(File Nos. 333-61525 and 811-08943)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
LEGG MASON LIGHT STREET TRUST, 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:
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<PAGE>
September 5, 2000
Dear Shareholder:
Enclosed is a proxy statement asking you to vote in favor of a Plan of
Liquidation for Legg Mason Market Neutral Trust ("Fund"), a series of Legg Mason
Light Street Trust, Inc.
As discussed in the proxy statement, the Board of Directors is proposing
to liquidate the Fund. Since the Fund commenced operations, it has been slow to
attract assets, and it has not performed in a manner that is likely to attract
additional assets. Moreover, the Fund has incurred higher expenses than most
other mutual funds, and the Fund's small asset base has prevented it from
achieving economies of scale. As described in the proxy statement, the Board
concluded that it would be in the best interests of the Fund's shareholders to
liquidate the Fund.
Since the Board decision was announced, the Fund has experienced heavy net
redemptions of its shares. Due to the need for cash to meet such redemptions and
the Fund's already small asset base, it became difficult to manage the Fund in
accordance with its investment objective and policies. As a result, Fund
management converted the Fund's entire portfolio to cash or cash equivalents for
temporary defensive purposes. Therefore, the Fund will not meet its investment
objective and its returns will be limited to the returns typical of money market
funds.
A special meeting of Fund shareholders is being held on September 29, 2000
to consider the proposed liquidation. If you owned Fund shares at the close of
business on August 25, 2000, you are entitled to vote at the meeting. THE FUND'S
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU APPROVE THIS PROPOSAL.
Your vote is important. Please take a moment now to sign and return your
proxy card in the enclosed postage-paid envelope or fax it to us at (410)
454-3130. If you have additional questions regarding the proposal, please
contact your Financial Advisor or Legg Mason Funds Investor Services at
1-800-822-5544.
Very truly yours,
LEGG MASON LIGHT STREET TRUST, INC.
/s/ Edward A. Taber, III
------------------------
Edward A. Taber, III
President
<PAGE>
LEGG MASON MARKET NEUTRAL TRUST
(A SERIES OF LEGG MASON LIGHT STREET TRUST, INC.)
----------------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 29, 2000
----------------------
TO THE SHAREHOLDERS:
A special meeting of shareholders of Legg Mason Market Neutral Trust
("Fund"), a series of Legg Mason Light Street Trust, Inc. ("Corporation"), will
be held on September 29, 2000 at 10:00 a.m., Eastern time, at 100 Light Street,
28th Floor (Oriole Room), Baltimore, Maryland 21202, for the following purposes:
(1) To consider and vote on a Plan of Liquidation for the
Fund and related amendments to the Corporation's Articles of
Incorporation; and
(2) To transact such other business as may properly come
before the meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournments thereof if
you owned Fund shares at the close of business on August 25, 2000. If you attend
the meeting, you may vote your shares in person. WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the Board of Directors,
PATRICIA A. MAXEY
SECRETARY
September 5, 2000
100 Light Street
Baltimore, Maryland 21202
<PAGE>
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD,
DATE AND SIGN IT, AND RETURN IT IN THE POSTAGE PAID ENVELOPE PROVIDED. If YOU
SIGN, DATE AND RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR
SHARES WILL BE VOTED "FOR" THE PLAN OF LIQUIDATION AND THE RELATED AMENDMENTS TO
THE CORPORATION'S ARTICLES OF INCORPORATION AND "FOR" OR "AGAINST" ANY OTHER
BUSINESS WHICH MAY PROPERLY ARISE AT THE MEETING, IN THE PROXIES' DISCRETION. IN
ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY CARD PROMPTLY.
--------------------------------------------------------------------------------
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general guidelines for signing proxy cards may be of
assistance to you and avoid the time and expense of validating your vote if you
fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears on
the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the
party signing should conform exactly to the name shown on the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing
the proxy card should be indicated unless it is reflected in the name of the
account. For example:
<TABLE>
<CAPTION>
ACCOUNT NAME VALID SIGNATURE
------------ ---------------
<S> <C>
Corporate Accounts
(1) ABC Corp................................... ABC Corp.
John Doe, Treasurer
(2) ABC Corp................................... John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer.......... John Doe
(4) ABC Corp. Profit Sharing Plan.............. John Doe, Trustee
Partnership Accounts
(1) The XYZ Partnership........................ Jane B. Smith, Partner
(2) Smith and Jones, Limited Partnership....... Jane B. Smith, General Partner
Trust Accounts
(1) ABC Trust Account.......................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/18/78........ Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust. f/b/o John B.
Smith, Jr. UGMA/UTMA....................... John B. Smith
(2) Estate of John B. Smith.................... John B. Smith, Jr., Executor
</TABLE>
<PAGE>
LEGG MASON MARKET NEUTRAL TRUST
(A SERIES OF LEGG MASON LIGHT STREET TRUST, INC.)
100 LIGHT STREET
BALTIMORE, MARYLAND 21202
-------------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 29, 2000
-------------------
This statement is furnished to the shareholders of Legg Mason Market
Neutral Trust ("Fund"), a series of Legg Mason Light Street Trust, Inc.
