Preliminary Copy
LMH FUND, LTD.
560 Hudson St., 2nd floor
Hackensack, NJ 07601
(212) 486-2004
February , 1997
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of LMH
FUND, LTD. on February___ , 1997 at _:00 __.m. Eastern time at the offices of
Matrix Asset Advisors, 444 Madison Ave., Suite 302, New York, NY 10022.
The matters to be acted upon at the meeting are described in the enclosed Notice
of Meeting and Proxy Statement. We urge you to consider these matters carefully
and to complete, sign, and return the enclosed proxy card(s) in the accompanying
postage paid envelope.
Your vote is very important. Please complete, sign and return the enclosed
proxy card so that your shares will be represented. By doing so promptly, you
will help avoid the expense of follow-up solicitations that may otherwise be
necessary to obtain a quorum. If you later decide to attend the meeting, you
may revoke your proxy at that time and vote your shares in person.
Sincerely,
David A. Katz, Vice President, Chief Investment Officer, and Secretary
QUESTIONS AND ANSWERS
Q. What is the purpose of this proxy solicitation?
A. The purpose of this proxy is to ask you to vote on two issues: (1) to
approve a new investment advisory agreement with Matrix Asset Advisors
("Matrix"), the Fund's current Sub-Advisor and (2) to elect a Board of five
directors.
Q. What changes in directors and officers will occur if the
proposals are approved?
A. Mr. Leonard Heine, Chairman and President of the Fund and of Heine
Management Group ("Heine Management"), the Fund's investment advisor since its
inception in 1983, is retiring from management of the Fund and the Advisor is
ceasing operations. It is proposed that Mr. Heine will remain as a Director, if
elected. Mr. David A. Katz, President of Matrix, the Fund's Sub-Advisor, and
Vice President, Secretary, and Chief Investment Officer of the Fund, is
standing for election as a Director, and if elected, it is anticipated that he
will become President and Treasurer of the Fund.
Mr. Robert Rosencrans, currently a director, is standing for re-election,
and two new candidates for director are proposed. Mr. Richard S. Harman is not
standing for re-election.
Q. Are there changes in the proposed investment advisory agreement?
A. The terms of the proposed investment advisory agreement do not
materially differ from the existing investment advisory agreement. The proposed
agreement will be between the Fund and Matrix and the investment advisory fee
will be paid to Matrix as investment advisor. Heine Management will cease
operations. It is proposed that the fee rate payable will remain the same,
i.e., 1.00% of the Fund's average daily net assets annually. If the Proposed
Agreement is approved, it is anticipated that the Fund's name will be changed to
"Matrix/LMH Value Fund."
Q. Will the Fund's operating expenses be changed as a result of the
proposed agreement?
A. The Fund's operating expense ratio has continued to decline, dropping
from 2.50% of average net assets at the end of the June 30,1994 fiscal year, to
1.84% at the close of the 1996 fiscal year, to an estimated 1.35% at the
beginning of this year (reflecting advisory and sub-advisory fee reductions
described below). No fee rate or expense items are proposed to be changed. Since
Matrix became Sub-Advisor in July, 1996, it has waived its Sub-Advisory fee and
Heine Management has waived all but 25% of its advisory fee. If the Agreement
is approved, the full investment advisory fee of 1.00% will be implemented. The
investment advisory fee rate of 1.00% annually is identical to the fee rate
payable to the Advisor under the current agreement. However, Matrix has proposed
to limit Fund operating expenses so that they will not exceed 1.65% annually
for the remainder of calendar year 1997. This is a voluntary undertaking on the
part of Matrix. If expenses were to exceed that amount, Matrix would waive all
or a portion of its advisory fee or pay certain Fund operating expenses to
assure that the limitation is not exceeded. Accordingly, at current asset
levels, the proposed agreement is not expected to result in increased operating
expenses.
Preliminary Copy
LMH FUND, LTD.
560 Hudson St., 2nd floor
Hackensack, NJ 07601
(212) 486-2004
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
to be held on
February __, 1997
TO THE SHAREHOLDERS:
A Special Meeting of Shareholders of the LMH Fund, Ltd. (the "Fund") will be
held on February , 1997 at _:00 pm Eastern time at the offices of
Matrix Asset Advisors, 444 Madison Ave., Suite 302, New York, NY
10022 for the following purposes:
1. To consider approval of a proposed Investment Advisory Agreement between
the Fund and Matrix Asset Advisors, Inc.;
2. To elect five members of the Board of Directors to serve indefinite terms;
3. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on January , 1997 are
entitled to notice of the meeting and to vote at the meeting or any adjournment
thereof. Shareholders who attend the meeting may vote in person. Shareholders
who do not expect to attend the meeting are urged by the Board of Trustees to
complete, date, sign, and return the enclosed proxy card(s) in the enclosed
postage-paid envelope. It is important that you return your signed proxy
promptly so that a quorum may be ensured.
