SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant (X)
Filed by a party other than the registrant ( )
Check the appropriate box:
( ) Preliminary proxy statement
(X) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FLAGSHIP ADMIRAL FUNDS INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
(X) No fee required.
( ) $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(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-(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transactions applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid::
N/A
( ) 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:
N/A
(2) Form, schedule or registration statement no.:
N/A
(3) Filing party:
N/A
(4) Date filed:
N/A
[Flagship Letterhead]
November 6, 1996
Dear Flagship Admiral Funds Inc. Shareholder:
As recently announced, Flagship Resources Inc. plans to
merge with The John Nuveen Company. The merger with Nuveen
will help Flagship serve a broader set of investors' needs,
providing a range of investment products and services for
conservative investors and the financial advisers who serve
them.
A special meeting of shareholders will be held Thursday,
December 12, 1996, at 10:00 a.m., Central Time, in the 31st
floor conference room of John Nuveen & Co. Incorporated, 333
W. Wacker Drive, Chicago, Illinois. At this meeting, you
will be asked to vote on proposals to make certain changes
to how your fund is managed, facilitating the integration of
the Flagship and Nuveen mutual fund families.
THE BOARD OF DIRECTORS OF YOUR FUND HAS UNANIMOUSLY
DETERMINED THAT THESE PROPOSALS YOU WILL VOTE ON ARE IN THE
BEST INTERESTS OF ALL SHAREHOLDERS AND URGES YOU TO VOTE IN
FAVOR OF THE PROPOSALS. THE INTEGRATION OF FLAGSHIP AND
NUVEEN SHOULD LEAD TO THE FOLLOWING BENEFITS:
( ) Lower operating costs from expanded distribution
( ) Access to a wider range of investment products
( ) Greater choices in the method for purchasing shares
The enclosed proxy statement describes the proposals
relating to your fund in greater detail.
WHETHER OR NOT YOU PLAN TO JOIN US AT THE MEETING, PLEASE
COMPLETE, DATE AND SIGN YOUR PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE SO THAT YOUR VOTE WILL BE COUNTED.
We appreciate your continued support and confidence.
Very truly yours,
/s/ Bruce Paul Bedford
Bruce P. Bedford
Chairman of the Board
FLAGSHIP ADMIRAL FUNDS INC.
THE GOLDEN RAINBOW A JAMES ADVISED MUTUAL FUND
FLAGSHIP UTILITY INCOME FUND
One Dayton Centre
One South Main Street
Dayton, Ohio 45402
Notice of Special Meeting of Shareholders
December 12, 1996
A Special Meeting of Shareholders of each of the
above referenced Funds (each a "Fund"), each of which is a
series of the Flagship Admiral Funds Inc. (the "Admiral
Funds"), a Maryland corporation, will be held in the 31st
floor conference room of John Nuveen & Co. Incorporated 333
West Wacker Drive, Chicago, Illinois on Thursday, December
12, 1996 at 10:00 a.m., (Central Time) for the following
purposes:
1. To approve new investment advisory agreements to
take effect upon the acquisition of Flagship
Resources Inc. by The John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with John Nuveen
& Co. Incorporated.
3. To elect eight (8) Directors to the Board of
Directors.
4. To transact such other business as may properly
come before the Meeting.
Shareholders of record at the close of business on
October 18, 1996 are entitled to notice of and to vote at
the Meeting.
Michael D. Kalbfleisch
Secretary
November 6, 1996
FLAGSHIP ADMIRAL FUNDS INC.
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 1996
INTRODUCTION
This proxy statement is solicited by the Board of
Directors (the "Board") of the Admiral Funds for voting at
the special meeting of shareholders of each Fund named below
to be held at 10:00 a.m., (Central Time) on Thursday,
December 12, 1996, in the 31st floor conference room of John
Nuveen & Co. Incorporated ("Nuveen"), 333 West Wacker Drive,
Chicago, Illinois and at any and all adjournments thereof
(the "Meeting"), for the purposes set forth in the
accompanying Notice of Special Meeting of Shareholders.
This proxy statement was first mailed to shareholders on or
about November 6, 1996.
Each share of the Admiral Funds is entitled to one vote
on each matter submitted to a vote of the shareholders at
the Meeting; no shares have cumulative voting rights.
Each valid proxy will be voted in accordance with your
instructions and as the persons named in the proxy determine
on such other business as may come before the Meeting. If
no instructions are given, the proxy will be voted FOR the
election of the persons who have been nominated as Directors
for the Fund and FOR Proposals 1 and 2. Shareholders who
execute proxies may revoke them at any time before they are
voted, either by writing to the Fund or in person at the
time of the Meeting. Proxies given by telephone or
electronically transmitted instruments may be counted if
obtained pursuant to procedures designed to verify that such
instructions have been authorized.
Proposal 3 (election of Directors) requires a plurality
vote of the shares of the Admiral Funds. This means that
the eight nominees receiving the largest number of votes
will be elected. Proposals 1 and 2 require the affirmative
vote of a "majority of the outstanding voting securities" of
each Fund. The term "majority of the outstanding voting
securities" as defined in the 1940 Act means: the
affirmative vote of the lesser of (1) 67% of the voting
securities of the Fund present at the meeting if more than
50% of the outstanding shares of the Fund are present in
person or by proxy or (2) more than 50% of the outstanding
shares of the Fund.
On Proposal 3, the shareholders of the Funds will vote
in the aggregate and not by Fund. On Proposal 1 each Fund
will vote separately. On Proposal 2, the each class of
shares of each Fund will vote separately as a class.
The By-Laws of the Admiral Funds provides that the
presence at a shareholder meeting in person or by proxy of
at least a majority of the shares of the Admiral Funds
entitled to vote constitutes a quorum. Thus, the meeting
for the Admiral Funds could not take place on its scheduled
date if less than a majority of the shares of the Admiral
Funds were represented. If, by the time scheduled for the
meeting, a quorum of shareholders of the Admiral Funds is
not present or if a quorum is present but sufficient votes
in favor of any of the Proposals are not received, the
persons named as proxies may propose one or more
adjournments of the Meeting for the Admiral Funds to permit
further soliciting of proxies from shareholders of the
Admiral Funds. Any such adjournment will require the
affirmative vote of a majority of the shares of the Admiral
Funds (or series) 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 any such adjournment if
they determine that such adjournment and additional
solicitation are reasonable and in the interest of the
Admiral Funds' shareholders.
The Meeting is scheduled as a joint meeting of the
respective shareholders of both Funds because the
shareholders of both Funds will consider and vote on
essentially the same matters. The Board has determined that
the use of a joint proxy statement for the Meeting is in the
best interest of each of the Funds shareholders. In the
event that any shareholder present at the Meeting objects to
the holding of a joint Meeting and moves for an adjournment
of such Fund's Meeting to a time immediately after the
Meeting so that such Fund's Meeting may be held separately,
the persons named as proxies will vote in favor of such
adjournment.
In tallying shareholder votes, abstentions and "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 discretionary voting power
on a particular matter) will be counted for purposes of
determining whether a quorum is present for purposes of
convening the Meeting. On Proposal 3, abstentions and
broker non-votes will have no effect; the eight nominees
receiving the largest number of votes will be elected. On
Proposals 1 and 2, abstentions and broker non-votes will be
considered to be both present at the Meeting and issued and
outstanding and, as a result, will have the effect of being
counted as voted against the Proposal. Proxies solicited
and signed in accordance with voting instructions given by
telephone or electronically transmitted instruments may be
counted if obtained pursuant to procedures designed to
verify that such instructions have been authorized.
THE BOARD OF DIRECTORS OF THE ADMIRAL FUNDS RECOMMENDS
THAT YOU VOTE IN FAVOR OF ALL PROPOSALS.
The shareholders of each Fund are being asked to vote
upon three Proposals. FOR EACH FUND, APPROVAL OF EACH OF
PROPOSALS 2 AND 3 IS CONDITIONAL UPON THE APPROVAL OF
PROPOSAL 1.
The Board of the Admiral Funds has fixed the close of
business on October 18, 1996 as the record date (the "Record
Date") for determining holders of the Fund's shares entitled
to notice of and to vote at the Meeting. Each shareholder
will be entitled to one vote for each share held. At the
close of business on the Record Date, the following shares
were outstanding:
Class A Class C Total Fund
Fund Shares Shares Shares
The Golden Rainbow A James 9,724,554.088 N/A 9,724,554.088
Advised Mutual Fund
Flagship Utility Income Fund 2,193,958.422 544,141.080 2,738,099.522
DESCRIPTION OF THE TRANSACTIONS
The Meeting is being called to consider approval of new
advisory agreements and the other proposals of the Funds in
connection with the sale of Flagship Resources Inc.
("Flagship") to The John Nuveen Company, the parent company
of Nuveen and Nuveen Advisory Corp. ("Nuveen Advisory"). An
Agreement and Plan of Merger dated as of July 16, 1996,
pursuant to which Flagship and its subsidiaries, Flagship
Financial Inc. (the "Adviser") and Flagship Funds Inc. (the
"Distributor") will be acquired by The John Nuveen Company
(the "Acquisition") has been executed by the parties
thereto. In consideration for the Acquisition, shareholders
of Flagship will receive, in the aggregate, $18 million in
cash plus shares of The John Nuveen Company valued at $45
million (plus or minus certain adjustments based on the
total assets under management as of the closing date), plus
up to $20 million of additional contingent merger
consideration based on the cumulative performance of the
combined municipal bond mutual fund business, commencing
January 1, 1997 and concluding December 31, 2000 (the
"Contingent Payment Period"). Specifically, the additional
contingent consideration will be paid (i) if the municipal
bond mutual fund business and managed account business
achieves 15% annual growth in assets under management over
the Contingent Payment Period, (ii) if operating margins and
pricing for such business over such period remains at least
as favorable to Flagship and The John Nuveen Company as
current operating margins and pricing, and (iii) if certain
aggregate cost savings are achieved in such business over
such period. Subsequent to the Acquisition, The John Nuveen
Company will consider reorganizations or consolidations of
the businesses and operations of Flagship.
