<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 29, 1997
REG. ICA NO. 811-7691
FILE NO. 333-7543
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-2
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] PRE-EFFECTIVE AMENDMENT NO. 2
[ ] POST-EFFECTIVE AMENDMENT NO. __
AND/OR
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X] AMENDMENT NO. 2
THE DESSAUER GLOBAL EQUITY FUND
EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER
<TABLE>
<S> <C>
5 BAY STATE COURT, P.O. BOX 1689 ORLEANS, MASSACHUSETTS 02653
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (NUMBER, STREET, CITY, STATE, ZIP CODE)
(818) 795-0039
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
KRAMER, LEVIN, NAFTALIS & FRANKEL
SUSAN PENRY-WILLIAMS, ESQ. 919 THIRD AVENUE, NEW YORK, NEW YORK 10022
NAME AND ADDRESS OF AGENT FOR SERVICE (NUMBER, STREET, CITY, STATE, ZIP CODE)
</TABLE>
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AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
APPROXIMATE DATE OF PROPOSED OFFERING
If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on
Rule 415 under the Securities Act of 1933, other than securities offered in
connection with a dividend reinvestment plan, check the following box. [ ]
It is proposed that this filing will become effective (check appropriate box)
[ ] when declared effective pursuant to section 8(c)
If appropriate, check the following box:
[ ] This amendment designates a new effective date for a previously filed
registration statement.
[ ] This form is filed to register an additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
for the same offering is .
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
==================================================================================================================
TITLE OF SECURITIES AMOUNT BEING PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
BEING REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock............ 5,750,000 shares $ 12.50 $71,875,000 $21,825.00
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE> 2
CROSS-REFERENCE SHEET
(Pursuant to Rule 495(a) showing location in the form of Prospectus of the
responses to the Items in Part A and location in the form of Prospectus and the
Statement of Additional Information of the responses to the Items in Part B of
Form N-2).
<TABLE>
<CAPTION>
ITEM NUMBER
FORM N-2,
PART A PROSPECTUS CAPTION
- ----------- -------------------------------------------------------------------------------
<C> <S>
1 Front Cover Page
2 Inside Front and Outside Back Cover Page
3(1) Summary of the Company's Expenses
(2) Prospectus Summary
4 Not Applicable
5 Plan of Distribution
6 Not Applicable
7 The Company and Its Objectives, Policies and Risks
8(1) Prospectus Summary; The Company and Its Objectives, Policies and Risks
(2) The Company and Its Objectives, Policies and Risks
(3) The Company and Its Objectives, Policies and Risks
(4) The Company and Its Objectives, Policies and Risks
(5) Not Applicable
(6) Not Applicable
9(a) Management of the Company
(b) Management of the Company
(c) Management of the Company
(d) Management of the Company
(e) Management of the Company
(f) Management of the Company
10(1) Capital Stock of the Company
(2) Not Applicable
(3) Not Applicable
(4) Taxes
(5) Not Applicable
(6) Not Applicable
11 Not Applicable
12 Not Applicable
13 Table of Contents of the Statement of Additional Information
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEM NUMBER STATEMENT OF
FORM N-2, ADDITIONAL
PART B PROSPECTUS CAPTION INFORMATION CAPTION
- ----------- --------------------------------------------------------- ---------------------
<C> <S> <C>
14 Front Cover Page......................................... *
15 Front Cover Page......................................... *
16 *........................................................ Not Applicable
17 The Company and its Objectives, Policies and Risks....... *
18 Management of the Company................................ *
19 *........................................................ Not Applicable
20 The Company and its Objectives, Policies and Risks....... *
21 Portfolio Transactions and Brokerage..................... *
22 Tax Matters.............................................. *
23 *........................................................ Not Applicable
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR
SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 29, 1997
5,000,000 SHARES
THE DESSAUER GLOBAL EQUITY FUND
SHARES OF BENEFICIAL INTEREST
The Dessauer Global Equity Fund (the "Fund") is a newly organized,
non-diversified, closed-end management investment company. The Fund's investment
objective is long-term capital appreciation. The Fund will seek to achieve its
investment objective by investing primarily in the securities of issuers that it
believes are positioned to benefit from growth in the global economy. Generally,
the companies in which the Fund intends to invest will be traded in the markets
of, or derive a substantial portion of their revenues from business activities
within North America (the U.S. and Canada), Western Europe, Asia and Japan.
There is no assurance that the Fund will achieve its objective. See "The Fund
and its Objective and Policies."
INVESTMENT IN EQUITY SECURITIES OF FOREIGN ISSUERS AND IN SECURITIES
DENOMINATED IN FOREIGN CURRENCIES INVOLVES A SIGNIFICANT DEGREE OF RISK.
ACCORDINGLY, AN INVESTMENT IN THE FUND INVOLVES SPECIAL CONSIDERATIONS AND RISKS
AND SHOULD NOT BE CONSIDERED A COMPLETE INVESTMENT PROGRAM. SEE "RISK FACTORS"
COMMENCING ON PAGE 11.
Dessauer Asset Management, Inc. and Guinness Flight Investment Management
Limited are the Fund's investment advisers. Prior to this offering, there has
been no public market for the shares of beneficial interest (the "Shares") in
the Fund. See "Underwriting." The Shares have been approved for listing, subject
to notice of issuance, on the New York Stock Exchange, under the symbol "DGE."
Investors should be aware that shares of closed-end investment companies in
the past frequently have traded at a discount to their net asset value. The risk
of loss associated with this characteristic of closed-end investment companies
may be greater for investors purchasing Shares in the initial public offering
and expecting to sell such Shares soon after the completion thereof.
The Prospectus sets forth concisely information about the Fund that a
prospective investor should consider before investing. Investors are advised to
read this Prospectus carefully and to retain it for future reference. Additional
information about the Fund has been filed with the Securities and Exchange
Commission and is available upon request without charge and on the Commission's
web site (http://www.sec.gov_). See "Additional Information."
The Fund is the first closed-end investment company to contain an automatic
conversion feature (the "Automatic Conversion Provision").
(Continued on next page)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<S> <C> <C> <C>
PRICE TO PROCEEDS
PUBLIC SALES LOAD(1) TO FUND(2)
--------------------- --------------------- ---------------------
Per Share.................... $12.50 $ $
Total(3)..................... $62,500,000 $ $
</TABLE>
(1) The Fund and the Investment Advisers have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) Before deduction of organizational and offering expenses payable by the
Fund, estimated to be $170,000 and $ , respectively, which includes
up to $ to be paid to the Underwriter in partial reimbursement of its
expenses. Organizational expenses will be amortized over a period not to
exceed 60 months from the date that the Fund commences investment
operations. Offering expenses will be deducted from net proceeds.
(3) The Fund has granted to the Underwriter an option, exercisable within 45
days of the date hereof, to purchase up to an additional 750,000 Shares
solely to cover over-allotments, if any. If such option is exercised in
full, the total Price to Public, Sales Load and Proceeds to Fund will be
$ , $ and $ , respectively. See "Underwriting."
------------------------
The Shares are offered by the Underwriter, subject to prior sale, when, as
and if delivered to and accepted by the Underwriter, and subject to certain
conditions. Delivery of the Shares is expected against payment therefor on or
about , 1997, at the offices of Wheat, First Securities, Inc.,
Richmond, Virginia.
WHEAT FIRST BUTCHER SINGER
The date of this Prospectus is , 1997.
<PAGE> 5
(Continued from page one)
The Fund's Declaration of Trust provides that beginning after 18 months
from the date of the initial public offering, the Fund will automatically
convert into an open-end investment company if its Shares close at a 5% or
greater discount from the net asset value of the Fund on the last business day
of any week and for each of the next 14 business days. No further approval of
the shareholders of the Fund would be necessary. See "Automatic Conversion to an
Open-End Investment Company."
The address of Dessauer Asset Mangement, Inc. is 5 Bay State Court, P.O.
Box 1689, Orleans, Massachusetts and its phone number is (508) 255-1651. The
address of Guinness Flight Investment Management Limited in England is
Lighterman's Court, 5 Gainsford Street, Tower Bridge, London, England and its
phone number is 44-171-522-2100, and its United States address is 225 South Lake
Avenue, Suite 777, Pasadena, California and its phone number is (818) 795-0039.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF
THE SHARES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZATION, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. SEE "UNDERWRITING."
2
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information, including "Risk Factors," included elsewhere in this
Prospectus. The discussion in this Prospectus contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), which involve risks and uncertainties and
represent the Fund's expectation or beliefs, including, but not limited to,
statements concerning the Fund's investment rationale, performance and financial
condition. For this purpose, any statements contained in this Prospectus that
are not statements of historical fact may be deemed to be forward-looking
statements. The Fund desires to take advantage of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. The Fund wishes to
caution readers that actual results and the timing of certain events may differ
significantly from the results discussed in the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in "Risk Factors" and "Taxes." Unless otherwise
indicated, the information in this Prospectus assumes that the Underwriter's
over-allotment option will not be exercised.
THE FUND................... The Dessauer Global Equity Fund (the "Fund") is a
non-diversified closed-end management investment
company. The Fund is designed for investors
desiring to invest a portion of their assets in the
securities of issuers that, in the opinion of
Dessauer Asset Management, Inc. ("Dessauer") and
Guinness Flight Investment Management Limited
("Guinness Flight"), the Fund's investment
advisers, are likely to benefit from a high level
of global economic growth. See "Investment
Rationale."
INVESTMENT OBJECTIVE....... The Fund's investment objective is long-term
capital appreciation. The Fund will seek to achieve
its investment objective by investing primarily in
the securities of issuers that it believes are
positioned to benefit from growth in the global
economy. Generally, the companies in which the Fund
intends to invest will be traded in the markets of,
or will derive a substantial portion of their
revenues from business activities within North
America (the U.S. and Canada), Western Europe, Asia
and Japan (collectively, the "Major Markets").
Under normal market conditions, the Fund will
invest at least 65% of its total assets in a
portfolio of equity securities of companies located
in at least three different countries. See "The
Fund and its Objective and Policies."
Investment in equity securities of foreign issuers
and in securities denominated in foreign currencies
involves a significant degree of risk. Accordingly,
an investment in the Fund should be considered as
an investment for only a portion of an investor's
assets, not as a complete investment program. See
"Risk Factors."
THE OFFERING............... The Fund is offering 5,000,000 shares of beneficial
interest (the "Shares"), par value $0.01 per Share,
at a maximum offering price of $12.50 per share.
The Shares are being offered by the underwriter,
Wheat, First Securities, Inc. (the "Underwriter").
The Fund has granted to the Underwriter an option,
exercisable within 45 days of the date hereof, to
purchase up to an additional 750,000 Shares solely
to cover over-allotments, if any. The minimum
investment in the offering is 100 Shares ($1,250).
See "Underwriting."
INVESTMENT ADVISERS........ Dessauer and Guinness Flight will act as the Fund's
investment advisers (collectively, the "Investment
Advisers"). The Fund has an asset allocation
committee that will be chaired by John P. Dessauer
and will include an additional representative from
Dessauer and one from Guinness
3
<PAGE> 7
Flight. The asset allocation committee will
allocate assets of the Fund among the Major Markets
and will designate the Fund's cash and cash
equivalent holdings. At this time, it is expected
that Dessauer will be responsible for investment
decisions related to North America and Western
Europe and that Guinness Flight will be responsible
for investment decisions related to Asia and Japan.
The Fund will pay Dessauer a monthly fee at an
annual rate of .60% of the average weekly net asset
value of the Fund and will pay Guinness Flight a
monthly fee at an annual rate of .40% of the
average weekly net asset value of the Fund. This
fee, in the aggregate, is higher than that paid by
many other investment companies.
Dessauer, an investment adviser registered with the
Securities and Exchange Commission (the "SEC"), was
founded in 1986 and as of March 31, 1997 managed
$195.0 million in both U.S. and international
assets for individuals. Guinness Flight, also an
investment adviser registered with the SEC, was
founded in 1987. Guinness Flight and its parent,
Guinness Flight Global Asset Management Limited,
managed approximately $4.1 billion in international
assets as of March 31, 1997. See "Management of the
Fund." Additionally, in May 1997 Guinness Flight's
parent company merged with Hambros Fund Management
PLC. See "Management of the Fund -- Investment
Advisers and Investment Advisory Agreements."
ADMINISTRATOR.............. Investment Company Administration Corporation
("ICAC") will act as the Fund's administrator. The
Fund has agreed to pay ICAC a monthly fee at an
annual rate of .25% of the average weekly net asset
value of the Fund. ICAC has agreed to reduce its
annual fee to a maximum of .10% of the average
weekly net asset value of the Fund as long as the
Fund remains a closed-end investment company. See
"Management of the Fund."
DISTRIBUTIONS AND
DIVIDEND REINVESTMENT
PLAN....................... The Fund's policy is to distribute to its
shareholders all of its net investment income and
net realized capital gains, if any, for each year.
All distributions to shareholders whose Shares are
registered in their own names will be reinvested
automatically in additional Shares of the Fund,
unless the shareholders elect to receive cash.
Shares will be purchased in the open market or, if
the Shares are trading at a premium to net asset
value, issued directly by the Fund. Shareholders
whose Shares are held in the name of a broker or
nominee should contact such broker or nominee to
determine whether or how they may participate in
the Fund's dividend reinvestment plan. See "Taxes"
and "Automatic Dividend Reinvestment and Cash
Purchase Plan."
ESTIMATED EXPENSES......... The Fund's annual operating expenses, including
advisory and administrative fees and other expenses
(excluding interest expenses), are estimated to be
approximately $1.0 million in its first full year
of operation. Estimated offering expenses of
$ will be charged to capital upon
completion of the offering of the Shares.
Organizational expenses are estimated to be
$170,000 and will be amortized over a period not to
exceed 60 months from the date the Fund commences
operations. See "Summary of the Fund's Expenses"
and "Management of the Fund."
4
<PAGE> 8
USE OF PROCEEDS............ The principal purpose for which nearly all the net
proceeds of the offering are intended to be used is
the purchase of securities consistent with the
Fund's investment objective and policies. Since the
Fund expects to invest its assets gradually to
benefit from short-term fluctuations in the price
of securities the Fund will purchase, the Fund
anticipates that it will take approximately six
months from the date of this Prospectus to invest
fully the proceeds of the offering in accordance
with its investment objective and policies. See
"Use of Proceeds."
LISTING.................... The Shares have been approved for listing, subject
to notice of issuance, on the New York Stock
Exchange (the "NYSE"), under the symbol "DGE."
AUTOMATIC CONVERSION TO
OPEN-END INVESTMENT
COMPANY.................... The Declaration of Trust provides that, beginning
after 18 months from the date of the Fund's initial
public offering, the Fund will automatically
convert to an open-end investment company if its
Shares close at a market price that is at a 5% or
greater discount to the net asset value of the Fund
on the last business day of any week and for each
of the next 14 business days. A business day is any
day that the NYSE is open. No further approval of
shareholders of the Fund would be necessary. The
Fund is the first closed-end investment company to
contain such an automatic conversion feature (the
"Automatic Conversion Provision"). This provision
may be changed only by the affirmative vote of the
holders of at least 80% of the Fund's outstanding
voting securities. See "Automatic Conversion to
Open-End Investment Company."
If the Fund converts to an open-end investment
company, it will be able to continuously issue and
offer for sale Shares, and each such Share could be
presented to the Fund at the option of the holder
for redemption at a price based on the then current
net asset value per share. Shares would no longer
be listed on the NYSE. The Fund's investment
objective and policies, however, would not change
as a result of conversion to an open-end investment
company.
In the event of a conversion to an open-end
investment company, the Fund also may charge
additional fees in connection with distribution of
its Shares under Rule 12b-1 of the Investment
Company Act of 1940, as amended (the "1940 Act").
In addition, if the Fund converts to an open-end
investment company, its total annual expenses may
increase. As an open-end investment company, the
Fund may reserve the right to honor any request for
redemption by making payment in whole or in part in
securities chosen by the Fund and valued in the
same way as they would be valued for purposes of
computing the Fund's net asset value. If payment is
made in securities, a stockholder may incur
brokerage expenses in converting these securities
to cash. If such payment is made in securities of
issuers traded outside of the United States, a
shareholder may have more difficulty disposing of
such securities than the securities of issuers
traded within the United States.
QUALIFICATION AS A
REGULATED
INVESTMENT COMPANY......... The Fund intends to qualify as a regulated
investment company under Subchapter M of the U.S.
Internal Revenue Code of 1986, as amended. See
"Taxes."
5
<PAGE> 9
RISK FACTORS
Investors are advised to consider carefully the risks involved in investing
in foreign equity markets, which are in addition to the usual risks of investing
in equity securities. Due to these risks, an investment in the Fund should be
considered as an investment for only a portion of an investor's assets, not as a
complete investment program.
ECONOMIC AND POLITICAL
FACTORS AFFECTING FOREIGN
COUNTRIES.................. In the course of investing in foreign countries,
the Fund may be exposed to the direct or indirect
consequences of political, social and economic
changes in one or more countries. In emerging
countries in particular, there is increased risk of
hyperinflation, currency devaluation and government
intervention in the economy in general. See "Risk
Factors -- Economic and Political Factors Affecting
Foreign Countries."
FOREIGN CURRENCY
CONSIDERATIONS............. A portion of the Fund's assets will be invested in
securities denominated in foreign currencies. As a
result, changes in foreign currency exchange rates
will affect the value of securities in the Fund's
portfolio and the unrealized appreciation or
depreciation of the Fund's investments. Changes in
foreign exchange rates may also adversely affect
the Fund's ability to make distributions to its
shareholders. Although the Fund is authorized to
use various investment strategies to hedge currency
exchange rate risk, many of these strategies may
not initially be used by the Fund to a significant
extent. See "Risk Factors -- Foreign Currency
Considerations."
TRADING MARKETS IN FOREIGN
COUNTRIES.................. Trading volume in certain foreign securities
markets is substantially less than that in the
securities markets of the United States or other
developed countries. In addition, securities held
by the Fund may be less liquid and their prices
more volatile than those of securities of
comparable U.S. issuers. Commissions for trading on
foreign country stock exchanges are generally
higher than commissions for trading on U.S.
exchanges, and companies in foreign countries are
not generally subject to uniform accounting,
auditing and financial reporting standards,
practices and disclosure requirements comparable to
those applicable to U.S. companies. Further,
certain foreign markets may have less government
supervision and regulation of the securities
markets as compared to the U.S. markets. See "Risk
Factors -- Trading Markets in Foreign Countries."
REPATRIATION; INVESTMENT
CONTROLS................... Foreign investment in certain countries may be
restricted or controlled to varying degrees by
local or national governments. These restrictions
or controls may include the requirement of
governmental approval for the repatriation of
investment income or the proceeds of sales of
securities by foreign investors, and could limit or
preclude foreign investment in certain foreign
securities and increase the costs and expenses of
the Fund. See "Risk Factors -- Repatriation;
Investment Controls."
6
<PAGE> 10
DISCOUNT TO NET
ASSET VALUE................ Shares of closed-end investment companies in the
past frequently have traded at a discount to their
net asset value. This characteristic is a risk
separate and distinct from the risk that the Fund's
net asset value may decrease, and may be greater
for investors purchasing shares in the initial
public offering and expecting to sell such Shares
soon after the completion thereof. To reduce or
eliminate any discount to net asset value, the
Declaration of Trust of the Fund provides that the
Fund will automatically convert to an open-end
investment company if the circumstances described
herein exist. However, notwithstanding the
elimination of the market discount upon conversion
of the Fund to an open-end investment company, a
shareholder may incur a loss upon the sale of its
Shares. See "Risk Factors -- Discount to Net Asset
Value" and "Automatic Conversion to an Open-End
Investment Company."
LACK OF OPERATING HISTORY;
DEPENDENCE ON INVESTMENT
ADVISERS................... The Fund is a newly organized management investment
company with no prior operating history. In
addition, the Investment Advisers have not provided
advisory services to a U.S. closed-end investment
company. The Fund is dependent upon the diligence
and skill of the Investment Advisers for the
selection, structuring, closing and monitoring of
its investments. See "Risk Factors -- Lack of
Operating History; Dependence on Investment
Advisers."
FOREIGN TAXATION........... Dividends, interest and capital gains received by
the Fund may be subject to withholding and other
taxes imposed by foreign countries, whose taxes
would reduce the return to the Fund on those
securities; this reduction may not be recoverable
by the Fund or its shareholders. See "Risk
Factors -- Foreign Taxation" and "Taxes."
NON-DIVERSIFIED STATUS..... The Fund is classified as a "non-diversified"
investment company under the 1940 Act, which means
that the Fund may invest in as few as 12 issuers.
To the extent that the Fund invests in a limited
number of issuers, the Fund will be subject to
greater risk of loss as a result of changes in the
value of any single investment. The Fund intends to
comply with the diversification requirements
imposed by Subchapter M of the U.S. Internal
Revenue Code of 1986, as amended (the "Code"). See
"Risk Factors -- Non-Diversified Status" and
"Taxes."
ANTI-TAKEOVER PROVISIONS... Certain provisions of the Fund's Declaration of
Trust may have the effect of limiting the ability
of other persons to acquire control of the Fund. In
certain circumstances, these provisions might also
inhibit the ability of shareholders to sell their
Shares at a premium over prevailing market prices.
The Fund's Board of Trustees has determined that
these provisions are in the best interests of
shareholders generally. See "Risk
Factors -- Anti-Takeover Provisions" and "Shares of
Beneficial Interest in the Fund."
7
<PAGE> 11
SUMMARY OF THE FUND'S EXPENSES
The expense summary below was developed to help you make your investment
decisions. You should consider this expense information along with other
important information in this Prospectus, including the Fund's investment
objective.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering price)................... 5.00%
Dividend Reinvestment and Cash Purchase Plan Fees................ None
ANNUAL EXPENSES (as a percentage of average daily net assets)
Advisory Fees.................................................... 1.00%
Administration Fees (after fee waivers)(1)....................... 0.10%
Other Expenses................................................... 0.65%
-----
Total Annual Expenses......................................... 1.75%
=====
</TABLE>
- ---------------
(1) The Fund has agreed to pay ICAC a monthly fee at an annual rate of .25% of
the average weekly net assets of the Fund. ICAC has agreed to reduce its
annual fee to a maximum of .10% of the average weekly net assets of the Fund
as long as the Fund remains a closed-end investment company.
SHAREHOLDER TRANSACTION EXPENSES represent charges paid when you purchase
shares of the Fund.
ANNUAL EXPENSES are based on the Fund's anticipated expenses for the
current fiscal year. "Other Expenses" are based on estimated amounts for the
current fiscal year and assume that the Fund receives net proceeds of
$ from the issue and sale of 5,000,000 Shares. The Investment Advisers
or the Administrator may, from time to time, voluntarily agree to defer or waive
fees or absorb some or all of the expenses of the Fund. To the extent they
should do so, the Investment Advisers and the Administrator may seek
reimbursement of such deferred fees or absorbed expenses; provided, no repayment
will be made if the expense ratio would exceed 1.75%.
EXAMPLE OF EXPENSES
You would pay the following expenses on a $1,000 investment in the Fund,
assuming a 5% annual return:
<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
- ---- ---- ---- ----
<S> <C> <C> <C>
$ 67 $102 $140 $246
</TABLE>
The purpose of the above table is to assist you in understanding the
various costs and expenses that an investor in the Fund would bear directly or
indirectly. See "Management of the Fund" for more complete descriptions of such
costs and expenses.
