As filed with the Securities and Exchange Commission on April 30, 1998
Registration No. 33-45437
File No. 811-6549
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
-------------------------------------------------------
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 7 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [X]
ACT OF 1940
Amendment No. 11 [X]
(Check appropriate box or boxes)
AMERICA'S UTILITY FUND, INC.
(Exact name of registrant as specified in charter)
901 East Byrd Street
Richmond, Virginia 23219
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code (804) 775-5719
---------------
Paul F. Costello, President
901 East Byrd Street
Richmond, Virginia 23219
(Name and address of agent for service)
-----------------
Copy to:
Timothy W. Diggins, Esquire
ROPES & GRAY
One International Place
Boston, Massachusetts 02110
--------------
It is proposed that this filing will become effective (check appropriate box):
[X] immediately upon filing pursuant to paragraph (b)
[ ] on [date] pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
AMERICA'S UTILITY FUND
CROSS REFERENCE SHEET
(as required by Rule 404(c))
Part A
<TABLE>
<CAPTION>
N-1A Item No.
Location
<S> <C>
1. Cover Page............................. Cover Page
2. Synopsis............................... Cover Page; Expense Summary;
Example
3. Condensed Financial Information........ Financial Highlights
4. General Description of Registrant...... Cover Page; Investment Objective
and Policies; Other Investment
Practices; The Fund; Transfer and
Dividend Agent Services;
Performance Information
5. Management of the Fund................. Management of the Fund; Taxes
5A. Management's Discussion
of Fund Performance.................. Contained in the Annual Report of
the Registrant
6. Capital Stock and Other
Securities........................... How to Invest in the Fund;
Method of Investing Payments and
Distributions; Your Rights in the
Fund and Under Your Plan; Taxes
7. Purchase of Securities Being
Offered.............................. How to Invest in the Fund;
Method of Investing Payments and
Distributions;
8. Redemption or Repurchase............... Redemption of Fund Shares
9. Pending Legal Proceedings.............. Not Applicable
</TABLE>
-3-
<PAGE>
Part B
<TABLE>
<CAPTION>
N-1A Item No. Location
<S> <C>
10. Cover Page............................ Cover Page
11. Table of Contents..................... Table of Contents
12. General Information and History....... General Information; Ratings
13. Investment Objectives and
Policies............................ Investment Restrictions; Certain
Investment Techniques
14. Management of the Fund................ Management
15. Control Persons and Principal
Holders of Securities............... Management; Control Persons and
Principal Holders of Securities
16. Investment Advisory and Other
Services............................ Investment Advisory Services;
Other Services; Brokerage;
Custodian; Independent Auditors;
Members of Investment Teams at
Mentor Advisors
17. Brokerage Allocation.................. Brokerage
18. Capital Stock and Other
Securities.......................... General Information
19. Purchase, Redemption and Pricing
of Securities Being Offered......... How to Buy Shares; Distribution;
Determination of Net Asset Value;
20. Tax Status............................ Tax Status
21. Underwriters.......................... Distribution
22. Calculations of Yield Quotations
of Money Market Funds............... Performance Information
23. Financial Statements.................. Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.
-4-
<PAGE>
AMERICA'S UTILITY FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1998
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Prospectus of America's Utility Fund, Inc. dated
May 1, 1998, a copy of which may be obtained by writing Mentor Services Company,
Inc., 901 East Byrd Street, P.O. Box 26501, Richmond, Virginia 23261-6501, or by
calling 1-800-487-3863.
TABLE OF CONTENTS
Page
GENERAL INFORMATION.........................................................B-2
INVESTMENT RESTRICTIONS.....................................................B-2
CERTAIN INVESTMENT TECHNIQUES...............................................B-4
MANAGEMENT.................................................................B-10
CONTROL PERSONS AND PRINCIPAL HOLDERS......................................B-15
INVESTMENT ADVISORY SERVICES...............................................B-15
OTHER SERVICES.............................................................B-17
BROKERAGE..................................................................B-19
DETERMINATION OF NET ASSET VALUE...........................................B-21
TAX STATUS.................................................................B-23
DISTRIBUTION ..............................................................B-25
PERFORMANCE INFORMATION....................................................B-25
MEMBERS OF INVESTMENT TEAMS AT MENTOR ADVISORS.............................B-30
CUSTODIAN..................................................................B-32
INDEPENDENT AUDITORS.......................................................B-32
RATINGS ..................................................................B-32
FINANCIAL STATEMENTS.......................................................B-36
B-1
<PAGE>
GENERAL INFORMATION
America's Utility Fund, Inc. (the "Fund") was organized on January 28,
1992 as a Maryland corporation, and is registered as a diversified, open-end,
management investment company.
INVESTMENT RESTRICTIONS
The following are fundamental investment restrictions, which may not be
changed without approval by the holders of a majority of the outstanding shares
of the Fund. The Fund will not:
1. Purchase any security (other than obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, for temporary investment) if as a result
more than 5% of the Fund's total assets are invested in the
securities of any one issuer; the Fund will concentrate its
investments (more than 25% of its assets) in securities issued
by utility companies.
2. Purchase any security if as a result the Fund would
then hold more than 10% of any class of securities of an
issuer (taking all common stock issues as a single class, all
preferred stock issues as a single class and all debt issues
as a single class) or more than 10% of the outstanding voting
securities of any one issuer.
3. Borrow money or securities for any purpose except to
the extent that borrowing up to 10% of the Fund's total assets
is permitted for emergency purposes. (Any such borrowings will
be made on a temporary basis from banks and will not be made
for investment purposes.) Money borrowed will be repaid before
additional portfolio securities are purchased.
4. Invest in securities of any issuer if, to the knowledge
of the Fund, any officer or director of the Fund or of the
Manager owns more than 1/2 of 1% of the outstanding securities
of such issuer, and such officers and directors who own more
than 1/2 of 1% own in the aggregate more than 5% of the
outstanding securities of such issuer.
5. Purchase securities for the purpose of exercising
control over the issuers thereof.
6. Underwrite securities of other issuers; provided, that
this policy shall not be construed to prevent or limit in any
manner the right of the Fund to purchase securities for
investment purposes.
B-2
<PAGE>
7. Make loans to other persons other than (i) through the
purchase of a portion of an issue of publicly distributed debt
securities which are not considered loans, (ii) through the
purchase of bonds, debentures, commercial paper, corporate
notes and similar evidences of indebtedness of a type commonly
sold privately to financial institutions, or (iii) by entering
into repurchase agreements with respect to not more than 25%
of its total assets (taken at current value).
8. Buy securities on margin, or effect short sales of
securities. (Margin payments in connection with transactions
in futures contracts, options, forward contracts, and other
financial instruments are not considered to constitute the
purchase of securities on margin for this purpose.)
9. Issue senior securities other than as consistent with
borrowings permitted under 3 above.
10. Invest in the securities of other investment companies
except by purchases in the open market involving only
customary brokerage commissions and as a result of which not
more than 5% of its total assets (taken at current value)
would be invested in such securities, or except as part of a
merger, consolidation or other acquisition.
11. Own, buy or sell commodities or commodity contracts
(except that the Fund may purchase and sell foreign
currencies, foreign currency futures contracts and related
options), or real estate or interests in real estate;
provided, that the Fund may purchase and sell securities which
are secured by real estate and securities of companies which
invest or deal in real estate.
12. Invest in warrants unless acquired as a unit or
attached to other securities.
13. Invest in puts, calls, straddles, spreads, or any
combination thereof (except that the Fund may invest in
foreign currency futures and options transactions and forward
contracts).
14. Invest in limited partnerships or similar interests in
oil, gas and other mineral exploration development programs;
provided, that the Fund may invest in the securities of other
corporations whose activities include such exploration and
development.
15. Invest more than 5% of its total assets in any issuer
or issuers having a record of less than three years continuous
operation, which may include the operations of predecessor
companies.
B-3
<PAGE>
16. Purchase any security restricted as to disposition
under federal securities laws.
The Investment Company Act of 1940, as amended (the "1940 Act"),
provides that the approval of a majority of the outstanding shares of the Fund
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund and (2) 67% or more of the shares present at a meeting if
more than 50% of the outstanding shares are represented at the meeting in person
or by proxy.
All percentage limitations on investments will apply at the time of the
making of an investment and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and as a result of such
investment.
It is also a policy of the Fund, which may be changed without
shareholder approval, not to purchase any voting security of any electric or gas
utility company (as defined by the Public Utility Holding Company Act of 1935)
if as a result the Fund would then hold 5% or more of the outstanding voting
securities of such company.
Although not a fundamental policy, the Fund will not invest in
securities which are not readily marketable. (Foreign currency forward
contracts, futures contracts, and options are not considered securities for this
purpose.)
CERTAIN INVESTMENT TECHNIQUES
Set forth below is information concerning certain investment techniques
in which the Fund may engage, and certain of the risks they may entail.
Repurchase Agreements
A repurchase agreement is a contract under which the Fund acquires a
security for a relatively short period (usually not more than one week) subject
to the obligation of the seller to repurchase and the Fund to resell such
security at a fixed time and price (representing the Fund's cost plus interest).
It is the Fund's present intention to enter into repurchase agreements only with
member banks of the Federal Reserve System and securities dealers meeting
certain criteria as to creditworthiness and financial condition established by
the Board of Directors and only with respect to obligations of the U.S.
government or its agencies or instrumentalities or other high quality short term
debt obligations. Repurchase agreements may also be viewed as loans made by the
Fund which are collateralized by the securities subject to repurchase. Mentor
Advisors will monitor such transactions to ensure that the value of the
underlying securities will be at least equal at all times to the total amount of
the repurchase obligation, including the interest factor. If the seller
defaults, the Fund could realize a loss on the sale of the underlying security
to the extent that the proceeds of sale including accrued interest are less than
the resale price provided
B-4
<PAGE>
in the agreement including interest. In addition, if the seller should be
involved in bankruptcy or insolvency proceedings, the Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and required to return
the underlying collateral to the seller's estate.
Foreign Securities
Investments in foreign securities may involve considerations different
from investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment against
a foreign issuer.
In addition, to the extent that the Fund's foreign investments are not
United States dollar-denominated, the Fund may be affected favorably or
unfavorably by changes in currency exchange rates; exchange control regulations;
foreign withholding taxes or restrictions or prohibitions on the repatriation of
foreign currencies and may incur costs in connection with conversion between
currencies.
Income received by the Fund from sources within foreign countries may
be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested in
various countries is not known, and tax laws and their interpretations may
change from time to time and may change without advance notice. Any such taxes
paid by the Fund will reduce its net income available for distribution to
stockholders.
Foreign Currency Transactions
The Fund may engage in currency exchange transactions to protect
against uncertainty in the level of future foreign currency exchange rates and
to increase current return. The Fund may engage in both "transaction hedging"
and "position hedging".
When it engages in transaction hedging, the Fund enters into foreign
currency transactions with respect to specific receivables or payables of the
Fund generally arising in connection with the purchase or sale of its portfolio
securities. The Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
B-5
<PAGE>
currency. By transaction hedging the Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
The Fund may purchase or sell a foreign currency on a spot (or cash)
basis at the prevailing spot rate in connection with transaction hedging. The
Fund may also enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes the Fund may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives the Fund the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives the Fund the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives the Fund the right to assume a
long position in the futures contract until the expiration of the option. A call
option on currency gives the Fund the right to purchase a currency at the
exercise price until the expiration of the option.
When it engages in position hedging, the Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which securities held by the Fund are denominated or are
quoted in their principle trading markets or an increase in the value of
currency for securities which the Fund expects to purchase. In connection with
position hedging, the Fund may buy or sell foreign currency futures contracts
and put and call options on foreign currencies and on foreign currency futures
contracts. The Fund may also purchase or sell foreign currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of the
Fund's portfolio securities at the expiration or maturity of a forward or
futures contract. Accordingly, it may be necessary for the Fund to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Fund is obligated to deliver and if a
decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities of the Fund if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to deliver.
B-6
<PAGE>
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market.
Currency Forward and Futures Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward contract
generally has no deposit requirement, and no commissions are charged at any
stage for trades. A foreign currency futures contract is a standardized contract
for the future delivery of a specified amount of a foreign currency at a future
date at a price set at the time of the contract. Foreign currency futures
contracts traded in the United States are designed by and traded on exchanges
regulated by the CFTC, such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity date
of a forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in a given
month. Forward contracts may be in any amounts agreed upon by the parties rather
than predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A forward
contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, the Fund may either
accept or make delivery of the currency specified in the contract, or at or
prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
B-7
<PAGE>
Positions in foreign currency futures contracts and related options may
be closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although the Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, the Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
Foreign Currency Options. Options on foreign currencies are traded
primarily in the over-the-counter market, although options on foreign currencies
have recently been listed on several exchanges. There can be no assurance that a
liquid secondary market will exist for a particular option at any specific time.
Options on foreign currencies are affected by all of those factors which
influence exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
To the extent that the U.S. options markets are closed while the
markets for the underlying currencies remain open, significant price and rate
movements may take place in the underlying markets that cannot be reflected in
the U.S. options markets.
Settlement Procedures. Settlement procedures relating to the Fund's
investments in foreign securities and to the Fund's foreign currency exchange
transactions may be more complex than settlements with respect to investments in
debt or equity securities of U.S. issuers, and may involve certain risks not
present in the Fund's domestic investments. For example, settlement of
transactions involving foreign securities or foreign currency may occur within a
foreign country, and the Fund may be required to accept or make delivery of the
underlying securities or currency in conformity with any applicable U.S. or
foreign restrictions or regulations, and may be required to pay any fees, taxes
or charges associated with such delivery. Such investments may also involve the
risk that an entity involved in the settlement may not meet its obligations.
Foreign Currency Conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign
B-8
<PAGE>
currency to the Fund at one rate, while offering a lesser rate of exchange
should the Fund desire to resell that currency to the dealer.
B-9
<PAGE>
MANAGEMENT
Officers and Directors
The directors and officers of the Fund are as follows. Unless otherwise
noted, the address of each officer and director is 901 East Byrd Street,
Richmond, Virginia 23219.
<TABLE>
<CAPTION>
Position Held Principal Occupation
Name and Address with Portfolio During Past 5 Years
- ---------------- -------------- -------------------
<S> <C>
*Daniel J. Ludeman Chairman; Trustee Chairman and Chief Executive
Officer, Mentor Investment Group,
LLC; Managing Director, Wheat,
First Securities, Inc.; Director,
Wheat First Butcher Singer, Inc.;
Chairman and Director, Mentor
Income Fund, Inc.; Chairman and
Trustee, Mentor Institutional Trust
and Cash Resource Trust.
Louis W. Moelchert, Jr. Trustee Vice President for Investments,
University of Richmond; Trustee,
Mentor Institutional Trust and Cash
Resource Trust; Director, Mentor
Income Fund, Inc.
Thomas F. Keller Trustee Professor of Business Administration
and former Dean, Fuqua School of
Business, Duke University; Trustee,
Mentor Institutional Trust and Cash
Resource Trust; and Director, Mentor
Income Fund, Inc.
Arnold H. Dreyfuss Trustee Chairman, Eskimo Pie Corp.;
formerly, Chairman and Chief
Executive Officer, Hamilton
Beach/Proctor-Silex, Inc.; Trustee,
Mentor Institutional Trust and Cash
Resource Trust; and Director, Mentor
Income Fund, Inc.
B-10
<PAGE>
Troy A. Peery, Jr. Trustee President, Heilig-Meyers Company.
Trustee, Mentor Institutional Trust and
Cash Resource Trust; and Director,
Mentor Income Fund, Inc.
*Peter J. Quinn, Jr. Trustee President, Mentor Distributors, LLC;
Managing Director, Mentor Investment
Group, LLC and Wheat First Butcher
Singer, Inc.; formerly, Senior
Vice President/Director of Mutual
Funds, Wheat First Butcher Singer,
Inc.; Trustee, Mentor Institutional
Trust and Cash Resource Trust; and
Director, Mentor Income Fund, Inc.
Arch T. Allen, III Trustee Attorney at law, Raleigh, North
Carolina; Trustee, Mentor Institutional
Trust and Cash Resource Trust;
Director, Mentor Income Fund, Inc.;
formerly, Vice Chancellor for
Development and University Relations,
University of North Carolina at Chapel
Hill.
Weston E. Edwards Trustee President, Weston Edwards &
Associates; Trustee, Mentor
Institutional Trust; Director, Mentor
Income Fund, Inc.; Founder and
Chairman, The Housing Roundtable;
formerly, President, Smart Mortgage
Access, Inc.
B-11
<PAGE>
Jerry R. Barrentine Trustee President, J.R. Barrentine & Associates;
Trustee, Mentor Institutional Trust and
Cash Resource Trust; Director, Mentor
Income Fund, Inc.; formerly, Executive
Vice President and Chief
Financial Officer, Barclays/American
Mortgage Director Corporation; Managing
Partner, Barrentine Lott & Associates.
J. Garnett Nelson Trustee Consultant, Mid-Atlantic Holdings, LLC;
Trustee, Mentor Institutional Trust and
Cash Resource Trust; Director, Mentor
Income Fund, Inc., GE Investment Funds,
Inc., and Lawyers Title Corporation;
Member, Investment Advisory
Committee, Virginia Retirement System;
formerly, Senior Vice President, The
Life Insurance Company of Virginia.
Paul F. Costello President Managing Director, Mentor Investment
Group, LLC, Wheat First Butcher Singer,
Inc., and Mentor Investment Advisors,
LLC; President, Mentor Income Fund,
Inc., Mentor Institutional Trust, and
Cash Resource Trust; Director, Mentor
Perpetual Advisors, LLC and Mentor
Trust Company.
Terry L. Perkins Treasurer Senior Vice President, Mentor
Investment Group, LLC; Treasurer, Cash
Resource Trust, Mentor Income Fund,
Inc., and Mentor Institutional Trust;
Treasurer; formerly, Treasurer and
Comptroller, Ryland Capital Management,
Inc.
B-12
<PAGE>
Michael Wade Assistant Treasurer Vice President, Mentor Investment Group,
LLC; Assistant Treasurer, Cash Resource
Trust, Mentor Income Fund, Inc., Mentor
Institutional Trust; formerly, Senior
Accountant, Wheat First Butcher Singer,
Inc.; Audit Senior, BDO Seidman.
Geoffrey B. Sale Secretary Associate Vice President Mentor Investment
Group, LLC; Clerk Mentor Institutional Trust;
Secretary Cash Resource Trust, Mentor Income
Fund, Inc., Mentor Funds and Mentor Variable
Investment Portfolios.
- ---------------------
</TABLE>
* This person is deemed to be an "interested person" of the Fund under the
Investment Company Act of 1940, as amended.
B-13
<PAGE>
Director Compensation
The table below shows the fees paid to each current Director by the
Fund for the 1997 fiscal year.
Total compensation
Aggregate Compensation from all
Trustees from the Fund complex funds (23 Funds)
- -------- ----------------------- ------------------------
Daniel J. Ludeman $ 0 $ 0
Arnold H. Dreyfuss+ $ 0 $15,200
Thomas F. Keller+ $ 0 $15,200
Louis W. Moelchert, Jr. $11,000 $26,200
Troy A. Peery, Jr.+ $ 0 $14,175
Peter J. Quinn, Jr.+ $ 0 $ 0
Arch T. Allen, III+ $11,000 $11,000
Weston E. Edwards+ $ 0 $28,000
Jerry R. Barrentine+ $ 0 $20,000
J. Garnett Nelson+ $ 0 $20,000
- -------------
+ Elected as a Director December 22, 1997
The Directors do not receive pension or retirement benefits from the
Fund.
The Articles of Incorporation of the Fund provide that the Fund will
indemnify its Directors and officers against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices with the Fund, except if it is determined in the manner specified in the
Articles of Incorporation that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Fund or
that such indemnification would relieve any officer or Director of any liability
to the Fund or its Shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of his or her duties. The Fund, at its
expense, provides liability insurance for the benefit of its Directors and
officers.
B-14
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS
The Directors and officers as a group owned less than 1% of the
outstanding shares of common stock of the Fund as of April 1, 1998. To the
knowledge of the Fund, as of April 1, 1998 no person owned of record or
beneficially more than 5% of the outstanding shares of common stock of the Fund
as of such date.
INVESTMENT ADVISORY SERVICES
Investment decisions for the Fund and for the other investment advisory
clients of Mentor Advisors and its affiliates are made with a view to achieving
their respective investment objectives. Investment decisions are the product of
many factors in addition to basic suitability for the particular client
involved. Thus, a particular security may be bought or sold for certain clients
even though it could have been bought or sold for other clients at the same
time. Likewise, a particular security may be bought for one or more clients when
one or more other clients are selling the security. In some instances, one
client may sell a particular security to another client. It also sometimes
happens that two or more clients simultaneously purchase or sell the same
security, in which event each day's transactions in such security are, insofar
as possible, averaged as to price and allocated between such clients in a manner
which in Mentor Advisors' opinion is equitable to each and in accordance with
the amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients. Mentor Advisors employs a professional staff of
investment personnel who draw upon a variety of resources for research
information for the Fund.
Expenses incurred in the operation of the Fund, including but not
limited to taxes, interest, brokerage fees and commissions, SEC fees and related
expenses, state Blue Sky qualification fees, charges of the custodian and
transfer and dividend disbursing agents, outside auditing, accounting, and legal
services, investor servicing fees and expenses, charges for the printing of
prospectuses and statements of additional information for regulatory purposes or
for distribution to shareholders, certain shareholder report charges, and
charges relating to corporate matters are borne by the Fund.
The Management Contract is subject to annual approval (beginning in
2000) by (i) the Board of Directors or (ii) vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of the Fund, provided that in
either event the continuance is also approved by a majority of the Directors who
are not "interested persons" (as defined in the 1940 Act) of the Fund or Mentor
Advisors by vote cast in person at a meeting called for the purpose of voting on
such approval. The Management Contract is terminable without penalty, on not
more than sixty days' notice by the Fund or Mentor Advisors.
B-15
<PAGE>
Prior to September 9, 1995, Lord, Abbett & Co. ("Lord, Abbett"), the
General Motors Building, 767 Fifth Avenue, New York, New York 10153 served as
investment adviser to the Fund under an Investment Advisory Agreement dated
February 14, 1992. For its services, Lord, Abbett received $200,000 for the
period February 14, 1993 through February 13, 1994, and $300,000 for the period
February 14, 1994 through February 13, 1995. After February 13, 1995, the Fund
paid a quarterly fee to Lord, Abbett according to the same schedule for fees
under the current Management Contract with Mentor Advisors.
Management Fees
The Fund paid management fees in the following amounts for the fiscal
years indicated below:
1997 1996 1995
--------- -------- ---------
$371,906 $352,144 $323,431(1)
- ----------
(1) $198,375 of this amount was paid to Lord, Abbett.