The Acquisition transaction is expected to close on or
prior to December 31, 1996 and is subject to various
conditions, including the receipt of shareholder approval by
funds for which the Adviser provides investment advisory
services that represent at least 92.5% of the assets of all
such funds of new investment advisory agreements with Nuveen
Advisory and the receipt of the approval of the boards of
such funds of distribution agreements with Nuveen. In
addition, the Acquisition is conditioned upon investment
advisory clients (other than the funds), which represent at
least 92.5% of the assets for which any Flagship company
provides investment advisory services, consenting to the
assignment of their contracts. Bruce P. Bedford and Richard
P. Davis have agreed to sign long-term employment contracts
with Nuveen that provide that upon consummation of the
Acquisition, Mr. Bedford shall serve as Executive Vice
President and Director of Product Management of Nuveen and
that Mr. Davis shall serve as a Vice president of Nuveen,
Director of the Broker-Dealer Group of Nuveen and General
Manager of Nuveen's Dayton operations. In addition both Mr.
Bedford and Mr. Davis will serve on Nuveen's management
committee. In the view of the Board and Flagship Financial
Inc., there should be no material changes in the portfolio
management and investment operations of the Funds after the
transaction, although investment operations will be
consolidated with those of Nuveen.
Consummation of the Acquisition would constitute an
"assignment," as that term is defined in the Investment
Company Act of 1940 (the "1940 Act"), of the Utility Income
Fund's current investment advisory agreement and the Golden
Rainbow Fund's investment management agreement with the
Adviser. As required by the 1940 Act, each such agreement
provides for its automatic termination in the event of its
assignment. In anticipation of the Acquisition, a new
investment advisory agreement between each Fund and Nuveen
Advisory is being proposed for approval by shareholders of
each Fund.
The transactions contemplated by the Acquisition were
presented to the Board of Directors of the Admiral Funds for
consideration at a number of Board meetings. The Board,
including a majority of the Directors who are not interested
persons voted to approve the transactions contemplated by
the Acquisition. The independent directors retained their
own counsel to assist them in evaluating the transaction and
the various proposals. The Board of Directors concluded
unanimously that each of the Proposals set forth in this
proxy statement is in the best interests of each Fund.
During its review and deliberations, the Board of
Directors evaluated the potential benefits, detriments and
costs to each Fund and its shareholders of the proposed
Acquisition. The Board received information regarding the
new advisory agreement and 12b-1 plan that would be entered
into by each Fund, including a comparison of the proposed
fee structure and expense ratios with the existing structure
and ratios. The Board received information from Nuveen
Advisory and Nuveen regarding their management, history,
qualifications and other relevant information, including
portfolio transaction practices. Representatives of Nuveen
made presentations and were available for questions at the
meetings. The Board conducted additional due diligence
meetings with Nuveen personnel at their offices.
With respect to the Utility Income Fund, the Board
considered the qualifications and capabilities of Nuveen
Advisory to serve as investment adviser for the Funds. In
this regard, the Board noted the fact that Nuveen Advisory
has been in operation since 1976 and has extensive
experience managing investment companies, with approximately
$32 billion in assets under management. In addition, Nuveen
Advisory is a part of a larger organization that provides
investment advice to or credit surveillance for a larger
number of registered investment companies, including open-
end funds, exchange-traded funds, and unit investment
trusts. Total assets under management or credit
surveillance by Nuveen and its affiliates is in excess of
$45 billion.
In evaluating the Acquisition, including the new
advisory agreement with Nuveen Advisory, the Board
determined that Fund shareholders would likely benefit from
affiliation with the Nuveen organization for several
reasons, including the greater financial strength of the
sponsoring entity and Nuveen's larger technological
infrastructure. In addition the Board considered that Bruce
P. Bedford and Richard P. Davis have agreed to sign long-
term employment contracts with Nuveen that provide that Mr.
Bedford shall serve as an Executive Vice President and
Director of Product Management of Nuveen and that Mr. Davis
will serve as a Vice President of Nuveen, Director of the
Broker-Dealer group of Nuveen and General Manager of
Nuveen's Dayton operations. In addition, both Mr. Bedford
and Mr. Davis will serve on Nuveen's Management Committee.
The Board also considered the fact that potential benefits
from the larger Nuveen organization were being obtained with
the expected retention of the current portfolio managers for
the Funds, as members of the Nuveen organization.
Similarly, the benefits will be obtained with no significant
changes in the portfolio management and operations of the
Funds. Moreover, with the proposed change in the investment
adviser, Fund shareholders would gain access to a broader
array of investments products through the Fund's exchange
privilege. In addition, the Board had extensive discussions
with representatives of Nuveen regarding continuity of
management functions and the level and quality of services
affecting the Funds and considered the representation by
Nuveen of its intention to maintain the continuity of
management functions and the current level and quality of
services obtained by the Funds after the Acquisition.
In evaluating the transactions contemplated by the
Acquisition, the Board also considered the qualifications
and capabilities of Nuveen to serve as principal underwriter
for the Funds and, with respect to certain classes of Fund
shares, to receive Rule 12b-1 payments. In this regard, the
Board noted the fact that Nuveen has been in operation since
1898 and serves as the principal underwriter for open-end
funds with assets in excess of $6 billion and has served as
co-managing underwriter for approximately $25 billion of
exchange-traded funds. The Board determined that Fund
shareholders would likely benefit from the proposed change
in distribution in that Nuveen brings a national sales
organization and multi-channel distribution system to the
Funds, which should result in greater distribution, with
resulting administrative and operating efficiencies to the
Funds from asset growth. The independent Directors also
considered the proposed continuing role of senior Flagship
personnel in distribution of the Fund. In addition,
following the Acquisition, the Funds would offer additional
classes of shares, which would provide existing and future
shareholders the benefit of greater choices in the method
for purchasing shares and should enhance the distribution
capabilities of the Funds with the attendant potential for
growth and administrative and operating efficiencies. The
Board noted the costs associated with sponsoring classes of
shares that require the financing of distribution expenses,
which costs would be effectively borne by Nuveen.
Specifically with regard to fees and expenses, the
Board considered the current fee and expense structure,
historical expense ratios, expense limitations and voluntary
reimbursements as compared to the fee and expense structure
proposed. The Board also reviewed the proposed fees as
compared to those of comparable funds. The Board determined
that the proposed agreements were beneficial and in the best
interests of the Funds in that the contractual rates for
investment advisory fees, Rule 12b-1 services and Rule 12b-1
distribution fees were within the range of rates for
comparable funds and, in addition, the aggregate would be
the same or lower than the current fee structure for each
current class of each Fund's shares. With regard to the
Flagship Utility Income Fund (the "Utility Income Fund"),
the Board specifically considered the proposed modification
of the graduated rates and new breakpoints used to calculate
the investment advisory fee. In evaluating the new advisory
agreement for the Utility Income Fund, the Board considered
the nature and quality of services to be provided; the
performance of funds managed by Nuveen Advisory with other
comparable funds; the proposed investment advisory fee and
expense ratios for the Fund and for comparable investment
companies, including those currently advised by Nuveen
Advisory and the anticipated profitability to Nuveen
Advisory from managing the Fund. The Board also considered
the written undertaking by Nuveen Advisory that there are no
projected decreases in dividends to shareholders or
aggregate increases in net expense ratios for each of the
Funds for the period beginning on consummation of the
Acquisition through each of the Fund's current fiscal year
end and the further representation by Nuveen Advisory of
their intention to continue the policy followed by the
Adviser with regard to the Funds to waive fees or reimburse
expenses to the extent necessary to maintain a competitive
distribution rate.
The Board considered the agreement between Flagship and
The John Nuveen Company pursuant to which The John Nuveen
Company and Flagship would share all the costs and expenses
of preparing printing and mailing the proxy statements and
other solicitation materials related to the required
approvals by the shareholders of the Admiral Funds.
The Adviser and Nuveen Advisory have assured the Board
that they intend to comply with Section 15(f) of the 1940
Act. Section 15(f) provides a non-exclusive safe harbor for
an investment adviser to an investment company or any of its
affiliated persons to receive any amount or benefit in
connection with a change in control of the investment
adviser so long as two conditions are met. First, for a
period of three years after the transaction, at least 75% of
the board members of the investment company must not be
interested persons of the Adviser or Nuveen Advisory.
Second, an "unfair burden" must not be imposed upon the
investment company as a result of such transaction or any
express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year
period after the Acquisition whereby the investment adviser,
or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or
indirectly, from the investment company or its shareholders
(other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase
or sale of securities or other property to, from or on
behalf of the investment company (other than bona fide
ordinary compensation as principal underwriter for such
investment company). The Adviser and Nuveen Advisory are
not aware of any express or implied term, condition,
arrangement or understanding that would impose an "unfair
burden" on the Funds as a result of the Acquisition. Nuveen
has agreed that it and its affiliates will take no action
that would have the effect of imposing an "unfair burden" on
the Funds as a result of the Acquisition, and will indemnify
the shareholders and the independent Directors of the
Admiral Funds for any losses from imposition of an unfair
burden.
Based upon its evaluation of the relevant information
presented to them, and in light of their fiduciary duties
under federal and state law, the Board, including all its
disinterested Directors of the Admiral Funds, unanimously
determined that the transactions contemplated by the
Acquisition, including the new advisory agreements and the
12b-1 plan and related agreements for the Funds, are
advisable and in the best interests of each Fund and their
shareholders, and recommended the approval of each of the
following Proposals by the shareholders at the Meeting.
PROPOSAL 1
APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENT
INTRODUCTION
The Adviser acts as investment manager to the Golden
Rainbow A James Advised Mutual Fund (the "Golden Rainbow
Fund") pursuant to an investment management agreement, and
James Investment Research, Inc. acts as investment adviser
to the Golden Rainbow Fund pursuant to an advisory agreement
between James Investment Research, Inc., the Adviser and the
Golden Rainbow Fund. Under this arrangement, James
Investment Research, Inc. supervises and arranges the
purchase of securities subject to the authority of the
Adviser to assure compliance with applicable law and the
Fund's investment objectives and policies. The Adviser also
acts as investment adviser to the Utility Income Fund
pursuant to a separate investment advisory agreement. The
Adviser's administrative obligations include: (i) assisting
in supervising all aspects of the Admiral Funds' operations;
(ii) providing the Admiral Funds, at Flagship's expense,
with the services of persons competent to perform such
administrative and clerical functions as are necessary in
order to provide effective corporate administration; and
(iii) providing the Admiral Funds, at Flagship's expense,
with adequate office space and related services.