David A. Katz, Vice President, Chief Investment Officer, and Secretary
February , 1997
<PAGE>
Preliminary Copy
LMH FUND, LTD.
560 Hudson St., 2d floor
Hackensack, NJ 07601
PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
to be held on February , 1997
This Proxy Statement is being furnished to shareholders of LMH Fund, Ltd. (the
"Fund") in connection with the solicitation of proxies by the Board of Directors
(the "Board") of the Fund. Proxies solicited will be used at the Special Meeting
of shareholders of the Fund to be held on [Insert Date of Shareholder Meeting]
and any adjournment thereof. This Proxy Statement describes matters to be voted
upon at the meeting. Shareholders of record of the Fund at the close of
business on January , 1997 (the "Record Date") will be entitled to vote at
the meeting. On the Record Date, the Fund had net assets of $7,859,696.77 and
there were 298,523.449 shares of the Fund outstanding. It is expected that this
proxy statement and accompanying proxy card will first be sent to shareholders
of the Fund on or about February , 1997..
Each shareholder will be entitled to one vote for each share of the Fund held on
the Record Date; any fractional share is entitled to a proportional fractional
vote. If the accompanying Proxy Card is properly executed and returned, shares
represented by it will not be counted but will be voted at the meeting. The
persons named as proxies on the enclosed proxy card will vote shares represented
by such proxy cards in accordance with your direction as indicated thereon. If
no voting instructions are indicated, shares will be voted in favor of the
Proposals. However, abstentions and broker non-votes will be counted in
determining whether a quorum is present and thus will have the same effect as a
vote against the Proposals. If any other matter comes properly before the
meeting, shares will be voted in accordance with the recommendation of the
Board.
A shareholder may revoke a proxy previously given by executing another, later
dated, proxy, by giving written notice of revocation to the Fund at the address
indicated above prior to the time the proxy is voted or by attending the meeting
and voting in person at that meeting. More than 50% of the total outstanding
shares of the Fund must be present (in person or by proxy) in order to conduct
business at the meeting. The affirmative vote of the holders of a majority of
the outstanding voting securities of the Fund on the Record Date is necessary
to approve Proposal 1. As defined by the Investment Company Act of 1940 (the
"1940 Act"), a "majority of the outstanding voting securities" of the Fund means
the lesser of (1) 67% of the shares of the Fund present at a meeting of
shareholders if the owners of more than 50% of the shares of the Fund then
outstanding are present in person or by proxy or (2) more than 50% of the
outstanding voting securities of the Fund.
The solicitation of proxies will be made primarily by mail. Employees or agents
of Matrix Asset Advisors, Inc.("Matrix") the Fund's Sub-Advisor and proposed
Investment Advisor, may also solicit proxies by telephone or other electronic
means, or in person, but will not receive any special compensation for these
activities. The cost of soliciting proxies in connection with the meeting will
be paid by the Fund. Persons holding shares of the Fund as nominees will, upon
request, be reimbursed for their reasonable expenses incurred in sending
soliciting materials to their principals. In the event that a quorum is not
present at the meeting, or in the event that a quorum is present but sufficient
votes to approve the Proposals are not received, the persons named as proxies
may propose one or more adjournments to permit further solicitation of proxies.
In determining whether to adjourn the meeting, the following factors may be
considered: the nature of the proposals that are the subject of the meeting,
the percentage of votes actually cast, the percentage of negative votes actually
cast, the nature of any further solicitation, and the information to be provided
to shareholders with respect to the reasons for the further solicitation.
Approval of any such proposal to adjourn will require the affirmative vote of a
majority of those shares represented at the meeting in person or by proxy. A
vote may, however, be taken on any proposal in this proxy statement prior to any
adjournment, if sufficient votes have been received for approval.
PROPOSAL 1: APPROVAL OF AN INVESTMENT ADVISORY AGREEMENT WITH
MATRIX ASSET ADVISORS, INC.
Since the Fund's inception in 1983, Heine Management has served as the Fund's
investment advisor pursuant to an Investment Advisory Agreement ("current
agreement"). During the past year, Mr. Leonard Heine, who has owned and
controlled the Advisor from its inception and has been the Fund's portfolio
manager, informed the Board of Directors that he intended to retire from active
management of the Fund on or about year-end 1996, and recommended to the current
Board of Directors that it consider possible replacement Advisors. The Advisor
recommended that Matrix Asset Advisors, Inc. be appointed as Sub-Advisor to the
Fund for an interim period, during which time Matrix agreed to waive any
sub-advisory fees payable from the Advisor and the Advisor agreed to waive
payment of fees payable under the current Investment Advisory Agreement in
excess of 25% of the net advisory fees due thereunder. The Board of Directors
reviewed the qualifications of Matrix and the terms of the proposed Sub-Advisory
Agreement and at a meeting held on July 3, 1996, approved the Sub-Advisory
Agreement whereby Matrix became Sub-Advisor to the Fund and Mr. David A. Katz,
President and co-owner of Matrix, was appointed as Vice President, Secretary,
and Chief Investment Officer of the Fund and became co-manager of the Fund's
portfolio. Since that date Matrix has served, and continues to serve, as
Sub-Advisor to the Fund without charge.
