<PAGE> PAGE 1
000 B000000 10/31/1999
000 C000000 0000892823
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 PRINCIPAL UTILITIES FUND, INC.
001 B000000 811-07266
001 C000000 5152475476
002 A000000 PRINCIPAL FINANCIAL GROUP
002 B000000 DES MOINES
002 C000000 IA
002 D010000 50392
002 D020000 0200
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
020 A000001 DEUTSCHE MORGAN GRENFELL
020 B000001 13-2730828
020 C000001 21
020 A000002 PRUDENTIAL SECURITIES, INC.
020 B000002 22-2347336
020 C000002 13
020 A000003 OPPENHEIMER & CO.
020 B000003 13-2798343
020 C000003 13
020 A000004 BEAR STEARNS & CO.
020 B000004 13-3299429
020 C000004 7
020 A000005 BERNSTEIN, SANFORD C.
020 B000005 13-2625074
020 C000005 7
020 A000006 MERRILL LYNCH, PIERCE, FENNER & SMITH
020 B000006 13-5674085
020 C000006 6
020 A000007 SG WARBURG AND CO.
020 B000007 13-3340045
020 C000007 5
020 A000008 PAINE WEBBER INC.
020 B000008 13-2638166
020 C000008 4
020 A000009 MORGAN, J.P. SECURITIES
020 B000009 13-3224016
020 C000009 3
020 A000010 LEHMAN BROTHERS
<PAGE> PAGE 2
020 B000010 13-2501865
020 C000010 3
021 000000 95
022 A000001 ASSOCIATES CORPORATION OF NORTH AMERICA
022 B000001 74-1494554
022 C000001 866161
022 D000001 0
022 A000002 LEHMAN BROTHERS
022 B000002 13-2501865
022 C000002 1203
022 D000002 707
022 A000003 BANK OF NY, ASSOC.
022 B000003 13-6062916
022 C000003 0
022 D000003 1542
022 A000004 FORD MOTOR CREDIT CO.
022 B000004 38-1612444
022 C000004 1354
022 D000004 0
022 A000005 FURMAN SELZ INC.
022 B000005 13-2753731
022 C000005 0
022 D000005 1182
022 A000006 MORGAN, J.P. SECURITIES
022 B000006 13-3224016
022 C000006 1144
022 D000006 0
022 A000007 AMERICAN EXPRESS CREDIT CORPORATION
022 B000007 11-1988350
022 C000007 1039
022 D000007 0
022 A000008 CREDIT SUISSE FIRST BOSTON CORP
022 B000008 13-5659485
022 C000008 927
022 D000008 0
022 A000009 GENERAL ELECTRIC CAPITAL CORP.
022 B000009 13-1500700
022 C000009 919
022 D000009 0
022 A000010 PRUDENTIAL SECURITIES, INC.
022 B000010 22-2347336
022 C000010 0
022 D000010 895
023 C000000 873729
023 D000000 5211
024 000000 N
027 000000 Y
028 A010000 2650
028 A020000 0
028 A030000 0
028 A040000 2313
<PAGE> PAGE 3
028 B010000 3407
028 B020000 492
028 B030000 0
028 B040000 1857
028 C010000 2890
028 C020000 0
028 C030000 0
028 C040000 1940
028 D010000 2639
028 D020000 0
028 D030000 0
028 D040000 1352
028 E010000 2409
028 E020000 475
028 E030000 0
028 E040000 1960
028 F010000 1975
028 F020000 0
028 F030000 0
028 F040000 1744
028 G010000 15970
028 G020000 967
028 G030000 0
028 G040000 11166
028 H000000 6027
029 000000 Y
030 A000000 458
030 B000000 4.75
030 C000000 0.00
031 A000000 130
031 B000000 0
032 000000 40
033 000000 288
034 000000 Y
035 000000 55
036 A000000 N
036 B000000 0
042 A000000 0
042 B000000 0
042 C000000 100
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 418
044 000000 0
055 A000000 N
055 B000000 N
062 A000000 N
062 B000000 0.0
<PAGE> PAGE 4
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
066 A000000 Y
066 B000000 N
066 C000000 N
066 D000000 N
066 E000000 Y
066 F000000 N
066 G000000 N
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
071 A000000 41928
071 B000000 26157
071 C000000 111366
071 D000000 23
072 A000000 12
072 B000000 177
072 C000000 3459
072 D000000 0
072 E000000 0
072 F000000 685
072 G000000 0
072 H000000 0
072 I000000 391
072 J000000 2
072 K000000 0
072 L000000 0
072 M000000 7
072 N000000 34
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 4
072 S000000 1
072 T000000 418
<PAGE> PAGE 5
072 U000000 0
072 V000000 0
072 W000000 6
072 X000000 1548
072 Y000000 0
072 Z000000 2088
072AA000000 8056
072BB000000 0
072CC010000 4964
072CC020000 0
072DD010000 1892
072DD020000 273
072EE000000 1475
073 A010000 0.0000
073 A020000 0.0000
073 B000000 0.2384
073 C000000 0.0000
074 A000000 43
074 B000000 0
074 C000000 2015
074 D000000 0
074 E000000 0
074 F000000 124160
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 0
074 K000000 0
074 L000000 401
074 M000000 0
074 N000000 126619
074 O000000 0
074 P000000 0
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 174
074 S000000 0
074 T000000 126445
074 U010000 5591
074 U020000 1491
074 V010000 0.00
074 V020000 0.00
074 W000000 0.0000
074 X000000 17033
074 Y000000 0
075 A000000 0
075 B000000 114747
076 000000 0.00
077 A000000 Y
<PAGE> PAGE 6
077 B000000 Y
077 C000000 Y
077 I000000 Y
077 Q010000 Y
080 A000000 ICI MUTUAL INSURANCE COMPANY
080 C000000 21000
081 A000000 Y
081 B000000 18
082 A000000 N
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 Y
085 B000000 N
SIGNATURE A S FIEAN
TITLE VICE PRES/SECRETARY
Report of Independent Auditors
The Board of Directors and Shareholders
Principal Utilities Fund, Inc.
In planning and performing our audit of the financial statements of Principal
Utilities Fund, Inc. for the year ended October 31, 1999, we considered its
internal control, including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of expressing our
opinion on the financial statements and to comply with the requirements of Form
N-SAR, and not to provide assurance on internal control.
The management of Principal Utilities Fund, Inc. is responsible for establishing
and maintaining internal control. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. These controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements being audited may occur and not
be detected within a timely period by employees in the normal course of
performing their assigned functions. However, we noted no matters involving
internal control and its operation, including controls for safeguarding
securities, that we consider to be material weaknesses as defined above at
October 31, 1999.
This report is intended solely for the information and use of management, the
Board of Directors of Principal Utilities Fund, Inc. and the Securities and
Exchange Commission and is not intended to be and should not be used by anyone
other than these specified parties.
/s/Ernst & Young LLP
November 24, 1999
SPECIAL MEETING OF SHAREHOLDER
OF
CLASS C SHARES
OF THE
PRINCIPAL UTILITIES FUND, INC.
680 8TH Street, Des Moines, Iowa July 1, 1999 3:00 p.m.
A special meeting of the shareholder of Class C shares of the Principal
Utilities Fund, Inc. was held at 680 8th Street, Des Moines, Iowa at 3:00 p.m.
on July 1, 1999.
The meeting was called to order by Mr. M. J. Beer, who presided as chairman of
the meeting. Mr. B. L. Agnew acted as secretary of the meeting. Also present was
Mr. E. H. Gillum.