B-16
<PAGE>
OTHER SERVICES
Administrative Services
Mentor Investment Group, LLC ("Mentor") acts as administrator to the
Fund pursuant to an Administrative Services Agreement. Pursuant to the
Administrative Services Agreement, Mentor assists the Fund in preparation of
certain reports to shareholders of the Fund, tax returns, and filings with the
SEC, prepares and furnishes reports to the Fund's Board of Directors, and
generally assists in the Fund's business operations.
The Administrative Services Agreement is subject to annual approval
(beginning in 2000) by the Board of Directors, provided that the continuance is
also approved by a majority of the Directors who are not "interested persons"
(as defined in the 1940 Act) of the Fund, or Mentor, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Agreement is
terminable without penalty, immediately upon notice, by the Board of Directors
or by vote of the holders of a majority of the Fund shares, and on not less than
thirty days' notice by Mentor.
The Fund pays Mentor for such services at an annual rate of 0.65% of
the Fund's average daily net assets, less the amount of any management fees paid
to Mentor Advisors pursuant to the Management Contract.
Prior to August 21, 1995, America's Utility Fund Service Company ("AUF
Service Company") provided administrative services and certain shareholder and
transfer and dividend payment agent services to the Fund pursuant to an
Administrative Services and Transfer Agency Agreement. For these combined
services, AUF Service Company received fees from the Fund at the annual rate of
1% of the Fund's average daily net assets. AUF Service Company also paid the
management fee for the Fund.
Administrative Fees
The Fund paid the following fees for administrative services for the
fiscal years indicated below. Amounts prior to August 21, 1995 reflect the 1%
fee paid to AUF Service Company.
1997 1996 1995
--------- --------- ---------
$596,068 $617,040 $948,530(1)
- ----------------
(1) Of this amount, $735,127 was paid to AUF Service Company.
B-17
<PAGE>
Shareholder Servicing
The Fund has entered into a Shareholder Service Agreement dated
February 1, 1998 with Mentor, pursuant to which Mentor, by itself or through
other financial institutions, provides shareholder support services to the Fund
and its shareholders. These services may include, but are not limited to,
providing office space and various clerical, supervisory, and computer personnel
for the maintenance of shareholder accounts, processing purchase and redemption
transactions, and providing assistance to shareholders. In return for providing
these services, the Fund pays Mentor a fee, at the annual rate of 0.25% of the
Fund's average daily net assets. Prior to October 31, 1997, pursuant to a
Sub-Shareholder Services Agreement between Mentor and AUF Service Company,
Mentor paid fees to AUF Service Company at the same annual rate of the Fund's
net assets in respect of which AUF Service Company provided specified
shareholder services.
The Fund paid shareholder services fees to Mentor (which in turn paid
fees to AUF Service Company) of $354,802 during fiscal year 1997.
AUF Service Company (prior to August 21, 1995) and Mentor (throughout
the period from August 21, 1995 to December 31, 1997) paid the expenses of the
Fund to the extent total Fund operating expenses exceeded 1.21% of the Fund's
average daily net assets. As a result of this expense limitation, AUF Service
Company and Mentor incurred expenses of $118,162 and $66,941 respectively, for
the Fund during the 1995 fiscal year, and Mentor incurred expenses of $144,093
and $124,524, respectively, for the 1996 and 1997 fiscal years.
Transfer agent services
Prior to December 15, 1997, AUF Service Company received fees from
State Street Bank and Trust Company ("State Street"), the Fund's transfer agent,
for services performed under a Sub-Transfer Agency Agreement dated August 21,
1995. Pursuant to that Agreement, AUF Service Company provided certain transfer
agent, dividend disbursing agent, and other services to the Fund and its
shareholders who purchased shares of the Fund through facilities made available
to Virginia Power and North Carolina Power customers. State Street paid AUF
Service Company a fee at the annual rate of 0.10% of the Fund's average net
assets attributable to shares held such shareholders. For fiscal year 1997,
these fees amounted to $337,898.
Custody Arrangements
Pursuant to a Custody Agreement dated March 1, 1995, Investors
Fiduciary Trust Corporation ("IFTC"), serves as custodian to the Fund.
B-18
<PAGE>
BROKERAGE
Transactions on U.S. stock exchanges, commodities markets, and futures
markets and other agency transactions involve the payment by the Fund of
negotiated brokerage commissions. Such commissions vary among different brokers.
A particular broker may charge different commissions according to such factors
as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Fund usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by the Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")), from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, Mentor Advisors receives brokerage and research services and other
similar services from many broker-dealers with which it places the Fund's
portfolio transactions and from third parties with which these broker-dealers
have arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services and personal
computers utilized by Mentor Advisors' managers and analysts. Where the services
referred to above are not used exclusively by Mentor Advisors for research
purposes, Mentor Advisors, based upon its own allocations of expected use, bears
that portion of the cost of these services which directly relates to its
non-research use. Some of these services are of value to Mentor Advisors and its
affiliates in advising various of its clients (including the Fund), although not
all of these services are necessarily useful and of value in managing the Fund.
Mentor Advisors places all orders for the purchase and sale of
portfolio investments for the Fund and buys and sells investments for the Fund
through a substantial number of brokers and dealers. Mentor Advisors seeks the
best overall terms available for the Fund, except to the extent it may be
permitted to pay higher brokerage commissions as described below. In doing so,
Mentor Advisors, having in mind the Fund's best interests, considers all factors
it deems relevant, including, by way of illustration, price, the size of the
transaction, the nature of the market for the security or other investment, the
amount of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker-dealer involved, and the quality of service rendered by the
broker-dealer in other transactions.
B-19
<PAGE>
As permitted by Section 28(e) of the 1934 Act, and by the Management
Contract, the Mentor Advisors may cause the Fund to pay a broker-dealer which
provides "brokerage and research services" (as defined in the 1934 Act) to
Mentor Advisors an amount of disclosed commission for effecting securities
transactions on stock exchanges and other transactions for the Fund on an agency
basis in excess of the commission which another broker-dealer would have charged
for effecting that transaction. Mentor Advisors' authority to cause the Fund to
pay any such greater commissions is also subject to such policies as the Board
of Directors may adopt from time to time. Mentor Advisors does not currently
intend to cause the Fund to make such payments. It is the position of the staff
of the Securities and Exchange Commission that Section 28(e) does not apply to
the payment of such greater commissions in "principal" transactions.
Accordingly, Mentor Advisors will use its best efforts to obtain the best
overall terms available with respect to such transactions, as described above.
Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc. and subject to such other policies as the Board of
Directors may determine, Mentor Advisors may consider sales of shares of the
Fund as a factor in the selection of broker-dealers to execute portfolio
transactions for the Fund.
The Directors have determined that portfolio transactions for the Fund
may be effected through Wheat, First Securities, Inc. ("Wheat"), and EVEREN
Securities, Inc. ("EVEREN"), broker-dealers affiliated with Mentor Advisors. The
Board of Directors has adopted certain policies incorporating the standards of
Rule 17e-l issued by the SEC under the 1940 Act which requires, among other
things, that the commissions paid to Wheat and EVEREN must be reasonable and
fair compared to the commissions, fees, or other remuneration received by other
brokers in connection with comparable transactions involving similar securities
during a comparable period of time. Wheat and EVEREN will not participate in
brokerage commissions given by the Fund to other brokers or dealers.
Over-the-counter purchases and sales are transacted directly with principal
market makers except in those cases in which better prices and executions may be
obtained elsewhere. The Fund will in no event effect principal transactions with
Wheat and EVEREN in over-the-counter securities in which Wheat or EVEREN makes a
market, as the case may be.
Under rules adopted by the SEC, Wheat and EVEREN may not execute
transactions for the Fund on the floor of any national securities exchange, but
may effect transactions for the Fund by transmitting orders for execution and
arranging for the performance of this function by members of the exchange not
associated with them. Wheat and EVEREN will be required to pay fees charged to
those persons performing the floor brokerage elements out of the brokerage
compensation they receive from the Fund. The Fund has been advised by Wheat that
on most transactions, the floor brokerage generally constitutes from 5% and 10%
of the total commissions paid.
B-20
<PAGE>
Brokerage Commissions
The Fund paid brokerage commissions in the following amounts during the
periods set forth below:
Fiscal year Fiscal year Fiscal year
1995 1996 1997
------------ ------------ -----------
$162,737 $102,955 $161,766
The following table shows brokerage commissions paid by the Fund to
affiliated brokers for the periods indicated:
Fiscal year Fiscal year Fiscal year
1995 1996 1997
------------ ------------ -----------
Wheat First Securities, Inc. $29,539(1) $39,946 $41,440
EVEREN Securities, Inc. N/A $ 3,360(2) $18,544
- ----------------
(1) For the period September, 1995 through December 31, 1995. (2) For the period
November, 1996 through December 31, 1996.
For fiscal 1995, the brokerage commissions shown above paid to Wheat
amounted to 18.15% of the Fund's aggregate brokerage commissions on 13.51% of
the Fund's aggregate dollar amount of brokerage transactions. For fiscal 1996
the brokerage commissions shown above paid to Wheat amounted to 38.8% of the
Fund's aggregate brokerage commissions on 11.45% of the Fund's aggregate dollar
amount of brokerage transactions. For fiscal 1996 the brokerage commissions
shown above paid to EVEREN amounted to 3.26% of the Fund's aggregate brokerage
commissions on 0.71% of the Fund's aggregate dollar amount of brokerage
transactions. For fiscal 1997 the brokerage commissions shown above paid to
Wheat amounted to 25.62% of the Fund's aggregate brokerage commissions on
22.39% of the Fund's aggregate dollar amount of brokerage transaction. For
fiscal 1997 the brokerage commissions shown above paid to EVEREN amounted to
11.46% of the Fund's aggregate brokerage commissions on 11.32% of the Fund's
aggregate dollar amount of brokerage transactions.
DETERMINATION OF NET ASSET VALUE
The Fund determines its net asset value per share each day the New York
Stock Exchange (the "Exchange") is open. Currently, the Exchange is closed
Saturdays, Sundays, and the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving, and Christmas.
B-21
<PAGE>
Securities for which market quotations are readily available are
valued at prices which, in the opinion of the Board of Directors or Mentor
Advisors, most nearly represent the market values of such securities. Currently,
such prices are determined using the last reported sale price or, if no sales
are reported (as in the case of some securities traded over-the-counter), the
last reported bid price, except that certain U.S. Government securities are
stated at the mean between the last reported bid and asked prices. Short-term
investments having remaining maturities of 60 days or less are stated at
amortized cost, which approximates market value. All other securities and assets
are valued at their fair value following procedures approved by the Board of
Directors. Liabilities are deducted from the total, and the resulting amount is
divided by the number of shares of the Fund outstanding.
Reliable market quotations are not considered to be readily available
for long-term corporate bonds and notes, certain preferred stocks, tax-exempt
securities, or certain foreign securities. These investments are stated at fair
value on the basis of valuations furnished by pricing services, which determine
valuations for normal, institutional-size trading units of such securities using
methods based on market transactions for comparable securities and various
relationships between securities which are generally recognized by institutional
traders.
If any securities held by the Fund are restricted as to resale, Mentor
Advisors determines their fair values. The fair value of such securities is
generally determined as the amount which the Fund could reasonably expect to
realize from an orderly disposition of such securities over a reasonable period
of time. The valuation procedures applied in any specific instance are likely to
vary from case to case. However, consideration is generally given to the
financial position of the issuer and other fundamental analytical data relating
to the investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by the Fund
in connection with such disposition). In addition, specific factors are also
generally considered, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer.
In the case of certain fixed-income securities, including certain less
common mortgage-backed securities, market quotations are not readily available
to the Fund on a daily basis, and pricing services may not provide price
quotations. In such cases, Mentor Advisors is typically able to obtain dealer
quotations for each of the securities on at least a weekly basis. On any day
when it is not practicable for Mentor Advisors to obtain an actual dealer
quotation for a security, Mentor Advisors may reprice the securities based on
changes in the value of a U.S. Treasury security of comparable duration. When
the next dealer quotation is obtained, Mentor Advisors compares the dealer quote
against the price obtained by it using its U.S. Treasuryspread calculation, and
makes any necessary adjustments to its calculation methodology. Mentor Advisors
attempts to obtain dealer quotes for each security at least weekly, and on any
day when there has been an unusual occurrence affecting the securities which, in
Mentor
B-22
<PAGE>
Advisors' view, makes pricing the securities on the basis of U.S. Treasuries
unlikely to provide a fair value of the securities.
Generally, trading in certain securities (such as foreign securities)
is substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
of the Fund's shares are computed as of such times. Also, because of the amount
of time required to collect and process trading information as to large numbers
of securities issues, the values of certain securities (such as convertible
bonds, U.S. Government securities, and tax-exempt securities) are determined
based on market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the Exchange which will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value following procedures approved by the Board of Directors.
TAX STATUS
The Fund intends to qualify each year and elect to be taxed as a
regulated investment company under Subchapter M of the United States Internal
Revenue Code of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, the Fund will not be subject to federal income
tax on any of its net investment income or net realized capital gains that are
distributed to shareholders.
In order to qualify as a "regulated investment company," the Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies
and (b) diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government Securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total assets
of the Fund and not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any issuer (other than U.S. Government Securities). In order to
receive the favorable tax treatment accorded regulated investment companies and
their shareholders, moreover, the Fund must in general distribute with respect
to each taxable year at least 90% of the sum of its taxable net investment
income, its net tax-exempt income, and the excess, if any, of net short-term
capital gains over net long-term capital losses for such year.
B-23
<PAGE>
An excise tax at the rate of 4% will be imposed on the excess, if any,
of the Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Portfolio
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by the Fund during October, November, or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
The Fund is required to withhold 31% of all income dividends and
capital gain distributions, and 31% of the gross proceeds of all redemptions of
Fund shares, in the case of any shareholder who does not provide a correct
taxpayer identification number, about whom the Fund is notified that the
shareholder has under reported income in the past, or who fails to certify to
the Fund that the shareholder is not subject to such withholding. Tax-exempt
shareholders are not subject to these back-up withholding rules so long as they
furnish the Fund with a proper certification.
Foreign currency-denominated securities and related hedging
transactions. The Fund's transactions in foreign currencies, foreign
currency-denominated debt securities, and certain foreign currency options,
futures contracts, and forward contracts (and similar instruments) may give rise
to ordinary income or loss to the extent such income or loss results from
fluctuations in the value of the foreign currency concerned.
If more than 50% of the Fund's assets at year end consists of stock or
securities of foreign corporations, the Fund may elect to permit shareholders to
claim a credit or deduction on their income tax returns for their pro rata
portion of qualified taxes paid by the Fund to foreign countries. In such a
case, shareholders will include in gross income from foreign sources their pro
rata shares of such taxes. A shareholder's ability to claim a foreign tax credit
or deduction in respect of foreign taxes paid by the Fund may be subject to
certain limitations imposed by the Code (including, with respect to a foreign
tax credit, a holding period requirement imposed pursuant to the Tax payer
Relief Act of 1997), as a result of which a shareholder may not get a full
credit or deduction for the amount of such taxes. Shareholders who do not
itemize on their federal income tax returns may claim a credit (but no
deduction) for such foreign taxes.
Investment by the Fund in certain "passive foreign investment
companies" could subject the Fund to a U.S. federal income tax or other charge
on the proceeds from the sale of its investment in such a company; however, this
tax can be avoided by making an election to mark such investments to market
annually or to treat the passive foreign investment company as a "qualified
electing fund."
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should
B-24
<PAGE>
be made to the pertinent Code sections and regulations. The Code and regulations
are subject to change by legislative or administrative actions. Dividends and
distributions also may be subject to foreign, state and federal taxes.
Shareholders are urged to consult their tax advisers regarding specific
questions as to federal, foreign, state or local taxes. The foregoing discussion
relates solely to U.S. federal income tax law. Non-U.S. investors should consult
their tax advisers concerning the tax consequences of ownership of shares of the
Fund, including the possibility that they could be subject to the backup
withholding rules described above or that distributions may be subject to a 30%
United States withholding tax (or a reduced rate of withholding provided by
treaty).
DISTRIBUTION
Mentor Distributors, LLC ("Mentor Distributors") serves as principal
distributor of the Fund under a Distribution Agreement dated February 1, 1998.
Pursuant to the Distribution Agreement, Mentor Distributors agrees to bear the
expenses of printing any promotional or sales literature used by Mentor
Distributors or furnished by Mentor Distributors to dealers in connection with
the public offering of the Fund's shares, including expenses of advertising in
connection with such public offerings. Mentor Distributors has not undertaken to
sell any specified number of shares of the Fund.
The Fund or Mentor Distributors may terminate the Distribution
Agreement on sixty days' written notice without penalty. The Distribution
Agreement will terminate automatically in the event of its assignment.
PERFORMANCE INFORMATION
Total return for the one-, five-, and ten-year periods (or for the life
of the Fund, if shorter) is determined by calculating the actual dollar amount
of investment return on a $1,000 investment in the Fund at the beginning of the
period, and then calculating the annual compounded rate of return which would
produce that amount. Total return for a period of one year is equal to the
actual return of the Fund during that period. Total return calculations assume
reinvestment of all Fund distributions at net asset value per share on their
respective reinvestment dates. The total return for the one-year period ending
December 31, 1997 and the average annual total return for the life of the Fund
(May 5, 1992 through December 31, 1997) were 23.31% and 11.96%, respectively.
The Fund's yield is presented for a specified thirty-day period (the
"base period"). Yield is based on the amount determined by (i) calculating the
aggregate amount of dividends and interest earned by the Fund during the base
period less expenses accrued for that period, and (ii) dividing that amount by
the product of (A) the average daily number of shares of the Fund outstanding
during the base period and entitled to receive dividends and (B) the net asset
value per share on the last day of the base period. The result is annualized on
a compounding basis to determine the yield. For this calculation, interest
earned on debt obligations held by
B-25
<PAGE>
the Fund is generally calculated using the yield to maturity (or first expected
call date) of such obligations based on their market values (or, in the case of
receivables-backed securities such as GNMA's, based on cost). Dividends on
equity securities are accrued daily at their stated dividend rates. The yield
for the Fund for the thirty-day period ended December 31, 1997 was 3.34%.
All data for the Fund are based on past performance and do not predict
future results.
Independent statistical agencies measure the Fund's investment
performance and publish comparative information showing how the Fund, and other
investment companies, performed in specified time periods. Agencies whose
reports are commonly used for such comparisons are set forth below. From time to
time, the Fund may distribute these comparisons to its shareholders or to
potential investors. The agencies listed below measure performance based on the
basis of their own criteria rather than on the basis of the standardized
performance measures described above.
Lipper Analytical Services, Inc. distributes mutual fund rankings
monthly. The rankings are based on total return performance calculated
by Lipper, reflecting generally changes in net asset value adjusted for
reinvestment of capital gains and income dividends. They do not reflect
deduction of any sales charges. Lipper rankings cover a variety of
performance periods, for example year-to-date, 1-year, 5-year, and
10-year performance. Lipper classifies mutual funds by investment
objective and asset category.
Morningstar, Inc. distributes mutual fund ratings twice a month. the
ratings are divided into five groups: highest, above average, neutral,
below average and lowest. They represent a fund's historical
risk/reward ratio relative to other funds with similar objectives. The
performance factor is a weighted-average assessment of the Portfolio's
3-year, 5-year, and 10-year total return performance (if available)
reflecting deduction of expenses and sales charges. Performance is
adjusted using quantitative techniques to reflect the risk profile of
the fund. The ratings are derived from a purely quantitative system
that does not utilize the subjective criteria customarily employed by
rating agencies such as Standard & Poor's Corporation and Moody's
Investor Service, Inc.
Weisenberger's Management Results publishes mutual fund rankings and is
distributed monthly. The rankings are based entirely on total return
calculated by Weisenberger for periods such as year-to-date, 1-year,
3-year, 5-year and 10-year performance. Mutual funds are ranked in
general categories (e.g., international bond, international equity,
municipal bond, and maximum capital gain). Weisenberger rankings do not
reflect deduction of sales charges or fees.
Independent publications may also evaluate the Fund's performance.
certain of those publications are listed below. The Fund may
distribute evaluations by or excerpts from these
B-26
<PAGE>
publications to its shareholders or to potential investors. The
following illustrates the types of information provided by these
publications.
Business Week publishes mutual fund rankings in its Investment Figures
of the Week column. The rankings are based on 4-week and 52-week total
return reflecting changes in net asset value and the reinvestment of
all distributions. They do not reflect deduction of any sales charges.
Portfolios are not categorized; they compete in a large universe of
over 2,000 funds. The source for rankings is data generated by
Morningstar, Inc.
Investor's Business Daily publishes mutual fund rankings on a daily
basis. The rankings are depicted as the top 25 funds in a given
category. The categories are based loosely on the type of fund, e.g.,
growth funds, balanced funds, U.S. government funds, GNMA funds, growth
and income funds, corporate bond funds, etc. Performance periods for
sector equity funds can vary from 4 weeks to 39 weeks; performance
periods for other fund groups vary from 1 year to 3 years. Total return
performance reflects changes in net asset value and reinvestment of
dividends and capital gains. The rankings are based strictly on total
return. They do not reflect deduction of any sales charges Performance
grades are conferred from A+ to E. An A+ rating means that the fund has
performed within the top 5% of a general universe of over 2000 funds;
an A rating denotes the top 10%; an A- is given to the top 15%, etc.
Barron's periodically publishes mutual fund rankings. The rankings are
based on total return performance provided by Lipper Analytical
Services. The Lipper total return data reflects changes in net asset
value and reinvestment of distributions, but does not reflect deduction
of any sales charges. The performance periods vary from short-term
intervals (current quarter or year-to-date, for example) to long-term
periods (five-year or ten-year performance, for example). Barron's
classifies the funds using the Lipper mutual fund categories, such as
Capital Appreciation Portfolios, Growth Portfolios, U.S. Government
Portfolios, Equity Income Portfolios, Global Portfolios, etc.
Occasionally, Barron's modifies the Lipper information by ranking the
funds in asset classes. "Large funds" may be those with assets in
excess of $25 million; "small funds" may be those with less than $25
million in assets.
The Wall Street Journal publishes its Mutual Portfolio Scorecard on a
daily basis. Each Scorecard is a ranking of the top-15 funds in a given
Lipper Analytical Services category. Lipper provides the rankings based
on its total return data reflecting changes in net asset value and
reinvestment of distributions and not reflecting any sales charges. The
Scorecard portrays 4-week, year-to-date, one-year and 5-year
performance; however, the ranking is based on the one-year results. The
rankings for any given category appear approximately once per month.
Fortune magazine periodically publishes mutual fund rankings that have
been compiled for the magazine by Morningstar, Inc. Portfolios are
placed in stock or bond fund
B-27
<PAGE>
categories (for example, aggressive growth stock funds, growth stock
funds, small company stock funds, junk bond funds, Treasury bond funds
etc.), with the top-10 stock funds and the top-5 bond funds appearing
in the rankings. The rankings are based on 3- year annualized total
return reflecting changes in net asset value and reinvestment of
distributions and not reflecting sales charges. Performance is adjusted
using quantitative techniques to reflect the risk profile of the fund.
