SCHEDULE 14C
INFORMATION STATEMENT PURSUANT TO SECTION 14(c) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
/ / Preliminary Information Statement / / Confidential,
for use of the Commission only
/X/ Definitive Information Statement (as permitted by Rule 14c-5(d)(2)).
LINDNER INVESTMENTS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) 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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
LINDNER INVESTMENTS
520 LAKE COOK ROAD, SUITE 381
DEERFIELD, ILLINOIS 60015
INFORMATION STATEMENT
FEBRUARY 28, 2002
This information statement is being furnished to the shareholders of
Lindner Market Neutral Fund (the "Fund"), a series of Lindner Investments, a
Massachusetts business trust (the "Trust"), in lieu of a proxy statement,
pursuant to the terms of an exemptive order (the "SEC Order") issued by the
Securities and Exchange Commission ("SEC"). The SEC Order permits the Fund's
Adviser (as defined below) to hire new subadvisers and to make certain changes
to existing subadvisory contracts with the approval of the Board of Trustees,
without obtaining shareholder approval. Pursuant to the SEC Order, the Fund has
agreed to provide certain information about any new subadviser to the
shareholders of the Fund being managed by the subadviser. Shareholders are not
being asked to vote on the hiring of the new subadviser, but are encouraged to
review this information statement.
The Trust is registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), as an open-end management investment
company. Six separate investment portfolios are currently offered by the Trust,
one of which is Lindner Market Neutral Fund. The Trust's trustees are referred
to here as the "Board," "Board Members" or "Trustees." The Trust's principal
executive office is at 520 Lake Cook Road, Suite 381, Deerfield, Illinois 60015.
This information statement relates to the approval by the Trustees,
including a majority of the Trustees who are not parties to the contract and
were not interested persons of those parties, as defined in the Investment
Company Act (the "Independent Trustees"), on November 20, 2001, of a new
subadvisory contract for the Fund dated November 21, 2001, between Lindner Asset
Management, Inc. (the "Adviser") and Standish Mellon Asset Management Company
LLC ("Standish Mellon") (the "Subadvisory Contract"), a copy of which is
attached hereto as Exhibit A. The Subadvisory Contract became effective on
November 30, 2001. Prior to Standish Mellon's assumption of its subadvisory
responsibilities, the Fund did not have a subadviser.
The Fund will pay for the costs associated with preparing and
distributing this information statement to its respective shareholders. This
information statement will be mailed on or about February 28, 2002.
THIS IS NOT A PROXY STATEMENT. WE ARE NOT ASKING FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
1
THE INVESTMENT ADVISER
Lindner Asset Management, Inc. serves as the Fund's investment adviser
under an investment management agreement dated as of August 1, 2001. The Adviser
also performs certain administrative services for the Fund. The Adviser is
registered as an investment adviser with the SEC. As of September 30, 2001, the
Adviser managed approximately $500 million of assets, all of which were assets
of the Trust. Information concerning the Trust's current management arrangements
can be found in Exhibit B. Information concerning officers of the Trust is set
forth in Exhibit C.
MANAGER-OF-MANAGERS STYLE. The Adviser intends to act as a
"manager-of-managers." The SEC Order generally allows the Adviser to enter into
and amend agreements with unaffiliated investment subadvisers without obtaining
shareholder approval each time. This authority is subject to certain conditions,
including the requirement that the Trustees (including a majority of the
Independent Trustees) must approve any new or amended agreements with
subadvisers. Shareholders of the Fund will continue to have the right to
terminate an agreement with a subadviser at any time, without penalty, by a vote
of the majority of outstanding shares of the Fund. The Adviser, on behalf of the
Fund, will notify shareholders of any new subadviser or of any material
amendments to the agreement with a subadviser pursuant to the SEC Order. The
Adviser remains responsible for the performance of all of the six separate
investment portfolios of the Trust, oversees subadvisers to ensure compliance
with the Fund's investment objectives and policies, and monitors each
subadviser's adherence to its investment style and performance results in order
to recommend any changes in subadvisers to the Trust's Board of Trustees.
SHAREHOLDER REPORTS
The Fund's most recent annual report for the fiscal year ended June 30,
2001, has been sent to its shareholders. Copies of the Fund's most recent annual
report and semi-annual report may be obtained without charge by writing the
Fund, care of US Bancorp Fund Services, LLC, 615 East Michigan Street,
Milwaukee, Wisconsin 53202 or by calling (800) 995-7777 (toll-free).
