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
THE MENTOR FUNDS
(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):
( ) $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:
(X) 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:
THE MENTOR FUNDS
901 EAST BYRD STREET
RICHMOND, VIRGINIA 23219
May 4, 1995
To Shareholders of Mentor Perpetual Global Portfolio:
Enclosed are proxy materials for the upcoming meeting of
shareholders of your Portfolio to be held on May 30, 1995. At the
meeting, you will be asked to approve a new Investment Advisory and
Management Agreement between the Portfolio and Mentor Perpetual
Advisors, L.C. ("Mentor Perpetual"). Your Trustees have approved the
Agreement and are recommending that you do so as well.
Mentor Perpetual is an investment advisory firm owned in equal
parts by Perpetual plc, a diversified global financial services holding
company based in the United Kingdom, and Mentor Investment Group, Inc.,
the parent company of Commonwealth Advisors, Inc., your Portfolio's
current investment adviser.
Your Trustees believe that Mentor Perpetual will bring to the
Portfolio the wide experience of the Perpetual organization in global
and international investing, together with Mentor Investment Group's
expertise in servicing mutual fund organizations. The proposal, and the
reasons for its adoption by the Trustees, are described in greater
detail in the attached proxy statement.
PLEASE RETURN YOUR PROXY TODAY. IT IS IMPORTANT THAT YOU RESPOND
BEFORE MAY 30, 1995 IN ORDER TO AVOID THE EXPENSE TO THE PORTFOLIO OF
ADDITIONAL MAILINGS. If you have questions regarding the proposal,
please call your financial representative or The Mentor Funds
(800-382-0016) today. We appreciate your continued trust and confidence
and look forward to earning it well into the future.
Sincerely,
Paul F. Costello
PRESIDENT
MENTOR PERPETUAL GLOBAL PORTFOLIO
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MAY 30, 1995
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders of
the Mentor Perpetual Global Portfolio (the "Portfolio"), a series of
shares of beneficial interest of The Mentor Funds (the "Trust"), will be
held at the offices of the Trust, 901 East Byrd Street, Richmond,
Virginia, on Tuesday, May 30, 1995 at 9:00 a.m. (Eastern time) for the
following purposes:
1. To approve the Investment Advisory and Management Agreement
between the Portfolio and Mentor Perpetual Advisors, L.C.
2. To consider and act upon any other matters which may properly
come before the meeting or any adjournment thereof.
By Order of the Trustees
John M. Ivan,
SECRETARY
May 4, 1995
YOUR VOTE IS IMPORTANT
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT
THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
MENTOR PERPETUAL GLOBAL PORTFOLIO
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees of The
Mentor Funds (the "Trust") for use at the Special Meeting of Shareholders (the
"Meeting") of the Mentor Perpetual Global Portfolio (the "Portfolio"), a series
of shares of beneficial interest of the Trust, to be held at 901 East Byrd
Street, Richmond, Virginia on Tuesday, May 30, 1995 at 9:00 a.m. and at any
adjournment or adjournments thereof (the "Meeting"). Proxy materials are being
mailed to shareholders beginning on or about May 4, 1995. A copy of the Annual
Report of the Trust, which includes information about the Portfolio for the
fiscal year ended September 30, 1994, may be obtained without charge by calling
the Trust at 1-800-382-0016.
Shareholders of record of the Portfolio at the close of business on April
12, 1995 will be entitled to be present and to vote at the Meeting. Each Class A
and Class B share is entitled to one vote, and votes will be counted together
without regard to class. Shares represented by executed and unrevoked proxies
will be voted in accordance with the specifications made thereon. A shareholder
who executes and returns the enclosed form of proxy nevertheless may revoke it
by giving another proxy or by letter or telegram directed to the Trust which
must show the shareholder's name and account number. To be effective, such
revocation must be received prior to the Meeting. Any shareholder who attends
the Meeting in person may vote by ballot at the Meeting, thereby cancelling any
proxy previously given. To the Trust's knowledge, no shareholder owned
beneficially 5% or more of the Portfolio's outstanding shares of beneficial
interest on April 12, 1995. The number of shares of beneficial interest of the
Portfolio issued and outstanding as of April 12, 1995 was 1,200,484 shares.