The Secretary reported the only shareholder of Class C shares of the Corporation
was Principal Life Insurance Company, that all such shares were represented by
proxies held by Mr. Gillum and that a quorum was present.
The Chairman directed that the proxies be appended to the minutes of this
meeting.
The Chairman stated it would be in order to consider ratification and approval
of the Distribution and Shareholder Servicing Plan and Agreement for Class C
shares adopted by the Board of Directors pursuant to Rule 12b-1 of the
Investment Company Act of 1940. A copy of said Agreement was presented at the
meeting. Thereupon, the following resolution was duly adopted by the vote of all
the outstanding shares of Class C shares of the Common Stock of the Corporation:
"BE IT RESOLVED, That the Distribution and Shareholder Servicing Plan
and Agreement for Class C shares between the Corporation and Princor
Financial Services Corporation, which was approved by the Board of
Directors, including a majority of the non-interested directors
thereof, be, and it hereby is, ratified and approved."
There being no further business, the meeting was adjourned.
/s/ B. L. Agnew
Secretary of the Meeting
Description of Securities Offered
Contingent deferred sales charge: Class C shares
You may buy Class C shares at the net asset value per share next computed after
the Fund receives your purchase order without the imposition of an initial sales
charge; however, Class C shares redeemed (sold) within one year of purchase is
subject to a CDSC of 1% (.5% for Limited Term Bond Fund). The charge is assessed
on the amount equal to the lesser of the current market value or the original
purchase cost of the shares being redeemed. No CDSC is imposed on increases in
account value above the initial purchase price, including shares derived from
the reinvestment of dividends or capital gains distributions. Class C shares do
not convert to any other class of Fund shares.
For the purpose of determining the time of any purchase, all payments during a
month are aggregated and considered to have be made on the first day of that
month. In processing redemptions of Class C shares, the Fund first redeems
shares not subject to any CDSC, and then shares held for the shortest period of
time during the one-year period. As a result, you pay the lowest possible CDSC.
Contingent Deferred Sales Charge
as a Percentage of
Dollar Amount Subject to Charge
All Funds
Years Since Purchase Except Limited Term Limited Term
Payments Made Bond Fund Bond Fund
-------------------- ------------------- ------------
1 year or less 1.0% 0.50%
more than 1 year None None
Proceeds from the CDSC are paid to Princor Financial Services Corporation. The
fees are used to help offset Princor's expenses related to providing
distribution-related services to the Fund in connection with the sale of Class C
shares, including the payment of compensation to broker-dealers.
Class C shares of the Cash Management Fund may be purchased only by exchange
from other Class C share accounts. Class C shares do not convert into any other
Class shares. Class C shares provide you the benefit of putting all your dollars
to work from the time of investment, but have higher ongoing fees and lower
dividends than Class A or Class B shares.
ARTICLES SUPPLEMENTARY
OF
PRINCIPAL UTILITIES FUND, INC.
Principal Utilities Fund, Inc., and Maryland Corporation having its principal
office on this state in Baltimore City, Maryland (hereinafter called the
Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940.
SECOND: The Board of Directors of the Corporation have classified
authorized but unissued stock of the Corporation under authority
contained in the charter of the Corporation.
THIRD: A description of the stock as set by the Board of Directors and as
provided in Article V of the corporate charter as supplemented by
these Articles Supplementary is as follows:
ARTICLE V
Capital Stock
Section 1. Authorized Shares: The total number of shares of stock which the
Corporation shall have authority to issue is one hundred million (100,000,000)
shares, of the par value of one cent ($.01) each and of the aggregate par value
of one million dollars ($1,000,000). The shares may be issued by the Board of
Directors in such separate distinct classes as the Board of Directors shall from
time to time create and establish. The Board of Directors shall have full power
and authority, in its sole discretion, to establish and designate classes, and
to classify or reclassify any unissued shares in separate classes having such
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption as shall be fixed and determined from time to time by the Board of
Directors. Expenses related to the distribution of, and other identified
expenses that should properly be allocated to, the shares of a particular class
may be charged to and borne solely by such class, and the bearing of expenses
solely by a class may be appropriately reflected (in a manner determined by the
Board of Directors) and cause differences in the net asset value attributable
to, and the dividend, redemption and liquidation rights of, the shares of each
class. Subject to the authority of the Board of Directors to increase and
decrease the number of, and to reclassify the, shares of any class, there are
hereby established two classes of common stock, each comprising the number of
shares and having the designation indicated:
Class Number of Shares
Class A 25,000,000
Class B 25,000,000
Class C 25,000,000
Class R 25,000,000
In addition, the Board of Directors is hereby expressly granted authority to
change the designation of any class, to increase or decrease the number of
shares of any class, provided that the number of shares of any class shall not
be decreased by the Board of Directors below the number of shares thereof then
outstanding, and to reclassify any unissued shares into one or more classes that
may be established and designated from time to time. Notwithstanding the
designations herein of classes, the Corporation may refer, in prospectuses and
other documents furnished to shareholders, filed with the Securities and
Exchange Commission or used for other purposes, to a class of shares as a
"series".
(a) The Corporation may issue shares of stock in fractional
denominations to the same extent as its whole shares, and shares
in fractional denominations shall be shares of stock having
proportionately, to the respective fractions represented thereby,
all the rights of whole shares, including without limitation, the
right to vote, the right to receive dividends and distributions
and the right to participate upon liquidation of the Corporation,
but excluding the right to receive a stock certificate
representing fractional shares.
(b) The holder of each share of stock of the Corporation shall be
entitled to one vote for each full share, and the fractional vote
for each fractional share of stock, irrespective of the class,
then standing in the holder's name on the books of the
Corporation. On any matter submitted to a vote of stockholders,
all shares of the Corporation then issued and outstanding and
entitled to vote shall be voted in the aggregate and not by class
except that (1) when otherwise expressly required by the Maryland
General Corporation Law or the Investment Company Act of 1940, as
amended, shares shall be voted by individual class, and (2) if
the Board of Directors, in its discretion, determines that a
matter affects the interests of only one or more particular
classes then only the holders of shares of such affected class or
classes shall be entitled to vote thereon.
(c) Unless otherwise provided in the resolution of the Board of
Directors providing for the establishment and designation of any
new class or classes, each class of stock of the Corporation shall
have the following powers, preferences and rights, and
qualifications, restrictions and limitations thereof:
(1) Assets belonging to a class. All consideration received by the
Corporation for the issue or sale of shares of a particular
class, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to
that class for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books and
accounts of the corporation. Such consideration, assets,
income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may
be, together with any general items allocated to that class as
provided in the following sentence, are hereinafter referred
to as "assets belonging to" that class. In the event that
there are any assets, income, earning, profits, proceeds
thereof, funds or payments which are not readily identifiable
as belonging to any particular class (collectively "general
items"), such general items shall be allocated by or under the
supervision of the Board of Directors to and among any one or
more of the classes established and designated from time to
time in such manner and on such basis as the Board of
Directors, in its sole discretion, deems fair and equitable,
and any general items so allocated to a particular class shall
belong to that class. Each such allocation by the Board of
Directors shall be conclusive and binding for all purposes.
Notwithstanding the foregoing, the assets belonging to the
Class A Shares and to the Class B Shares need not be
segregated or recorded separately on the books and records of
the Corporation, and reference herein to each of those classes
shall refer to the proportional interest of that class in the
aggregate assets belonging to both classes.