SHAREHOLDINGS
The table below sets forth the Fund's net asset value and number of
outstanding shares as of January 31, 2002:
Net Asset Value Number of Outstanding Shares
--------------- ----------------------------
$9,867,808 1,658,341.275
The beneficial owners, directly or indirectly, of more than 5% of the
outstanding shares of the Fund as of January 31, 2002, are listed below:
2
No. of Shares Percent of Outstanding
Name and Address Held Beneficially Shares Held Beneficially
- ---------------- ----------------- ------------------------
Charles Schwab Co. Inc. 187,156.400 11.29%
FBO Schwab Customers
(Reinvestment Account)
Attn Mutual Funds Dept
101 Montgomery St
San Francisco, CA 94104
National Financial Services Corp 164,211.162 9.91%
FBO of Our Customers
200 Liberty St
1 World Financial Center
New York, NY 10281
To the knowledge of the Trust, the executive officers and Board members
of the Fund, as a group, owned less than 1% of the outstanding shares of the
Fund as of January 31, 2002.
NEW SUBADVISORY CONTRACT
On November 20, 2001, the Trustees, including all of the Independent
Trustees, unanimously approved the selection by the Adviser of Standish Mellon
as subadviser to the Fund and the Subadvisory Contract.
Section 15 of the Investment Company Act requires that a majority of
the Fund's outstanding shares approve its subadvisory contract(s). However, on
November 30, 2001, the SEC issued the SEC Order granting exemptive relief from
certain requirements of Section 15, provided that the Fund complies with the
conditions of the SEC Order. According to the SEC Order, which is subject to a
number of conditions, the Adviser may enter into subadvisory contracts on behalf
of the Fund without receiving prior shareholder approval.
On July 6, 2001, shareholders of the Fund authorized the Adviser to
hire, terminate or replace investment subadvisers, and make material changes to
subadvisory contracts, without the approval of the Fund's shareholders, but
subject to the supervision and approval of the Board.
As a result of the SEC's issuance of the SEC Order, and the approval by
shareholders' of the Fund, of the manager-of-managers management style, the
Subadvisory Contract became effective on November 30, 2001, and the Board of
Trustees will, without further shareholder approval, hereafter be able to
appoint initial, additional or replacement subadvisers for the Fund.
3
BOARD CONSIDERATION OF SUBADVISORY CONTRACT
In considering the approval of the Subadvisory Contract, the Trustees,
including the Independent Trustees, considered whether the approval of the
Subadvisory Contract was in the best interests of the Fund. At the meeting, the
Trustees reviewed materials furnished by the Adviser and Standish Mellon and met
with representatives of Standish Mellon. The Adviser explained to the Trustees
the research, review and selection process that it employed to identify
subadviser candidates for the Fund, which included the submission of requests
for proposals from candidates and on-site visits by the Adviser to those
candidates under serious consideration. The Adviser explained the reasons why it
selected Standish Mellon and why it recommended that the Trustees approve
Standish Mellon as the Fund's new subadviser.
The Trustees considered a number of factors in approving Standish
Mellon, including Standish Mellon's history and background in managing market
neutral portfolios for other clients, Standish Mellon's investment philosophy,
long-term performance record, and the experience and background of the Standish
Mellon personnel who would be responsible for managing the Fund's assets. The
Trustees also considered Standish Mellon's facilities and compliance procedures.
The Trustees considered the nature, quality and extent of services expected to
be provided to the Fund by Standish Mellon as well as the reputation of Standish
Mellon in the asset management industry. The Trustees also considered the size
and structure of Standish Mellon, as well as the amount of assets that Standish
Mellon currently manages.
The Trustees discussed and reviewed the terms of the Subadvisory
Contract. Under the Subadvisory Contract between the Adviser and Standish
Mellon, the subadvisory fee is payable at the rate of 0.70% of the Fund's
average daily net assets up to $24,999,999, 0.75% of the Fund's average daily
net assets from $25 million to $49,999,999, and 0.80% of the Fund's average
daily net assets from $50 million. These fees are paid by the Adviser and
therefore the Fund will not experience an increase in its expenses as a result
of the Subadvisory Contact.