Upon the Acquisition of Flagship, as described above,
the investment advisory agreement for the Utility Income
Fund and the investment management agreement for the Golden
Rainbow Fund will immediately terminate by operation of law.
In order for the Utility Income Fund to receive advisory
services from Nuveen Advisory, shareholders must approve a
new investment advisory agreement (the "New Advisory
Agreement") with Nuveen Advisory. The New Advisory
Agreement is attached hereto as Exhibit A. In addition,
shareholders of the Golden Rainbow Fund are being asked to
approve a new investment management agreement identical to
the existing investment management agreement, except Nuveen
Advisory will be substituted for the Adviser. It is
currently anticipated that the tri-party arrangement between
the Golden Rainbow Fund, the Adviser and James Investment
Research, Inc. will remain the same except that Nuveen
Advisory will be substituted for the Adviser. This contract
does not by its terms, terminate if the Adviser is
terminated under the investment management agreement.
However, to the extent Nuveen Advisory would be deemed to be
performing advisory services under the existing advisory
arrangement after the Acquisition, shareholder approval
would be necessary. Therefore by reapproving the existing
investment management agreement with Nuveen Advisory being
substituted for the Adviser, shareholders will also be
reapproving the existing advisory agreement with James
Investment Research, Inc. with Nuveen Advisory being
substituted for the Adviser.
The Board, including the independent Directors,
unanimously approved the New Advisory Agreement between the
Utility Income Fund and Nuveen Advisory, the new investment
management agreement between the Golden Rainbow Fund and
Nuveen Advisory, as well as the tri-party arrangement
between the Golden Rainbow Fund, Nuveen Advisory and James
Investment Research, Inc., subject to approval by the
shareholders of each Fund and the consummation of the
Acquisition.
James Investment Research, Inc.'s principal business
address is 1349 Fairground Road, Beavercreek, Ohio 45385.
James Investment Research, Inc., which was established in
1972 by Frank James, Ph.D., provides advice to institutional
as well as individual clients, including NYSE listed
corporations, colleges, banks, hospitals, foundations,
trusts, endowment funds and individuals. Pursuant to the
Advisory Agreements dated May 30, 1991, among the Golden
Rainbow Fund, the Adviser and James Investment Research,
Inc. with respect to the Golden Rainbow series, the Adviser
pays James Investment Research, Inc. a fee, computed daily
and payable monthly, at an annual rate of .55% of the Golden
Rainbow Fund's average daily net assets. For the fiscal
year ended June 30, 1996, the fee paid to James Investment
Research, Inc. was .55% of the average net assets on an
annualized basis.
Pursuant to an investment management agreement dated
May 30, 1991, the Adviser, as investment manager to the
Golden Rainbow Fund, is paid a fee, computed daily and
payable monthly, at an annual rate of .74% of the average
daily net assets of the Golden Rainbow Fund. Of this amount
the Adviser pays James Investment Research, Inc. as
described herein. For the fiscal year ended June 30, 1996,
the total expenses of the Golden Rainbow Fund and the fee
paid to Flagship Financial Inc. expressed as a percentage of
the average daily net assets on an annualized basis, were
1.06% and .74% respectively.
With respect to the advisory agreement dated November
27, 1984 with the Utility Income series, the Adviser is paid
a fee, computed daily and payable monthly, at an annual rate
of .50% of the average daily net assets of such series up to
and including $100,000,000, plus .45% of such net assets
over $100,000,000 up to and including $200,000,000, plus
.40% of such net assets over $200,000,000 up to and
including $300,000,000, plus .35%of such net assets over
$300,000,000 up to and including $500,000,000, plus .30% of
such net assets over $500,000,000. For the Utility Income
series' fiscal year ended June 30, 1996, the Adviser waived
its fee, and the total expenses of the Fund was .98% of the
average net assets for Class A shares and 1.52% of the
average net assets for Class C shares.
The Advisory Agreements were last submitted for
approval by shareholders on June 4, 1992, with respect to
the Golden Rainbow series and December 18, 1984 with respect
to the Utility Income series. The Advisory Agreements for
all series were last approved by the Board of Directors on
August 23, 1996.
Each Advisory Agreement will terminate automatically
upon its assignment and its continuance must be approved
annually by the Board or a majority of the particular Fund's
outstanding voting shares and in either case, by a majority
of the Board's disinterested Directors. Each Advisory
Agreement is terminable at any time without penalty by the
Directors or by a vote of a majority of the particular
Fund's outstanding voting shares on 60 days' written notice
to the Adviser, or by the Adviser on 60 days' written notice
to the Admiral Funds.
The Adviser has agreed that in the event the operating
expenses of the series (including fees paid to the Adviser
and payments to Flagship Funds Inc. but excluding taxes,
interest, brokerage and extraordinary expenses) for any
fiscal year ending on a date on which the related Advisory
Agreement is in effect exceed the expense limitations
imposed by applicable state securities laws or any
regulations thereunder, it will, up to the amount of its
fee, reduce its fee or reimburse the Fund in the amount of
such excess.
COMPARISON OF THE NEW ADVISORY AGREEMENT AND THE EXISTING
ADVISORY AGREEMENTS
Advisory Services. As noted above, the existing
advisory arrangement with respect to the Golden Rainbow Fund
will not change, except that Nuveen Advisory will be
substituted for the Adviser. However, shareholders are
being asked to approve a New Advisory Agreement with Nuveen
Advisory with respect to the Utility Income Fund. The
following discussion is qualified in its entirety by
reference to the Form of the New Advisory Agreement attached
hereto as Exhibit A. The Existing Advisory Agreement is
discussed above.
The New Advisory Agreement provides that Nuveen
Advisory will provide the same types of services and will
act as investment advisor for and manage the investment and
reinvestment of the assets of the Utility Income Fund.
Nuveen Advisory also will administer the Fund's business
affairs, and provide office facilities and equipment and
certain clerical, bookkeeping and administrative services.
For the services and facilities furnished by Nuveen
Advisory, the Utility Income Fund would pay an annual
management fee as follows:
Average Daily Net Asset Value Management Fee
For the first $125 million .5000 of 1%
For the next $125 million .4875 of 1%
For the next $250 million .4750 of 1%
For the next $500 million .4625 of 1%
For the next $1 billion .4500 of 1%
For assets over $2 billion .4250 of 1%
The New Advisory Agreement will be dated as of the date
of the consummation of the Acquisition. The Acquisition is
currently expected to close on or about December 31, 1996
(although it may occur earlier). The New Advisory Agreement
will be in effect for an initial term of up to two years,
and may continue thereafter from year to year if it is
continued at least annually by a vote of "a majority of the
outstanding voting securities" of the Fund, as defined in
the 1940 Act, or by the Board and, in either event, the vote
of a majority of the Directors who are not parties to the
agreement or interested persons of any such party, cast in
person at a meeting called for such purpose. The management
fee structure under the New Investment Advisory agreement
for the Utility Income Fund being considered for approval in
this proxy statement and described above will not be
implemented for administrative reasons until February 1,
1997 and provided further that implementation of the new
management fee structure is contingent upon the
implementation of the decrease in the Rule 12b-1 fees for
the Utility Income Fund as described in Proposal 2.
Therefore, until the date of the implementation of the new
management fee structure as described above, the Funds will
continue to pay management fees at the rates provided for in
the existing advisory agreement.
As noted below under Proposal 2, it is also proposed
that each Fund's Rule 12b-1 Plan be amended to authorize the
compensation of John Nuveen & Co. Incorporated, as
distributor of each class of both Funds pursuant to a
Distribution Agreement dated as of the consummation of the
Acquisition. Such compensation will be in the form of
service and distribution fees on the classes of shares of
the Funds. The distribution fee primarily reimburses John
Nuveen & Co. Incorporated for providing compensation to
authorized dealers, including John Nuveen & Co.
Incorporated, either at the time of sale or on an ongoing
basis. The service fee payable to John Nuveen & Co.
Incorporated is used to compensate authorized dealers,
including John Nuveen & Co. Incorporated, in connection with
the provision of ongoing account services to shareholders.
See Proposal 2. The current distribution plan only
authorizes the Fund to reimburse any underwriter,
distributor or selling agent for out-of-pocket costs and
expenditures actually incurred for financing or assisting in
the financing of any activity which is primarily intended to
result in the sale of the shares of the Fund.
The table below shows the current fee arrangements
applicable to and expense ratio of each Fund and illustrates
the pro forma effect that the New Advisory Agreement and the
new 12b-1 fees would have had on fees payable by, and
expense ratio of, each Fund had such Agreement and 12b-1
Plans been in effect during the Fund's last fiscal year.
Although there is no assurance that the Funds' actual
expenses after the Acquisition will be equal to or less than
those shown or the current actual expenses of the Funds,
Nuveen Advisory has represented in writing that there are no
projected aggregate increases in net expense ratios for the
Funds and it is expected that such ratios will be the same
or lower than such Fund's aggregate current net expense
ratios for the period beginning on the Acquisition through
the end of each Fund's current fiscal year end; actual
expenses of the Funds after the Acquisition will be a
function of the extent to which fee waivers and
reimbursements are necessary to maintain a competitive
dividend rate consistent with the past practice of the
Adviser.
FEE TABLE
Fiscal year Fiscal year Fiscal year
Average Net Average Net Average Net
Assets as of Assets as of Assets as of
6/30/96 6/30/96 6/30/96 Current Current Pro Forma Pro Forma
Fund Class A Class C Fund Mgmt Fee $ Mgmt Fee % Mgmt Fee % Mgmt Fee $*
Golden Rainbow 193,566,959 N/A 193,566,959 1,434,522 0.74 0.74 1,434,522
Utility Income 25,454,105 5,925,770 31,379,875 157,329 0.50 0.50 157,329
* Pro forma management fees calculated using the average net assets times
new breakpoints.