(2) Liabilities belonging to a class. The assets belonging to each
particular class shall be charged with the liabilities of the
Corporation in respect of that class and all expenses, costs,
charges, and reserves attributable to that class, and any
general liabilities, expenses, costs, charges or reserves of
the Corporation which are not readily identifiable as
belonging to any particular class shall be allocated and
charged by or under the supervision of the Board of Directors
to and among any one or more of the classes established and
designated from time to time in such manner and on such basis
as the Board of Directors, in its sole discretion, deems fair
and equitable. The liabilities, expenses, costs, charges and
reserves allocated and so charged to a class are herein
referred to a "liabilities belonging to" that class. Each
allocation of liabilities, expenses, costs, charges and
reserves by the Board of Directors shall be conclusive and
binding for all purposes.
(3) Dividends. The Board of Directors may from time to time
declare and pay dividends or distributions, in stock, property
or cash, on any or all classes of stock, the amount of such
dividends and property distributions and the payment of them
being wholly in the discretion of the Board of Directors.
Dividends may be declared daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with
such frequency as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to that
class. All dividends or distributions on shares of a
particular class shall be paid only out of surplus or other
lawfully available assets determined by the Board of Directors
as belonging to such class. The Board of Directors shall have
the power, in its sole discretion, to distribute in any fiscal
year as dividends, including dividends designated in whole or
in part as capital gains distribution, amounts sufficient, in
the opinion of the Board of Directors, to enable the
Corporation, or where applicable each class of shares, to
qualify as a regulated investment company under the Internal
Revenue Code of 1986, as amended, or any successor or
comparable statute thereto, and regulations, promulgated
thereunder, and to avoid liability for the Corporation, or
each class of shares, for federal income and excise taxes in
respect of that or any other year.
(4) Liquidation. In the event of the liquidation of the
Corporation or of the assets attributable to a particular
class, the shareholders of each class that has been
established and designated and is being liquidated shall be
entitled to receive, as a class, when and as declared by the
Board of Directors, the excess of the assets belonging to that
class over the liabilities belonging to that class. The
holders of shares of any class shall not be entitled thereby
to any distribution upon liquidation of any other class. The
assets so distributable to the shareholder of any particular
class shall be distributed among such shareholders according
to their respective rights taking into account the proper
allocation of expenses being borne by that class. The
liquidation of assets attributable to any particular class in
which there are shares then outstanding may be authorized by
vote of a majority of the Board of Directors then in office,
subject to the approval of a majority of the outstanding
voting securities of that class, as defined in the Investment
Company Act of 1940, as amended. In the event that there are
any general assets not belonging to any particular class of
stock and available for distribution, such distribution shall
be made to the holder of stock of various classes in such
proportion as the Board of Directors shall be conclusive and
binding for all purposes.
(5) Redemption. All shares of stock of the Corporation shall have
the redemption rights provided for in Article V, Section 5.
(d) The Corporation's shares of stock are issued and sole, and all
persons who shall acquire stock of the Corporation shall acquire
the same, subject to the condition and understanding that the
provisions of the Corporation's Articles of Incorporation, as from
time to time amended, shall be binding upon them.
Section 2. Quorum requirements and voting rights: Except as otherwise
expressly provided by the Maryland General Corporation Law, the presence in
person or by proxy of the holders of one-third of the shares of capital stock of
quorum at any meeting of the stockholders, except that where the holders of any
class are required or permitted to vote as a class, one-third of the aggregate
number of shares of that class outstanding and entitled to vote shall constitute
a quorum.
Notwithstanding any provision of Maryland General Corporation Law requiring
a greater proportion than a majority of the votes of all classes or of any
classes of the Corporation's stock entitled to be cast in order to take or
authorize any action, any such action may be taken or authorized upon the
concurrence of a majority of the aggregate number of votes entitled to be cast
thereon subject to the applicable laws and regulations as from time to time in
effect or rules or orders of the Securities and Exchange Commission or any
successor thereto. All shares of stock of this Corporation shall have the voting
rights provided for in Article V, Section 1, paragraph (b).
Section 3. No preemptive rights: No holder of shares of capital stock of
the Corporation shall, as such holder, have any right to purchase or subscribe
for any shares of capital stock of the Corporation which the Corporation may
issue or sell (whether consisting of shares of capital stock authorized by these
Articles of Incorporation, or shares of capital stock of the Corporation
acquired by it after the issue thereof, or other shares) other than any right
which the Board of Directors of the Corporation, in its discretion, may
determine.
Section 4. Determination of net asset value: The net asset value of each
shares of the Corporation, or of each class, shall be the quotient obtained by
dividing the value of the net assets of the Corporation, or if applicable of the
class (being the value of the assets of the Corporation or of the particular
class less its actual and accrued liabilities exclusive of capital stock and
surplus), by the total number of outstanding shares of the Corporation or the
class, as applicable. Such determination may be made on a class-by-class basis
and shall include any expenses allocated to a specific class thereof. The Board
of Directors may adopt procedures for determination of net asset value
consistent with the requirements of applicable statutes and regulations and, so
far as accounting matters are concerned, with generally accepted accounting
principles. The procedures may include, without limitation, procedures for
valuation of the Corporation's portfolio securities and other assets, for
accrual of expenses or creation of reserves and for the determination of the
number of shares issued and outstanding at any given time.
Section 5. Redemption and repurchase of shares of capital stock: Any
shareholder may redeem shares of the Corporation for the net asset value of each
class or series thereof by presentation of an appropriate request, together with
the certificates, if any, for such shares, duly endorsed, at the office or
agency designated by the Corporation. Redemptions as aforesaid, or purchases by
the Corporation of its own stock, shall be made in the manner and subject to the
conditions contained in the bylaws or approved by the Board of Directors.
Section 6. Purchase of shares: The Corporation shall be entitled to
purchase shares of any class of its capital stock, to the extent that the
Corporation may lawfully effect such purchase under Maryland General Corporation
Law, upon such terms and conditions and for such consideration as the Board of
Directors shall deem advisable, by agreement with the stockholder at a price not
exceeding the net asset value per share computed in accordance with Section 4 of
this Article.
Section 7. Redemption of minimum amounts:
(a) If after giving effect to a request for redemption by a
stockholder the aggregate net asset value of his remaining shares
of any class will be less than the minimum amount then in effect,
the Corporation shall be entitled to require the redemption of the
remaining shares of such class owned by such stockholder, upon
notice given in accordance with paragraph (c) of this section, to
the extent that the Corporation may lawfully effect such
redemptions under Maryland General Corporation Law.
(b) The term "Minimum Amount" when used herein shall mean Three
Hundred Dollars ($300) unless otherwise fixed by the Board of
Directors from time to time, provided that the minimum amount may
not in any event exceed Five Thousand Dollars ($5,000).
(c) If any redemption under paragraph (a) of this section is upon
notice, the notice shall be in writing personally delivered or
deposited in the mail, at least thirty days prior to such
redemption. If mailed, the notice shall be addressed to the
stockholder at his post office address as shown on the books of
the Corporation, and sent by certified or registered mail, postage
prepaid. The price for shares redeemed by the Corporation pursuant
to paragraph (a) of this section shall be paid in cash in an
amount equal to the net asset value of such shares, computed in
accordance with Section 4 of this article.
Section 8. Mode of payment: Payment by the Corporation for shares of any
class of the capital stock of the Corporation surrendered to it for redemption
shall be made by the Corporation within seven business days of such surrender
out of the funds legally available, therefor, provided that the Corporation may
suspend the right of the holders of capital stock of the Corporation to redeem
shares of capital stock and may postpone the right of such holders to receive
payment for any shares when permitted or required to do so by law. Payment of
the redemption or purchase price may be made in cash or, at the option of the
Corporation, wholly or partly in such portfolio securities of the Corporation as
the Corporation may select.
