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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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Filed by the Registrant [X]
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 Section 240.14a-11(c) or Section
240.14a-12
EQUITY STRATEGY FUND, A SERIES OF PIPER FUNDS INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
[INSERT NAME]
-----------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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:
- --------------------------------------------------------------------------------
[ ] 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.:
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(3) Filing Party:
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(4) Date Filed:
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[LOGO]
Piper Capital Management
222 South Ninth Street
Minneapolis, MN 55402-3804
612 342-6402
Dear Shareholders:
Attached is the proxy statement for a special meeting of shareholders of Equity
Strategy Fund to be held September 12, 1996.
SHAREHOLDERS ARE BEING ASKED TO VOTE FOR A NEW INVESTMENT OBJECTIVE OF LONG-TERM
CAPITAL APPRECIATION FOR THE FUND. If that proposal is approved, the fund's
investment strategy will be changed to that of a small-company growth fund. In
addition, the fund will be renamed, and a different portfolio manager will take
on its day-to-day management.
THIS PROPOSAL, WHICH WAS RECOMMENDED BY THE FUND'S ADVISER, PIPER CAPITAL
MANAGEMENT, RECEIVED THE BOARD'S UNANIMOUS APPROVAL, AND THE BOARD RECOMMENDS
THAT SHAREHOLDERS APPROVE IT AS WELL. The shareholder Q&A and the proxy
statement on the following pages provide more detailed information about the
proposal.
PLEASE TAKE A MOMENT NOW TO READ THE INFORMATION AND SIGN AND RETURN THE PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. Your prompt attention to this proxy
statement will eliminate the need for additional mailings. If you haven't
already voted as the date of the meeting approaches, you may receive a telephone
call reminding you to exercise your right to vote. If you have questions about
these proposals, please contact your Piper Jaffray Investment Executive or call
Piper Capital Management at 1 800 866-7778.
Sincerely,
/s/ William Ellis
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William H. Ellis
President
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[LOGO]
SHAREHOLDER Q&A
JULY 15, 1996
_____________________________________________________________________________
PIPER CAPITAL MANAGEMENT INCORPORATED (PIPER CAPITAL) RECENTLY RECOMMENDED THAT
THE BOARD OF DIRECTORS OF EQUITY STRATEGY FUND APPROVE A NEW INVESTMENT
OBJECTIVE FOR THE FUND OF LONG-TERM CAPITAL APPRECIATION. IF THE PROPOSAL IS
APPROVED, THE FUND'S INVESTMENT STRATEGY WILL BE CHANGED TO THAT OF A
SMALL-COMPANY GROWTH FUND, THE FUND WILL BE RENAMED, AND A DIFFERENT PORTFOLIO
MANAGER WILL TAKE ON ITS DAY-TO-DAY MANAGEMENT. THE BOARD OF DIRECTORS APPROVED
THE RECOMMENDATION AND RECOMMENDS SHAREHOLDERS VOTE FOR THE PROPOSAL.
HOW WILL CHANGING THE FUND'S INVESTMENT OBJECTIVE AFFECT ITS STRATEGY?
The fund's current objective is to provide high total investment return
consistent with prudent investment risk. If shareholders approve changing the
fund's investment objective to long-term capital appreciation, the fund will
seek to achieve its objective by investing in common stocks of
small-capitalization companies which Piper Capital believes possess superior
growth potential. Currently, the fund invests in common stocks of companies
representing a number of economic sectors and seeks to achieve its objective by
varying the weighting of its portfolio among these sectors.
WHY ARE THESE CHANGES RECOMMENDED?
Because of the poor relative performance of the Equity Strategy Fund, we believe
a change in the investment objective is in the best interest of shareholders. We
believe that the proposed changes in the fund's investment objective and
policies will enhance its prospects for future growth.
WHY THE NEW NAME?
If shareholders approve the fund's new investment objective, the fund will be
restructured as a small-company growth fund. The new name, Piper Funds Inc.--
Small Company Growth Fund, better reflects the fund's new investment policies.
WHAT EXPERIENCE WILL THE NEW PORTFOLIO MANAGER BRING TO THE FUND?
If shareholders approve the fund's proposed new investment objective, Sandra K.