In the event that sufficient votes in favor of the Proposal set forth in
the notice of the Meeting are not received by May 30, 1995, the persons named as
proxies may propose one or more adjournments of the Meeting for a period or
periods of not more than 60 days in the aggregate to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of a
plurality of the shares present 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 the
Proposal. They will vote against any such adjournment those proxies required to
be voted against the Proposal and will not vote any proxies that abstained from
voting on the Proposal. Votes cast by proxy or in person at the Meeting will be
counted by persons appointed by the Trust to act as tellers for the Meeting.
The costs of solicitation of proxies will be borne by the Portfolio.
Solicitation of proxies by personal interview, mail, telephone, and telegraph
may be made by officers and Trustees of the Trust and employees of Wheat First
Butcher Singer, Inc. and its affiliates. In addition, the firm of Management
Information Systems has been retained to assist in the solicitation of proxies,
at a cost to the Portfolio which is not expected to exceed $5,600, plus
reimbursement of the firm's out-of-pocket expenses.
PROPOSAL 1: TO APPROVE THE INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT BETWEEN
THE PORTFOLIO AND MENTOR PERPETUAL ADVISORS, L.C.
The Trustees are recommending that you approve a new Investment Advisory
and Management Agreement (the "Management Agreement") between the Portfolio and
Mentor Perpetual Advisors, L.C. ("Mentor Perpetual"). If shareholders approve
the new Management Agreement, Mentor Perpetual would replace Commonwealth
Advisors, Inc. ("Commonwealth Advisors") as investment adviser to the Portfolio,
and the subadvisory agreement among the Portfolio, Commonwealth Advisors, and
Perpetual Portfolio Management Ltd. would be terminated. Provided below is
information with respect to the Proposal and other information intended to help
you reach a decision.
BACKGROUND. Commonwealth Advisors (formerly Cambridge Investment Advisors,
Inc.) has acted as the Trust's investment adviser since April 17, 1992 pursuant
to an investment management agreement between Commonwealth Advisors and the
Trust (the "Commonwealth Investment Advisory Agreement"). The Commonwealth
Investment Advisory Agreement was approved by the Portfolio's shareholders in
March, 1994. Pursuant to the Commonwealth Investment Advisory Agreement,
Commonwealth Advisors has the responsibility, subject to the review and approval
by the Trustees of the Trust, to conduct all operations of the Trust (other than
any operations conducted by the Trust's sub-advisers, custodian, transfer agent,
or administrator), including supervision of any sub-advisers.
Perpetual Portfolio Management Ltd. ("Perpetual (UK)") currently serves as
sub-adviser to the Portfolio under a sub-advisory agreement with Commonwealth
Advisors dated April 12, 1995. The Trustees approved the sub-advisory agreement
among the Portfolio, Perpetual (UK), and Commonwealth Advisors on that date. As
sub-adviser, Perpetual (UK), at its expense, furnishes continuously an
investment program for the Portfolio, makes investment decisions for the
Portfolio, and places all orders for the purchase and sale of investments for
the Portfolio. Perpetual (UK) also furnishes, at its expense, all necessary
investment and related management services to the Portfolio. Perpetual (UK) was
organized under the laws of England, and currently serves as investment adviser
for assets of more than $6.0 billion. Its clients include 28 unit investment
trusts and other public investment pools for over 150 clients, including private
individuals, charities, pension plans, and life assurance companies. Perpetual
(UK) employs 28 investment advisory personnel, all of whom are employed in
international or global investment management. Commonwealth Advisors pays
Perpetual (UK) an annual fee equal to 0.55% of the first $75 million of the
Portfolio's average net assets and 0.50% of the Portfolio's average net assets
over $75 million.
Prior to Perpetual (UK)'s appointment as sub-adviser, Scudder, Stevens &
Clark ("Scudder") served as sub-adviser to the Portfolio. On April 12, 1995,
Scudder's sub-advisory agreement with Commonwealth Advisors and the Portfolio
was terminated by the Trustees.
The Portfolio pays Commonwealth Advisors an annual investment advisory fee
equal to 1.10% of the average daily net assets of the Portfolio up to $75
million and 1.00% of the average daily net assets of the Portfolio in excess of
$75 million. For the 1994 fiscal year, the Portfolio paid Commonwealth Advisors
$69,515 in investment advisory fees, of which $34,757 was paid by Commonwealth
Advisors to the Portfolio's sub-adviser.