In evaluating the terms of the Subadvisory Contract, the Trustees took
into account the fact 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 Standish
Mellon with the Fund's investment objective, policies and restrictions, as well
as with laws and regulations applicable to the Fund, evaluating the performance
of Standish Mellon as compared to certain selected benchmarks and 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.
Based upon their review, the Trustees concluded that the Subadvisory
Contract was in the best interests of the Fund and the shareholders of the Fund.
Accordingly, after consideration of the above factors, and such other factors
and information as they deemed
4
relevant, the Trustees, including the Independent Trustees, unanimously approved
the Subadvisory Contract.
INFORMATION CONCERNING STANDISH MELLON ASSET MANAGEMENT
The following is a description of Standish Mellon. Standish Mellon is
not affiliated with the Adviser.
Standish Mellon's principal executive offices are located at One
Financial Center, Boston, Massachusetts 02111-2662. Standish Mellon is a
registered investment adviser that is a wholly-owned subsidiary of Mellon
Financial Corporation ("Mellon"), a financial services company headquartered in
Pittsburgh, Pennsylvania. Standish Mellon was founded in 1933. The primary
business of Standish Mellon is the management of investment portfolios for
institutions and individuals, and at September 30, 2001, it had in excess of $40
billion of assets under management. Standish Mellon has appointed the following
portfolio managers of the Fund:
Steven Gold earned a BA degree from Case Western Reserve University and
an MBA degree from Temple University. He joined Standish Mellon in
1994, and was previously employed for more than 14 years by Aetna Life
and Casualty Insurance Company. Mr. Gold has broad investment
experience as an analyst and portfolio manager that covers a range of
industries. Mr. Gold is a Chartered Financial Analyst.
David Cameron earned a BA degree from St. Lawrence University. He is
the lead portfolio manager for the large-cap value strategy of Standish
Mellon. Mr. Cameron joined Standish Mellon in 1987, and prior to that
time he was employed by BayBank Investment Management for more than six
years. Mr. Cameron is a Chartered Financial Analyst.
The day-to-day management and operating control of Standish Mellon
takes place through the Office of the Chairman. The Office of the Chairman is
comprised of Edward H. Ladd as Chairman and as many as three Vice Chairmen:
Richard S. Wood, Vice Chairman and Chief Investment Officer; Thomas P. Sorbo,
Vice Chairman and Chief Operating Officer; and Stephen R. Burke, Vice Chairman
and Chief Marketing Officer. Each is a Managing Director of Standish Mellon.
The Board of Directors of Standish Mellon is comprised of seven
persons. Each of the four members of the Office of the Chairman is also a member
of the Board of Directors. The remaining three directors are Ronald P. O'Hanley,
John J. Nagoniak and James M. Gockley. Mr. O'Hanley is the Chairman and director
of Boston Safe Advisors, Inc. and The Boston Company Asset Management Company,
LLC and Vice Chairman of The Dreyfus Corporation. Mr. Nagoniak is the Chairman
and a director of Franklin Portfolio Holdings, Inc., the holding company for a
registered investment adviser. Mr. Gockley is the Assistant General Counsel of
Mellon.
5
Standish Mellon does not presently serve as an investment adviser to
any investment company having a similar objective to the Fund.
TERMS OF SUBADVISORY CONTRACT
The following summary of the Subadvisory Contract is qualified in its
entirety by reference to the copy of the Subadvisory Contract attached as
Exhibit A to this information statement.
Under the Subadvisory Contract, Standish Mellon is compensated by the
Adviser (and not the Fund) at an annual rate of 0.70% of the Fund's average
daily net assets up to $24,999,999, 0.75% of the Fund's average daily net assets
from $25 million to $49,999,999, and 0.80% of the Fund's average daily net
assets from $50 million. The Subadvisory Contract provides that, subject to the
Adviser's and the Board of Trustees' supervision, Standish Mellon is responsible
for managing the investment operations of the Fund and for making investment
decisions and placing orders to purchase and sell securities for the Fund, all
in accordance with the investment objective and policies of the Fund as
reflected in its current prospectus and statement of additional information and
as may be adopted from time to time by the Board of Trustees. In accordance with
the requirements of the Investment Company Act, Standish Mellon also provides
the Adviser with all books and records relating to the transactions it executes
and renders to the Trustees such periodic and special reports as the Board of
Trustees may reasonably request.