("Corporation"), in connection with the Board of Directors' solicitation of
proxies to be used at the special meeting of the shareholders of the Fund to be
held on September 29, 2000 at 10:00 a.m., Eastern time, at 100 Light Street,
28th Floor (Oriole Room), Baltimore, Maryland 21202, or any adjournment or
adjournments thereof ("Meeting"). This proxy statement and the related proxy
card will first be mailed to shareholders on or about September 5, 2000.
The close of business on August 25, 2000 has been fixed as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Meeting ("Record Date"). On that date, the Fund had 140,096 shares of
common stock outstanding and entitled to vote. Each share of common stock is
entitled to one vote at the Meeting, and fractional shares are entitled to
proportionate fractions of one vote. The proposal to adopt a Plan of Liquidation
for the Fund and the related amendments to the Corporation's Articles of
Incorporation must be approved by the affirmative vote of a simple majority of
the Fund's outstanding shares.
As of the Record Date, the directors and officers of the Fund did not
own any of the Fund's outstanding shares. Except as set forth below, as of the
Record Date, the Fund does not know of any person who owns beneficially 5% or
more of the Fund's outstanding shares:
NUMBER OF SHARES PERCENT BENEFICIAL
---------------- ------------------
SHAREHOLDER'S NAME/ADDRESS OWNED OWNERSHIP
-------------------------- ----- ---------
Legg Mason, Inc. 64,711.513* 46%*
100 Light Street
Baltimore, Maryland 21202
Daniel J. Decola, Sr.** 9,610.924 6.9%
*Includes ownership of Fund shares by affiliates of Legg Mason, Inc.
**Daniel J. Decola, Sr. may be contacted c/o Legg Mason Fund Adviser, Inc.,
100 Light Street, Baltimore, Maryland 21202.
<PAGE>
In an effort to help the Fund maintain its investment program in the
face of persistent shareholder redemptions, Legg Mason, Inc. decided to make a
substantial purchase of Fund shares to provide an additional asset base.
Accordingly, Legg Mason, Inc. purchased Fund shares at net asset value on August
11, 2000, August 21, 2000, and August 22, 2000. Under the Investment Company Act
of 1940, as amended ("1940 Act"), the beneficial owner of more than 25% of the
voting securities of a mutual fund is presumed to control that fund. Under this
definition, Legg Mason, Inc. now controls the Fund. Because Legg Mason, Inc. and
its affiliates intend to vote their shares in favor of the Plan of Liquidation
for the Fund and the related amendments to the Corporation's Articles of
Incorporation, the affirmative vote of only a minority of the Fund's other
shares will be needed to approve the proposal.
One-third of the shares outstanding on the Record Date, represented in
person or by proxy, must be present for the transaction of business at the
Meeting. In the event that a quorum is not present at the Meeting, or if a
quorum is present at the Meeting but sufficient votes to approve the Proposal
are not received, the persons named as proxies 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
represented at the Meeting in person or by proxy. The persons named as proxies
will vote those proxies which they are entitled to vote "FOR" any such proposal
in favor of such an adjournment, and will vote those proxies required to be
voted "AGAINST" any such proposal against such adjournment.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any proposal. Accordingly, abstentions and
broker non-votes effectively will have no effect on the proposal to adjourn the
Meeting because an adjournment must be approved only by a majority of the votes
cast at the Meeting, but effectively will be a vote against a Plan of
Liquidation for the Fund and the related amendments to the Corporation's
Articles of Incorporation because this proposal must be approved by a simple
majority of the Fund's outstanding shares.
The individuals named as proxies on the enclosed proxy card will vote
in accordance with your direction as indicated thereon if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you give no voting instructions (and your shares are not
held in street name), your shares will be voted "FOR" the Plan of Liquidation
for the Fund and the related amendments to the Corporation's Articles of
Incorporation and "FOR" or "AGAINST" any other business which may properly arise
at the meeting, in the proxies' discretion. You may revoke any proxy by giving
another proxy or by letter or telegram revoking the initial proxy. To be
effective, your revocation must be received by the Fund prior to the Meeting and
must indicate your name and account number. In addition, if you attend the
Meeting in person you may, if you wish, vote by ballot at the Meeting, thereby
canceling any proxy previously given.
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The solicitation of proxies, the cost of which will be borne by Legg
Mason Fund Adviser, Inc. ("LMFA"), will be made primarily by mail but also may
include telephone or oral communications by regular employees of Legg Mason Wood
Walker, Incorporated ("Legg Mason") or LMFA. The Fund may also use Shareholder
Communications Corporation ("SCC"), a professional proxy solicitation firm, to
assist in the solicitation of proxies. If the Fund uses SCC, it estimates that
SCC will be paid fees and expenses of approximately $6,000 in connection with
the solicitation.
Copies of the Fund's most recent annual and semi-annual reports,
including financial statements, have previously been delivered to shareholders.
SHAREHOLDERS MAY REQUEST FREE COPIES OF THESE REPORTS BY WRITING LEGG MASON AT
100 LIGHT STREET, BALTIMORE, MARYLAND 21202 OR BY CALLING TOLL-FREE (800)
822-5544.