The Advisor's recommendation to the Board that Matrix be retained as Sub-Advisor
stemmed principally from the Advisor's belief that in view of the Fund's small
size and Mr. Katz' familiarity with the Fund and with Heine Management's
investment approach, in light of his previous association with principals of
Heine Management early in his career in the investment management business, it
would be beneficial, in light of Matrix's willingness to provide such
assistance, to have access to its experienced professional staff and greater
resources. Among the factors the Board considered were the experience of
Matrix's key investment management personnel, its investment performance record
and the quality of services expected to be provided to the Fund by Matrix. In
addition, the Board considered the agreements of Matrix and Heine Management
with respect to fee waivers.
Based on the factors listed above, and on the experience to date with Matrix
serving as Sub-Advisor, the Board of Directors at a meeting held on January ,
1997, approved an Investment Advisory Agreement between the Fund and Matrix as
Investment Advisor, subject to approval by shareholders at this meeting as
Proposal No. 1. The Proposed Agreement is set forth at Exhibit B-2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
PROPOSAL NO. 1.
The terms of the proposed Investment Advisory Agreement ("proposed agreement")
with Matrix do not differ materially from the existing Investment Advisory
Agreement with the Advisor. Both agreements provide in essence that the Advisor
(I) furnishes the Fund with a continuous investment program and strategy with
respect to the investment of the Fund's assets, including the provision of
advice on buying and selling securities and other investments and, management of
the investments of the Fund, (ii) furnishes the Fund with office space (iii)
provides or arranges for the provision of administrative services and most of
the personnel needed by the Fund. Both the current and proposed Agreements
provide that the Fund is to pay the Advisor a monthly management fee (accrued
daily) based on the average daily net assets of the Fund at the rate of 1.00%
annually.
Although Matrix has waived any fees payable to it under the Sub-Advisory
Agreement from its inception on July 3, 1996 to date, and the Advisor has waived
all but 25% of the net advisory fees otherwise due to it from July 3, 1996 to
date, these waivers will not continue in effect after the date of this meeting,
if the proposed agreement is approved, and the full advisory fee rate will be
accrued and paid to Matrix as Investment Advisor. However, Matrix has
voluntarily undertaken to limit the Fund's annual ratio of operating expenses to
average net assets ("expense ratio") to 1.55% for the remainder of calendar year
1997, and as a result may waive all or a portion of the advisory fees to which
it would otherwise be entitled, and may in addition reimburse the Fund for other
operating expenses in order to meet this limitation. Exhibit B-1 sets forth the
Fund's current and pro forma fees, assuming approval of the proposed agreement.
Both the current and proposed agreements further provide that the Fund bears all
expenses incurred in the operation of the Fund that are not specifically assumed
by the Advisor under the Advisory Agreement. These expenses include, but are
not limited to, custodial and transfer agency fees, brokerage commissions,
registration fees under the Federal securities laws and notice filing fees
payable to states, taxes, legal, accounting, and auditing expenses. The current
and proposed agreements are terminable at any time, without the payment of any
penalty by the Fund, upon the vote of the Board or a majority of the outstanding
voting securities of the Fund and on 60 days' written notice to the Advisor, or
by the Advisor at any time, without payment of any penalty, on 60 days' written
notice to the Fund. In addition, the Agreements terminate in the event of
assignment as such term is defined in the 1940 Act.
Matrix and the Advisor. Matrix is a registered investment advisor which was
founded in 1986. It provides investment advisory services to individuals,
endowment, and pension accounts with a value totaling over $400 million. The
two principal shareholders of Matrix are Mr. David A. Katz, Vice President,
Chief Investment Officer and Secretary of the Fund and Mr. Morley Goldberg.
Matrix is located at 444 Madison Avenue, New York, NY 10022. The Advisor has
provided investment advisory services to the Fund since its inception in 1983
and formerly provided investment management services to individual and
institutional investors. It is controlled by Mr. Leonard M. Heine, Jr.
The Board has approved a change in the name of the Fund to "Matrix/LMH Value
Fund" contingent upon approval of the Proposed Agreement.
PROPOSAL 2. ELECTION OF DIRECTORS
The present Board of Directors consists of Mr. Leonard M. Heine, Jr., President
and Treasurer of the Fund and of the Advisor, and Mr. Richard S. Harman and Mr.
