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:
(X) Preliminary proxy statement
( ) Definitive proxy statement
( ) Definitive additional materials
( ) Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FLAGSHIP ADMIRAL FUNDS INC.
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(Name of Registrant as Specified in Its Charter)
N/A
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(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
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid::
N/A
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( ) 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
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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[Flagship Letterhead]
November __ , 1996
Dear Flagship Admiral Funds Inc. Shareholder:
We are pleased to announce that 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, at the 31st floor conference room of John
Nuveen & Co. Incorporated, 333 W. Wacker Drive, Chicago, Illinois. Subject
to shareholder approval at this meeting, we plan to merge Flagship's
portfolio management, sales and service operations with Nuveen's
corresponding divisions.
The Board of Directors of your fund has unanimously determined that the
proposals you will vote on are advisable and in the best interests of all
shareholders. The merger should lead to the following benefits:
( ) Increased fund administration and operating efficiencies.
( ) Access to a wider range of investment products.
( ) Greater choices in the method for purchasing shares.
The enclosed proxy statement describes these proposals 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,
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 at 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__, 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, at 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 , 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 in-
terest 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 for on 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
Fund Shares Shares
The Golden Rainbow A James Advised Mutual Fund
Flagship Utility Income Fund
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 Flagship 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 each Fund's current investment advisory agreement with the
Adviser. As required by the 1940 Act, each current investment advisory
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 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 undertaking by Nuveen Advisory 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 by the Adviser with
applicable law and 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. Each 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 each of the Funds 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.
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. This contract does not by its terms, terminate if the
Adviser is terminated under its agreement. However, to the extent the
Adviser 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 the Adviser, shareholders will also be
reapproving the existing advisory agreement with James Investment Research,
Inc.
The Board, including the independent Directors, unanimously
approved the New Advisory Agreement between the Utility Income Fund and
Nuveen Advisory, as well as the tri-party arrangement between the Golden
Rainbow Fund, the Adviser 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 below. 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 until August 1, 1997, 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 such
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.
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 servicing and
distribution fees on the three classes of shares of the Fund. 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. There is no
assurance that the Funds' actual expenses after the Acquisition will be
equal to or less than the current actual expenses, and in some cases, are
currently estimated to be higher; actual expenses of the Funds after the Acqui-
sition 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.
<TABLE>
<CAPTION>
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 $*
<S> <C> <C> <C> <C> <C> <C> <C>
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.
</TABLE>
<TABLE>
<CAPTION>
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 % *
<S> <C> <C> <C> <C> <C>
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.
</TABLE>
<TABLE>
<CAPTION>
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 % *
<S> <C> <C> <C> <C> <C>
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.
</TABLE>
<TABLE>
<CAPTION>
Total Total Total Total Total Total Total Total Difference
Current Current Current Current Pro Pro Pro Pro Current vs.
Expense $ Expense % Expense $ Expense $ Forma Forma Forma Forma Proforma %
Expense $ Expense % Expense $ Expense %
Fund Class Class Class Class Class Class Class Class Class Class
A A C C A A C C A C
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Golden 2,445,841 1.26 N/A N/A 2,445,841 1.26 N/A N/A 0.00 N/A
Rainbow
Utility 387,071 1.52 122,792 2.07 335,884 1.32 110,786 1.87 0.20 0.20
Income
* Total columns represent the sum of management fees, 12b-1 fees and other expenses.
** This table assumes that current "other expenses" will be the same as pro forma "other expenses".
</TABLE>
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. Davis is currently a Director 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 79 management
investment company portfolios (including the Funds) with approximately
$31.6 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:
o 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.
o Fees -- 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.
o Increased Investment Choices -- The Funds would offer additional
classes of shares, which would provide existing and future
shareholders the benefit of an expanded set of purchase options.
o Continuity of Portfolio Management and Distribution 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.
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 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. As a technical matter, existing Plans permit reimbursement of
expenses and the proposed Plans permit payment without regard to whether it
is a reimbursement. However the Distributor's expenses far exceeded the
permitted reimbursements, so as a practical matter this change should have
little effect for the foreseeable future.
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 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.
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 Plans 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 Plans, the Board determined,
as with the current Rule 12b-1 Plan, that there is a reasonable likelihood
that the proposed Rule 12b-1 Plans would benefit the Fund and its
shareholders. In doing so, the Board considered several factors, including
that the proposed Rule 12b-1 Plans 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 Plans and to submit them to the
shareholders for their approval.