PROPOSED NEW ARRANGEMENT. The Trustees of the Trust have approved an
Investment Advisory and Management Agreement (the "Management Agreement")
between the Portfolio and Mentor Perpetual, pursuant to which Mentor Perpetual
would replace Commonwealth Advisors as investment adviser to the Portfolio.
Mentor Perpetual was organized on March 17, 1995, by Mentor
Investment Group, Inc. ("Mentor") (formerly Investment Management Group,
Inc.) and Perpetual plc, the parent corporation of Perpetual (UK).
Mentor and Perpetual plc have equal ownership interests in Mentor
Perpetual, and each elects three members of Mentor Perpetual's board of
directors. The parties have informed the Trustees that Mentor Perpetual,
was formed to provide investment services to U.S. investment advisory
clients, drawing on the expertise of the Perpetual organization in
global and international investment and of Mentor in servicing
investment companies and other U.S. advisory entities. Commonwealth
Advisors, Perpetual (UK), and Mentor Perpetual have advised the Trustees
that all of the investment advisory personnel of Mentor Perpetual are
also employees of Perpetual (UK), that the portfolio manager responsible
for the Portfolio at Perpetual (UK), Mr. Scott S. McGlashan, will
continue to be the portfolio manager of the Portfolio at Mentor
Perpetual following the proposed implementation of the Management
Agreement, and that all of the expertise and experience of Perpetual
(UK) will be made available to Mentor Perpetual in its management of the
Portfolio.
In approving the Management Agreement with Mentor Perpetual, the Trustees
considered, among other things, the wide experience in international markets
offered by the Perpetual organization, the experienced team of investment
professionals Mentor Perpetual has selected to manage the Portfolio, and the
investment record of those professionals and of the entire Perpetual
organization. The Trustees also considered the facts that, due to Mentor's fifty
percent ownership interest in Mentor Perpetual, Mentor Perpetual would be able
to draw on Mentor's expertise in servicing investment company clients and that
Mentor, as owner of Mentor Perpetual, would be in a position potentially to
enhance the services provided to the Portfolio by Mentor Perpetual.
PROPOSED MANAGEMENT AGREEMENT. The proposed Management Agreement between
the Portfolio and Mentor Perpetual provides that, subject to such policies as
the Trustees may determine, Mentor Perpetual, at its expense, shall furnish
continuously an investment program for the Portfolio and make investment
decisions on behalf of the Portfolio consistent with the Portfolio's stated
investment objectives, policies, and restrictions. Mentor Perpetual, at its
expense, will furnish all necessary investment and related management
facilities, including salaries of personnel, required for it to execute its
duties. Mentor Perpetual also places all orders for the purchase and sale of the
Portfolio's investments with broker-dealers selected by Mentor Perpetual. The
Trustees have considered the fact that Mentor Perpetual may receive brokerage
and research services and other similar services from broker-dealers with which
Mentor Perpetual places the Portfolio's portfolio transactions and from third-
parties who have arrangements with these broker-dealers. Some of these services
may be of value to Mentor Perpetual and its affiliates in advising various
clients (including the Portfolio), although not all of these services are
necessarily useful and of value in managing the Portfolio. By placing portfolio
transactions with such broker-dealers, Mentor Perpetual may cause the Portfolio
to pay greater brokerage commissions than it might otherwise pay.
The Management Agreement provides that Mentor Perpetual shall not be
subject to any liability to the Portfolio or to any shareholder of the Portfolio
for any act or omission in the course of, or connected with, its rendering
services thereunder in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Under the terms of the Management Agreement, the Portfolio shall pay to
Mentor Perpetual, as full compensation for services rendered under the Agreement
with respect to the Portfolio, an annual fee at the same rate as now paid to
Commonwealth Advisers: 1.10% of the first $75 million of the Portfolio's net
assets and 1.00% of any net assets under management over $75 million.
The Management Agreement may be terminated at any time, without the payment
of any penalty, by the Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Portfolio on 30 days' written notice to
Mentor Perpetual or by Mentor Perpetual upon not less than 30 days' written
notice to the other party, and terminates automatically in the event of its
assignment.