Fiscal year
Average Net
Assets as of
6/30/96 Current A Current A Pro Forma A Pro Forma A
Fund Class A 12b-1 Fee $ 12b-1 Fee % 12b-1 Fee $* 12b-1 Fee %*
Golden Rainbow 193,566,959 774,268 0.40 774,268 0.40**
Utility Income 25,454,105 102,095 0.40 50,908 0.20
* Pro forma 12b-1 calculated using the average net assets times new rate.
** Assumes the pro forma 12b-1 rate is the same as the existing rate,
therefore dollar amount did not change.
Fiscal year
Average Net
Assets as of
6/30/96 Current C Current C Pro Forma C Pro Forma C
Fund Class C 12b-1 Fee $ 12b-1 Fee % 12b-1 Fee $* 12b-1 Fee%*
Golden Rainbow N/A N/A N/A N/A N/A
Utility income 5,925,770 56,449 0.95 44,443 0.75
* Pro forma 12b-1 calculated using the average net assets times new rate.
Total Total Total Total Tota Total Total Total Difference
Current Current Current Current Pro Forma Pro Forma Pro Forma Pro Forma Current vs.
Expense $ Expense % Expense $ Expense % Expense $ Expense % Expense $ Expense % Proforma %
Fund Class A Class A Class C Class C Class A Class A Class C Class C Class A Class C
- --------------------------------------------------------------------------------------------------------------------------------
Golden Rainbow 2,445,841 1.26 N/A N/A 2,445,841 1.26 N/A N/A 0.00 N/A
Utility Income 387,071 1.52 122,792 2.07 335,884 1.32 110,786 1.87 0.20 0.20
* Total columns represent the sum of management fees, 12b-1 fees and other
expenses prior to any waivers or reimbursements of any fees or expenses.
** This table assumes that current "other expenses" will be the same as pro
forma "other expenses."
INFORMATION CONCERNING FLAGSHIP, THE ADVISER, THE
ADMIRAL FUNDS AND NUVEEN ADVISORY
FLAGSHIP AND THE ADVISER
The Adviser is 100% owned by Flagship, which in
turn is 100% owned by the families of Bruce P. Bedford
and Richard P. Davis and various trusts organized for
their benefit. Flagship is owned 50% by the Richard P.
Davis Trust, 25% by Susan Logan Bedford and 25% by
Julie Ann Bedford. The address of Flagship, the
Adviser, the Richard P. Davis Trust, Susan Logan
Bedford and Julie Ann Bedford is One Dayton Centre, One
South Main Street, Dayton, OH 45402.
The names, addresses and principal occupations of
the principal executive officers and the directors of
the Adviser are as follows:
Name and Address Principal Occupation
Bruce P. Bedford . . . . . . . . Chairman and Chief Executive
Chairman, Chief Executive Officer of Flagship, the
Officer and Director Adviser and the Distributor.
One Dayton Centre
One South Main Street
Dayton, Ohio 45402-2030
Richard P. Davis . . . . . . . . President and Chief Operating
President, Chief Operating Officer of Flagship, the
Officer and Director Adviser and the Distributor.
One Dayton Centre
One South Main Street
Dayton, Ohio 45402-2030
Michael D. Kalbfleisch . . . . . Vice President, Chief
Vice President, Chief Financial Financial Officer and
Officer and Treasurer Treasurer of Flagship, the
One Dayton Centre Adviser and the Distributor.
One South Main Street
Dayton, Ohio 45402-2030
James P. Dunmyer . . . . . . . . Controller of Flagship, the
Controller Adviser, and the Distributor.
One Dayton Centre
One South Main Street
Dayton, Ohio 45402-2030
In addition, Mr. Bedford is a Director and
Chairman of the Board of the Admiral Funds, Mr. Davis
is a Director and President of the Admiral Funds and
Mr. Kalbfleisch is Treasurer and Secretary of the
Admiral Funds.
THE ADMIRAL FUNDS
The current executive officers of the Admiral
Funds are listed below. Each of them hold the same
position with each series of the Admiral Funds and has
held the office shown or other offices in the same
company for the last five years. In addition, Mr.
Bedford and Mr. Davis are currently Directors of the
Admiral Funds.
NAME AND ADDRESS PRINCIPAL OCCUPATION
Bruce Bedford . . . . . . Chairman and Chief
Chairman of the Board Executive Officer of
One Dayton Centre Flagship, the Adviser and
One South Main Street the Distributor
Dayton, Ohio 45402-2030
Richard P. Davis . . . . President and Chief
President Operating Officer of
One Dayton Centre Flagship, the Adviser and
One South Main Street the Distributor
Dayton, Ohio 45402-2030
M. Patricia Madden . . . Vice President, Operations
Vice President of the Distributor
One Dayton Centre
One South Main Street
Dayton, Ohio 45402-2030
Michael D. Kalbfleisch . Vice President, Chief
Treasurer and Secretary Financial Officer and
One Dayton Centre Treasurer of Flagship, the
One South Main Street Adviser and the
Dayton, Ohio 45402-2030 Distributor
LeeAnne G. Sparling . . . Director of Portfolio
Controller Operations of the Adviser
One Dayton Centre
One South Main Street
Dayton, Ohio 45402-2030
NUVEEN ADVISORY
Nuveen Advisory is a wholly-owned subsidiary of
John Nuveen & Co. Incorporated, located at 333 West
Wacker Drive, Chicago, Illinois 60606, the oldest and
largest investment banking firm specializing in the
underwriting and distribution of tax-exempt securities.
Nuveen, which maintains the largest research department
of all investment banking firms devoted exclusively to
municipal securities, has issued over $30 billion of
tax-exempt unit trusts since 1961 and currently
sponsors 81 management investment company portfolios
with approximately $32 billion in tax-exempt securities
under management. Over 1,000,000 individuals have
invested to date in Nuveen's tax-exempt funds and
trusts. Founded in 1898, Nuveen is a majority-owned
subsidiary of The John Nuveen Company, which, in turn,
is approximately 78% owned by The St. Paul Companies,
Inc., 385 Washington Street, St. Paul, Minnesota 55102,
a management company of St. Paul, Minnesota,
principally engaged in providing property-liability
insurance through subsidiaries.
The names, addresses and principal occupations of
the principal executive officers and the directors of
Nuveen Advisory are as follows:
Name and Address Principal Occupation
Timothy R. Schwertfeger . . . . . Chairman of the Board and
Chairman of the Board and Director, John Nuveen & Co.
Director (Principal Executive Incorporated
Officer)
333 West Wacker Drive
Chicago, Illinois 60606
Anthony T. Dean . . . . . . . . . President and Director, John
President and Director Nuveen & Co. Incorporated
333 West Wacker Drive
Chicago, Illinois 60606
John P. Amboian . . . . . . . . . Executive Vice President,
Executive Vice President John Nuveen & Co.
333 West Wacker Drive Incorporated
Chicago, Illinois 60606
BOARD RECOMMENDATION THAT SHAREHOLDERS APPROVE THE NEW
ADVISORY AGREEMENTS
The Board of Directors of the Admiral Funds has
determined that the new advisory agreements are
advisable and in the best interests of each Fund's
shareholders.
THE BOARD HAS UNANIMOUSLY RECOMMENDED THAT
SHAREHOLDERS VOTE "FOR" THE NEW ADVISORY AGREEMENTS.
In making this recommendation, the Boards
considered the following factors, among others:
* Portfolio Management The Boards evaluated the
qualifications and capabilities of Nuveen Advisory
to serve as investment adviser, noting that Nuveen
Advisory has extensive experience managing
investment companies with approximately $32
billion under management. In addition, Nuveen
Advisory is a part of an organization that
provides investment advice to or credit
surveillance for a large number of open-end and
exchange-traded funds. Total assets under
management or credit surveillance by Nuveen and
affiliates is in excess of $45 billion.
* Fees and Dividends That the proposed
contractual rates for investment advisory fees,
Rule 12b-1 service and Rule 12b-1 distribution
fees were within the range of rates for comparable
funds and, in addition, the aggregate would be the
same or lower than the current fee structure for
each current class of each Fund's shares. In
addition, the Board considered the written
undertaking by Nuveen Advisory that there are no
projected decreases in dividends to shareholders
or aggregate increases in net expense ratios for
each of the Funds for the period beginning on
consummation of the Acquisition through each of
the Fund's current fiscal year end and the further
representation by Nuveen Advisory of their
intention to continue the policy followed by the
Advisor with regard to the Funds to waive fees or
reimburse expenses to the extent necessary to
maintain competitive distribution rate.
* Increased Investment Choices The Utility Income
Fund would offer additional classes of shares,
which would provide existing and future
shareholders the benefit of an expanded set of
purchase options.
* Continuity of Portfolio Management and Management
Personnel It is expected that, subject to normal
personnel turnover, the current portfolio managers
for the Funds will continue as managers of the
Funds and Bruce Bedford and Richard Davis have
agreed to sign long-term employment contracts with
Nuveen.
* Continuity of Management Functions and Level and
Quality of Services The Board considered the
representation by Nuveen of its intention to
maintain the continuity of management functions
and the current level and quality of services
obtained by the Funds after the Acquisition.
PROPOSAL 2
APPROVAL OF 12B-1 PLAN
Rule 12b-1, adopted by the SEC under the 1940 Act,
governs the adoption of distribution plans. The rule
provides, among other things, that an investment
company may not engage directly or indirectly in
financing any activity which is primarily intended to
result in the sale of its shares except pursuant to a
written plan (the "Plan") adopted in accordance with
the rule, that contains certain provisions that have
been approved by the Board and shareholders. On July
15, 1996, the Board, including all of the disinterested
Directors, voted to approve the existing 12b-1 Plan for
the Golden Rainbow Fund amended to substitute John
Nuveen & Co. Incorporated as distributor and a new 12b-
1 plan for the Utility Income Fund and directed that it
be submitted to shareholders of each Fund at the
Meeting along with a recommendation that each
shareholder approve such respective 12b-1 Plan. The
fees for the proposed Plans are the same as or lower
than the existing Plans and they operate in
substantially the same manner. The existing Plan for
the Utility Income Fund permits the Distributor to
reimburse itself out of the amounts it receives under
the Plan for its expenditures, including its ordinary
overhead expenses such as rent and salaries,
irrespective of whether it is the dealer of record for
particular shares, while the proposed Plan requires
Nuveen to pay the entire amount it receives under the
Plan to authorized dealers, and may reimburse itself
only to the extent that it is the dealer of record for
particular shares.