Section 9. Rights of holders of shares purchased or redeemed: The right of
any holder of any class of capital stock of the Corporation purchased or
redeemed by the Corporation as provided in this article to receive dividends
thereon and all other rights of such holder with respect to such shares shall
terminate on all other rights of such holder with respect to such shares shall
terminate at the time as of which the purchase or redemption price of such
shares id determined, except the right of such holder to receive (i) the
purchase or redemption price of such shares from the Corporation or its
designated agent and (ii) any dividend or distribution or voting rights to which
such holder has previously become entitled as the record holder of such shares
on the record date for the determination of the stockholders entitled to receive
such dividend or distribution or to vote at the meeting of stockholders.
Section 10. Status of shares purchased or redeemed: In the absence of any
specification as to the purchase for which such shares of any class of capital
stock of the Corporation are redeemed or purchased by it, all shares so redeemed
or purchased shall be deemed to re retired in the sense contemplated by the laws
of the State of Maryland and may be reissued. The number of authorized shares of
capital stock of the Corporation shall not be reduced by the number of any
shares redeemed or purchased by it.
Section 11. Additional limitations and powers: The following provisions are
inserted for the purpose of defining limiting and regulating the powers of the
Corporation and of the Board of Directors and stockholders:
(a) 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, as to the amount of the assets, debts,
obligations or liabilities of the Corporation, as to the amount
of any reserves or charges set up and the propriety thereof, as
to the time of or purpose for creating such reserves or charges,
as to the use, alteration or cancellation of any reserves or
charges (whether or not any debt, obligation or liability for
which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required
to be paid or discharged), as to the establishment or designation
of procedures or methods to be employed for valuing any
investment or other assets as to the allocation of any asset of
the Corporation to a particular class or classes of the
Corporation's stock, as to the funds available for the
declaration of dividends and as to the declaration of dividends,
as to the charging of any liability of the Corporation to a
particular class or classes of the Corporation's stock, as to the
number of shares of any class or classes of the Corporation's
outstanding stock, as to the estimated expense to the Corporation
in connection with purchases or redemptions of its shares, as to
the ability to liquidate investments in orderly fashion, or as to
any other matters relating to the issue, sale, purchase or
redemption or other acquisition or disposition of investments or
shares of the Corporation, or in the determination of the net
asset value per share of shares of any class of the Corporation's
stock shall be conclusive and binding for all purposes.
(b) Except to the extend prohibited by the Investment Company Act of
1940, as amended, or rules, regulations or orders thereunder
promulgated by the Securities and Exchange Commission or any
successor thereto or by the bylaws of the Corporation, a
director, officer or employee of the Corporation shall not be
disqualified by his position from dealing or contracting with the
Corporation, nor shall any transaction or contract of the
Corporation be void or voidable by reason of the fact that any
director, officer or employee or any firm of which any director,
officer or employee is a member, of any corporation of which any
director, officer or employee is a stockholder, officer or
director, is in any way interested in such transaction or
contract; provided that in case a director, or a firm or
corporation of which a director is a member, stockholder, officer
or director is so interested, such fact shall be disclosed to or
shall have been known by the Board of Directors or a majority
thereof. Nor shall any director or officer of the Corporation by
liable to the Corporation or to any stockholder or creditor
thereof or to any person for any loss incurred by it or him or
for any profit realized by such director or officer under or by
reason of such contract or transaction; provided that nothing
herein shall protect any director or officer of the Corporation
against any liability to the Corporation or to 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;
and provided always that such contract or transaction shall have
been on terms that were not unfair to the Corporation at the time
at which it was entered into. Any director of the Corporation who
is so interested, or who is a member, stockholder, officer or
director of such firm or corporation, may be counted in
determining the existence of a quorum at any meeting of the Board
of Directors of the Corporation which shall authorize any such
transaction or contract, with like force and effect as if he were
not such director, or member, stockholder, officer or director of
such firm or corporation.
(c) Specifically and without limitation of the foregoing paragraph (b)
but subject to the exception therein prescribed, the Corporation
may enter into management or advisory, underwriting, distribution
and administration contracts, custodian contracts and such other
contracts as may be appropriate.
I, Arthur S. Filean, Vice President and Secretary, hereby acknowledge on
behalf of Principal Utilities Fund, Inc., that the foregoing Articles
Supplementary are the corporate act of said Corporation under the penalties of
perjury.
By /s/Arthur S. Filean
Arthur S. Filean, Vice President and Secretary
Principal Utilities Fund, Inc.
ATTEST:
By /s/Ernest H. Gillum
Ernest H. Gillum
Assistant Secretary
BYLAWS
OF
PRINCIPAL UTILITIES FUND, INC.
ARTICLE 1
Name, Fiscal Year
1.01 The name of this corporation shall be Principal Utilities Fund,
Inc., Inc. Except as otherwise from time to time provided by the board of
directors, the fiscal year of the corporation shall begin November 1 and end
October 31.
ARTICLE 2
Stockholders' Meetings
2.01 Place of Meetings. All meetings of the stockholders shall be held
at such place within or without the State of Maryland, as is stated in the
notice of meeting.
2.02 Annual Meetings. The Board of Directors of the Fund shall
determine whether or not an annual meeting of stockholders shall be held. In the
event that an annual meeting of stockholders is held, such meeting shall be held
on the first Tuesday after the first Monday of February in each year or on such
other day during the 31-day period following the first Tuesday after the first
Monday of February as the directors may determine.
2.03 Special Meetings. Special meetings of the stockholders shall be
held whenever called by the chairman of the board, the president or the board of
directors, or when requested in writing by 10% of the Fund's outstanding shares.
2.04 Notice of Stockholders' Meetings. Notice of each stockholders'
meeting stating the place, date and hour of the meeting and the purpose or
purposes for which the meeting is called shall be given by mailing such notice
to each stockholder of record at his address as it appears on the records of the
corporation not less than 10 nor more than 90 days prior to the date of the
meeting. Any meeting at which all stockholders entitled to vote are present
either in person or by proxy or of which those not present have waived notice in
writing shall be a legal meeting for the transaction of business notwithstanding
that notice has not been given as herein provided.
2.05 Quorum. Except as otherwise expressly required by law, these
bylaws or the Articles of Incorporation, as from time to time amended, at any
meeting of the stockholders the presence in person or by proxy of the holders of
one-third of the shares of capital stock of the Corporation issued and
outstanding and entitled to vote, shall constitute a quorum, but a lesser
interest may adjourn any meeting from time to time and the meeting may be held
as adjourned without further notice.
2.06 Proxies and Voting Stockholders of record may vote at any meeting
either in person or by written proxy signed by the stockholder or by the
stockholder's duly authorized attorney-in-fact dated not more than eleven months
before the date of exercise, which shall be filed with the Secretary of the
meeting before being voted. Each stockholder shall be entitled to one vote for
each share of stock held, and to a fraction of a vote equal to any fractional
share held."
2.07 Stock Ledger. The Corporation shall maintain at the office of the
stock transfer agent of the Corporation, or at the office of any successor
thereto as stock transfer agent of the Corporation, an original stock ledger
containing the names and addresses of all stockholders and the number of shares
of each class held by each stockholder. Such stock ledger may be in written form
or any other form capable of being converted into written form within a
reasonable time for visual inspection.