The Subadvisory Contract will remain in full force and effect for a
period of two years from the date of its execution, and will continue thereafter
as long as its continuance is specifically approved at least annually by vote of
a majority of the outstanding voting securities (as that term is defined in the
Investment Company Act) of the Fund, or by the Board of Trustees, including the
approval by a majority of the Independent Trustees, at a meeting called for the
purpose of voting on such approval; provided, however, that (1) the Subadvisory
Contract may be terminated at any time without the payment of any penalty,
either by vote of the Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund, (2) the Subadvisory Contract will
terminate immediately in the event of its assignment (within the meaning of the
Investment Company Act) or upon the termination of the Fund's investment
management agreement with the Adviser, and (3) the Subadvisory Contract may be
terminated at any time by Standish Mellon or the Adviser on 60 days' prior
written notice to the other party to the Subadvisory Contract.
The Subadvisory Contract provides that, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties thereunder, Standish Mellon
will not be liable for any act or omission in connection with its activities as
subadviser to the Fund.
6
SHAREHOLDER PROPOSALS
As a Massachusetts business trust, the Trust is not required to hold
annual meetings of shareholders and the Trustees currently do not intend to hold
such meetings unless shareholder action is required in accordance with the
Investment Company Act or the Trust's Declaration of Trust. A shareholder
proposal intended to be presented at any meeting of shareholders of the Fund
must be received by the Fund a reasonable time before the Trustees' solicitation
relating thereto is made in order to be included in the Fund's proxy statement
and form of proxy relating to that meeting and presented at the meeting. The
mere submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the proxy statement because certain rules under the
federal securities laws must be complied with before inclusion of the proposal
is required.
Robert L. Miller, Secretary
Dated February 28, 2002
7
EXHIBIT A
SUBADVISORY CONTRACT WITH
STANDISH MELLON ASSET MANAGEMENT COMPANY LLC
LINDNER MARKET NEUTRAL FUND
This Sub-Advisory Contract (the "Agreement") is entered into on
November 21, 2001, between LINDNER ASSET MANAGEMENT, INC., a Michigan
corporation ("LAMI" or the "Adviser"), and STANDISH MELLON ASSET MANAGEMENT
COMPANY LLC, a Delaware limited liability company (the "Subadviser").
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 that is registered as
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 Market Neutral Fund (the "Fund"); and
WHEREAS, the Trust has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") for the purpose of registering its shares for public offering under
the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, LAMI desires to retain the Subadviser to provide investment
advisory services to the Fund and to manage the Fund as the Adviser shall from
time to time direct, commencing on the Effective Date specified in Section 7,
and the Subadviser is willing to render such investment advisory services;
NOW, THEREFORE, the Parties agree as follows:
1. Subject to the direction of the Adviser and the Board of Trustees of
the Trust, the Subadviser shall provide portfolio management services to the
Fund, including (but not limited to) the purchase, retention and disposition of
portfolio securities 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), portfolio reconciliation, cash management,
back-office services, periodic reporting to the Adviser and the Board of
Trustees of the Trust and such other services as may be reasonably requested by
the Adviser. The Subadviser's activities shall be subject to the following
understandings:
(a) The Subadviser 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 or invested in cash equivalents.
A-1
(b) In the performance of its duties and obligations under
this Agreement, the Subadviser shall act in conformity with the
Declaration of Trust, Bylaws 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 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 federal and state laws and regulations to the extent
applicable to the Subadviser's services. In connection therewith, the
Subadviser shall, among other things, comply with the Subadviser's Code
of Ethics and the Trust's soft dollar trading and brokerage allocation
policies (as described in the Trust's Statement of Additional
Information or as otherwise adopted from time to time by the Trust),
and such other policies as the Adviser or the Trust may establish, and
it shall prepare and provide to the Adviser such reports as are, or may
in the future be, reasonably required to permit the Adviser or the
Trust to make such filings as are required by the Commission. The
Adviser agrees to provide copies of such policies to the Subadviser
prior to their adoption by the Adviser or the Trust, and to allow the
Subadviser an opportunity to comment thereon.