Money magazine periodically publishes mutual fund rankings on a
database of funds tracked for performance by Lipper Analytical
Services. The funds are placed in 23 stock or bond fund categories and
analyzed for five-year risk adjusted return. Total return reflects
changes in net asset value and reinvestment of all dividends and
capital gains distributions and does not reflect deduction of any sales
charges. Grades are conferred (from A to E): the top 20% in each
category receive an A, the next 20% a B, etc. To be ranked, a fund must
be at least one year old, accept a minimum investment of $25,000 or
less and have had assets of at least $25 million as of a given date.
Financial World publishes its monthly Independent Appraisals of Mutual
Portfolios, a survey of approximately 1000 mutual funds. Portfolios are
categorized as to type, e.g., balanced funds, corporate bond funds,
global bond funds, growth and income funds, U.S. government bond funds,
etc. To compete, funds must be over one year old, have over $1 million
in assets, require a maximum of $10,000 initial investment, and should
be available in at least 10 states in the United States. The funds
receive a composite past performance rating, which weighs the
intermediate - and long-term past performance of each fund versus its
category, as well as taking into account its risk, reward to risk, and
fees. An A+ rated fund is one of the best, while a D- rated fund is one
of the worst. The source for Financial World rating is Schabacker
investment management in Rockville, Maryland.
Forbes magazine periodically publishes mutual fund ratings based on
performance over at least two bull and bear market cycles. The funds
are categorized by type, including stock and balanced funds, taxable
bond funds, municipal bond funds, etc. Data sources include Lipper
Analytical Services and CDA Investment Technologies. The ratings are
based strictly on performance at net asset value over the given cycles.
Portfolios performing in the top 5% receive an A+ rating; the top 15%
receive an A rating; and so on until the bottom 5% receive an F rating.
Each fund exhibits two ratings, one for performance in "up" markets and
another for performance in "down" markets.
Kiplinger's Personal Finance Magazine (formerly Changing Times),
periodically publishes rankings of mutual funds based on one-, three-
and five-year total return performance reflecting changes in net asset
value and reinvestment of dividends and capital gains and not
reflecting deduction of any sales charges. Portfolios are ranked by
tenths: a rank of 1 means that a fund was among the highest 10% in
total return for the period; a rank of 10 denotes the bottom 10%.
Portfolios compete in categories of similar
B-28
<PAGE>
funds -- aggressive growth funds, growth and income funds, sector
funds, corporate bond funds, global governmental bond funds,
mortgage-backed securities funds, etc. Kiplinger's also provides a
risk-adjusted grade in both rising and falling markets. Portfolios are
graded against others with the same objective. The average weekly total
return over two years is calculated. Performance is adjusted using
quantitative techniques to reflect the risk profile of the fund.
U.S. News and World Report periodically publishes mutual fund rankings
based on an overall performance index (OPI) devised by Kanon Bloch
Carre & Co., a Boston research firm. Over 2000 funds are tracked and
divided into 10 equity, taxable bond and tax-free bond categories.
Portfolios compete within the 10 groups and three broad categories. The
OPI is a number from 0-100 that measures the relative performance of
funds at least three years old over the last 1, 3, 5 and 10 years and
the last six bear markets. Total return reflects changes in net asset
value and the reinvestment of any dividends and capital gains
distributions and does not reflect deduction of any sales charges.
Results for the longer periods receive the most weight.
The 100 Best Mutual Portfolios You Can Buy (1992), authored by Gordon
K. Williamson. The author's list of funds is divided into 12 equity and
bond fund categories, and the 100 funds are determined by applying four
criteria. First, equity funds whose current management teams have been
in place for less than five years are eliminated. (The standard for
bond funds is three years.) Second, the author excludes any fund that
ranks in the bottom 20 percent of its category's risk level. Risk is
determined by analyzing how many months over the past three years the
fund has underperformed a bank CD or a U.S. Treasury bill. Third, a
fund must have demonstrated strong results for current three-year and
five-year performance. Fourth, the fund must either possess, in Mr.
Williamson's judgment, "excellent" risk-adjusted return or "superior"
return with low levels of risk. Each of the 100 funds is ranked in five
categories: total return, risk/volatility, management, current income
and expenses. The rankings follow a fivepoint system: zero designates
"poor"; one point means "fair"; two points denote "good"; three points
qualify as a "very good"; four points rank as "superior"; and five
points mean "excellent."
B-29
<PAGE>
MEMBERS OF INVESTMENT TEAMS AT MENTOR ADVISORS
The following persons are investment personnel of Mentor Advisors, as
indicated.
Large Capitalization Quality Equity Growth
John G. Davenport, CFA -- Managing Director, Chief Investment Officer Mr.
Davenport has twelve years of investment management experience. He joined the
Mentor organization after heading equity research for Lowe, Brockenbrough,
Tierney, & Tattersall. He earned his undergraduate business degree from the
University of Richmond and his graduate degree in business from the University
of Virginia.
Richard H. Skeppstrom II -- Vice President, Portfolio Manager
Mr. Skeppstrom has six years of investment management experience. He has earned
both his undergraduate degree and masters of business administration from the
University of Virginia.
Richard L. Rice, CFA -- Vice President, Portfolio Manager
Mr. Rice has twenty-four years' experience in the securities industry. Prior to
joining the Mentor organization in 1993, he was a partner in the equity
management software firm, Parata Analytics Research, which was acquired by the
Mentor organization. His previous responsibilities include director of Research
for Signet Asset Management, Senior Research Analyst for Capitoline Investment
Services, and research positions at First Atlanta Corp. and Southeast Banking.
He earned his undergraduate business degree from the University of Florida.
Active Fixed-Income
P. Michael Jones, CFA -- Managing Director, Chief Investment Officer
Mr. Jones has eleven years of investment management experience. Mr. Jones is
responsible for the design and implementation of the fixed-income group's
proprietary analytical system. He earned his undergraduate degree from the
College of William and Mary.
Steven C. Henderson -- Associate Vice President, Portfolio Manager
Mr. Henderson has seven years of investment management experience. He has an
undergraduate degree from the University of Richmond and a masters in business
administration from George Washington University.
Stephen R. McClelland -- Vice President, Portfolio Manager
Mr. McClelland has six years of investment management experience, all of which
have been with the Mentor organization. He is a Certified Public Accountant and
received his undergraduate degree in accounting from Iowa State University and
his graduate business degree from Virginia Commonwealth University.
B-30
<PAGE>
Keith Wantling
Mr. Wantling has five years of experience. Mr. Wantling performs analysis and
screening for credit sensitive private label mortgage-backed securities and
directs the firm's portfolio analysis effort. He holds his undergraduate degree
in accounting information systems from Virginia Polytechnic Institute.
Small-to-Medium Capitalization Equity Growth
Theodore W. Price, CFA -- Managing Director, Chief Investment Officer
Mr. Price has over thirty years of investment management experience, with over
twenty-three years' tenure at Charter Asset Management, the predecessor to
Mentor Advisors. He has managed Mentor Growth Portfolio since its inception. He
earned both his undergraduate degree and masters of business administration from
the University of Virginia.
Linda A. Ziglar, CFA -- Portfolio Manager
Ms. Ziglar has seventeen years of investment management experience. Ms. Ziglar
joined Charter Asset Management, the predecessor to Mentor Advisors, from
Federated Investors, where she managed $300 million in equity assets. She holds
an undergraduate degree from Randolph-Macon Woman's College where she graduated
summa cum laude. She also holds a graduate degree in business administration
from the University of Pittsburgh.
Jeffrey S. Drummond, CFA -- Vice President, Portfolio Manager
Mr. Drummond has eight years of investment management experience. Mr. Drummond
began his career as a portfolio analyst in the Investment Strategy Department at
Wheat First Butcher Singer, where he shared responsibility for directing $100
million in assets following the Strategic Sectors Portfolio. He received his
undergraduate degree in finance from the University of Richmond, where he
graduated cum laude.
Edward Rick IV
Mr. Rick has two years of investment management experience. He received his
undergraduate degree in finance from the University of Richmond, where he
graduated cum laude.
Tactical Asset Allocation
Don R. Hays -- Chief Investment Officer
Mr. Hays has over twenty-seven years of investment experience and is Director of
Investment Strategy for Wheat First Butcher Singer, Inc., a position he has held
since 1984. Mr. Hays began his career as an engineer with the Von Braun
rocket-development team in 1968. He is regarded as one of the country's leading
investment strategists and his market outlook is quoted regularly in the Wall
Street Journal, Investor's Business Daily, USA Today, and other major media. He
has been a guest on the PBS series Wall $treet Week with Louis Rukeyser and is
regularly featured by Dow Jones, Reuters and Bloomberg News Services.
B-31
<PAGE>
Asa W. Graves VII, CFA -- Portfolio Manager
Mr. Graves has five years of investment management experience and works closely
with Mr. Hays to develop the analytical framework used in managing the Mentor
Strategy Portfolio. He earned his undergraduate degree from the University of
Richmond.
William P. Ryder -- Research Analyst
Mr. Ryder joined Wheat First Butcher Singer in 1991 as a member of its
Investment Strategy Group, working as a research analyst on its growth and
growth and income model portfolios. In 1995 he became part of the team
responsible for managing the Mentor Strategy Portfolio. In that capacity he
focuses primarily on conducting economic analysis, industry group studies, and
asset allocation modeling. Mr. Ryder attended Virginia Commonwealth University
and has five years' investment experience.
CUSTODIAN
Investors Fiduciary Trust Company, 127 West 10th Street, Kansas City,
Missouri, 64105, acts as the custodian for the Fund's portfolio securities and
cash. In this capacity, it maintains certain financial and accounting books and
records pursuant to agreements with the Fund.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, located at 99 High Street, Boston, Massachusetts
02110, are the Fund's independent accountants, providing audit services, tax
return review and other tax consulting services and assistance and consultation
in connection with the review of various Securities and Exchange Commission
filings. Prior to the 1997 fiscal year, Deloitte & Touche L.L.P., 707 East Main
Street, Richmond, Virginia 23219, served as the Fund's independent accountants.
RATINGS
The rating services' descriptions of corporate bonds are:
Moody's Investors Service, Inc.:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated
B-32
<PAGE>
lower than the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long term risks
appear somewhat larger than in Aaa securities.
A -- Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Standard & Poor's:
AAA -- Bonds rated AAA have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.
A -- Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
A-1 and Prime-1 Commercial Paper Ratings
The rating A-1 (including A-1+) is the highest commercial paper rating assigned
by S&P. Commercial paper rated A-1 by S&P has the following characteristics:
o liquidity ratios are adequate to meet cash requirements;
o long-term senior debt is rated "A" or better;
o the issuer has access to at least two additional channels of
borrowing;
B-33
<PAGE>
o basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances;
o typically, the issuer's industry is well established and the issuer
has a strong position within the industry; and
o the reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that are
determined by S&P to have overwhelming safety characteristics are designated
A-1+.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
o evaluation of the management of the issuer;
o economic evaluation of the issuer's industry or industries and an
appraisal of speculative- type risks which may be inherent in certain
areas;
o evaluation of the issuer's products in relation to competition and
customer acceptance;
o liquidity;
o amount and quality of long-term debt;
o trend of earnings over a period of ten years;
o financial strength of parent company and the relationships which
exist with the issuer; and
o recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to
meet such obligations.
Note Ratings:
MIG1/VMIG1 - This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2 - This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
B-34
<PAGE>
A-1 - This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus sign (+) designation.
A-2 - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
B-35
<PAGE>
FINANCIAL STATEMENTS
The Independent Auditor's Report, financial highlights, and financial
statements in respect of the Fund, included in the Fund's Annual Report for the
fiscal year ended December 31, 1997, filed electronically on February 26, 1998
(File No. 811-6549) (Accession No. 0000916641-98-000165), are incorporated by
reference into this Statement of Additional Information.
B-36
<PAGE>
AMERICA'S UTILITY FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements
Financial Statements:
(1) Independent Auditor's Report (b)
(2) Statement of Assets and Liabilities -- December 31, 1997 (b)
(3) Statement of Operations -- Year Ended December 31, 1997 (b)
(4) Statements of Changes in Net Assets -- Years Ended
December 31, 1997 and 1996 (b)
(5) Financial Highlights (a)
(6) Notes to Financial Statements (b)
Supporting Schedules:
Schedule I -- Portfolio of Investments -- December 31, 1997 (b)
Schedule II through IX omitted because the required matter
is not present.
(a) Included in Part A.
(b) Incorporated by reference into Part B.
b. Exhibits
(1) Articles of Incorporation. (b)
(2) By-laws. (b)
(3) Inapplicable.
(4) Article V of the Articles of Incorporation filed
herewith, and Article I of the By-laws filed
herewith, set forth provisions related to shareholder
rights.
(5)
(A) Management Contract dated February 1, 1998. (b)
(B) Administrative Services Agreement dated February 1, 1998.(b)
(6) Distribution Agreement, dated as of February 1, 1998. (b)
(7) Inapplicable.
(8)
(A) Inapplicable
(B) Shareholder Service Agreement dated February 1, 1998. (b)
<PAGE>
(C) Transfer Agency and Services Agreement dated August 21,
1995. (a)
(D) Sub-Transfer Agency Agreement dated August 21, 1995. (a)
(E) Custody Agreement dated March 1, 1995. (a)
(9) Inapplicable.
(10)
(A) Opinion of Counsel, including consent. (b)
(B) Opinion of Special Maryland Counsel, including consent. (a)
(11)
(A) Consent of Independent Auditors. (b)
(B) Consent of Independent Auditors. (b)
(12) Inapplicable.
(13) Inapplicable.
(14) Form of Registrant's IRA Documents. (b)
(15) Inapplicable.
(16) Schedule of Computation of Performance. (a)
(19) Powers of Attorney. (b)
(27) Financial Data Schedule. (a)
(a) Incorporated by reference to Registrant's Post-Effective Amendment No. 6 on
Form N-1A filed May 1, 1997.
(b) Filed herewith.
Item 25: Persons Controlled by or Under Common Control with Registrant
None
Item 26: Number of Holders of Securities (as of March 1, 1998)
- ------- -----------------------------------------------------
(1) (2)
Title of Class Number of Record Shareholders
--------------- -----------------------------
Common Stock, par 33,094
value $.001 per share
Item 27: Indemnification
The information required by this item is incorporated herein by
reference from Post-Effective Amendment No. 4 to the Registrant's
Statement on Form N-1A (Reg. No. 33-45437) under the Securities Act of
1933, filed on February 16, 1995.
Item 28. Business or Other Connections of Investment Adviser
-2-
<PAGE>
(a) The following is additional information with respect to
the directors and officers of Mentor Investment Advisors, LLC:
The business and other connections of each director, officer,
or partner of Mentor Investment Advisors, LLC in which such director, officer,
or partner is or has been, at any time during the past two fiscal years, engaged
for his own account or in the capacity of director, officer, employee, partner,
or trustee are set forth in the following table.
-3-
<PAGE>
Other Substantial
Position with the Business, Profession,
Name Investment Adviser Vocation or Employment
- ----- ------------------ -----------------------
John G. Davenport Managing Director None
R. Preston Nuttall Managing Director Formerly, Senior Vice
President, Capitoline
Investment Services
Paul F. Costello Managing Director Managing Director, Wheat
First Butcher Singer, Inc.
and Mentor Investment
Group, LLC; President,
Mentor Funds, Mentor
Income Fund, Inc., Cash
Resource Trust, and
Mentor Institutional Trust;
Director, Mentor Perpetual
Advisors, LLC and Mentor
Trust Company
Theodore W. Price Managing Director Formerly, President,
Charter Asset
Management, Inc.
P. Michael Jones
Managing Director
Formerly, Managing
Director, Commonwealth
Investment Counsel, Inc.
Thomas L. Souders Treasurer Managing Director and
Chief Financial Officer,
Wheat, First Securities,
Inc.; formerly, Manager of
Internal Audit, Heilig-
Myers; formerly, Manager,
Peat Marwick & Mitchell
& Company
Robert P. Wilson Assistant Treasurer Assistant Treasurer,
Mentor Distributors, LLC
-4-
<PAGE>
Geoffrey B. Sale Secretary Associate Vice President
Mentor Investment Group,
LLC; Clerk Mentor
Institutional Trust;
Secretary America's Utility
Fund, Cash Resource Trust,
Mentor Income Fund, Inc.,
Mentor Funds and Mentor
Variable Investment
Portfolios.
Howard T. Macrae, Jr. Assistant Secretary Assistant Secretary,
Mentor Distributors, LLC
Item 29. Principal Underwriters
(a) Mentor Distributors, LLC, the Fund's principal
underwriter, acts as principal underwriter for the following investment
companies:
The Mentor Funds
o Mentor Growth Portfolio
o Mentor Strategy Portfolio
o Mentor Short-Duration Income Portfolio
o Mentor Balanced Portfolio
o Mentor Capital Growth Portfolio
o Mentor Perpetual Global Portfolio
o Mentor Income and Growth Portfolio
o Mentor Quality Income Portfolio
o Mentor Municipal Income Portfolio
o Mentor Institutional U.S. Government Money Market Portfolio
o Mentor Institutional Money Market Portfolio
Cash Resource Trust
o Cash Resource Money Market Fund
o Cash Resource U.S. Government Money Market Fund
o Cash Resource Tax-Exempt Money Market Fund
o Cash Resource California Tax-Exempt Money Market Fund
o Cash Resource New York Tax-Exempt Money Market Fund
Mentor Institutional Trust
o Mentor U. S. Government Cash Management Portfolio
o Mentor Fixed-Income Portfolio
o Mentor Perpetual International Portfolio
Mentor Investment Group
o Mentor Income Fund
o America's Utility Fund
Mentor Variable Investment Portfolios
o Mentor VIP Growth Portfolio
o Mentor VIP Strategy Portfolio
-5-
<PAGE>
o Mentor VIP Balanced Portfolio
o Mentor VIP Capital Growth Portfolio
o Mentor VIP Perpetual International Portfolio
(b) Information concerning officers of Mentor Distributors,
LLC:
Name And Principal Positions And Offices Positions And Offices
Business Address* With Underwriter With Registrant
----------------- --------------------- ---------------------
Lynn Mangum Chairman Inapplicable
D'Ray Moore President Inapplicable
Dennis Sheehan Executive Vice President Inapplicable
William J. Tomko Senior Vice President Inapplicable
Mark J. Rybarczyk Senior Vice President Inapplicable
Kevin J. Dell Vice President and Inapplicable
Secretary
Michael D. Burns Vice President Inapplicable
David Blackmore Vice President Inapplicable
Robert L. Tuch Assistant Secretary Inapplicable
Steven Ludwig Compliance Officer Inapplicable
-6-
<PAGE>
*Principal Address for all Officers:
BISYS Fund Services, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-8000
(c) Inapplicable.
Item 30. Location of Accounts and Records
Certain accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules
promulgated thereunder are maintained by the Fund at 901 East
Byrd Street, Richmond, Virginia 23219 or by Boston Financial
Data Services, Inc., the Registrant's transfer agent, at 2
Heritage Drive, North Quincy, Massachusetts 02171. Records
relating to the duties of the Registrant's custodian are
maintained by the Registrant's Custodian, Investors Fiduciary
Trust Company, 127 West 10th Street, Kansas City, Missouri
64105. Records relating to the duties of the Registrant's
distributor are maintained by the Registrant's Distributor,
Mentor Distributors, LLC, 3435 Stelzer Road, Columbus, Ohio
432219-8000.
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
-7-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Richmond, and Commonwealth of Virginia, on the 30th
day of April, 1998:
AMERICA'S UTILITY FUND, INC.
By: /s/ Paul F. Costello
-----------------------
Paul F. Costello
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated on the 30th day of April, 1998:
*
______________________________ Director, President and
Daniel J. Ludeman Principal Executive Officer
______________________________ Director
Louis W. Moelchert, Jr.
______________________________ Director
Thomas F. Keller
*
______________________________ Director
Arnold H. Dreyfuss
*
______________________________ Director
Troy A. Peery, Jr.
*
______________________________ Director
Peter J. Quinn, Jr.
*
______________________________ Director
Arch T. Allen, III
-8-
<PAGE>
*
______________________________ Director
Weston E. Edwards
______________________________ Director
Jerry R. Barrentine
______________________________ Director
J. Garnett Nelson
*
______________________________ Treasurer, Principal
Terry L. Perkins Accounting Officer, and
Principal Financial
Officer
*By: /s/ Paul F. Costello
--------------------------
Paul F. Costello
Attorney-in-fact
-9-
<PAGE>
INDEX TO EXHIBITS
(1) Articles of Incorporation
(2) By-laws
(5)(A) Management Contract
(5)(B) Administrative Services Agreement
(6) Distribution Agreement
(8)(B) Shareholder Service Agreement
(10)(A) Opinion of Counsel
(11)(A) Consent of Independent Auditors
(11)(B) Consent of Independent Auditors
(14) Form of Registrant's IRA Plan
(19) Powers of Attorney
-10-
ARTICLES OF INCORPORATION
OF
AMERICA'S UTILITY FUND, INC.
APPROVED AND RECEIVED FOR RECORD BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF MARYLAND JANUARY 28, 1992 AT 10:27 O'CLOCK A.M. AS IN CONFORMITY
WITH LAW AND ORDERED RECORDED.
--------------------
ORGANIZATION AND RECORDING SPECIAL
CAPITALIZATION FEE PAID: FEE PAID: FEE PAID:
$100.00 $20.00 $
----------------------
D3362332
TO THE CLERK OF THE COURT OF BALTIMORE CITY
IT IS HEREBY CERTIFIED, THAT THE WITHIN INSTRUMENT, TOGETHER WITH ALL
INDORSEMENTS THEREON, HAS BEEN RECEIVED, APPROVED AND RECORDED BY THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.
<PAGE>
ARTICLES OF INCORPORATION
OF
AMERICA'S UTILITY FUND, INC.
ARTICLE I
I, the incorporator, Paul J. McElroy, whose post office address is 1701
Pennsylvania Ave., N.W., Suite 800, Washington, D.C. 20006, being at least
eighteen years of age, does, under and by virtue of the general laws of the
State of Maryland authorizing the formation of corporations, hereby act as
incorporator with the intention of forming a corporation.
ARTICLE II
The name of the Corporation (hereinafter called the "Corporation") is:
America's Utility Fund, Inc.
ARTICLE III
Purposes
The purpose for which the Corporation is formed is to act as an open-end
management investment company registered as such with the Securities and
Exchange Commission pursuant to the Investment Company Act of 1940, as amended,
and to exercise and generally to enjoy all of the powers, rights and privileges
granted to, or conferred upon, corporations by the laws of the State of Maryland
now or hereafter in force.