ARTICLE 3
Board of Directors
3.01 Number, Service. The Corporation shall have a Board of Directors
consisting of not less than three and no more than fifteen members. The number
of Directors to constitute the whole board within the limits above-stated shall
be fixed by the Board of Directors. The Directors may be chosen (i) by
stockholders at any annual meeting of stockholders held for the purpose of
electing directors or at any meeting held in lieu thereof, or at any special
meeting called for such purpose, or (ii) by the Directors at any regular or
special meeting of the Board to fill a vacancy on the Board as provided in these
bylaws and Maryland General Corporation Law. Each director should serve until
the next annual meeting of shareholders and until a successor is duly qualified
and elected, unless sooner displaced.
3.02 Powers. The board of directors shall be responsible for the entire
management of the business of the Corporation. In the management and control of
the property, business and affairs of the Corporation the board of directors is
hereby vested with all the powers possessed by the corporation itself so far as
this designation of authority is not inconsistent with the laws of the State of
Maryland, but subject to the limitations and qualifications contained in the
Articles of Incorporation and in these bylaws.
3.03 Executive Committee and Other Committees. The board of directors
may elect from its members an executive committee of not less than three which
may exercise certain powers of the board of directors when the board is not in
session pursuant to Maryland law. The executive committee may make rules for the
holding and conduct of its meetings and keeping the records thereof, and shall
report its action to the board of directors.
The board of directors may elect from its members such other
committees from time to time as it may desire. The number composing such
committees and the powers conferred upon them shall be determined by the board
of directors at its own discretion.
3.04 Meetings. Regular meetings of the board of directors may be held
in such places within or without the State of Maryland, and at such times as the
board may from time to time determine, and if so determined, notices thereof
need not be given. Special meetings of the board of directors may be held at any
time or place whenever called by the president or a majority of the directors,
notice thereof being given by the secretary or the president, or the directors
calling the meeting, to each director. Special meetings of the board of
directors may also be held without formal notice provided all directors are
present or those not present have waived notice thereof.
3.05 Quorum. A majority of the members of the board of directors from
time to time in office but in no event not less than one-third of the number
constituting the whole board shall constitute a quorum for the transaction of
business provided, however, that where the Investment Company Act of 1940
requires a different quorum to transact business of a specific nature, the
number of directors so required shall constitute a quorum for the transaction of
such business.
A lesser number may adjourn a meeting from time to time and
the meeting may be held without further notice. When a quorum is present at any
meeting a majority of the members present thereat shall decide any question
brought before such meeting except as otherwise expressly required by law, the
Articles of Incorporation or these bylaws.
3.06 Action by Directors Other than at a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors, or of 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 Directors or such committee, as
the case may be, and such written consent is filed with the minutes of
proceedings of the Board of Directors or committee.
3.07 Holding of Meetings by Conference Telephone Call. At any regular
or special meeting, members of the Board of Directors or any committee thereof
may participate by conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting.
ARTICLE 4
Officers
4.01 Selection. The officers of the corporation shall be a president,
one or more vice presidents, a secretary and a treasurer. The board of directors
may, if it so determines, also elect a chairman of the board. All officers shall
be elected by the board of directors and shall serve at the pleasure of the
board. The same person may hold more than one office except the offices of
president and vice president.
4.02 Eligibility. The chairman of the board, if any, and the president
shall be directors of the corporation. Other officers need not be directors.
4.03 Additional Officers and Agents. The board of directors may appoint
one or more assistant treasurers, one or more assistant secretaries and such
other officers or agents as it may deem advisable, and may prescribe the duties
thereof.
4.04 Chairman of the Board of Directors. The chairman of the board, if
any, shall preside at all meetings of the board of directors at which he is
present. He shall have such other authority and duties as the board of directors
shall from time to time determine.
4.05 The President. The president shall be the chief executive officer
of the corporation; he shall have general and active management of the business,
affairs and property of the corporation, and shall see that all orders and
resolutions of the board of directors are carried into effect. He shall preside
at meetings of stockholders, and of the board of directors unless a chairman of
the board has been elected and is present.
4.06 The Vice Presidents. The vice presidents shall respectively have
such powers and perform such duties as may be assigned to them by the board of
directors or the president. In the absence or disability of the president, the
vice presidents, in the order determined by the board of directors, shall
perform the duties and exercise the powers of the president.
4.07 The Secretary. The secretary shall keep accurate minutes of all
meetings of the stockholders and directors, and shall perform all duties
commonly incident to his office and as provided by law and shall perform such
other duties and have such other powers as the board of directors shall from
time to time designate. In his absence an assistant secretary or secretary pro
tempore shall perform his duties.
4.08 The Treasurer. The treasurer shall, subject to the order of the
board of directors and in accordance with any arrangements for performance of
services as custodian, transfer agent or disbursing agent approved by the board,
have the care and custody of the money, funds, securities, valuable papers and
documents of the corporation, and shall have and exercise under the supervision
of the board of directors all powers and duties commonly incident to his office
and as provided by law. He shall keep or cause to be kept accurate books of
account of the corporation's transactions which shall be subject at all times to
the inspection and control of the board of directors. He shall deposit all funds
of the corporation in such bank or banks, trust company or trust companies or
such firm or firms doing a banking business as the board of directors shall
designate. In his absence, an assistant treasurer shall perform his duties.
ARTICLE 5
Vacancies
5.01 Removals. The stockholders may at any meeting called for the
purpose, by vote of the holders of a majority of the capital stock issued and
outstanding and entitled to vote, remove from office any director and, unless
the number of directors constituting the whole board is accordingly decreased,
elect a successor. To the extent consistent with the Investment Company Act of
1940, the board of directors may by vote of not less than a majority of the
directors then in office remove from office any director, officer or agent
elected or appointed by them and may for misconduct remove any thereof elected
by the stockholders.
5.02 Vacancies. If the office of any director becomes or is vacant by
reason of death, resignation, removal, disqualification, an increase in the
authorized number of directors or otherwise, the remaining directors may by vote
of a majority of said directors choose a successor or successors who shall hold
office for the unexpired term; provided that vacancies on the board of directors
may be so filled only if, after the filling of the same, at least two-thirds of
the directors then holding office would be directors elected to such office by
the stockholders at a meeting or meetings called for the purpose. In the event
that at any time less than a majority of the directors were so elected by the
stockholders, a special meeting of the stockholders shall be called forthwith
and held as promptly as possible and in any event within sixty days for the
purpose of electing an entire new board of directors.
ARTICLE 6
Certificates of Stock
6.01 Certificates. The board of directors may adopt a policy of not
issuing certificates except in extraordinary situations as may be authorized
from time to time by an officer of the Corporation. If such a policy is adopted,
a stockholder may obtain a certificate or certificates of the capital stock of
the Corporation owned by such stockholder only if the stockholder demonstrates a
specific reason for needing a certificate. If issued, the certificate shall be
in such form as shall, in conformity to law, be prescribed from time to time by
the board of directors. Such certificates shall be signed by the chairman of the
board of directors or the president or a vice president and by the treasurer or
an assistant treasurer or the secretary or an assistant secretary. If such
certificates are countersigned by a transfer agent or registrar other than the
Corporation or an employee of the Corporation, the signatures of the
aforementioned officers upon such certificates may be facsimile. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation, whether because of death, resignation or
otherwise, before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates or whose facsimile signature or
signatures have been used thereon had not ceased to be such officer or officers
of the Corporation.