The Management Agreement must be approved by a majority of Trustees of the
Trust who are not parties to the Agreement or "interested persons" of any such
party. The Agreement must also be approved by the holders of a "majority of the
outstanding voting securities" of the Portfolio, which for this purpose means
the affirmative vote of the lesser of (1) 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 and (2) more than 50% of the
outstanding shares of the Portfolio.
It is intended that the proposed Management Agreement, if approved by the
shareholders of the Portfolio, will take effect on May 30, 1995 (or on a later
date following the effectiveness of Mentor Perpetual's registration with the
Securities and Exchange Commission as an investment adviser) and will continue
in effect until the second anniversary of its taking effect, and thereafter for
successive annual periods as long as such continuance is approved in accordance
with the Investment Company Act of 1940.
A copy of the Management Agreement is attached to this proxy statement as
Exhibit A.
COMPARISON OF THE CURRENT AND PROPOSED ARRANGEMENTS. The proposed new
management arrangement for the Portfolio differs from the current arrangement in
that Mentor Perpetual would become responsible for the day-to-day management of
the Portfolio's investment operations, replacing Perpetual (UK). In addition,
Commonwealth Advisors would no longer monitor the investment operations of the
Portfolio, because Mentor Perpetual would replace Commonwealth Advisors as
investment adviser. In managing the Portfolio, Mentor Perpetual intends to
employ all of the investment advisory personnel of Perpetual (UK) who currently
manage the Portfolio's investments, including Mr. McGlashan, who will continue
to be portfolio manager to the Portfolio.
INFORMATION ABOUT COMMONWEALTH ADVISORS, INC.; PERPETUAL (UK); AND MENTOR
PERPETUAL. Commonwealth Advisors, which was incorporated under the laws of
Virginia in 1991, is a wholly-owned subsidiary of Mentor Investment Group, Inc.,
which, in turn, is a wholly-owned subsidiary of Wheat First Butcher Singer, Inc.
("WFBS"), a diversified financial services holding company. Mentor also serves
as administrator to the Portfolio. The address of Commonwealth Advisors and
Mentor is 901 East Byrd Street, Richmond, Virginia 23219. Mr. John G. Davenport
is the President and a director of Commonwealth Advisors. He also serves as
President and sole director of Commonwealth Investment Counsel, Inc., a
registered investment advisory firm. Peter J. Quinn, Jr. is a director of
Commonwealth Advisors. Each of Messrs. Davenport and Quinn also serves as
Managing Director of WFBS and as a director of Mentor. Paul F. Costello,
President of the Trust, is Senior Vice President of Commonwealth Advisors. John
M. Ivan, Secretary of the Trust, is Secretary of Commonwealth Advisors.
Perpetual (UK) is a corporation organized in February 1974 under the laws
of England. Mr. Martyn Arbib, chairman of Perpetual (UK), is its principal
executive officer. Messrs. Roger C. Cornick, Alastair B. McIntosh, Scott S.
McGlashan, David S. Mossop, and Robert J. Yerbury are the directors of Perpetual
(UK). Mr. Cornick serves as Deputy Chairman of Marketing at Perpetual (UK).
Messrs. McIntosh and McGlashan serve as investment managers at Perpetual (UK).
The address of the chairman and the directors of Perpetual (UK) is c/o Perpetual
Portfolio Management Ltd., 48 Hart Street, Henley-on-Thames, Oxfordshire,
England RG92A2. Perpetual (UK) is a wholly-owned subsidiary of Perpetual plc,
located at 48 Hart Street, Henley-on-Thames, Oxfordshire, England RG92A2.
Mr. McGlashan is the President of Mentor Perpetual. Daniel J. Ludeman,
Chairman and Trustee of the Trust, Paul F. Costello, President of the Trust, and
Richard J. Rossi, are directors of Mentor Perpetual. Mr. Ludeman is Chairman and
Chief Executive Officer of Mentor and a Managing Director of WFBS. Mr. Costello
is a Managing Director of WFBS and Mentor. Mr. Rossi is a Managing Director of
WFBS and Chief Operating Officer and a Managing Director of Mentor. The address
of Messrs. Ludeman, Costello, and Rossi is c/o the Trust, 901 East Bryd Street,
Richmond, Virginia 23219. Messrs. Arbib, Cornick, and Mossop are also directors
of Mentor Perpetual.