A form of the Plan for the Utility Income Fund is
attached as Exhibit B and the following summary is
qualified in its entirety by reference to such Exhibit
B. If approved by the shareholders, the Plan will
become effective on the date of the consummation of the
Acquisition described above, subject to approval of
Proposal 1.
Flagship Funds Inc., acting as principal
underwriter and distributor for the Admiral Funds
distributes each class of each Fund's shares. Both
Funds are authorized to issue multiple classes of
shares under the current Rule 18f-3 and 12b-1 Plan.
The Golden Rainbow Fund currently offers only one class
of shares, while the Utility Income Fund currently
offers two classes--Class A and Class C, although it is
allowed to issue two additional classes--Class B and
Class Y, which are not currently being offered. After
the Acquisition, it is expected that the Utility Income
Fund will offer Class B and Class R Shares, which
correspond to the Class B and Class Y shares currently
authorized to be offered.
New 12b-1 Plan for Utility Income Fund. Under the
new Plan, the Fund is authorized to compensate John
Nuveen & Co. Incorporated (the "New Distributor"), as
distributor of each class of each Fund pursuant to a
Distribution Agreement dated as of the consummation of
the Acquisition. For the Utility Income Fund the New
Distributor's compensation will initially be at the
same rate as currently exists under the existing 12b-1
plan as described in the Fee Table in Proposal 1 until
February 1, 1997 and thereafter will be: a service fee
of .20% of the average net assets of the Class A shares
of the Fund; a service fee of .20% of the average net
assets of the Class B shares of the Fund, plus a
distribution fee of .75% of the average daily net
assets of the Class B shares the Fund; and a service
fee of .20% of the average net assets of the Class C
shares of the Fund, plus a distribution fee of .55% of
the average daily net assets of the Class C shares the
Fund. The distribution fee primarily reimburses the
New Distributor for providing compensation to
authorized dealers, including the New Distributor,
either at the time of sale or on an ongoing basis. The
service fee payable to the New Distributor is used to
compensate authorized dealers, including the New
Distributor, in connection with the provision of
ongoing account services to shareholders. Such
compensation will be accrued daily and paid monthly.
Such fees may be in addition to fees paid to the New
Distributor or to other authorized dealers and brokers
for providing other services to shareholders of the
Fund.
The services for which such authorized dealers
will be compensated include, but are not limited to,
maintaining account records for shareholders who
beneficially own shares; answering inquiries relating
to shareholders' accounts, the policies of the Fund and
the performance of their investment; providing
assistance and handling the transmission of funds in
connection with the purchase, redemption and exchange
orders for shares; providing assistance in connection
with changing account setups and enrolling in various
optional fund services; producing and disseminating
shareholder communications or servicing materials; the
ordinary or capital expenses, such as equipment, rent,
fixtures, salaries, bonuses, reporting and
recordkeeping and third party consultancy or similar
expenses, relating to any activity for which payment is
authorized by the Board; and the financing of any other
activity for which payment is authorized by the Board.
New 12b-1 Plan for Golden Rainbow Fund.
Shareholders of the Golden Rainbow Fund are being asked
to approve a new 12b-1 Plan identical to such Fund's
existing 12b-1 Plan, except the New Distributor will be
substituted for the Distributor.
Existing 12b-1 Plan. The existing Plan authorizes
the Fund to reimburse any underwriter, distributor or
selling agent (a "Seller") for out-of-pocket costs and
expenditures actually incurred for financing or
assisting in the financing of any activity which is
primarily intended to result in the sale of the shares
of the Fund. The services for which any such Seller is
reimbursed under the existing Plan is substantially
similar to that under the proposed Plans. The existing
Plan also authorizes the payment of monthly fees to
non-affiliated entities who provide marketing and
distribution services to the Fund. Reimbursement is
made only to Sellers with which the Fund has entered
into a Distribution Agreement. Such authority is
subject to the discretion of the Board.
The table below shows, as to the Rule 12b-1 Plan
for each class of Shares of each Fund, the date
adopted, the date of last amendment (if any), the date
last approved by the Directors and the date to which it
continues.
RULE 12B-1 PLAN
APPROVAL
BY
FUND ADOPTED AMENDED DIRECTORS CONTINUED TO
Golden Rainbow 5/30/91 _____ 8/23/96 8/23/97
Utility Income 8/24/83 6/5/92 8/23/96 8/23/97
The proposed Rule 12b-1 Plan will be in effect
until August 1, 1997, and may continue thereafter from
year to year for a class if specifically approved at
least annually by vote of "a majority of the
outstanding voting securities" of that class, as
defined under the 1940 Act, or by the Board, including,
in either event, the vote of a majority of the "non-
interested" Directors, cast in person at a meeting
called for such purpose.
Pursuant to the proposed Rule 12b-1 Plan, Nuveen
will prepare reports to the Board on a quarterly basis
for each class of the Fund's Shares showing the amounts
paid to the various firms and such other information as
from time to time the Board may reasonably request.
Rule 12b-1 requires the Board to review such reports at
least quarterly.
In approving the proposed Rule 12b-1 Plan, the
Board determined, as with the current Rule 12b-1 Plan,
that there is a reasonable likelihood that the proposed
Rule 12b-1 Plan would benefit the Fund and its
shareholders. In doing so, the Board considered
several factors, including that the proposed Rule 12b-1
Plan would (i) have the same or lower fees, (ii) enable
investors to choose the purchasing option best suited
to their individual situations, thereby encouraging
current shareholders to make additional investments in
each Fund and attracting new investors and assets to
the Funds to the benefit of each Fund and its
shareholders, (iii) facilitate distribution of each
Fund's shares, (iv) help maintain the competitive
position of each Fund in relation to other funds that
have implemented or are seeking to implement similar
distribution arrangements, and (v) permit possible
administrative and operating efficiencies through
increased fund size.
BOARD RECOMMENDATION
As a result of its consideration of the foregoing
factors, the Board voted to approve the new Rule 12b-1
Plan and to submit it to the shareholders for their
approval.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE NEW RULE 12B-1 PLAN.
PROPOSAL 3
ELECTION OF BOARD OF DIRECTORS
A condition to the consummation of the Acquisition
is that the Admiral Funds' Board of Directors comply
with Section 15(f) of the 1940 Act. The Board is not
currently composed of 75% of independent directors.
Section 15(f) provides, in pertinent part, that for a
period of three years after the Acquisition, at least
75% of the members of the Board may not be "interested
persons" (as defined in the 1940 Act) of Flagship or
Nuveen. Therefore it is necessary to elect additional
directors.
The current disinterested Directors (Messrs.
Bremner, Castellano, Nezi and Schneider), have
nominated eight (8) persons to take office upon each
person's election by the shareholders. The nominees
include two (2) of the Admiral Funds' current
disinterested Directors (Messrs. Bremner and
Schneider), four additional disinterested nominees (all
four of whom also serve as disinterested members of the
boards of other mutual funds managed by Nuveen
Advisory) and two nominees who are directors of Nuveen
Advisory and who also serve as board members of Nuveen
Advisory managed funds. Messrs. Bremner and Schneider
also have been nominated to serve as members of other
mutual funds managed by Nuveen Advisory.
The nominees, if elected, will take office upon
the consummation of the Acquisition. The term of each
person elected as Director will be from election until
the next meeting held for the purpose of electing
Directors and until his or her successor is elected and
qualified. If the advisory agreements are not approved
by Shareholders or if the Acquisition is not
consummated, the current Directors of the Admiral Funds
will continue to serve as the Admiral Funds' Board.
All of the nominees have consented to serve as
Directors. However, if any nominee is not available
for election at the time of the Meeting, the proxies
may be voted for such other person(s) as shall be
determined by the persons acting under the proxies in
their discretion.
The following table shows each nominee who is
standing for election and his age, principal occupation
or employment during the past five years and other
public board memberships. The table also shows the
year in which the nominee was elected to the Board of
Directors of the Admiral Funds, or whether the nominee
is standing for election for the first time at this
Meeting, in addition to shareholdings in each Fund.
SHARES/PERCENTAGE
NAME, AGE AND FIVE- BENEFICIALLY OWNED
YEAR BUSINESS LENGTH OF AS OF AUG. 8, 1996
EXPERIENCE SERVICE BY FUND
Robert P. Bremner (56) Since 1983 Golden Rainbow-5,092.852**
Currently a private
investor and management
consultant.
William J. Schneider (52) Since 1983 Golden Rainbow-4,525.68**
Currently a senior Utility Income-355.477**
partner at Miller-
Valentine Partners,
Vice President
Miller-Valentine
Realty, Inc.
Lawrence H. Brown (61) Nominee None
Retired in August
1989 as Senior Vice
President of the
Northern Trust Company.
*Timothy R. Schwertfeger (47) Nominee None
Chairman (since
July 1996) and
Director of The John
Nuveen Company, John
Nuveen & Co.
Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;
prior thereto,
Executive Vice
President of The
John Nuveen Company,
John Nuveen & Co.
Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.
Anne E. Impellizzeri (63) Nominee None
President and Chief
Executive Officer of
Blanton-Peale
Institute (since
December 1990);
prior thereto, Vice
President of New
York City
Partnership (from
1987 to 1990) and
Vice President of
Metropolitan Life
Insurance Company
(from 1980 to 1987).
Margaret K. Rosenheim (69) Nominee None
Helen Ross Professor
of Social Welfare
Policy, School of
Social Service
Administration,
University of Chicago.
