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 to Section 240.14a-11(c) or Section 240.14a-12
LM INSTITUTIONAL FUND ADVISORS I, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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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LM INSTITUTIONAL FUND ADVISORS I, INC.
117 EAST COLORADO BOULEVARD
PASADENA, CALIFORNIA 91105
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
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A special meeting (the "Meeting") of the shareholders of the Western Asset
Limited Duration Portfolio (the "Portfolio") of LM Institutional Fund Advisors
I, Inc. (the "Company") will be held on July 6, 1998, at 9:00 a.m., Pacific
time, at the offices of the Company, 117 East Colorado Boulevard, Pasadena,
California 91105, for the following purposes:
1a. To approve or disapprove an amendment to the Portfolio's
fundamental investment restriction with respect to making loans;
1b. To approve or disapprove an amendment to the Portfolio's
fundamental investment restriction with respect to borrowing and
senior securities; and
2. To consider and act upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Shareholders of record as of the close of business on June 15, 1998 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
By order of the Board of Directors of
the Company,
Donna E. Barnes
SECRETARY
June 24, 1998
<PAGE>
LM INSTITUTIONAL FUND ADVISORS I, INC.
117 EAST COLORADO BOULEVARD
PASADENA, CALIFORNIA 91105
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PROXY STATEMENT
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This proxy statement is furnished to the holders of shares in the Western
Asset Limited Duration Portfolio (the "Portfolio") of LM Institutional Fund
Advisors I, Inc. (the "Company") in connection with the solicitation of proxies
by and on behalf of the Board of Directors of the Company to be used at a
special meeting of such holders to be held at 9:00 a.m., Pacific time, on July
6, 1998, or any adjournment thereof (the "Meeting"), at the offices of the
Company, 117 East Colorado Boulevard, Pasadena, California. Shareholders of
record at the close of business on June 15, 1998 are entitled to be present and
vote at the Meeting. These proxy materials are first being made available to
shareholders on or about June 24, 1998.
Shares represented by duly executed proxies will be voted in accordance
with the specification made. If no specification is made, shares will be voted
in accordance with the recommendation of the Board of Directors and in the
judgment of the proxy holders as to any other business that properly comes
before the Meeting. You may revoke a proxy at any time before it is exercised by
sending or delivering a written revocation to the Secretary of the Company
(which will be effective when it is received by the Secretary), by properly
executing a later-dated proxy or by attending the Meeting, requesting return of
your proxy, and voting in person.
COPIES OF THE PORTFOLIO'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORT MAY BE
OBTAINED WITHOUT CHARGE BY WRITING TO THE COMPANY AT 117 EAST COLORADO
BOULEVARD, PASADENA, CALIFORNIA 91105, ATTENTION: DONNA BARNES, OR BY CALLING
1-800-822-5544.
On the record date, June 15, 1998, there were 493,147.782 shares of capital
stock, $.001 par value per share, outstanding in the Portfolio. Each whole share
is entitle to one vote and each fractional share is entitled to a proportionate
fractional vote. As of the record date, only shares of the Company's
Institutional Class were outstanding; there were no shares outstanding of the
Company's Financial Intermediary Class.
PROPOSAL 1: PROPOSED CHANGES TO FUNDAMENTAL INVESTMENT RESTRICTIONS
As described in the following proposals, the Directors are recommending
that shareholders approve changes to the Portfolio's fundamental investment
restrictions. The purpose of these changes is to increase the Portfolio's
investment flexibility consistent with the Portfolio's current investment
objective. The Directors believe that by changing the fundamental investment
restrictions, as described below, the Portfolio will avoid situations where a
fundamental investment restriction will prevent it, absent another shareholder
vote, from taking advantage of opportunities that are legally permissible and
potentially advantageous to shareholders. The adoption of either of these
proposals is not contingent on the adoption of the other proposal.
REQUIRED VOTE FOR ITEMS 1.a-1.b. As provided in the Investment Company Act
of 1940, as amended (the "1940 Act"), approval of amendments to either of the
fundamental investment restrictions requires the affirmative vote of a "majority
of the outstanding voting securities" of the Portfolio, which for this purpose
means the affirmative vote of the lesser of (i) more than 50% of the outstanding
shares of the Portfolio or (ii) 67% or more of the shares of the Portfolio
present at the Meeting if more than 50% of the outstanding shares are present at
the Meeting in person or by proxy.
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE TO AMEND THE PORTFOLIO'S
FUNDAMENTAL INVESTMENT RESTRICTIONS AS DESCRIBED BELOW.