(c) The Subadviser shall place orders with or through such
persons, brokers or dealers (but only with brokers or dealers that are
not directly or indirectly affiliated with the Subadviser) to carry out
the policy with respect to brokerage as set forth in the Fund's
Prospectus or as the Board of Trustees or the Adviser may direct from
time to time. In providing the Fund with investment supervision, it is
recognized that the Subadviser will give primary consideration to
securing the most favorable price and efficient execution. Within the
framework of this policy, the Subadviser 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 Subadviser's other
clients may be a party. It is understood that no broker or dealer
affiliated with the Subadviser may be used as principal broker for
securities transactions. It is also understood that it is desirable for
the Fund that the Subadviser 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 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 Subadviser 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 and the Adviser 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 Subadviser in connection with the Subadviser's services to other
clients.
On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interests of the Fund as well as other
clients of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and
A-2
regulations, may, but shall be under no obligation 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
Subadviser in the manner the Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and
to such other clients.
(d) The Subadviser 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
and to the Adviser such periodic and special reports as the Trustees or
the Adviser may reasonably request. The Subadviser shall make
reasonably available its employees and officers for consultation with
any of the Trustees or officers or employees of the Fund or the Adviser
with respect to any matter discussed herein, including, without
limitation, the valuation of the Fund's securities.
(e) The Subadviser shall provide to the Adviser and to the
Fund's Custodian on each business day information relating to all
transactions concerning the Fund's assets that it manages, including
(but not limited to) any pricing discrepancies from daily closing
prices reported by the Fund's pricing services, and shall provide the
Adviser with such other information as the Adviser may request.
(f) The Subadviser and Adviser understand and agree that the
Adviser intends to manage the Fund in a "manager-of-managers" style,
and that the Adviser will, among other things, (i) continually evaluate
the performance of the Subadviser to the Fund through quantitative and
qualitative analysis and consultations with the Subadviser, (ii)
periodically make recommendations to the Trust's Board of Trustees as
to whether this contract with the Subadviser 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 Subadviser recognizes that its services may
be terminated or modified pursuant to this process.
(g) The Subadviser will provide to the Adviser reasonable
support for marketing and sales activities with respect to the Fund,
including (but not limited to) providing press and other publicity
interviews, attending conferences and seminars that the Adviser
reasonably deems to be appropriate and meeting with prospective and
existing shareholders, registered investment advisers and other
financial intermediaries. The Adviser will reimburse the Subadviser for
its out-of-pocket expenses incurred in connection with such marketing
support, provided that the expenses are approved in advance by the
Adviser.
A-3
(h) The Subadviser shall promptly notify the Adviser of any
change in the employment status of the specific individuals employed by
the Subadviser to perform the investment management services described
above, of any change in the investments process by which the Fund is
managed, and of any material changes in the senior management,
operations or ownership of the Subadviser.
(i) For a period of one year after the date of this Agreement,
the Subadviser will not, without the prior written consent of the
Adviser, provide portfolio management services to any other mutual
fund that is registered with the Commission under the 1940 Act which
uses a "market neutral" investment style.
2. The Subadviser shall keep the Fund's books and records required to
be maintained by the Subadviser pursuant to Section 1(d) hereof and shall timely
furnish to the Adviser all information relating to the Subadviser'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 Subadviser agrees that all
records which it maintains for the Fund are the property of the Fund and the
Subadviser will surrender promptly to the Fund any of such records upon the
Fund's request, provided, however, that the Subadviser may retain a copy of such
records. The Subadviser 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 Section 1(d) hereof.
3. The Subadviser agrees to maintain its registration as an investment
adviser under the Investment Advisers Act of 1940 (the "Advisers Act") and to
maintain adequate compliance procedures to ensure its compliance with the 1940
Act, the Advisers Act and any other applicable state and federal laws or
regulations.
4. The Subadviser 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 Section 1(b) hereof as the
Adviser may reasonably request.