The Example of Expenses is a hypothetical example that illustrates the
expenses associated with a $1,000 investment in the Fund over periods of one,
three, five and ten years, based on the estimated expenses in the above table
and an assumed annual rate of return of 5%. The 5% return and expenses should
not be considered a representation of future levels. Actual returns and expenses
may be greater or less than those shown. In addition, the above Example of
Expenses does not reflect offering costs in connection with the public offering,
estimated to be approximately $ , which will be charged against the
proceeds of the offering. The Example of Expenses also assumes that all
dividends and other distributions are reinvested at net asset value and that the
percentage amounts listed under Annual Expenses remain the same in the years
shown. Although the Example of Expenses assumes reinvestment of all dividends
and distributions at net asset value, participants in the Fund's Automatic
Dividend Reinvestment and Cash Purchase Plan may receive shares issued at a
price or value different from net asset value. See "Automatic Dividend
Reinvestment and Cash Purchase Plan."
8
<PAGE> 12
INVESTMENT RATIONALE
The Fund's investment objective and policies reflect the belief of Dessauer
and Guinness Flight that the world economy is in the early stages of sustained
economic growth. The Investment Advisers believe that the convergence of certain
economic, political and technological changes are catalysts for this growth.
The International Monetary Fund (the "IMF") has reported that global
economic growth, as measured by gross domestic product, has been growing at an
average real rate of 3.3% per year for the past 20 years. Further, the IMF
projects the global economy to grow at a 4.5% real rate per year into the near
future. Dessauer and Guinness Flight believe that four primary trends will
support this global economic expansion:
DECLINE OF COMMUNISM. The collapse of Communism in the former Soviet
Union and Eastern Europe and the transformation of China's Communist
economy to a market-based economy has undermined the ideology of state
control of economies. This move to open markets will allow for more rapid
economic growth around the world.
OPENING OF WORLD TRADE. A decline in trade barriers globally over the
last two decades has increased international trade, enhanced the efficiency
of markets around the world and contributed to global economic expansion.
GROWTH IN ASIA. Economic reforms in China and other Asian countries
have stimulated significant economic growth within Asia. As a result of
this economic growth, vast numbers of people in Asia have been able to
emerge from poverty. In China alone, there are over 720 million people
under the age of 30. This class of young people may be the first generation
in recent Chinese history to have economic prosperity within their grasp.
The Investment Advisers believe that these trends will propel growth within
Asia, which in turn serves as a major catalyst for growth in the world
economy.
TECHNOLOGICAL INNOVATION. Rapid technological advancement, which is
the hallmark of the last quarter of the 20(th) century, is spurring global
economic growth for both developed and underdeveloped countries. This
technological innovation is creating whole new industries as well as
improving the efficiency and growth prospects of existing industries.
As a result of these and other factors, Dessauer and Guinness Flight
believe that the opportunity exists to make investments in certain companies
that have the potential to benefit from these macroeconomic trends toward
worldwide growth. The Fund will seek to invest in the securities of issuers that
Dessauer and Guinness Flight believe are positioned to benefit from this growth
in the global economy. The Investment Advisers further believe that certain
issuers whose stock is traded in the markets of, or who derive a substantial
portion of their revenues from business activities within, the Major Markets may
be able to capitalize on the convergence of these four trends.
THE FUND AND ITS OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE AND POLICIES
The Fund is a newly organized, non-diversified, closed-end management
investment company organized under the laws of the State of Delaware. The Fund
intends to allocate the net proceeds of the offering in accordance with the
investment objective and policies as described below. Since the Fund expects to
invest its assets gradually to benefit from short-term fluctuations in the
prices of securities the Fund is purchasing, the Investment Advisers believe the
net proceeds of the offering will be fully invested within six months depending
on market conditions.
The Fund's investment objective is long-term capital appreciation. The Fund
will seek to achieve its investment objective by investing primarily in the
securities of issuers that it believes are positioned to benefit
9
<PAGE> 13
from the growth in the global economy. Generally, the companies in which the
Fund intends to invest will be traded in the markets of, or derive a substantial
portion of their revenues from business activities within, North America (the
U.S. and Canada), Western Europe, Asia and Japan. Under normal market
conditions, the Fund will invest at least 65% of its total assets in a portfolio
of equity securities of companies located in at least three different countries.
Although the Fund will not have a general limit as to the types of
securities which it can purchase, most of the Fund's investments will be in
marketable common stocks or marketable securities convertible into common
stocks. Such securities may be traded on an exchange or in the over-the-counter
market. Securities other than common stock or securities convertible into common
stock may be held from time to time, but the Fund normally will not invest in
fixed income securities except for defensive purposes or to temporarily employ
uncommitted cash balances.
The investment objective and policies described herein will not change if
the Fund converts to an open-end investment company. See "Automatic Conversion
to an Open-End Investment Company."
INVESTMENT PRACTICES
In pursuing its investment objective, the Fund does not intend to lend
portfolio securities or invest in illiquid or restricted securities. In
addition, the Fund will observe a non-fundamental policy of not investing for
the purpose of exercising control over management, even though it may take
substantial positions in securities of small companies and in certain
circumstances this may result in the acquisition of such control. Such
circumstances could arise, for example, when existing controlling persons of an
issuer dispose of their holdings to larger groups or to the public or where an
issuer defaults to the Fund on its obligations pursuant to the provisions of a
purchase agreement or instrument governing the rights of a senior security held
by the Fund.
INVESTMENT RESTRICTIONS AND INVESTMENT POLICIES
Investment restrictions are fundamental and cannot be changed without
approval of the holders of a majority (as defined in the 1940 Act) of the
outstanding shares of the Fund. The term "majority of the outstanding shares" of
the Fund means the vote of the lesser of (i) 67% or more of the shares of the
Fund present at a meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the outstanding shares of the Fund. Investment policies are not fundamental and
may be changed by the Board of Trustees without shareholder approval. The
following are the Fund's investment restrictions set forth in their entirety.
INVESTMENT RESTRICTIONS. The Fund may not:
1. (a) With respect to 50% of its assets, invest more than 5% of its
total assets, at market value, in the securities of one issuer (except the
securities of the United States Government) and may not purchase more than
10% of the outstanding voting securities of a single issuer.
(b) With respect to the other 50% of its assets, invest more than
25% of the market value of its total assets in a single issuer.
These two restrictions, hypothetically, could give rise to a portfolio
with as few as 12 issuers. To the extent that the Fund's assets are
invested in a small number of issuers, there may be a greater risk in an
investment in the Fund than in a diversified investment company.
2. Borrow money or issue senior securities, borrow money or pledge its
assets, except that the Fund may borrow up to 33 1/3% of the value of its
total assets from a bank (i) for temporary or emergency purposes, including
to meet redemption requests if the Fund is operating as an open-end
investment company, (ii) for such short-term credits necessary for the
clearance or settlement of the transactions, (iii) to finance repurchases
of its Shares or (iv) to pay dividends required to be distributed in order
for
10
<PAGE> 14
the Fund to maintain its qualification as a regulated investment company
under the Code or otherwise to avoid taxation under the Code, in amounts
not exceeding 5% of its total assets (including the amount borrowed and
excluding the liability for the borrowings).
3. Invest 25% or more of the total value of its assets in a particular
industry, except that this restriction shall not apply to U.S. Government
Securities.
4. Buy or sell commodities or commodity contracts or real estate or
interests in real estate (including real estate limited partnerships),
except that it may purchase and sell futures contracts on stock indices,
interest rate instruments, and foreign currencies; securities which are
secured by real estate or commodities; and securities of companies which
invest or deal in real estate or commodities.
5. Act as an underwriter except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under applicable securities laws.
Changes in the market value of securities in the Fund's portfolio generally
will not cause the Fund to violate these investment restrictions unless any
failure to satisfy these restrictions exists immediately after the acquisition
of any security or other property and is wholly or partly the result of such
acquisition.
INVESTMENT POLICIES. The Fund may not make short sales of securities, other
than short sales "against the box," or purchase securities on margin except for
short-term credits necessary for clearance of portfolio transactions, provided
that this policy will not be applied to limit the use of options, futures
contracts, and related options, in the manner otherwise permitted by the
investment restrictions, policies, and investment program of the Fund.
RISK FACTORS
The Fund should be considered as an investment for only a portion of an
investor's assets and not as a complete investment program. Investors should
carefully consider the following risk factors described below before investing
in the Fund:
ECONOMIC AND POLITICAL FACTORS AFFECTING FOREIGN COUNTRIES
In the course of investment in foreign countries, the Fund may be exposed
to the direct or indirect consequences of political, social and economic changes
in one or more countries. The economies of individual foreign countries may
differ favorably or unfavorably from the U.S. economy in such respects as growth
of gross domestic product, rate of inflation, currency appreciation or
depreciation, capital reinvestment, resource self-sufficiency and balance of
payments position. These economies may also be dependent upon international
trade and, as a result, have been and may continue to be adversely affected by
trade barriers, exchange controls, managed adjustments in relative currency
values and other protectionist measures imposed or negotiated by the countries
with which they trade.
The possibility exists in some, if not all, foreign countries of
nationalization, expropriation or confiscatory taxation, political changes,
government regulation, social instability or diplomatic developments (including
war) that could affect adversely the economies of those countries or the value
of the Fund's investments in the countries. It may be difficult for a company
operating in a foreign country to obtain and enforce a legal judgement outside
of the United States. In emerging countries in particular, there is increased
risk of hyperinflation, currency devaluation and government intervention in the
economy in general.
It is likely that a portion of the Fund's assets will be invested in
companies trading or doing business in Hong Kong. There are specific risks
associated with the transition of Hong Kong to China after June 30, 1997. If
China takes certain unexpected actions towards Hong Kong during and after this
transition such actions could adversely affect the markets in Hong Kong and Asia
and corporations operating in those regions.
11
<PAGE> 15
FOREIGN CURRENCY CONSIDERATIONS
The Fund will invest in securities denominated or quoted in currencies
other than the U.S. dollar. As a result, changes in foreign currency exchange
rates will affect the value of securities in the Fund's portfolio and the
unrealized appreciation or depreciation of the Fund's investments. The Fund will
also incur costs in connection with conversions between various currencies.
Although the Fund is authorized to use various investment strategies to
hedge currency exchange rate risk, many of these strategies may not initially be
used by the Fund to a significant extent. The Fund will conduct its foreign
currency exchange transactions either on a spot (that is, cash) basis at the
spot rate prevailing in the foreign currency exchange market, or by entering
into forward, futures or options contracts to purchase or sell foreign
currencies. The use of forwards, futures and options contracts entails certain
special risks. The variable degree of correlation between exchange rate
movements of futures contracts and exchange rate movements of the related
portfolio position of the Fund, for example, could create the possibility that
losses on the hedging instrument would be greater than gains in the value of the
Fund's position. In addition, forwards, futures and options markets may not be
liquid in all circumstances and certain over-the-counter options may have no
markets. As a result, in certain markets, the Fund may not be able to close out
a transaction without incurring substantial losses. Although the use of
forwards, futures and options transactions for hedging would tend to minimize
the risk of loss due to a decline in the value of the hedged position, at the
same time it could limit any potential gains that might result from an increase
in value of the position. Finally, the daily variation margin requirements for
futures contracts create a greater ongoing potential financial risk than would
purchases of options, in which case the exposure is limited to the cost of the
initial premium.
Much of the income received by the Fund may be in foreign currencies. The
Fund will, however, compute and distribute its income in U.S. dollars, and the
computation of income will be made on the date on which the income is earned by
the Fund at the foreign exchange rate in effect on that date. As a result, if
the value of the foreign currencies in which the Fund receives its income falls
relative to the U.S. dollar between the receipt of the income and the time at
which the Fund converts the foreign currencies to U.S. dollars, the Fund may be
required to liquidate securities in order to make distributions if the Fund has
insufficient cash in U.S. dollars to meet distribution requirements. The
liquidation of investments, if required, could have an adverse effect on the
Fund's performance.
TRADING MARKETS IN FOREIGN COUNTRIES
Trading volume in certain foreign country securities markets is
substantially less than that in the securities markets of the United States or
other developed countries. In addition, securities of some companies located in
foreign countries will be less liquid and more volatile than securities of
comparable U.S. companies. Commissions for trading on foreign country stock
exchanges are generally higher than commissions for trading on U.S. exchanges,
although the Fund will seek the most favorable net results on its portfolio
transactions and may, in certain instances, be able to purchase its portfolio
investments on stock exchanges on which commissions are negotiable. Further,
some foreign markets are subject to less government supervision and regulation
of the securities markets and their participants and have significantly smaller
capitalization as compared to the U.S. markets. Investments in certain foreign
markets are also likely to experience delays in settlement of securities
transactions. Clearing and registration of securities transactions in certain
countries are subject to significant risks not associated with investments in
the U.S. and other more developed markets.
Companies in certain foreign countries are not generally subject to uniform
accounting, auditing and financial reporting standards, practices and disclosure
requirements comparable to those applicable to U.S. companies. Consequently,
less information about a foreign company may be available than about a U.S.
publicly-traded company. When a foreign issuer's financial statements are not
deemed to reflect accurately its financial situation, Guinness Flight or
Dessauer may take additional steps to evaluate the proposed investment. These
steps may include an on-site inspection of the company, interviews with its
management and
12
<PAGE> 16
consultations with accountants, bankers and other specialists. In certain cases,
financial statements must be developed or verified by these specialists. In
addition, government supervision and regulation of foreign stock exchanges,
brokers and listed companies is generally less than in the United States.
REPATRIATION; INVESTMENT CONTROLS
Foreign investment in certain countries may be restricted or controlled to
varying degrees by local or national governments. These restrictions or controls
at times may include the requirement of governmental approval for the
repatriation of investment income or the proceeds of sales of securities by
foreign investors. Certain countries may require governmental approval prior to
investments by foreign persons, limit the amount of investment by foreign
persons in a particular company, limit the investment by foreign persons only to
a specific class of securities of a company that may have less advantageous
rights than the classes available for purchase by domiciliaries of the countries
and/or impose additional taxes on foreign investors. Certain countries may also
restrict investment opportunities in issuers in industries deemed important to
national interests. The Fund could be adversely affected by delays in, or a
refusal to grant, any required governmental approval for repatriation of
capital, as well as by the application to the Fund of any restrictions on
investments. Indirect foreign investment in the securities of companies listed
and traded on the stock exchanges in emerging countries may be permitted by
certain of these countries in certain instances through investment funds that
have been specifically authorized.
DISCOUNT TO NET ASSET VALUE
Shares of closed-end investment companies in the past frequently have
traded at a discount to net asset value. This characteristic is a risk separate
and distinct from the risk that the Fund's net asset value may decrease. The
risk of loss associated with this characteristic of closed-end investment
companies may be greater for investors purchasing Shares in the initial public
offering and expecting to sell such Shares soon after the completion thereof.
For those investors, realization of gain or loss on their investments is likely
to be more dependent upon the existence of a premium or discount than upon
portfolio performance. The net asset value per Share immediately following the
completion of the offering will be the initial offering price per Share of
$12.50, minus the sales load and other per Share offering expenses. The Fund
cannot predict whether the Shares will trade at, below or above net asset value.
The Fund contains an Automatic Conversion Provision whereby the Fund will
automatically convert to an open-end investment company after trading at a 5% or
greater discount from net asset value for 15 consecutive days beginning on the
last business day of any week. See "Automatic Conversion to an Open-End
Investment Company."
LACK OF OPERATING HISTORY; DEPENDENCE ON INVESTMENT ADVISERS
The Fund is a newly organized investment company with no prior operating
history. Prior to this offering, there has been no public market for the Fund's
Shares. The Fund has been organized to make investments selected by the
Investment Advisers. Although Dessauer and Guinness Flight have a prior record
of making and managing investments similar to those to be made by the Fund, the
Fund itself has no operating history. In addition, neither Dessauer nor Guinness
Flight has provided advisory services to a U.S. closed-end investment company.
However, Guinness Flight currently advises four U.S. operated investment
companies, and Guinness Flight Hambro Asset Management Limited, the parent of
Guinness Flight, provides advisory services to non-U.S. closed-end investment
companies. The Fund is dependent upon the diligence and skill of the Investment
Advisers for the selection, structuring, closing and monitoring of its
investments. See "Management of Fund."
13
<PAGE> 17
FOREIGN TAXATION
Dividends, interest and capital gains received by the Fund may be subject
to withholding and other taxes imposed by foreign countries, whose taxes would
reduce the return to the Fund on those securities; this reduction may not be
recoverable by the Fund or its shareholders. See "Taxes."
NON-DIVERSIFIED STATUS
The Fund is classified as a "non-diversified" investment company under the
1940 Act, which means that the Fund may invest in as few as 12 issuers. To the
extent that the Fund invests in a limited number of issuers, the Fund will be
subject to risk of loss as a result of changes in the value of any single
investment. Investment in the Fund, therefore, may present greater risks to
investors than an investment in a diversified fund. The investment return on a
non-diversified investment company typically is dependent upon the performance
of a smaller number of securities relative to the number of securities held in a
diversified fund. Moreover, with respect to 50% of its portfolio, the Fund may
assume large positions in the obligations of a limited number of issuers. To the
extent the Fund exercises this ability, the value of the securities the Fund
holds will be affected to a greater extent than those in a diversified fund in
the event of changes in the financial condition or the market's assessment of
such limited number of issuers. See "The Fund and its Objective and Policies --
Investment Restrictions and Investment Policies."
ANTI-TAKEOVER PROVISIONS
Certain provisions of the Fund's Declaration of Trust may have the effect
of limiting the ability of other persons to acquire control of the Fund. In
certain circumstances, these provisions might also inhibit the ability of
shareholders to sell their Shares at a premium over prevailing market prices.
The Fund's Board of Trustees has determined that these provisions are in the
best interests of shareholders generally. See "Shares of Beneficial Interest in
the Fund."
14
<PAGE> 18
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
The overall management of the business and affairs of the Fund is vested in
the Board of Trustees. The Board of Trustees approves all significant agreements
between the Fund and persons or companies furnishing services to the Fund,
including the Fund's investment advisory agreements with Dessauer and Guinness
Flight, the agreement with Investors Bank and Trust Company ("IB&T") as the
custodian, the agreement with State Street Bank & Trust Company ("State Street")
as transfer agent, the agreement with ICAC as the administrator, and the
underwriting agreement relating to the offering of shares contemplated hereby
with the Underwriter. The day-to-day operations of the Fund are delegated to the
officers, always subject to the investment objective and policies of the Fund
and to the general supervision of the Board of Trustees.
The Trustees and principal executive officers of the Fund and their
principal occupations are noted below. The address of each individual is c/o
Dessauer Asset Management, Inc., P.O. Box 1689, Orleans Brewster Office Park
Unit #5, New England Drive, Orleans, Massachusetts 02653.
<TABLE>
<CAPTION>
POSITIONS HELD WITH PRINCIPAL OCCUPATIONS
NAME AND AGE REGISTRANT DURING PAST 5 YEARS
- --------------------------- ------------------------- ------------------------
<S> <C> <C>
John P. Dessauer, 61 Chairman, Trustee Chairman, Dessauer Asset
Management, Inc.
Thomas P. McIntyre, 41 President, Trustee President, Dessauer
Asset Management, Inc.
James J. Atkinson, Jr., 40 Trustee Director, Guinness
Flight Global Asset
Management; Senior Vice
President, Huntington
Advisers, Inc.
Max A. Fischer, 60 Trustee Independent Financial
Consultant; General
Manager, Shearson Lehman
Brothers Bank
(Switzerland)
Ingrid R. Hendershot, 39 Trustee President, Hendershot
Investments; Vice
President, Financial
Analyst, Growth Stock
Outlook, Inc.
Geoffrey O. Lubbock, 50 Trustee Director Generation
Divestitures, Boston
Edison Company;
Financial Strategic
Planner, Boston Edison
Company
Kevin Melich, 54 Trustee Partner, Chartwell
Investment Partners;
Portfolio Manager,
Delaware Investment
Advisers
J. Brooks Reece, 50 Trustee Vice President, Sales &
Marketing, Adcole
Corporation
</TABLE>
15
<PAGE> 19
The annual compensation of the Trustees is noted below. Since the Fund has
not yet completed its first fiscal year, the amounts listed are estimates based
upon an understanding between the Fund and each Trustee.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION FROM
COMPENSATION BENEFITS ACCRUED AS BENEFITS FUND AND FUND COMPLEX
NAME OF PERSON FROM FUND PART OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
- ---------------------- ------------ --------------------- ---------------- -----------------------
<S> <C> <C> <C> <C>
John P. Dessauer...... -- -- -- --
Thomas P. McIntyre.... -- -- -- --
James J. Atkinson,
Jr.................. -- -- -- --
Max A. Fischer........ $5,000 -- -- $ 5,000
Ingrid R.
Hendershot.......... $5,000 -- -- $ 5,000
Geoffrey O. Lubbock... $5,000 -- -- $ 5,000
Kevin Melich.......... $5,000 -- -- $ 5,000
J. Brooks Reece....... $5,000 -- -- $ 5,000
</TABLE>
INVESTMENT ADVISERS AND INVESTMENT ADVISORY AGREEMENTS
Dessauer and Guinness Flight are investment managers of the Fund. Dessauer,
an investment adviser registered with the SEC, was founded in 1986 and as of
March 31, 1997 managed $195.0 million in both U.S. and international assets for
individuals. John P. Dessauer and Thomas P. McIntyre own 100% of the common
stock of Dessauer and therefore are "controlling persons" as defined by the 1940
Act.
Guinness Flight, also an investment adviser registered with the SEC, and
its former parent, Guinness Flight Global Asset Management Limited
(collectively, the "Guinness Flight Firm") trace their roots back to 1836.
Timothy Guinness and Howard Flight are joint managing directors of the Guinness
Flight Firm. As of March 31, 1997, the Guinness Flight Firm employed 237
professional staff worldwide with offices in London, Pasadena, Hong Kong and
Guernsey, and associated investments and joint ventures in Zurich, Montreal,
Madras and Mexico City. As of March 31, 1997, the Guinness Flight Firm managed
67 non-U.S. based investment funds, four U.S.-open-end funds ($417.4 million in
assets) and separate accounts for individual and institutional clients totalling
$4.3 billion in assets. Guinness Flight is a private company that is owned 100%
indirectly by the Bank of Yokohama, Hambros PLC and the management and employees
of Guinness Flight and Guinness Flight Hambro Asset Management Limited.
Pursuant to a transaction completed in May 1997, Guinness Flight Global
Asset Management Limited ("GFGAM"), Hambros PLC and Hambros Fund Management PLC
("HFM") were acquired by GFGAM (which was renamed Guinness Flight Hambro Asset
Management Limited) and further shares in GFGAM were acquired by Hambros PLC
from Guinness Mahon Holdings plc, the former parent of GFGAM ("Guinness Mahon")
and other shareholders of GFGAM. As a result of the transaction, Guinness Mahon
and Hambros PLC each own approximately 42.5% and Guinness Flight management owns
the remaining approximately 15% of Guinness Flight Hambro Asset Management
Limited. In addition, option schemes will be established for management which
could, when appropriate targets are met, increase management's ownership
percentage to approximately 30%. As a result of the transaction, Guinness Flight
Hambro Asset Management manages approximately $15 billion in international
assets.
The Fund has an asset allocation committee (consisting of two
representatives of Dessauer and one representative of Guinness Flight) that will
allocate Fund assets among the markets in which the Fund may invest. Dessauer
will be responsible for investment decisions related to North America and
Western Europe, and Guinness Flight will be responsible for managing the portion
of the Fund's assets allocated to Asia and Japan.
16
<PAGE> 20
ADVISORY AGREEMENTS. Pursuant to separate investment advisory agreements
(the "Advisory Agreements") with the Fund, Dessauer and Guinness Flight will
provide investment management and financial advisory services, including causing
the purchase and sale of securities in the Fund's portfolio at all times subject
to the policies set forth by the Board of Trustees. The Advisory Agreements
provide that Dessauer and Guinness Flight will identify and analyze possible
investments for the Fund, determine the amount and timing of such investments,
and determine the forms of investments. Dessauer and Guinness Flight each have
the responsibility of monitoring and reviewing the Fund's portfolio.