1a. APPROVAL OF DISAPPROVAL OF AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO MAKING LOANS
The Directors are recommending that the Portfolio's fundamental investment
restriction with respect to making loans be revised to, among other things,
permit the Portfolios to purchase securities that are not publicly distributed,
which could be considered loans for these purposes. The current restriction
states that the Portfolios may not:
"Make loans, except loans of portfolio securities and except to the
extent that the purchase of a portion of an issue of publicly distributed
notes, bonds or other evidences of indebtedness or deposits with banks and
other financial institutions may be considered loans."
The proposed amended fundamental investment restriction is set forth below:
1
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"Each Portfolio may make loans to the fullest extent permitted by the
1940 Act, the rules or regulations thereunder or applicable orders of the
SEC, as such statute, rules, regulations, or orders may be amended from
time to time."
If this proposal is approved, the Portfolio may, consistent with its
investment objective and policies and applicable law, make loans, including
purchasing securities that are not publicly distributed. The 1940 Act permits
the Portfolio to make loans only if expressly permitted by the Portfolio's
investment policies, but never to persons who control or are under common
control with the Portfolio. Thus, the 1940 Act effectively prohibits the
Portfolio from making loans to certain persons when conflicts of interest or
undue influence are most likely present. The Portfolio may, however, make other
loans which if made would expose shareholders to certain additional risk, such
as the failure of the other party to repay the loan.
Securities that are not publicly distributed are generally restricted as to
resale under federal securities laws or by contract. Such securities are often
less liquid and more difficult to value than securities that are publicly
distributed, and the Portfolio may find it more difficult to sell such
securities at a price that approximates fair market value.
1b. APPROVAL OR DISAPPROVAL OF AN AMENDMENT TO THE FUNDAMENTAL INVESTMENT
RESTRICTION WITH RESPECT TO BORROWING AND SENIOR SECURITIES
The Directors are recommending that the Portfolio's fundamental investment
restriction with respect to borrowing and senior securities be amended to, among
other things, permit the Portfolio to engage in reverse repurchase agreements
and dollar rolls to the maximum extent permitted by the 1940 Act. The
Portfolio's current restriction states that the Portfolio may not:
"Borrow money or issue senior securities, except that it may borrow
from banks or enter into reverse repurchase agreements, provided that,
immediately after such borrowing, the total amount borrowed by the
Portfolio, including reverse repurchase agreements, does not exceed 33 1/3%
of its total assets (including the amount borrowed) less liabilities (other
than the borrowings); and provided further that it may enter into
transactions in options, futures, options on futures and forward foreign
currency contracts as described in the Prospectus and this Statement of
Additional Information."
The proposed fundamental investment restriction is set forth below:
"Borrow money or issue senior securities, except that a Portfolio may
borrow from banks, provided that, immediately after such borrowing, the
total amount borrowed by the Portfolio does not exceed 5% of its total
assets (including the amount borrowed) less liabilities (other than the
borrowings); and provided further that transactions in reverse repurchase
agreements, dollar rolls, options, futures, options on futures and forward
foreign currency contracts will not be considered borrowings or senior
securities for these purposes."
The proposed restriction would decrease the amount that the Portfolio could
borrow from banks from 33-1/3% of assets to 5% of assets. The
Portfolio would, however, be able to engage in reverse repurchase agreements,
dollar rolls and other strategic transactions without limitation.
A reverse repurchase agreement is a portfolio management technique in which
the Portfolio temporarily transfers possession of a portfolio instrument to
another person, such as a financial institution or broker-dealer, in return for
cash. At the same time, the Portfolio agrees to repurchase the instrument at an
agreed upon time (normally within seven days) and price, including an interest
payment.
A dollar roll is a transaction in which the Portfolio sells a fixed income
security for delivery in the current month and simultaneously contracts to
purchase substantially similar (same type, coupon and maturity) securities at an
agreed upon future time. By engaging in the dollar roll transaction the
Portfolio foregoes principal and interest paid on the security that is sold, but
receives the difference between the current sales price and the forward price
for the future purchase. The Portfolio would also be able to earn interest on
the income, if any, that is received from the initial sale.
While engaging in reverse repurchase agreements and dollar roll
transactions, the Portfolio will maintain cash or securities in a segregated
account with a value at least equal to the Portfolio's obligation in connection
with the transaction. These transactions may expose the Portfolio to greater
fluctuations in the value of its assets and renders the segregated assets
unavailable for sale or other disposition. The obligation to purchase securities
on a specified future date involves the risk that the market value of the
securities that the Portfolio is obligated to purchase may decline below the
purchase price. In addition, in the event the other party to the transaction
files for bankruptcy, becomes insolvent or defaults on its obligation, the
Portfolio may be adversely affected.