The Board recommends that shareholders vote "FOR" approval of the
new Rule 12b-1 Plans.
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 Since 1983 Golden Rainbow-
(56) 5,092.852**
Currently a private
investor and
management
consultant.
William J. Schneider Since 1983 Golden Rainbow-
(52) 4,525.68**
Currently a senior Utility Income-
partner at Miller- 355.477**
Valentine Partners,
Vice President
Miller-Valentine
Realty, Inc.
Lawrence H. Brown Nominee None
(61)
Retired in August
1989 as Senior Vice
President of the
Northern Trust
Company
*Timothy R. Nominee None
Schwertfeger (47)
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 Nominee None
(63)
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. Nominee None
Rosenheim (69)
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 Nominee None
(51)
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. Bremmer,
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 trustee 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
From Admiral Funds
Aggregate and
Compensation Fund Complex
Trustee From Admiral Funds Paid to Directors
Robert P. Bremner $5,000 $25,500
Joseph F. Castellano $5,000 $26,500
William J. Schneider $5,000 $26,500
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 have 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,
____________________________________
Secretary
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 compa-
nies.
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 August 1, 1997 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 any one year
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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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 (c), (d) and (a) 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.
IN WITNESS WHEREOF, the Fund and Distributor have executed this
Plan of Distribution and Servicing as of the day and year first above
written.
FLAGSHIP ADMIRAL FUNDS INC. JOHN NUVEEN & CO. INCORPORATED
By:____________________________ By:_____________________________
Its Vice President Its Vice President
[The following will be inserted on the top of the proxy
card for each Fund]
A special meeting of shareholders will be held on
Thursday, December 12, 1996, at 10:00 a.m., Central Time,
at 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 AGREED 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:
Increased fund administration and operating efficiencies.
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
--------------------------------------------------------------
[PROPOSALS]
1996 SPECIAL MEETING
FLAGSHIP ADMIRAL FUNDS INC.
The Golden Rainbow A James Advised Mutual Fund
One Dayton Centre, One South Main Street, Dayton, OH 45402
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder.
If no direction is made this proxy will be voted FOR
proposals 1, 2 and 3.
1. To approve a new investment advisory FOR ( ) AGAINST ( )
agreement to take effect upon the ABSTAIN ( )
acquisition of Flagship Resources Inc. by
The John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with FOR ( ) AGAINST ( )
John Nuveen & Co. Incorporated. ABSTAIN ( )
3. To elect eight (8) members to the Board FOR ( ) AGAINST ( )
of Directors of the Fund. STOCKHOLDERS ABSTAIN ( )
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
Anthony T. Dean
4. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or any ABSTAIN ( )
adjournments thereof.
(OVER)
THE GOLDEN RAINBOW SERIES OF FLAGSHIP ADMIRAL FUNDS INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
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 THE GOLDEN RAINBOW A JAMES ADVISED MUTUAL FUND STOCK
(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 STOCKHOLDERS OF THE
FUND TO BE HELD ON DECEMBER 12, 1996 OR ANY ADJOURNMENT
THEREOF.
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 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.
Signature
Signature
Date
1996 SPECIAL MEETING
FLAGSHIP ADMIRAL FUNDS INC.
Flagship Utility Income Fund
One Dayton Centre, One South Main Street, Dayton, OH 45402
This proxy when properly executed will be voted in the
manner directed herein by the undersigned stockholder.
If no direction is made this proxy will be voted FOR
proposals 1, 2 and 3.
1. To approve a new investment advisory FOR ( ) AGAINST ( )
agreement to take effect upon the ABSTAIN ( )
acquisition of Flagship Resources Inc. by
The John Nuveen Company.
2. To approve a new Rule 12b-1 Plan with FOR ( ) AGAINST ( )
John Nuveen & Co. Incorporated. ABSTAIN ( )
3. To elect eight (8) members to the Board FOR ( ) AGAINST ( )
of Directors of the Fund. STOCKHOLDERS ABSTAIN ( )
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 Anthony T. Dean
4. To transact such other business as may FOR ( ) AGAINST ( )
properly come before the meeting or any ABSTAIN ( )
adjournments thereof.
