SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as
permitted by Rule 14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
LEUTHOLD FUNDS, INC.
(Name of Registrant as Specified in Its Charter)
Not Applicable
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(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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[X ] No fee required.
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6(i)(4) and 0-11.
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transaction applies:
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LEUTHOLD FUNDS, INC.
100 North Sixth Street, Suite 700A
Minneapolis, Minnesota 55403
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 25, 1999
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To the Stockholders of
LEUTHOLD FUNDS, INC.
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of LEUTHOLD
FUNDS, INC. (the "Corporation") will be held at 5000 IDS Center, Nicollet Mall,
Minneapolis, Minnesota on Monday the 25th day of January, 1999, at 10:30 a.m.,
for the following purposes:
1. To consider and act upon a proposal to approve a change in the
investment restrictions of the Leuthold Core Investment Fund (the
"Fund") to permit the Fund to effect short sales as permitted by the
Investment Company Act of 1940, as amended.
2. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only stockholders of record at the close of business on November 30, 1998,
the record date for this meeting, shall be entitled to notice of and to vote at
the meeting or any adjournment or postponement thereof.
YOUR VOTE IS IMPORTANT AND ALL STOCKHOLDERS ARE ASKED TO BE PRESENT IN PERSON
OR BY PROXY. IF YOU ARE UNABLE TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE
USING THE ENCLOSED STAMPED ENVELOPE. SENDING IN YOUR PROXY WILL NOT PREVENT YOU
FROM PERSONALLY VOTING YOUR SHARES AT THE MEETING SINCE YOU MAY REVOKE YOUR
PROXY BY ADVISING THE SECRETARY OF THE CORPORATION IN WRITING (BY SUBSEQUENT
PROXY OR OTHERWISE) OF SUCH REVOCATION AT ANY TIME BEFORE IT IS VOTED.
By Order of the Board of Directors,
/S/ STEVEN C. LEUTHOLD
STEVEN C. LEUTHOLD
President
Minneapolis, Minnesota
December 15, 1998
LEUTHOLD FUNDS, INC.
100 North Sixth Street, Suite 700A
Minneapolis, Minnesota 55403
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PROXY STATEMENT
INTRODUCTION
The enclosed proxy is being solicited by and on behalf of the Board of
Directors of Leuthold Funds, Inc. (the "Corporation") for use at the Special
Meeting of Stockholders to be held at 5000 IDS Center, Nicollet Mall,
Minneapolis, Minnesota 55402, on Monday, the 25th day of January, 1999, at 10:30
a.m. and at any adjournment or postponement thereof (the "Meeting"), for the
purposes set forth in the attached Notice of Special Meeting of Stockholders.
The Meeting could be adjourned if a quorum does not exist or the Meeting is
disrupted by fire or other emergency. For purposes of any adjournment, proxies
will be voted "FOR" adjournment unless otherwise directed. A stockholder may
otherwise direct by writing anywhere on the enclosed proxy that the stockholder
will vote against any adjournments.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING FORM OF PROXY WHETHER
YOU EXPECT TO BE PERSONALLY PRESENT AT THE MEETING OR NOT. Timely executed
proxies will be voted as you instruct. If no choice is indicated, proxies will
be voted for the proposal set forth in the Notice of Special Meeting of
Stockholders. Any stockholder giving a proxy has the power to revoke it at any
time before it is exercised by giving notice thereof to the Corporation in
writing (by subsequent proxy or otherwise), but if not so revoked, the shares
represented by the proxy will be voted at the Meeting. Presence at the Meeting
of a stockholder who has signed a proxy does not in itself revoke a proxy.
Proxies will be solicited by mail. In addition to solicitation by mail,
certain officers and employees of the Corporation may solicit by telephone,
telegraph and personally. Such officers and employees will not be specifically
paid for these services. The cost of solicitation, including preparing,
assembling and mailing the proxy material, will be borne by the Corporation.
The Notice of Special Meeting of Stockholders, this Proxy Statement and the
accompanying form of proxy were first mailed to stockholders of the Corporation
on or about December 15, 1998.
Only stockholders of record at the close of business on November 30, 1998
will be entitled to notice of and to vote at the Meeting. On that date, there
were issued and outstanding 4,070,713 shares of common Stock, $.0001 par value,
of the Leuthold Core Investment Fund (the "Fund"). The record holder of each
outstanding share of the Fund is entitled to one vote on all matters submitted
to stockholders of the Fund.
See "Vote Required" under the Proposal for information as to the required
vote.
THE CORPORATION WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS MOST RECENT
ANNUAL AND SEMI-ANNUAL REPORTS TO ANY STOCKHOLDER UPON REQUEST. REQUESTS FOR
SUCH REPORTS SHOULD BE DIRECTED TO KRISTEN E. VOIGTSBERGER AT THE ABOVE ADDRESS
OR BY CALLING 1-800-273-6886.