LMFA serves as the Fund's manager. Batterymarch Financial Management,
Inc. ("Batterymarch") serves as the Fund's investment adviser. Legg Mason serves
as the Fund's distributor. LMFA, Batterymarch, and Legg Mason are all wholly
owned subsidiaries of Legg Mason, Inc., a financial services holding company.
The principal business address of LMFA, Legg Mason, and Legg Mason, Inc. is 100
Light Street, Baltimore, Maryland 21202. The principal business address of
Batterymarch is 200 Clarendon Street, Boston, Massachusetts 02116.
PROPOSAL---APPROVAL OF A PLAN OF LIQUIDATION FOR
THE FUND AND RELATED AMENDMENTS TO THE
CORPORATION'S ARTICLES OF INCORPORATION
The Corporation's Board of Directors, including the Directors who are
not "interested persons" of the Corporation, as defined by the 1940 Act, has
approved, and recommends that the shareholders of the Fund approve, a Plan of
Liquidation for the Fund and the related amendments to the Corporation's
Articles of Incorporation.
BACKGROUND
The Fund commenced operations on February 16, 1999. Its investment
objective has been to seek long-term capital appreciation while minimizing
exposure to general U.S. equity market volatility. The Fund has been slow to
attract assets, and it has not performed in a manner that is likely to attract
additional assets. As of August 25, 2000, the Fund's net assets were
approximately $1,206,229. The Fund has two authorized classes of shares: Primary
Class and Navigator Class. No shares of the Fund's Navigator Class have been
sold. The Fund's expenses are higher than those of most other mutual funds due
to its very small size and its particular investment mandate. Because the Fund's
fixed expenses are borne by such a small asset base, the Fund's expenses per
share are significantly higher than in larger funds.
The Fund's investment mandate has contributed to the Fund's high
expense ratio. In order to achieve its investment objective, the Fund's
investment adviser, Batterymarch, is committed to purchasing equity securities
that it believes are undervalued, selling short equity securities that it
believes to be overvalued, and coordinating the establishment of long and short
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positions in an effort to keep the portfolio neutral to general U.S. equity
market volatility. Maintaining the Fund's neutrality requires that for every
desired securities transaction, Batterymarch must also research and evaluate an
opposing transaction to keep the portfolio's balance of long and short
positions. Such double effort, as well as the increased transaction costs of
effecting this strategy, contributes to the Fund's comparatively high expenses.
These relatively high expenses have persisted despite the fact that LMFA has
waived all of its advisory fees since the Fund's inception.
For the most recent fiscal year, the Fund's operating expenses were:
Market Neutral Trust--Primary Class Shares
Ratio of Net Expenses to Average Ratio of Expenses to Average Net
Net Assets After Reimbursement or Assets Before Reimbursement or
Waiver Waiver
3.00% 6.70%*
* The Fund's expense ratio for the current fiscal year is expected to be higher
than the Fund's ratio for the previous year.
The Fund has not been able to sell a sufficient number of shares to
lower its operating expense ratio by spreading expenses over a larger asset base
and, consequently, has had to rely on LMFA's contractual commitment to limit the
Fund's expenses. This contractual expense limitation terminates on February 28,
2001. In the event that the Proposal is not approved, LMFA has indicated to the
Board that it may not be willing to continue to waive fees and bear expenses of
the Fund to maintain the Fund's expenses at current levels beyond February 28,
2001. If the Fund has not grown substantially by that time, expenses borne by
investors could increase significantly from current levels.
At a meeting held on August 9 and 10, 2000, the Board reviewed a number
of factors in consideration of the proposal to liquidate the Fund, including the
Fund's performance history, the amount of the Fund's net assets, the Fund's
expense ratio (with and without the waiver and reimbursement of expenses by
LMFA), and the likelihood that additional sales of the Fund's shares could
enable it to attain an asset level that would sustain an acceptable expense
ratio. The Board also reviewed the expenses that had been assumed by LMFA during
the life of the Fund, the efforts and expenses of Legg Mason to distribute
shares of the Fund, and the effect of the operating expenses on the historic and
anticipated returns of shareholders. The Board considered that LMFA had not been
able to collect or retain any significant advisory or administrative fees during
the life of the Fund, that there appears to be little prospect that this will
change in the near future, and that LMFA may be unwilling to subsidize the
operation of the Fund indefinitely.
The Board determined that an increase in Fund expenses attributable to
the likely discontinuance or reduction of the fee waiver and reimbursement of
Fund expenses in the future would adversely affect the Fund's performance.
Moreover, the availability of larger funds (unaffiliated with LMFA) with similar
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objectives that are better able to operate on an efficient basis and, therefore,
provide higher returns to shareholders, makes it unlikely that the Fund could
realize significant increases in asset size and achieve economies of scale. The
Board concluded, therefore, that it would be in the interest of the Fund's
shareholders to liquidate the Fund promptly in accordance with a Plan of
Liquidation.
LMFA and the Board have regularly reviewed developments and considered
alternatives regarding the Fund, including whether a merger with or transfer of
assets to another fund would be possible, and if such alternatives would produce
desirable results for shareholders. After reviewing current market conditions,
the relatively small size of the Fund, the costs and tax effects of liquidation,
and the absence of appropriate merger candidates in the Legg Mason complex, LMFA
recommended and the Board agreed that liquidating the Fund is preferable to
effectuating a merger or transfer of assets.