<PAGE>
ARTICLE IV
Principal Office and Resident Agent
-----------------------------------
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202.
The name of the Corporation's resident agent is The Corporation Trust
Incorporated, and its address is 32 South Street, Baltimore, Maryland 21202. The
resident agent is a Maryland corporation.
ARTICLE V
Common Stock
------------
Section 1. (a) The total number of shares of stock which the Corporation
initially has authority to issue is 500,000,000 shares of common stock (the
"Shares") of the par value of $0.001 each, all of one class, having an aggregate
par value of $500,000. All Shares shall be issued without certificates in
accordance with the provisions of the General Corporation Law in the State of
Maryland. The Board of Directors of the Corporation shall have the power and
authority to increase or decrease, from time to time, the aggregate number of
shares of stock (of any class) which the Corporation shall have authority to
issue.
(b) The Board of Directors of the Corporation shall have the power and
authority to classify or reclassify
-2-
<PAGE>
any unissued stock from time to time by setting or changing the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of such unissued
stock.
Section 2. Each Share shall be subject to the following provisions:
(a) Subject to subsection (b) of this Section 2, the net asset value per
Share shall be the quotient obtained by dividing the value of the net assets of
the Corporation (being the value of the total assets of the Corporation less
liabilities) by the total number of Shares outstanding. Subject to subsection
(b) of this Section 2, the value of the total assets of the Corporation shall be
determined by, determined pursuant to the direction of, or determined pursuant
to procedures or methods prescribed or approved by the Board of Directors in its
sole discretion, and shall be so determined at the time or times prescribed or
approved by the Board of Directors in its sole discretion.
(b) The net asset value of each Share, for the purpose of the issue,
redemption or repurchase of such Share, shall be determined in accordance with
any applicable provision of the Investment Company Act of 1940, as amended, any
applicable rule, regulation or order of the Securities and Exchange Commission
thereunder, and any applicable rule or regulation made or adopted by any
securities association
-3-
<PAGE>
registered under the Securities Exchange Act of 1934, as amended.
(c) All Shares now or hereafter authorized shall be subject to
redemption or redeemable at the option of the stockholder, in the sense used in
the General Corporation Law of the State of Maryland. Each holder of a Share,
upon request to the Corporation accompanied by appropriate documents of
transfer, shall be entitled to require the Corporation to redeem all or any part
of the Shares standing in the name of such holder on the books of the
Corporation at a redemption price per Share equal to the net asset value per
Share determined in accordance with subsection (a) of this Section 2.
(d) Notwithstanding subsection (c) of this Section 2, the Board of
Directors of the Corporation may suspend the right of the holders of Shares to
require the Corporation to redeem such Shares or may suspend any voluntary
purchase of such Shares:
(i) for any period (A) during which the New York Stock Exchange
is closed other than customary weekend and holiday closings, or (B)
during which trading on the New York Stock Exchange is restricted;
(ii) for any period during which an emergency, as defined by the
rules of the Securities and Exchange Commission or any successor
thereto, exists as a result of which (A) disposal by the Corporation of
securities
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<PAGE>
owned by it is not reasonably practicable; or (B) it is not reasonably
practicable for the Corporation fairly to determine the value of its net
assets; or
(iii) for such periods as the Securities and Exchange Commission
or any successor thereto may by order permit for the protection of
stockholders of the Corporation.
(e) All Shares now or hereafter authorized shall be subject to
redemption and redeemable at the option of the Corporation. The Board of
Directors may by resolution from time to time authorize the Corporation to
require the redemption of all or any part of the outstanding Shares upon the
sending of written notice thereof to each stockholder any of whose Shares are so
redeemed and upon such terms and conditions as the Board of Directors shall deem
advisable, out of funds legally available therefor, at net asset value per Share
determined in accordance with subsection (a) of this Section 2 and to take all
other steps deemed necessary or advisable in connection therewith.
(f) The Board of Directors may by resolution from time to time authorize
the repurchase by the Corporation, either directly or through an agent, of
Shares upon such terms and conditions and for such consideration as the Board of
Directors shall deem advisable, out of funds legally available therefor, at
prices per Share not in excess of the net asset value per Share determined in
accordance with
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<PAGE>
subsection (a) of this Section 2 and to take all other steps deemed necessary or
advisable in connection therewith.
(g) Except as otherwise permitted by the Investment Company Act of 1940,
as amended, payment of the redemption or repurchase price of Shares surrendered
to the Corporation for redemption pursuant to the provisions of subsection (c)
or (e) of this Section 2 or for repurchase by the Corporation pursuant to the
provisions of subsection (f) of this Section 2 shall be made by the Corporation
within seven days after surrender of such Shares to the Corporation for such
purpose. Any such payment may be made in whole or in part in portfolio
securities or in cash, as the Board of Directors shall deem advisable, and no
stockholder shall have the right, other than as determined by the Board of
Directors, to have his Shares redeemed or repurchased in portfolio securities.
(h) In the absence of any specification as to the purpose for which
Shares are redeemed or repurchased by the Corporation, all Shares so redeemed or
repurchased shall be deemed to be acquired for retirement in the sense
contemplated by the General Corporation Law of the State of Maryland. Shares
retired by redemption or repurchase shall thereafter have the status of
authorized but unissued Shares.
Section 3. (a) The presence in person or by proxy of the holders of
record of one-third of the Shares
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<PAGE>
issued and outstanding and entitled to vote thereat shall constitute a quorum
for the transaction of any business at all meetings of the stockholders except
as otherwise provided by law or in these Articles of Incorporation.
(b) On any given matter, the presence in any meeting, in person or by
proxy, or holders of record of less than one-third of the Shares issued and
outstanding and entitled to vote thereat shall not prevent action at such
meeting upon any other matter or matters which may properly come before the
meeting, if there shall be present thereat, in person or by proxy, holders of
record of the number of Shares required for action in respect of such other
matter or matters.
Section 4. Notwithstanding any provision of law requiring action to be
taken or authorized by the affirmative vote of the holders of a designated
proportion greater than a majority of the outstanding Shares, such action shall
be valid and effective if taken or authorized by the affirmative vote of the
holders of a majority of the total number of Shares issued and outstanding and
entitled to vote thereupon pursuant to the provisions of these Articles of
Incorporation.
Section 5. No holder of shares shall, as such holder, have any
preemptive right to purchase or subscribe for any Shares which the Corporation
may issue or sell (whether out of the number of Shares authorized by these
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<PAGE>
Articles of Incorporation, or out of any Shares acquired by the Corporation
after the issue thereof, or otherwise).
Section 6. All persons who shall acquire Shares in the Corporation shall
acquire the same subject to the provisions of these Articles of Incorporation.
ARTICLE VI
Directors
---------
The number of directors of the Corporation shall initially be three
(3), and the names of those who shall act as such until the first annual meeting
and until their successors are duly elected and qualify are as follows:
O.J. Peterson, III (Chairman)
J. Dennis O'Connor
Peter W. Brown
However, the By-laws of the Corporation may fix the number of directors
at a number larger than three (3) and may authorize the Board of Directors, by
the vote of a majority of the entire Board of Directors, (a) to increase or
decrease the number of directors within a limit specified in the By-laws, and
(b) to fill the vacancies created by any such increase in the number of
directors. Unless otherwise provided by the By-laws of the Corporation, the
directors of the Corporation need not be stockholders.
The By-laws of the Corporation may divide the directors of the
Corporation into classes and prescribe the
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<PAGE>
tenure of office of the several classes; but no class shall be elected for a
period shorter than that from the time of the election of such class until the
next annual meeting and thereafter for a period shorter than the interval
between annual meetings or for a longer period than five years, and the term of
office of at least one class shall expire each year.
ARTICLE VII
Limitation of Liability
-----------------------
A director or officer of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director or officer, except to the extent such exemption from
liability or limitation thereof is not permitted by law (including the
Investment Company Act of 1940) as currently in effect or as the same may
hereafter be named.
No amendment, modification or repeal of this Article VII shall adversely
affect any right or protection of a director or officer that exists at the time
of such amendment modification or repeal.
ARTICLE VIII
Indemnification of Directors and Officers
-----------------------------------------
The Corporation shall indemnify to the fullest extent permitted by law
(including the Investment Company Act of 1940) as currently in effect or as the
same may
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<PAGE>
hereafter be amended, any person made or threatened to be made a party to any
action, suit or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that such person or such person's testator
or intestate is or was a director or officer of the Corporation or serves or
served at the request of the Corporation any other enterprise as a director or
officer. To the fullest extent permitted by law (including the Investment
Company Act of 1940) as currently in effect or as the same may hereafter be
amended, expenses incurred by any such person in defending any such action, suit
or proceeding shall be paid or reimbursed by the Corporation promptly upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by this
Article VIII shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve as a
director or officer as provided above. No amendment of this Article VIII shall
impair the rights of any person arising at any time with respect to events
occurring prior to such amendment. For purposes of this Article VIII, the term
"Corporation" shall include the Corporation, any predecessor of the Corporation
and any constituent corporation (including any constituent of a constituent)
absorbed by the Corporation in a consolidation
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<PAGE>
or merger; the term "other enterprise" shall include any corporation,
partnership, joint venture, trust or employee benefit plan; service "at the
request of the Corporation" shall include service as a director or officer of
the Corporation which imposes duties on, or involves services by, such director
or officer with respect to an employee benefit plan, its participants or
beneficiaries; any excise taxes assessed on a person with respect to any
employee benefit plan shall be deemed to be idemnifiable expenses; and action by
a person with respect to any employee benefit plan which such person reasonably
believes to be in the interest of the participants and beneficiaries of such
plan shall be deemed to be action not opposed to the best interests of the
Corporation.
Nothing in this Article VIII or in Article IX, Section 2, shall be
construed to protect any director or officer of the Corporation against any
liability to the Corporation or its stockholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
ARTICLE IX
Miscellaneous
-------------
The following provisions are inserted for the management of the business
and for the conduct of the
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<PAGE>
affairs of the Corporation, and for creating, defining, limiting and regulating
the powers of the Corporation, the directors and the stockholders.
Section 1. The Board of Directors shall have the management and control
of the property, business and affairs of the Corporation and is hereby vested
with all the powers possessed by the Corporation itself so far as is not
inconsistent with law or these Articles of Incorporation. In furtherance and
without limitation of the foregoing provisions, it is expressly declared that,
subject to these Article of Incorporation, the Board of Directors shall have
power:
(a) To make, alter, amend or repeal from time to time the By-laws of the
Corporation except as such power may otherwise be limited in the By-laws.
(b) Authorize the issuance from time to time of shares of its stock of
any class, whether now or hereafter authorized, in each case upon the terms and
conditions and for such consideration as the Board of Directors shall from time
to time determine.
(c) To authorize the issuance from time to time of fractional shares of
stock of this Corporation, whether now or hereafter authorized, and any
fractional shares so issued shall entitle the holder thereof to exercise voting
rights, receive dividends and participate in the distribution of assets of the
Corporation in the event of
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<PAGE>
liquidation or dissolution to the extent of the proportionate interest
represented by such fractional shares. The Corporation shall not be obligated to
issue stock certificates evidencing fractional shares.
(d) To authorize the repurchase of Shares in the open market or
otherwise, at prices not in excess of the net asset value of such Shares
determined in accordance with subsection (a) of Section 2 of Article V hereof,
provided the Corporation has assets legally available for such purpose, and to
pay for such Shares in cash, securities or other assets then held or owned by
the Corporation.
(e) To declare and pay dividends and distributions on Shares from funds
legally available therefor, in such amounts, if any, and in such manner
(including declaration by means of a formula or other similar method of
determination whether or not the amount of the dividend or distribution so
declared can be calculated at the time of such declaration) and to the
stockholders of record as of such date, as the Board of Directors may determine.
Section 2. Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the direction of the Board of Directors,
shall be final and conclusive, and shall be binding upon the Corporation and all
holders of Shares, past, present and
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<PAGE>
future, and Shares are issued and sold on the condition and undertaking,
evidenced by confirmation of such Shares being held for the account of any
stockholder, that any and all such determinations shall be binding as aforesaid.
Section 3. The directors of the Corporation may receive compensation for
their services, subject, however, to such limitations with respect thereto as
may be determined from time to time by the stockholders.
Section 4. Except as required by law, the holders of Shares shall have
only such right to inspect the records, documents, accounts and books of the
Corporation as may be granted by the Board of Directors of the Corporation.
Section 5. Any voting authorizing liquidation of the Corporation or
proceedings for its dissolution may authorize the Board of Directors to
determine in accordance with generally accepted accounting principles what
constitutes the assets available for distribution to stockholders and may
authorize the Board of Directors to divide such assets among the stockholders of
the Corporation in such manner that every stockholder will receive a
proportionate amount of the value of such assets (determined as aforesaid) upon
such liquidation or dissolution.
Section 6. Except to the extent otherwise prohibited by applicable law,
the Corporation may enter into any management or investment advisory contract or
underwriting contract or any other type of contract with, and may
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<PAGE>
otherwise engage in any transaction or do business with, any person, firm or
corporation or any subsidiary or other affiliate of any such person, firm or
corporation, and may authorize such person, firm or corporation or such
subsidiary or other affiliate to enter into any other contracts or arrangements
with any other person, firm or corporation which relate to the Corporation or
the conduct of its business, notwithstanding that any directors or officers of
the Corporation are or may subsequently become partners, directors, officers,
stockholders or employees of such person, firm or corporation or of such
subsidiary or other affiliate or may have a material financial interest in any
such contract, transaction or business; and except to the extent otherwise
provided by applicable law, no such contract, transaction or business shall be
invalidated or voidable, or in any way affected thereby, nor shall any of such
directors or officers of the Corporation be liable to the Corporation or to any
stockholder or creditor thereof or to any other person for any loss incurred
solely because of the entering into and performance of such contract or the
engaging in such transaction or business or the existence of such material
financial interest therein, provided that such relationship to such person, firm
or corporation or such subsidiary or affiliate or such material financial
interest was disclosed or otherwise known to the Board of Directors prior to the
Corporation's entering into such contract or
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<PAGE>
engaging in such transaction or business, and in the case of directors of the
Corporation, that any requirements of the General Corporation Law in the State
of Maryland have been satisfied. Provided further, that nothing herein shall
protect any director or officer of the Corporation from liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE X
Amendments
----------
The Corporation reserves the right from time to time to amend, alter or
repeal any of the provisions of these Articles of Incorporation (including any
amendment that changes the terms of any of the outstanding Shares by
classification, reclassification or otherwise), and any contract rights, as
expressly set forth in these Articles of Incorporation, of any outstanding
Shares, and to add or insert any other provisions that may, under the statutes
of the State of Maryland at the time in force, be lawfully contained in articles
of incorporation, and all rights at any time conferred upon the stockholders of
the Corporation by these Articles of Incorporation are subject to the provisions
of this Article X.
------------------------------
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The term "Articles of Incorporation" as used herein and in the By-laws
of the Corporation shall be deemed to mean these Articles of Incorporation as
from time to time amended and restated.
------------------------------
I acknowledge this document to be my act, and state that, to the best of
my knowledge, information and belief, all matters and facts herein are true in
all material respects and that this statement is made under the penalties for
perjury.
January 27, 1992
/s/Paul J McElroy
-----------------
Paul J. McElroy
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<PAGE>
STATE OF MARYLAND 14055 4
STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: JANUARY 28, 1992
THIS IS TO ADVISE YOU THAT YOUR ARTICLES OF INCORPORATION FOR AMERICA'S
UTILITY FUND, INC. WERE RECEIVED AND APPROVED FOR RECORD ON JANUARY 28, 1992 AT
10:27 AM.
FEE PAID: 193.00
[SEAL] PAUL B. ANDERSON
CORPORATE ADMINISTRATION
Exhibit 2
AMERICA'S UTILITY FUND, INC.
a Maryland Corporation
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Time and Place of Meetings. Meetings of the stockholders of
the Corporation need not be held except as required under the general laws of
the State of Maryland, as the same may be amended from time to time. Meetings of
the stockholder shall be held at places designated by the Board of Directors and
set forth in the notice of the meeting.
Section 2. Annual Meetings. If a meeting of the stockholders of the
Corporation is required by the Investment Company Act of 1940, as amended, to
take action with respect to the election of directors, then such matter shall
be submitted to the stockholders at a special meeting called for such purpose,
which shall be deemed the annual meeting of stockholders for that year. In
years in which no such action by stockholders is so required, no annual
meeting of stockholders need be held.
Section 3. Special Meetings. Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board of
Directors, if any, by the
<PAGE>
President or by a majority of the Board of Directors. In addition, such
special meetings shall be called by the Secretary upon receipt of a request
in writing, signed by stockholders entitled to case at least 10% of all the
votes entitled to be cast at the meeting, which states the purpose of the
meeting and the matters proposed to be acted on at the meeting, and upon
payment by such stockholders of the estimated costs of preparing and mailing
a notice of the meeting. Unless requested by stockholders entitled to cast
a majority of all the votes entitled to be cast at the meeting, a special
meeting need not be called to consider any matter which is substantially the
same as a matter voted on at a special meeting of the stockholders held during
the preceding twelve (12) months.
Section 4. Notice of Meeting of Stockholders. Written or printed
notice of every meeting of stockholders, stating the time and place thereof
(and the purpose of any special meeting), shall be given, not less than ten
(10) days nor more than ninety (90) days before the date of the meeting, to
each stockholder entitled to vote at the meeting and each other stockholder
entitled to notice, by delivering such notice personally, or leaving such notice
at each stockholder's residence or usual place of business, or by mailing such
notice, postage prepaid, addressed to each stockholder at such stockholder's
address as it appears upon
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the books of the Corporation. Each person who is entitled to notice of any
meeting shall be deemed to have waived notice if present at the meeting in
person or by proxy, or if such person signs a waiver of notice (either before
or after the meeting) which is filed with the records of stockholders
meetings.
Section 5. Closing of Transfer Books, Record Dates. The Board of
directors may direct that the stock transfer books of the Corporation be closed
for a stated period not exceeding twenty (20) days for the purpose of making
any proper determination with respect to stockholders, including determining
which stockholders are entitled to notice of and to vote at a meeting, receive
a dividend or be allotted other rights. If such books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of providing for the closing of the
stock transfer books, the Board of Directors may set a date, not more than
ninety (90) days nor less than ten (10) days preceding (a) the date of any
meeting of stockholders, (b) any dividend payment date, or (c) any date for the
allotment of rights, as a record date for the determination of the stockholders
entitled to notice of and to vote at such meeting, or entitled to received such
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dividends or rights, as the case may be; and only stockholders of record on
such date shall be entitled to notice of and to vote at such meeting, or to
receive such dividends or rights, as the case may be.
Section 6. Manner of Acting; Adjournment of Meetings. A majority of all
votes cast at a meeting of stockholders at which a quorum is present shall be
sufficient to approve any matter which properly comes before the meeting,
unless otherwise provided by applicable law, the Articles of Incorporation or
these By-Laws. If at any meeting of stockholders there shall be less than a
quorum present, the stockholders present at such meeting may, without further
notice, adjourn the meeting from time to time (but not more than 120 days after
the original record date for such meeting) until a quorum is attained, but no
business shall be transacted at any such adjourned meeting, except business
which might have been lawfully transacted had the meeting not been adjourned.
Section 7. Voting and Inspectors. (a) At all meetings of stockholders,
every stockholder of record entitled to vote may do so either in person or
by written proxy signed by such stockholder or such stockholder's duly
authorized attorney in fact. Unless a proxy provides otherwise, such proxy
shall not be valid more than eleven (11) months after its date.
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<PAGE>
(b) At any meeting of stockholders considering the election of
directors, the Board of Directors prior to the convening of such meeting may,
or, if the Board has not so acted, the Chairman of the meeting may, appoint
two (2) inspectors of election, who shall first subscribe an oath or
affirmation to execute faithfully the duties of inspectors at such election
with strict impartiality and according to the best of their ability, and shall
after the election certify the result of the vote taken. No candidate for
election as a director shall be appointed to act as an inspector of election.
(c) The Chairman of the meeting may cause a vote by ballot to be taken
with respect to any election or matter.
Section 8. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by law or the Articles of Incorporation, any action required
or permitted to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without
a vote, if the following are filed with the records of stockholders' meetings:
(i) a unanimous written consent which sets forth the action and is signed by
each stockholder entitled to vote on the matter, and (ii) a written waiver of
any right
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to dissent signed by each stockholder entitled to notice of the meeting but not
entitled to vote thereat.
Section 9. Conduct of Stockholders Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, or if the
Chairman shall not be present or if there is no Chairman, by the President, or
if the President shall not be present, by a Vice-President, or if no Vice-
President is present, by a chairman elected for such purpose at the meeting.
The Secretary of the Corporation, if present, shall act as Secretary of such
meetings, or if the Secretary is not present, an Assistant Secretary of the
Corporation shall so act, and if no Assistant Secretary is present, then the
meeting shall elect a secretary for the meeting.
Section 10. Validity of Proxies and Ballots. At every meeting of the
stockholders, all proxies shall be received and maintained by and all ballots
shall be received and canvassed by, the secretary of the meeting, who shall
decide all questions concerning the qualification of votes, the validity
of proxies, and the acceptance or rejection of votes, unless inspectors of
election shall have been appointed, in which case the inspectors of election
shall decide all such questions.
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ARTICLE II
BOARD OF DIRECTORS
Section 1. Number and Term of Office. The business and property of the
Corporation shall be conducted and managed under the direction of a Board of
Directors initially consisting of three (3) directors, which number may be
increased or decreased as herein provided. Directors shall hold office until
their respective successors have been duly elected and qualified. Directors
need not be stockholders.
Section 2. Increase or Decrease in Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board, may increase the
number of directors and may appoint directors to fill the vacancies created by
any increase in the number of directors, and such appointed directors shall hold
office until their successors have been duly elected and qualify. The Board of
Directors, by the vote of a majority of the entire Board, may decrease the
number of directors to a number not less than three (3) or the number of
stockholders, whichever is less, but any such decrease shall not affect the term
of office of any director. Vacancies occurring other than by reason of any
increase in the number of directors shall be filled as provided by the Maryland
General Corporation Law.
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Section 3. Place of Meetings. The directors may hold their meetings
and keep the books of the Corporation outside the state of Maryland, at any
office or offices of the Corporation or at any other place as they may from time
to time determine; and in the case of meetings, as shall be specified in the
respective notices of such meetings.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and on such notice, if any, as the
directors may from time to time determine.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be held from time to time upon call of the Chairman of the Board
of Directors, if any, the President, or any two (2) or more of the directors, by
oral, telegraphic or written notice duly given to each director not less than
one (1) business day before such meeting, or if sent or mailed to each director,
not less than three (3) business days before such meeting. Each director who is
entitled to notice shall be deemed to have waived notice if such director is
present at the meeting, or either before or after the meeting, such director
signs a waiver of notice which is filed with the minutes of the meeting. Such
notice or waiver of notice need not state the purpose or purposes of such
meeting.