Shrewsbury will assume primary responsibility for the day-to-day management of
the fund's portfolio, replacing Edward P. Nocoski, who has managed the fund
since its inception in 1987. Sandra has been a vice president of Piper Jaffray
Inc., the principal distributor of the fund's shares, since 1990. She is also a
senior vice president of Piper Capital Management. Sandra is a Chartered
Financial Analyst with 13 years of financial experience. She heads up the team
that manages Piper Funds Inc.-- Emerging Growth Fund, a fund with similar
investment policies to the proposed Small Company Growth Fund, but with a focus
on somewhat larger companies. Piper Capital believes that Sandra and her team
are well-positioned to expand their efforts to the smaller capitalization sector
of the market, because much of the team's work overlaps small-cap issues.
WHEN IS MY PROXY DUE? WHERE DO I SEND IT?
We'd like to receive your completed, signed and dated proxy as soon as possible,
regardless of whether you plan to attend the shareholder meeting. A postage-paid
envelope is enclosed for mailing your proxy. If you have misplaced your
envelope, please mail your proxy to:________________________. If you haven't
returned your ballot as the meeting date approaches, you may receive a telephone
call reminding you to vote.
When and Where will the shareholder meeting take place?
The special shareholder meeting will be held at 10 a.m. on Thursday, Sept. 12,
1996, on the ______floor of the Piper Jaffray Tower, 222 South Ninth Street,
Minneapolis, Minnesota. Piper Capital will validate parking at the Energy Center
Ramp located at South Ninth Street and Third Avenue South. Please bring your
parking ticket to the meeting for validation.
PLEASE READ THE FULL TEXT OF THE ATTACHED PROXY STATEMENT FOR FURTHER
INFORMATION.
<PAGE>
[PRELIMINARY PROXY]
EQUITY STRATEGY FUND
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402-3804
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 12, 1996
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of Equity
Strategy Fund (the "Fund"), a series of Piper Funds Inc., will be held at 10:00
a.m., Central Time, on Thursday, September 12, 1996, on the floor of the
Piper Jaffray Tower, 222 South Ninth Street, Minneapolis, Minnesota. The
purposes of the meeting are as follows:
1. To approve or disapprove a change in the Fund's fundamental investment
objective from an objective of high total investment return consistent
with prudent investment risk to an objective of long-term capital
appreciation.
2. To transact such other business as may properly come before the
meeting.
Shareholders of record on July 15, 1996, are the only persons entitled to
notice of and to vote at the meeting.
Your attention is directed to the attached Proxy Statement. WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE UPCOMING MEETING, PLEASE FILL IN, SIGN, DATE,
AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO SAVE FURTHER
SOLICITATION EXPENSE. A stamped return envelope is enclosed for your
convenience.
Susan Sharp Miley, Secretary
Dated: July , 1996
<PAGE>
[PRELIMINARY PROXY]
PROXY STATEMENT
EQUITY STRATEGY FUND
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402-3804
SPECIAL MEETING OF SHAREHOLDERS--SEPTEMBER 12, 1996
The enclosed proxy is solicited by the Board of Directors of Piper Funds
Inc. (the "Company") in connection with a special meeting of the shareholders of
Equity Strategy Fund (the "Fund"), a series of the Company, to be held September
12, 1996, and any adjournments thereof. The costs of solicitation, including
the cost of preparing and mailing the Notice of Meeting and this Proxy
Statement, will be paid by Piper Capital Management Incorporated (the
"Adviser"), the investment adviser and manager of the Fund. Such mailing will
take place on approximately , 1996. Representatives of the Adviser may,
without cost to the Fund, solicit proxies on behalf of the management of the
Fund by means of mail, telephone, or personal calls. In addition, the Fund has
engaged Shareholder Communications Corporation to assist in the solicitation of
proxies. The address of the Adviser is that of the Fund as provided above.
A proxy may be revoked before the meeting by giving written notice of
revocation to the Secretary of the Fund, or at the meeting prior to voting.