Under the terms of the Advisory Agreements, the Fund pays all of its
expenses (other than those expenses specifically assumed by Dessauer and
Guinness Flight) including the costs incurred in connection with its
registration under the Securities Act and the 1940 Act; printing of the
prospectus distributed to shareholders; taxes or governmental fees; brokerage
commissions; custodial, transfer and shareholder servicing agents; expenses of
outside counsel and independent accountants; preparation of shareholder reports;
and expenses of Trustee and shareholder meetings. Dessauer and Guinness Flight
may from time to time, subject to the Board of Trustees approval, contract with
other service providers to perform support services that aid in managing the
assets of the Fund.
The Fund's Advisory Agreements were approved initially by the Board of
Trustees (including the affirmative vote of all the Trustees who were not
parties to the Agreements or interested persons of any such party) on May ,
1997. Each Advisory Agreement may be terminated without penalty on 60 days'
written notice by a vote of the majority of the Fund's Board of Trustees or by
the respective investment adviser or by holders of a majority of the Fund's
outstanding shares. Each Advisory Agreement will continue for two years from its
effective date and from year to year thereafter, provided it is approved, at
least annually, in the manner stipulated in the 1940 Act. The 1940 Act requires
that the Advisory Agreements and any renewal thereof be approved by a vote of
the majority of the Fund's Trustees who are not parties thereto or interested
persons of any such party, cast in person at a meeting specifically called for
the purpose of voting on such approval.
Pursuant to the Advisory Agreements, the Fund will pay Dessauer a monthly
fee calculated at an annual rate of .60% of the Fund's average weekly net assets
and will pay Guinness Flight a monthly fee calculated at an annual rate of .40%
of the Fund's average weekly net assets. The Board of Trustees believes that
such fees are appropriate because of the complexity of managing funds that
invest in international securities. From time to time, Dessauer and/or Guinness
Flight may voluntarily agree to defer or waive fees or absorb some or all of the
expenses of the Fund. To the extent that they should do so, they may seek
repayment of such deferred fees and absorbed expenses after they discontinue
this practice. However, no repayment would be made if it would result in the
Fund's expense ratio exceeding 1.75% of net assets.
MANAGEMENT OF DESSAUER. John P. Dessauer and Thomas P. McIntyre are
principals of Dessauer and will manage the portion of the Fund's portfolio
advised by Dessauer. Mr. Dessauer has more than 25 years experience as an
investment professional. In the 1970s, Mr. Dessauer was a senior investment
officer in Europe for Citibank and was responsible for managing all of
Citibank's European money management services for four years. He later served as
a member of the investment policy committee of a German private bank in
Dusseldorf. Mr. Dessauer has experience in foreign currencies, international
stocks, and international bonds. He founded John Dessauer's Investor's World, an
investment newsletter, in order to bring professional, international money
management services within the reach of individual investors. John Dessauer's
Investor's World is a monthly investor newsletter specializing in international
investing with a circulation of approximately 84,000 as of March 31, 1997. Mr.
Dessauer also is a regular panelist on "Wall Street Week with Louis Rukeyser,"
and the author of two books on international investing, Passport to Profits and
International Strategies for American Investors.
Mr. McIntyre joined Dessauer in 1989 and became President in 1990. For two
years prior to joining Dessauer, he served as an assistant treasurer for the
National Association of Securities Dealers, Inc. and was responsible for their
$84 million fixed-income portfolio. He previously served as Vice President and
Controller
17
<PAGE> 21
for a $140 million closed-end equity fund. Mr. McIntyre graduated from Notre
Dame University (with high honors) in 1977 with a degree in economics and went
on to earn an M.B.A. from Notre Dame in 1979. Mr. McIntyre is a Certified Public
Accountant and a Chartered Financial Analyst with over 15 years experience in
financial analysis and portfolio management. Mr. McIntyre, together with Mr.
Dessauer, manage $195.0 million in both U.S. and international assets for
individuals.
MANAGEMENT AND KEY PERSONNEL OF GUINNESS FLIGHT. Timothy Guinness and
Howard Flight are principals of Guinness Flight. The portion of the Fund's
portfolio advised by Guinness Flight will be managed by Timothy Thomas, Richard
Farrell, Lynda Johnstone, Nerissa Lee, and Philip Whittome. Mr. Guinness
originally joined Guinness Mahon, a predecessor entity of Guinness Flight, in
1977 in the Corporate Finance Department, and later transferred to the
investment department, becoming Senior Investment Director in 1982. He served as
Fund Manager of both the Guinness Flight Global Equity Fund and United Kingdom
Equity Fund, which are foreign investment funds. In 1987, he became Joint
Managing Director of Guinness Flight.
Mr. Flight has been involved in asset management for over 25 years
throughout the world. He joined Guinness Mahon in 1979 as a director of the
investment department. In 1987, he became Joint Managing Director of Guinness
Flight. Presently, he is responsible for Guinness Flight's currency and fixed
income activities. Until its dissolution, he was a member of H.M. Treasury Tax
Consultative Committee.
Mr. Thomas joined Guinness Mahon in 1984 as an assistant manager in the
investment department. After leaving the organization to receive an M.B.A., he
re-joined Guinness Mahon in 1987 to specialize in international equity
investment. He manages the Guinness Flight Global Strategy Fund's Global Equity
Fund and the Guinness Flight International Accumulation Fund's International
Equity Fund, which are foreign investment funds. Mr. Thomas will be a member of
the asset allocation committee of the Fund.
Mr. Farrell joined Guinness Mahon in 1978. He specializes in Asian markets
and currently is the investment adviser to the Guinness Flight Global Strategy
Fund's Japan Fund, Japan & Pacific Fund, and Japan Smaller Companies Fund, all
of which are foreign investment funds. As the head of Guinness Flight's Asia
Equity Desk, Mr. Farrell has strategic input on all of Guinness Flight's Asia
Equity Funds. In addition, Mr. Farrell serves as the portfolio manager of the
Guinness Flight Asia Blue Chip Fund and co-manager of the Guinness Flight China
& Hong Kong Fund, which are U.S. registered open-end investment companies.
Ms. Johnstone joined Guinness Mahon in 1986 in the investment department as
a member of the Equity Team. Currently, she is responsible for running the
Guinness Flight Global Strategy Fund's Hong Kong Fund and ASEAN Fund, which are
foreign investment funds. Ms. Johnstone serves as the co-manager of the Guinness
Flight China & Hong Kong Fund, a U.S. registered open-end investment company.
Ms. Lee joined Guinness Flight's Hong Kong office in 1995 and specializes
in Asian markets. She has a degree in economics from Hong Kong University and 20
years of experience in Asian markets. She started in the research department of
the Hong Kong Stock Exchange and has been managing funds for eight years.
Currently, Ms. Lee manages the Guinness Flight Global Strategy Fund's Asian
Smaller Companies Fund and the Guinness Flight Select Fund's China Fund, which
are foreign investment funds. Ms. Lee also serves as the Manager of the Guinness
Flight Asia Small Cap Fund, which is a U.S. registered open-end investment
company.
Mr. Whittome joined Guinness Flight in 1996. He currently is a Japanese
equities analyst at Guinness Flight. Prior to joining Guinness Flight, he held
positions at IBJ International as a Senior Japanese Equity Analyst and at
Barings London in the Japanese and Korean Equity Capital Markets Department.
18
<PAGE> 22
ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND PAYING AGENT
ICAC will supervise administration of the Fund pursuant to an
administration agreement with the Fund. State Street will act as the Fund's
transfer agent and dividend paying agent. As of the date of this Prospectus,
ICAC acts as administrator of registered investment companies with total assets
of approximately $3.0 billion.
Under the administration agreement, ICAC will supervise the administration
of all aspects of the Fund's operations, including the Fund's receipt of
services for which the Fund is obligated to pay, provide the Fund with general
office facilities, and provide, at the Fund's expense, the services of persons
necessary to perform such supervisory, administrative, and clerical functions as
are needed to operate the Fund effectively. Those persons, as well as certain
employees and trustees of the Fund, may be directors, officers, or employees of
ICAC and its affiliates. For these services and facilities, the Fund has agreed
to pay ICAC a monthly fee at an annual rate of .25% of the average weekly net
assets of the Fund. ICAC has agreed to reduce its annual fee to a maximum of
.10% of the average weekly net assets of the Fund so long as the Fund remains a
closed-end investment company.
State Street, a registered transfer agent, will act as the Fund's transfer
agent and dividend disbursing agent. State Street will maintain an account for
each shareholder of the Fund (unless such accounts are maintained by subtransfer
agents or processing agents) and will perform other transfer agency and related
functions. For these services, State Street will receive an annual fee based on
the number of shareholder accounts or a minimum of $1,000 per month, plus
account charges and expenses. The Fund will also reimburse State Street for
certain expenses incurred on behalf of the Fund. State Street is authorized to
subcontract any or all of its functions to one or more qualified sub-transfer
agents, shareholder servicing agents or processing agents, who may be affiliates
of State Street, and who agree to comply with the terms of State Street's
agreement with the Fund.
CUSTODIAN
IB&T is custodian for the securities and cash of the Fund and will perform
portfolio accounting services for the Fund. IB&T will receive a fee for
custodial services computed and paid monthly at an annual rate based on a
percentage of the average weekly net assets of the Fund, which percentage varies
depending on the location of custody. IB&T will receive an annual fee of $50,000
for fund accounting and calculation of the Fund's net asset value. IB&T also
charges certain transaction-based fees.
EXPENSES
The Fund will bear the expenses of this offering, which are not expected to
exceed $ , including legal and accounting fees relating to its
organization, regulatory filing fees and the costs of preparing solicitation
materials. Organizational expenses will be capitalized and amortized over a
period of five years. In addition to the fees to be paid to the investment
advisers, administrator, transfer agent, dividend paying agent and custodian
discussed within this prospectus, the Fund will pay all other ongoing expenses,
including but not limited to legal fees, accounting fees for preparation of
financial statements and tax returns, annual audits, brokerage commissions,
transfer taxes and other clearing, settlement and transactional charges.
PRIOR PERFORMANCE OF THE INVESTMENT ADVISERS
The following tables set forth composite performance data relating to the
Fund based on accounts managed by each of the Investment Advisers that are
substantially similar to the Fund. The data are provided to illustrate the past
performance of the Investment Advisers in managing such substantially similar
accounts, as measured against specified market indices. In addition, the
Investment Advisers have provided information assuming their past performance
with respect to such accounts was subject to the Fund's projected expenses for
each individual calendar year and was subject to the Fund's sales and other
projected expenses for the one-year and multiple year periods. Investors should
not consider this performance data as an indication of future performance of the
Fund.
19
<PAGE> 23
All information in the tables relies on data supplied by the Investment
Advisers or from statistical services, reports or other sources believed by the
Investment Advisers to be reliable. Such information has not been independently
verified by the Fund. Each Investment Adviser has indicated that such results
are net of the investment advisory fees paid by such accounts and give effect to
all transaction costs as well as reinvestment of income and gains.
DESSAUER ASSET MANAGEMENT, INC.
Set forth below are certain performance data of the asset management
accounts managed by Dessauer. Dessauer has advised the Fund that its net
performance results in the table with respect to its accounts are the annual
rates of return for the composite of all fully discretionary accounts of
Dessauer from their first full month or quarter (as described in footnote(1)
below) under management, net of management fees. Dessauer has advised the Fund
that these accounts are managed under the same investment objective and
substantially similar policies and strategies as those of the Fund.
TOTAL RETURN FOR PERIODS ENDING DECEMBER 31
<TABLE>
<CAPTION>
DESSAUER ASSET
MANAGEMENT, DESSAUER ADJUSTED MORGAN STANLEY
INC.(1)(2) PERFORMANCE(3) WORLD INDEX(4)
-------------------- ------------------ ---------------
<S> <C> <C> <C>
1991.................. 51.9% 51.5% 16.0%
1992.................. 18.5 18.1 (7.1)
1993.................. (0.6) (1.0) 20.4
1994.................. (13.6) (14.0) 3.4
1995.................. 46.9 46.5 18.7
1996.................. 27.1 26.7 11.7
One-Year Period(5).... 27.1 20.4 11.7
Three-Year
Period(5)........... 17.3 14.9 11.1
Five-Year Period(5)... 13.7 12.1 8.9
From 1991(5).......... 19.3 17.9 10.1
</TABLE>
- ---------------
(1) General. The rates of return for the asset management accounts (the
"Accounts") managed by Dessauer include the rates of return on all Accounts
managed by Dessauer, which comprise one composite, for the period from
January 1, 1991 through December 31, 1996. Dessauer began asset management
services in January 1986. Rates of return are not presented for Accounts
managed by Dessauer prior to January 1, 1991, however, as the data for the
period from January 1986 through December 1990 are not sufficiently adequate
to accurately determine performance or whether they were managed in a
substantially similar manner to the Fund.
Calculations of the Accounts' rates of return. Dessauer utilizes a
time-weighted rate of return formula. For the singular years 1991 and 1992,
Dessauer calculated quarterly rates of return using the Dietz Method, which
assumes that all cash flows into a portfolio occur at the mid-point of the
quarter. For all singular years beginning in 1993, Dessauer calculated
quarterly rates of return (monthly rates of return beginning in 1994) using
the Modified Dietz Method, which weights each cash flow by the amount of
time it is held in the portfolio. The formula for the Modified Dietz Method
is:
RDIETZ = MVE -- MVB -- F/MVB + FW
For this formula, "MVE" means the market value of an account at the end of a
period; "MVB" means the market value of an account at the beginning of a
period; "F" means the sum of cash flows within a period; and "FW" means the
sum of each cash flow multiplied by its weight.
For the years ended December 31, 1991, 1992 and 1993 the composite quarterly
rate of return was calculated by adding each Account's quarterly rate of
return and dividing by the number of Accounts (equal weighting). For the
years ended December 31, 1994, 1995 and 1996, the composite monthly rate of
return was calculated by asset weighting each Account's monthly rate of
return based on its liquidation value to the composite's liquidation value.
For the years ended December 31, 1991, 1992 and 1993, the annual rate of
return was computed by linking the composite quarterly rates of return
through multiplication. For the years ended December 31, 1994, 1995 and
1996, the annual rate of return was computed by linking the composite
monthly rates of return through multiplication.
For each of the six years in the period ended December 31, 1996, the rates
of return are net of a management fee and are without a provision for
federal or state income tax effects. Additionally, the rates of return
include realized and unrealized gains and losses and the reinvestment of
dividends and interest. No sales load is included because Dessauer has not
historically charged up front fees.
(2) Dessauer performance figures provided by Dessauer Asset Management, Inc.
(3) The Dessauer performance figures have been restated in this column to show
what such performance figures would have been for the individual years
indicated if the projected expenses of the Fund had been applicable. In
addition, the One-, Three- and Five-Year
20
<PAGE> 24
and From 1991 periods are restated to show what such performance figures would
have been if the projected expenses of the Fund had been applicable and assumes
an average annual advisory fee of 1.35% was historically charged by Dessauer.
(4) Source: Bloomberg L.P. Index performance figures do not include the sales
load and other expenses.
(5) Annualized return for the period ended December 31, 1996. The annualized
return assumes a sales load of 5% charged at the beginning of the period.
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
Set forth below are certain performance data of Guinness Flight Global
Equity Fund, which is a non-U.S. based fund. Guinness Flight has advised the
Fund that the Guinness Flight Global Equity Fund is managed under the same
investment objective and substantially similar policies and strategies as those
of the Fund.
TOTAL RETURN FOR PERIODS ENDING DECEMBER 31
<TABLE>
<CAPTION>
GUINNESS FLIGHT GLOBAL
GUINNESS FLIGHT EQUITY FUND MORGAN STANLEY
GLOBAL EQUITY FUND(1) ADJUSTED PERFORMANCE(2) WORLD INDEX(3)
--------------------- ------------------------ ---------------
<S> <C> <C> <C>
1985(4).................. 49.7% 49.6% N/A
1986(4).................. 57.3 57.2 N/A
1987(4).................. 10.2 10.0 N/A
1988(4).................. 10.4 10.2 21.2%
1989(4).................. 25.8 25.5 14.7
1990(4).................. (5.2) (5.5) (18.6)
1991(4).................. 14.5 14.3 16.0
1992(4).................. 2.5 2.2 (7.1)
1993(4).................. 31.1 30.8 20.4
1994(4).................. 0.4 0.0 3.4
1995(4).................. 14.0 13.7 18.7
1996(4).................. 9.8 9.5 11.7
One-Year Period(5)(6).... 4.3 4.0 11.7
Three-Year
Period(5)(6)........... 6.1 5.7 11.1
Five-Year Period(5)(6)... 9.9 9.6 8.9
Ten-Year Period(5)(6).... 10.3 10.0 N/A
From Inception(5)(6)..... 16.6 16.4 N/A
Inception Date........... 1/25/85 1987
</TABLE>
- ---------------
(1) Guinness Flight Global Equity Fund performance figures provided by Guinness
Flight Investment Management Limited.
(2) The Guinness Flight Global Equity Fund performance figures have been
restated in this column to show what such performance figures would have
been for the individual years indicated if the projected expenses of the
Fund had been applicable. In addition, the One-, Three-, Five- and Ten-Year
and From Inception periods are restated to show what such performance
figures would have been if the 5% sales load and other projected expenses of
the Fund had been applicable.
(3) Source: Bloomberg L.P. Index performance figures do not include the sales
load and other expenses.
(4) Guinness Flight Global Equity Fund rates of return were calculated using the
mean net asset value, calculated in accordance with accounting standards of
the United Kingdom as reported in the Guinness Flight Global Equity Fund's
financial statements, which do not include a sales load.
(5) For the period ending December 31, 1996.
(6) Guinness Flight Global Equity Fund rates of return were calculated using the
mean net asset value as reported in the Guinness Flight Global Equity Fund's
financial statements and have been adjusted to include a 5% sales load.
The results presented above are not intended to predict or suggest the
return to be experienced by the Fund, or the return an individual investor might
achieve by investing in the Fund. Results may differ because of, among other
factors, differences in brokerage commissions, expenses (including investment
advisory fees), diversification of securities, timing of purchases and sales. In
addition, these results do not reflect the effects of federal, state or excise
taxes or 1940 Act investment restrictions applicable to registered investment
companies. Investors should not rely on the above performance data.
21
<PAGE> 25
USE OF PROCEEDS
The net proceeds to the Fund of the offering, estimated to be $
million, will be invested in accordance with the policies described above under
"The Fund and its Objective and Policies." Since the Fund expects to invest its
assets gradually to benefit from short-term fluctuations in the price of
securities the Fund is purchasing, the Fund expects that net proceeds will be
invested fully, consistent with its investment objective and policies, within
six months of the date of this Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Board of Trustees, decisions to buy and
sell securities for the Fund will be made by the Investment Advisers. The
Investment Advisers are authorized to allocate the orders placed by them on
behalf of the Fund to such brokers who also provide research or statistical
material, or other services to the Fund or the Investment Advisers for the
Fund's use. Such allocation shall be in such amounts and proportions as the
Investment Advisers shall determine and the Investment Advisers will report on
such allocations regularly to the Board of Trustees indicating the brokers to
whom such allocations have been made and the basis thereof. In addition, the
Investment Advisers may consider sales of shares of the Fund and of any other
funds advised or managed by the Investment Advisers as a factor in the selection
of unaffiliated brokers to execute portfolio transactions for the Fund, subject
to the requirements of best execution.
In selecting a broker to execute each particular transaction, the
Investment Advisers will take the following into consideration: the best net
price available; the reliability, integrity, and financial condition of the
broker; the size and difficulty in executing the order; and the value of the
expected contribution of the broker to the investment performance of the Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund in any transaction may be greater than that available from other brokers if
the difference is justified reasonably by other aspects of the portfolio
execution services offered. Subject to such policies and procedures as the Board
of Trustees may determine, neither Investment Adviser shall be deemed to have
acted unlawfully or to have breached any duty solely by reason of its having
caused the Fund to pay an unaffiliated broker that provides research services to
the Investment Advisers for the Fund's use a commission for effecting a
portfolio investment transaction in excess of the commission another broker
would have charged for effecting the same transaction. The Investment Adviser
must determine in good faith, however, that the commission was reasonable in
relation to the value of the research service provided by such broker with
respect to the particular transaction or the Investment Adviser's ongoing
responsibilities with respect to the Fund.
ALLOCATION OF INVESTMENTS
The Investment Advisers have other advisory clients, including individuals,
trusts, pensions, and profit sharing funds, that have investment objectives
similar to the Fund's investment objective. As such, there will be times when
the Investment Advisers may recommend purchases and/or sales of the same
portfolio securities for the Fund and their other clients. In such
circumstances, it will be the policy of the Investment Advisers to allocate
purchases and sales among the Fund and their other clients in a manner which the
Investment Advisers deem equitable, taking into consideration such factors as
size of account, concentration of holdings, investment objectives, tax status,
cash availability, purchase cost, holding period and other pertinent factors
relative to each account. Simultaneous transactions may have an adverse effect
upon the price or amount of a security purchased by the Fund.
22
<PAGE> 26
AUTOMATIC DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
All distributions to shareholders whose shares are registered in their own
names automatically will be reinvested in additional shares of the Fund pursuant
to the Fund's Automatic Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), unless they elect to receive cash. Shareholders whose shares are held
in the name of a broker or nominee should contact such broker or nominee to
determine whether or how they may participate in the Plan. Participation in the
Plan is voluntary and may be terminated or resumed at any time upon written
notice from the participant received by State Street, the plan agent (the "Plan
Agent"), prior to the record date of the next dividend. Additional information
regarding such election may be obtained from the Fund.
Dividend payments and other distributions to be made by the Fund to
participants in the Plan ("Plan Participants") either will be paid to the Plan
Agent in cash (which then must be used to purchase shares in the open market) or
will be represented by the delivery of shares, depending upon which of the two
options would be the most favorable to participants, as determined in accordance
with the procedures hereafter described. On each date the Fund determines the
net asset value of the shares (the "Valuation Date"), and which occurs not more
than five business days prior to a date fixed for payment of a dividend or other
distribution from the Fund, the Plan Agent will compare the determined net asset
value per share with the market price per share. For all purposes of the Plan,
"market price" shall be deemed to be the highest price bid at the close of the
NYSE or other primary exchange on which the Fund is traded on the date which
coincides with the relevant Valuation Date, or, if no bids were made on such
date, the next preceding day on which a bid was made. If the net asset value in
any such comparison is found to be lower than the market price, the Plan Agent
will demand that the Fund satisfy its obligation with respect to any such
dividend or other distribution by issuing additional shares to the Plan
Participants at a price per share equal to the greater of the determined net
asset value per share or 95% of the market price per share determined as of the
close of business on the relevant Valuation Date. However, if the net asset
value per share is higher than the market price per share, then the Plan Agent
will demand that the Fund satisfy its obligation with respect to any such
dividend or other distribution by a cash payment to the Plan Agent for the
account of Plan Participants. The Plan Agent then shall use such cash payment to
buy additional shares of the Fund in the "open market" for the account of the
Plan Participants; provided, however, that the Plan Agent shall not purchase
shares in the "open market" at a price in excess of the net asset value as of
the relevant Valuation Date. In the event the Plan Agent is unable to complete
its acquisition of shares to be purchased in the "open market" by the end of the
first trading day following receipt of the cash payment from the Fund, any
remaining funds shall be used by the Plan Agent to purchase newly issued Shares
from the Fund at the greater of the determined net asset value per share or 95%
of the market price per share as of the relevant Valuation Date or the next
preceding date.