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Section 6. Quorum. One third (1/3) of the directors then in office
(but in no event less than two (2) directors), shall constitute a quorum of the
Board of Directors for the transaction of business. If at any meeting of the
Board there shall be less than a quorum present, a majority of those directors
present may adjourn the meeting from time to time until a quorum shall have been
attained. The act of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors, except as may be
otherwise specifically provided by applicable law, the Articles of Incorporation
or these By-Laws.
Section 7. Telephonic Meetings. The members of the Board of Directors,
or any committee of the Board of Directors, may participate in a meeting by
means of a conference telephone call or similar communications equipment if all
persons participating in such meeting can simultaneously hear each other, and
participation in a meeting by these means constitutes present in person at such
meeting.
Section 8. Executive Committee. The Board of Directors may appoint an
Executive Committee consisting of two (2) or more directors. Between meetings
of the board of Directors, the Executive Committee, if any, shall have and may
exercise any or all of the powers of the Board of
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Directors with respect to the management of the business and affairs of the
Corporation, except (a) as otherwise provided by law and (b) the power to
increase or decrease the size of, or fill vacancies on, the Board of Directors.
The Executive Committee may determine its own rules of procedure, and may meet
when and as the Executive Committee determines, or when directed by resolution
of the Board of Directors. The presence of a majority of the Executive
Committee shall constitute a quorum. The Board of Directors shall have the power
at any time to change the members and powers of, to fill vacancies on, and to
dissolve the Executive Committee. In the absence of any member of the Executive
Committee, the members present at any meeting, whether or not they constitute a
quorum, may appoint a director to act in the place of such absent member.
Section 9. Other Committees. The Board of Directors may appoint other
committees which shall in each case consist of such member of directors (not
less than two (2)), which shall have and may exercise such powers as the Board
may from time to time determine. A majority of all members of any such
committee may determine its action, and the time and place of its meetings,
unless the Board of Directors shall provide otherwise. The Board of Directors
shall have the power at any time to change the members and powers of, to fill
vacancies on, and to dissolve any such
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<PAGE>
committee. In the absence of any member of such committee, the members present
at any meeting, whether or not they constitute a quorum, may appoint a director
to act in the place of such absent member.
Section 10. Informal Action by Directors. Except to the extent
otherwise specifically provided by applicable law, any action required or
permitted to be taken at any meeting of the Board of Directors or any committee
thereof, may be taken without a meeting, if a written consent to such action is
signed by all members of the Board of such committee, and such consent is filed
with the minutes of proceedings of the Board of such committee.
Section 11. Compensation of Directors. Directors shall be entitled to
receive such compensation from the Corporation for their services as directors
as the Board of Directors may from time to time determine.
ARTICLE III
OFFICERS
Section 1. Executive Officers. The initial executive officers of the
Corporation shall be elected by the Board of Directors as soon as practicable
after the incorporation of the Corporation. The executive officers may include
a Chairman of the Board, and shall include a President, one or more Vice
Presidents (the number thereof
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to be determined by the Board of Directors), a Secretary and a Treasurer. The
Chairman of the Board, if any, shall be selected from among the directors. The
Board of Directors may also in its discretion appoint Assistant Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and other officers, agents and
employees, who shall have such authority and perform such duties as the Board
may determine. The Board of Directors may fill any vacancy which may occur in
any office. Any two (2) offices, except those of President and Vice President,
may be held by the same person, but no officer shall execute, acknowledge or
verify any instrument on behalf of the Corporation in more than one (1)
capacity, if such instrument is required by law or by these By-Laws to be
executed, acknowledged or verified by two (2) or more officers.
Section 2. Term of Office. Unless otherwise specifically determined by
the Board of Directors, the officers shall serve at the pleasure of the Board of
Directors. If the Board of Directors in its judgment finds that the best
interests of the Corporation will be served, the Board of Directors may remove
any officer of the Corporation at any time with or without cause.
Section 3. President. The President shall be the chief executive
officer of the Corporation and, subject to the Board of Directors, shall
generally control and manage
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the business and affairs of the Corporation. If there is no Chairman of the
Board, or if the Chairman of the Board has been appointed but is absent, the
President shall, if present, preside at all meetings of the stockholders and the
Board of Directors.
Section 4. Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the stockholders and the Board of Directors, if
the Chairman of the Board is present. The Chairman of the Board shall have such
other powers and duties as shall be determined by the Board of Directors, and
shall undertake such other assignments as may be requested by the President.
Section 5. Other Officers. The Chairman of the Board or one or more
Vice President shall have and exercise such powers and duties of the President
in the absence or inability to act of the President, as may be assigned to them,
respectively, by the Board of Directors or, to the extent not so assigned, by
the President. In the absence or inability to act of the President, the powers
and duties of the President not otherwise assigned by the Board of Directors or
the President shall devolve upon the Chairman of the Board, or in the Chairman's
absence, the Vice Presidents in the order of their election.
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Section 6. Secretary. The Secretary shall have custody of the seal of
the Corporation, and shall keep the minutes of the meetings of the stockholders,
Board of Directors and any committees thereof, and shall issue all notices of
the Corporation. The Secretary shall have charge of the stock records and such
other books and papers as the Board may direct, and shall perform such other
duties as may be incidental to the office or which are assigned by the Board of
Directors. The Secretary shall also keep or cause to be kept a stock book,
which may be maintained by means of computer systems, containing the names,
alphabetically arranged, of all persons who are stockholders of the Corporation,
showing their places of residence, the number of shares of stock held by them,
respectively, and the dates when they became the record owners thereof, and such
book shall be open for inspection as prescribed by the laws of the State of
Maryland.
Section 7. Treasurer. The Treasurer shall have the care and custody of
the funds and securities of the Corporation and shall deposit the same in the
name of the Corporation in such bank or banks or other depositories, subject to
withdrawal in such manner as these By-Laws or the Board of Directors may
determine. The Treasurer shall, if required by the Board of Directors, give
such bond for the
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faithful discharge of duties in such form as the Board of Directors may require.
ARTICLE IV
CAPITAL STOCK
Section 1. Stock Certificates. No stockholder of the Corporation shall
be entitled to certificates for the shares of stock of the Corporation owned by
such stockholder.
Section 2. Transfer of Shares. If certificates representing shares of
the Corporation are issued, such shares shall be transferable on the books of
the Corporation by the holder(s) thereof, in person or by such holder's duly
authorized attorney or legal representative, upon surrender and cancellation of
certificates, if any, for the same number of shares, duly endorsed or
accompanied by proper instruments of assignment and transfer, with such proof of
the authenticity of the signature(s) as the Corporation or its agents may
reasonably require. In the case of shares not represented by certificates, the
same or similar requirements may be imposed by the Board of Directors.
Section 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of shares
held by them, respectively, shall be kept at the principal offices of the
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Corporation, or if the Corporation has appointed a transfer agent, at the
offices of such transfer agent.
Section 4. Lost, Stolen or Destroyed Certificates. If any certificates
representing shares of the Corporation is issued, the Board of Directors may
determine the conditions upon which a new stock certificate may be issued in
place of any such certificate which is alleged to have been lost, stolen or
destroyed. The Board of Directors may in its discretion require the owner of
any such certificate to give bond, with sufficient surety to the Corporation and
the transfer agent, if any, to indemnify the Corporation and such transfer agent
against any and all losses or claims which may arise by reason of the issuance
of a replacement certificate.
ARTICLE V
CORPORATE SEAL
The Board of Directors may provide for a suitable corporate seal, in
such form and bearing such inscriptions as it may determine. In lieu of fixing
the Corporation's seal to a document, it is sufficient to meet the requirements
of any law, rule or regulation relating to a corporate seal to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
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ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be determined by the Board of
Directors.
ARTICLE VII
INDEMNIFICATION
Section 1. Indemnification of Directors and Officers. The Corporation
shall indemnify its directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify its officers to the same extent as its directors and to such
further extent as is consistent with law. The Corporation shall indemnify its
directors and officers who while serving as directors or officers also serve at
the request of the Corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of anther corporation, partnership, joint venture,
trust, other enterprise or employee benefit plan to the fullest extent
consistent with law. The indemnification and other rights provided for by this
Article shall continue as to a person who has ceased to be a director or
officer, and shall inure to the benefit of the heirs, executors and
administrators of such a person. This Article shall not protect any such person
against any liability to the
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Corporation or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such person's office
("disabling conduct").
Section 2. Advances. Any current or former director or officer of the
Corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred in connection with the matter as to which indemnification is sought, in
the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The person seeking indemnification shall provide to the
Corporation a written affirmation of his or her good faith belief that the
standard of conduct necessary for indemnification by the Corporation has been
met and a written undertaking to repay any such advance if it should ultimately
be determined that the requisite standard of conduct has not been met. In
addition, at least one of the following conditions must be satisfied: (a) the
person seeking indemnification shall provide security in form and amount
acceptable to the Corporation for the foregoing undertaking, (b) the Corporation
shall be insured against losses arising by reason of the advance, or (c) a
majority of a quorum of directors of the Corporation who are neither
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"interested persons," as defined in Section 2(a)(19) of the Investment Company
Act of 1940, as amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel in a written opinion, shall have
determined, based on a review of facts readily available to the Corporation at
the time the advance is proposed to be made, that there is reason to believe
that the person seeking indemnification will ultimately be found to be entitled
to indemnification.
Section 3. Procedure. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation law, whether the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final decision on the
merits by a court or other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of disabling conduct, or (b)
in the absence of such a decision, a reasonable determination, based upon a
review of the facts, that the person to be indemnified was not liable by reason
of disabling conduct by, (i) the vote of a majority of a quorum of disinterested
non-party directors, or (ii) an independent legal counsel in a written opinion.
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Section 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940, as amended.
Section 5. Other Rights. The Board of Directors may make further
provision consistent with law for indemnification and advancement of expenses to
directors, officers, employees and agents by resolution, agreement or otherwise.
The indemnification provided for by this Article shall not be deemed exclusive
of any other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance, other agreement,
resolution of stockholders or disinterested directors, or otherwise.
Section 6. Subsequent Changes to Law. References in this Article are
to the Maryland General Corporation Law and to the Investment Company Act of
1940 as from time to time amended. No amendment of these By-Laws shall affect
any right of any person under this Article based on any event, omission or
proceeding occurring prior to such amendment.
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ARTICLE VIII
AMENDMENT OF BY-LAWS
These By-Laws may be altered, amended or repealed by the Board of
Directors.
AMERICA'S UTILITY FUND, INC.
MANAGEMENT CONTRACT
This Management Contract dated as of February 1, 1998 between AMERICA'S
UTILITY FUND, INC., a Maryland corporation (the "Fund"), and MENTOR INVESTMENT
ADVISORS, LLC, a Virginia limited liability company (the "Manager")
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO THE FUND.
(a) The Manager, at its expense, will furnish continuously an
investment program for the Fund, will determine what investments shall be
purchased, held, sold, or exchanged by the Fund and what portion, if any, of the
assets of the Fund shall be held uninvested and shall, on behalf of the Fund,
make changes in the Fund's investments. In the performance of its duties, the
Manager will comply with the provisions of the Articles of Incorporation and
By-Laws of the Fund and the Fund's stated investment objectives, policies, and
restrictions, and will use its best efforts to safeguard and promote the welfare
of the Fund and to comply with other policies which the Board of Directors may
from time to time determine.
(b) The Manager, at its expense, will furnish (i) all necessary
investment and related management facilities, including, salaries of personnel,
required for it to execute its duties faithfully, (ii) suitable office space for
the Fund, and (iii) such facilities, including bookkeeping, clerical personnel,
and equipment as may be necessary for the efficient performance by the Manager
of its obligations. The Manager will pay the compensation of such of its
directors, officers, and employees as may duly be elected Directors or officers
of the Fund.
(c) The Manager, at its expense, shall place all orders for the
purchase and sale of portfolio investments for the Fund's account with brokers
or dealers selected by the Manager. In the selection of such brokers or dealers
and the placing of such orders, the Manager shall give primary consideration to
securing for the Fund the most favorable price and execution available, except
to the extent it may be permitted to pay higher brokerage commissions for
brokerage and research services as described below. In doing so, the Manager,
bearing in mind the Fund's best interests at all times, shall consider all
factors it deems relevant, including, by way of illustration, price, the size of
the transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience, and financial stability of the broker or
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dealer involved, and the quality of service rendered by the broker or dealer in
other transactions. Subject to such policies as the Board of Directors of the
Fund may determine, the Manager shall not be deemed to have acted unlawfully or
to have breached any duty created by this Contract or otherwise solely by reason
of its having caused the Fund to pay a broker or dealer that provides brokerage
and research services to the Manager an amount of commission for effecting a
portfolio investment transaction in excess of the amount of commission that
another broker or dealer would have charged for effecting that transaction, if
the Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to other clients of the Manager as to which the Manager exercises investment
discretion.
(d) The Fund hereby authorizes any entity or person associated with the
Manager which is a member of a national securities exchange to effect any
transaction on the exchange for the account of the Fund which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Fund hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(2)(iv).
(e) The Manager shall not be obligated to pay any expenses of or for
the Fund not expressly assumed by the Manager pursuant to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Directors, officers, and
employees of the Fund may be a shareholder, director, officer, or employee of,
or be otherwise interested in, the Manager, and in any person controlled by or
under common control with the Manager, and that the Manager and any person
controlled by or under common control with the Manager may have an interest in
the Fund. It is also understood that the Manager and any person controlled by or
under common control with the Manager have and may have advisory, management,
service, or other contracts with other organizations and persons, and may have
other interests and business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
As compensation for the services performed and the facilities furnished
and expenses assumed by the Manager, including the services of any consultants
retained by the Manager, the Fund shall pay the Manager, promptly (but in any
event within three business days) after the last day of each calendar month, a
fee, calculated daily, at an annual rate as follows: for the first $5 million of
assets under management, 0.75% of the average daily net assets in the Fund; for
the next $5 million under management, .50% of the average daily net assets in
the Fund; for the next $90 million under management, .25% of the average daily
net assets in the Fund; for the next $100 million under management, .20% of the
average daily net assets in the
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Fund; for the next $100 million under management, .15% of the average daily net
assets in the Fund; and for any amounts over $300 million under management, .10%
of the average daily net assets in the Fund.
If this Agreement is terminated as of any date not the last day of a
calendar month, the fee payable to the Manager shall be paid promptly (but in
any event within three business days) after such date of termination.
The average daily net assets of the Fund shall in all cases be based
only on business days and be computed as of the time of the regular close of
business of the New York Stock Exchange, or such other time as may be determined
by the Board of Directors. Each such payment shall be accompanied by a report of
the Fund prepared either by the Fund or by a reputable firm of independent
accountants which shall show the amount properly payable to the Manager under
this Agreement and the detailed computation thereof.
3. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Contract shall not be amended
unless such amendment be approved at a meeting by the affirmative vote of a
majority of the outstanding shares of the Fund, and by the vote, cast in person
at a meeting called for the purpose of voting on such approval, of a majority of
the Directors of the Fund who are not interested persons of the Fund or of the
Manager.
4. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract shall become effective upon its execution and shall
remain in full force and effect for two years from the date hereof, and is
renewable annually thereafter by specific approval of the Board of Directors or
by vote of a majority of the outstanding voting securities of the Fund. Any such
renewal shall be approved by the vote of a majority of the Directors who are not
interested persons under the Investment Company Act of 1940, as amended, cast in
person at a meeting called for the purpose of voting on such renewal. This
Contract may be terminated without penalty at any time by the Fund or the
Manager upon 60 days written notice. The termination of this Contract shall not
affect any obligation or liability on the Fund's part for any transaction
entered into or obligation incurred on the Fund's behalf prior to such
termination.
Termination of this Contract pursuant to this Section 4 will be without
the payment of any penalty.
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<PAGE>
5. CERTAIN DEFINITIONS.
For the purposes of this Contract, the "vote of a majority of the
outstanding shares" of the Fund means the affirmative vote, at a duly called and
held meeting of such shareholders, (a) of the holders of 67% or more of the
shares of the Fund present (in person or by proxy) and entitled to vote at such
meeting, if the holders of more than 50% of the outstanding shares of the Fund
entitled to vote at such meeting are present in person or by proxy, or (b) of
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting, whichever is less.
For the purposes of this Contract, the terms "interested person" and
"assignment" shall have their respective meanings defined in the Investment
Company Act of 1940, as amended, and the Rules and Regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act; the term "approval by a majority of the
outstanding voting securities of the Fund" shall be construed in a manner
consistent with the Investment Company Act of 1940, as amended, and the Rules
and Regulations thereunder; and the term "brokerage and research services" shall
have the meaning given in the Securities Exchange Act of 1934, as amended, and
the Rules and Regulations thereunder.
6. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith, or gross negligence
on the part of the Manager, or reckless disregard of its obligations and duties
hereunder, the Manager shall not be subject to any liability to the Fund or to
any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder.
IN WITNESS WHEREOF, AMERICA'S UTILITY FUND, INC. and MENTOR INVESTMENT
ADVISORS, LLC, have each caused this instrument to be signed in duplicate in its
behalf by its President or Vice President thereunto duly authorized, all as of
the day and year first above written. This document is executed by each of the
parties hereto under seal. This Agreement shall be governed and construed in
accordance with the laws (other than conflict of laws rules) of The Commonwealth
of Virginia.
AMERICA'S UTILITY FUND, INC.
By: /s/ Paul Costello
-----------------
MENTOR INVESTMENT ADVISORS, LLC
By: /s/ Paul Costello
-----------------
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AMERICA'S UTILITY FUND, INC.
901 East Byrd Street
Richmond, Virginia 23219
February 1, 1998
Mentor Investment Group, LLC.
901 East Byrd Street
Richmond, Virginia 23219
Re: Administrative Services Agreement
Dear Gentlemen:
America's Utility Fund, Inc., a Maryland corporation (the "Fund"), is
engaged in the business of a registered investment company. The Fund desires
that you act as administrator of the Fund, and you are willing to act as such
administrator and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Fund agrees with you as follows:
1. Delivery of Fund Documents. The Fund has furnished you with
copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Fund.
(b) By-Laws of the Fund as in effect on the date hereof.
(c) Resolutions of the Board of Directors of the Fund selecting
you as administrator and approving the form of this Agreement.
The Fund will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
2. Administrative Services. You will continuously provide business
management services to the Fund and will generally, subject to the general
oversight of the Board of Directors of the Fund and, except as provided in the
next following paragraph, manage all of the business and affairs of the Fund,
subject always to the provisions of the Fund's Articles of Incorporation and
By-Laws and of the Investment Company Act of 1940, as amended (the "1940 Act"),
and subject, further, to such policies and instructions as the Board of
Directors of the Fund may from time to time establish. You shall, except as
provided in the next
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following paragraph, advise and assist the officers of the Fund in taking such
steps as are necessary or appropriate to carry out the decisions of the Board of
Directors of the Fund and the appropriate committees of such Board of Directors
regarding the conduct of the business of the Fund. Without limiting the
generality of the foregoing, and subject in each case to the provisions of the
following paragraph, you will take all reasonable steps to coordinate and
oversee the preparation and filing of all amendments to the registration
statement of the Fund on Form N-1A as are required by the Securities Act of 1933
or the 1940 Act, and the preparation and mailing of all financial reports to
shareholders required by the 1940 Act; to coordinate and oversee the Fund's
compliance with the registration requirements of applicable state securities or
"Blue Sky" laws; to prepare and furnish all reports to the Board of Directors of
the Fund in respect of the Fund, including materials relating to any meeting of
the Board of Directors of the Fund, as may reasonably be requested by the Board
of Directors or the officers of the Fund; to oversee and perform certain agreed
tax-related functions for the Fund (including, without limitation, performance
of excise tax and income tax calculations for year-end dividend distributions to
shareholders, preparation of the income tax information footnote in year-end
financial statements, and preparation and filing of federal tax returns for the
Fund and Virginia and Maryland tax return forms); and otherwise to assist the
officers of the Fund in the performance of their duties. You will be fully
protected in complying with or relying on the instructions of the President or
any other officer of the Fund, or the advice of counsel for the Fund, in the
performance of your duties hereunder.
Notwithstanding any provision of this Agreement, you will not at any
time provide, or be required to provide, to the Fund or to any person with
respect to the Fund, investment research, advice, or supervision, or in any way
advise the Fund or any person acting on behalf of the Fund as to the value of
securities or other investments or as to the advisability of investing in,
purchasing, or selling securities or other investments, nor shall you be
responsible for monitoring, determining, or advising as to the compliance of any
investment in or purchase or sale of securities or other investments with any
applicable law.
3. Allocation of Charges and Expenses. You will make available, without
expense to the Fund, the services of such of your directors, officers, and
employees as may duly be elected Directors or officers of the Fund, subject to
their individual consent to serve and to any limitations imposed by law. You
will provide, at your expense, all clerical services relating to the business of
the Fund. You will pay the compensation of such of your directors, officers, and
employees as may duly be elected Directors or officers of the Fund. You will not
be required to pay any expenses of the Fund other than those specifically
allocated to you in this paragraph 3. In particular, but without limiting the
generality of the foregoing, you will not be required to pay: clerical salaries
not relating to the services described in paragraph 2 above; fees and expenses
incurred by the Fund in connection with membership in investment company
organizations; brokers' commissions; payment for portfolio pricing services to a
pricing agent, if any; legal, auditing, or accounting expenses; taxes or
governmental fees; the fees and expenses of the transfer agent of the Fund; the
cost of preparing share certificates or any other expenses, including clerical
expenses, incurred in
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connection with the issue, sale, underwriting, redemption, or repurchase of
shares of the Fund; the expenses of and fees for registering or qualifying
securities for sale; the fees and expenses of Directors of the Fund who are not
affiliated with you; the cost of preparing and distributing reports and notices
to shareholders; public and investor relations expenses; or the fees or
disbursements of custodians of the Fund's assets, including expenses incurred in
the performance of any obligations enumerated by the Articles of Incorporation
or By-Laws of the Fund insofar as they govern agreements with any such
custodian.
4. Compensation. As compensation for the services performed and the
facilities furnished and expenses assumed by you, including the services of any
consultants retained by you, the Fund shall pay you, promptly (but in any event
within three business days) after the last day of each calendar month, a fee,
calculated daily, of 0.65 of 1% annually of the Fund's average daily net assets,
less the amount of any fees paid to Mentor Investment Advisors, LLC for such
month under its Management Contract with the Fund dated as of February 1, 1998.
If this Agreement is terminated as of any date not the last day of a
calendar month, the fee payable to you shall be paid promptly (but in any event
within three business days) after such date of termination.
The average daily net assets of the Fund shall in all cases be based
only on business days and be computed as of the time of the regular close of
business of the New York Stock Exchange, or such other time as may be determined
by the Board of Directors. Each such payment shall be accompanied by a report of
the Fund prepared either by the Fund or by a reputable firm of independent
accountants which shall show the amount properly payable to you under this
Agreement and the detailed computation thereof.