5. For the services provided and the expenses assumed pursuant to this
Agreement, the Adviser shall pay the Subadviser as full compensation therefor,
as follows:
(a) prior to the earlier of (i) the date on which this
Agreement is approved by the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund or (ii) the
date on which the Securities and Exchange Commission issues an order
exempting the Trust and the Adviser from the provisions of Section
15(a) of the 1940 Act that would otherwise require that this Agreement
be approved by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund, the Adviser shall pay to the
Subadviser an amount equal to the out-of-pocket costs incurred by the
Subadviser in performing its duties under this Agreement, which amount
shall be paid by the
A-4
Adviser within ten (10) days after submission to it by the Subadviser
of an itemized statement detailing such costs; and
(b) from and after the earlier of (i) the date on which this
Agreement is approved by the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the Fund or (ii) the
date on which the Securities and Exchange Commission issues an order
exempting the Trust and the Adviser from the provisions of Section
15(a) of the 1940 Act that would otherwise require that this Agreement
be approved by vote of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund, the Adviser shall pay to the
Subadviser a fee at the annual rates described below with respect to
the average daily net assets of the Fund, which fee will be computed
daily, and paid monthly. Such fee shall be calculated by applying the
annual rates set forth below to the average daily net assets of the
Fund for the calendar year computed in the manner used for the
determination of the net asset value of shares of the Fund. The annual
fee rates are as follows:
Rate Amount of Incremental Net Assets
---- --------------------------------
70 basis points (0.70%) First $24,999,999 of net assets
75 basis points (0.75%) Next $25,000,000 of net assets, up to $49,999,999
80 basis points (0.80%) Assets in excess of $50,000,000
For example, if the Fund has average daily net assets of $55,000,000,
the fee would be 70 basis points on the first $24,999,999 of assets, 75
basis points on the next $25,000,000 of assets and 80 basis points on
the last $5,000,001 of assets.
(c) If the exemptive order referred to in this Section 5 is not issued
on or before February 1, 2002, the Adviser agrees to take reasonable actions to
recommend to the Trust's Board of Trustees that a special meeting of the
shareholders of the Fund be called for the purpose of obtaining the shareholder
approval of this Agreement required by Section 15(a) of the 1940 Act.
6. The Subadviser 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 Subadviser's part in the performance of its
duties or from its reckless disregard of its obligations and duties under this
Agreement.
7. The Subadviser shall commence to provide services hereunder, and
this Agreement shall become effective, on the date first stated above (the
"Effective Date"). This Agreement shall continue in effect for a period of two
years from the Effective Date, unless sooner terminated as hereinafter provided.
This Agreement shall continue in effect 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; 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
A-5
the outstanding voting securities (as defined in the 1940 Act) of the Fund, or
by the Adviser or the Subadviser at any time, without the payment of any
penalty, on 60 days' prior 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.
8. Nothing in this Agreement shall limit or restrict the right of any
of the Subadviser'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
Subadviser's right to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
9. During the term of this Agreement, the Adviser agrees to furnish the
Subadviser 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 Subadviser in any
way, prior to use thereof and not to use material if the Subadviser reasonably
objects in writing within three (3) business days (or such other time as may be
mutually agreed) after receipt thereof. Sales literature may be furnished to the
Subadviser hereunder by first-class or overnight mail, facsimile transmission
equipment or hand delivery.
10. This Agreement may be amended by mutual written consent, but the
consent of the Fund must be obtained in conformity with the requirements of the
1940 Act.
11. 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 State of
Illinois.
12. Any notices or other communications required or permitted hereunder
shall be deemed to have been given if sent by first class mail, overnight
delivery or hand delivery to the following addresses:
If to the Adviser, to:
Lindner Asset Management, Inc.
520 Lake Cook Road, Suite 381
A-6
Deerfield, IL 60015
Attention: Vice President and Chief Investment Officer
If to the Subadviser, to:
Standish Mellon Asset Management Company LLC
One Financial Center
Boston, MA 02111-2662
Attention: Chief Compliance Officer
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: /s/ Doug T. Valassis
---------------------------------------------------
Doug T. Valassis, Chairman
STANDISH MELLON ASSET MANAGEMENT COMPANY LLC
By: /s/ Richard S. Woods
---------------------------------------------------
Richard S. Woods, Vice Chairman
A-7
EXHIBIT B
MANAGEMENT OF THE TRUST
THE INVESTMENT ADVISER
Lindner Asset Management, Inc. serves as the Fund's investment adviser
under an investment management agreement ("Advisory Agreement") dated as of
August 1, 2001, and renewed thereafter as required by the Investment Company
Act. The Advisory Agreement was last approved by the Trustees of the Fund,
including a majority of the Independent Trustees, on March 12, 2001. The
Advisory Agreement was approved by the Fund's shareholders on July 6, 2001.