Peter R. Sawers (63) Nominee None
Adjunct Professor of
Business and
Economics,
University of
Dubuque, Iowa;
Adjunct Professor,
Lake Forest Graduate
School of
Management, Lake
Forest, Illinois
(since January
1992); prior
thereto, Executive
Director, Towers
Perrin Australia
(management
consultant);
Chartered Financial
Analyst; Certified
Management Consultant.
*Anthony T. Dean (51) Nominee None
Director and (since
July 1996) President
of The John Nuveen
Company, John
Nuveen & Co.
Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.;
prior thereto
Executive Vice
President of The
John Nuveen Company,
John Nuveen & Co.
Incorporated, Nuveen
Advisory Corp. and
Nuveen Institutional
Advisory Corp.
* Directors who are or would be "interested persons"
as defined in the Investment Company Act of 1940.
** Less than 1%.
R. Bremner and W. Schneider serve as board members
of two registered investment companies advised by the
Adviser. L. Brown, A. Dean, P. Sawers, T. Schwertfeger,
A. Impellizzeri and M. Rosenheim serve as board members
of 60 registered investment companies advised by Nuveen
Advisory. In addition, A. Dean and T. Schwertfeger serve
as board members of six registered investment companies
advised by Nuveen Institutional Advisory Corp. The current
Directors of the Admiral Funds are Robert P. Bremner,
William J. Schneider, Bruce P. Bedford, Joseph F. Castellano,
Richard P. Davis and Paul F. Nezi.
The Board met 7 times during the Admiral Funds'
fiscal year ended June 30, 1996. Each then current
Director attended 75% or more of the respective
meetings of the Board and the committees of which he
was a member. The Board does not have an audit
committee, nominating committee or a compensation
committee.
The Admiral Funds pay the disinterested Directors
$1,250 per quarter each. As reflected above, the
Directors currently serve as board members of one other
investment companies for which the Adviser serves as
investment adviser. Directors or officers who are
"interested persons" receive no compensation from the
Admiral Funds.
The table below shows, for each disinterested
Director, the aggregate compensation paid or accrued by
the Admiral Funds for the fiscal year ended June 30,
1996 and the total compensation that all existing Funds
paid to each trustee during the calendar year 1995.
Total
Compensation
Aggregate From Admiral
Compensation Funds
From and
Admiral Fund Complex
Trustee Funds Paid to Directors
Robert P. $5,000 $25,500
Bremner
Joseph F. $5,000 $26,500
Castellano
William J. $5,000 $26,500
Schneider
Paul F. Nezi $5,000 $26,500
It is anticipated that, after completion of the
Acquisition, the restructured Board of the Admiral
Funds will elect new officers who are expected to
include persons affiliated with Nuveen.
As of August 8, 1996, the Directors and executive
officers of the Admiral Funds as a group owned 23,757
shares of the Admiral Funds. As of August 8, 1996, no
person known to the Admiral Funds owned beneficially
more than five percent of the shares of any class of
any Fund.
OTHER INFORMATION
GENERAL
The cost of preparing, printing and mailing the
enclosed proxy, accompanying notice and proxy statement
and all other costs in connection with solicitation of
proxies related to the required approvals will be paid
by Flagship and The John Nuveen Company, including any
additional solicitation made by letter, telephone or
telegraph. In addition to solicitation by mail,
certain officers and representatives of the Admiral
Funds, officers and employees of Flagship and Nuveen
and certain financial services firms and their
representatives, who will receive no extra compensation
for their services, may solicit proxies by telephone,
telegram or personally. In addition, Flagship and
Nuveen may retain a firm to solicit proxies on behalf
of the Board; the fee for which will be borne by the
Adviser and Nuveen. A COPY OF YOUR FUND'S ANNUAL
REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 1996 IS
AVAILABLE WITHOUT CHARGE UPON REQUEST BY WRITING TO THE
ADMIRAL FUNDS AT ONE DAYTON CENTRE, ONE SOUTH MAIN
STREET, DAYTON OH, 45402 OR BY CALLING 1-800-414-7447.
PROPOSALS OF SHAREHOLDERS
Under the By-Laws and under Maryland law, the
Admiral Funds are not required to hold annual
shareholder meetings, but it will hold special meetings
as required or deemed desirable, or upon request by
holders of 25% of the shares. Since the Admiral Funds
do not hold regular meetings of shareholders, the
anticipated date of the next special 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 Admiral Funds no later than
four months prior to the date proxy statements are
mailed to shareholders.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board is not aware of any matters that will be
presented for action at the Meeting other than the
matters set forth herein. Should any other matters
requiring a vote of shareholders arise, the proxy in
the accompanying form will confer upon the person or
persons entitled to vote the shares represented by such
proxy the discretionary authority to vote matters in
accordance with their best judgment.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
By order of the Board of Directors,
Michael D. Kalbfleisch
Secretary
EXHIBIT A
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of
, 1996, by and between FLAGSHIP UTILITY INCOME
FUND, a Maryland Corporation (the "Fund"), and NUVEEN
ADVISORY CORP., a Delaware corporation (the "Adviser").
WITNESSETH
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the
parties hereto as follows:
1. The Fund hereby employs the Adviser to act as the
investment adviser for, and to manage the
investment and reinvestment of the assets of each
of the Fund's portfolios as may exist from time to
time in accordance with the Fund's investment
objective and policies and limitations relating to
such portfolio, and to administer the Fund's
affairs to the extent requested by and subject to
the supervision of the Board of Directors of the
Fund for the period and upon the terms herein set
forth. The investment of the assets of each
portfolio shall be subject to the Fund's policies,
restrictions and limitations with respect to
securities investments as set forth in the Fund's
registration statement on Form N-lA under the
Securities Act of 1933 and the Investment Company
Act of 1940 covering the Fund's shares of
beneficial interest, including the Prospectus and
Statement of Additional Information forming a part
thereof, all as filed with the Securities and
Exchange Commission and as from time to time
amended, and all applicable laws and the
regulations of the Securities and Exchange
Commission relating to the management of
registered open-end, diversified management
investment companies.
The Adviser accepts such employment and agrees
during such period to render such services, to
furnish office facilities and equipment and
clerical, bookkeeping and administrative services
(other than such services, if any, provided by the
Fund's transfer agent and shareholder service
agent) for the Fund, to permit any of its officers
or employees to serve without compensation as
Directors or officers of the Fund if elected to
such positions, and to assume the obligations
herein set forth for the compensation herein
provided. The Adviser shall, for all purposes
herein provided, be deemed to be an independent
contractor and, unless otherwise expressly
provided or authorized, shall have no authority to
act for nor represent the Fund in any way, nor
otherwise be deemed an agent of the Fund.
2. For the services and facilities described in
Section 1, the Fund will pay to the Adviser, at
the end of each calendar month, an investment
management fee related to each of the Fund's
portfolios. For each portfolio, calculated
separately, the fees shall be computed at the rate
of:
_______________________________________________________
RATE NET ASSETS
.5000% For the first $125 million
.4875% For the next $125 million
.4750% For the next $250 million
.4625% For the next $500 million
.4500% For the next $1 billion
.4250% For assets over $2 billion
For the month and year in which this Agreement
becomes effective, or terminates, and for any
month and year in which a portfolio is added or
eliminated from the Fund, there shall be an
appropriate proration on the basis of the number
of days that the Agreement shall have been in
effect, or the portfolio shall have existed,
during the month and year, respectively. The
services of the Adviser to the Fund under this
Agreement are not to be deemed exclusive, and the
Adviser shall be free to render similar services
or other services to others so long as its
services hereunder are not impaired thereby.
Regardless of any of the above provisions, the
Adviser guarantees that the total expenses of the
Fund in any fiscal year, exclusive of taxes,
interest, brokerage commissions, and extraordinary
expenses such as litigation costs, shall not
exceed, and the Adviser undertakes to pay or
refund to the Fund any amount up to but not
greater than the aggregate fees received by the
Adviser under this Agreement for such fiscal year,
the limitation imposed by any jurisdiction in
which the Fund continues to offer and sell its
shares after exceeding such limitation.
The net asset value of the Fund shall be
calculated as provided in the Articles of
Incorporation of the Fund. On each day when net
asset value is not calculated, the net asset value
of a share of beneficial interest of the Fund
shall be deemed to be the net asset value of such
share as of the close of business on the last day
on which such calculation was made for the purpose
of the foregoing computations.
3. The Adviser shall arrange for officers or
employees of the Adviser to serve, without
compensation from the Fund, as Directors, officers
or agents of the Fund, if duly elected or
appointed to such positions, and subject to their
individual consent and to any limitations imposed
by law.
4. Subject to applicable statutes and regulations, it
is understood that officers, Directors, or agents
of the Fund are, or may be, interested in the
Adviser as officers, directors, agents,
shareholders or otherwise, and that the officers,
directors, shareholders and agents of the Adviser
may be interested in the Fund otherwise than as
Directors, officers or agents.
5. The Adviser shall not be liable for any loss
sustained by reason of the purchase, sale or
retention of any security, whether or not such
purchase, sale or retention shall have been based
upon the investigation and research made by any
other individual, firm or corporation, if such
recommendation shall have been selected with due
care and in good faith, except loss resulting from
willful misfeasance, bad faith, or gross
negligence on the part of the Adviser in the
performance of its obligations and duties, or by
reason of its reckless disregard of its
obligations and duties under this Agreement.
6. The Adviser currently manages other investment
accounts and funds, including those with
investment objectives similar to the Fund, and
reserves the right to manage other such accounts
and funds in the future. Securities considered as
investments for a Fund portfolio may also be
appropriate for other Fund portfolios or for other
investment accounts and funds that may be managed
by the Adviser. Subject to applicable laws and
regulations, the Adviser will attempt to allocate
equitably portfolio transactions among the Fund's
portfolios and the portfolios of its other
investment accounts and funds purchasing
securities whenever decisions are made to purchase
or sell securities by a Fund portfolio and another
Fund's portfolio or one or more of such other
accounts or funds simultaneously. In making such
allocations, the main factors to be considered by
the Adviser will be the respective investment
objectives of the Fund portfolio or portfolios
purchasing such securities and such other accounts
and funds, the relative size of portfolio holdings
of the same or comparable securities, the
availability of cash for investment by the Fund
portfolios and such other accounts and funds, the
size of investment commitments generally held by
the Fund portfolios and such accounts and funds,
and the opinions of the persons responsible for
recommending investments to the Fund and such
other accounts and funds.