(OVER)
THE UTILITY INCOME SERIES OF FLAGSHIP ADMIRAL FUNDS INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
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 FLAGSHIP UTILITY INCOME FUND STOCK (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 STOCKHOLDERS OF THE FUND TO BE HELD ON
DECEMBER 12, 1996 OR ANY ADJOURNMENT THEREOF.
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 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.
Signature
Signature
Date
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000721704
<NAME> GOLDEN RAINBOW FUND
<SERIES>
<NUMBER> 02
<NAME> CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 161,208,709
<INVESTMENTS-AT-VALUE> 183,086,813
<RECEIVABLES> 1,727,612
<ASSETS-OTHER> 11,586
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 184,826,011
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 518,949
<TOTAL-LIABILITIES> 518,949
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 164,429,171
<SHARES-COMMON-STOCK> 10,494,564
<SHARES-COMMON-PRIOR> 10,481,430
<ACCUMULATED-NII-CURRENT> 8,324
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3,654,411
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,215,156
<NET-ASSETS> 184,307,062
<DIVIDEND-INCOME> 1,772,583
<INTEREST-INCOME> 8,040,943
<OTHER-INCOME> 0
<EXPENSES-NET> (2,057,358)
<NET-INVESTMENT-INCOME> 7,756,168
<REALIZED-GAINS-CURRENT> 12,088,033
<APPREC-INCREASE-CURRENT> (5,260,060)
<NET-CHANGE-FROM-OPS> 14,584,141
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,849,812)
<DISTRIBUTIONS-OF-GAINS> (13,926,555)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,286,586
<NUMBER-OF-SHARES-REDEEMED> (2,390,075)
<SHARES-REINVESTED> 1,116,623
<NET-CHANGE-IN-ASSETS> (7,165,465)
<ACCUMULATED-NII-PRIOR> 101,968
<ACCUMULATED-GAINS-PRIOR> 5,492,933
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,434,522
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,445,841
<AVERAGE-NET-ASSETS> 193,556,959
<PER-SHARE-NAV-BEGIN> 18.27
<PER-SHARE-NII> 0.73
<PER-SHARE-GAIN-APPREC> 0.61
<PER-SHARE-DIVIDEND> (0.74)
<PER-SHARE-DISTRIBUTIONS> (1.31)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 17.56
<EXPENSE-RATIO> 1.06
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000721704
<NAME> FLAGSHIP UTILITY INCOME FUND
<SERIES>
<NUMBER> 011
<NAME> CLASS A
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 28,637,209
<INVESTMENTS-AT-VALUE> 31,301,292
<RECEIVABLES> 2,011,401
<ASSETS-OTHER> 15,649
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,328,342
<PAYABLE-FOR-SECURITIES> 962,100
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,054,852
<TOTAL-LIABILITIES> 2,016,952
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,661,604
<SHARES-COMMON-STOCK> 2,254,287
<SHARES-COMMON-PRIOR> 2,440,747
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20,014,297)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,664,083
<NET-ASSETS> 31,311,390
<DIVIDEND-INCOME> 2,004,164
<INTEREST-INCOME> 126,983
<OTHER-INCOME> 0
<EXPENSES-NET> (316,609)
<NET-INVESTMENT-INCOME> 1,814,538
<REALIZED-GAINS-CURRENT> 777,426
<APPREC-INCREASE-CURRENT> 1,636,281
<NET-CHANGE-FROM-OPS> 4,228,245
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,498,943)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 376,821
<NUMBER-OF-SHARES-REDEEMED> (637,030)
<SHARES-REINVESTED> 73,749
<NET-CHANGE-IN-ASSETS> 9,638
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (44,163,229)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157,329
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 509,863
<AVERAGE-NET-ASSETS> 31,379,875
<PER-SHARE-NAV-BEGIN> 10.24
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> 0.85
<PER-SHARE-DIVIDEND> (0.64)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.09
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 55,342
<AVG-DEBT-PER-SHARE> 0.02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000721704
<NAME> FLAGSHIP UTILITY
INCOME FUND
<SERIES>
<NUMBER> 013
<NAME> CLASS C
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 28,637,209
<INVESTMENTS-AT-VALUE> 31,301,292
<RECEIVABLES> 2,011,401
<ASSETS-OTHER> 15,649
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33,328,342
<PAYABLE-FOR-SECURITIES> 962,100
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,054,852
<TOTAL-LIABILITIES> 2,016,952
<SENIOR-EQUITY> 0
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</TABLE>