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. As of April 10, 2001, these trusts together beneficially owned 65%
of the voting stock of the Adviser. 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.
TERMS OF THE ADVISORY AGREEMENT
Under the Advisory Agreement, and the Administration Agreement, dated
as of August 1, 2001 (the "Administration Agreement"), between the Trust and the
Adviser, the Adviser provides the Fund with investment advisory services and
certain administrative services. As the Adviser, Lindner Asset Management
manages the investment operations of the Fund and the composition of the Fund's
investment portfolio, including the purchase, retention and sale of securities
in the portfolio, in accordance with the Fund's investment objectives, policies
and restrictions. The Advisory Agreement authorizes the Adviser to employ a
subadviser for the Fund, which will furnish the day-to-day portfolio management
services for the Fund. If a Subadviser is employed for the Fund, the Adviser
will continue to have responsibility for all investment advisory services
furnished pursuant to any sub-advisory contract
MANAGER-OF-MANAGERS STYLE. The Adviser intends to act as a
"manager-of-managers." The SEC Order generally allows the Adviser to enter into
and amend agreements with unaffiliated investment subadvisers without obtaining
shareholder approval each time. This authority is subject to certain conditions,
including the requirement that the Trustees (including a majority of the
Independent Trustees) must approve any new or amended agreements with
subadvisers. Shareholders of the Fund will continue to have the right to
terminate an agreement with a subadviser at any time, without penalty, by a vote
of the majority of outstanding shares of the Fund. The Adviser, on behalf of the
Fund, will notify shareholders of any new subadviser or of any
B-1
material amendments to the agreement with a subadviser pursuant to the SEC
Order. The Adviser remains responsible for the performance of all of the six
separate investment portfolios of the Trust, oversees subadvisers to ensure
compliance with the Fund's investment objectives and policies, and monitors each
subadviser's adherence to its investment style and performance results in order
to recommend any changes in subadvisers to the Trust's Board of Trustees.
THE ADVISER'S DIRECTORS AND OFFICERS
The business and other connections of the Adviser's directors and
principal executive officers are set forth below.
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 381 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, Inc.;
Suite 381 Vice President, Treasurer and
Deerfield, IL 60015 Secretary of the Trust
D. Craig Valassis Private investor and part owner Director
39400 Woodward Avenue of Franklin Enterprises, Inc.
Suite 270
Bloomfield Hills, MI 48304
Eric E. Ryback Private investor Director and President
7343 Westmoreland
St. Louis, MO 63130
ADVISER COMPENSATION AND FEE WAIVERS
Under the Advisory Agreement, the Trust will pay the Adviser management fees at
a rate of 1.00% of the average daily net assets of the Fund (before giving
effect to any fee waivers described below).
The compensation payable to all subadvisers is paid by the Adviser. The Fund is
not responsible for payment of any subadvisory fees. For the two fiscal years
ending June 30, 2003, the Adviser has agreed to waive a portion of its
investment management fees and its administration fees, or to reimburse
expenses, to the extent that the Fund's total expense ratio exceeds 2.18%. After
July 1, 2003, this fee waiver may be discontinued by the Adviser at any time.
B-2
The Fund paid $234,356 for advisory fees during the fiscal year ended June 30,
2001 before deducting any fee waivers or expense reimbursements. These fees were
paid pursuant to advisory and service contracts that are no longer in effect,
and have been replaced by the Advisory Agreement described above.
TRANSFER AGENT
The Fund's transfer agent is US Bancorp Fund Services, LLC ("US Bancorp
Services"), 615 East Michigan Street, Milwaukee, Wisconsin 53202, pursuant to
which US Bancorp Services maintains shareholder records and keeps such accounts,
books, records, or other documents as the Fund is required to keep under federal
or state laws. US Bancorp Services also acts as stock registrar and dividend
disbursing agent, issues and redeems the Fund's shares, mails the Fund's
prospectus and proxy statements to the Fund's shareholders, and disburses
dividend payments. Prior to February 19, 2001, the Adviser served as transfer
agent, stock registrar and dividend disbursing agent for the Fund, and as
compensation for these services, the Adviser was paid $6,785 for its services in
connection with the Fund during the fiscal year ended June 30, 2001.