Despite the efforts of Legg Mason, Inc. to stabilize the Fund through
purchases of its shares, subsequent to the public announcement of the Board's
decision to liquidate the Fund, the Fund experienced heavy net redemptions. Due
to the need for cash to meet such redemptions and the Fund's already small asset
base, it became very difficult to manage the Fund in accordance with its
investment objective and policies. Fund management anticipated that this pattern
of substantial redemptions of Fund shares would continue up to the date of the
Meeting and, thus, converted the Fund's entire portfolio to cash or cash
equivalents for temporary defensive purposes. As a result of this conversion,
the Fund will no longer follow its stated investment objective and policies and
its returns will be limited to the returns typical of money funds.
PLAN OF LIQUIDATION
The Board has approved a Plan of Liquidation for the Fund (the "Plan"),
which is set forth in Exhibit A to this proxy statement and summarized below.
The Plan will become effective on the date of its adoption and approval
by the affirmative vote of a simple majority of all outstanding shares of the
Fund at the Meeting (the "Effective Date"). Following this approval, the Fund
will sell any remaining portfolio securities (if any) in order to convert the
Fund's assets to cash. The Fund will then make a cash distribution to each
shareholder based on the shareholder's proportionate share of the Fund's net
assets, after payment to (or reservation of assets for the payment to) all
creditors of the Fund, in redemption and cancellation of the outstanding shares
of the Fund. This distribution will be made as soon as possible after the
Effective Date of the Plan, but in any event within thirty days thereafter. All
shareholders of the Fund will receive information concerning the sources of the
liquidating distribution (I.E., the portions that represent net income, capital
gains, and return of capital). (See Section 6 of the Plan.)
The date on which the Fund makes the liquidating distribution of its
assets to shareholders and redeems and cancels its outstanding shares will be
known as its "Liquidation Date." As of the "close of business" (I.E., the close
of regular trading on the New York Stock Exchange) on the Liquidation Date, the
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Fund will cease its business as an investment company and will not engage in any
business activities except for the purposes of winding up its business and
affairs. (See Section 2 of the Plan).
The proportionate interest of each shareholder in the assets of the
Fund shall be fixed on the basis of that shareholder's respective holdings as of
the close of business on the Liquidation Date. On such date the books of the
Fund will be closed. (See Section 3 of the Plan.)
LMFA will bear all expenses incurred in connection with carrying out
the Plan that the Fund normally would not incur if it were to continue in
business, including legal and auditing expenses and printing, mailing,
solicitation and miscellaneous expenses arising from the liquidation. Normal
operating expenses of the Fund will be borne by the Fund to the same extent such
expenses would have been incurred absent a liquidation. Any expenses and
liabilities attributed to the Fund subsequent to the mailing of the liquidating
distribution, and not reserved for, will be borne by LMFA. (See Section 7 of the
Plan.)
Under the Plan, the outstanding shares of the Fund will be cancelled,
as more fully described below. The Corporation's Articles of Incorporation will
be amended to reflect such cancellation. The Plan provides that the Board shall
have the authority to authorize such variations from or amendments to the
provisions of the Plan as may be necessary or appropriate to marshal the assets
of the Fund and to effect the complete liquidation and termination of the
existence of the Fund and the purposes to be accomplished by the Plan. The Board
has the power to abandon the Plan and/or the related Articles of Amendment if
doing so would be in the best interest of Fund shareholders. (See Sections 8-9
of the Plan.)
Prior to the Liquidation Date, shareholders may redeem their Fund
shares or exchange them for Primary Class shares of another series of the
Corporation or another Legg Mason fund in accordance with the procedures set
forth in the current prospectus (and any retirement plan, trust agreement or
custodial account agreement ("Plan Agreement") under which you hold your shares)
without waiting for the Fund to take any action respecting its liquidation.
In the case of a shareholder that is a retirement plan, the
determination of whether to redeem or exchange Fund shares held by the plan
prior to the Fund's liquidation and/or how liquidating cash distributions are to
be reinvested must be communicated by the plan participants to the appropriate
plan fiduciary in accordance with the terms of the Plan Agreement. RETIREMENT
PLAN PARTICIPANTS ARE URGED TO PROVIDE ALTERNATIVE ALLOCATION INSTRUCTIONS WITH
RESPECT TO ASSETS INVESTED IN THE FUND. Those retirement plan participants who
do not provide instructions prior to the Liquidation Date will have their
proceeds distributed to their plan's trustee or custodian, which may be
obligated to reinvest the proceeds of the distribution in accordance with any
procedures outlined in their Plan Agreement. For certain retirement plan
arrangements, participants must provide their plan fiduciary with explicit
instructions on how to reinvest distributions. You should refer to your Plan
Agreement, where applicable, for information on the reinvestment of
distributions.