CERTAIN BROKERAGE MATTERS. The Management Agreement requires Mentor
Perpetual, in executing portfolio transactions and selecting brokers and
dealers, to give primary consideration to securing for the Portfolio the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions for brokerage and research
services as described below. In doing so, Mentor Perpetual is required,
bearing in mind the Portfolio's best interests at all times, to consider all
factors it deems relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience, and financial stability of the broker or
dealer involved, and the quality of service rendered by the broker or dealer in
other transactions. The Management Agreement provides that, subject to such
policies as the Trustees of the Trust may determine, Mentor Perpetual shall not
be deemed to have acted unlawfully or to have breached any duty solely by reason
of its having caused the Portfolio to pay a broker or dealer that provides
brokerage and research services to Mentor Perpetual an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission that another broker or dealer would have charged for effecting that
transaction, if Mentor Perpetual determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or Mentor Perpetual's overall responsibilities with
respect to the Portfolio and to other clients of Mentor Perpetual.
CERTAIN PAYMENTS TO AFFILIATES. In addition to investment advisory fees,
the Portfolio pays fees for certain administrative services provided to the
Portfolio. In fiscal 1994, the Portfolio paid $6,344 to Mentor and $796 to
Cambridge Administrative Services in fees for these administrative services.
Also, the Portfolio pays Mentor Distributors, Inc. (formerly Cambridge
Distributors, Inc.) ("Mentor Distributors"), the Portfolio's distributor,
shareholder servicing fees and fees under the Portfolio's Distribution Plan. In
fiscal 1994, the Portfolio paid shareholders service fees of $15,340 to Mentor
Distributors and paid Mentor Distributors $20,749 under the Distribution Plan.
Mentor Distributors is located at 901 East Byrd Street, Richmond, Virginia
23219.
TRUSTEE ACTION; REQUIRED SHAREHOLDER VOTE. On April 12, 1995, the Trustees
of the Trust voted to approve the Management Agreement, and to terminate the
Portfolio's existing sub-advisory agreement with Perpetual (UK) effective at
such time as the Management Agreement becomes effective.
The vote required to approve the Management Agreement is the lesser
of (1) 67% of the shares of the Portfolio represented at the Meeting, if
more than 50% of the shares of the Portfolio are represented at the
Meeting, and (2) more than 50% of the outstanding shares of the
Portfolio. If shareholders of the Portfolio do not approve the
Management Agreement, the Portfolio's current investment advisory
arrangement will remain in effect, and the Trustees will consider such
alternative actions as may be in the best interests of the Portfolio.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF THE PORTFOLIO VOTE
TO APPROVE THE PROPOSED MANAGEMENT AGREEMENT.
OTHER MATTERS
Fifty percent of the shares, regardless of class, of the Portfolio
outstanding on the record date, present in person or represented by proxy, are
required to constitute a quorum for the transaction of business at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by the Trust as tellers for the Meeting. The tellers will count the
total number of votes cast "for" approval of the Proposal for purposes of
determining whether sufficient affirmative votes have been cast. The tellers
will count all shares represented by proxies that reflect abstentions and
"broker non-votes" (I.E., shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or the persons
entitled to vote) for purposes of determining the presence of a quorum.
Abstentions and broker non-votes have the effect of a negative vote on the
Proposal.
Although the Meeting is called to transact any other business that
may properly come before it, the only business that management intends
to present or knows that others will present is the Proposal in the
Notice of Meeting. However, you are being asked on the enclosed proxy to
authorize the persons named therein to vote in accordance with their
judgment with respect to any additional matters which properly come
before the Meeting, and on all matters incidental to the conduct of the
Meeting.
Shareholder proposals to be presented at any future meeting of shareholders
of the Trust must be received by the Trust a reasonable time before the Trust's
solicitation of proxies for that meeting in order for such proposals to be
considered for inclusion in the proxy materials relating to that meeting.
May 4, 1995
EXHIBIT A
MENTOR PERPETUAL GLOBAL PORTFOLIO
of
THE MENTOR FUNDS
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
This Investment Advisory and Management Agreement dated as of
, 1995 between THE MENTOR FUNDS, a Massachusetts business trust (the
"Trust"), and MENTOR PERPETUAL ADVISORS, L.C., a Virginia corporation
(the "Manager")
WITNESSETH:
That in consideration of the mutual covenants herein contained, it
is agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO TRUST.