5. Limitation of Liability. You shall not be liable for any error of
judgement or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates except a loss resulting from
willful misfeasance, bad faith, or gross negligence on your part in the
performance of your duties, or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Fund shall
be deemed, when acting within the scope of his or her employment by the Fund, to
be acting in such employment solely for the Fund and not as your employee or
agent.
6. Duration and Termination of this Agreement. This Agreement shall
remain in force until February 1, 2000 and continue from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Directors who are not interested
persons of you or of the Fund, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Directors. This
Agreement may, on 30 days notice, be terminated at any time without the payment
of any penalty by you, and, immediately upon notice, by the Board of Directors
or by vote of a majority of the outstanding voting securities of the Fund. In
interpreting the provisions of
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this Agreement, the definitions contained in Section 2(a) of the 1940 Act, as
modified by rule 18f-2 under the Act (particularly the definitions of
"interested person" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission by any
rule, regulation, or order.
7. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought, and no amendment of this Agreement shall be
effective as to the Fund until approved by the Board of Directors, including a
majority of the Directors who are not interested persons of you or of the Fund,
cast in person at a meeting called for the purpose of voting on such approval.
8. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Yours very truly,
AMERICA'S UTILITY FUND, INC.
By: /s/ Paul Costello
------------------------
The foregoing Agreement is hereby accepted as of the date thereof.
MENTOR INVESTMENT GROUP, LLC
By: /s/ Paul Costello
------------------------
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AMERICA'S UTILITY FUND, INC.
DISTRIBUTION AGREEMENT
This Distribution Agreement is entered into as of ________, 1998 by and
between AMERICA'S UTILITY FUND, INC. (the "Fund") and BISYS FUND SERVICES
LIMITED PARTNERSHIP ("BISYS").
WHEREAS, the Fund and BISYS are desirous of entering into an agreement
providing for the distribution by BISYS of shares of beneficial interest
("shares") of the Fund;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Fund hereby appoints BISYS as a distributor of shares of the Fund,
and BISYS hereby accepts such appointment, all as set forth below:
1. Reservation of Right Not to Sell. The Fund reserves the right to
refuse at any time or times to sell any of its shares hereunder for any reason.
2. Payments to BISYS. In connection with the distribution of shares of
the Fund, BISYS will be entitled to receive: (a) payments pursuant to any
Distribution Plan from time to time in effect in respect of the Fund or any
particular class of shares of the Fund, as determined by the Board of Directors
of the Fund, (b) any contingent deferred sales charges applicable to the
redemption of shares of the Fund or of any particular class of shares of the
Fund, determined in the manner set forth in the then current Prospectus and
Statement of Additional Information of the Fund, and (c) subject to the
provisions of Section 3 below, any front-end sales charges applicable to the
sale of shares of the Fund or of any particular class of shares of the Fund,
less any applicable dealer discount.
3. Services to be provided by BISYS; Sales of Shares to BISYS and Sales
by BISYS. BISYS will provide general sales and distribution services in respect
of the shares of the Fund, including without limitation reviewing advertising
and sales literature and filing such advertising and sales literature with
appropriate regulatory authorities, monitoring the Fund's continuing compliance
with all applicable state securities and Blue Sky laws, preparing reports to the
officers and Directors of the Fund in respect of the distribution of the Fund's
shares, performing internal audit examinations related to the distribution
function (the scope and timing of such examinations to be as determined from
time to time by the officers of the Fund and BISYS), and providing such other
services as are customarily provided by the principal underwriter and
distributor for an open-end investment company, subject in each case to such
instructions or guidelines as may be specified by the Directors or officers of
the Fund from time to time.
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BISYS will have the right, as principal, to purchase shares from the
Fund at their net asset value and to sell such shares to investment dealers or
the public against orders therefor (a) at the public offering price (calculated
as described below) less a discount determined by BISYS, which discount shall
not exceed the amount of the maximum sales charge permitted under applicable
law, or (b) at net asset value, in each case as provided in the current
Prospectus and Statement of Additional Information relating to such shares. Upon
receipt of an order in proper form (in accordance with the then current
prospectus) to purchase shares from an investment dealer with whom BISYS has a
sales contract, BISYS will promptly fill such order. The public offering price
of a class of shares of the Fund shall be the net asset value of such shares
then in effect, plus any applicable front-end sales charge determined in the
manner set forth in the then current Prospectus and Statement of Additional
Information relating to such shares or as permitted by the Investment Company
Act of 1940, as amended, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. The net asset value of the shares
shall be determined in the manner provided in the Articles of Incorporation of
the Fund as then amended and when determined shall be applicable to transactions
as provided for in the then current Prospectus and Statement of Additional
Information relating to such shares.
BISYS will also have the right, as principal, to sell shares otherwise
subject to a front-end sales charge or a contingent deferred sales charge not
subject to such a sales charge to such persons as may be approved by the Board
of Directors of the Fund, all such sales to comply with the provisions of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Upon receipt of registration instructions in proper form and payment
for shares, BISYS will transmit such instructions to the Fund or its agent for
registration of the shares purchased.
On every sale the Fund shall receive the applicable net asset value of
the shares. The net asset value of the shares of any class shall be determined
in the manner provided in the Articles of Incorporation of the Fund as then
amended and when determined shall be applicable to transactions as provided for
in the then current Prospectus and Statement of Additional Information relating
to such shares.
4. Sales of Shares by the Fund. The Fund reserves the right to issue
shares at any time directly to its shareholders as a stock dividend or stock
split and to sell shares to its shareholders or to other persons at not less
than net asset value.
5. Repurchase of Shares. BISYS will act as agent for the Fund in
connection with the repurchase of shares of the Fund by the Fund upon the terms
and conditions set forth in a then current Prospectus and Statement of
Additional Information relating to such shares.
6. Basis of Purchases and Sales of Shares. BISYS will use its best
efforts to place shares sold by it on an investment basis. BISYS does not agree
to sell any specific number of
-2-
<PAGE>
shares. Shares will be sold by BISYS only against orders therefor. BISYS will
not purchase shares from anyone other than the Fund except in accordance with
Section 5, and will not take "long" or "short" positions in shares contrary to
the Articles of Incorporation of the Fund.
7. Rules of NASD, etc. BISYS will conform to the Rules of the National
Association of Securities Dealers, Inc. and applicable securities laws of any
jurisdiction in which it sells, directly or indirectly, any shares. BISYS also
agrees to furnish to the Fund sufficient copies of any agreements or plans it
intends to use in connection with any sales of shares in adequate time for the
Fund to file and clear them with the proper authorities before they are put in
use, and not to use them until so filed and cleared.
8. BISYS Independent Contractor. BISYS shall be an independent
contractor, and neither BISYS nor any of its officers or employees, as such, is
or shall be an employee of the Fund. BISYS is responsible for its own conduct
and the employment, control, and conduct of its agents and employees and for
injury to such agents or employees or to others through its agents or employees.
BISYS assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employer taxes thereunder.
BISYS will maintain at its own expense insurance against public
liability in such an amount as the Board of Directors of the Fund may from time
to time reasonably request.
9. Expenses. BISYS will pay all of its own expenses in performing its
obligations hereunder.
10. Indemnification. (a) The Fund agrees to indemnify, defend, and hold
harmless BISYS, its several partners and employees, and any person who controls
BISYS within the meaning of Section 15 of the Securities Act of 1933, as amended
(the "Securities Act"), from and against any and all losses, claims, demands,
liabilities, and reasonable expenses (including the costs of investigating or
defending such losses, claims, demands, or liabilities and reasonable counsel
fees incurred in connection therewith) which BISYS, its partners and employees,
or any such controlling person may incur or to which they or any of them may
become subject under the Securities Act or under common law or otherwise,
arising out of or based upon any untrue statement, or alleged untrue statement,
of a material fact contained in any registration statement or any prospectus of
the Fund for the sale of shares of the Fund or arising out of or based upon any
omission or alleged omission to state a material fact required to be stated in
any such registration statement or prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that (i) the
Fund shall be under no obligation to indemnify, defend, or hold harmless BISYS,
its partners or employees, or any such controlling person from or against any
such losses, claims, demands, liabilities, or expenses directly or indirectly
arising out of or based on any such untrue statement or alleged untrue statement
or any such omission or alleged omission made in reliance upon and in conformity
with information furnished to the Fund or its agents by BISYS or persons acting
for it or on its behalf, (ii) the Fund shall not be liable to BISYS under this
paragraph if any such
-3-
<PAGE>
losses, claims, demands, liabilities, or expenses result from the fact that
BISYS sold securities of the Fund to any person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the then
current prospectus of the Fund relating to such securities; and (iii) the Fund
shall not be liable to BISYS under this paragraph in respect of any liability of
BISYS or any other person to the Fund or its shareholders by reason of the
willful misconduct, bad faith, or gross negligence of BISYS or any such other
person or the reckless disregard of BISYS of its obligations under this
Agreement.
(b) BISYS agrees to indemnify, defend, and hold harmless the Fund, its
several Directors and employees, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act, from and against any and all
losses, claims, demands, liabilities, and reasonable expenses (including the
costs of investigating or defending such losses, claims, demands, or liabilities
and reasonable counsel fees incurred in connection therewith) which the Fund,
its Directors and employees, or any such controlling person may incur or to
which they or any of them may become subject under the Securities Act or under
common law or otherwise, (i) arising out of or based upon any untrue statement,
or alleged untrue statement, of a material fact contained in any registration
statement or any prospectus for the sale of shares of the Fund or arising out of
or based upon any omission or alleged omission to state a material fact required
to be stated in any such registration statement or prospectus or necessary to
make the statements in either thereof not misleading if any such untrue
statement or alleged untrue statement or any such omission or alleged omission
is made by the Fund in reliance upon and in conformity with information
furnished to the Fund or its agents by BISYS or persons acting for it or on its
behalf or (ii) arising out of or based upon any breach or alleged breach by
BISYS of any provision of this Agreement or the gross negligence of BISYS or the
reckless disregard by BISYS of its duties.
11. Assignment Terminates this Agreement; Amendments of this Agreement.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment. This Agreement may be amended only if
such amendment be approved either by action of the Board of Directors of the
Fund or at a meeting of the shareholders of the Fund by the affirmative vote of
a majority of the outstanding shares of the Fund, and by a majority of the
Directors of the Fund who are not interested persons of the Fund or of BISYS by
vote cast in person at a meeting called for the purpose of voting on such
approval.
12. Effective Period and Termination of this Agreement. This Agreement
shall take effect upon the date first above written and shall remain in full
force and effect continuously (unless terminated automatically as set forth in
Section 11) until terminated in respect of the Fund:
(a) Either by the Fund or BISYS by not more than sixty (60)
days nor less than ten (10) days written notice delivered or mailed by
registered mail, postage prepaid, to the other party; or
-4-
<PAGE>
(b) If the continuance of this Agreement after the date two
years from the date of this Agreement is not specifically approved at
least annually by the Board of Directors of the Fund or the
shareholders of the Fund by the affirmative vote of a majority of the
outstanding shares of the Fund, and by a majority of the Directors of
the Fund who are not interested persons of the Fund or of BISYS by vote
cast in person at a meeting called for the purpose of voting on such
approval.
Action by the Fund under (a) above may be taken either (i) by vote of
the Board of Directors or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund. The requirement under (b) above that continuance
of this Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
Termination of this Agreement pursuant to this Section 12 shall be
without the payment of any penalty.
13. Certain Definitions. For purposes of this Agreement, the
"affirmative vote of a majority of the outstanding shares" of the Fund means the
affirmative vote, at a duly called and held meeting of shareholders of the Fund,
(a) of the holders of 67% or more of the shares of the Fund present (in person
or by proxy) and entitled to vote at such meeting, if the holders of more than
50% of the outstanding shares of the Fund entitled to vote at such meeting are
present in person or by proxy, or (b) of the holders of more than 50% of the
outstanding shares of the Fund entitled to vote at such meeting, whichever is
less.
For the purposes of the Agreement, the terms "interested person" and
"assignment" shall have the meanings defined in the Investment Company Act of
1940, as amended, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
IN WITNESS WHEREOF, each of AMERICA'S UTILITY FUND, INC. and BISYS FUND
SERVICES LIMITED PARTNERSHIP has caused this Distribution Agreement to be signed
in duplicate in its behalf, as of the day and year first above written.
AMERICA'S UTILITY FUND, INC.
By /s/ Paul Costello
------------------
BISYS FUND SERVICES
LIMITED PARTNERSHIP
By
------------------
-5-
<PAGE>
SHAREHOLDER SERVICE AGREEMENT
This SHAREHOLDER SERVICE AGREEMENT is made as of the 1st day of
February, 1998, between America's Utility Fund, Inc., a Maryland corporation
(the "Fund"), and Mentor Investment Group, LLC, a Virginia limited liability
company (the "Service Agent"). In consideration of the mutual covenants
hereinafter contained, it is hereby agreed by and between the parties hereto as
follows:
1. The Service Agent, itself, or through other financial institutions,
shall provide shareholder support services to the Fund and its shareholders.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities and various
personnel, including clerical, supervisory and computer, as necessary or
beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions; answering routine shareholder
inquiries regarding the Fund; assisting shareholders in changing dividend
options, account designations, and addresses; and providing such other
shareholder services as the Fund reasonably requests.
2. To compensate the Service Agent for the services it provides and the
expenses it bears hereunder, the Fund will pay the Service Agent a service fee
(the "Service Fee") accrued daily and paid promptly (but in any event within
three business days) after the last day of each calendar month at the annual
rate of 0.25 of one percent (0.25%) of the Fund's average daily net assets
(determined as provided from time to time in the prospectus of the Fund or as
otherwise specified from time to time by the Board of Directors). The Service
Fee paid under this Agreement is intended to qualify as a "service fee" as
defined in Section 2830 of the Conduct Rules of the National Association of
Securities Dealers, Inc. (or any successor provision) as in effect from time to
time.
If this Agreement is terminated as of any date not the last day of a
calendar month, then the fee payable to you shall be paid promptly (but in any
event within three business days) after such date of termination.
3. Quarterly in each year that the Service Agreement remains in effect,
the Service Agent shall provide the Fund for review by the Directors, and the
Directors shall review, a written report of the amounts expended under the
Service Agreement and the purposes for which such expenditures were made.
4. This Agreement shall continue in effect for one year from the date
of its execution, and thereafter for successive periods of one year if this
Agreement is approved at least annually by the Directors, including a majority
of the Directors who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of this Agreement (the
"Disinterested Directors").
-1-
<PAGE>
5. Notwithstanding paragraph 4, this Agreement may be terminated as
follows:
(a) at any time, without the payment of any penalty, by the
Service Agent, on the one hand, or by the vote of a majority of the
Disinterested Directors or by a vote of a majority of the outstanding
voting securities of the Fund as defined in the Investment Company Act
of 1940, as amended, on the other, on not more than sixty (60) days
written notice; and
(b) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940.
6. This Agreement may be amended by an instrument in writing signed by
both of the parties hereto.
7. This Agreement shall be construed in accordance with the Laws of The
Commonwealth of Virginia.
IN WITNESS WHEREOF, the parties hereto have caused this Shareholder
Service Agreement to be executed by their officers thereunto duly authorized.
AMERICA'S UTILITY FUND, INC.
By: /s/ Paul Costello
------------------
Its President
------------------
MENTOR INVESTMENT GROUP, LLC
By: /s/ Paul Costello
-------------------
Its Managing Director
-------------------
-2-
Exhibit 10(A)
[SULLIVAN & CROMWELL LETTERHEAD]
TELEPHONE: (202) 956-7300
TELEX 69825
FACSIMILE: (202) 293-6220
1701 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
March 27, 1992
America's Utility Fund, Inc.,
901 East Byrd Street,
Richmond, Virginia 23219.
Dear Sirs:
In connection with the Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A (File No. 33-45437) of America's Utility
Fund, Inc., a Maryland corporation (the "Company"), which you expect to file
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to shares of Common Stock, par value $0.01 per share (the "Shares"), we,
as your counsel, have examined such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion.
Upon the basis of such examination, we advise you that, in our
opinion, the Shares have been duly authorized to the extent of 500,000,000
Shares and, when the Registration Statement referred to above has become
effective under the Securities Act and the Shares have been
<PAGE>
America's Utility Fund, Inc., -2-
issued and sold (a) for at least the par value thereof, (b) so as not to exceed
the then authorized number of Shares and (c) in accordance with the Company's
Articles of Incorporation, as amended, and as authorized by the Board of
Directors of the Company, the Shares will be validly issued, fully paid and
nonassessable.
The foregoing opinion is limited to the Federal laws of the United
States and the General Corporation Law of the State of Maryland, and we are
expressing no opinion as to the effect of the laws of any other jurisdiction.
Also, we have relied as to certain matters on information obtained
from public officials, officers of the Company and other sources believed by us
to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Pre-Effective Amendment referred to above. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/ Sullivan & Cromwell
-----------------------
Sullivan & Cromwell
Consent of Independent Auditors'
The Board of Directors
America's Utility Fund, Inc.:
We consent to the use of our report dated February 6, 1998 incorporated herein
by reference and to the references to our firm under the captions "Financial
Highlights" in the prospectus and "Independent Auditors" in the statement of
additional information.
/s/ KPMG Peat Marwick LLP.
---------------------------
KPMG Peat Marwick LLP
Boston, Massachusetts
April 30, 1998
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 7 to Registration
Statement No. 33-45437 of America's Utility Fund, Inc. of our report dated
February 4, 1997, incorporated by reference in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
reference to us under the heading "Financial Highlights" appearing in the
Prospectus, which also is a part of such Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
Richmond, Virginia
April 30, 1998
FEES AND EXPENSES
Custodian's Fee
The following is a list of the fees charged by the Custodian for maintaining
either a Traditional IRA or a Roth IRA.
Annual maintenance fee per individual .................................$10.00
Termination, rollover, or transfer of
account to successor custodian ........................................$10.00
General Fee Policies
o Fees may be paid by you directly, or the Custodian may deduct them from your
Traditional or Roth IRA
o Fees may be changed upon 30 days written notice to you.
o The full annual maintenance fee will be charged for any calendar year during
which you have a Traditional or Roth IRA with us. This fee is not pro-rated
periods of less than one full year.
o Termination fees are charged when your account is closed whether the funds are
distributed to you or transferred to a successor custodian or trustee.
o The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
Other Charges
o There may be sales or other charges associated with the purchase or redemption
of shares of a fund in which your Traditional IRA or Roth IRA is invested.
Before investing, be sure to read carefully the current prospectus of any
fund you are considering as an investment for your Traditional IRA or Roth
IRA for a description of applicable charges.
<PAGE>
AMERICA'S UTILITY FUND
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
CUSTODIAL AGREEMENT
Part One: Provisions applicable to Traditional IRAs Provisions
The following provisions of Articles I to VII are in the form promulgated by the
Internal Revenue Service in From 5305-A for use in establishing an individual
retirement custodial account.
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c)(but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other property
except in a common trust fund or common investment fund (within the meaning
of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m) except as otherwise permitted by Section 408(m)
(3) which provides an exception for certain gold and silver coins and coins
issued under the laws of any state.
Article IV
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including
the incidental death benefit provisions of Proposed Regulations section
1.401(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
Depositor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or begin to
be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period that
may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed to him
or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest has
begun, distribution must continue to be made in accordance with paragraph
3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the Depositor's
death. If, however, the beneficiary is the Depositor's surviving spouse,
then this distribution is not required to begin before December 31 of the
year in which the Depositor would have turned age 70 1/2.
<PAGE>
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted
in the account.
5. In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each
year, divide the Depositor's entire interest in the custodial account as of
the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy
of the Depositor and the Depositor's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies.) In the case of
distributions under paragraph 3, determine the initial life expectancy
(or joint life and last survivor expectancy) using the attained ages of
the Depositor and designated beneficiary as of their birthdays in the year
the Depositor reaches age 70 1/2. In the case of a distribution in
accordance with paragraph 4(b)(ii), determine life expectancy using the
attained age of the designated beneficiary as of the beneficiary's
birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method
permits an individual to satisfy these requirements by taking from
one individual retirement account the amount required to satisfy the
requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under section 408(i)
and Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) and the related
regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear on the Adoption Agreement.
Part Two: Provisions applicable to Roth IRAs
The following provisions of Articles I to VII are in the form promulgated by the
Internal Revenue Service in Form 5305-RA for use in establishing a Roth
Individual Retirement Custodial Account.
Article I
1. If this Roth IRA is not designated as a Roth Conversion IRA, then, except in
the case of a rollover contribution described in section 408A(e), the
Custodian will accept only cash contributions and only up to a maximum
amount of $2,000 for any tax year of the Depositor.
2. If this Roth IRA is designated as a Roth Conversion IRA, no contributions
other than IRA Conversion Contributions made during the same tax year will
be accepted.
Article I-A
The $2,000 limit described in Article I is gradually reduced to $0 between
certain levels of adjusted gross income (AGI). For a single Depositor, the
$2,000 annual contribution is phased out between AGI of $95,000 and $110,000;
for a married Depositor who files jointly, between AGI of $150,000 and $160,000;
and for a married Depositor who files separately, between $0 and $10,000. In
case of a conversion, the Custodian will not accept IRA Conversion Contributions
in a tax year if the Depositor's AGI for that tax year exceeds $100,000 or if
the Depositor is married and files a separate return. Adjusted gross income is
defined in section 408A(c)(3) and does not include IRA Conversion Contributions.
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance contracts,
nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within
the meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section
408(m)(3), which provides an exception for certain gold, silver, and
platinum coins, coins issued under the laws of any state, and certain
bullion.
Article IV
1. If the Depositor dies before his or her entire interest is distributed to him
or her and the Depositor's surviving spouse is not the sole beneficiary,
the entire remaining interest will, at the election of the Depositor or,
if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either:
(a) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(b) Be distributed over the life expectancy of the designated
beneficiary starting not later than December 31 of the year
following the year of the Depositor's death.
If distributions do not begin by the date described in (b), distribution method
(a) will apply.
2. In the case of distribution method 1(b) above, to determine the minimum
annual payment for each year, divide the Depositor's entire interest in
the trust as of the close of business on December 31 of the preceding year
by the life expectancy of the designated beneficiary using the attained
age of the designated beneficiary as of the beneficiary's birthday
in the year distributions are required to commence and subtract 1 for each
subsequent year.
3. If the Depositor's spouse is the sole beneficiary on the Depositor's date of
death, such spouse will then be treated as the Depositor.
Article V
1. The Depositor agrees to provide the Custodian with information necessary for
the Custodian to prepare any reports required under sections 408(i)
and 408A(d)(3)(E), and Regulations section 1.408-5 and 1.408-6, and under
guidance published by the Internal Revenue Service.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through IV and this sentence will be controlling. Any
additional articles that are not consistent with section 408A, the related
regulations, and other published guidance will be invalid.