Unless revoked, properly executed proxies in which choices are not specified by
the shareholders will be voted "for" each item for which no choice is specified,
in accordance with the recommendation of the Company's Board of Directors. In
instances where choices are specified by the shareholders in the proxy, those
proxies will be voted or the vote will be withheld in accordance with the
shareholder's choice. Abstentions may be specified on any proposal and will be
counted as present for purposes of determining whether a quorum of shares is
present at the meeting with respect to the item on which the abstention is
noted, but will be counted as a vote "against" such item. Under the Rules of
the New York Stock Exchange, if a proposal is considered "non-discretionary,"
then brokers who hold Fund shares in street name for customers are not
authorized to vote on such proposal on behalf of their customers without
specific voting instructions from such customers. If a broker returns a
"non-vote" proxy, indicating a lack of authority to vote on a proposal, then the
shares covered by such non-vote shall not be counted as present for purposes of
calculating the vote with respect to such proposal. So far as the Board of
Directors is aware, no matters other than those described in this Proxy
Statement will be acted upon at the meeting. Should any other matters properly
come before the meeting calling for a vote of shareholders, it is the intention
of the persons named as proxies in the enclosed proxy to vote upon such matters
according to their best judgment.
Only shareholders of record on July 15, 1996, may vote at the meeting or
any adjournments thereof. As of that date, there were issued and outstanding
common shares, $.01 par value, of the Fund. Common shares represent the
only class of securities of the Fund. Each shareholder of the Fund is entitled
to one vote for each share held. As of July 15, 1996, no person, to the
knowledge of Fund management, was the beneficial owner of more than 5% of the
voting shares of the Fund, and the officers and directors of the Fund, as a
group, did not own more than 1% of the voting shares of the Fund.
In the event that sufficient votes are not received for the adoption of the
proposal being put before shareholders, an adjournment or adjournments of the
meeting may be sought. Any adjournment would require a vote in favor of the
adjournment by the holders of a majority of the shares present at
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the meeting (or any adjournment thereof) in person or by proxy. The persons
named as proxies will vote all shares represented by proxies which they are
required to vote in favor of the proposals in favor of an adjournment and will
vote all shares which they are required to vote against the proposal, against
the adjournment.
COPIES OF THE FUND'S MOST RECENT ANNUAL REPORT AND SUBSEQUENT SEMI-ANNUAL
REPORT ARE AVAILABLE TO SHAREHOLDERS UPON REQUEST. IF YOU WOULD LIKE TO RECEIVE
A COPY, PLEASE CONTACT THE FUND AT 222 SOUTH NINTH STREET, MINNEAPOLIS,
MINNESOTA 55402, OR CALL 800-866-7778, EXTENSION 6786, AND ONE WILL BE SENT,
WITHOUT CHARGE, BY FIRST-CLASS MAIL WITHIN THREE BUSINESS DAYS OF YOUR REQUEST.
APPROVAL OR DISAPPROVAL OF
A CHANGE IN INVESTMENT OBJECTIVE
The Fund's current investment objective is to provide a high total
investment return consistent with prudent investment risk. The Fund invests
primarily in common stocks and in securities that are convertible into or that
carry rights to buy common stocks representing a number of different sectors of
the economy and seeks to achieve its objective by varying the weighting of its
portfolio among the different sectors. Each sector consists of a number of
"MicroGroups," which are groups of stocks that have similar trading patterns and
whose earnings or revenues are derived from similar lines of business. Sector
and MicroGroup selections are based upon both fundamental factors (e.g.,
economic and interest rate sensitivity) and technical factors (e.g., whether the
sector or MicroGroup appears to be under accumulation or distribution) and upon
relative strength considerations (whether the sector or MicroGroup is
outperforming or underperforming the market). This investment strategy has
resulted, particularly in the last two calendar years, in poor Fund performance
relative to the Fund's broad-based benchmark index, the Standard & Poor's 500
Stock Index. In addition, redemptions of Fund shares have increased
significantly during the last two years, and sales of Fund shares have
decreased. As a result, in May 1996 the Adviser proposed to the Fund's Board of
Directors that certain changes be made to the Fund. These include changing the
Fund's investment objective to long-term capital appreciation, which requires
shareholder approval, making certain changes in the investment policies of the
Fund and in portfolio management, and changing the Fund's name.