Plan Participants will also have the option of making additional cash
payments to the Plan Agent, on a monthly basis, for investment in the Fund's
shares. Such payments may be made in any amount from a minimum of $50 to a
maximum of $1,000 per month per Plan Participant. The Fund may, in its
discretion, waive the maximum monthly limit with respect to any participant. At
the end of each calendar month, the Plan Agent will determine the amount of
funds accumulated in the Fund. Purchases made from the accumulation of payments
during any one calendar month will be made on or about the first business day of
the following month (the "Investment Date"). The funds will be used to purchase
Shares from the Fund. If the net asset value of the shares is lower than the
market price as of the Valuation Date which occurs not more than five business
days prior to the relevant Investment Date, such shares will be newly issued
shares and will be issued at a price per share equal to the greater of the
determined net asset value per share or 95% of the market price per share. If
the net asset value per share is higher than the market price per share, then
the Plan Agent shall use such cash payments to buy additional shares in the
"open market" for the account of the Plan Participants; provided, however, that
the Plan Agent shall not purchase shares in the "open market" at a price in
excess of the net asset value as of the relevant Valuation Date. In the event
that the Plan Agent is unable to
23
<PAGE> 27
complete its acquisition of shares to be purchased in the "open market" by the
end of the Investment Date, any remaining cash payments shall be used by the
Plan Agent to purchase newly issued Shares from the Fund at the greater of the
determined net asset value per share or 95% of the market price per share as of
the relevant Valuation Date. All cash payments received by the Plan Agent in
connection with the Plan will be held without earning interest. To avoid
unnecessary cash accumulations, and also to allow ample time for receipt and
processing by the Plan Agent, participants that wish to make voluntary cash
payments should send such payments to the Plan Agent in such a manner that
assures that the Plan Agent will receive and collect Federal Funds by the end of
the month. This procedure will avoid unnecessary accumulations of cash and will
enable participants to realize lower brokerage commissions and to avoid
additional transaction charges. If a voluntary cash payment is not received in
time to purchase shares in any calendar month, such payment shall be invested on
the next Investment Date. A participant may withdraw a voluntary cash payment by
written notice to the Plan Agent if the notice is received by the Plan Agent at
least 48 hours before such payment is to be invested by the Plan Agent.
State Street will perform bookkeeping and other administrative functions,
such as maintaining all shareholder accounts in the Plan and furnishing written
confirmation of all transactions in the account, including information needed by
shareholders for personal and tax records. Shares in the account of each Plan
Participant will be held by the Plan Agent in noncertificated form in the name
of the participant, and each shareholder's proxy will include those shares
purchased pursuant to the Plan and of record as of the record date for
determining those shareholders who are entitled to vote on any matter involving
the Fund. In case of shareholders who hold shares for others who are the
beneficial owners, such as banks, brokers, or nominees, the Plan Agent will
administer the Plan on the basis of the number of Shares certified from time to
time by such shareholders as representing and limited to the total number of
Shares registered in the shareholder's name and held for the account of
beneficial owners who have elected to participate in the Plan.
There are no special fees or charges to participants other than reasonable
transactions fees, which shall not exceed the lesser of % of the amount
reinvested or $ and a termination fee of up to $ .
With respect to purchases from voluntary cash payments, the Plan Agent will
charge $ , plus a pro rata share of the brokerage commissions, if any.
Brokerage charges for purchasing small blocks of stock for individual accounts
through the Plan are expected to be less than the usual brokerage charges for
such transactions, as the Plan Agent will purchase shares for all participants
in large blocks and prorate the commission rate.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income tax liability associated therewith.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any voluntary cash payment received and any dividend or distribution
to be paid subsequent to a date specified in a notice of the change sent to all
shareholders at least 90 days before such specified date. The Plan may also be
terminated on at least 90 days' written notice to all shareholders in the Plan.
24
<PAGE> 28
AUTOMATIC CONVERSION TO AN
OPEN-END INVESTMENT COMPANY
AUTOMATIC CONVERSION PROVISION
The Fund is the first closed-end investment company to contain an automatic
conversion feature. The Fund's conversion to an open-end investment company will
occur automatically upon the occurrence of the conditions described below
without requiring a vote of the shareholders of the Fund.
The Declaration of Trust provides that, beginning after 18 months from the
date of the initial public offering, the Fund will automatically convert into an
open-end investment company if its Shares close at a market price that is a 5%
or greater discount to the net asset value of the Fund on the last business day
of any week and for each of the next 14 business days thereafter. A business day
is any day that the NYSE is open. This provision may be amended only by the
affirmative vote of the holders at least 80% of the Fund's outstanding voting
securities.
Once the Automatic Conversion Provision is triggered, the Fund may not
continue to operate as a closed-end investment company even if the Fund ceases
to trade at a 5% or greater discount to the net asset value of the Fund. Within
one week thereafter, the Fund will file a registration statement with the SEC to
register as an open-end investment company. The disclosure concerning the Fund
contained in such registration statement will be substantially identical to the
disclosure contained in this offering document except for the provisions
concerning the purchase and sale of Shares and any other item pertaining to
open-end investment companies.
If the Fund converts to an open-end investment company, it will be able to
continuously issue and offer for sale Shares, and each such Share could be
presented to the Fund at the option of the holder for redemption at a price
based on the then-current net asset value per share. Further, Shares would no
longer be listed on the NYSE. After the conversion, Shares may be purchased from
and redeemed by the Fund at net asset value as follows.
PURCHASING SHARES
Investors will be permitted to purchase Shares from the Fund's transfer
agent or from other selected securities brokers or dealers following conversion
to an open-end investment company. A buyer whose purchase order is received by
the transfer agent before the close of trading on the NYSE, currently 4:00 p.m.
Eastern time, will acquire Shares at the net asset value determined as of that
day. A buyer whose purchase order is received by the transfer agent after the
close of trading on the NYSE will acquire Shares at the net asset value set as
of the next trading day. A broker may charge a transaction fee for the purchase.
The Fund anticipates that, should it convert to an open-end investment
company, the minimum initial investment in the Fund will be $2,500 for regular
accounts and $1,000 for tax-qualified retirement plans. The Fund anticipates
that the minimum additional investment in the Fund will be $1,000 for regular
accounts and $500 for tax-qualified retirement plans. The Fund may further
reduce or waive the minimums for certain retirement and other employee benefit
plans; for the Adviser's employees, clients and their affiliates; for advisers
or financial institutions offering investors a program of services; or any other
person or organization deemed appropriate by the Funds. Investors will be
permitted to purchase Shares by check or by wire. The Fund will provide a
pre-authorized investment plan to investors.
Upon conversion, the Fund may institute a distribution plan pursuant to
Rule 12b-1 of the 1940 Act. Pursuant to the Plan, the Fund would be permitted to
incur distribution expenses related to the sale of its shares of up to .25% per
annum of the Fund's average daily net assets. The Plan would provide that the
Fund may finance activities which are primarily intended to result in the sale
of the Fund's shares, including, but not limited to, advertising, printing of
prospectuses and reports for other than existing shareholders, preparation
25
<PAGE> 29
and distribution of advertising material and sales literature and payments to
dealers and shareholder servicing agents who enter into agreements with the Fund
or its distributor.
REDEEMING SHARES
Investors will be permitted to redeem Shares through the transfer agent of
the Fund or from other selected securities brokers or dealers following
conversion to an open-end investment company. A shareholder whose redemption
order is received by the Transfer Agent before the close of trading on the NYSE,
currently 4:00 p.m. Eastern time, will redeem Shares at the net asset value set
as of that day. A shareholder whose redemption order is received by the Transfer
Agent after the close of trading on the NYSE will redeem Shares at the net asset
value set as of the next trading day on the NYSE. A broker may charge a
transaction fee for the redemption.
SHARES OF BENEFICIAL INTEREST IN THE FUND
The Fund is a Delaware business trust that was created on June 28, 1996.
The Fund is authorized to issue 50 million shares of beneficial interest, par
value $.01 per share. Each Share has equal voting, dividend, distribution, and
liquidation rights. The Shares offered hereby, when issued and paid for pursuant
to the terms of this offering, will be fully paid and non-assessable. The Shares
are not redeemable and have no preemptive, conversion, or cumulative voting
rights.
The Fund's Declaration of Trust provides that under certain conditions the
affirmative vote of at least 75% of the outstanding voting stock is required:
(i) to voluntarily convert the Fund into an open-end investment company; (ii) to
approve any proposal to dissolve, merge, or consolidate the Fund; (iii) to sell
its assets; or (iv) to effect any amendment to the Declaration of Trust to
voluntarily make the Shares a redeemable security (as well as to amend any of
the foregoing provisions). These provisions and others in the Declaration of
Trust make it more difficult for a third party to obtain control of the Fund.
"Anti-takeover" provisions could have the effect of depriving stockholders of an
opportunity to sell their shares at a premium over prevailing market prices by
discouraging third parties from seeking to gain control in a tender offer, proxy
contest or similar transaction.
Under Delaware law, shareholders of the Fund are not held personally liable
for the obligations of the Fund. The Declaration of Trust of the Fund provides
that, to the fullest extent permitted by the law, no Trustee or officer of the
Fund will have any liability to the Fund or its stockholders for damages. The
Fund will indemnify and advance expenses to its Trustees or officers to the
fullest extent that indemnification is permitted by law.
The Declaration of Trust does not waive a Trustee's or officer's duty to
comply with the Securities Act or the 1940 Act or any rule, regulation, or order
thereunder. Further, the Declaration of Trust does not protect the officers and
Trustees against any liability to the Fund or its stockholders to which such
others or Trustees would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of their offices.
Shares entitle the holders to one vote per share. The shareholders have
certain rights, as set forth in the Bylaws of the Fund, to call a meeting for
any purpose, including the purpose of voting on removal of one or more Trustees.
TAXES
Under certain circumstances, the Fund may be in a position to (in which
case it would) elect to "pass-through" to its shareholders the right to a credit
or deduction for income or other creditable taxes paid by the Fund to foreign
governments.
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It is the Fund's policy to distribute to shareholders all of its investment
income (net of expenses) and any capital gains (net of capital losses) in
accordance with the requirements imposed by the Code. The Fund may, however,
subject to the review of the Board of Trustees, retain the net realized
long-term capital gains of the Fund. In such event, the taxes thereon would be
paid by the Fund and appropriate credit allowed to the shareholders of the Fund,
pursuant to Code section 852(b)(3)(D).
A statement setting forth the federal income tax status of all
distributions made (or deemed made) during the year will be sent to shareholders
promptly after the end of each year.
Qualification as a Regulated Investment Company
The Fund will elect to be taxed as a regulated investment company under
Subchapter M of the Code. As a regulated investment company, the Fund will not
be subject to federal income tax on the portion of its net investment income
(i.e., taxable interest, dividends, and other taxable ordinary income, net of
expenses) and capital gain net income (i.e., the excess of capital gains over
capital losses) that it distributes to shareholders, provided that it
distributes at least 90% of its investment company taxable income (i.e., net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year (the "Distribution Requirement"),
and satisfies certain other requirements of the Code that are described below.
Distributions by the Fund made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year, will be
considered distributions of income and gains of the taxable year and will
therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures, or
forward contracts) derived with respect to its business of investing in such
stock, securities, or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities, or foreign
currencies (or options, futures, or forward contracts thereon) held for less
than three months (the "Short-Short Gain Test"). Because of the Short-Short Gain
Test, the Fund may have to limit the sale of appreciated securities that it has
held for less than three months. However, the Short-Short Gain Test will not
prevent the Fund from disposing of investments at a loss, since the recognition
of a loss before the expiration of the three-month holding period is disregarded
for this purpose. Interest (including original issue discount) received by the
Fund at maturity or upon the disposition of a security held for less than three
months will not be treated as gross income derived from the sale or other
disposition of such security within the meaning of the Short-Short Gain Test.
However, income that is attributable to realized market appreciation will be
treated as gross income from such sale or other disposition of securities for
this purpose.
In general, gain or loss recognized by the Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Fund at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Fund held the debt obligation. In
addition, under the rules of Code section 988, gain or loss recognized as
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to extent attributable to changes in foreign
currency exchange rates) and gain or loss recognized on the disposition of a
forward foreign currency contract, futures contract, option or similar financial
investment, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code section 1256, will generally be
treated as ordinary income or loss.
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In general, for purposes of determining whether capital gain or loss
recognized by the Fund on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (1) the asset is
used to close a "short sale" (which includes for certain purposes the
acquisition of a put option) or is substantially identical to another asset so
used, (2) the asset is otherwise held by the Fund as part of a "straddle" (which
term generally excludes a situation where the asset is stock and the Fund grants
a qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto) or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto.
However, for purposes of the Short-Short Gain Test, the holding period of the
asset disposed of may be reduced only in the case of clause (1) above. In
addition, the Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by the Fund on the lapse of, or any gain or loss
recognized by the Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by the Fund will commence on the date it is written and end on the date it
lapses or the date a closing transaction is entered into. Accordingly, the Fund
may be limited in its ability to write options which expire within three months
and to enter into closing transactions at a gain within three months of the
writing of options.
Certain transactions that may be engaged in by the Fund (such as regulated
futures contracts and options on stock indexes and futures contracts) will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year, even though a taxpayer's obligations (or
rights) under such contracts have not terminated (by delivery, exercise,
entering into a closing transaction, or otherwise) as of such date. Any gain or
loss recognized as a consequence of the year-end deemed disposition of Section
1256 contracts is taken into account for the taxable year together with any
other gain or loss that was previously recognized upon the termination of
Section 1256 contracts during that taxable year. Any capital gain or loss for
the taxable year with respect to Section 1256 contracts (including any capital
gain or loss arising as a consequence of the year-end deemed sale of such
contracts) generally is treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. The Fund, however, may elect not to have this
special tax treatment apply to Section 1256 contracts that are part of a "mixed
straddle" with other investments of the Fund that are not Section 1256
contracts. Under Treasury Regulations, gains arising from Section 1256 contracts
will be treated for purposes of the Short-Short Gain Test as being derived from
securities held for not less than three months.
Treasury Regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) for any taxable
year, to elect (unless it has made a taxable year election for excise tax
purposes as discussed below) to treat all or any part of any net capital loss,
or any net long-term capital loss incurred after October 31 as if it had been
incurred in the succeeding year.
In addition to satisfying the requirements described above, the Fund must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which each of the
Fund has not invested more than 5% of the value of the Fund's total assets in
securities of such issuer and does not hold more than 10% of the outstanding
voting securities of such issuer), and no more than 25% of the value of its
total assets may be invested in the securities of any one issuer (other than
U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option.
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<PAGE> 32
If for any taxable year the Fund does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall reduce
its capital gain net income (but not below its net capital gain) by the amount
of any net ordinary loss for the calendar year.
The Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that the Fund may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Fund Distributions
The Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be taxable
to shareholders as ordinary income and treated as dividends for federal income
tax purposes. Such dividends paid by the Fund will qualify for the 70%
dividends-received deduction for corporate shareholders only to the extent
discussed below.
Ordinary income dividends paid by the Fund with respect to a taxable year
will qualify for the 70% dividends received deduction generally available to
corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by the Fund from domestic corporations for the taxable year.
A dividend received by the Fund will not be treated as a qualifying dividend (1)
if it has been received with respect to any share of stock that the Fund has
held for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose under the rules of Code Section 246(c)(3) and (4),
(i) any day more than 45 days (or 90 days in the case of certain preferred
stock) after the date on which the stock becomes ex-dividend and (ii) any period
during which the Fund has an option to sell, is under a contractual obligation
to sell, has made and not closed a short sale of, is the grantor of a
deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to such (or
substantially identical) stock; (2) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (3) to the
extent the stock on which the dividend is paid is treated as debt-financed under
the rules of Code Section 246A. Moreover, the dividends-received deduction for a
corporate shareholder may be disallowed or reduced (1) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Fund or (2) by application of Code Section 246(b) which in general
limits the dividends-received deduction to 70% of the shareholder's taxable
income (determined without regard to the dividends-received deduction and
certain other items).
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Alternative minimum tax ("AMT") is imposed in addition to, but only to the
extent it exceeds, the regular tax and is computed at a maximum marginal rate of
28% for noncorporate taxpayers and 20% for corporate taxpayers on the excess of
the taxpayer's alternative minimum taxable income ("AMTI") over an exemption
amount. For purposes of the corporate AMT, the corporate dividends-received
deduction is not itself an item of tax preference that must be added back to
taxable income or is otherwise disallowed in determining a corporation's AMTI.
However, corporate shareholders generally will be required to take the full
amount of any dividend received from the Fund into account (without a
dividends-received deduction) in determining their adjusted current earnings,
which are used in computing an additional corporate preference item (i.e., 75%
of the excess of a corporate taxpayer's adjusted current earnings over its AMTI
(determined without regard to this item and the AMT net operating loss
deduction)) includable in AMTI.
The Fund may either retain or distribute to shareholders its net capital
gain for each taxable year. The Fund currently intends to distribute any such
amounts. Net capital gain distributed and designated as a capital gain dividend
will be taxable to shareholders as long-term capital gain, regardless of the
length of time the shareholder has held his Shares or whether such gain was
recognized by the Fund prior to the date on which the shareholder acquired his
Shares. The Code provides, however, that under certain conditions only 50% of
the capital gain recognized upon the Fund's disposition of domestic "small
business" stock will be subject to tax.
Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such income.
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. If more than 50% of the value of the Fund's total assets at the close of
its taxable year consists of the stock or securities of foreign corporations,
the Fund may elect to "pass through" to the Fund's shareholders the amount of
foreign taxes paid by the Fund. If the Fund so elects, each shareholder would be
required to include in gross income, even though not actually received, its pro
rata share of the foreign taxes paid by the Fund, but would be treated as having
paid its pro rata share of such foreign taxes and would therefore be allowed to
either deduct such amount in computing taxable income or use such amount
(subject to various Code limitations) as a foreign tax credit against federal
income tax (but not both). For purposes of the foreign tax credit limitation
rules of the Code, each shareholder would treat as foreign source income its pro
rata share of such foreign taxes plus the portion of dividends received from the
Fund representing income derived from foreign sources. No deduction for foreign
taxes could be claimed by an individual shareholder who does not itemize
deductions.
Distributions by the Fund that do not constitute ordinary income dividends
or capital gain dividends will be treated as a return of capital to the extent
of (and in reduction of) the shareholder's tax basis in his Shares; any excess
will be treated as gain from the sale of his shares, as discussed below.
Distributions by the Fund will be treated in the manner described above
regardless of whether they are paid in cash or reinvested in additional Shares
of the Fund (or of another fund). Shareholders receiving a distribution in the
form of additional Shares will be treated as receiving a distribution in an
amount equal to the fair market value of the shares received, determined as of
the reinvestment date. In addition, if the net asset value at the time a
shareholder purchases shares of the Fund reflects undistributed net investment
income or recognized capital gain net income, or unrealized appreciation in the
value of the assets of the Fund, distributions of such amounts will be taxable
to the shareholder in the manner described above, although such distributions
economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November, or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Fund) on December 31 of
such calendar year if such dividends are actually
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<PAGE> 34
paid in January of the following year. Shareholders will be advised annually as
to the U.S. federal income tax consequences of distributions made (or deemed
made) during the year.
The Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
redemption proceeds, if any, paid to any shareholder (1) who has provided either
an incorrect tax identification number or no number at all, (2) who is subject
to backup withholding for failure to report the receipt of interest or dividend
income properly, or (3) who has failed to certify to the Fund that it is not
subject to backup withholding or that it is an "exempt recipient" (such as a
corporation).
Sale of Shares
A shareholder will recognize gain or loss on the sale of shares of the Fund
in an amount equal to the difference between the proceeds of the sale and the
shareholder's adjusted tax basis in the Shares. All or a portion of any loss so
recognized may be disallowed if the shareholder purchases other Shares of the
Fund within 30 days before or after the sale. In general, any gain or loss
arising from (or treated as arising from) the sale of Shares of the Fund will be
considered capital gain or loss and will be long-term capital gain or loss if
the Shares were held for longer than one year. However, any capital loss arising
from the sale of Shares held for six months or less will be treated as a
long-term capital loss to the extent of the amount of capital gain dividends
received on such Shares. For this purpose, the special holding period rules of
Code Section 246(c)(3) and (4) (discussed above in connection with the
dividends-received deduction for corporations) generally will apply in
determining the holding period of shares. Long-term capital gains of
noncorporate taxpayers are currently taxed at a maximum rate 11.6% lower than
the maximum rate applicable to ordinary income. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
The same rules will apply to redemptions of Fund Shares should the Fund
convert into an open-end investment company.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership ("foreign shareholder"), depends on whether the income from the Fund
is "effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, ordinary income dividends paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) upon the gross amount of the dividend. Such a foreign
shareholder generally would be exempt from U.S. federal income tax on gains
realized on the sale of shares of the Fund, capital gain dividends, and amounts
retained by the Fund that are designated as undistributed capital gains.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, the Fund may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of their
foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers
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<PAGE> 35
with respect to the particular tax consequences to them of an investment in the
Fund, including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect on
the date of this Prospectus. Future legislative or administrative changes or
court decisions may significantly change the conclusions expressed herein, and
any such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends and capital
gain dividends from regulated investment companies often differ from the rules
for U.S. federal income taxation described above. Shareholders are urged to
consult their tax advisers as to the consequences of these and other state and
local tax rules affecting investment in the Fund.
THE TAX DISCUSSION SET FORTH ABOVE IS A SUMMARY INCLUDED FOR GENERAL
INFORMATION PURPOSES ONLY. EACH SHAREHOLDER IS ADVISED TO CONSULT ITS OWN TAX
ADVISER WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO IT OF AN INVESTMENT IN
THE FUND, INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
THIS DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX PLANNING.
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UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, Wheat,
First Securities, Inc. (the "Underwriter") has agreed to purchase the 5,000,000
Shares offered hereby from the Fund, and the Fund has agreed to sell the
5,000,000 Shares offered hereby to the Underwriter.
The Underwriting Agreement provides that the obligations of the Underwriter
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriter's obligation is such
that it is committed to purchase and pay for all of the Shares if any are
purchased.
The Underwriter proposes to offer the Shares offered hereby initially at
the offering price set forth on the cover page of this Prospectus. The
Underwriter proposes to offer the Shares to certain securities dealers at such
price less a concession not in excess of $. per share. The Underwriter may
allow, and such selected dealers may reallow, a concession not in excess of
$. per share to certain brokers and dealers. After the offering, the price
to the public, concession, allowance and reallowance may be changed by the
Underwriter. The Underwriting Agreement provides that the Fund will pay the
Underwriter up to $ in partial reimbursement of its expenses.
The Fund has granted to the Underwriter an option, exercisable within 45
days of the date of this Prospectus, to purchase up to an additional 750,000
additional Shares to cover over-allotments, if any, at the same price per share
as the initial 5,000,000 Shares to be purchased by the Underwriter from the
Fund. To the extent that the Underwriter exercises this option, the Underwriter
will be committed, subject to certain conditions, to purchase such additional
Shares. The Underwriter may purchase such Shares only to cover over-allotments
made in connection with this offering.
Investors must pay for the Shares on the third business day following the
date of the final Prospectus. Investors should consult their brokers concerning
the manner and method of payment. In addition, physical delivery of certificates
representing Shares initially may be required to transfer ownership.
In connection with the requirements for listing of the Shares on the NYSE,
the Underwriter has undertaken to sell lots of 100 or more shares to a minimum
of 2,000 beneficial owners in the United States. The minimum investment
requirement is 100 Shares ($1,250).
The Fund anticipates that from time to time the Underwriter may act as
broker or dealer in connection with the execution of its portfolio transactions
after it has ceased to be an Underwriter and, subject to certain restrictions,
may act as broker while it is Underwriter.
The Fund has agreed not to issue, and all Trustees and executive officers
of the Fund have agreed not to resell, any additional Shares or other equity
securities of the Fund for 180 days after the date of this Prospectus without
the prior written consent of the Underwriter.