(a) The Manager, at its expense, will furnish continuously an
investment program for Mentor Perpetual Global Portfolio (the
"Portfolio"), will determine what investments shall be purchased, held,
sold, or exchanged by the Portfolio and what portion, if any, of the
assets of the Portfolio shall be held uninvested and shall make changes
in the Portfolio's investments. In the performance of its duties, the
Manager will comply with the provisions of the Agreement and Declaration
of Trust and Bylaws of the Portfolio and the Portfolio's stated
investment objectives, policies, and restrictions, and will use its best
efforts to safeguard and promote the welfare of the Portfolio and to
comply with other policies which the Trustees may from time to time
determine and shall exercise the same care and diligence expected of the
Trustees.
(b) The Manager, at its expense, except as such expense is paid by
the Portfolio as provided in Section 1(e), will furnish all necessary
investment and related management facilities, including salaries of
personnel, required for it to execute its duties faithfully. The Manager
will pay the compensation, if any, of certain officers of the Trust
carrying out the investment management and related duties provided for
by this Agreement.
(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Portfolio's account
with brokers or dealers selected by the Manager. In the selection of
such brokers or dealers and the placing of such orders, the Manager
shall give primary consideration to securing for the Portfolio the most
favorable price and execution available, except to the extent it may be
permitted to pay higher brokerage commissions for brokerage and research
services as described below. In doing so, the Manager, bearing in mind
the Portfolio's best interests at all times, shall consider all factors
it deems relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount
of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience, and financial
stability of the broker or dealer involved, and the quality of service
rendered by the broker or dealer in other transactions. Subject to such
policies as the Trustees of the Trust may determine, the Manager shall
not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having
caused the Portfolio to pay a broker or dealer that provides brokerage
and research services to the Manager an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission that another broker or dealer would have charged for
effecting that transaction, if the Manager determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or A-1
the Manager's overall responsibilities with respect to the Portfolio and
to other clients of the Manager as to which the Manager exercises
investment discretion.
(d) The Trust, on behalf of the Portfolio, hereby authorizes any
entity or person associated with the Manager which is a member of a
national securities exchange to effect any transaction on the exchange
for the account of the Portfolio which is permitted by Section 11(a) of
the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and
the Portfolio hereby consents to the retention of compensation for such
transactions in accordance with Rule 11a2-2(T)(2)(iv).
(e) The Manager shall not be obligated to pay any expenses of or
for the Portfolio not expressly assumed by the Manager pursuant to this
Section 1 other than as provided in Section 3.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers,
and employees of the Trust may be a shareholder, director, officer, or
employee of, or be otherwise interested in, the Manager, and in any
person controlled by or under common control with the Manager, and that
the Manager and any person controlled by or under common control with
the Manager may have an interest in the Portfolio. It is also understood
that the Manager and any person controlled by or under common control
with the Manager have and may have advisory, management, service, or
other agreements with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE PORTFOLIO TO THE MANAGER.
As compensation for the services performed and the facilities
furnished and expenses assumed by the Manager, including the services of
any consultants retained by the Manager, the Portfolio shall pay the
Manager, as promptly as possible after the last day of each month, a
fee, calculated daily, of 1.10% annually of the Portfolio's average
daily net assets up to $75 million, and 1.00% annually of the
Portfolio's average daily net assets over $75 million. The first payment
of the fee shall be made as promptly as possible at the end of the month
next succeeding the effective date of this Agreement, and shall
constitute a full payment of the fee due the Manager for all services
prior to that date. If this Agreement is terminated as of any date that
is not the last day of a month, such fee shall be paid as promptly as
possible after such date of termination, shall be based on the average
daily net assets of the Portfolio in that period from the beginning of
such month to such date of termination, and shall be that proportion of
such average daily net assets as the number of business days in such
period bears to the number of business days in such month. The average
daily net assets of the Portfolio shall in all cases be based only on
business days and be computed as of the time of the regular close of
business of the New York Stock Exchange, or such other time as may be
determined by the Trustees. Each such payment shall be accompanied by a
report of the Trust prepared either by the Trust or by a reputable firm
of independent accountants which shall show the amount properly payable
to the Manager under this Agreement and the detailed computation
thereof.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment; and this Agreement shall
not be amended unless such amendment be approved at a meeting by the
affirmative vote of a majority of the outstanding shares of the
Portfolio, and by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Trustees of the
Trust who are not interested persons of the Trust or of the Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution and shall
remain in full force and effect continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as
follows:
(a) Either party hereto may at any time terminate this Agreement by
not more than sixty days nor less than thirty days written notice
delivered or mailed by registered mail, postage prepaid, to the other
party, or
(b) If (i) the Trustees of the Trust or the shareholders by the
affirmative vote of a majority of the outstanding shares of the
Portfolio, and (ii) a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager, by vote cast in
person at a meeting called for the purpose of voting on such approval,
do not specifically approve at least annually the continuance of this
Agreement, then this Agreement shall automatically terminate at the
close of business on , 1997 or the expiration of one year
from the effective date of the last such continuance, whichever is
later.