PROPOSAL TO AMEND THE INVESTMENT RESTRICTION OF THE FUND
TO PERMIT THE USE OF SHORT SALES
The Board of Directors of the Corporation has proposed that the fundamental
investment restriction of the Fund concerning short sales as set forth in the
Fund's statement of additional information be changed to permit the Fund to
effect short sales as permitted by the Investment Company Act of 1940, as
amended. The proposed amendment to this investment restriction (the "Proposal")
will become effective only upon stockholder approval. If the Proposal is not
approved by a vote of the stockholders of the Fund, the current restriction for
the Fund will remain unchanged.
THE PROPOSAL
The CURRENT INVESTMENT RESTRICTION of the Fund relating to short sales, which
is a fundamental policy and cannot be changed without stockholder approval,
states:
1. The Fund will not sell securities short, buy securities on margin, or
write put or call options.
Subject to stockholder approval, THIS INVESTMENT RESTRICTION WILL BE AMENDED
to state:
1. The Fund will not buy securities on margin or write put or call
options.
The effect of this amendment, if approved by the stockholders, will be to
permit the Fund to effect short sales as permitted by the Investment Company Act
of 1940, as amended. The investment restriction will remain a fundamental
policy of the Fund which cannot be changed again without stockholder approval.
The Fund's Board of Directors unanimously supports this change.
DISCUSSION
The Fund's Board of Directors believes that the proposed change will enhance
the capabilities of the Fund's investment adviser and improve the adviser's
potential to achieve the investment objective of the Fund.
Currently, the adviser purchases primarily S&P 500 put options (stock index
options) in order to rapidly (and in the adviser's opinion) cost-effectively
reduce the Fund's equity exposure. Under certain volatile market conditions,
these put options become much less cost-effective. The Proposal, if adopted,
will enable the Fund's adviser to reduce equity exposure by engaging in short
sales of index-related and other securities. Under certain volatile market
conditions, the Fund's adviser believes that reducing equity exposure by
engaging in short sales is more effective than using put options.
In addition, the adviser may anticipate that certain segments of the market
are more likely to experience a decline, or decline in greater magnitude, than
the market as a whole. Under such conditions, the adviser would prefer to sell
short those index-related or other securities which represent the segment(s) of
the market that are anticipated to underperform.
The Fund primarily intends to engage in short sales in order to control the
total equity exposure of its portfolio on a short to intermediate term basis. In
volatile markets this might occur several times in one year. However, the
adviser does not expect to maintain any permanent short positions.
As with any strategy employed to reduce equity exposure, a short sale
involves certain investment risks. The investment performance of the Fund will
suffer if a security for which the Fund has effected a short sale appreciates in
value. Additionally the Fund may be required to close out a short position
earlier than it had intended if the securities lender requires it to deliver the
securities it borrowed at the commencement of the short sale and the Fund is
unable to borrow such securities from other securities lenders.
A "short sale" is made by selling a security the Fund does not own. In a short
sale transaction, the Fund will borrow a security from a broker and sell it with
the expectation that it will replace the security borrowed from the broker by
repurchasing the same security at a lower price. These securities may include
individual securities or index based securities such as Standard & Poor's
Depository Receipts ("SPDRs"). Whenever the Fund effects a short sale, it will
put in a segregated account cash or other liquid assets equal to the difference
between (a) the market value of the securities sold short and (b) any cash or
United States government securities required to be deposited as collateral with
the broker in connection with the short sale (but not including the proceeds of
the short sale). Until the Fund replaces the security it borrowed to effect
the short sale, it must maintain daily the segregated account at such a level
that the amount deposited in it plus the amount deposited with the broker as
collateral will equal the current market value of the securities sold short.
Initially no more than 25% of the value of the Fund's net assets will be, when
added together, (a) deposited as collateral for the obligation to replace
securities borrowed to effect short sales, and (b) allocated to segregated
accounts in connection with short sales.
The Board of Directors believes that the adviser's effectiveness is likely to
be enhanced by using short sales in place of, or in addition to, S&P 500 put
options. The Board also believes that the potential benefits of this strategy
exceed the potential risks.
VOTE REQUIRED
Approval of the Proposal requires the affirmative vote of the lesser of (i)
67% of the Fund's shares present or represented at the Meeting; or (ii) more
than 50% of the outstanding shares of the Fund. If the Proposal is not approved
by the stockholders of the Fund, the Fund's current investment limitation will
continue to apply. Abstentions and broker non-votes will not be counted for or
against the Proposal but will be counted as votes present for purposes of
determining whether or not a quorum is present or represented at the Meeting.