The Fund and the Investment Advisers have agreed to indemnify the
Underwriter against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriter may be required to
make in respect thereof.
NET ASSET VALUE
The net asset value of shares of the Fund will be determined no less
frequently than weekly, on the last business day of each week and at such other
times as the Fund's Board of Trustees may determine as of the close of regular
trading on the NYSE by dividing the value of the total assets of the Fund, less
all liabilities, by the total number of shares outstanding.
An exchange-traded equity security (not subject to resale restrictions) is
valued at its most recent sale price. Lacking any sales, the security is valued
at the calculated mean between the most recent bid quotation
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<PAGE> 37
and the most recent asked quotation (the "Calculated Mean"). If there are no bid
and asked quotations, the security is valued at the most recent bid quotation.
An unlisted equity security which is traded on the Nasdaq Stock Market or the
Nasdaq National Market is valued at the most recent sale price. If there are no
such sales, the security is valued at the high or "inside" bid quotation. The
value of an equity security not quoted on the Nasdaq Stock Market or the Nasdaq
National Market but traded in another over-the-counter market, is the most
recent sale price. If there are no such sales, the security is valued at the
Calculated Mean. If there is no Calculated Mean, the security is valued at the
most recent bid quotation.
GENERAL INFORMATION
ACCOUNTANTS
Ernst & Young LLP is the independent accountant of the Fund. Generally, the
independent accountant will audit the financial statements and the financial
highlights of the Fund, as well as provide reports to the Trustees.
LEGAL COUNSEL
Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New York
10022 is legal counsel of the Fund. In addition, Kramer Levin will provide
counsel to the Board of Trustees of the Fund.
Hunton & Williams, Riverfront Plaza, East Tower, 951 East Byrd Street,
Richmond, Virginia 23219-4047 is legal counsel to the Underwriter.
ADDITIONAL INFORMATION
The Fund has filed with the SEC a Registration Statement under the
Securities Act and the 1940 Act with respect to the Shares offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and its exhibits and schedules. For further information with respect
to the Fund and the Shares offered hereby, reference is made to the Registration
Statement, including the exhibits and schedules filed as part thereof.
Statements contained in this Prospectus as to the contents of any contract or
any other document are not necessarily complete, and, in each such instance,
reference is hereby made to the copy of the contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by this reference thereto. The Registration Statement, together
with its exhibits and schedules, may be inspected without change at the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
and the regional offices of the SEC located at 7 World Trade Center, Suite 1300,
New York, New York 10048 and at 500 West Madison Street, Suite 1400 Chicago,
Illinois 60661. Copies of all or any part of such materials may be obtained from
any such office upon payment of the fees prescribed by the SEC. Such information
may also be inspected and copied at the offices of the NYSE at 20 Broad Street,
New York, New York 10005. The SEC maintains an internet site at
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants, including the Fund, that file
electronically with the SEC.
FINANCIAL STATEMENTS
Shareholders receive reports at least semi-annually showing the Fund's
holdings and other information. In addition, shareholders receive financial
statements examined by the Fund's independent accountant.
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REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
The Dessauer Global Equity Fund
We have audited the accompanying statement of assets and liabilities of The
Dessauer Global Equity Fund (the "Fund") as of May 23, 1997. This financial
statement is the responsibility of the Fund's management. Our responsibility is
to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Fund at
May 23, 1997 in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Los Angeles, California
May 23, 1997
35
<PAGE> 39
THE DESSAUER GLOBAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 23, 1997
<TABLE>
<S> <C>
ASSETS
Assets:
Cash............................................................................ $100,000
Deferred offering costs......................................................... 330,000
Deferred organization expenses (Note 1)......................................... 170,000
---------
Total Assets............................................................ 600,000
Liabilities:
Due to advisers (Note 3)........................................................ 330,000
Organization expenses payable................................................... 170,000
---------
Total Liabilities....................................................... 500,000
---------
Commitments (Note 2)
Net Assets........................................................................ $100,000
========
Represented by:
Common Stock, $.01 par value, authorized 50,000,000 shares;
8,418 shares issued and outstanding.......................................... 84
Paid-in Surplus................................................................. 99,916
---------
$100,000
========
Net Asset Value per share......................................................... $11.88
========
Maximum Offering Price per share ($11.88/0.95).................................... $12.50
========
</TABLE>
NOTE 1. ORGANIZATION:
The Dessauer Global Equity Fund (the "Fund") was organized in Delaware on
June 28, 1996 and is registered with the Securities and Exchange Commission as a
non-diversified closed-end management investment company under the Investment
Company Act of 1940, as amended. The objective of the Fund is long-term capital
appreciation in the global economy. The Fund has no operations other than the
issue of shares of its common stock on May 23, 1997 to Dessauer Asset
Management, Inc. and Guinness Flight Investment Management Limited. As of May
23, 1997, the Fund is preparing for the registration and offering of 5,750,000
shares of its common stock at $12.50 per share.
Organization costs estimated at $170,000 will be deferred and amortized on
a straight-line basis over a 60-month period from the date the Fund commences
operations. In the event that any of the initial shares of the Fund are redeemed
during the amortization period by any holder thereof, the redemption proceeds
will be reduced by any unamortized organization costs in the same proportion as
the number of such shares being redeemed bears to the number of initial shares
that are outstanding at the time of the redemption. Deferred offering costs will
be charged against the proceeds of the offering upon its successful closing or
will be expensed otherwise.
NOTE 2. AGREEMENTS:
The Fund intends to enter into investment advisory agreements with Dessauer
Asset Management, Inc. ("Dessauer") and Guinness Flight Investment Management
Limited ("Guinness Flight") (together, the "Investment Advisers") pursuant to
which the Investment Advisers will be responsible for providing
36
<PAGE> 40
investment advisory services to the Fund (the "Advisory Agreements"). For
services under the Investment Advisory Agreements, the Fund will pay Dessauer a
monthly fee at an annual rate of .60% of the average weekly net asset value of
the Fund and will pay Guinness Flight a monthly fee at an annual rate of .40% of
the average weekly net asset value of the Fund.
The Fund intends to enter into an administrative agreement with Investment
Company Administration Corporation (the "Administrator") pursuant to which the
Administrator will provide the Fund with certain administrative services. For
its services, the Administrator will receive a monthly fee at an annual rate of
.25% of the average weekly net asset value of the Fund. The Administrator has
agreed to an annual rate of .10% instead of the .25% as long as the Fund is a
closed-end investment company. Certain employees of the Administrator are
officers of the Fund.
The Fund also intends to enter into a custody agreement with Investors Bank
and Trust Company (the "Custodian") pursuant to which the Custodian will provide
the Fund with custody services for the Fund's assets. The custody agreement
provides for an annual fee of $50,000 for accounting services plus a fee for
custodial services computed and paid monthly at an annual rate based on the
amount of assets under custody, plus transactional fees.
NOTE 3. RELATED PARTY TRANSACTIONS:
As of May 23, 1997, all of the Fund's issued and outstanding shares are
owned by Dessauer Asset Management, Inc. and Guinness Flight Investment Limited.
Certain officers of Dessauer and Guinness Flight are also officers and
trustees of the Fund.
Certain costs of the offering and organizational expenses were paid by the
Investment Advisers on behalf of the Fund. These amounts are reflected on the
Statement of Assets and Liabilities as Due to the Investment Advisers.
37
<PAGE> 41
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 6
Summary of the Fund's Expenses...... 8
Investment Rationale................ 9
The Fund and Its Objective and
Policies ......................... 9
Risk Factors........................ 11
Management of the Fund.............. 15
Prior Performance of the Investment
Advisers.......................... 19
Use of Proceeds..................... 22
Portfolio Transactions and
Brokerage......................... 22
Allocation of Investments........... 22
Automatic Dividend Reinvestment and
Cash Purchase Plan................ 23
Automatic Conversion to an Open-End
Investment Company................ 25
Shares of Beneficial Interest in the
Fund ............................. 26
Taxes............................... 26
Underwriting........................ 33
Net Asset Value..................... 33
General Information................. 34
Additional Information.............. 34
Financial Statements................ 34
Report of Independent Auditors...... 35
Statement of Assets and
Liabilities....................... 36
</TABLE>
------------------------
Until , 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions
in the Shares, whether or not participating in this distribution, may be
required to deliver a Prospectus. This is in addition to the obligation of
dealers to deliver a Prospectus when acting as Underwriter and with respect to
their unsold allotments or subscriptions.
5,000,000 SHARES
THE DESSAUER
GLOBAL EQUITY FUND
SHARES OF
BENEFICIAL INTEREST
------------------------
PROSPECTUS
------------------------
WHEAT FIRST BUTCHER SINGER
, 1997
<PAGE> 42
PART B
STATEMENT OF ADDITIONAL INFORMATION
The information required by Part B of Form N-2 has been incorporated into
the Prospectus under Part A.
<PAGE> 43
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a)FINANCIAL STATEMENTS.
In Part A:
Report of Independent Auditors.
Statement of Assets and Liabilities.
In Part B:
Not Applicable.
In Part C:
None.
(b) EXHIBITS.
<TABLE>
<S> <C>
EX-99.2A Certificate of Trust of Registrant filed as Exhibit 99.2A to
Registrant's Registration Statement on Form N-2 filed
electronically on July 3, 1996 (accession number
0000922423-96-000307) and incorporated herein by reference.
EX-99.2B(1) Delaware Trust Instrument dated June 27, 1996, as revised May
23, 1997, is filed herewith.
EX-99.2B(2) By-laws adopted June 27, 1996 are filed herewith.
EX-99.2C Not Applicable.
EX-99.2D Specimen Share Certificate filed herewith.
EX-99.2E Automatic Dividend Reinvestment and Cash Purchase Plan filed
herewith.
EX-99.2F Not Applicable.
EX-99.2G(1) Investment Advisory Agreement between the Registrant and
Guinness Flight Investment Management Limited is filed
herewith.
EX-99.2G(2) Investment Advisory Agreement between the Registrant and
Dessauer Asset Management, Inc. is filed herewith.
EX-99.2H Underwriting Agreement between the Registrant, Dessauer Asset
Management, Inc., Guinness Flight Investment Management
Limited and Wheat, First Securities Inc. is filed herewith.
EX-99.2I Not Applicable.
EX-99.2J Form of Custodian Agreement between the Registrant and
Investors Bank and Trust Company is filed herewith.
EX-99.2K(1) Form of Administration Agreement by and between the
Registrant and Investment Company Administration Corporation.
EX-99.2K(2) Form of Registrar, Transfer Agency and Service Agreement by
and between the Registrant and State Street Bank and Trust
Company.
EX-99.2L Opinion of Kramer, Levin, Naftalis & Frankel filed herewith.
EX-99.2M Not Applicable.
</TABLE>
<PAGE> 44
<TABLE>
<S> <C>
EX-99.2N(1) Consent of Kramer, Levin, Naftalis & Frankel filed herewith.
EX-99.2N(2) Consent of Ernst & Young filed herewith.
EX-99.2O Not Applicable.
EX-99.2P(1) Agreement between the Registrant and Dessauer Asset
Management, Inc. dated May 23, 1997 in consideration for
providing the initial capital is filed herewith.
EX-99.2P(2) Agreement between the Registrant and Guinness Flight
Investment Management Limited dated May 23, 1997 in
consideration for providing the initial capital is filed
herewith.
EX-99.2Q Not Applicable.
EX-99.2R Not Applicable.
</TABLE>
ITEM 25. MARKETING ARRANGEMENTS
None.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC Registration Fees............................................. $ 23,925
NASD Fees and Fees and Expenses of Qualification under State
Securities Laws................................................. 9,688
New York Stock Exchange Listing Fee............................... 91,600
Printing.......................................................... 104,590
Legal Fees and Expenses........................................... 16,000
Accounting Fees and Expenses...................................... 15,000
Marketing Expenses................................................ 100,000
Miscellaneous..................................................... 10,000
========
Total................................................... $370,803
</TABLE>
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
TITLE OF CLASS; SHARES NUMBER OF RECORD HOLDERS
($.01 PAR VALUE PER SHARE) AS OF MAY 23, 1997
--------------------------------------------------------------------
<S> <C>
THE DESSAUER GLOBAL EQUITY FUND 2
</TABLE>
ITEM 29. INDEMNIFICATION
(a) Subject to the exceptions and limitations contained in section (b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified
by the Trust to the fullest extent permitted by law against
C-2
<PAGE> 45
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and
the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office
or (B) not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or other
body approving the settlement; (B) by at least a majority of those Trustees
who are neither Interested Persons of the Trust nor are parties to the
matter based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or (C) by written opinion of independent legal counsel
based upon a review of readily available facts (as opposed to a full
trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
section (a) may be paid by the Trust or Series from time to time prior to final
disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Trust or Series
if it is ultimately determined that he is not entitled to indemnification;
provided, however, that either (i) such Covered Person shall have provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe that
such Covered Person will be found entitled to indemnification.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Dessauer Asset Management, Inc. and its affiliates provide management
services to the Registrant and individual client accounts. To the best of the
Registrant's knowledge, the directors and officers of Dessauer Asset Management,
Inc. have not held at any time during the past two fiscal years or been engaged
for their own account or in the capacity of director, officer, employee, partner
or trustee in any other businesses, professions, vocations or employment.
C-3
<PAGE> 46
Guinness Flight Investment Management Limited and its affiliates provide
management services to the Registrant, the Guinness Flight Investments Funds,
off-shore funds and separate accounts. To the best of the Registrant's
knowledge, the directors and officers of Guinness Flight Investment Management
Limited have not held at any time during the past two fiscal years or been
engaged for their own account or in the capacity of director, officer, employee,
partner or trustee in any other businesses, professions, vocations or
employment.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books or other documents required to be maintained by Section
31(a) of the 1940 Act and the rules promulgated thereunder are maintained by
Investment Company Administration Corporation, 2025 East Financial Way, Suite
101, Glendora, CA 91741, except for those maintained by the Fund's Custodian.
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(1) The Registrant undertakes to suspend the offering of shares until the
prospectus is amended if (1) subsequent to the effective date of its
registration statement, the net asset value declines more than ten percent from
its net asset value as of the effective date of the registration statement or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.
(2) Not applicable.
(3) Not applicable.
(4) Not applicable.
(5) Not applicable.
(6) The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two business days of receipt
of a written or oral request, any Statement of Additional Information.
(7) The Registrant undertakes that for the purpose of determining any
liability under the 1933 Act, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant under Rule
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(8) The Registrant undertakes that for the purpose of determining any
liability under the 1933 Act, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering thereof.
C-4
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 2 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto authorized, in the City of New York, and
State of New York, on the 23rd day of May, 1997.
THE DESSAUER GLOBAL EQUITY FUND
By: /s/ THOMAS P. MCINTYRE
------------------------------------
Thomas P. McIntyre, President
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------- -------------
<S> <C> <C>
/s/ JOHN P. DESSAUER Trustee May 23, 1997
- ---------------------------------------------
John P. Dessauer
/s/ THOMAS P. MCINTYRE Trustee May 23, 1997
- ---------------------------------------------
Thomas P. McIntyre
/s/ JAMES. J. ATKINSON, JR. Trustee May 23, 1997
- ---------------------------------------------
James J. Atkinson, Jr.
/s/ MAX A. FISCHER Trustee May 23, 1997
- ---------------------------------------------
Max A. Fischer
/s/ INGRID R. HENDERSHOT Trustee May 23, 1997
- ---------------------------------------------
Ingrid R. Hendershot
/s/ GEOFFREY O. LUBBOCK Trustee May 23, 1997
- ---------------------------------------------
Geoffrey O. Lubbock
/s/ KEVIN MEDICK Trustee May 23, 1997
- ---------------------------------------------
Kevin Medick
/s/ J. BROOKS REECE, JR. Trustee May 23, 1997
- ---------------------------------------------
J. Brooks Reece, Jr.
</TABLE>
C-5
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<S> <C>
EX-99.2B(1) Delaware Trust Instrument
EX-99.2B(2) By-Laws
EX-99.2D Specimen Share Certificate
EX-99.2E Automatic Dividend Reinvestment and Cash Purchase Plan
EX-99.2G(1) Investment Advisory Agreement between the Registrant and Guinness Flight
Investment Management Limited
EX-99.2G(2) Investment Advisory Agreement between the Registrant and Dessauer Asset
Management, Inc.
EX-99.2H Underwriting Agreement
EX-99.2J Form of Custodian Agreement
EX-99.2K(1) Form of Administration Agreement by and between the Registrant and
Investment Company Administration Corporation
EX-99.2K(2) Form of Registrar, Transfer Agency and Service Agreement by and between the
Registrant and State Street Bank and Trust Company.
EX-99.2L Opinion of Kramer, Levin, Naftalis & Frankel
EX-99.2N(1) Consent of Kramer, Levin, Naftalis & Frankel
EX-99.2N(2) Consent of Ernst & Young LLP
EX-99.2P(1) Agreement between the Registrant and Guinness Flight Investment Management
Limited for providing the initial capital
EX-99.2P(2) Agreement between the Registrant and Dessauer Asset Management, Inc. for
providing the initial capital
</TABLE>
<PAGE> 1
EXHIBIT 99.2B(1)
THE DESSAUER GLOBAL EQUITY FUND
TRUST INSTRUMENT
DATED JUNE 27, 1996
AS AMENDED MAY 23, 1997
<PAGE> 2
THE DESSAUER GLOBAL EQUITY FUND
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
NAME AND DEFINITION
Section 1.01 Name........................................................ 1
Section 1.02 Definitions................................................. 1
ARTICLE 11
BENEFICIAL INTEREST............................................................. 2
Section 2.01 Shares of Beneficial Interest............................... 2
Section 2.02 Rights of Shareholders...................................... 2
Section 2.03 Issuance of Shares.......................................... 2
Section 2.04 Register of Shares and Share Certificates................... 3
Section 2.05 Transfer of Shares.......................................... 3
Section 2.06 Treasury Shares............................................. 3
Section 2.07 Investment in the Trust..................................... 3
Section 2.08 Notices..................................................... 3
Section 2.09 Inspection of Records....................................... 4
Section 2.10 No Personal Liability of Shareholder........................ 4
Section 2.11 Assent to Trust Instrument.................................. 4
ARTICLE III
THE TRUSTEES.................................................................... 4
Section 3.01 Management of the Trust..................................... 4
Section 3.02 Initial Trustees............................................ 5
Section 3.03 Term of Office.............................................. 5
Section 3.04 Vacancies and Appointments.................................. 5
Section 3.05 Temporary Absence........................................... 6
Section 3.06 Number of Trustees.......................................... 6
Section 3.07 Effect of Ending of a Trustee's Service..................... 6
Section 3.08 Ownership of Assets of the Trust............................ 6
ARTICLE IV
POWERS OF THE TRUSTEES.......................................................... 6
Section 4.01 Powers...................................................... 6
Section 4.02 Issuance and Repurchase of Shares........................... 9
Section 4.03 Trustees and Officers as Shareholders....................... 9
Section 4.04 Action by the Trustees...................................... 9
Section 4.05 Chairman of the Trustees.................................... 10
Section 4.06 Principal Transactions...................................... 10
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V
EXPENSES OF THE TRUST........................................................... 10
ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT................................................ 11
Section 6.01 Investment Adviser.......................................... 11
Section 6.02 Principal Underwriter....................................... 11
Section 6.03 Administration.............................................. 11
Section 6.04 Transfer Agent.............................................. 12
Section 6.05 Parties to Contract......................................... 12
Section 6.06 Provisions and Amendments................................... 12
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS........................................ 12
Section 7.01 Voting Powers............................................... 12
Section 7.02 Meetings.................................................... 13
Section 7.03 Quorum and Required Vote.................................... 13
ARTICLE VIII
CUSTODIAN....................................................................... 14
Section 8.01 Appointment and Duties...................................... 14
Section 8.02 Central Certificate System.................................. 14
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS................................................... 15
Section 9.01 Distributions............................................... 15
Section 9.02 Net Asset Value............................................. 15
Section 9.03 Determination of Net Income................................. 15
Section 9.04 Power to Modify Foregoing Procedures........................ 16
Section 9.05 Suspension of the Right of Redemption....................... 16
Section 9.06 Redemption of Shares in Order to Qualify as Regulated
Investment Company................................................. 16
Section 9.07 Redemption of Small Accounts................................ 16
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION..................................... 17
Section 10.01 Limitation of Liability..................................... 17
Section 10.02 Indemnification............................................. 17
Section 10.03 Shareholders................................................ 18
ARTICLE XI
MISCELLANEOUS............................................................. 18
Section 11.01 Trust Not A Partnership..................................... 18
Section 11.02 Trustee's Good Faith Action, Expert Advice, No Bond or
Surety............................................................ 19
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 11.03 Establishment of Record Dates............................... 19
Section 11.04 Termination of Trust........................................ 19
Section 11.05 Reorganization.............................................. 20
Section 11.06 Conversion.................................................. 20
Section 11.07 Filing of Copies, References, Headings...................... 21
Section 11.08 Applicable Law.............................................. 21
Section 11.09 Amendments.................................................. 21
Section 11.10 Fiscal Year................................................. 22
Section 11.11 Provisions in Conflict With Law............................. 22
</TABLE>
iii
<PAGE> 5
THE DESSAUER GLOBAL EQUITY Trust
June 27, 1996
TRUST INSTRUMENT, made by Susan Penry-Williams and Louis S. Citron (the
"Trustees").
WHEREAS, the Trustees desire to establish a Delaware business trust for
the investment and reinvestment of funds contributed thereto;
WHEREAS, the Trustees intend that this Trust Instrument shall be the
governing instrument of the Trust;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITION
SECTION 1.01 NAME. The name of the trust created hereby is "The Dessauer
Global Equity Trust."
SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time. Whenever reference is made hereunder to the 1940 Act, such
references shall be interpreted as including any applicable order or orders of
the Commission or any rules or regulations adopted by the Commission thereunder
or interpretive releases of the Commission staff;
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustees, as
amended from time to time;
(c) "Commission" has the meaning given it in the 1940 Act. In addition,
"Affiliated Person," "Interested Person" and "Principal Underwriter" shall have
the respective meanings given them in the 1940 Act;
(d) "Delaware Act" means the Delaware Business Trust Act, Chapter 38 of
Title 12 of the Delaware Code, as amended from time to time;
(e) "Net Asset Value" means the net asset value of each Series of the
Trust determined in the manner provided in Article IX, Section 9.02 hereof;
(f) "Outstanding Shares" means those Shares shown from time to time in the
books of the Trust or its transfer agent as then issued and outstanding, but
shall not include Shares
1
<PAGE> 6
which have been redeemed or repurchased by the Trust and which are at the time
held in the treasury of the Trust;
(g) "Shareholder" means a record owner of Outstanding Shares of the Trust;
(h) "Shares" means the equal proportionate transferable units into which
the beneficial interest of the Trust shall be divided, which may include
fractions of Shares as well as whole Shares;
(i) The "Trust" means The Dessauer Global Equity Trust, a Delaware
business trust;
(j) The "Trustees" means the person or persons who has or have signed this
Trust Instrument so long as he or they shall continue in office in accordance
with the terms hereof and all other persons who may from time to time be duly
qualified and serving as Trustees in accordance with the provisions of Article
III hereof, and reference herein to a Trustee or to the Trustees shall refer to
the individual Trustees in their respective capacity as Trustees hereunder;
(k) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust.
(l) "Fundamental Policies" shall mean the investment policies and
restrictions set forth in the Registration Statement and designated as
fundamental policies therein.
(m) Investment Adviser means any party, other than the Trust, to a
contract described in Section 4.1 hereof.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The interest of the
beneficiaries hereunder shall be divided into transferable shares of beneficial
interest, par value $0.01 per share. The number of such shares of beneficial
interest authorized hereunder is 50 million. All Shares issued hereunder,
including Shares issued in connection with a dividend in Shares or a split in
Shares, shall be fully paid and nonassessable.