Action by the Trust under (a) above may be taken either (i) by vote
of a majority of its Trustees, or (ii) by the affirmative vote of a
majority of the outstanding shares of the Portfolio.
Termination of this Agreement pursuant to this Section 5 will be
without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding shares" of the Portfolio means the
affirmative vote, at a duly called and held meeting of such
shareholders, (a) of the holders of 67% or more of the shares of the
Portfolio present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of
the Portfolio entitled to vote at such meeting are present in person or
by proxy, or (b) of the holders of more than 50% of the outstanding
shares of the Portfolio entitled to vote at such meeting, whichever is
less.
For the purposes of this Agreement, the terms "affiliated person",
"control", "interested person," and "assignment" shall have their
respective meanings defined in the Investment Company Act of 1940, as
amended, and the Rules and Regulations thereunder, subject, however, to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act; the term "specifically approve at least
annually" shall be construed in a manner consistent with the Investment
Company Act of 1940, as amended, and the Rules and Regulations
thereunder; and the term "brokerage and research services" shall have
the meaning given in the Securities Exchange Act of 1934, as amended,
and the Rules and Regulations thereunder.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith, or gross
negligence on the part of the Manager, or reckless disregard of its
obligations and duties hereunder, the Manager shall not be subject to
any liability to the Trust or to any shareholder of the Trust for any
act or omission in the course of, or connected with, rendering services
hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of
the Trustees of the Trust as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees,
officers, or shareholders of the Trust but are binding only upon the
assets and property of the Trust.
IN WITNESS WHEREOF, THE MENTOR FUNDS and MENTOR PERPETUAL ADVISORS,
L.C., have each caused this instrument to be signed in duplicate on its
behalf by its President or Vice President thereunto duly authorized, all
as of the day and year first above written.
THE MENTOR FUNDS
on behalf of MENTOR PERPETUAL GLOBAL
PORTFOLIO
By:
MENTOR PERPETUAL ADVISORS, L.C.
By:
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 PROPOSAL 1
IN THEIR DISCRETION, THE PROXIES WILL BE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. THE TRUSTEES
RECOMMEND A VOTE FOR THE PROPOSAL BELOW.
1. To approve the Investment Advisory and Management Agreement relating to the
Portfolio between The Mentor Funds and Mentor Perpetual Advisors L.C.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
MENTOR PERPETUAL GLOBAL PORTFOLIO PROXY SOLICITED BY THE TRUSTEES
A SERIES OF THE MENTOR FUNDS
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS -- MAY 30, 1995
The undersigned hereby appoints Peter J. Quinn, Jr., Daniel J. Ludeman,
and Paul F. Costello, and each of them, proxies, with power of
substitution to each, and hereby authorizes them to represent and to
vote, as designated below, at the Special Meeting of Shareholders of the
Mentor Perpetual Global Portfolio (the "Portfolio"), a series of The
Mentor Funds (the "Trust"), on Tuesday, May 30, 1995 at 9:00 a.m.
Eastern time, and at any adjournments thereof, all of the shares of the
Portfolio which the undersigned would be entitled to vote if personally
present.
NOTE: Please sign exactly as your
name appears on this card. All
joint owners should sign. When
signing as executor, administrator,
attorney, trustee, or guardian or
as custodian for a minor, please
give full title as such. If a
corporation, please sign in full
corporate name and indicate the
signer's office. If a partner, sign
in the partnership name.
Signature(s)
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Date
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