Article VII
This agreement will be amended from time to time to comply with the provisions
of the Code, related regulations, and other published guidance. Other amendments
may be made with the consent of the persons whose signatures appear below.
Part Three: Provisions applicable to both Traditional IRAs and Roth IRAs
Article VIII
1. As used in this Article VIII the following terms have the following meanings:
"Account" or "Custodial Account" means the individual retirement account
established using the terms of either Part One or Part Two and, in either event,
Part Three of this America's Utility Fund Universal Individual Retirement
Account Custodial Agreement and the Adoption Agreement signed by the Depositor.
The Account may be a Traditional Individual Retirement Account or a Roth
Individual Retirement Account, as specified by the Depositor. See Section 24
below.
"Custodian" means America's Utility Fund.
"Fund" means any registered investment company which is advised, sponsored or
distributed by Sponsor provided, however, that such a mutual fund or registered
investment company must be legally offered for sale in the state of the
Depositor's residence.
"Distributor" means the entity which has a contract with the America's Utility
Fund to serve as distributor of the shares of such America's Utility Fund.
In any case where there is no Distributor, the duties assigned hereunder to the
Distributor may be performed by America's Utility Fund or by an entity that has
a contract to perform management or investment advisory services for America's
Utility Fund.
"Service Company" means any entity employed by the Custodian or the Distributor,
including the transfer agent for America's Utility Fund, to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned hereunder to
the Service Company will be performed by the Distributor (if any) or by an
entity specified in the second preceding paragraph.
"Sponsor" means [insert fund management company or other fund entity that is
making America's Utility Fund available under this Agreement and has the power
to appoint a successor Custodian.]
2. The Depositor may revoke the Custodial Account established hereunder by
mailing or delivering a written notice of revocation to the Custodian
within seven days after the Depositor receives the Disclosure Statement
related to the Custodial Account. Mailed notice is treated as given to the
Custodian on date of the postmark (or on the date of Post Office
certification or registration in the case of notice sent by certified or
registered mail). Upon timely revocation, the Depositor's initial
contribution will be returned, without adjustment for administrative
expenses, commissions or sales charges, fluctuations in market value or
other changes.
The Depositor may certify in the Adoption Agreement that the Depositor received
the Disclosure Statement related to the Custodial Account at least seven days
before the Depositor signed the Adoption Agreement to establish the Custodial
Account, and the Custodian may rely upon such certification.
3. All contributions to the Custodial Account shall be invested and reinvested
in full and fractional shares of one or more Funds. Such investments shall
be made in such proportions and/or in such amounts as Depositor from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in such form as may be acceptable to the Service Company) may
direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor, or will be held uninvested (or invested in a
money market fund if available) pending clarification or completion by the
Depositor, in either case without liability for interest or for loss of income
or appreciation. If any other directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the Custodial
Account are unclear or incomplete in the opinion of the Service Company, the
Service Company will refrain from carrying out such investment directions or
from executing any such sale or purchase, without liability for loss of income
or for appreciation or depreciation of any asset, pending receipt of
clarification or completion from the Depositor.
All investment directions by Depositor will be subject to any minimum initial or
additional investment or minimum balance rules applicable to a Fund as described
in its prospectus.
All dividends and capital gains or other distributions received on the shares of
any Fund held in the Depositor's Account shall be (unless received in additional
shares) reinvested in full and fractional shares of such Fund (or of any other
Fund offered by the Sponsor, if so directed).
4. Subject to the minimum initial or additional investment, minimum balance and
other exchange rules applicable to a Fund, the Depositor may at any time
direct the Service Company to exchange all or a specified portion of the
shares of a Fund in the Depositor's Account for shares and fractional shares
of one or more other Funds. The Depositor shall give such directions by
written notice acceptable to the Service Company, and the Service Company
will process such directions as soon as practicable after receipt thereof
(subject to the second paragraph of Section 3 of this Article VIII).
5. Any purchase or redemption of shares of a Fund for or from the Depositor's
Account will be effected at the public offering price or net asset value of
such Fund (as described in the then effective prospectus for such
Fund) next established after the Service Company has transmitted the
Depositor's investment directions to the transfer agent for America's Utility
Fund.
Any purchase, exchange, transfer or redemption of shares of a Fund for or from
the Depositor's Account will be subject to any applicable sales, redemption or
other charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases or sales
of shares of one or more Funds for the Depositor's Custodial Account.
Any account maintained in connection herewith shall be in the name of the
Custodian for the benefit of the Depositor. All assets of the Custodial
Account shall be registered in the name of the Custodian or of a suitable
nominee. The books and records of the Custodian shall show that all such
investments are part of the Custodial Account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the Custodial Account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the Account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the Custodial
Account will have any responsibility for rendering advice with respect to
the investment and reinvestment of Depositor's Custodial Account, nor
shall such parties be liable for any loss or diminution in value which
results from Depositor's exercise of investment control over his Custodial
Account. Depositor shall have and exercise exclusive responsibility for
and control over the investment of the assets of his Custodial Account, and
neither Custodian nor any other such party shall have any duty to question
his directions in that regard or to advise him regarding the purchase,
retention or sale of shares of one or more Funds for the Custodial Account.
8. The Depositor may in writing appoint an investment advisor with respect to
the Custodial Account on a form acceptable to the Custodian and the
Service Company. The investment advisor's appointment will be in effect
until written notice to the contrary is received by the Custodian and the
Service Company. While an investment advisor's appointment is in effect,
the investment advisor may issue investment directions or may issue orders
for the sale or purchase of shares of one or more Funds to the Service
Company, and the Service Company will be fully protected in carrying out such
investment directions or orders to the same extent as if they had been given
by the Depositor.
The Depositor's appointment of any investment advisor will also be deemed to be
instructions to the Custodian and the Service Company to pay such investment
advisor's fees to the investment advisor from the Custodial Account hereunder
without additional authorization by the Depositor or the Custodian.
9. Distribution of the assets of the Custodial Account shall be made at such
time and in such form as Depositor (or the Beneficiary if Depositor is
deceased) shall elect by written order to the Custodian. Depositor
acknowledges that any distribution of a taxable amount from the
Custodial Account (except for distribution on account of Depositor's
disability or death, return of an "excess contribution" referred to in Code
Section 4973, or a "rollover" from this Custodial Account) made earlier
than age 59 1/2 may subject Depositor to an "additional tax on early
distributions" under Code Section 72(t) unless an exception to such
additional tax is applicable. For that purpose, Depositor will be considered
disabled if Depositor can prove, as provided in Code Section 72(m)(7),
that Depositor is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can
be expected to result in death or be of long-continued and indefinite
duration. It is the responsibility of the Depositor (or the Beneficiary)
by appropriate distribution instructions to the Custodian to insure that
any applicable distribution requirements of Code Section 401(a)(9) and
Article IV above are met. If the Depositor (or Beneficiary) does not
direct the Custodian to make distributions from the Custodial Account by the
time that such distributions are required to commence in accordance with
such distribution requirements, the Custodian (and Service Company) shall
assume that the Depositor (or Beneficiary) is meeting the minimum
distribution requirements from another individual retirement arrangement
maintained by the Depositor (or Beneficiary) and the Custodian and
Service Company shall be fully protected in so doing. The Depositor
(or the Depositor's surviving spouse) may elect to comply with the
distribution requirements in Article IV using the recalculation of
life expectancy method, or may elect that the life expectancy of the
Depositor and/or the Depositor's surviving spouse, as applicable, will not
be recalculated; any such election may be in such form as the Depositor
(or surviving spouse) provides (including the calculation of minimum
distribution amounts in accordance with a method that does not provide
for recalculation of the life expectancy of one or both of the Depositor
and surviving spouse and instructions for withdrawals to the Custodian
in accordance with such method). Notwithstanding paragraph 2 of
Article IV, unless an election to have life expectancies recalculated
annually is made by the time distributions are required to begin, life
expectancies shall not be recalculated. Neither the Custodian nor any
other party providing services to the Custodial Account assumes any
responsibility for the tax treatment of any distribution from the Custodial
Account; such responsibility rests solely with the person ordering the
distribution.
10. The Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary
if Depositor is deceased) containing such information as the
Custodian may reasonably request. Also, before making any distribution
or honoring any assignment of the Custodial Account, Custodian shall be
furnished with any and all applications, certificates, tax waivers,
signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable by Custodian, but
Custodian shall not be responsible for complying with any order or
instruction which appears on its face to be genuine, or for refusing to
comply if not satisfied it is genuine, and Custodian has no duty of further
inquiry. Any distributions from the Account may be mailed, first-class
postage prepaid, to the last known address of the person who is to receive
such distribution, as shown on the Custodian's records, and such
distribution shall to the extent thereof completely discharge the
Custodian's liability for such payment.
11.(a) The term "Beneficiary" means the person or persons designated as such by
the "designating person" (as defined below) on a form acceptable
to the Custodian for use in connection with the Custodial Account,
signed by the designating person, and filed with the Custodian. The form
may name individuals, trusts, estates, or other entities as
either primary or contingent beneficiaries. However, if the
designation does not effectively dispose of the entire Custodial Account
as of the time distribution is to commence, the term "Beneficiary" shall
then mean the designating person's estate with respect to the assets of
the Custodial Account not disposed of by the designation form. The form
last accepted by the Custodian before such distribution is to
commence, provided it was received by the Custodian (or deposited in the
U.S. Mail or with a reputable delivery service) during the designating
person's lifetime, shall be controlling and, whether or not fully
dispositive of the Custodial Account, thereupon shall revoke all such
forms previously filed by that person. The term "designating person"
means Depositor during his/her lifetime; after Depositor's death, it
also means Depositor's spouse, but only if the spouse elects to treat
the Custodial Account as the spouse's own Custodial Account in
accordance with applicable provisions of the Code.
(b) When and after distributions from the Custodial Account to
Depositor's Beneficiary commence, all rights and obligations assigned to
Depositor hereunder shall inure to, and be enjoyed and exercised by,
Beneficiary instead of Depositor.
12.(a) The Depositor agrees to provide information to the Custodian at such time
and in such manner as may be necessary for the Custodian to prepare any
reports required under Section 408(i) or Section 408A(d)(3)(E) of
the Code and the regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and manner and
containing such information as is prescribed by the Internal Revenue
Service.
(c) The Depositor, Custodian and Service Company shall furnish to each
other such information relevant to the Custodial Account as may be
required under the Code and any regulations issued or forms adopted by
the Treasury Department thereunder or as may otherwise be necessary
for the administration of the Custodial Account.
(d) The Depositor shall file any reports to the Internal Revenue Service
which are required of him by law (including Form 5329), and neither the
Custodian nor Service Company shall have any duty to advise Depositor
concerning or monitor Depositor's compliance with such requirement.
13.(a) Depositor retains the right to amend this Custodial Account document in
any respect at any time, effective on a stated date which shall be at
least 60 days after giving written notice of the amendment (including its
exact terms) to Custodian by registered or certified mail, unless
Custodian waives notice as to such amendment. If the Custodian does not
wish to continue serving as such under this Custodial Account document as
so amended, it may resign in accordance with Section 17 below.
(b) Depositor delegates to the Custodian the Depositor's right so to
amend, provided (i) the Custodian does not change the investments
available under this Custodial Agreement and (ii) the Custodian amends
in the same manner all agreements comparable to this one, having
the same Custodian, permitting comparable investments, and under
which such power has been delegated to it; this includes the power to
amend retroactively if necessary or appropriate in the opinion of the
Custodian in order to conform this Custodial Account to pertinent
provisions of the Code and other laws or successor provisions of law, or
to obtain a governmental ruling that such requirements are met, to
adopt a prototype or master form of agreement in substitution for this
Agreement, or as otherwise may be advisable in the opinion of the
Custodian. Such an amendment by the Custodian shall be communicated in
writing to Depositor, and Depositor shall be deemed to have consented
thereto unless, within 30 days after such communication to
Depositor is mailed, Depositor either (i) gives Custodian a written
order for a complete distribution or transfer of the Custodial Account,
or (ii) removes the Custodian and appoints a successor under Section 17
below.
Pending the adoption of any amendment necessary or desirable to conform this
Custodial Account document to the requirements of any amendment to any
applicable provision of the Internal Revenue Code or regulations or rulings
thereunder, the Custodian and the Service Company may operate the Depositor's
Custodial Account in accordance with such requirements to the extent that the
Custodian and/or the Service Company deem necessary to preserve the tax benefits
of the Account.
(c) Notwithstanding the provisions of subsections (a) and (b) above,
no amendment shall increase the responsibilities or duties of Custodian
without its prior written consent.
(d) This Section 13 shall not be construed to restrict the Custodian's right
to substitute fee schedules in the manner provided by Section 16 below,
and no such substitution shall be deemed to be an amendment of this
Agreement.
14.(a) Custodian shall terminate the Custodial Account if this Agreement is
terminated or if, within 30 days (or such longer time as Custodian may
agree) after resignation or removal of Custodian under Section 17,
Depositor or Sponsor, as the case may be, has not appointed a
successor which has accepted such appointment. Termination of the
Custodial Account shall be effected by distributing all assets thereof
in a single payment in cash or in kind to Depositor, subject to
Custodian's right to reserve funds as provided in Section 17.
(b) Upon termination of the Custodial Account, this custodial account
document shall have no further force and effect (except for Sections
15(f), 17(b) and (c) hereof which shall survive the termination of the
Custodial Account and this document), and Custodian shall be relieved
from all further liability hereunder or with respect to the Custodial
Account and all assets thereof so distributed.
15.(a) In its discretion, the Custodian may appoint one or more contractors or
service providers to carry out any of its functions and may compensate
them from the Custodial Account for expenses attendant to those
functions. In the event of such appointment, all rights and
privileges of the Custodian under this Agreement shall pass through
to such contractors or service providers who shall be entitled to
enforce them as if a named party.
(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor and for
dealing with or forwarding the same to the transfer agent for America's
Utility Fund.
(c) The parties do not intend to confer any fiduciary duties on Custodian
or Service Company (or any other party providing services to the
Custodial Account), and none shall be implied. Neither shall be
liable (or assumes any responsibility) for the collection of
contributions, the proper amount, time or tax treatment of any
contribution to the Custodial Account or the propriety of any
contributions under this Agreement, or the purpose, time, amount
(including any minimum distribution amounts), tax treatment or
proprietary of any distribution hereunder, which matters are the sole
responsibility of Depositor and Depositor's Beneficiary.
(d) Not later than 60 days after the close of each calendar year (or after
the Custodian's resignation or removal), the Custodian or Service Company
shall file with Depositor a written report or reports reflecting the
transactions effected by it during such period and the assets of the
Custodial Account at its close. Upon the expiration of 60 days after
such a report is sent to Depositor (or Beneficiary), the Custodian or
Service Company shall be forever released and discharged from all
liability and accountability to anyone with respect to transactions
shown in or reflected by such report except with respect to any such
acts or transactions as to which Depositor shall have filed
written objections with the Custodian or Service Company within such 60
day period.
(e) The Service Company shall deliver, or cause to be delivered, to
Depositor all notices, prospectuses, financial statements and
other reports to shareholders, proxies and proxy soliciting materials
relating to the shares of the Fund(s) credited to the Custodial Account.
No shares shall be voted, and no other action shall be taken pursuant to
such documents, except upon receipt of adequate written instructions
from Depositor.
(f) Depositor shall always fully indemnify Service Company,
Distributor, America's Utility Fund, Sponsor and Custodian and save
them harmless from any and all liability whatsoever which may arise
either (i) in connection with this Agreement and the matters which it
contemplates, except that which arises directly out of the Service
Company's, Distributor's, Fund's, Sponsor's or Custodian's bad faith,
gross negligence or willful misconduct, (ii) with respect to making or
failing to make any distribution, other than for failure to make
distribution in accordance with an order therefor which is in full
compliance with Section 10, or (iii) actions taken or omitted in
good faith by such parties. Neither Service Company nor Custodian shall
be obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless
agreed upon by that party and Depositor, and unless fully indemnified
for so doing to that party's satisfaction.
(g) The Custodian and Service Company shall each be responsible solely
for performance of those duties expressly assigned to it in this
Agreement, and neither assumes any responsibility as to duties
assigned to anyone else hereunder or by operation of law.
(h) The Custodian and Service Company may each conclusively rely upon and
shall be protected in acting upon any written order from Depositor or
Beneficiary, or any investment advisor appointed under Section 8, or any
other notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed,
and so long as it acts in faith, in taking or omitting to take any other
action in reliance thereon. In addition, Custodian will carry out the
requirements of any apparently valid court order relating to the
Custodial Account and will incur no liability or responsibility for
so doing.
16.(a) The Custodian, in consideration of its services under this Agreement,
shall receive the fees specified on the applicable fee schedule.
The fee schedule originally applicable shall be the one specified in
the Adoption Agreement or Disclosure Statement, as applicable. The
Custodian may substitute a different fee schedule at any time upon 30
days' written notice to Depositor. The Custodian shall also receive
reasonable fees for any services not contemplated by any applicable
fee schedule and either deemed by it to be necessary or desirable or
requested by Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes or any
kind whatsoever, including transfer taxes incurred in connection with
the investment or reinvestment of the assets of the Custodial Account,
that may be levied or assessed in respect to such assets, and all
other administrative expenses incurred by the Custodian in the
performance of its duties (including fees for legal services rendered to
it in connection with the Custodial Account) shall be charged to the
Custodial Account. If the Custodian is required to pay any such amount,
the Depositor (or Beneficiary) shall promptly upon notice thereof
reimburse the Custodian.
(c) All such fees and taxes and other administrative expenses charged to
the Custodial Account shall be collected either from the amount of any
contribution or distribution to or from the Account, or (at the option of
the person entitled to collect such amounts) to the extent possible under
the circumstances by the conversion into cash of sufficient shares
of one or more Funds held in the Custodial Account (without
liability for any loss incurred thereby). Notwithstanding the
foregoing, the Custodian or Service Company may make demand upon the
Depositor for payment of the amount of such fees, taxes and other
administrative expenses. Fees which remain outstanding after 60 days
may be subject to a collection charge.
17.(a) Upon 30 days' prior written notice to the Custodian, Depositor or
Sponsor, as the case may be, may remove it from its office
hereunder. Such notice, to be effective, shall designate a successor
custodian and shall be accompanied by the successor's written acceptance.
The Custodian also may at any time resign upon 30 days' prior written
notice to Sponsor, whereupon the Sponsor shall notify the Depositor (or
Beneficiary) and shall appoint a successor to the Custodian. In
connection with its resignation hereunder, the Custodian may, but is not
required to, designate a successor custodian by written notice to the
Sponsor or Depositor (or Beneficiary), and the Sponsor or
Depositor (or Beneficiary) will be deemed to have consented to such
successor unless the Sponsor or Depositor (or Beneficiary) designates a
different successor custodian and provides written notice thereof
together with such a different successor's written acceptance by such
date as the Custodian specifies in its original notice to the Sponsor
or Depositor (or Beneficiary) (provided that the Sponsor or Depositor
(or Beneficiary) will have a minimum of 30 days to designate a
different successor).
(b) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury under
Code Section 408(a)(2). Upon receipt by Custodian of written acceptance
by its successor of such successor's appointment, Custodian shall
transfer and pay over to such successor the assets of the Custodial
Account and all records (or copies thereof), of Custodian pertaining
thereto, provided that the successor custodian agrees not to dispose of
any such records without the Custodian's consent. Custodian is
authorized, however, to reserve such sum of money or property as it may
deem advisable for payment of all its fees, compensation, costs,
and expenses, or for payment of any other liabilities constituting a
charge on or against the assets of the Custodial Account or on or against
the Custodian, with any balance of such reserve remaining after the
payment of all such items to be paid over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of
its predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including successors
to such sections.
19. Except where otherwise specifically required in this Agreement, any notice
from Custodian to any person provided for in this Agreement shall be effective
if sent by first-class mail to such person at that person's last address on the
Custodian's records.
20. Depositor or Depositor's Beneficiary shall not have the right or power to
anticipate any part of the Custodial Account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The Custodial Account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to any
seizure, attachment, execution or other legal process in respect thereof except
to the extent required by law. At no time shall it be possible for any part of
the assets of the Custodial Account to be used for or diverted to purposes other
than for the exclusive benefit of the Depositor or his/her Beneficiary except to
the extent required by law.
21. When accepted by the Custodian, this Agreement is accepted in and shall be
construed and administered in accordance with the laws of the state where the
principal offices of the Custodian are located. Any action involving the
Custodian brought by any other party must be brought in a state or federal court
in such state.
If in the Adoption Agreement, Depositor designates that the Custodial Account is
a Traditional IRA, this Agreement is intended to qualify under Code Section
408(a) as an individual retirement Custodial Account and to entitle Depositor to
the retirement savings deduction under Code Section 219 if available. If in the
Adoption Agreement Depositor designates that the Custodial Account is a Roth
IRA, this Agreement is intended to qualify under Code Section 408A as a Roth
Individual Retirement Custodial Account and to entitle Depositor to the tax-free
withdrawal of amounts from the Custodial Account to the extent permitted in such
Code section. If any provision hereof is subject to more than one interpretation
or any term used herein is subject to more than one construction, such ambiguity
shall be resolved in favor of that interpretation or construction which is
consistent with the intent expressed in whichever of the two preceding sentences
is applicable.
However, the Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is referred
to Depositor's attorney for any such assurances.
22. Depositor should seek advice from Depositor's attorney regarding the legal
consequences (including but not limited to federal and state tax matters) of
entering into this Agreement, contributing to the Custodial Account, and
ordering Custodian to make distributions from the Account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. If any provision of any document governing the Custodial Account provides
for notice, instructions or other communications from one party to another in
writing, to the extent provided for in the procedures of the Custodian, Service
Company or another party, any such notice, instructions or other communications
may be given by telephonic, computer, other electronic or other means, and the
requirement for written notice will be deemed satisfied.
24. The legal documents governing the Custodial Account are as follows:
(a) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Traditional IRA under Code Section 408(a), the provision
of Part One and Part Three of this Agreement and the provisions of the
Adoption Agreement are the legal documents governing the Depositor's
Custodial Account.
(b) If in the Adoption Agreement the Depositor designated the Custodial
Account as a Roth IRA under Code Section 408A, the provisions of Part Two
and Part Three of this Agreement and the provisions of the Adoption
Agreement are the legal documents governing the Depositor's Custodial
Account.
(c) In the Adoption Agreement the Depositor must designate the Custodian
Account as either a Roth IRA or a Traditional IRA, and a separate
account will be established for such IRA. One Custodial Account may not
serve as a Roth IRA and a Traditional IRA (through the use of subaccounts
or otherwise).