SECTION 2.02 RIGHTS OF SHAREHOLDERS. The ownership of the Trust Property
of every description and the right to conduct any business herein before
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Trust nor can they be called
upon to assume any losses of the Trust or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights in the Trust Instrument specifically set forth. The
Shares shall not entitle the holder to preference, preemptive, appraisal,
conversion or exchange rights.
2
<PAGE> 7
SECTION 2.03 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time, without a vote of the Shareholders, issue Shares, in addition
to the then issued and outstanding Shares and Shares held in the treasury, to
such party or parties and for such amount and type of consideration, subject to
applicable law, including cash or securities, at such time or times and on such
terms as the Trustees may deem appropriate, and may in such manner acquire other
assets (including the acquisition of assets subject to, and in connection with,
the assumption of liabilities) and businesses. In connection with any issuance
of Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1000th of a Share or integral
multiples thereof. The Trustees or any person the Trustees may authorize for the
purpose may, in their discretion, reject any application for the issuance of
shares.
SECTION 2.04 REGISTER OF SHARES AND SHARE CERTIFICATES. A register shall
be kept at the principal office of the Trust or an office of the Trust's
transfer agent which shall contain the names and addresses of the Shareholders,
the number of Shares (or any class or classes thereof) held by them respectively
and a record of all transfers thereof. No share certificates shall be issued by
the Trust except as the Trustees may otherwise authorize, and the persons
indicated as shareholders in such register shall be entitled to receive
dividends or other distributions or otherwise to exercise or enjoy the rights of
Shareholders. No Shareholder shall be entitled to receive payment of any
dividend or other distribution, nor to have notice given to him as herein or in
the Bylaws provided, until he has given his address to the transfer agent or
such officer or other agent of the Trustees as shall keep the said register for
entry thereon.
SECTION 2.05 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by his agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Trust's transfer agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees.
Upon such delivery the transfer shall be recorded on the register of the Trust,
Until such record is made, the Shareholder of record shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any transfer agent or registrar nor any officer, employee or
agent of the Trust shall be affected by any notice of the proposed transfer.
SECTION 2.06 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.03 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any dividends or other
distributions declared with respect to the Shares. The Trustees shall have the
power, without a vote of Shareholders, to retire or cancel Treasury Shares of
the Trust.
SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in the Trust from such persons and on such terms as they may from
time to time authorize. investments in the Trust shall be credited to each
Shareholder's account in the form of full and fractional Shares at the net asset
value per Share next determined after the investment is received or accepted as
may be determined by the Trustees; provided, however, that the Trustees may,
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in their sole discretion, (a) fix minimum amounts for initial and subsequent
investments or (b) impose a sales charge upon investments in such manner and at
such time determined by the Trustees.
SECTION 2.08 NOTICES. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust. Annual reports and proxy
statements need not be sent to a shareholder if: (i) an annual report and proxy
statement for two consecutive annual meetings, or (ii) all, and at least two,
checks (if sent by first class mail) in payment of dividends or interest and
shares during a twelve month period have been mailed to such shareholder's
address and have been returned undelivered. However, delivery of such annual
reports and proxy statements shall resume once a Shareholder's current address
is determined.
SECTION 2.09 INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
a Delaware business corporation under the Delaware General Corporation Law.
SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. No Shareholder shall be
personally liable for the debts, liabilities, obligation and expenses incurred
by, contracted for, or otherwise existing with respect to, the Trust or by or on
behalf of any Series. The Trustees shall have no power to bind any Shareholder
personally or to call upon any Shareholder for the payment of any sum of money
or assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay by way of subscription for any Shares or otherwise.
Every note, bond, contract or other understanding issued by or on behalf of the
Trust or the Trustees relating to the Trust or to a Series shall include a
recitation limiting the obligation represented thereby to the Trust or to one or
more Series and its or their assets (but the omission of such a recitation shall
not operate to bind any Shareholder or Trustee of the Trust).
SECTION 2.11 ASSENT TO TRUST INSTRUMENT. Every Shareholder, by virtue of
having purchased a Share shall become a Shareholder and shall be held to have
expressly assented and agreed to be bound by the terms hereof.
ARTICLE III
THE TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Trust Instrument. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices both within and without the State of Delaware, in any and
all states of the United States of America, in the District of Columbia, in any
and all commonwealths, territories, dependencies, colonies, or possessions of
the United States of America, and in any foreign jurisdiction and to do all such
other things and execute all such
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instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Trust Instrument, the presumption shall be in favor of a grant of power to
the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III and except as otherwise provided in
Section 3.02 of this Article III, the Trustees shall be elected by the
Shareholders owning of record a plurality of the Shares voting at a meeting of
Shareholders. Any Shareholder meeting held for such purpose shall be held on a
date fixed by the Trustees. In the event that less than a majority of the
Trustees holding office have been elected by Shareholders, the Trustees then in
office will call a Shareholders' meeting for the election of Trustees in
accordance with the provisions of the 1940 Act.
SECTION 3.02 INITIAL TRUSTEES. The initial Trustees shall be the persons
named herein. The initial Trustees shall appoint additional or substitute
Trustees at an organizational meeting of Trustees. Thereafter, Trustees shall be
appointed or elected as provided in Sections 3.01 and 3.04 of this Article III.
SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
refired or who has died, become physically or mentally incapacitated by reason
of illness or otherwise, or is otherwise unable to serve, may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) that a Trustee may be removed at any meeting of
the Shareholders of the Trust by a vote of Shareholders owning at least
two-thirds of the Outstanding Shares of the Trust.
SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of a Trustee's
declination to serve, death, resignation, retirement, removal, physical or
mental incapacity by reason of illness, disease or otherwise, or if a Trustee is
otherwise unable to serve, or if there is an increase in the number of Trustees,
a vacancy shall occur. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such vacancy shall be
conclusive. In the case of a vacancy, the remaining Trustees shall fill such
vacancy by appointing such other person as they in their discretion see fit, to
the extent consistent with the limitations provided under the 1940 Act. Such
appointment shall be evidenced by a written instrument signed by a majority of
the
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Trustees in office or by resolution of the Trustees, duly adopted, which shall
be recorded in the minutes of a meeting of the Trustees, whereupon the
appointment shall take effect.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any person
appointed as a Trustee pursuant to this Section 3.04 shall have accepted this
Trust, the trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and such person
shall be deemed a Trustee.
SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that in no case shall fewer than two
Trustees personally exercise the other powers hereunder except as herein
otherwise expressly provided.
SECTION 3.06 NUMBER OF TRUSTEES. From and after the date of appointment
of Trustees by the initial Trustees named herein, the number of Trustees shall
be at least three (3), and thereafter shall be such number as shall be fixed
from time to time by a majority of the Trustees, provided, however, that the
number of Trustees shall in no event be more than twelve (12).
SECTION 3.07 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the Trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
SECTION 3.08 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of, the Trust or in the name
of any person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series based upon the number of Shares owned. The Shares shall be
personal property giving only the rights specifically set forth in this Trust
Instrument.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the Shareholders. The
Trustees shall have full power and authority to do any and all acts and to make
and execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust.
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The Trustees shall not in any way be bound or limited by present or future laws
or customs in regard to trust investments, but shall have full authority and
power to make any and all investments which they, in their sole discretion,
shall deem proper to accomplish the purpose of this Trust without recourse to
any court or other authority. Subject to any applicable limitation in this Trust
Instrument or the Bylaws of the Trust, the Trustees shall have the power and
authority:
(a) To invest and reinvest cash and other property and to hold cash or
other property of the Trust uninvested, without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust:
(b) To operate as and carry on the business of an investment company, and
exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other evidence
of indebtedness; to secure borrowings by mortgaging, pledging or otherwise
subjecting as security the Trust Property; to endorse, guarantee, or undertake
the performance of an obligation or engagement of any other Person and to lend
Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter in the manner hereinafter provided for or by the
Trust itself, or both, or otherwise pursuant to a plan of distribution of any
kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument providing
for the conduct of the business of the Trust and to amend and repeal them to the
extent that they do not reserve that right to the Shareholders; such Bylaws
shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more banks, trust companies or companies that are
members of a national securities exchange or such other entities as the
Commission may permit as custodians of any assets of the Trust subject to any
conditions set forth in this Trust Instrument or in the Bylaws;
(h) To retain one or more transfer agents and shareholder servicing
agents, or both;
(i) To set record dates in the manner provided herein or in the Bylaws;
(j) To delegate such authority as they consider desirable (with power of
subdelegation) to any officers or employees of the Trust and to any investment
adviser, manager, custodian, underwriter or other agent or independent
contractor;
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(k) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XI, subsection 11.04(b) hereof;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or property in a form not indicating any trust,
whether in bearer, book entry, unregistered or other negotiable form; or either
in the name of the Trust or in the name of a custodian or a nominee or nominees,
subject in either case to proper safeguards according to the usual practice of
Delaware business trusts or investment companies;
(o) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern, and to pay calls or
subscriptions with respect to any security held in the Trust;
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(q) To make distributions of income and of capital gains to Shareholders
in the manner provided herein;
(r) To establish, from time to time, a minimum investment for Shareholders
in the Trust;
(s) To establish one or more committees, to delegate any of the powers of
the Trustees to said committees and to adopt a committee charter providing for
such responsibilities, membership (including Trustees, officers or other agents
of the Trust therein) and any other characteristics of said committees as the
Trustees may deem proper. Notwithstanding the provisions of this Article TV, and
in addition to such provisions or any other provision of this Trust Instrument
or of the Bylaws, the Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
action, suit or proceeding which shall be pending or threatened to be brought
before any court, administrative agency or other adjudicatory body;
(t) To interpret the investment policies, practices or limitations of the
Trust;
(u) To establish a registered office and have a registered agent in the
state of Delaware; and
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(v) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see the application of
any payments made or property transferred to the Trustees or upon their order.
SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust with respect to which such Shares are issued.
SECTION 4.03 TRUSTEES AND OFFICERS as SHAREHOLDERS. Any Trustee, officer
or other agent of the Trust may acquire, own and dispose of Shares to the same
extent as if he were not a Trustee, officer or agent; and the Trustees may issue
and sell or cause to be issued and sold Shares to and buy such Shares from any
such person or any firm or company in which he is interested, subject only to
the general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in the
Bylaws.
SECTION 4.04 ACTION BY THE TRUSTEES. In any action taken by the Trustees
hereunder, unless otherwise specified, the Trustees shall act by majority vote
at a meeting duly called or by unanimous written consent without a meeting or by
telephone meeting provided a quorum of Trustees participate in any such
telephone meeting, unless the 1940 Act requires that a particular action be
taken only at a meeting at which the Trustees are present in person. At any
meeting of the Trustees, a majority of the Trustees shall constitute a quorum.
Meetings of the Trustees may be called orally or in writing by the Chairman of
the Board of Trustees or by any two other Trustees. Notice of the time, date and
place of all meetings of the Trustees shall be given by the person calling the
meeting to each Trustee by telephone, facsimile or other electronic mechanism
sent to his home or business address at least twenty-four hours in advance of
the meeting or by written notice mailed to his home or business address at least
seventy-two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Any
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meeting conducted by telephone shall be deemed to take place at the principal
office of the Trust, as determined by the Bylaws or by the Trustees. Subject to
the requirements of the 1940 Act, the Trustees by majority vote may delegate to
any one or more of their number their authority to approve particular matters or
take particular actions on behalf of the Trust. Written consents or waivers of
the Trustees may be executed in one or more counterparts. Execution of a written
consent or waiver and delivery thereof to the Trust may be accomplished by
facsimile or other similar electronic mechanism.
SECTION 4.05 CHAIRMAN OF THE TRUSTEES. The Trustees shall appoint one of
their number to be Chairman of the Board of Trustees. The Chairman shall preside
at all meetings of the Trustees, shall be responsible for the execution of
policies established by the Trustees and the administration of the Trust, and
may be (but is not required to be) the chief executive, financial and/or
accounting officer of the Trust.
SECTION 4.06 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from or sell any securities to, or lend any assets of the Trust to, any Trustee
or officer of the Trust or any firm of which any such Trustee or officer is a
member acting as principal, or have any such dealings with any investment
adviser, administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person; and the Trust may employ any such person, or
firm or company in which such person is an Interested Person, as broker, legal
counsel, registrar, investment adviser, administrator, distributor, transfer
agent, dividend disbursing agent, custodian or in any other capacity upon
customary terms.
ARTICLE V
EXPENSES OF THE TRUST
Subject to the provisions of Article II, Section 2.07 hereof, the Trustees
are authorized to pay or cause to be paid from the Trust estate expenses and
disbursements, including, without limitation, interest charges, taxes, brokerage
fees and commissions; expenses of issue, repurchase and redemption of Shares;
certain insurance premiums; applicable fees, interest charges and expenses of
third parties, including the Trust's investment advisers, managers,
administrators, distributors, custodian, transfer agent and fund accountant;
fees of pricing, interest, dividend, credit and other reporting services; costs
of membership in trade associations; telecommunications expenses; funds
transmission expenses; auditing, legal and compliance expenses; costs of forming
the Trust and maintaining its existence; costs of preparing and printing the
Trust's prospectuses, statements of additional information and shareholder
reports and delivering them to existing Shareholders; expenses of meetings of
Shareholders and proxy solicitations therefor; costs of maintaining books and
accounts; costs of reproduction, stationery and supplies; fees and expenses of
the Trust's trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust; costs of Trustee
meetings; Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses and for such
non-recurring items as may arise, including litigation to which the Trust (or a
Trustee acting as such) is a party, and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses and
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liabilities the Trustees shall have a lien on the assets belonging to the Trust,
prior to any rights or interests of the Shareholders thereto. This section shall
not preclude the Trust from directly paying any of the aforementioned fees and
expenses.
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ARTICLE VI
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER,
ADMINISTRATOR AND TRANSFER AGENT
SECTION 6.01 INVESTMENT ADVISER. (a) The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts with
respect to the Trust whereby the other party or parties to such contract or
contracts shall undertake to furnish the Trustees with such investment advisory,
statistical and research facilities and services and such other facilities and
services, if any, all upon such terms and conditions (including any Shareholder
vote) that may be required under the 1940 Act, as may be prescribed in the
Bylaws, or as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws). Notwithstanding any other provision of this Trust Instrument,
the Trustees may authorize any investment adviser (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales or exchanges of portfolio securities, other investment
instruments of the Trust, or other Trust Property on behalf of the Trustees, or
may authorize any officer, agent, or Trustee to effect such purchases, sales or
exchanges pursuant to recommendations of the investment adviser (and all without
further action by the Trustees). Any such purchases, sales and exchanges shall
be deemed to have been authorized by all of the Trustees.
(b) The Trustees may authorize the investment adviser to employ, from time
to time, one or more sub-advisers to perform such of the acts and services of
the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and subadviser (such terms and conditions
not to be inconsistent with the provisions of this Trust Instrument or of the
Bylaws). Any reference in this Trust Instrument to the investment adviser shall
be deemed to include such sub-advisers, unless the context otherwise requires;
provided that no Shareholder approval shall be required with respect to any
sub-adviser unless required under the 1940 Act or other law, contract or order
applicable to the Trust.
SECTION 6.02 PRINCIPAL UNDERWRITER. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting contract
or contracts providing for the sale of Shares, whereby the Trust may either
agree to sell Shares to the other party to the contract or appoint such other
party its sales agent for such Shares. In either case, the contract shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws); and
such contract may also provide for the repurchase or sale of Shares by such
other party as principal or as agent of the Trust.
SECTION 6.03 ADMINISTRATION. The Trustees may in their discretion from
time to time enter into one or more management or administrative contracts
whereby the other party or parties shall undertake to furnish the Trustees with
management or administrative services. The contract or contracts shall be on
such terms and conditions as may be prescribed in the Bylaws and as the Trustees
may in their discretion determine (such terms and conditions not to be
inconsistent with the provisions of this Trust Instrument or of the Bylaws).
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SECTION 6.04 TRANSFER AGENT. The Trustees may in their discretion from
time to time enter into one or more transfer agency and shareholder service
contracts whereby the other party or parties shall undertake to furnish the
Trustees with transfer agency and shareholder services. The contract or
contracts shall be on such terms and conditions as may be prescribed in the
Bylaws and as the Trustees may in their discretion determine (such terms and
conditions not to be inconsistent with the provisions of this Trust Instrument
or of the Bylaws).
SECTION 6.05 PARTIES TO CONTRACT. Any contract of the character described
in Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or any contract of the
character described in Article VIII hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered void or voidable by reason of the existence of
any relationship, nor shall any person holding such relationship be disqualified
from voting on or executing the same in his capacity as Shareholder and/or
Trustee, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article VI or Article VIII hereof or of
the Bylaws. The same person (including a corporation, firm, partnership, trust,
or association) may be the other party to contracts entered into pursuant to
Sections 6.01, 6.02, 6.03 and 6.04 of this Article VI or pursuant to Article
VIII hereof and any individual may be financially interested or otherwise
affiliated with persons who are parties to any or all of the contracts mentioned
in this Section 6.05.
SECTION 6.06 PROVISIONS AND AMENDMENTS. Any contract entered into pursuant
to Section 6.01 or 6.02 of this Article VI shall be consistent with and subject
to the requirements of Section 15 of the 1940 Act, if applicable, or other
applicable Act of Congress hereafter enacted with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal thereof, and no amendment to any contract entered into
pursuant to Section 6.01 of this Article VI shall be effective unless assented
to in a manner consistent with the requirements of said Section 15, as modified
by any applicable rule, regulation or order of the Commission.
ARTICLE VIE
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01 VOTING POWERS. (a) The Shareholders shall have power to vote
only (a) for the election of Trustees to the extent provided in Article III,
Section 3.01 hereof, (b) for the removal of Trustees to the extent provided in
Article III, Section 3.03(d) hereof, (c) with respect to any investment advisory
contract to the extent provided in Article VI, Section 6.01 hereof, (d) with
respect to an amendment of this Trust Instrument, to the extent provided in
Article XI, Section 11.08, and (e) with respect to such additional matters
relating to the Trust as may be required by law, by this Trust Instrument, or
any registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
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(b) Notwithstanding paragraph (a) of this Section 7.01 or any other
provision of this Trust Instrument (including the Bylaws) which would by its
terms provide for or require a vote of Shareholders, the Trustees may take
action without a Shareholder vote if (i) the Trustees shall have obtained an
opinion of counsel that a vote or approval of such action by Shareholders is not
required under (A) the 1940 Act or any other applicable laws, or (B) any
registrations, undertakings or agreements of the Trust known to such counsel,
and the Trustees determine in good faith that the taking of such action without
a Shareholder vote would be consistent with the best interests of the
Shareholders.
(c) Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy or in any manner
provided for in the Bylaws. A proxy may be given in writing. The Bylaws may
provide that proxies may also, or may instead, be given by any electronic or
telecommunications device or in any other manner. Notwithstanding anything else
herein or in the Bylaws, in the event a proposal by anyone other than the
officers or Trustees of the Trust is submitted to a vote of the Shareholders, or
in the event of any proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees of the Trust, Shares may
be voted only in person or by written proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required or permitted by law, this Trust Instrument or any of the Bylaws of the
Trust to be taken by Shareholders.
SECTION 7.02 MEETINGS. Meetings of Shareholders may be held within or
without the State of Delaware. Special meetings of the Shareholders for the
purpose of voting upon the removal of a Trustee or Trustees may be called by the
Trustees and shall be called by the Trustees upon the written request of
Shareholders owning at least one tenth of the Outstanding Shares of the Trust
entitled to vote. Whenever ten or more Shareholders meeting the qualifications
set forth in Section 16(c) of the 1940 Act, as the same may be amended from time
to time, seek the opportunity of furnishing materials to the other Shareholders
with a view to obtaining signatures on such a request for a meeting, the
Trustees shall comply with the provisions of said Section 16(c) with respect to
providing such Shareholders access to the list of the Shareholders of record of
the Trust or the mailing of such materials to such Shareholders of record,
subject to any rights provided to the Trust or any Trustees provided by said
Section 16(c). Notice shall be sent, by First Class Mail or such other means
determined by the Trustees, at least 10 days prior to any such meeting.
Notwithstanding anything to the contrary in this Section 7.02, the Trustees
shall not be required to call a special meeting of the Shareholders of any
Series or to provide Shareholders seeking the opportunity of furnishing the
materials to other Shareholders with a view to obtaining signatures on a request
for a meeting except to the extent required under the 1940 Act.
SECTION 7.03 QUORUM AND REQUIRED VOTE. One-third of Shares outstanding and
entitled to vote in person or by proxy as of the record date for a Shareholders'
meeting shall be a quorum for the transaction of business at such Shareholders'
meeting. Any meeting of Shareholders may be adjourned from time to time by a
majority of the votes properly cast upon the question of adjourning a meeting to
another date and time, whether or not a quorum is present. Any adjourned session
or sessions may be held, within a reasonable time after the date set for the
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original meeting, without the necessity of further notice. Except when a larger
vote is required by law or by any provision of this Trust Instrument or the
Bylaws, a majority of the Shares voted in person or by proxy at a meeting at
which a quorum is present shall decide any questions and a plurality shall elect
a Trustee.
ARTICLE VIII
CUSTODIAN
SECTION 8.01 APPOINTMENT AND DUTIES. The Trustees shall employ a bank, a
company that is a member of a national securities exchange, or a trust company,
that in each case shall have capital, surplus and undivided profits of at least
twenty million dollars ($20,000,000) and that is a member of the Depository
Trust Company (or such other person or entity as may be permitted to act as
custodian of the Trust's assets under the 1940 Act) as custodian with authority
as its agent, but subject to such restrictions, limitations and other
requirements, if any, as may be contained in the Bylaws of the Trust: (a) to
hold the securities owned by the Trust and deliver the same upon written order
or oral order confirmed in writing; (b) to receive and receipt for any moneys
due to the Trust and deposit the same in its own banking department or elsewhere
as the Trustees may direct; and (c) to disburse such funds upon orders or
vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a bank, a company that is a member of a
national securities exchange, or a trust company organized under the laws of the
United States or one of the states thereof and having capital, surplus and
undivided profits of at least twenty million dollars ($20,000,000) and that is a
member of the Depository Trust Company or such other person or entity as may be
permitted by the Commission or is otherwise able to act as custodian of the
Trust's assets in accordance with the 1940 Act.
SECTION 8.02 CENTRAL CERTIFICATE SYSTEM. Subject to the 1940 Act and such
other rules, regulations and orders as the Commission may adopt, the Trustees
may direct the custodian to deposit all or any part of the securities owned by
the Trust in a system for the central handling of securities established by a
national securities exchange or a national securities association registered
with the Commission under the Securities Exchange Act of 1934, as amended, or
such other person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act, pursuant to which system all securities of any
particular class or series of any issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of such securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the Trust or its custodians,
sub-custodians or other agents.
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ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01 DISTRIBUTIONS.
(a) The Trustees may from time to time declare and pay dividends or other
distributions. The amount of such dividends or distributions and the payment of
them and whether they are in cash or any other Trust Property shall be wholly in
the discretion of the Trustees.
(b) Dividends and other distributions may be paid or made to the
Shareholders of record at the time of declaring a dividend or other distribution
or among the Shareholders of record at such other date or time or dates or times
as the Trustees shall determine, which dividends or distributions, at the
election of the Trustees, may be paid pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans or related plans as the Trustees
shall deem appropriate.