2
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MISCELLANEOUS
OTHER BUSINESS. The Directors know of no other business to be brought
before the Meeting. However, if any other matters properly come before the
Meeting, it is the Directors' intention that proxies which do not contain
specific restrictions to the contrary will be voted on such matters in
accordance with the judgment of the persons named in the enclosed form of proxy.
QUORUM. A majority of the shares entitled to vote on a particular
proposal -- present in person or represented by proxy -- constitutes a quorum
for the transaction of business with respect to such proposal at the Meeting.
SOLICITATION OF PROXIES. In addition to the solicitation of proxies by
mail, Directors of the Company, employees of Western Asset Management Company
and its affiliates and other persons retained by the Company may solicit proxies
in person or by telephone. The cost of the solicitation will be borne by the
Company.
TABULATION OF VOTES. Votes cast by proxy or in person at the Meeting will
be counted by persons appointed to act as inspectors for the Meeting. The
inspectors will count the total number of votes cast "for" approval of each
proposal for purposes of determining whether sufficient affirmative votes have
been cast. As stated above, shares represented by duly executed proxies will be
voted in accordance with the specification made. If no specification is made,
shares will be voted in accordance with the recommendation of the Board of
Directors. The inspectors will count shares represented by proxies that withhold
authority to vote or that reflect abstentions or "broker non-votes" (I.E.,
shares held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum. Shares represented by proxies
that withhold authority to vote, abstentions and broker non-votes will have the
effect of negative votes on each of the proposals.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT MEETINGS OF
SHAREHOLDERS. As allowed by Maryland law, the Portfolio does not intent to hold
annual shareholders' meetings except where the 1940 Act requires a shareholder
vote on certain matters. Pursuant to the Bylaws of the Company, holders of 10%
or more of the outstanding shares of the Company have the right to call a
special meeting of holders of shares in the Company. To call such a special
meeting, a shareholder should submit a written request to the Secretary of the
Company at 117 East Colorado Boulevard, Pasadena, California 91105, stating the
purpose of the proposed meeting and the matters to be acted on at such special
meeting.
Shareholders wishing to submit proposals for inclusion in a proxy statement
for a subsequent shareholders' meeting should send their written proposals to
the attention of the Secretary of the Company at the above address. A
shareholder may include with the proposal a supporting statement which (together
with the proposal) should not exceed 500 words in length. Proposals should be
received by the Company within a reasonable time before the proxy statement for
the meeting is mailed to shareholders.
ADJOURNMENT. In the event that sufficient votes in favor of any of the
proposals set forth in the Notice of the Meeting are not received by the time
scheduled for the Meeting, the persons named as proxies may propose one or more
adjournments of the Meeting for a reasonable time after the date set for the
original Meeting to permit further solicitation of proxies with respect to any
of such proposals. In addition, if, in the judgment of the persons named as
proxies, subsequent developments make it advisable to defer action on a
proposal, but not both proposals, the persons named as proxies may propose one
or more adjournments of the Meeting for a reasonable time in order to defer
action on such proposal as they deem advisable. Any such adjournments will
require the affirmative vote of a majority of the votes cast on the question in
person or by proxy at the session of the Meeting to be adjourned. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of such proposal in respect of which such
adjournment is proposed. They will vote all other proxies against any such
adjournment. The costs of any such additional solicitation and of any adjourned
session will be borne by the Company. If the Meeting is adjourned with respect
to a proposal, the other proposal may still be acted upon by the shareholders.
PRINCIPAL HOLDERS OF SECURITIES. As of June 15, 1998, the Directors and
executive officers as a group beneficially owned less than 1% of the outstanding
shares of the Portfolio. Set forth below is a table which contains the name,
address and percentage of ownership of each person who is known by the Company
to own beneficially five percent or more of the outstanding shares of the
Portfolio as of June 15, 1998:
3
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<TABLE>
<CAPTION>
% OF OWNERSHIP
NAME AND ADDRESS AS OF JUNE __, 1998
- ---------------- -------------------
<S> <C>
Western Michigan University 64.36%
Investment & Endowment Mgmt.