6.02 Replacement of Certificates. The board of directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed. When authorizing such issue of a new certificate or certificates, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost or destroyed certificate or
certificates, or its legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
6.03 Stockholder Open Accounts. The corporation may maintain or cause
to be maintained for each stockholder a stockholder open account in which shall
be recorded such stockholder's ownership of stock and all changes therein, and
certificates need not be issued for shares so recorded in a stockholder open
account unless requested by the stockholder and such request is approved by an
officer.
6.04 Transfers. Transfers of stock for which certificates have been
issued will be made only upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to transfer, whereupon
the Corporation will issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction on its books. Transfers of
stock evidenced by open account authorized by Section 6.03 will be made upon
delivery to the Corporation or the transfer agent of the Corporation of
instructions for transfer or evidence of assignment or succession, in each case
executed in such manner and with such supporting evidence as the Corporation or
transfer agent may reasonably require.
6.05 Closing Transfer Books. The transfer books of the stock of the
corporation may be closed for such period (not to exceed 20 days) from time to
time in anticipation of stockholders' meetings or the declaration of dividends
as the directors may from time to time determine.
6.06 Record Dates. The board of directors may fix in advance a date,
not exceeding ninety days preceding the date of any meeting of stockholders, or
the date for the payment of any dividend, or the date for the allotment of
rights, or the date when any change or conversion or exchange of capital stock
shall go into effect, or a date in connection with obtaining any consent or for
any other lawful purpose, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent, and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date as fixed shall be entitled to such notice of, and to vote
at, such meeting, and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation after any such record date fixed as
aforesaid.
6.07 Registered Ownership. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner and shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland.
ARTICLE 7
Notices
7.01 Manner of Giving. Whenever under the provisions of the statutes or
of the Articles of Incorporation or of these bylaws notice is required to be
given to any director, committee member, officer or stockholder, it shall not be
construed to mean personal notice, but such notice may be given, in the case of
stockholders, in writing, by mail, by depositing the same in a United States
post office or letter box, in a postpaid sealed wrapper, addressed to each
stockholder at such address as it appears on the books of the corporation, or,
in default to other address, to such stockholder at the General Post Office in
the City of Baltimore, Maryland, and, in the case of directors, committee
members and officers, by telephone, or by mail or by telegram to the last
business address known to the secretary of the corporation, and such notice
shall be deemed to be given at the time when the same shall be thus mailed or
telegraphed or telephoned.
7.02 Waiver. Whenever any notice is required to be given under the
provisions of the statutes or of the Articles of Incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE 8
General Provisions
8.01 Disbursement of Funds. All checks, drafts, orders or instructions
for the payment of money and all notes of the corporation shall be signed by
such officer or officers or such other person or persons as the board of
directors may from time to time designate.
8.02 Voting of Stock in Other Corporations. Unless otherwise ordered by
the board of directors, any officer or, at the direction of any such officer,
any Manager shall have full power and authority to attend and act and vote at
any meeting of stockholders of any corporation in which this Corporation may
hold stock, at of any such meeting may exercise any and all the rights and
powers incident to the ownership of such stock. Any officer of this corporation
or, at the direction of any such officer, any Manager may execute proxies to
vote shares of stock of other corporations standing in the name of this
Corporation."
8.03 Execution of Instruments. Except as otherwise provided in these
bylaws, all deeds, mortgages, bonds, contracts, stock powers and other
instruments of transfer, reports and other instruments may be executed on behalf
of the corporation by the president or any vice president or by any other
officer or agent authorized to act in such matters, whether by law, the Articles
of Incorporation, these bylaws, or any general or special authorization of the
board of directors. If the corporate seal is required, it shall he affixed by
the secretary or an assistant secretary.
8.04 Seal. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its incorporation and the words "Corporate Seal,
Maryland." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE 9
Regulations
9.01 Investment and Related Matters. The Corporation shall not purchase
or hold securities in violation of the investment restrictions enumerated in its
then current prospectus and the registration statement or statements filed with
the Securities and Exchange Commission pursuant to the Securities Act of 1933
and the Investment Company Act of 1940, as amended, nor shall the Corporation
invest in securities the purchase of which would cause the Corporation to
forfeit its rights to continue to publicly offer its shares under the laws,
rules or regulations of any state in which it may become authorized to so offer
its shares unless, by specific resolution of the board of directors, the
Corporation shall elect to discontinue the sale of its shares in such state.
9.02 Other Matters. When used in this section the following words shall
have the following meanings: "Sponsor" shall mean any one or more corporations,
firms or associations which have distributor's contracts in effect with this
Corporation. "Manager" shall mean any corporation, firm or association which may
at the time have an investment advisory contract with this Corporation.
(a) Limitation of Holdings by this Corporation of Certain
Securities and of Dealings with Officers or Directors. This Corporation shall
not purchase or retain securities of any issuer if those officers and directors
of the Fund or its Manager owning beneficially more than one-half of one per
cent (0.5%) of the shares or securities of such issuer together own beneficially
more than five per cent (5%) of such shares or securities; and each officer and
director of this Corporation shall keep the treasurer of this Corporation
informed of the names of all issuers (securities of which are held in the
portfolio of this Corporation) in which such officer or director owns as much as
one-half of one percent (1/2 of 1%) of the outstanding shares or securities and
(except in the case of a holding by the treasurer) this Corporation shall not be
charged with knowledge of any such security holding in the absence of notice
given if as aforesaid if this Corporation has requested such information not
less often than quarterly. The Corporation will not lend any of its assets to
the Sponsor or Manager or to any officer or director of the Sponsor or Manager
or of this Corporation and shall not permit any officer or director, and any
officer or director of the Sponsor or Manager, to deal for or on behalf of the
Corporation with himself as principal agent, or with any partnership,
association or corporation in which he has a financial interest. Nothing
contained herein shall prevent (1) officers and directors of the Corporation
from buying, holding or selling shares in the Corporation, or from being
partners, officers or directors of or otherwise financially interested in the
Sponsor or the Manager or any company controlling the Sponsor or the Manager;
(2) employment of legal counsel, registrar, transfer agent, dividend disbursing
agent or custodian who is, or has a partner shareholder, officer or director who
is, an officer or director of the Corporation, if only customary fees are
charged for services to the Corporation; (3) sharing statistical and research
expenses and office hire and expenses with any other investment company in which
an officer or director of the Corporation is an officer or director or otherwise
financially interested.
(b) Limitation Concerning Participating by Interested Persons in
Investment Decisions. In any case where an officer or director of the
Corporation or of the Manager, or a member of an advisory committee or portfolio
committee of the Corporation, is also an officer or a director of another
corporation, and the purchase or sale of shares issued by that other corporation
is under consideration, the officer or director or committee member concerned
will abstain from participating in any decision made on behalf of the
Corporation to purchase or sell any securities issued by such other corporation.
(c) Limitation on Dealing in Securities of this Corporation by
certain Officers, Directors, Sponsor or Manager. Neither the Sponsor nor
Manager, nor any officer or director of this Corporation or of the Sponsor or
Manager shall take long or short positions in securities issued by this
Corporation, provided, however, that:
(1) The Sponsor may purchase from this Corporation shares
issued by this Corporation if the orders to purchase from this Corporation are
entered with this Corporation by the Sponsor upon receipt by the Sponsor of
purchase orders for shares of this Corporation and such purchases are not in
excess of purchase orders received by the Sponsor.
(2) The Sponsor may in the capacity of agent for this
Corporation buy securities issued by this Corporation offered for sale by other
persons.