ADMINISTRATOR
The Trust bears all expenses of its operations other than those incurred by the
Adviser and the Subadvisers under their respective Advisory Agreement or
Sub-Advisory Contract, and those incurred by the Adviser under the
Administration Agreement. In particular, the Fund pays investment management
fees, administration fees, shareholder servicing fees and expenses, custodian
and accounting fees and expenses, legal and auditing fees, expenses of printing
and mailing prospectuses and shareholder reports, registration fees and
expenses, proxy and meeting expenses and Trustees' fees and expenses. The
Adviser currently performs, or supervises the performance by others of, certain
management services for the Trust. The Administration Agreement provides for
compensation to be paid to the Adviser equal to 0.10% per year of the Fund's
average daily net assets. No amounts were paid to the Adviser under the current
Administration Agreement for the fiscal year ended June 30, 2001. As of May 14,
2001, US Bancorp Services acts as the Fund's Sub-administrator.
Each of the Advisory Agreement, the Sub-Advisory Contracts, the Transfer Agent
Servicing Agreement and the Administration Agreement may be terminated by any
party thereto upon 60 days' notice, and may be terminated immediately by the
Trust for cause, as defined in each Agreement. Each Agreement also provides that
after an initial two-year period, it will automatically terminate (1) if it is
not approved by a majority of the Trust's trustees and a majority of the Trust's
Independent Trustees prior to the anniversary date of the agreement, or (2) if
it is assigned in whole or in part by either party. If any Agreement is
terminated for either of the foregoing reasons, the Trust will enter into a
similar arrangement with another qualified party upon such terms and conditions
as can be obtained at that time.
B-3
DISTRIBUTOR; DISTRIBUTION PLAN
Quasar Distributors, LLC (the "Distributor") acts as the principal underwriter
and distributor of the Fund's shares and continually offers shares of the Fund
pursuant to a Distribution Agreement approved by the Trustees. The Distributor
is a Delaware limited liability company that is an indirect wholly-owned
subsidiary of U.S. Bancorp.
Pursuant to a Distribution Plan adopted in March 2001 by the Board of Trustees
and approved by the shareholders of the Fund in July 2001 under Rule 12b-1 under
the Investment Company Act, the Fund may incur certain expenses that may not
exceed a maximum amount equal to 0.25% of the average daily net asset value of
the Fund. The Fund did not pay any fees under the previous Distribution Plan
during the fiscal year ended June 30, 2001. No amounts were paid under the new
Distribution Plan during the fiscal year ended June 30, 2001.
BROKERAGE
During the fiscal year ended June 30, 2001, the Fund paid total brokerage
commissions of $319,485. During the fiscal year ended June 30, 2001, the Fund
did not pay any brokerage commissions to Bemos Investments Advisers, LLC
("Bemos"), a broker that was an affiliated person of Doug T. Valassis, the
Chairman of the Trust. Mr. Valassis controls certain investment entities that
owned 85% of the voting securities of Bemos. The amount of brokerage commissions
paid to Bemos during the fiscal year ended June 30, 2000 was $600. In September
2000, the Adviser ceased trading through Bemos and Bemos is no longer in
business.
B-4
EXHIBIT C
OFFICER INFORMATION
The Officers of the Trust are listed below, together with information
regarding their principal business occupations during at least the past five
years and their ages.
POSITION(S)
HELD WITH PRINCIPAL OCCUPATION(S)
NAME, AGE AND ADDRESS THE TRUST DURING PAST FIVE YEARS
- --------------------- ----------- -----------------------
Doug T. Valassis, 49 Chairman Chairman and Trustee of the Trust. Chairman,
520 Lake Cook Road of the a Director and Treasurer of the Adviser since
Suite 381 Board and 1993. President of Franklin Enterprises, Inc., a
Deerfield, IL 60015 Trustee private investment firm, for more than five
years.
Eric E. Ryback, 49 President President and Trustee of the Trust. President
7343 Westmoreland and Trustee and a Director of the Adviser since 1993.
St. Louis, MO 63130
Robert L. Miller, 45 Vice President Vice President and Treasurer of Franklin
520 Lake Cook Road Secretary and Enterprises, Inc. for more than five years.
Suite 381 Treasurer Also serves as Vice President, Secretary and a
Deerfield, IL 60015 Director of the Adviser.
C-1