6
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ARTICLES OF AMENDMENT
In connection with the Plan, and as described therein, the
Corporation's Articles of Incorporation are advised by the Board and proposed to
be amended, as set forth in the Articles of Amendment, as follows: (1) each
unissued share of the Fund would be reclassified as, and would become, one
unissued, unclassified share of capital stock of the Corporation; (2) each
issued and outstanding share of the Fund would be cancelled and would be
reclassified as one unissued, unclassifed share of capital stock of the
Corporation; and (3) the provisions of the Articles of Incorporation designating
and classifying shares of stock of the Corporation into shares of the Fund and
setting forth the attributes of such shares, would be deleted. A vote in favor
of the Proposal will constitute a vote in favor of the proposed amendments to
the Corporation's Articles of Incorporation as well as the Plan of Liquidation.
FEDERAL INCOME TAX CONSEQUENCES
The following summary provides general information regarding the
federal income tax consequences to the Fund resulting from its liquidation and
to its shareholders on their receipt of liquidating distributions from the Fund.
This summary generally applies to shareholders who are individual U.S. citizens
(other than dealers in securities) and does not address the particular federal
income tax consequences that may apply to shareholders that are, for example,
corporations, trusts, estates, tax-exempt organizations, or nonresident aliens;
nor does this summary address state or local tax consequences. The tax
consequences discussed herein may affect shareholders differently, depending on
their particular tax situations unrelated to the receipt of liquidating
distributions, and, accordingly, this summary is not a substitute for careful
tax planning. SHAREHOLDERS MAY WISH TO CONSULT THEIR PERSONAL TAX ADVISERS
CONCERNING THEIR PARTICULAR TAX SITUATIONS AND THE IMPACT THEREON OF RECEIVING
LIQUIDATING DISTRIBUTIONS AS DISCUSSED HEREIN, INCLUDING ANY STATE AND LOCAL TAX
CONSEQUENCES.
As discussed above, if the Plan is approved by its shareholders, the
Fund will sell its assets and distribute the proceeds to its shareholders. The
Fund anticipates that it will retain its qualification for treatment as a
regulated investment company under the Internal Revenue Code of 1986, as amended
("Code"), during the liquidation period and thus will not be taxed on any of the
net gain realized from the sale of its assets.
RETIREMENT PLAN PARTICIPANTS AND IRA ACCOUNTHOLDERS. Normally, a
shareholder's receipt of a liquidating distribution would constitute a taxable
event, as described more fully in the following paragraph; however, net income
and gains of retirement plans, such as plans that satisfy the requirements of
section 401(a) or section 403(b)(7) of the Code ("Retirement Plans"), and net
income and gains of individual retirement accounts ("IRAs"), generally are
exempt from federal income tax until they are distributed to Retirement Plan
participants or IRA accountholders, respectively. Liquidating distributions made
in redemption and cancellation of Fund shares held by any Retirement Plan or IRA
thus will not be taxable for federal income tax purposes as long as the proceeds
thereof continue to be held in the Retirement Plan or IRA by its trustee or
custodian. THESE PROCEEDS WOULD BE TAXABLE IMMEDIATELY, HOWEVER, TO THE EXTENT
THEY ARE DISTRIBUTED FROM A RETIREMENT PLAN TO A PARTICIPANT, OR FROM AN IRA TO
ITS ACCOUNTHOLDER, UNLESS THE PARTICIPANT OR ACCOUNTHOLDER ROLLS THE
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DISTRIBUTION OVER IN ACCORDANCE WITH APPLICABLE LAW INTO AN ELIGIBLE RETIREMENT
PLAN OR IRA, RESPECTIVELY.
OTHER SHAREHOLDERS. Shareholders who receive a liquidating distribution
in redemption and cancellation of their Fund shares will be treated as having
sold those shares for the amount of the distribution. A shareholder will
recognize gain or loss on that sale measured by the difference between his, her,
or its adjusted tax basis for the shares and the amount of the liquidating
distribution. If the shares are held as capital assets, the gain or loss will be
characterized as capital gain or loss. Capital gain or loss attributable to
shares held for more than one year will constitute long-term capital gain (taxed
at a maximum of 20%) or loss, while capital gain or loss attributable to shares
held for one year or less will be short-term. Shareholders also should be aware
that the Fund is required to withhold 31% of liquidating distributions payable
to any individuals and certain other non-corporate shareholders who do not
provide the Fund with a correct taxpayer identification number.
FAILURE TO APPROVE THE PLAN OF LIQUIDATION AND THE ARTICLES OF AMENDMENT
If the Fund's shareholders do not approve the Plan and the related
amendments to the Corporation's Articles of Incorporation, the Fund would
continue to exist as a series of the Corporation in accordance with its stated
investment objective and policies. Fund shareholders would continue to be
subject to the Fund's high expense ratio, which would likely increase due to the
reduction in the Fund's assets that has occurred since the announcement of the
Fund's proposal to liquidate. The Board would then meet to consider what, if
any, further steps to take in the interests of shareholders.
REQUIRED VOTE
The approval of a Plan of Liquidation for the Fund requires approval by
the simple majority of the Fund's outstanding shares.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
A PLAN OF LIQUIDATION FOR THE FUND AND THE RELATED AMENDMENTS TO
THE CORPORATION'S ARTICLES OF INCORPORATION
SHAREHOLDER PROPOSALS
The Fund is not required to, and does not, hold annual meetings of
shareholders, except as required by the 1940 Act. When annual or special
meetings are held by the Fund, shareholder proposals which are intended for
inclusion in the proxy materials for the meeting must be received by the Fund
within a reasonable period of time before the solicitation is made. Any
shareholder who wishes to submit proposals to be considered at a future meeting
of shareholders should send such proposals to the Secretary of the Corporation
at 100 Light Street, Baltimore, Maryland 21202. Timely submission of a proposal
does not guarantee its inclusion.
