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:
[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 ' 240.14a-11(c) or ' 240.14a-12
Leuthold Funds, Inc.
(Name of Registrant as Specified in its Charter)
-----------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
<PAGE>
LEUTHOLD FUNDS, INC.
100 North Sixth Street, Suite 700A
Minneapolis, Minnesota 55403
================================================================================
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 25, 1999
================================================================================
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
Steven C. Leuthold
President
Minneapolis, Minnesota
December 15, 1998
<PAGE>
LEUTHOLD FUNDS, INC.
100 North Sixth Street, Suite 700A
Minneapolis, Minnesota 55403
------------------------------
PROXY STATEMENT
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, not by the stockholders of the Leuthold Core Investment Fund. 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.
<PAGE>
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 ELIZABETH PAGE AT THE ABOVE ADDRESS OR BY
CALLING 1-800-273-6886.
PROPOSAL TO AMEND THE INVESTMENT
RESTRICTION OF THE FUND CONCERNING
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
-2-
<PAGE>
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.
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.
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
-3-
<PAGE>
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.
-4-
<PAGE>
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 then outstanding shares of the Fund. Each person has sole power to vote or
dispose of such shares, except as otherwise indicated.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership of Class
Thomas F. Elsen 2,031 *
Steven C. Leuthold 104,617* 2.59%
Charles D. Zender 15,206 *
John S. Chipman 0 0
Lawrence L. Horsch 0 0
Paul M. Kelnberger 728 *
Elizabeth M. Page 5,501 *
Kristen E. Voigtsberger 1,337 *
Norwest Bank Minnesota,
Trustee
FBO Fairview
401(k) Plan 222,101 5.49%
P.O. Box 1533
Minneapolis, MN 55480-1533
American Express Trust Company,
Trustee
Gray, Plant, Mooty Retirement
Savings Plan
33 South 6th Street, Suite 3400 412,519 10.2%
Minneapolis, MN 55402-3796
- --------------
*Less than 1%
**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.
-5-
<PAGE>
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
Steven C. Leuthold
President
Minneapolis, Minnesota
December 15, 1998
-6-
<PAGE>
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS
Leuthold Funds, Inc.
January 25, 1999
The undersigned constitutes and appoints Steven C. Leuthold and
Elizabeth M. Page, 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:
(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.
This proxy will be voted as specified. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED
FOR THE PROPOSAL. The signature on this proxy
should correspond exactly with the name of the
shareholder as it appears on the proxy. If stock
is issued in the name of two or more persons, each
should sign the proxy. If a proxy is signed by an
administrator, trustee, guardian, attorney or
other fiduciary, please indicate full title as
such.
Dated ________________, 199_
Signed
Signed
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF
DIRECTORS OF LEUTHOLD FUNDS,
INC.
| | Please check here if you WILL be attending the meeting.