(C) Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof on the books, the above
provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
(d) The Trustees may always retain from the net income, earnings, profits
or gains of the Trust such amount as they may deem necessary to pay the debts or
expenses of the Trust or to meet obligations of the Trust, or as they may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business. The Trustees may adopt and offer to
Shareholders of the Trust such dividend reinvestment plans as the Trustees deem
appropriate.
SECTION 9.02 NET ASSET VALUE. The net asset value of each outstanding
Share of the Trust shall be determined on such days and at such time or times as
the Trustees may determine. The method of determination of net asset value shall
be determined by the Trustees and shall be as set forth in the Registration
Statement. The power and duty to make the calculations may be delegated by the
Trustees to any Investment Adviser, the Custodian, the Transfer Agent or such
other person as the Trustees by resolution may determine. The Trustees may
suspend the determination of net asset value to the extent permitted by the 1940
Act.
SECTION 9.03 DETERMINATION OF NET INCOME. The Trustees shall have the
power to determine the net income of the Trust and from time to time to
distribute such net income ratably among the Shareholders as dividends in cash
or additional Shares issuable hereunder. The determination of net income and the
resultant declaration of dividends shall be as set forth in the Registration
Statement. The Trustees or their delegates shall have full discretion to
determine whether any cash or property received by the Trust shall be treated as
income or as principal and
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whether any item of expense shall be charged to the income or the principal
account, and their determination made in good faith shall be conclusive upon the
Shareholders. In the case of stock dividends received, the Trustees shall have
full discretion to determine, in the light of the particular circumstances, how
much, if any, of the value thereof shall be treated as income, the balance, if
any, to be treated as principal.
SECTION 9.04 POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of
the foregoing provisions of this Article IX, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or desirable
to enable the Trust to comply with any provision of the 1940 Act, or any rule or
regulation thereunder, or any order of exemption issued by the Commission, all
as in effect now or hereafter amended or modified.
SECTION 9.05 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
if permitted under the 1940 Act. Such suspension shall take effect at such time
as the Trustees shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of redemption, a
Shareholder may either withdraw his request for redemption or receive payment
based on the Net Asset Value per Share next determined after the termination of
the suspension.
SECTION 9.06 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of the Trust has or may
become concentrated in any Person to an extent which would disqualify any Series
as a regulated investment company under the Internal Revenue Code, then the
Trustees shall have the power (but not the obligation) by lot or other means
deemed equitable by them (a) to call for redemption by any such person of a
number, or principal amount, of Shares sufficient to maintain or bring the
direct or indirect ownership of Shares into conformity with the requirements for
such qualification and (b) to refuse to transfer or issue Shares to any person
whose acquisition of Shares in question would result in such disqualification.
The redemption shall be effected at the redemption price and in the manner
provided in this Article IX.
The holders of Shares shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
as the Trustees deem necessary to comply with the requirements of any taxing
authority or this Section 9.05.
SECTION 9.07 REDEMPTION OF SMALL ACCOUNTS. Subject to the requirements of
the 1940 Act, the Trustees may cause the Trust to redeem, at the price and in
the manner provided in this Article IX, Shares held by any Shareholder.
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ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01 LIMITATION OF LIABILITY. Neither a Trustee nor an officer of
the Trust, when acting in such capacity, shall be personally liable to any
person other than the Trust or the Shareholders for any act, omission or
obligation of the Trust, any Trustee or any officer of the Trust. Neither a
Trustee nor an officer of the Trust shall be liable for any act or omission or
any conduct whatsoever in his capacity as Trustee or as an officer of the Trust,
provided that nothing contained herein or in the Delaware Act shall protect any
Trustee or any officer of the Trust against any liability to the Trust or to
Shareholders 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 the office of Trustee or officer of the Trust
hereunder.
SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b):
(i) every person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified
by the Trust to the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him in connection with
any claim, action, suit or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been a Trustee or
officer and against amounts paid or incurred by him in the settlement
thereof;
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office
or (B) not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office, (A) by the court or other
body approving the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are parties
to the matter based upon a review of readily available facts (as opposed
to a full trial-type inquiry): or (C) by written opinion
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of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against
by policies maintained by the Trust, shall be severable, shall not be exclusive
of or affect any other rights to which any Covered Person may now or hereafter
be entitled, shall continue as to a person who has ceased to be a Covered Person
and shall inure to the benefit of the heirs, executors and administrators of
such a person. Nothing contained herein shall affect any rights to
indemnification to which Trust personnel, other than Covered Persons, and other
persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection (a) of this Section 10.02 may be paid by the Trust from time to time
prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
Trust if it is ultimately determined that he is not entitled to indemnification
under this Section 10.02; provided, however, that either (i) such Covered Person
shall have provided appropriate security for such undertaking, (ii) the Trust is
insured against losses arising out of any such advance payments or (iii) either
a majority of the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe that
such Covered Person will be found entitled to indemnification under this Section
10.02.
SECTION 10.03 SHAREHOLDERS. In case any Shareholder shall be held to be
personally liable solely by reason of his being or having been a Shareholder and
not because of his acts or omissions or for some other reason, the Shareholder
or former Shareholder (or his heirs, executors, administrators or other legal
representatives, or, in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets belonging to the
Trust to be held harmless from and indemnified against all loss and expense
arising from such liability. The Trust shall, upon request by the Shareholder,
assume the defense of any claim made against the Shareholder for any act or
obligation of the Trust and satisfy any judgment thereon from the assets of the
Trust.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a trust and not a partnership is created hereby. No Trustee hereunder shall
have any power to bind personally either the Trust officers or any Shareholder.
All persons extending credit to, contracting with or having any claim against
the Trust or the Trustees shall look only to the assets of the Trust for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of their agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Trust Instrument shall protect a
Trustee against any liability to the Trust or a Shareholder to which the Trustee
would otherwise be subject by reason of willful
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misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees or the officers of the Trust of their
powers and discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested. Subject
to the provisions of Article X hereof and to Section 11.01 of this Article XI,
the Trustees and the officers of the Trust shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees and the officers of the Trust
may take advice of counsel or other experts with respect to the meaning and
operation of this Trust Instrument, and subject to the provisions of Article X
hereof and Section 11.01 of this Article XI, shall be under no liability for any
act or omission in accordance with such advice or for failing to follow such
advice. The Trustees and the officers of the Trust shall not be required to give
any bond as such, nor any surety if a bond is obtained.
SECTION 11.03 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for the payment
of any dividends or other distributions, or the date for the allotment of
rights, or the date when any change or conversion or exchange of Shares shall go
into effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding sixty (60) days preceding the
date of any meeting of Shareholders, or the date for payment of any dividend or
other distribution, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend
or other distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of Shares, and in
such case such Shareholders and only such Shareholders as shall be Shareholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting, or to receive payment of such dividend or other distribution,
or to receive such allotment or rights, or to exercise such rights, as the case
may be, notwithstanding any transfer of any Shares on the books of the Trust
after any such record date fixed as aforesaid.
SECTION 11.04 TERMINATION OF TRUST.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsection 11.04(b).
(b) The Trust may be terminated (i) by the affirmative vote of the holders
of not less than three-quarters (75%) of the Shares outstanding and entitled to
vote at any meeting of Shareholders of the Trust except that a Majority
Shareholder Vote shall be sufficient if termination of the Trust has been
recommended by two-thirds of the Trustees, or (ii) by an instrument in writing,
without a meeting, signed by a majority of the Trustees and consented to by the
holders of not less than three-quarters (75%) of such Shares of the Trust. Upon
the termination of the Trust:
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(i) The Trust shall carry on no business except for the purpose of
winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust
and all of the powers of the Trustees under this Trust Instrument shall
continue until the affairs of the Trust shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust,
collect its assets, sell, convey, assign, exchange, transfer or otherwise
dispose of all or any part of the remaining Trust Property to one or more
persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the
Trust Property shall require Shareholder approval in accordance with
Section 11.04(b) hereof.
Upon making reasonable provision, in the determination of the Trustees, for the
payment of all liabilities by assumption or otherwise, the Trustees shall
distribute the remaining proceeds or assets (as the case may be) ratably among
the holders of Shares of the Trust, based upon the ratio that each Shareholder's
Shares bears to the number of Shares then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in Subsection 11.04(b), the Trust shall terminate
and the Trustees and the Trust shall be discharged of any and all further
liabilities and duties hereunder and the right, title and interest of all
parties with respect to the Trust shall be cancelled and discharged.
Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
SECTION 11.05 REORGANIZATION. The Trust may not merge or consolidate with
any other corporation, association, trust or other organization, or sell, lease
or exchange all or substantially all of its assets, including its good will, and
thereafter be terminated, unless authorized at a meeting of Shareholders called
for the purpose, by the vote of the holders of at least seventy-five percent
(75%) of the Shares then Outstanding, provided, however, if such termination is
recommended by two-thirds of the total number of Trustees then in office, the
vote of at least a majority of the Common Shares then outstanding shall be
sufficient authorization. Nothing contained herein shall be construed as
requiring approval of Shareholders for any sale or assets in the ordinary course
of business of the Trust.
SECTION 11.06 CONVERSION. Beginning after eighteen (18) months from the
date of the Trust's initial public offering, the Trust will automatically
convert from a "closed-end investment company" to an "open-end investment
company" as those terms are defined in the 1940 Act if, its Shares close at a
5% or greater discount from the net asset value of the Trust on the last
business day of any week and for each of the next 14 business days thereafter. A
business day is any day that the NYSE is open. At such time the Trust may not
continue as a closed-end investment company even if the Trust ceases to trade at
a discount.
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SECTION 11.07 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions such
as "herein," "hereof" and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions such as "his,", "he" and "him," shall be deemed to include the
feminine and neuter, as well as masculine, genders. Headings are placed herein
for convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 11.08 APPLICABLE LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust," and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
SECTION 11.09 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment which would affect their rights
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to vote granted in Section 7.01 of Article VII hereof, (b) on any amendment to
this Section 11.09, (c) on any amendment as may be required by law or by the
Trust's registration statement filed with the Commission and (d) on any
amendment submitted to them by the Trustees. Notwithstanding any other provision
of this Trust Instrument, any amendment to Article X hereof shall not limit the
rights to indemnification or insurance provided therein with respect to action
or omission of Covered Persons prior to such amendment.
Notwithstanding anything herein to the contrary, any amendment of Section
11.06 shall require a vote of the Shareholders holding eighty percent (80%),
regardless of the percentage of Trustees recommending such amendment.
SECTION 11.10 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws, provided, however, that the Trustees
may change the fiscal year of the Trust.
SECTION 11.11 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions is in conflict with the 1940 Act,
the regulated investment company provisions of the Internal Revenue Code or with
other applicable laws and regulations, the conflicting provision shall be deemed
never to have constituted a part of this Trust Instrument; provided, however,
that such determination shall not affect any of the remaining provisions of this
Trust Instrument or render invalid or improper any action taken or omitted prior
to such determination. If any provision of this Trust Instrument shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any matter affect such provision in any other jurisdiction or any
other provision of this Trust Instrument in any jurisdiction.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees of the
Trust, have executed this instrument as of date first written above.
/s/ Susan Penry-Williams /s/ Louis Citron
- ------------------------------- -------------------------------
Susan Penry-Williams Louis Citron
as Trustee and not individually as Trustee and not individually
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EXHIBIT 99.2B(2)
THE DESSAUER GLOBAL EQUITY FUND
(a Delaware Business Trust)
BY-LAWS
June 27, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I
DEFINITIONS............................................................. iv
ARTICLE II
PRINCIPAL OFFICE........................................................ iv
ARTICLE III
OFFICERS AND THEIR ELECTION............................................. iv
Section 3.01 Officers.......................................... iv
Section 3.02 Election of Officers.............................. iv
Section 3.03 Resignations...................................... v
ARTICLE IV
POWERS AND DUTIES OF OFFICERS AND TRUSTEES.............................. v
Section 4.01 Management of the Trust........................... v
Section 4.02 Executive And Other Committees.................... v
Section 4.03 Compensation...................................... v
Section 4.04 Chairman Of The Trustees.......................... v
Section 4.05 President......................................... v
Section 4.06 Treasurer......................................... vi
Section 4.07 Secretary......................................... vi
Section 4.08 Vice President.................................... vi
Section 4.09 Assistant Treasurer............................... vi
Section 4.10 Assistant Secretary............................... vi
Section 4.11 Subordinate Officers.............................. vi
Section 4.12 Surety Bonds......................................vii
Section 4.13 Removal...........................................vii
Section 4.14 Remuneration......................................vii
ARTICLE V
SHAREHOLDERS' MEETINGS..................................................vii
Section 5.01 Special Meetings..................................vii
Section 5.02 Annual Meetings...................................vii
Section 5.03 Notices...........................................vii
Section 5.04 Voting-Proxies...................................viii
Section 5.05 Place of Meeting.................................viii
Section 5.06 Action Without a Meeting.........................viii
Section 5.07 Quorum and Adjournment of Meetings...............viii
Section 5.08 Inspectors of Election............................ ix
Section 5.09 Inspection of Books and Records................... ix
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VI
TRUSTEES' MEETINGS........................................................... ix
Section 6.01 Special Meetings....................................... ix
Section 6.02 Regular Meetings....................................... ix
Section 6.03 Quorum................................................. ix
Section 6.04 Notice................................................. x
Section 6.05 Place of Meeting....................................... x
Section 6.06 Special Action......................................... x
Section 6.07 Action by Consent...................................... x
Section 6.08 Participation in Meetings By Conference Telephone...... x
Section 6.09 Execution of Instruments and Documents and Signing
of Checks and Other Obligations and Transfers.............. x
ARTICLE VII
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT.......................... x
Section 7.01 Fiscal Year............................................ x
Section 7.02 Registered Office and Registered Agent................. xi
ARTICLE VIII
DIVIDENDS AND DISTRIBUTIONS..................................................xii
ARTICLE IX
CERTIFICATES OF SHARES.......................................................xii
SECTION 9.01 Certificates of Shares.................................xii
Section 9.02 Transfer of Shares.....................................xii
Section 9.03 Share Ledgers.........................................xiii
Section 9.04 Lost, Stolen, Destroyed and Mutilated Certificates....xiii
ARTICLE X
TERMS OF COMMON SHARES......................................................xiii
Section 10.01 Designation..........................................xiii
Section 10.02 Common Shares........................................xiii
Section 10.04 Record Date...........................................xiv
ARTICLE XI
WAIVER OF NOTICE............................................................. xv
ARTICLE XII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES............................... xv
ARTICLE XIII
SEAL......................................................................... xv
ARTICLE XIV
AMENDMENTS................................................................... xv
</TABLE>
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<TABLE>
ARTICLE XV
<S> <C>
COMPLIANCE WITH FEDERAL REGULATIONS.......................................xvi
ARTICLE XVI
THE TRUST.................................................................xvi
</TABLE>
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<PAGE> 5
THE DESSAUER GLOBAL EQUITY FUNDS
BY-LAWS
These Bylaws of The Dessauer Global Equity Fund (the "Trust"),
a Delaware business trust, are subject to the Trust Instrument of the Trust,
dated June 27, 1996, as from time to time amended, supplemented or restated (the
"Trust Instrument"). Capitalized terms used herein which are defined in the
Trust Instrument are used as therein defined.
ARTICLE I
DEFINITIONS
The terms "Commission", "Trust", "Trust Property", "Investment
Adviser", "Majority Shareholder Vote", "1940 Act", "Shareholder", "Shares",
"Transfer Agent", and "Trustees" have the respective meanings given them in the
Trust Instrument of the Fund dated June 27, 1996, as amended from time to time.
ARTICLE II
PRINCIPAL OFFICE
The principal office of the Trust shall be located in
Pasadena, California or such other location as the Trustees may, from time to
time, determine. The Trust may establish and maintain such other offices and
places of business as the Trustees may, from time to time, determine.
ARTICLE III
OFFICERS AND THEIR ELECTION
SECTION 3.01 OFFICERS. The officers of the Trust shall be a
President, a Treasurer, a Secretary, and such other officers as the Trustees may
from time to time elect. The Trustees may delegate to any officer or committee
the power to appoint any subordinate officers or agents. It shall not be
necessary for any Trustee or other officer to be a holder of Shares in the
Trust.
SECTION 3.02 ELECTION OF OFFICERS. The Treasurer and Secretary
shall be chosen by the Trustees. The President shall be chosen by and from the
Trustees. Two or more offices may be held by a single person except the offices
of President and Secretary. Subject to the provisions of Section 4.13 hereof the
President, the Treasurer and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees. The executive officers of the Fund shall be
elected annually by the Trustees and each executive officer so elected shall
hold office until his successor is elected and has qualified.
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SECTION 3.03 RESIGNATIONS. Any officer of the Trust may
resign, notwithstanding Section 3.02 hereof, by filing a written resignation
with the President, the Trustees or the Secretary, which resignation shall take
effect on being so filed or at such time as may be therein specified.
ARTICLE IV
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
SECTION 4.01 MANAGEMENT OF THE TRUST. The business and affairs
of the Trust shall be managed by, or under the direction of the Trustees, and
they shall have all powers necessary and desirable to carry out their
responsibilities, so far as such powers are not inconsistent with the laws of
the State of Delaware, the Trust Instrument or with these Bylaws.
SECTION 4.02 EXECUTIVE AND OTHER COMMITTEES. The Trustees may
elect from their own number an executive committee, which shall have any or all
of the powers of the Board of Trustees while the Board of Trustees is not in
session. The Trustees may also elect from their own number other committees from
time to time. The number composing such committees and the powers conferred upon
the same are to be determined by vote of a majority of the Trustees. All members
of such committees shall hold such offices at the pleasure of the Trustees. The
Trustees may abolish any such committee at any time. Any committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees. The Trustees shall have
power to rescind any action of any committee, but no such rescission shall have
retroactive effect.
SECTION 4.03 COMPENSATION. Each Trustee and each committee
member may receive such compensation for his services and reimbursement for his
expenses as may be fixed from time to time by resolution of the Trustees.
SECTION 4.04 CHAIRMAN OF THE TRUSTEES. The Trustees may
appoint from among their number a Chairman who shall serve as such at the
pleasure of the Trustees. When present, he shall preside at all meetings of the
Shareholders and the Trustees, and he may, subject to the approval of the
Trustees, appoint a Trustee to preside at such meetings in his absence. He shall
perform such other duties as the Trustees may from time to time designate.
SECTION 4.05 PRESIDENT. The President shall be the chief
executive officer of the Trust and, subject to the direction of the Trustees,
shall have general administration of the business and policies of the Trust.
Except as the Trustees may otherwise order, the President shall have the power
to grant, issue, execute or sign such powers of attorney, process, agreements or
other documents as may be deemed advisable or necessary in the furtherance of
the interests of the Trust or any Series thereof. He shall also have the power
to employ attorneys, accountants and other advisors and agents and counsel for
the Trust. The President shall perform such duties additional to all of the
foregoing as the Trustees may from time to time designate.
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<PAGE> 7
SECTION 4.06 TREASURER. The Treasurer shall be the principal
financial and accounting officer of the Trust. He shall deliver all funds and
securities of the Trust which may come into his hands to such company as the
Trustees shall employ as Custodian in accordance with the Trust Instrument and
applicable provisions of law. He shall make annual reports regarding the
business and condition of the Trust, which reports shall be preserved in Trust
records, and he shall furnish such other reports regarding the business and
condition of the Trust as the Trustees may from time to time require. The
Treasurer shall perform such additional duties as the Trustees may from time to
time designate.
SECTION 4.07 SECRETARY. The Secretary shall record in books
kept for the purpose all votes and proceedings of the Trustees and the
Shareholders at their respective meetings. He shall have the custody of the seal
of the Trust. The Secretary shall perform such additional duties as the Trustees
may from time to time designate.
SECTION 4.08 VICE PRESIDENT. Any Vice President of the Trust
shall perform such duties as the Trustees or the President may from time to time
designate. At the request or in the absence or disability of the President, the
Vice President (or, if there are two or more Vice Presidents, then the senior of
the Vice Presidents) present and able to act may perform all the duties of the
President and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the President.
SECTION 4.09 ASSISTANT TREASURER. Any Assistant Treasurer of
the Trust shall perform such duties as the Trustees or the Treasurer may from
time to time designate, and, in the absence of the Treasurer, the senior
Assistant Treasurer, present and able to act, may perform all the duties of the
Treasurer and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer.
SECTION 4.10 ASSISTANT SECRETARY. Any Assistant Secretary of
the Trust shall perform such duties as the Trustees or the Secretary may from
time to time designate, and, in the absence of the Secretary, the senior
Assistant Secretary, present and able to act, may perform all the duties of the
Secretary and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the Secretary.
SECTION 4.11 SUBORDINATE OFFICERS. The Trustees from time to
time may appoint such officers or agents as they may deem advisable, each of
whom shall have such title, hold office for such period, have such authority and
perform such duties as the Trustees may determine. The Trustees from time to
time may delegate to one or more officers or committees of Trustees the power to
appoint any such subordinate officers or agents and to prescribe their
respective terms of office, authorities and duties.
SECTION 4.12 SURETY BONDS. The Trustees may require any
officer or agent of the Trust to execute a bond (including without limitation,
any bond required by the 1940 Act and the rules and regulations of the
Commission) to the Trust in such sum and with such surety or sureties as the
Trustees may determine, conditioned upon the faithful performance of his duties
to the Trust including responsibility for negligence and for the accounting of
any of the Trust's property, funds or securities that may come into his hands.
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<PAGE> 8
SECTION 4.13 REMOVAL. Any officer may be removed from office,
with or without cause, whenever in the judgment of the Trustees the best
interest of the Trust will be served thereby, by the vote of a majority of the
Trustees given at any regular meeting or any special meeting of the Trustees. In
addition, any officer or agent appointed in accordance with the provisions of
Section 3.10 hereof may be removed, either with or without cause, by any officer
upon whom such power of removal shall have been conferred by the Trustees.
SECTION 4.14 REMUNERATION. The salaries or other compensation,
if any, of the officers of the Trust shall be fixed from time to time by
resolution of the Trustees.
ARTICLE V
SHAREHOLDERS' MEETINGS
SECTION 5.01 SPECIAL MEETINGS. Special meetings of
Shareholders of the Fund shall be held whenever called by the Board of Trustees
or the President of the Fund. Special meetings of Shareholders shall also be
called by the Secretary upon the written request of the holders of Shares
entitled to vote not less than twenty-five percent (25%) of all the votes
entitled to be cast at such meeting. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on thereat. The
Secretary shall inform such Shareholders of the reasonable estimated cost of
preparing and mailing such notice of the meeting, and, upon payment to the Fund
of such costs, the Secretary shall give notice stating the purpose or purposes
of the meeting to all entitled to vote at such meeting. No special meeting need
be called upon the request of the holders of Shares entitled to cast less that a
majority of all votes entitled to be cast at such meeting, to consider any
matter which is substantially the same as a matter voted upon at any special
meeting of Shareholders held during the preceding twelve months.
SECTION 5.02 ANNUAL MEETINGS. Meeting of Shareholders, at
which the Shareholders shall elect Trustees and transact such other business as
may properly come before the meeting, shall be held annually so long as such
annual meetings shall be required by the New York Stock Exchange or the other
exchanges or trading system upon which Shares are principally traded.
SECTION 5.03 NOTICES. Except as provided in Section 5.01,
notices of any meeting of the Shareholders shall be given by the Secretary by
delivering or mailing, postage prepaid, to each Shareholder entitled to vote at
said meeting, written or printed notification of such meeting at least ten (10)
days before the meeting, to such address as may be registered with the Trust by
the Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the records of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholder's meeting to another time or place need not be given, if such time
and place are announced at the meeting or reasonable notice is given to persons
present at the meeting and the adjourned meeting is held within a reasonable
time after the date set for the original meeting.