AT A MEETING HELD JUNE 18, 1996, THE FUND'S BOARD OF DIRECTORS CONCLUDED
THAT THE PROPOSAL WAS IN THE BEST INTEREST OF SHAREHOLDERS AND UNANIMOUSLY
APPROVED, AND RECOMMENDED THAT SHAREHOLDERS APPROVE, CHANGING THE FUND'S
INVESTMENT OBJECTIVE TO LONG-TERM CAPITAL APPRECIATION. The Board also approved
the other changes proposed by the Adviser, subject to shareholder approval of
the investment objective change. In making its determination, the Board
reviewed, among other things, a memorandum furnished by the Adviser setting
forth the basis for the Adviser's recommendation and received advice from legal
counsel to the independent directors as to their responsibilities in evaluating
the Adviser's proposal.
CHANGES IN INVESTMENT POLICIES
Subject to shareholder approval of the Fund's proposed new investment
objective, the Board of Directors approved certain changes to the investment
policies of the Fund. The Fund will seek to achieve its objective of long-term
capital appreciation by investing primarily (at least 65% of its assets under
normal market conditions) in common stocks of small-capitalization companies
which the Adviser believes possess superior growth potential. A company will be
considered a small-capitalization company if, at the time of purchase, it has a
market capitalization within the range of market capitalizations for those
companies included in the S&P SmallCap 600 Index (currently $45 million to $2.7
billion). Under normal circumstances, the Fund will be fully invested in common
stocks,
2
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except that a small portion of the Fund's assets will be held in short-term
money market securities and cash to pay redemption requests and Fund expenses.
As is currently the case, under unusual circumstances, as a defensive measure,
the Fund will have the ability to retain cash or invest part or all of its
assets in short-term money market securities deemed by the Adviser to be
consistent with a temporary defensive posture.
Small-capitalization companies are generally positioned in the first phase
of their growth cycle, or early in the second phase. In the Adviser's view,
there are four broad phases of corporate growth. The first phase of corporate
growth occurs during the infancy of a company. Investing in a company during
this phase involves the potential for rapid growth but also involves high risk.
During the second phase of a company's growth, sometimes referred to as the
emerging growth phase, there is often a period of swift development during which
growth occurs at a rate generally not equaled by more mature companies.
Investing in a company during this phase of its growth may still involve
substantial risk. There next occurs a third phase of established growth in
which growth is generally less dramatic because of competitive forces,
regulations and internal bureaucracy. This is followed by a fourth phase of
maturity, when the growth pattern of a company begins to roughly reflect the
increase in gross national product. Of course, the actual growth of a company
is not necessarily consistent with this pattern and cannot be foreseen.
While the Adviser believes that small-capitalization companies can provide
greater growth potential than larger, more mature companies, investing in
small-capitalization companies may involve greater risks and portfolio price
volatility. Small-capitalization companies often lack the management
experience, financial resources, product diversification and competitive
strengths of larger companies. The securities of small-cap companies may have
limited market stability and may be subject to more abrupt or erratic market
movements than those of larger, more established companies of the market in
general. In addition, in many instances, the frequency and volume of their
trading is substantially less than is typical of larger companies. Therefore,
the securities of smaller companies may be subject to wider price fluctuations
than those of larger companies. The spreads between the bid and asked prices of
the securities of these companies are typically larger than the spreads for more
actively traded securities. When making large sales, the Fund may have to sell
portfolio holdings at a discount from quoted prices or may have to make a series
of small sales over an extended period of time due to the trading volume of
smaller company securities. The values of the shares of small-capitalization
companies may move independently of the values of larger capitalization
companies or of general stock market indices such as the Dow Jones Industrial
Average or the Standard & Poor's 500 Stock Index.
NAME CHANGE
Subject to shareholder approval of the Fund's proposed new investment
objective, the Board of Directors approved an amendment to the Fund's bylaws
changing the name of the Fund to "Small Company Growth Fund," which reflects
the revised investment objective and policies of the Fund.
PORTFOLIO MANAGEMENT
Edward P. Nicoski has been primarily responsible for the day-to-day
management of the Fund since its inception in 1987. If shareholders approve the
Fund's proposed new investment objective, Sandra K. Shrewsbury will assume
primary responsibility for the day-to-day management of the Fund's portfolio.
