS
[ ] For [ ] Against [ ] Abstain
PROPOSAL 4
To approve a new Sub-Advisory Contract between Lindner Asset Management, Inc.,
and CastleArk Management, LLC, for the Lindner Large-Cap Fund--INVESTOR AND
INSTITUTIONAL SHARES OF THE LARGE-CAP FUND
[ ] For [ ] Against [ ] Abstain
PROPOSAL 5
To approve a new Sub-Advisory Contract between Lindner Asset Management, Inc.,
and CastleArk Management, LLC, for the Lindner Small-Cap Fund--INVESTOR AND
INSTITUTIONAL SHARES OF THE SMALL-CAP FUND
[ ] For [ ] Against [ ] Abstain
PROPOSAL 6
To approve a new Sub-Advisory Contract between Lindner Asset Management, Inc.,
and U.S. Bancorp Piper Jaffray Asset Management, Inc., for the Lindner
Government Money Market Fund--SHARES OF THE GOVERNMENT MONEY MARKET FUND
[ ] For [ ] Against [ ] Abstain
PROPOSAL 7
To approve an amendment to the investment objective of the Lindner Asset
Allocation Fund--INVESTOR AND INSTITUTIONAL SHARES OF THE ASSET
ALLOCATION FUND
[ ] For [ ] Against [ ] Abstain
73
PROPOSAL 8
(A) To amend the investment objective of the Utility Fund to "Long term capital
appreciation".
[ ] For [ ] Against [ ] Abstain
(B) To amend the investment subclassification and eliminate a fundamental
investment policy of the Utility Fund to permit it to operate as a
"non-diversified" mutual fund.
[ ] For [ ] Against [ ] Abstain
(C) To eliminate the fundamental investment policy of the Utility Fund that
requires it to concentrate its investments in securities of Utilities.
[ ] For [ ] Against [ ] Abstain
INVESTOR AND INSTITUTIONAL SHARES OF THE UTILITY FUND
The undersigned hereby revokes any prior proxy to vote at the Special Meeting,
and hereby ratifies and confirms all that such attorneys and proxies, or each of
them, may lawfully do by virtue hereof. The undersigned hereby acknowledges
receipt of the Notice of Special Meeting of Shareholders and the Proxy Statement
dated May 17, 2001.
Name of Lindner Fund:
---------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
- ----------------------------------------
DATE: , 2001
- ---------------------------------------- ----------------
Signature(s), (Title(s), if applicable)
Please sign above exactly as name(s) appear(s) hereon. Corporate or partnership
proxies should be signed in full corporate or partnership name by an authorized
officer. Each joint owner should sign personally. When signing as a fiduciary,
please give full title as such. Please return this proxy card promptly in the
enclosed postage-paid envelope. In the absence of any specification, this proxy
will be voted in favor of Proposals 1 through 6.