1083 Seibert Admin. Bldg.
Kalamazoo, MI 49008
University Athletic Association 21.10%
P.O. Box 14485
Gainseville, FL 32604
Good Shephard Medical Center 8.57%
P.O. Box 160
Westerville, OH 43086
HFA Investment Partnership 5.97%
600 HFA Building
914 S. 8th Street
Minneapolis, MN 55404
</TABLE>
OTHER INFORMATION. The address of the Company, Western Asset Management
Company, the Portfolio's investment adviser, and Arroyo Seco, Inc., one of the
Portfolio's principal underwriters, is 117 East Colorado Boulevard, Pasadena,
California 91105. The address of the Company's investment manager, LM
Institutional Advisors, Inc., and its other principal underwriter, Legg Mason
Wood Walker, Incorporated, is 100 Light Street, P.O. Box 1476, Baltimore,
Maryland 21203-1476.
4
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P R O X Y
LM INSTITUTIONAL FUND ADVISORS I, INC.
WESTERN ASSET LIMITED DURATION PORTFOLIO
PROXIES SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking any previous proxies, hereby appoint(s) Donna E.
Barnes, Ilene S. Harker, and W. Curtis Livingston, III, and each of them
separately, as proxies, with full power of substitution to each, and hereby
authorizes them to represent the undersigned and to vote all shares of the
Western Asset Limited Duration Portfolio ("Portfolio") of LM Institutional Fund
Advisors I, Inc. (the "Company") which the undersigned would be entitled to vote
if personally present, as designated below, at the Special Meeting of
Shareholders of the Company to be held at the offices of the Company at 117 East
Colorado Boulevard, Pasadena, California, 91105 on July 6, 1998 at 9:00 a.m.,
Pacific time, and at any adjournments or postponements thereof. All powers may
be exercised by a majority of said proxyholders or substitutes voting or acting
or, if only one votes and acts, then by that one. Receipt of the Notice of
Special Meeting and the accompanying Proxy Statement is hereby acknowledged.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned shareholder. If no direction is made, this proxy will be voted
for each of the proposals and for the election of each nominee and in the
proxies' discretion for such other business as may properly come before the
Meeting.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Meeting. The Board of Directors
recommends a vote FOR each proposal.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
__________________________________ _________________________________________
__________________________________ _________________________________________
__________________________________ _________________________________________
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
<TABLE>
<S> <C> <C> <C>
ALL SHAREHOLDERS PLEASE VOTE: FOR AGAINST ABSTAIN
1a. Proposal to amend the Portfolio's fundamental investment restriction with respect to ___ ___ ___
making loans.
1b. Proposal to amend the Portfolio's fundamental investment restriction with respect to ___ ___ ___
borrowing and senior securities.
</TABLE>
Please sign your name exactly as it appears on this card. If you are signing
for a corporation, please sign the full corporate name and indicate the signer's
office. Such signer must be the corporation's president or a vice president or
other person duly appointed to vote shares of the Company on said corporation's
behalf. Execution of this proxy card by a person other than the president or a
vice president on behalf of the corporation shall be deemed to be confirmation
that the undersigned has been duly appointed. If you are a partner, sign in the
partnership name. If you are a joint owner, each owner should sign. When signing
as executor, administrator, attorney, trustee, guardian, or as custodian for a
minor, please give your full title as such when signing.
RECORD DATE SHARES:
[NAME OF SHAREHOLDER]
[ADDRESS OF SHAREHOLDER]
[NUMBER OF SHARES OWNED ON JUNE 15, 1998]
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shareholder sign here Title Co-owner sign here
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
<PAGE>
Dear Shareholder, June 23, 1998
As we discussed yesterday, enclosed you will find a new Proxy Statement
and Proxy Card for the Western Asset Limited Duration Portfolio. Note that there
are two items that require your attention. Both relate to fundamental investment
restrictions presented in the May proxy. Please note that we have reduced the
number of restrictions that are proposed to be revised from eight to two (1a and
1b). We also rewrote the language to specifically address the needs of the
Limited Duration portfolio. Both items are explained in detail in the attached
statement.
Please complete and return the enclosed Proxy Card by the shareholders
meeting on July 6, 1998 at 9:00 AM. A self-addressed stamped envelope has been
provided for your convenience. For more efficient processing, please fax the
Proxy Card as soon as possible to me at (626) 844-9551. If you have any
questions on how this proxy differs from the previous proxy, or would like an
explanation on how it will effect the portfolio, please feel free to call me at
844-9585, or Scott Mullet at 844-9594.
With warm regards,
Kristin M. Benz, CFA