(3) Any officer or director of this Corporation or of the
Sponsor or Manager or any Company controlling the Sponsor or Manager may at any
time, or from time to time, purchase from this Corporation or from the Sponsor
shares issued by this Corporation at a price not lower than the net asset value
of the shares, no such purchase to be in contravention of any applicable state
or federal requirement.
(d) Securities and Cash of this Corporation to be held by
Custodian subject to certain Terms and Conditions.
(1) All securities and cash owned by this Corporation shall as
hereinafter provided, be held by or deposited with a bank or trust company
having (according to its last published report) not less than two million
dollars ($2,000,000) aggregate capital, surplus and undivided profits (which
bank or trust company is hereby designated as "Custodian"), provided such a
Custodian can be found ready and willing to act.
(2) This Corporation shall enter into a written contract with
the Custodian regarding the powers, duties and compensation of the Custodian
with respect to the cash and securities of this Corporation held by the
Custodian. Said contract and all amendments thereto shall be approved by the
board of directors of this Corporation.
(3) This Corporation shall upon the resignation or inability
to serve of its Custodian or upon change of the Custodian:
(aa) in case of such resignation or inability to serve,
use its best efforts to obtain a successor Custodian;
(bb) require that the cash and securities owned by this
Corporation be delivered directly to the successor Custodian; and
(cc) In the event that no successor Custodian can be
found, submit to the stockholders, before permitting delivery of the cash and
securities owned by this Corporation otherwise than to a successor Custodian,
the question whether or not this Corporation shall be liquidated or shall
function without a Custodian.
(e) Amendment of Investment Advisory Contract. Any investment
advisory contract entered into by this Corporation shall not be subject to
amendment except by (1) affirmative vote at a shareholders meeting, of the
holders of a majority of the outstanding stock of this Corporation, or (2) a
majority of such Directors who are not interested persons (as the term is
defined in the Investment Company Act of 1940) of the Parties to such
agreements, cast in person at a board meeting called for the purpose of voting
on such amendment.
(f) Reports relating to Certain Dividends. Dividends paid from net
profits from the sale of securities shall be clearly revealed by this
Corporation to its shareholders and the basis of calculation shall be set forth.
(g) Maximum Sales Commission. The Corporation shall, in any
distribution contract with respect to its shares of common stock entered into by
it, provide that the maximum sales commission to be charged upon any sales of
such shares shall not be more than nine per cent (9%) of the offering price to
the public of such shares. As used herein, "offering price to the public" shall
mean net asset value per share plus the commission charged adjusted to the
nearest cent.
ARTICLE 10
Purchases and Redemption of Shares:
Suspension of Sales
10.01 Purchase by Agreement. The Corporation may purchase its shares by
agreement with the owner at a price not exceeding the net asset value next
computed following the time when the purchase or contract to purchase is made.
10.02 Redemption. The Corporation shall redeem such shares as are
offered by any stockholder for redemption upon the presentation of a written
request therefor, duly executed by the record owner, to the office or agency
designated by the corporation. If the shareholder has received stock
certificates, the request must be accompanied by the certificates, duly endorsed
for transfer, in acceptable form; and the Corporation will pay therefor the net
asset value of the shares next effective following the time at which the
request, in acceptable form, is so presented. Payment for said shares shall
ordinarily be made by the Corporation to the stockholder within seven days after
the date on which the shares are presented.
10.03 Suspension of Redemption. The obligations set out in Section
10.02 may be suspended (i) for any period during which the New York Stock
Exchange, Inc. is closed other than customary week-end and holiday closings, or
during which trading on the New York Stock Exchange, Inc. is restricted, as
determined by the rules and regulations of the Securities and Exchange
Commission or any successor thereto; (ii) for any period during which an
emergency, as determined by the rules and regulations of the Securities and
Exchange Commission or any successor thereto, exists as a result of which
disposal by the Corporation of securities owned by it is not reasonably
practicable or as a result of which it is not reasonably practicable for the
Corporation to fairly determine the value of its net assets; or (iii) for such
other periods as the Securities and Exchange Commission or any successor thereto
may by order permit for the protection of security holders of the Corporation.
Payment of the redemption or purchase price may be made in cash or, at the
option of the Corporation, wholly or partly in such portfolio securities of the
Corporation as the Corporation may select.
10.04 Suspension of Sales. The Corporation reserves the right to
suspend sales of its shares if, in the judgment of the majority of the board of
directors or a majority of the executive committee of its Board, if such
committee exists, it is in the best interest of the Corporation to do so, such
suspension to continue for such period as may be determined by such majority.
ARTICLE 11
Fractional Shares
11.01 The board of directors may authorize the issue from time to time
of shares of the capital stock of the corporation in fractional denominations,
provided that the transactions in which and the terms upon which shares in
fractional denominations may be issued may from time to time be determined and
limited by or under authority of the board of directors.
ARTICLE 12
Indemnification
12.01 (a) Every person who is or was a director, officer or employee of
this Corporation or of any other corporation which he served at the request of
this Corporation and in which this Corporation owns or owned shares of capital
stock or of which it is or was a creditor shall have a right to be indemnified
by this Corporation against all liability and reasonable expenses incurred by
him in connection with or resulting from a claim, action, suit or proceeding in
which he may become involved as a party or otherwise by reason of his being or
having been a director, officer or employee of this Corporation or such other
corporation, provided (1) said claim, action, suit or proceeding shall be
prosecuted to a final determination and he shall be vindicated on the merits, or
(2) in the absence of such a final determination vindicating him on the merits,
the board of directors shall determine that he acted in good faith and in a
manner he reasonably believed to be in the best interest of the Corporation in
the case of conduct in the director's official capacity with the Corporation and
in all other cases, that the conduct was at least not opposed to the best
interest of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; said
determination to be made by the board of directors acting through a quorum of
disinterested directors, or in its absence on the opinion of counsel.
(b) For purposes of the preceding subsection: (1) "liability and
reasonable expenses" shall include hut not be limited to reasonable counsel fees
and disbursements, amounts of any judgment, fine or penalty, and reasonable
amounts paid in settlement; (2) "claim, action, suit or proceeding" shall
include every such claim, action, suit or proceeding, whether civil or criminal,
derivative or otherwise, administrative, judicial or legislative, any appeal
relating thereto, and shall include any reasonable apprehension or threat of
such a claim, action, suit or proceeding; (3) the termination of any proceeding
by judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent creates a rebuttable presumption that the director did not meet
the standard of conduct set forth in subsection (a)(2), supra.
(c) Notwithstanding the foregoing, the following limitations shall
apply with respect to any action by or in the right of the Corporation: (1) no
indemnification shall be made in respect of claim, issue or matter as to which
the person seeking indemnification shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the Court of Chancery of the State of
Maryland or the court in which such action or suit was brought shall determine
upon application that despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper; and (2) indemnification shall extend only to reasonable
expenses, including reasonable counsel's fees and disbursements.
(d) The right of indemnification shall extend to any person
otherwise entitled to it under this bylaw whether or not that person continues
to be a director, officer or employee of this Corporation or such other
corporation at the time such liability or expense shall be incurred. The right
of indemnification shall extend to the legal representative and heirs of any
person otherwise entitled to indemnification. If a person meets the requirements
of this bylaw with respect to some matters in a claim, action suit, or
proceeding, but not with respect to others, he shall be entitled to
indemnification as to the former. Advances against liability and expenses may be
made by the Corporation on terms fixed by the board of directors subject to an
obligation to repay if indemnification proves unwarranted.
(e) This bylaw shall not exclude any other rights of
indemnification or other rights to which any director, officer or employee may
be entitled to by contract, vote of the stockholders or as a matter of law.