Robert Rosencrans, each of whom is not an "interested person" within the meaning
of the Investment Company Act of 1940. Mr. Heine and Mr. Rosencrans are standing
for re-election. Mr. David A. Katz, President of Matrix and Vice President,
Chief Investment Officer and Secretary of the Fund is a nominee for Director,
together with two additional nominees who are not "interested persons." If Mr.
Heine is elected, he will serve as a Director of the Fund, and it is anticipated
that Mr. Katz will be elected as President and Treasurer of the Fund. Each of
the current Board members has been present at the meetings held during the past
fiscal year. The directors who are not interested persons of the Fund serve as
the Fund's audit committee, which met once in the past fiscal year. The audit
committee reviews reports prepared by the Fund's independent public accountants,
including reports on the Fund's internal control procedures, reviews and makes
recommendations for audit services and fees charged for such services and makes
such recommendations as it deems necessary.
The nominees for election as Board members, their ages and a description of
their principal occupations for the past five years are listed in the table
below.
*Mr. Leonard M. Heine, Age 72
Mr. Heine has been President and Chief Financial Officer of the Adviser and the
Fund since 1983.
*Mr. David A. Katz, Age 35
Mr. Katz is President of Matrix, with which he has been associated since 1986.
He has served as Vice President, Chief Investment Officer, and Secretary of the
Fund since July, 1996.
Mr. Robert Rosencrans, Age 69
Mr. Rosencrans has been President of Columbia International, Inc., since 1984.
Mr. T. Michael Tucker, Age 54.
Mr. Tucker is the owner of T. Michael Tucker, a certified public accounting
firm which he established in 1977.
Mr. Larry D. Kieszek, Age 46.
Mr. Kieszek is Managing Partner of Purvis, Gray & Company, a certified public
accounting firm with which he has been associated since 1980.
During the fiscal year ended June 30, 1996 no directors received fees,
compensation, reimbursement of expenses, retirement or other benefits.
The candidates receiving the affirmative vote of a plurality of the votes cast
for election of Board members at the Meeting will be elected, provided that a
quorum is present.
BENEFICIAL OWNERS
As of the date of this proxy statement, the following persons own of record and
beneficially more than 5% of the Fund's outstanding shares of common stock:
Richton International Corp., Madison, NJ 07940 __.__%; A. Levitt, P.
Whalen-Levitt, Jt Ten, Greensboro, NC 27403, __.__% In addition, directors,
nominees for director and all officers and directors as a group owned less than
1% of the Fund's outstanding shares of common stock.
ANNUAL MEETINGS
As a general matter, the Fund does not hold regular annual or other meetings of
Shareholders. Should such meetings be scheduled, shareholders who wish to
present a proposal for action at any such meeting should submit the proposal to
the Secretary of the Fund, at 444 Madison Ave., New York, NY 10022, to be
considered for inclusion in proxy materials for such a meeting.
The Fund will furnish, without charge, a copy of the most recent Annual Report
to Shareholders of the Fund on request. Any such requests should be directed to
the Fund at (212) 486-2004 or to its Transfer Agent (800) 424-2295 or sent to
the Fund at the address in the preceding paragraph.
OTHER BUSINESS
Management knows of no business to be presented to the meeting other than the
matters set forth in this proxy statement.
By order of the Board of Directors,
February , 1997
Preliminary Copy
Please mark, date and return this Proxy by February, 1997.
Proxy Solicited on Behalf of the Board of Directors of the
Fund for the Meeting of Shareholders to be held on
February , 1997
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR THE ADOPTION OF ALL PROPOSALS
LMH FUND, LTD.
The undersigned hereby appoints Leonard M. Heine and David A. Katz
and each of them, his/her true and lawful agents and proxies with
full power of substitution in each to represent the undersigned at
the Meeting of Shareholders to he held on February , 1997 at the
offices of the Fund and at any adjournments thereof, on all matters
coming before said meeting.
(1) Approval of the Advisory Agreement between the Fund and
Matrix Asset Advisors, Inc.
_____FOR _____AGAINST _____ABSTAIN
(2) Election of 5 members of the Board of Directors
For all nominees__ Withhold authority for all nominees ___ .
To withhold authority for any individual nominees, strike a
line through the nominee's name listed below.
Leonard M. Heine; David A. Katz; Robert M. Rosencrans;
T. Michael Tucker; Larry D. Kieszek
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no decision is
made, this proxy will be voted FOR proposals 1 and 2.
Please sign exactly as name or names appear hereon. Joint owners
should each sign personally. Corporate and partnership accounts
should be signed in the full corporate or partnership name by an
authorized officer or partner. Fiduciaries should give full titles
as such.
______________________________
Signature
______________________________
Signature
PLEASE INDICATE IF YOU PLAN TO ATTEND THE MEETING ______
Dated ______________, 1997