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OTHER BUSINESS
The Fund and LMFA know of no business to be presented at the Meeting
other than the matters set forth in this proxy statement, but should any other
matter requiring a vote of shareholders arise, the proxies will vote thereon
according to their best judgment in the interest of the Fund.
By order of the Board of Directors,
PATRICIA A. MAXEY
SECRETARY
September 5, 2000
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It is important that you execute and return your proxy promptly.
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9
<PAGE>
EXHIBIT A
LEGG MASON MARKET NEUTRAL TRUST
(a series of Legg Mason Light Street Trust, Inc.)
PLAN OF LIQUIDATION
This Plan of Liquidation ("Plan") is made by Legg Mason Light Street
Trust, Inc. ("Corporation"), a corporation organized and existing under the laws
of the State of Maryland, with respect to Legg Mason Market Neutral Trust
("Fund"), a separate series of the Corporation. The Corporation is an investment
company registered under the Investment Company Act of 1940, as amended ("1940
Act"). This Plan is intended to effect the complete liquidation of the Fund and
the redemption and cancellation of all of the outstanding shares thereof
("Shares"), in conformity with applicable provisions of Maryland law and the
Corporation's Articles of Incorporation and By-Laws.
WHEREAS, due to the small size of the Fund, its high expense ratio absent
fee waivers and expense reimbursements, the investment adviser's unwillingness
to maintain indefinitely the Fund's expenses at current levels, and the relative
lack of investor interest in the Fund, the Corporation's Board of Directors
("Board"), has determined that it is in the best interests of the Fund and its
shareholders to liquidate the Fund and to redeem and cancel the Shares; and
WHEREAS, at a meeting of the Board on August 9 and 10, 2000, the Board
considered and adopted this Plan for the purpose of liquidating the Fund and
directed that this Plan be submitted to shareholders of the Fund for approval in
accordance with applicable provisions of Maryland law and the Corporation's
Articles of Incorporation and By-Laws.
NOW THEREFORE, the liquidation of the Fund shall be carried out in the
manner hereinafter set forth:
1. EFFECTIVE DATE OF PLAN. This Plan shall become effective upon its
adoption and approval, at a meeting of shareholders called for the purpose of
voting thereon, by the affirmative vote of a majority of the Fund's Shares. The
date of such adoption and approval is hereinafter called the "Effective Date."
2. CESSATION OF BUSINESS. As of the "close of business" (I.E., the close
of regular trading on the New York Stock Exchange) on the date on which the Fund
makes the mailing described in Section 6 below ("Liquidation Date"), the Fund
shall cease its business as an investment company and shall not thereafter
engage in any business activities except for the purposes of winding up its
business and affairs.
3. RESTRICTION OF TRANSFER AND REDEMPTION OF SHARES. The proportionate
interests of shareholders in the assets of the Fund shall be fixed on the basis
of their respective shareholdings at the close of business on the Liquidation
Date. On such date, the books of the Fund shall be closed. Thereafter, unless
the books are reopened because this Plan cannot be carried into effect under the
laws of the State of Maryland or otherwise, the shareholders' respective
interests in the Fund's assets shall not be transferable or redeemable.
<PAGE>
4. LIQUIDATION OF ASSETS. As soon as is reasonable and practicable after
after the Effective Date, all portfolio securities and any other assets of the
Fund shall be converted to cash and cash equivalents.
5. PAYMENT OF DEBTS. As soon as is reasonable and practicable after the
Effective Date, the Fund shall determine and pay, or set aside in cash
equivalents, the amount of all its known or reasonably ascertainable liabilities
incurred or expected to be incurred prior to the Liquidation Date, subject to
Section 7 below.
6. LIQUIDATING DISTRIBUTION. As soon as possible after the Effective Date,
but in no event later than 30 days thereafter, the Fund shall deliver the
following to each shareholder by mail or other means, in complete redemption and
cancellation of the Shares held by such shareholder: (a) a liquidating
distribution equal to the shareholder's proportionate interest in the net assets
of the Fund as of the close of business on the Liquidation Date and (b)
information concerning the sources of the liquidating distribution (I.E., the
portions that represent net income, capital gains, and return of capital).
7. MANAGEMENT AND EXPENSES OF THE FUND SUBSEQUENT TO THE LIQUIDATING
DISTRIBUTION. The Fund's investment adviser, Legg Mason Fund Adviser, Inc.
("LMFA"), shall bear all expenses incurred in connection with carrying out this
Plan, including all printing, legal, and accounting fees and the expenses of any
reports to or meetings of shareholders. Any expenses and liabilities otherwise
attributable to the Fund subsequent to the mailing of the liquidating
distribution also will be borne by LMFA.