If any clause, provision or application of this section shall be
determined to be invalid, the other clauses, provisions or applications of this
section shall not be affected but shall remain in full force and effect. The
provisions of this bylaw shall be applicable to claims, actions, suits or
proceedings made or commenced after the adoption hereof, whether arising from
acts or omissions to act occurring before or after the adoption hereof.
(f) Nothing contained in this bylaw shall be construed to protect
any director or officer of the Corporation against any 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 13
Amendments
13.01 These bylaws may be amended or added to, altered or repealed at
any annual or special meeting of the stockholders by the affirmative vote of the
holders of a majority of the shares of capital stock issued and outstanding and
entitled to vote, provided notice of the general purport of the proposed
amendment, addition, alteration or repeal is given in the notice of said
meeting, or, at any meeting of the board of directors by vote of a majority of
the directors then in office, except that the board of directors may not amend
Article 5 to permit removal by said board without cause of any director elected
by the stockholders.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 91,257,260
<INVESTMENTS-AT-VALUE> 126,175,184
<RECEIVABLES> 401,215
<ASSETS-OTHER> 489
<OTHER-ITEMS-ASSETS> 42,671
<TOTAL-ASSETS> 126,619,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 174,000
<TOTAL-LIABILITIES> 174,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83,273,469
<SHARES-COMMON-STOCK> 5,591,326
<SHARES-COMMON-PRIOR> 5,183,590
<ACCUMULATED-NII-CURRENT> 198,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,056,089
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,917,924
<NET-ASSETS> 126,445,559
<DIVIDEND-INCOME> 3,459,473
<INTEREST-INCOME> 177,575
<OTHER-INCOME> 0
<EXPENSES-NET> (1,548,627)
<NET-INVESTMENT-INCOME> 2,088,421
<REALIZED-GAINS-CURRENT> 8,056,360
<APPREC-INCREASE-CURRENT> 4,964,248
<NET-CHANGE-FROM-OPS> 15,109,029
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,891,969)
<DISTRIBUTIONS-OF-GAINS> (1,242,661)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,320,329
<NUMBER-OF-SHARES-REDEEMED> (1,083,938)
<SHARES-REINVESTED> 171,345
<NET-CHANGE-IN-ASSETS> 27,516,764
<ACCUMULATED-NII-PRIOR> 280,319
<ACCUMULATED-GAINS-PRIOR> 1,475,420
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 685,175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,548,627
<AVERAGE-NET-ASSETS> 115,652,395
<PER-SHARE-NAV-BEGIN> 16.11
<PER-SHARE-NII> .33
<PER-SHARE-GAIN-APPREC> 2.00
<PER-SHARE-DIVIDEND> (.34)
<PER-SHARE-DISTRIBUTIONS> (.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.86
<EXPENSE-RATIO> 1.20
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 91,257,260
<INVESTMENTS-AT-VALUE> 126,175,184
<RECEIVABLES> 401,215
<ASSETS-OTHER> 489
<OTHER-ITEMS-ASSETS> 42,671
<TOTAL-ASSETS> 126,619,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 174,000
<TOTAL-LIABILITIES> 174,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83,273,469
<SHARES-COMMON-STOCK> 1,025,089
<SHARES-COMMON-PRIOR> 707,750
<ACCUMULATED-NII-CURRENT> 198,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,056,089
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,917,924
<NET-ASSETS> 126,445,559
<DIVIDEND-INCOME> 3,459,473
<INTEREST-INCOME> 177,575
<OTHER-INCOME> 0
<EXPENSES-NET> (1,548,627)
<NET-INVESTMENT-INCOME> 2,088,421
<REALIZED-GAINS-CURRENT> 8,056,360
<APPREC-INCREASE-CURRENT> 4,964,248
<NET-CHANGE-FROM-OPS> 15,109,029
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (191,707)
<DISTRIBUTIONS-OF-GAINS> (171,044)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 507,818
<NUMBER-OF-SHARES-REDEEMED> (210,456)
<SHARES-REINVESTED> 19,977
<NET-CHANGE-IN-ASSETS> 27,516,764
<ACCUMULATED-NII-PRIOR> 280,319
<ACCUMULATED-GAINS-PRIOR> 1,475,420
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 685,175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,548,627
<AVERAGE-NET-ASSETS> 115,652,395
<PER-SHARE-NAV-BEGIN> 16.09
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 1.98
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.83
<EXPENSE-RATIO> 1.95
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 91,257,260
<INVESTMENTS-AT-VALUE> 126,175,184
<RECEIVABLES> 401,215
<ASSETS-OTHER> 489
<OTHER-ITEMS-ASSETS> 42,671
<TOTAL-ASSETS> 126,619,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 174,000
<TOTAL-LIABILITIES> 174,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83,273,469
<SHARES-COMMON-STOCK> 12,632
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 198,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,056,089
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,917,924
<NET-ASSETS> 126,445,559
<DIVIDEND-INCOME> 3,459,473
<INTEREST-INCOME> 177,575
<OTHER-INCOME> 0
<EXPENSES-NET> (1,548,627)
<NET-INVESTMENT-INCOME> 2,088,421
<REALIZED-GAINS-CURRENT> 8,056,360
<APPREC-INCREASE-CURRENT> 4,964,248
<NET-CHANGE-FROM-OPS> 15,109,029
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (465)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 12,620
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> 27,516,764
<ACCUMULATED-NII-PRIOR> 280,319
<ACCUMULATED-GAINS-PRIOR> 1,475,420
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 685,175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,548,627
<AVERAGE-NET-ASSETS> 115,652,395
<PER-SHARE-NAV-BEGIN> 17.97
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> (.14)
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.84
<EXPENSE-RATIO> 2.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> OCT-31-1999
<INVESTMENTS-AT-COST> 91,257,260
<INVESTMENTS-AT-VALUE> 126,175,184
<RECEIVABLES> 401,215
<ASSETS-OTHER> 489
<OTHER-ITEMS-ASSETS> 42,671
<TOTAL-ASSETS> 126,619,559
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 174,000
<TOTAL-LIABILITIES> 174,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 83,273,469
<SHARES-COMMON-STOCK> 453,587
<SHARES-COMMON-PRIOR> 249,210
<ACCUMULATED-NII-CURRENT> 198,077
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,056,089
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,917,924
<NET-ASSETS> 126,445,559
<DIVIDEND-INCOME> 3,459,473
<INTEREST-INCOME> 177,575
<OTHER-INCOME> 0
<EXPENSES-NET> (1,548,627)
<NET-INVESTMENT-INCOME> 2,088,421
<REALIZED-GAINS-CURRENT> 8,056,360
<APPREC-INCREASE-CURRENT> 4,964,248
<NET-CHANGE-FROM-OPS> 15,109,029
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (80,547)
<DISTRIBUTIONS-OF-GAINS> (61,770)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 304,565
<NUMBER-OF-SHARES-REDEEMED> (108,625)
<SHARES-REINVESTED> 8,437
<NET-CHANGE-IN-ASSETS> 27,516,764
<ACCUMULATED-NII-PRIOR> 280,319
<ACCUMULATED-GAINS-PRIOR> 1,475,420
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 685,175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,548,627
<AVERAGE-NET-ASSETS> 115,652,395
<PER-SHARE-NAV-BEGIN> 16.07
<PER-SHARE-NII> .21
<PER-SHARE-GAIN-APPREC> 2.00
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (.24)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.82
<EXPENSE-RATIO> 1.87
</TABLE>