Ms. Shrewsbury has been a Vice President of Piper Jaffray Inc., the principal
distributor of the Fund's shares, since 1990. She is a Chartered Financial
Analyst and has 13 years of financial experience. Ms. Shrewsbury also has
primary responsibility for the day-to-day management of Emerging Growth Fund,
another series of the Company.
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OTHER CONSIDERATIONS
To the extent the Fund sells securities in its portfolio as a result of its
new investment objective and policies, gains or losses may be realized. These
unrealized gains and losses are already reflected in the Fund's net asset value;
however, by selling these securities, any potential for future appreciation (or
depreciation) will be lost. To the extent realized gains exceed realized
losses, such gains will have to be distributed to shareholders. Distributions
of net capital gains will be taxable to shareholders as long-term capital gains,
regardless of the length of time the shareholder has held shares of the Fund.
EFFECTIVE DATE OF CHANGES
If shareholders approve the proposal to change the Fund's investment
objective, such change in investment objective, and the investment policy,
portfolio management and name changes discussed above, will be implemented upon
effectiveness of an amendment to the Fund's registration statement incorporating
such changes, which is expected to occur on or about September 13, 1996.
REQUIRED VOTE
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF THE FUND VOTE IN
FAVOR OF THE PROPOSAL TO CHANGE THE FUND'S INVESTMENT OBJECTIVE TO LONG-TERM
CAPITAL APPRECIATION. Approval of the proposal requires the favorable vote of a
majority of the outstanding shares of the Fund, as defined in the Investment
Company Act of 1940, as amended, which means the lesser of the vote of (a) 67%
of the shares of the Fund present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund. Unless otherwise instructed, the proxies
will vote to approve the proposed change in the Fund's investment objective.
SHAREHOLDER PROPOSALS
As a series of a Minnesota corporation, the Fund is not required to hold
annual shareholder meetings. Since the Fund does not hold regular meetings of
shareholders, the anticipated date of the next shareholder meeting cannot be
provided. Any shareholder proposal which may properly be included in the proxy
solicitation material for a special shareholder meeting must be received by the
Fund no later than four months prior to the date proxy statements are mailed to
shareholders.
Dated: July , 1996 Susan Sharp Miley, Secretary
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EQUITY STRATEGY FUND
NOTICE OF SPECIAL
MEETING OF SHAREHOLDERS
TIME:
THURSDAY, SEPTEMBER 12, 1996
AT 10:00 A.M.
PLACE:
PIPER JAFFRAY TOWER, ______ FLOOR
222 SOUTH NINTH STREET
MINNEAPOLIS, MINNESOTA
IMPORTANT:
PLEASE DATE AND SIGN YOUR
PROXY CARD AND RETURN IT PROMPTLY
USING THE ENCLOSED REPLY ENVELOPE.
<PAGE>
EQUITY STRATEGY FUND
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned appoints William H. Ellis, Susan S. Miley and Robert H.
Nelson, and each of them, with power to act without the other and with the right
of substitution in each, the proxies of the undersigned to vote all shares of
Equity Strategy Fund (the "Fund"), held by the undersigned at the special
meeting of shareholders of the Fund to be held on September 12, 1996, and at any
adjournments thereof, with all the powers the undersigned would possess if
present in person. All previous proxies given with respect to the meeting are
revoked.
THE PROXIES ARE INSTRUCTED:
To vote: FOR AGAINST ABSTAIN
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approval of a change in the Fund's fundamental investment objective from an
objective high total investment return consistent with prudent investment risk
to an objective of long-term capital appreciation.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting or any adjournments or
postponements thereof.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE ABOVE MATTERS. IT IS
UNDERSTOOD THAT, IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE FUND. RECEIPT OF NOTICE OF MEETING AND PROXY STATEMENT IS
ACKNOWLEDGED BY YOUR EXECUTION OF THIS PROXY. SIGN, DATE, AND RETURN IN THE
ADDRESSED ENVELOPE-NO POSTAGE REQUIRED. PLEASE MAIL PROMPTLY TO SAVE THE FUND
FURTHER SOLICITATION EXPENSE.
Dated: , 1996
--------------------------------
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IMPORTANT: Please date and sign this proxy.
If the stock is held jointly, signature should
include both names. Executors,
administrators, trustees, guardians, and
others signing in a representative capacity
should give their full title as such.