8. POWER OF BOARD OF DIRECTORS. The Board and, subject to its approval,
the Corporation's officers shall have authority to do or authorize any and all
acts and things provided for in this Plan and any and all further acts and
things they may consider necessary or desirable to carry out the purposes of
this Plan, including the execution and filing of all certificates, documents,
information returns, tax returns, and other papers that may be necessary or
appropriate to implement this Plan or that may be required by the provisions of
the 1940 Act or any other applicable laws. In addition, the Board has the power
to abandon the Plan and/or the amendments to the Corporation's Articles of
Incorporation if doing so would be in the best interest of Fund shareholders.
The death, resignation, or disability of any Director or any officer of the
Corporation, or their replacements, shall not impair the authority of the
surviving or remaining Directors or officers to exercise any of the powers
provided for in this Plan.
9. AMENDMENT OF PLAN. The Board shall have the authority to authorize
variations from or amendments to this Plan necessary or appropriate to effect
the marshalling of Fund assets, the complete liquidation and termination of the
Fund's existence, and the distribution of the Fund's net assets to shareholders
in redemption and cancellation of the Shares, in accordance with the laws of the
State of Maryland and the purposes to be accomplished by this Plan.
10. FILINGS WITH THE STATE OF MARYLAND. In connection with this Plan and
in furtherance thereof, the Articles of Incorporation of the Corporation
currently in effect will be amended substantially as set forth in the Articles
2
<PAGE>
of Amendment attached hereto as Appendix I ("Articles of Amendment") to provide
for, among other things, the liquidation of the assets of the Fund, the
distribution of the proceeds therefrom to its shareholders, and the cancellation
of the Shares. The adoption and approval of this Plan by the shareholders of the
Fund, by the affirmative vote of a majority of the Shares, shall constitute
their adoption and approval of the Articles of Amendment. The
shareholder-approved Articles of Amendment shall be filed with the State
Department of Assessments and Taxation of Maryland on, or as expeditiously as
possible after, the Effective Date.
LEGG MASON LIGHT STREET TRUST, INC.
(on behalf of Legg Mason Market Neutral
Trust)
Date: ________________ By: ___________________________________
Name:
Title:
ACCEPTED (with respect to Section 7):
Legg Mason Fund Adviser, Inc.
Date: ________________ By:___________________________________
Name:
Title:
3
<PAGE>
APPENDIX I
LEGG MASON LIGHT STREET TRUST, INC.
ARTICLES OF AMENDMENT
LEGG MASON LIGHT STREET TRUST, INC., a Maryland corporation registered as
an open-end investment company under the Investment Company Act of 1940, as
amended, and having its principal office in the City of Baltimore in the State
of Maryland (hereinafter referred to as the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland (the "Department")
that:
FIRST: In connection with and in furtherance of a plan of liquidation of
Legg Mason Market Neutral Trust, a separate series of stock of the Corporation
(the "Liquidating Series"), the Corporation hereby amends its Articles of
Incorporation as currently in effect (the "Articles of Incorporation") to
include the following:
A. As of the Effective Date (as hereinafter defined):
(i) each unissued share of the Liquidating Series of the
Corporation, par value $0.001 per share, is hereby reclassified into, and shall
become, one unissued, unclassified share of capital stock of the Corporation;
and
(ii) the Corporation shall proceed to sell and liquidate all assets
assets belonging to the Liquidating Series and to pay from the proceeds thereof
all liabilities belonging to such Liquidating Series. After payment of the
liabilities belonging to the Liquidating Series, the remaining proceeds from the
sale and liquidation of the assets belonging to the Liquidating Series shall be
distributed as a liquidating distribution, as soon as practicable following the
Effective Date, but in any event within thirty days thereafter, among the
holders of the shares of the Liquidating Series. The date that the liquidating
distribution is paid shall be the "Liquidation Date." Holders of the shares of
the Liquidating Series shall receive a liquidating distribution in proportion to
the number of such shares held by them and recorded on the books of the
Corporation as of the close of business on the Liquidation Date.
B. Upon payment by the Corporation of the liquidating distribution on the
Liquidation Date to the holders of shares of the Liquidating Series, each
issued and outstanding share of the Liquidating Series shall be cancelled
and shall cease to be issued and outstanding, and each such cancelled share
shall be reclassified into, and shall become, one unissued, unclassified
share of capital stock of the Corporation.
C. Upon cancellation of the issued and outstanding shares of the
Liquidating Series, and the reclassification of such cancelled shares and
all unissued shares of such Liquidating Series to unissued, unclassified
shares of capital stock of the Corporation, the provisions of the Articles
of Incorporation designating and classifying shares of stock of the
<PAGE>
Corporation into shares of the Liquidating Series, establishing and
describing the preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption of shares of the Liquidating Series and the description, and
terms and conditions, of various classes of shares of the Liquidating
Series, shall be deleted from the Articles of Incorporation of the
Corporation. Such deletions from the Articles of Incorporation of the
Corporation shall include only provisions of the Articles of Incorporation
as they relate to shares of the Liquidating Series, and to the extent which
any provisions of the Articles of Incorporation of the Corporation relate
both to shares of the Liquidating Series and one or more other series of
stock of the Corporation, such provisions shall remain in the Articles of
Incorporation but shall be deemed to apply only to such one or more other
series of stock of the Corporation.