23. Articles I through VII of Part One of this Agreement are in the form
promulgated by the Internal Revenue Service as Form 5305-A. It is anticipated
that, if and when the Internal Revenue Service promulgates changes to Form
5305-A, the Custodian will amend this Agreement correspondingly.
Articles I through VII of Part Two of this Agreement are in the form promulgated
by the Internal Revenue Service as Form 5305-RA. It is anticipated that, if and
when the Internal Revenue Service promulgates changes to Form 5305-RA, the
Custodian will amend this Agreement correspondingly.
The Internal Revenue Service has endorsed the use of documentation permitting a
Depositor to establish either a Traditional IRA or Roth IRA (but not both using
a single Adoption Agreement), and this booklet complies with the requirements of
the IRS guidance for such use. If the Internal Revenue Service subsequently
determines that such an approach is not permissible, or that the use of a
"combined" Adoption Agreement does not establish a valid Traditional IRA or a
Roth IRA (as the case may be), the Custodian will furnish the Depositor with
replacement documents and the Depositor will if necessary sign such replacement
documents. Depositor acknowledges and agrees to such procedures and to cooperate
with Custodian to preserve the intended tax treatment of the Account.
26. If the Depositor maintains an Individual Retirement Account under Code
section 408(a), Depositor may convert or transfer such other IRA to a Roth IRA
under Code section 408A using the terms of this Agreement and the Adoption
Agreement by completing and executing the Adoption Agreement and giving suitable
directions to the Custodian and the custodian or trustee of such other IRA.
Alternatively, the Depositor may convert or transfer such other IRA to a Roth
IRA by use of a reply card or by telephonic, computer or electronic means in
accordance with procedures adopted by the Custodian or Service Company intended
to meet the requirements of Code section 408A, and the Depositor will be deemed
to have executed the Adoption Agreement and adopted the provisions of this
Agreement and the Adoption Agreement in accordance with such procedures.
27. The Depositor acknowledges that he or she has received and read the current
prospectus for each Fund in which his or her Account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.
<PAGE>
America's Utility Fund
STATE STREET BANK
UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
Instructions for Opening your Traditional IRA or Roth IRA
1. Read carefully the applicable sections of the Universal IRA Disclosure
Statement contained in this booklet, the Traditional or Roth Individual
Retirement Custodial Account document (as applicable), the Adoption
Agreement, and the prospectus for America's Utility Fund. Consult your lawyer
or other tax adviser if you have any questions about how opening a
Traditional IRA or Roth IRA will affect your financial and tax situation.
2. Complete the Adoption Agreement
o Print the identifying information where requested at the top of the
Adoption Agreement.
o For a Traditional IRA, check the box for Part A and check the other boxes
in Part A to specify the type of Traditional IRA you are opening and
provide the registered information.
If this is an IRA to which you expect to make contributions each year,
check Box 1 and enclose a check in the amount of your first contribution.
Be sure to indicate whether this is a contribution for last year or for the
current year.
If this is a transfer directly from another IRA custodian or trustee, check
Box 2. Check the appropriate box to indicate whether the funds transferred
were originally from contributions to an employee qualified plan or a
403(b) arrangement, or whether any of the funds were originally from your
annual contributions to the IRA. Complete and sign the Universal IRA
Transfer of Assets Form.
If this is a rollover of amounts distributed to you from another IRA or an
employer qualified plan or a 403(b) arrangement, check Box 3. Check the
appropriate box to indicate whether the transfer is coming from a qualified
plan or 403(b) arrangement, or an IRA that held only funds that were
originally from contributions to a qualified plan or 403(b), or whether any
of the funds were originally from your annual contributions to the IRA.
Enclose a check for the rollover contributions amount.
If this is a direct rollover from a qualified plan or 403(b) arrangement,
check Box 4. Complete and sign the Universal IRA Transfer of Assets Form.
Check Box 5 if applicable (for an IRA that will be used to receive employer
contributions under an employer's simplified employee pension (or "SEP")
plan or under a grandfathered salary reduction SEP plan (or "SARSEP").
o For a Roth IRA, check the box for Part B. Check the other boxes in Part B
to specify the type of Roth IRA you are opening and provide the requested
information.
29
<PAGE>
If this is Roth IRA to which you expect to make contributions each year,
enclose a check in the amount of your first contribution. Be sure to
indicate whether this is a contribution for last year or for the current
year. Only annual contributions may be accepted in an annual contribution
Roth IRA account. Note: Roth IRAs are available starting January 1, 1998,
so you cannot make a contribution for 1997.
If you are converting an existing Traditional IRA with the America's
Utility Fund as IRA custodian or trustee, check Box 2. Indicate your
current IRA account number and how much you are converting. Conversion of
an existing Traditional IRA will result in inclusion of taxable amounts in
the existing Traditional IRA on your income tax return. Note: If a
conversion, rollover or transfer from a Traditional IRA to a Roth IRA is
being made, only amounts converted, rolled over or transferred during the
same tax year will be accepted in a single Roth IRA. A separate Roth IRA
must be established to hold such amounts from a different tax year. Annual
contributions may never be deposited in a Roth IRA holding such converted,
rolled over, or transferred amounts.
If you are making a rollover or a transfer from an existing Traditional IRA
with a different custodian or trustee, check Box 3. A rollover or transfer
from an existing Traditional IRA means that the taxable amount in the
existing Traditional IRA will be treated as additional income on your
income tax return.
If you are making a rollover or a transfer from another Roth IRA with a
different trustee or custodian, check Box 4. Put the requested information
where indicated.
o In Part C, indicate your investment choices.
o Sign and date the Adoption Agreement in Part D at the end.
3. If you are transferring assets from an existing IRA to this IRA, complete the
Universal Transfer of Assets Form.
4. Complete and sign the Designation of Beneficiary.
5. The Custodian fees for maintaining your IRA are listed in the Fees and
Expenses section of Part Three of the Disclosure Statement or in the Adoption
Agreement. If you are paying by check, enclose a check for the correct amount
payable as specified below. If you do not pay by check, the correct amount
will be taken from your account.
6. Check to be sure you have properly completed all necessary forms and enclosed
a check for the Custodian's fees (unless being withdrawn from your account)
and a check for the first contribution to your Traditional or Roth IRA (if
applicable). Your Traditional IRA or Roth IRA cannot be accepted without the
properly completed documents or the Custodian fees.
All checks should be payable to America's Utility Fund
Mail completed forms and checks to:
America's Utility Fund
c/o State Street Bank and Trust Company
P.O. Box 8507
Boston, MA 02266
30
<PAGE>
America's Utility Fund
STATE STREET BANK UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
ADOPTION AGREEMENT
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account (IRA), which is either
a Traditional IRA or a Roth IRA, as indicated below, (the "Account") with State
Street Bank and Trust Company as Custodian ("Bank"). A Traditional IRA operates
under Internal Revenue Code Section 408(a). A Roth IRA operates under Internal
Revenue Code Section 408A. I agree to the terms of my Account, which are
contained in the applicable provisions of the document, State Street Bank and
Trust Company Universal Individual Retirement Custodial Account and this
Adoption Agreement. I certify the accuracy of the information in this Adoption
Agreement. My Account will be effective upon acceptance by America's Utility
Fund.
1. Depositor Information
- --------------------------------------
Print Full Name
- ---------------------------------------
Address
- ---------------------------------------
City State Zip
- ---------------------------------------
Social Security Number
- ---------------------------------------
Date of Birth
( )--------------------------------
Daytime Telephone Number
INSTRUCTIONS: To establish a Traditional IRA, check Box A and complete Part A.
To establish a Roth IRA, check Box B and complete Part B. In either case,
complete Part C to select your investment choices, and sign at the end of Part
D.
A. TRADITIONAL IRA [ ]
By checking this box, I designate my Account as a Traditional IRA under Code
Section 408(a). (Complete 1, 2, 3 or 4 below to indicate the type of
Traditional IRA you are opening. Check 5 or 6 if applicable.)
1. [ ] Annual Contributions
Current Contribution for the year 19--. Check enclosed for
$-------------------. This contribution does not exceed the maximum
permitted amount as described in the Traditional IRA Disclosure Statement.
2. [ ] Transfer
Transfer of existing Traditional IRA directly from current Custodian or
Trustee. Complete the Universal IRA Transfer of Assets Form.
[ ] The transferring IRA held annual contributions by me (or amounts
transferred or rolled over from another IRA holding annual contributions).
[ ] The transferring IRA held only amounts that were originally
contributions to an employer qualified plan or 403(b) plan.
3. [ ] Rollover
The requirements for a valid rollover are complex. See the Traditional IRA
Disclosure Statement for additional information and consult your tax
advisor for help if needed. Check enclosed for
$-------------------------------.
[ ] Rollover of a qualifying rollover distribution to Depositor from an
employer plan or 403(b) arrangement, or rollover from another Regular IRA
which held only assets distributed to Depositor from an employer plan or
403(b) arrangement and to which Depositor made no direct contributions.
[ ] Rollover of distribution to Depositor from another Traditional IRA
that held amounts that originated from annual contributions by the
Depositor.
4. [ ] Direct Rollover
[ ] Direct rollower of an eligible distribution from a qualified plan.
[ ] Direct rollover of an eligible distribution from a 403(b) account or
annuity.
Direct rollovers are described in the Traditional IRA Disclosure
Statement.
5. [ ] SEP Provision
Check here if the Depositor intends to use this Account in connection with
a SEP Plan or grandfathered SARSEP Plan established by the Depositor's
employer.
31
<PAGE>
B. ROTH IRA [ ]
By checking this box, I designate my Account as a Roth IRA under Code Section
408A. (Complete 1, 2, 3 or 4 on back to indicate the type of Roth IRA you are
opening.)
1. [ ] Annual Contributions
Current Contribution for the year 19--. Check enclosed for $------. This
contribution does not exceed the maximum permitted amount as described in
the Roth IRA Disclosure Statement.
2. [ ] Conversion
of existing Traditional IRA with Bank as Custodian or Trustee to a Roth IRA
with America's Utility Fund.
----------------------------------------------
Current Traditional IRA Account Number
Amount Converted
[ ] All [] Part (specify how much):
$--------------------------------------------
3. [ ] Rollover or Transfer
from existing Traditional IRA with a custodian or trustee other than
America's Utility Fund to a Roth IRA with America's Utility Fund.
4. [ ] Rollover or Transfer from existing Roth IRA with another custodian
or trustee to a Roth IRA with America's Utility Fund.
----------------------------------------------
Date existing Roth IRA was originally opened
Indicate whether any amount in the existing Roth IRA represents amounts
converted or transferred from a Traditional IRA into such other Roth IRA:
[ ] Yes [ ] No
If yes, date of the most recent conversion or transfer into such other
Roth:
----------------------------------------------
Complete the Universal IRA Transfer of Assets Form if either 3 or 4 is
checked and the transaction is a transfer (as opposed to a rollover).
Note: If a conversion, rollover or transfer from a Regular IRA to a Roth IRA
is being made, only amounts converted, rolled over or transferred during the
same tax year will be accepted in a single Roth IRA. A separate Roth IRA
must be established to hold such amounts from a different tax year. Annual
contributions may not be deposited in a Roth IRA holding such converted,
rolled over or transferred amounts.
C. INVESTMENTS
I acknowledge that I have sole responsibility for my investment choices and
that I have received a current prospectus for America's Utility Fund. I will
read the prospectus of America's Utility Fund before investing.
D. CERTIFICATIONS AND SIGNATURES
If the Depositor has indicated a Traditional IRA Rollover or Direct Rollover
above, Depositor certifies that the contribution does not include any employee
contributions to any qualified plan (other than accumulated deductible
employee contributions) or 403(b) arrangement; that any assets transferred in
kind by Depositor are the same assets received by the Depositor in the
distribution being rolled over; if the distribution is from another
Traditional IRA, that Depositor has not made another rollover within the
one-year period immediately preceding this rollover; that such distribution
was received within 60 days of making the rollover to this Account; and that
no portion of the amount rolled over is a required minimum distribution under
the required distribution rules.
If Depositor has indicated a Conversion or a Rollover of an existing
Traditional IRA to a Roth IRA, Depositor acknowledges that the amount
converted will be treated as taxable income (except for prior nondeductible
contributions) for federal income tax purposes. If Depositor has indicated a
Rollover from another Roth IRA (Item 4 of Part B above), Depositor certifies
that the information given in Item 4 is correct and acknowledges that adverse
tax consequences or penalties could result from giving incorrect information.
Depositor has received and read the applicable sections of the "America's
Utility Fund/State Street Bank and Trust Company Universal Individual
Retirement Account Disclosure Statement" relating to this Account (including
the Custodian's fee schedule), the Custodial Account document, and the
"Instructions" pertaining to this Adoption Agreement. Depositor acknowledges
receipt of the Universal Individual Retirement Custodial Account document and
Universal IRA Disclosure Statement at least 7 days before the date inscribed
below and acknowledges that Depositor has no further right of revocation.
Depositor acknowledges and understands that the beneficiaries named herein
may be changed or revoked at any time by filing a new designation in writing
with the Custodian. All forms must be acceptable to the Custodian and dated
and signed by the Depositor.
- ---------------------------------- ---------------
Signature of Depositor Date
32
<PAGE>
Custodian Acceptance. State Street Bank and Trust Company will accept
appointment as Custodian of the Depositor's Account. However, this Agreement is
not binding upon the Custodian until the Depositor has received a statement of
the transaction. Receipt by the Depositor of a confirmation of the purchase of
the Fund shares indicated above will serve as notification of State Street Bank
and Trust Company's acceptance of appointment as Custodian of the Depositor's
Account.
STATE STREET BANK AND TRUST COMPANY, CUSTODIAN
- ---------------------------------------------- ------------------------------
BY DATE
If the Depositor is a minor under the laws of the Depositor's state of
residence, a parent or guardian must also sign the Adoption Agreement here.
Until the Depositor reaches the age of majority, the parent or guardian will
exercise the powers and duties of the Depositor.
- ---------------------------------------------- ------------------------------
SIGNATURE OF PARENT OR GUARDIAN DATE
RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
STATE STREET BANK UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
DESIGNATION OF BENEFICIARY
- --------------------------------------------------------------------------------
PRINT NAME OF DEPOSITOR
As Depositor, I hereby make the following designation of beneficiary in
accordance with the State Street Bank and Trust Company Regular Individual
Retirement Custodial Account or Roth Individual Retirement Custodial Account:
In the event of my death, pay any interest I may have under my Account to the
following Primary Beneficiary or Beneficiaries who survive me. Make payment in
the proportions specified below (or in equal proportions if no different
proportions are specified). If any Primary Beneficiary predeceases me, his share
is to be divided among the Primary Beneficiaries who survive me in the relative
proportions assigned to each such surviving Primary Berneficiary.
Primary Beneficiary or Beneficiaries:
Name Relationship Date of Birth Social Security Number Proportion
- ----------------- --------- ------------ -------------------- --------
- ----------------- --------- ------------ -------------------- --------
- ----------------- --------- ------------ -------------------- --------
- ----------------- --------- ------------ -------------------- --------
If none of the Primary Beneficiaries survives me, pay any interest I may have
under my Account to the following Alternate Beneficiary or Beneficiaries who
survive me. Make payment in the proportions specified below (or in equal
proportions if no different proportions are specified). If any Alternate
Beneficiary predeceases me, his share is to be divided among the Alternate
Beneficiaries who survive me in the relative proportions assigned to each such
surviving Alternate Beneficiary.
<PAGE>
33
Alternate Beneficiary or Beneficiaries:
- ----------------- --------- ------------ -------------------- --------
- ----------------- --------- ------------ -------------------- --------
- ----------------- --------- ------------ -------------------- --------
- ----------------- --------- ------------ -------------------- --------
I understand that the beneficiaries named herein may be changed or revoked at
any time by filing a new designation in writing with the Custodian. All forms
must be acceptable to the Custodian and dated and signed by the Depositor.
- ------------------------------------------------ ------------------------------
PARTICIPANT DATE
IMPORTANT: This Designation of Beneficiary may have important tax-or
estate-planning effects. Also, if you are married and reside in a community
property or marital property state (Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas Washington or Wisconsin), you may need to obtain your
spouse's consent if you have not designated your spouse as primary beneficiary
for at least half of your Account. See your lawyer or other tax professional for
additional information and advice.
SPOUSAL CONSENT
This section should be reviewed if the account-holder is married and designates
a Beneficiary other than the spouse. It is the account-holder's responsibility
to determine if this section applies. The account-holder may need to consult
with legal counsel. Neither the Custodian nor the Sponsor are liable for any
consequences resulting from a failure of the account-holder to provide proper
spousal consent.
I am the spouse of the above-named account-holder. I acknowledge that I have
received a full and reasonable disclosure of my spouse's property and financial
obligations. Due to any possible consequences of giving up my community property
interest in this IRA, I have been advised to see a tax professional or legal
advisor.
I hereby consent to the Beneficiary designation(s) indicated above. I assume
full responsibility for any adverse consequence that may result. No tax or legal
advice was given to me by the Custodian or Sponsor.
- ------------------------------------------------ ------------------------------
SPOUSE DATE
- ------------------------------------------------ ------------------------------
WITNESS FOR SPOUSE DATE
<PAGE>
34
America's Utility Fund
STATE STREET BANK UNIVERSAL INDIVIDUAL RETIREMENT ACCOUNT
TRANSFER OF ASSETS FORM
1. Name and address of Depositor
- -------------------------------------- ----------------------------------------
PRINT FULL NAME SOCIAL SECURITY NUMBER
- -------------------------------------- ----------------------------------------
ADDRESS DATE OF BIRTH
- -------------------------------------- ( )---------------------------------
CITY STATE ZIP DAYTIME TELEPHONE NUMBER
2. Identification of receiving account
This a transfer to State Street Bank and Trust Company.
[ ] Traditional IRA* [ ] Roth IRA** [ ] SEP IRA
* You may not transfer from a Roth IRA to a raditional IRA or a simplified
employee pension (SEP) IRA. Transfers to a Traditional IRA or SEP IRA may
be made from another Traditional IRA or SEP IRA, qualified employer plan,
or a 403(b) arrangement.
** Transfers to a Roth IRA are possible only from another Traditional IRA or
from a Roth IRA, not from other tpes of tax-deferred accounts. A transfer
from a Traditional IRA will trigger federal income tax on the taxable
amount transferred from the Traditional IRA. Note: If a conversion,
rollover, or transfer from a Traditional IRA to a Roth IRA is being made,
only amounts converted, rolled over, or transferred during the same tax
year will be accepted in a single Roth IRA. A separate Roth IRA must be
established to hold such amounts from a different tax year. Annual
contributions may not be deposited in a Roth IRA holding such converted,
rolled over, or transferred amounts.
If you already have a Traditional IRA, Roth IRA, or a SEP IRA, indicate the
Account Number.
- --------------------------------------------------------------------------------
3. Instructions to present IRA custodian or trustee (Completed by Depositor)
- --------------------------------------------------------------------------------
NAME OF CUSTODIAN/TRUSTEE
- --------------------------------------------------------------------------------
ATTN: MR./MS.
- ------------------------------------------- --------------- ------ -------------
ADDRESS CITY STATE ZIP
- --------------------------------------------------------------------------------
IDENTIFICATION OF SENDING ACCOUNT (INCLUDING ACCOUNT NUMBER)
Please transfer assets from the above account to America's Utility fund c/o
State Street Bank and Trust Company, P.O. Box 8507, Boston, MA 02266. Transfer
should be in cash according to the following instructions:
( ) Transfer the total amount in my amount
or ( ) Transfer $---------------------------- and retain the balance.
Make checks payable to: --------------------------------------------------------
Over, please.
<PAGE>
35
4. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
Invest the transferred amount in accordance with the investment instructions in
the Adoption Agreement for my America's Utility fund IRA Custodial Account.
I acknowledge that I have sole responsibility for my investment choices and that
I have received a current prospectus for America's Utility Fund. I will read the
prospectus of America's Utility Fund before investing.
I understand that the requirements for a valid transfer to a Traditional IRA,
Roth IRA, or SEP IRA are complex and that I have the responsibility for
complying with all requirements and for the tax results of any such transfer.
5. SIGNATURE OF DEPOSITOR
The undersigned certifies to the present IRA custodian or trustee that the
undersigned has established a successor Individual Retirement Custodial Account
meeting the requirements of Internal Revenue Code Section 408(a), 408(p) or 408A
(as the case may be) to which assets will be transferred, and certifies to State
Street Bank and Trust Company that the IRA from which assets are being
transferred meets the requirements of Internal Revenue Code Section 408(a),
408(p) or 408A (as the case may be).
- ------------------------------------------------- -----------------------------
DEPOSITOR DATE
6. ACCEPTANCE BY NEW CUSTODIAN (Completed by State Street Bank and Trust
Company)
State Street Bank and Trust Company agrees to accept transfer of the above
amount for deposit to the Depositor's State Street Bank and Trust Company
Individual Retirement Custodial Account, and requests the liquidation and
transfer of assets as indicated above.
- ------------------------------------------------- -----------------------------
BY DATE
POWER OF ATTORNEY
We, the undersigned Directors of America's Utility Fund, Inc. (the "Fund"),
hereby severally constitute and appoint Daniel J. Ludeman, Paul F. Costello and
Peter J. Quinn, Jr., and each of them singly, our true and lawful attorneys,
with full power to them and each of them, to sign for us, and in our names and
in the capacities indicated below, the Registration Statement on Form N-1A of
the Fund and any and all amendments (including post-effective amendments) to
said Registration Statement and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto our said attorneys, and each of them acting alone,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to all intents and
purposes as he might or could do in person, and hereby ratify and confirm all
that said attorneys or either of them may lawfully do or cause to be done by
virtue thereof.
WITNESS our hands and common seal on the date set forth below.
Signature Title Date
- --------- ----- ----
/s/ Daniel J. Ludeman Chairman; Director April 29, 1998
- ---------------------
Daniel J. Ludeman
/s/ Paul F. Costello President; Principal April , 1998
- --------------------
Paul F. Costello
Executive Officer
/s/ Terry L. Perkins Treasurer; Principal April 29, 1998
- -------------------- Financial and
Terry L. Perkins Accounting Officer
/s/ Peter J. Quinn, Jr. Director April 29, 1998
- -----------------------
Peter J. Quinn, Jr.
/s/ Arnold H. Dreyfuss Director April , 1998
- -----------------------
Arnold H. Dreyfuss
Director April , 1998
- -----------------------
Thomas F. Keller
Director April , 1998
- -----------------------
Louis W. Moelchert, Jr.
/s/ Troy A. Peery, Jr. Director April , 1998
- -----------------------
Troy A. Peery, Jr.
/s/ Arch T. Allen, III Director April 29, 1998
- -----------------------
Arch T. Allen, III
/s/ Weston E. Edwards Director April , 1998
- -----------------------
Weston E. Edwards
Director April , 1998
- -----------------------
Jerry R. Barrentine
Director April , 1998
- -----------------------
J. Garnett Nelson