7. This Agreement shall be in effect until
[ ] unless and until terminated
by either party as hereinafter provided, and shall
continue in force from year to year thereafter,
but only as long as such continuance is
specifically approved, at least annually, in the
manner required by the Investment Company Act of
1940.
This Agreement shall automatically terminate in
the event of its assignment, and may be terminated
at any time without the payment of any penalty by
the Fund or by the Adviser upon sixty (60) days'
written notice to the other party. The Fund may
effect termination by action of the Board of
Directors, or, with respect to any Fund portfolio,
by vote of a majority of the outstanding voting
securities of that portfolio, accompanied by
appropriate notice.
This Agreement may be terminated, at any time,
without the payment of any penalty, by the Board
of Directors of the Fund, or, with respect to any
Fund portfolio, by vote of a majority of the
outstanding voting securities of that portfolio,
in the event that it shall have been established
by a court of competent jurisdiction that the
Adviser, or any officer or director of the
Adviser, has taken any action which results in a
breach of the covenants of the Adviser set forth
herein.
Termination of this Agreement shall not affect the
right of the Adviser to receive payments on any
unpaid balance of the compensation, described in
Section 2, earned prior to such termination
8. If any provision of this Agreement shall be held
or made invalid by a court decision, statute,
rule, or otherwise, the remainder shall not be
thereby affected.
9. The Adviser and its affiliates reserve the right
to grant, at any time, the use of the name
"Nuveen" or the name "Flagship", or any
approximation or abbreviation thereof, to any
other investment company or business enterprise.
Upon termination of this Agreement by either
party, or by its terms, the Fund shall thereafter
refrain from using any name of the Fund which
includes "Nuveen" or "Flagship" or any
approximation or abbreviation thereof, or is
sufficiently similar to such name as to be likely
to cause confusion with such name, and shall not
allude in any public statement or advertisement to
the former association.
10. Any notice under this Agreement shall be in
writing, addressed and delivered or mailed,
postage prepaid, to the other party at such
address as such other party may designate for
receipt of such notice.
11. The Fund's Articles of Incorporation is on file
with the Secretary of the State of Maryland. This
Agreement is executed on behalf of the Fund by the
Fund's officers as officers and not individually
and the obligations imposed upon the Fund by this
Agreement are not binding upon any of the Fund's
Directors, officers or shareholders individually
but are binding only upon the assets and property
of the Fund.
IN WITNESS WHEREOF, the Fund and the Adviser have
caused this Agreement to be executed on the day and
year above written.
FLAGSHIP UTILITY INCOME FUND NUVEEN ADVISORY
CORP.
by:____________________________ by:_________________________
Vice President Vice President
Attest:________________________ Attest:_______________________
Secretary Assistant Secretary
EXHIBIT B
FORM OF PLAN OF DISTRIBUTION AND SERVICE
PURSUANT TO RULE 12B-1
[UTILITY INCOME FUND]
____________,1996
WHEREAS, Flagship Admiral Funds Inc., a Maryland Corporation
(the "Fund") engages in business as an open end management
investment company and is registered under the Investment Company
Act of 1940, as amended (the "Act");
WHEREAS, the Fund employs John Nuveen & Co. Incorporated (the
"Distributor") as distributor of the shares of the Fund (the
"Shares") pursuant to a Distribution Agreement dated as of
, 1996;
WHEREAS, the Fund is authorized to issue Shares in different
classes ("Classes").
WHEREAS, the Fund desires to adopt a Plan of Distribution and
Service pursuant to Rule 12b-1 under the Act ("Rule 12b-1 and the
Board of Directors of the Fund has determined that there is a
reasonable likelihood that adoption of this Plan of Distribution
and Service will benefit the Fund and its shareholders;
WHEREAS, the Fund has adopted a Multiple Class Plan Pursuant
to Rule 18f-3 (the "Rule 18f-3 Plan") to enable the various
Classes of Shares to be granted different rights and privileges
and to bear different expenses, and has an effective registration
statement on file with the SEC containing a Prospectus describing
such Classes of Shares;
WHEREAS, as described in the Rule 18f-3 Plan, the purchase of
Class A Shares is generally subject to an up-front sales charge,
as set forth in the Fund's Prospectus and Statement of Additional
Information, and the purchase of Class B and Class C Shares will
not be subject to an up-front sales charge, but in lieu thereof
the Class B Shares will be subject to a declining contingent
deferred sales charge and Class C Shares will be subject to an
asset-based distribution fee, as described below; and
WHEREAS, Shares representing an investment in Class B will
automatically convert to Class A Shares 8 years after the
investment, as described in the Prospectus for the Shares-,
NOW, THEREFORE, the Fund hereby adopts, and the Distributor
hereby agrees to the terms of, this Plan of Distribution and
Service (the "Plan") in accordance with Rule 12b-1, on the
following terms and conditions:
1. (a) The Fund is authorized to compensate the Distributor for
services performed and expenses incurred by the
Distributor in connection with the distribution of
Shares of Class A, Class B and Class C of the Fund and
the servicing of accounts holding such Shares.
(b) The amount of such compensation paid during the period
beginning on January 1, 1997 through January 31, 1997
shall consist:
(i) with respect to Class A Shares of a Service Fee not
to exceed .20% of average daily net assets of the
Class A Shares of the Fund, plus a Distribution Fee
not to exceed .20% of average daily net assets of
the Class A Shares of the Fund;
(ii) with respect to Class B Shares of a Service Fee not
to exceed .20% of average daily net assets of the
Class B Shares of the Fund, plus a Distribution Fee
not to exceed .75% of average daily net assets of
the Class B Shares of the Fund; and
(iii) with respect to Class C Shares of a Service
Fee not to exceed .20% of average daily net
assets of the Class C Shares of the Fund, plus
a Distribution Fee not to exceed .75% of
average daily net assets of the Class C Shares
of the Fund. Such compensation shall be
calculated and accrued daily and paid monthly
or at such other intervals as the Board of
Directors may determine.
(c) The amount of such compensation paid beginning February
1, 1997 and for any one year thereafter shall consist
(i) with respect to Class A Shares of a Service Fee not
to exceed .20% of average daily net assets of the
Class A Shares of the Fund;
(ii) with respect to Class B Shares of a Service Fee not
to exceed .20% of average daily net assets of the
Class B Shares of the Fund, plus a Distribution Fee
not to exceed .75% of average daily net assets of
the Class B Shares of the Fund; and
(iii) with respect to Class C Shares of a Service
Fee not to exceed .20% of average daily net
assets of the Class C Shares of the Fund, plus
a Distribution Fee not to exceed .55% of
average daily net assets of the Class C Shares
of the Fund. Such compensation shall be
calculated and accrued daily and paid monthly
or at such other intervals as the Board of
Directors may determine.
(d) With respect to Class A Shares, the Distributor shall
pay any Service Fees it receives under the Plan for
which a particular underwriter, dealer, broker, bank or
selling entity having a Dealer Agreement in effect
("Authorized Dealer", which may include the Distributor)
is the dealer of record to such Authorized Dealers to
compensate such organizations for providing services to
shareholders relating to their investment. The
Distributor may retain any Service Fees not so paid.
(e) With respect to the Class B Shares, the Distributor:
(i) shall retain the Distribution Fee to compensate it
for costs associated with the distribution of the
Class B Shares, including the payment of broker
commissions to Authorized Dealers (which may
include the Distributor) who were the dealer of
record with respect to the purchase of those
shares; and
(ii) shall pay any Service Fees it receives under the
Plan for which a particular Authorized Dealer is
the dealer of record (which may include the
Distributor) to such Authorized Dealers to
compensate such organizations for providing
services to shareholders relating to their
investment; provided, however, that the Distributor
shall be entitled to retain, for the first year
after purchase of the Class B Shares, the Service
Fee to the extent that it may have pre-paid the
Service Fee to the Authorized Dealer of record.
The Distributor may retain any Distribution or
Service Fees not so paid.
(f) With respect to the Class C Shares, the Distributor:
(i) shall pay the Distribution Fee it receives under
the Plan with respect to Class C Shares for which a
particular Authorized Dealer is the dealer of
record (which may include the Distributor) to such
Authorized Dealers to compensate such organizations
in connection with such share sales; provided,
however, that the Distributor shall be entitled to
retain, for the first year after purchase of the
Class C Shares, the Distribution Fee to the extent
that it may have pre-paid the Distribution Fee to
the Authorized Dealer of record; and
(ii) shall pay any Service Fees it receives under the
Plan for which a particular Authorized Dealer is
the dealer of record (which may include the
Distributor) to such Authorized Dealers to
compensate such organizations for providing
services to shareholders relating to their
investment; provided, however, that the Distributor
shall be entitled to retain, for the first year
after purchase of the Class B Shares, the Service
Fee to the extent that it may have pre-paid the
Service Fee to the Authorized Dealer of record.
The Distributor may retain any Distribution or
Service Fees not so paid.
(g) Services for which such Authorized Dealers may receive
Service Fee payment include any or all of the following:
maintaining account records for shareholders who
beneficially own Shares; answering inquiries relating to
the shareholders' accounts, the policies of the Fund and
the performance of their investment; providing
assistance and handling transmission of funds in
connection with purchase, redemption and exchange orders
for Shares; providing assistance in connection with
changing account setups and enrolling in various
optional fund services; producing and disseminating
shareholder communications or servicing materials; the
ordinary or capital expenses, such as equipment, rent,
fixtures, salaries, bonuses, reporting and recordkeeping
and third party consultancy or similar expenses,
relating to any activity for which payment is authorized
by the Board; and the financing of any other activity
for which payment is authorized by the Board.
(h) Payments of Distribution or Service Fees to any
organization as of any quarter-end will not exceed the
appropriate amount based on the annual percentages set
forth in subparagraphs (d), (e) and (f) above, based on
average net assets of accounts for which such
organization appeared on the records of the Fund and/or
its transfer agent as the organization of record during
the preceding quarter.