SECOND: The amendments to the Articles of Incorporation of the Corporation
herein set forth were duly advised by the Board of Directors of the Corporation
and approved by the shareholders entitled to vote thereon, as required by the
Articles of Incorporation and By-Laws of the Corporation and applicable law.
THIRD: The amendments set forth herein do not increase the authorized
capital stock of the Corporation.
FOURTH: The amendments set forth herein shall become effective as of the
close of business on the date (the "Effective Date") which is the later of: (i)
________________, 2000; and (ii) the date on which these Articles of Amendment,
having been duly advised, approved, signed, acknowledged and sealed by the
Corporation as required by the laws of the State of Maryland, and not having
been abandoned prior to the Liquidation Date by majority vote of the entire
Board of Directors of the Corporation, are filed for record with the Department.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed in its name and on its behalf by its undersigned
[President] and witnessed or attested to by its undersigned [Secretary] as of
the ____ day of ________________, 2000 and its undersigned [President]
acknowledges that these Articles of Amendment are the act and deed of the
Corporation and, under penalties of perjury, that the matters and facts set
forth herein are true in all material respects to the best of his knowledge,
information and belief.
LEGG MASON LIGHT STREET TRUST, INC.
By: ___________________________________
Name:
Title:
ATTEST:
By: _______________________________
Name:
Title:
2
<PAGE>
PROXY PROXY
LEGG MASON MARKET NEUTRAL TRUST
(A SERIES OF LEGG MASON LIGHT STREET TRUST, INC.)
SPECIAL MEETING OF SHAREHOLDERS--SEPTEMBER 29, 2000
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF LEGG MASON
MARKET NEUTRAL TRUST ("FUND"), A SERIES OF LEGG MASON LIGHT STREET TRUST, INC.
("CORPORATION"). The undersigned hereby appoints as proxies Marc R. Duffy and
Philip E. Sachs and each of them (with power of substitution) to vote for the
undersigned all shares of common stock of the undersigned in the Fund at the
above referenced meeting and any adjournment thereof, with all the power the
undersigned would have if personally present. The shares represented by this
proxy will be voted as instructed. UNLESS INDICATED TO THE CONTRARY, THIS PROXY
SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE "FOR" THE SOLE PROPOSAL RELATING TO
THE FUND.
YOUR VOTE IS IMPORTANT. Please date and sign this proxy on the reverse side and
return it promptly in the enclosed envelope. To vote by facsimile, please send
your signed and dated proxy card to (410) 454-3130. If you vote by facsimile,
there is no need to return your proxy card by mail.
PLEASE INDICATE YOUR VOTE BY AN "X" IN THE APPROPRIATE BOX BELOW.
PROPOSAL: To consider and vote on a Plan of Liquidation for the Fund and
related amendments to the Corporation's Articles of Incorporation.
|_| FOR |_| AGAINST |_| ABSTAIN
PLEASE SIGN AND DATE THE REVERSE SIDE OF THIS CARD.
<PAGE>
YOUR VOTE IS IMPORTANT.
PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
This proxy will not be valid unless it is dated
and signed exactly as instructed below.
If shares are held by an individual, sign your
name exactly as it appears on this card. If shares
are held jointly, either party may sign, but the
name of the party signing should conform exactly
to the name shown on this proxy card. If shares
are held by a corporation, partnership or similar
account, the name and the capacity of the
individual signing the proxy card should be
indicated unless it is reflected in the form of
registration. For example: "ABC Corp., John Doe,
Treasurer."
--------------------------------------------------
Signature
--------------------------------------------------
Signature (if held jointly)
, 2000
--------------------------------------------
Date
PLEASE MARK YOUR VOTE ON THE REVERSE SIDE OF THIS CARD.
<PAGE>
Kirkpatrick & Lockhart LLP 1800 Massachusetts Avenue, NW
Second Floor
Washington, DC 20036-1800
202.778-9000
www.kl.com
Rachael M. Zufall
202.778.9046
Fax: 202.778-9100
[email protected]
August 30, 2000
VIA EDGAR
---------
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Legg Mason Light Street Trust, Inc.
File Nos. 333-61525
811-08943
Definitive Proxy Statement
--------------------------
Dear Sir or Madam:
On behalf of Legg Mason Market Neutral Trust (the "Fund"), a series of
Legg Mason Light Street Trust, Inc. ("Corporation"), transmitted herewith for
filing pursuant to Rule 14a-6(b) under the Securities Exchange Act of 1934, is
the Definitive Proxy Statement to be used in connection with the special meeting
of the shareholders of the Fund to be held on September 29, 2000 (the
"Meeting"). The Definitive Proxy Statement consists of a notice of meeting, the
proxy statement and form of proxy. The Definitive Proxy Statement will be mailed
to the Fund's shareholders on or about September 5, 2000.
The Meeting will be held to consider the following items of business:
1. To consider and vote on a Plan of Liquidation for the Fund and related
amendments to the Corporation's Articles of Incorporation; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
If you have any questions or comments regarding the foregoing, please
contact the undersigned at (202)778-9471.
Sincerely,
/s/ Rachael M. Zufall
---------------------
Rachael M. Zufall
Enclosures