Abstentions and broker non-votes have no effect if (i) is applicable and have
the same effect as a vote against the Proposal if (ii) is applicable.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSAL AND HAS
DETERMINED THAT THE PROPOSAL IS IN THE BEST INTERESTS OF THE FUND AND ITS
STOCKHOLDERS.
The Board of Directors recommends that stockholders of the Fund vote FOR the
---
Proposal.
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
Set forth below is certain information at October 31, 1998 regarding the
beneficial ownership of shares of the Fund by each director and executive
officer of the Corporation and persons who beneficially owned more than 5% of
the outstanding shares of the Fund. Each person has sole power to vote or
dispose of such shares, except as otherwise indicated.
<TABLE>
NAME OF BENEFICIAL OWNER AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ------------------------ ----------------------------------------- -----------------
<S> <C> <C>
Thomas F. Elsen 2,031 *<F1>
Steven C. Leuthold 104,617**<F2> 2.59%
Charles D. Zender 15,206 *<F1>
John S. Chipman 0 0
Lawrence L. Horsch 0 0
Paul M. Kelnberger 728 *<F1>
Elizabeth M. Page 5,501 *<F1>
Kristen E. Voigtsberger 1,337 *<F1>
Norwest Bank Minnesota, Trustee
FBO Fairview
401(k) Plan
P.O. Box 1533
Minneapolis, MN 55480-1533 222,101 5.49%
American Express Trust Company, Trustee
Gray, Plant, Mooty Retirement Savings Plan
33 South 6th Street, Suite 3400
Minneapolis, MN 55402-3796 412,519 10.2%
</TABLE>
- --------------------
*<F1> Less than 1%
**<F2> Includes shares held by a foundation and family trust, over which the
reporting person may share voting and investment power.
INVESTMENT ADVISER
The Fund's investment adviser is Leuthold & Anderson, Inc., with its
principal offices located at 100 North Sixth Street, Suite 700A, Minneapolis,
Minnesota 55403.
ADMINISTRATOR
The Fund's administrator is Firstar Mutual Fund Services, LLC, 615 East
Michigan Street, Milwaukee, Wisconsin 53202.
OTHER MATTERS
The Board of Directors of the Corporation knows of no other matters that may
come before the Meeting. If any other matters properly come before the Meeting,
it is the intention of the persons acting pursuant to the enclosed forms of
proxy to vote the shares represented by said proxies in accordance with their
best judgment with respect to such matters.
STOCKHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission, stockholder
proposals meeting tests contained in those rules may, under certain conditions,
be included in the Corporation's proxy materials for a particular meeting of
stockholders. One of these conditions relates to the timely receipt by the
Corporation of any such proposal. Since the Corporation does not have regular
annual meetings of stockholders, under these rules, proposals submitted for
inclusion in the proxy materials for a particular meeting must be received by
the Corporation a reasonable time before the solicitation of proxies for the
meeting is made. The fact that the Corporation receives a stockholder proposal
in a timely manner does not insure its inclusion in the Corporation's proxy
materials since there are other requirements in the proxy rules relating to such
inclusion.
By Order of the Board of Directors,
/S/ STEVEN C. LEUTHOLD
STEVEN C. LEUTHOLD
President
Minneapolis, Minnesota
December 15, 1998
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
LEUTHOLD FUNDS, INC.
JANUARY 25, 1999
The undersigned constitutes and appoints Steven C. Leuthold and Kristen E.
Voigtsberger, and each of them singly, with power of substitution, attorneys
and proxies for and in the name and place of the undersigned to appear and vote
with the same effect as the undersigned at the Special Meeting of Stockholders
of LEUTHOLD FUNDS, INC. (the "Corporation"), to be held at 5000 IDS Center,
Nicollet Mall, Minneapolis, Minnesota, on Monday, January 25, 1999 at 10:30 a.m.
local time, and at any adjournments or postponements thereof, all shares of
stock of the Corporation which the undersigned is entitled to vote as follows:
Dated--------------------------, 199--
[ ]
Signature(s)
The signature on this proxy should
correspond exactly with the name of the
stockholder as it appears on the proxy.
If stock is issued in the name of two or
more persons, each should sign the
proxy. If a proxy is signed by an
administrator, trustee, guardian,
attorney or other fiduciary, please
indicate full title as such.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LEUTHOLD FUNDS, INC.
This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE PROPOSAL.
Please vote by filling in the appropriate box(es) below.
(1) To approve the proposal to change the investment restriction of the
Leuthold Core Investment Fund to permit it to effect short sales as
permitted by the Investment Company Act of 1940.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(2) In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
Please check here if you WILL be [ ]
attending the meeting.