2. This Plan shall not take effect until the Plan, together with
any related agreements), has been approved by votes of a
majority of both (a) the Board of Directors of the Fund, and
(b) those Directors of the Fund who are not "interested
persons" of the Fund (as defined in the Act) and who have no
direct or indirect financial interest in the operation of the
Plan or any agreements related to it (the "Rule 12b-1
Directors") cast in person at a meeting (or meetings) called
for the purpose of voting on the Plan and such related
Agreement(s).
3. This Plan shall remain in effect until August 1, 1997, and
shall continue in effect thereafter so long as such
continuance is specifically approved at least annually in the
manner provided for approval of this Plan in paragraph 2.
4. The Distributor shall provide to the Board of Directors of
the Fund and the Board shall review, at least quarterly, a
written report of distribution- and service-related
activities, Distribution Fees, Service Fees, and the purposes
for which such activities were performed and expenses
incurred.
5. This Plan may be terminated at any time by vote of a majority
of the Rule 12b-1 Directors or by vote of a majority (as
defined in the Act) of the outstanding voting Shares of the
Fund.
6. This Plan may not be amended to increase materially the
amount of compensation payable by the Fund with respect to
Class A, Class B or Class C Shares under paragraph 1 hereof
unless such amendment is approved by a vote of at least a
majority (as defined in the Act) of the outstanding voting
Shares of that Class of Shares. No material amendment to the
Plan shall be made unless approved in the manner provided in
paragraph 2 hereof.
7. While this Plan is in effect, the selection and nomination of
the Directors who are not interested persons (as defined in
the Act) of the Fund shall be committed to the discretion of
the Directors who are not such interested persons.
8. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 4
hereof, for a period of not less than six years from the date
of the Plan, any such agreement or any such report, as the
case may be, the first two years in an easily accessible
place.
1996 SPECIAL MEETING
FLAGSHIP ADMIRAL FUNDS INC.
A Special Meeting of Shareholders will be held on Thursday, December 12,
1996, at 10:00 a.m., Chicago Time, in the 31st floor conference room of
John Nuveen & Co. Incorporated, 333 W. Wacker Drive, Chicago, Illinois at
which shareholders will be asked to consider and approve several proposals
relating to the proposed merger of Flagship Resources Inc. with The John
Nuveen Company. At this meeting, you will be asked to vote on proposals to
make certain changes to how your fund is managed to facilitate the
integration of the Nuveen and Flagship mutual fund families.
The Board of your fund has unanimously determined that these proposals are
in the best interests of shareholders and urges you to vote in favor of the
proposals. The integration of Nuveen and Flagship should lead to the
following benefits:
Lower operating costs from expanded distribution
Access to a wider range of investment products
Greater choices in the method of purchasing shares
Whether or not you plan to join us, please complete, date and sign your
proxy card and return it in the enclosed envelope so that your vote will be
counted.
Please fold at perforation before detaching
- ------------------------------------------------------------------------------
PROXY BALLOT
THE GOLDEN RAINBOW A JAMES ADVISED MUTUAL FUND
COMMON SHARES
Proxy Solicited by the Board of Directors
For Special Meeting of Shareholders
To be Held on December 12, 1996
The undersigned hereby appoints Bruce P. Bedford and Michael D. Kalbfleisch
as proxies, each with the power to appoint his or her substitute, and
hereby authorizes them to represent and to vote, as designated below, all
shares of stock of The Golden Rainbow A James Advised Mutual Fund (the
"Series") of Flagship Admiral Funds Inc. (the "Fund") held of record by the
undersigned on October 18, 1996, at the 1996 Special Meeting of
Shareholders of the Fund to be held on December 12, 1996 or any adjournment
thereof.
1. To approve a new investment advisory agreement to take effect upon the
acquisition of Flagship Resources Inc. by the John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with John Nuveen & Co. Incorporated.
3. To elect eight (8) members to the Board of Directors of the Fund.
Nominees: Robert P. Bremner, William J. Schneider,
Lawrence H. Brown, Timothy R. Schwertfeger,
Anne E. Impellizzeri, Margaret K. Rosenheim,
Peter R. Sawers and Anthony T. Dean.
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
- ------------------------------------------------------------------------------
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be voted
in accordance with the Board of Directors' recommendations. Please sign,
date and return this Proxy card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------
SEE REVERSE SIDE
The Board of Directors recommends
a vote FOR all nominees and the Please mark your votes as
proposals: in this example: |X|
FOR AGAINST ABSTAIN
1. To approve a new investment advisory |_| |_| |_|
agreement to take effect upon the
acquisition of Flagship Resources Inc. by
The John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with John |_| |_| |_|
Nuveen & Co. Incorporated.
3. To elect eight (8) members to the Board of |_| |_| |_|
Directors of the Fund. Shareholders may
withhold their vote for any nominees by
striking out the name of such nominee or
nominees.
Robert P. Bremner, William J. Schneider,
Lawrence H. Brown, Timothy R.
Schwertfeger, Anne E. Impellizzeri,
Margaret K. Rosenheim, Peter R. Sawers and
Anthony T. Dean.
4. To transact such other business as may
properly come before the meeting or any
adjournments thereof.
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" proposals 1, 2 and 3. By signing and dating the lower
portion of this card, you authorize the proxies to vote each proposal as
marked, or if not marked to vote "FOR" each proposal, and to use their
discretion to vote any other matter as may properly come before the
meeting. If you do not intend to personally attend the meeting, please
complete and mail this card at once in the enclosed envelope.
Please be sure to sign and date this Proxy
- ---------------------------------------
Signature Date
- ---------------------------------------
Signature Date
- ---------------------------------------
NOTE: Please sign name or names as printed on proxy to authorize the voting
of your shares as indicated. Where shares are registered with joint owners,
all joint owners should sign. Persons signing as executors, administrators,
trustees, etc. should so indicate.
1996 SPECIAL MEETING
FLAGSHIP ADMIRAL FUNDS INC.
A Special Meeting of Shareholders will be held on Thursday, December 12,
1996, at 10:00 a.m., Chicago Time, in the 31st floor conference room of
John Nuveen & Co. Incorporated, 333 W. Wacker Drive, Chicago, Illinois at
which shareholders will be asked to consider and approve several proposals
relating to the proposed merger of Flagship Resources Inc. with The John
Nuveen Company. At this meeting, you will be asked to vote on proposals to
make certain changes to how your fund is managed to facilitate the
integration of the Nuveen and Flagship mutual fund families.
The Board of your fund has unanimously determined that these proposals are
in the best interests of shareholders and urges you to vote in favor of the
proposals. The integration of Nuveen and Flagship should lead to the
following benefits:
Lower operating costs from expanded distribution
Access to a wider range of investment products
Greater choices in the method of purchasing shares
Whether or not you plan to join us, please complete, date and sign your
proxy card and return it in the enclosed envelope so that your vote will be
counted.
Please fold at perforation before detaching
- ------------------------------------------------------------------------------
PROXY BALLOT
FLAGSHIP UTILITY INCOME FUND
COMMON SHARES
Proxy Solicited by the Board of Directors
For Special Meeting of Shareholders
To be Held on December 12, 1996
The undersigned hereby appoints Bruce P. Bedford and Michael D. Kalbfleisch
as proxies, each with the power to appoint his or her substitute, and
hereby authorizes them to represent and to vote, as designated below, all
shares of stock of the Flagship Utility Income Fund (the "Series") of
Flagship Admiral Funds Inc. (the "Fund") held of record by the undersigned
on October 18, 1996, at the 1996 Special Meeting of Shareholders of the
Fund to be held on December 12, 1996 or any adjournment thereof.
1. To approve a new investment advisory agreement to take effect upon the
acquisition of Flagship Resources Inc. by the John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with John Nuveen & Co. Incorporated.
3. To elect eight (8) members to the Board of Directors of the Fund.
Nominees: Robert P. Bremner, William J. Schneider,
Lawrence H. Brown, Timothy R. Schwertfeger,
Anne E. Impellizzeri, Margaret K. Rosenheim,
Peter R. Sawers and Anthony T. Dean.
4. To transact such other business as may properly come before the meeting
or any adjournments thereof.
- ------------------------------------------------------------------------------
You are encouraged to specify your choices by marking the appropriate boxes
ON THE REVERSE SIDE. If you do not mark any boxes, your Proxy will be voted
in accordance with the Board of Directors' recommendations. Please sign,
date and return this Proxy card promptly using the enclosed envelope.
- ------------------------------------------------------------------------------
SEE REVERSE SIDE
The Board of Directors recommends
a vote FOR all nominees and the Please mark your votes as
proposals: in this example: |X|
FOR AGAINST ABSTAIN
1. To approve a new investment advisory |_| |_| |_|
agreement to take effect upon the
acquisition of Flagship Resources Inc. by
The John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with John |_| |_| |_|
Nuveen & Co. Incorporated.
3. To elect eight (8) members to the Board of |_| |_| |_|
Directors of the Fund. Shareholders may
withhold their vote for any nominees by
striking out the name of such nominee or
nominees.
Robert P. Bremner, William J. Schneider,
Lawrence H. Brown, Timothy R.
Schwertfeger, Anne E. Impellizzeri,
Margaret K. Rosenheim, Peter R. Sawers and
Anthony T. Dean.
4. To transact such other business as may
properly come before the meeting or any
adjournments thereof.
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" proposals 1, 2 and 3. By signing and dating the lower
portion of this card, you authorize the proxies to vote each proposal as
marked, or if not marked to vote "FOR" each proposal, and to use their
discretion to vote any other matter as may properly come before the
meeting. If you do not intend to personally attend the meeting, please
complete and mail this card at once in the enclosed envelope.
Please be sure to sign and date this Proxy
- -----------------------------------
Signature Date
- -----------------------------------
Signature Date
- -----------------------------------
NOTE: Please sign name or names as printed on proxy to authorize the voting
of your shares as indicated. Where shares are registered with joint owners,
all joint owners should sign. Persons signing as executors, administrators,
trustees, etc. should so indicate.