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<PAGE> 9
SECTION 5.04 VOTING-PROXIES. Subject to the provisions of the
Trust Instrument, shareholders entitled to vote may vote either in person or by
proxy, provided that either (a) an instrument authorizing such proxy to act is
executed by the Shareholder in writing and dated not more than eleven (11)
months before the meeting, unless the instrument specifically provides for a
longer period or (b) the Trustees adopt by resolution an electronic, telephonic,
computerized or other alternative to execution of a written instrument
authorizing the proxy to act, which authorization is received not more than
eleven (11) months before the meeting. Proxies shall be delivered to the
Secretary of the Trust or other person responsible for recording the proceedings
before being voted. A proxy with respect to shares held in the name of two or
more persons shall be valid if executed by one of them unless at or prior to
exercise of such proxy the Trust receives a specific written notice from any one
of them. Unless otherwise specifically limited by their terms, proxies shall
entitle the holder thereof to vote at any adjournment of a meeting. A proxy
purporting to be exercised by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger. At all meetings of the Shareholders,
unless the voting is conducted by inspectors, all questions relating to the
qualifications of voters, the validity of proxies, and the acceptance or
rejection of votes shall be decided by the Chairman of the meeting. Except as
otherwise provided herein or in the Trust Instrument, as these Bylaws or such
Trust Instrument may be amended or supplemented from time to time, all matters
relating to the giving, voting or validity of proxies shall be governed by the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware corporation
and the Shareholders were shareholders of a Delaware corporation.
SECTION 5.05 PLACE OF MEETING. All meetings of the
Shareholders shall be held at the principal place of business of the Trust or at
such other place in the United States as the Trustees may designate.
SECTION 5.06 ACTION WITHOUT A MEETING. Any action to be taken
by Shareholders may be taken without a meeting if all Shareholders entitled to
vote on the matter consent to the action in writing and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the Shareholders
held at the principal place of business of the Trust.
SECTION 5.07 QUORUM AND ADJOURNMENT OF MEETINGS. Except as
otherwise provided by law, by the Trust Instrument or by these By-Laws, at all
meetings of Shareholders the holders of a majority of the Shares issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum for the transaction of
business. In the absence of a quorum, the Shareholders present or represented by
proxy and entitled to vote thereat shall have power to adjourn the meeting from
time to time. Any adjourned meeting may be held as adjourned without further
notice. At any adjourned meeting at which a quorum shall be present, any
business may be transacted as if the meeting had been held as originally called.
SECTION 5.08 INSPECTORS OF ELECTION. In advance of
any meeting of Shareholders, the Trustees may appoint Inspectors of Election to
act at the meeting or any
- viii -
<PAGE> 10
adjournment thereof. If Inspectors of Election are not so appointed, the
chairman of any meeting of Shareholders may, and on the request of any
Shareholder or his proxy shall, appoint Inspectors of Election of the meeting.
In case any person appointed as Inspector fails to appear or fails or refuses to
act, the vacancy may be filled by appointment made by the Trustees in advance of
the convening of the meeting or at the meeting by the person acting as chairman.
The Inspectors of Election shall determine the number of Shares outstanding, the
Shares represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents, shall
hear and determine all challenges and questions in a way arising in connection
with the right to vote, shall count and tabulate all votes or consents,
determine the results, and do such other acts as may be proper to conduct the
election or vote with fairness to all Shareholders. On request of the chairman
of the meeting, or of any Shareholder or his proxy, the Inspectors of Election
shall make a report in writing of any challenge or question or matter determined
by them and shall execute a certificate of any facts found by them.
SECTION 5.09 INSPECTION OF BOOKS AND RECORDS.
Shareholders shall have such rights and procedures of inspection of the books
and records of the Fund as are granted to Shareholders under the General
Corporations Law of the State of Delaware.
ARTICLE VI
TRUSTEES' MEETINGS
SECTION 6.01 SPECIAL MEETINGS. Special meetings of the
Trustees may be called orally or in writing by the Chairman of the Board of
Trustees or any two other Trustees.
SECTION 6.02 REGULAR MEETINGS. Regular meetings of the
Trustees may be held at such places and at such times as the Trustees may from
time to time determine; each Trustee present at such determination shall be
deemed a party calling the meeting and no call or notice will be required to
such Trustee provided that any Trustee who is absent when such determination is
made shall be given notice of the determination by the Chairman or any two other
Trustees, as provided for in Section 4.04 of the Trust Instrument.
SECTION 6.03 QUORUM. A majority of the Trustees shall
constitute a quorum for the transaction of business at any meeting and an action
of a majority of the Trustees in attendance constituting a quorum shall
constitute action of the Trustees.
SECTION 6.04 NOTICE. Except as otherwise provided, notice of
any special meeting of the Trustees shall be given by the party calling the
meeting to each of the Trustees, as provided for in Section 4.04 of the Trust
Instrument. A written notice may be mailed, postage prepaid, addressed to him at
his address as registered on the books of the Trust or, if not so registered, at
his last known address.
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<PAGE> 11
SECTION 6.05 PLACE OF MEETING. All special meetings of the
Trustees shall be held at the principal place of business of the Trust or such
other place as the Trustees may designate. Any meeting may adjourn to any place.
SECTION 6.06 SPECIAL ACTION. When all the Trustees shall be
present at any meeting however called or wherever held, or shall assent to the
holding of the meeting without notice, or shall sign a written assent thereto
filed with the records of such meeting, the acts of such meeting shall be valid
as if such meeting had been regularly held.
SECTION 6.07 ACTION BY CONSENT. Any action by the Trustees may
be taken without a meeting if a written consent thereto is signed by all the
Trustees and filed with the records of the Trustees' meeting. Such consent shall
be treated, for all purposes, as a vote at a meeting of the Trustees held at the
principal place of business of the Trustees.
SECTION 6.08 PARTICIPATION IN MEETINGS BY CONFERENCE
TELEPHONE. Except when presence in person is required at a meeting under the
1940 Act or other applicable laws, Trustees may participate in a meeting of
Trustees by conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting. Any meeting
conducted by telephone shall be deemed to take place at and from the principal
office of the Trust.
SECTION 6.09 EXECUTION OF INSTRUMENTS AND DOCUMENTS AND
SIGNING OF CHECKS AND OTHER OBLIGATIONS AND TRANSFERS. All instruments,
documents and other papers shall be executed in the name and on behalf of the
Fund and all checks, notes, drafts and other obligations for the payment of
money by the Fund shall be signed, and all transfer of securities standing in
the name of the Fund shall be executed, by the President, any Vice President or
the Treasurer or by any one or more officers or agents of the Fund as shall be
designated for that purpose by vote of the Trustees.
ARTICLE VII
FISCAL YEAR; REGISTERED OFFICE AND REGISTERED AGENT
SECTION 7.01 FISCAL YEAR. The fiscal year of the Trust shall
end on June 30 of each year; provided that the last fiscal year of the Trust
shall end on the date on which the Trust is terminated; and further provided
that the Trustees by resolution and without a Shareholder vote may at any time
change the fiscal year of the Trust.
SECTION 7.02 REGISTERED OFFICE AND REGISTERED AGENT. The
initial registered office of the Trust in the State of Delaware shall be located
at 1013 Center Road, Wilmington, Delaware 19805. The registered agent of the
Trust at such location shall be Corporation Service Company; provided that the
Trustees by resolution and without a Shareholder vote may at any time change the
Trust's registered office or its registered agent, or both.
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<PAGE> 12
ARTICLE VIII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Trust
Instrument, dividends and distributions upon the Shares may be declared at such
intervals as the Trustees may determine, in cash, in securities or other
property, or in Shares, from any sources permitted by law, all as the Trustees
shall from time to time determine.
Inasmuch as the computation of net income and net profits from
the sale of securities or other properties for federal income tax purposes may
vary from the computation thereof on the records of the Fund, the Trustees shall
have power, in their discretion, to distribute as income dividends and as
capital gain distributions, respectively, amounts sufficient to enable the Fund
to avoid or reduce liability for federal income taxes.
ARTICLE IX
CERTIFICATES OF SHARES
SECTION 9.01 CERTIFICATES OF SHARES. Certificates for Shares
of the Fund shall be in such form and of such design as the Trustees shall
approve, subject to the right of the Trustees to change such form and design at
any time or from time to time, and shall be entered in the records of the Fund
as they are issued. Each such certificate shall bear a distinguishing number;
shall exhibit the holder's name and certify the number of full Shares owned by
such holder; shall be signed by or in the name of the Fund by the President, or
a Vice President, and countersigned by the Secretary or an Assistant Secretary
or the Treasurer and an Assistant Treasurer of the fund; shall be sealed with
the seal; and shall contain such recitals as may be required by law. Where any
certificate is signed by a Transfer Agent or by a Registrar, the signature of
such officers and the seal may be facsimile, printed or engraved. The Fund may,
at its option, determine not to issue a certificate or certificates to evidence
Shares owned of record by any Shareholder.
In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall appear on, any such certificate or
certificates shall cease to be such officer or officers of the Fund, whether
because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Fund, such certificate or
certificates shall, nevertheless, be adopted by the Fund and be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures shall appear therein had
not ceased to be such officer or officers of the Fund.
No certificates shall be issued for any share until such share
is fully paid.
SECTION 9.02 TRANSFER OF SHARES. Shares shall be transferable
on the books of the Fund by the holder thereof in person or by his 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,
- xi -
<PAGE> 13
with such proof of the authenticity of the signature as the Fund or its agent
may reasonably require; in the case of shares not represented by certificates,
the same or similar requirements may be imposed by the Board of Trustees.
SECTION 9.03 SHARE LEDGERS. The share ledgers of the Fund,
containing the name and address of the Shareholders of the Fund and the number
of shares held by them respectively, shall be kept at the principal offices of
the Fund or, if the Fund employs a transfer agent, at the offices of the
transfer agent of the Fund.
SECTION 9.04 LOST, STOLEN, DESTROYED AND MUTILATED
CERTIFICATES. The Trustees may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Fund alleged to have been lost, stolen or destroyed, upon satisfactory proof of
such loss, theft, or destruction; and the Trustees may, in their discretion,
require the owner of the lost, stolen or destroyed certificate, or his legal
representative, to give to the Fund and to such Registrar, Transfer Agent and/or
Transfer Clerk as may be authorized or required to countersign such new
certificate or certificates, a bond in such sum and of such type as they may
direct, and with such surety or sureties, as they may direct, as indemnity
against any claim that may be against them or any of them on account of or in
connection with the alleged loss, theft or destruction of any such certificate.
ARTICLE X
TERMS OF COMMON SHARES
SECTION 10.01 DESIGNATION. A class of common shares of
beneficial interest, without par value, is hereby designated "Common Shares"
(the "Common Shares").
SECTION 10.02 COMMON SHARES. Except as otherwise provided by
law, the holders of the Common Shares shall be entitled to one vote for each
share on each matter submitted to a vote of the shareholders of the Trust.
(i) The Trust may be voluntarily liquidated,
dissolved or wound up when and as authorized at any meeting of
shareholders called for the purpose, by the vote of the
holders of at least seventy-five percent (75%) of the Common
Shares then outstanding, provided, however, if such
termination is recommended by two-thirds (2/3) of the total
number of Trustees then in office, the vote of the holders of
at least a majority of the Common Shares then outstanding,
shall be sufficient authorization.
(ii) The Trust may merge or consolidate with any
other corporation, association, trust or other organization,
or may sell, lease or exchange all or substantially all of its
assets, including its good will, upon such terms and
conditions and for such consideration, and thereafter be
terminated, when and as authorized at any meeting of
shareholders called for the purpose, by the vote of the
holders of at least seventy-five percent (75%) of the Common
Shares then outstanding, provided, however, if such
termination is
- xii -
<PAGE> 14
recommended by two-thirds (2/3) of the total number of
Trustees then in office, the vote of the holders of at least a
majority of the Common Shares then outstanding, shall be
sufficient authorization.
SECTION 10.03 CONVERSION. The Trust will automatically convert
from a "closed end company" to an "open-end company" as those terms are defined
in the 1940 Act, if, after the Company has been in operation for a period of at
least twenty-four (24) months as measured from the date of its initial public
offering, its common stock trades at a discount of five percent (5%) or more for
a period of fifteen (15) consecutive days. This provision may be amended only by
the affirmative vote of at least eighty percent (80%) of the common shares
outstanding.
SECTION 10.04 RECORD DATE. The Trustees may fix in advance a
date as the record date for the purpose of determining Shareholders entitled to
notice of, or to vote at, any meeting of Shareholders, or Shareholders entitled
to receive payment of any dividend or the allotment of any rights, or in order
to make a determination of Shareholders for any other proper purpose. Such date,
in any case, shall be not more than ninety (90) days, and in case of a meeting
of Shareholders not less than ten (10) days, prior to the date on which
particular action requiring such determination of Shareholders is to be taken.
In lieu of fixing a record date the Trustees may provide that the transfer books
shall be closed for a stated period but not to exceed, in any case, twenty (20)
days. If the transfer books are closed for the purpose of determining
Shareholders entitled to notice of a vote at a meeting of Shareholders, such
books shall be closed for at least ten (10) days immediately preceding such
meeting.
ARTICLE XI
WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any
meeting of Shareholders, Trustees, or of any committee is required to be given
in accordance with law or under the provisions of the Trust Instrument or these
By-Laws, a waiver thereof in writing, signed by the person or persons entitled
to such notice and filed with the records of the meeting, whether before or
after the holding thereof, or actual attendance at the meeting of Shareholders,
Trustees or Committee, as the case may be, in person, shall be deemed equivalent
to the giving of such notice to such person.
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<PAGE> 15
ARTICLE XII
INSURANCE OF OFFICERS, TRUSTEES, AND EMPLOYEES
The Trust may purchase and maintain insurance on behalf of any
Covered Person (as defined in Section 10.02 of the Trust Instrument) or employee
of the Trust, including any Covered Person or employee of the Trust who is or
was serving at the request of the Trust as a Trustee, officer or employee of a
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and claimed by him in any such capacity or
arising out of his status as such, whether or not the Trustees would have the
power to indemnify him against such liability.
The Trust may not acquire or obtain a contract for insurance
that protects or purports to protect any Trustee or officer of the Trust against
any liability to the Trust or its Shareholders 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 XIII
SEAL
The seal of the Trust shall be circular in form bearing the
inscription:
"THE DESSAUER GLOBAL EQUITY FUND, 1996
DELAWARE"
ARTICLE XIV
AMENDMENTS
These Bylaws may be amended, altered, or repealed, or new
By-Laws may be adopted, (a) by a Majority Shareholder Vote, or (b) by the
Trustees; provided, however, that no By-Law may be amended, adopted or repealed
by the Trustees if such amendment, adoption or repeal requires, pursuant to law,
the Trust Instrument, or these By-Laws, a vote of the Shareholders. The Trustees
shall in no event adopt By-Laws which are in conflict with the Trust Instrument,
and any apparent inconsistency shall be construed in favor of the related
provisions in the Trust Instrument.
ARTICLE XV
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they
may deem to be necessary, desirable or appropriate so that the Fund is or shall
be in compliance with any federal or state statute, rule or regulation with
which compliance by the Fund is required.
- xiv -
<PAGE> 16
ARTICLE XVI
THE TRUST
The Trust Instrument establishing the Fund, dated June 27,
1996, a copy of which is on file in the office of the Secretary of State of the
State of Delaware, provides that the name The Dessauer Global Equity Fund refers
to the Trustees under the Trust collectively as Trustees, but not as individuals
or personally; and no Trustee, Shareholder, officer, employee or agent of the
Fund shall be held to any personal liability, nor shall resort to their private
property for the satisfaction of any obligation or claim or otherwise, in
connection with the affairs of said Fund, but the Fund Estate only shall be
liable.
The foregoing By-Laws were adopted by the Board of Trustees on
June 27, 1996.
/s/Louis Citron
Secretary
- xv -
<PAGE> 1
EXHIBIT 99.2(D)
Number Shares
-000- -000-
INCORPORATED UNDER THE LAWS SEE REVERSE FOR CERTAIN DEFINITIONS
OF THE STATE OF DELAWARE AND A STATEMENT AS TO THE RIGHTS
PREFERENCES, PRIVILEGES AND
TRANSFERABLE IN BOSTON,MASS., RESTRICTIONS OF SHARES
OR NEW YORK, NEW YORK
THE DESSAUER GLOBAL EQUITY FUND
This Certifies that VOID is the owner of FULLY PAID AND NON-ASSESSABLE SHARES OF
BENEFICIAL INTEREST, PAR VALUE OF $.01 PER SHARE, OF THE DESSAUER GLOBAL EQUITY
FUND transferable only on the books of the Business Trust by the registered
holder hereof in person or by duly authorized attorney upon surrender of this
certificate properly endorsed. This certificate is not valid unless
countersigned by the Transfer Agent and registered by the Registrar.
In Witness Whereof, the Business Trust has caused this certificate to
be signed in facsimile by its authorized officers and its facsimile seal to be
hereunto affixed.
Dated:
----------------- ------------------
Secretary President
COUNTERSIGNED AND REGISTERED
FIRST NATIONAL BANK OF BOSTON
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED OFFICER
<PAGE> 2
[REVERSE SIDE OF CERTIFICATE]
THE DESSAUER GLOBAL EQUITY FUND
A statement of the powers, designations, preferences, restrictions and
relative, participating, optional or other special rights of the shares of
beneficial interest may be obtained by the holder hereof upon request and
without charge from the Transfer Agent of the Business Trust at its offices in
Boston, MA or New York, NY.
- ------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM-as tenants in common UNIF GIFT MIN ACT-_________ Custodian
- --------
TEN ENT-as tenants by the (Cust) (Minor)
entireties under Uniform Gifts to Minors
Act
JT TEN-as joint tenants with
- ---------------------------------
right of survivorship (State)
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
For Value received, ______________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------
/------------------/
- ------------------------------------------------------------------------------
__________________________________________ Shares of beneficial interest
represented by the within Certificate and do hereby irrevocably constitute and
appoint _________________________________________________ Attorney to transfer
the said shares of beneficial interest on the books of the within named Business
Trust with full power of substitution in the premises.
Dated________________ X_____________________________
NOTICE. THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE
NAME(S) AS WRITTEN UPON THE FACE OF
THE CERTIFICATE, IN EVERY
PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT, OR ANY CHANGE
WHATSOEVER.
SIGNATURE GUARANTEED: _______________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE, IF IT IS LOST, STOLEN, OR
DESTROYED, THE BUSINESS TRUST MAY REQUIRE A BOND OF INDEMNITY AS A CONDITION
TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
<PAGE> 1
EXHIBIT 99.2E
AUTOMATIC DIVIDEND REINVESTMENT
AND CASH PURCHASE PLAN
All distributions to shareholders whose shares are registered in their
own names automatically will be reinvested in additional shares of the Dessauer
Global Equity Fund (the "Fund") pursuant to the Automatic Dividend Reinvestment
and Cash Purchase Plan (the "Plan"), unless they elect to receive cash.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Fund's dividend reinvestment plan. Participation is voluntary and may be
terminated or resumed at any time upon written notice from the participant
received by State Street Bank and Trust Company, the Plan Agent, prior to the
record date of the next dividend. Additional information regarding the
election may be obtained from the Fund.
Dividend payments and other distributions to be made by the Fund to
participants in the Plan either will be paid to the Plan Agent in cash (which
then must be used to purchase shares in the open market) or will be represented
by the delivery of shares depending upon which of the two options would be the
most favorable to participants, as hereafter determined. On each date on which
the Fund determines the net asset value of the shares ("Valuation Date"), and
which occurs not more than five business days prior to a date fixed for payment
of a dividend or other distribution from the Fund, the Plan Agent will compare
the determined net asset value per share with the market price per share. For
all purposes of the Plan, "market price" shall be deemed to be the highest
price bid at the close of the market by any market maker on the date which
coincides with the relevant Valuation Date, or, if no bids were made on such
date, the next preceding day on which a bid was made. If the net asset value
in any such comparison is found to be lower than said market price, the Plan
Agent will demand that the Fund satisfy its obligation with respect to any such
dividend or other distribution by issuing additional shares to the Participants
in the Plan at a price per share equal to the greater of the determined net
asset value per share or ninety-five percent (95%) of the market price per
share determined as of the close of business on the relevant Valuation Date.
However, if the net asset value per share (as determined above) is higher than
the market price per share, then the Plan Agent will demand that the Fund
satisfy its obligation with respect to any such dividend or other distribution
by a cash payment to the Plan Agent for the account of Plan Participants and
the Plan Agent then shall use such cash payment to buy additional shares in the
"open market" for the account of the Plan participants, provided, however, that
the Plan Agent shall not purchase shares in the "open market" at a price in
excess of the net asset value as of the relevant Valuation Date. In the event
the Plan Agent is unable to complete its acquisition of shares to be purchased
in the "open market" by the end of the first trading day following receipt of
the cash payment from the Fund, any remaining funds shall be used by the Plan
Agent to purchase newly issued Shares from the Fund at the greater of the
determined net asset value per share or ninety-five percent (95%) of the market
price per share as of the date coinciding with or next preceding the date of
the relevant Valuation Date.
Participants in the Plan will also have the option of making
additional cash payments to the Plan Agent, on a monthly basis, for investment
in the Fund's shares. Such payments may be made in any amount from a minimum
of $50.00 to a maximum of $1,000.00 per month. The Fund may, in its
discretion, waive the maximum monthly limit with respect to any participant.
At the end of each calendar month, the Plan Agent will determine the amount of
funds accumulated. Purchases made from the accumulation of payments during any
one calendar month will be made on or about the first business day of the
following month ("Investment Date"). The funds will be used to purchase Shares
from the Fund. If the net asset value of the shares is lower than the market
price as of the Valuation Date which occurs not more than five business days
prior to the relevant Investment Date, such shares will be newly issued shares
and will be issued at a price per share equal to the greater of the determined
net asset value per share or ninety-five percent (95%) of the market price per
share. If the net asset value per share is higher than the market price per
share, then the Plan Agent shall use such cash payments to buy additional
shares in the "open market" for the account of the Plan Participants, provided,
however, that the Plan Agent shall not purchase shares in the "open market" at
a price in excess of the net asset value as of the relevant Valuation Date. In
the event that the Plan Agent is unable to complete its acquisition of
<PAGE> 2
shares to be purchased in the "open market" by the end of the Investment Date,
any remaining cash payments shall be used by the Plan Agent to purchase newly
issued Shares from the Fund at the greater of the determined net asset value
per share or ninety-five percent (95%) of the market price per share as of the
relevant Valuation Date. All cash payments received by the Plan Agent in
connection with the Plan will be held without earning interest. To avoid
unnecessary cash accumulations, and also to allow ample time for receipt and
processing by the Plan Agent, participants that wish to make voluntary cash
payments should send such payments to the Plan Agent in such a manner that
assures that the Plan Agent will receive and collect Federal Funds by the end
of the month. This procedure will avoid unnecessary accumulations of cash and
will enable participants to realize lower brokerage commissions and to avoid
additional transaction charges. If a voluntary cash payment is not received in
time to purchase shares in any calendar month, such payment shall be invested on
the next Investment Date. A participant may withdraw a voluntary cash payment
by written notice to the Plan Agent if the notice is received by the Plan Agent
at least 48 hours before such payment is to be invested by the Plan Agent.
State Street will perform bookkeeping and other administrative
functions, such as maintaining all shareholder accounts in the Plan and
furnishing written confirmation of all transactions in the account, including
information needed by shareholders for personal and tax records. Shares in the
account of each Plan participant will be held by the Plan Agent in
noncertificated form in the name of the participant, and each shareholder's
proxy will include those shares purchased pursuant to the Plan and of record as
of the record date for determining those shareholders who are entitled to vote
on any matter involving the Fund. In case of shareholders such as banks,
brokers, or nominees, which hold shares for others who are the beneficial
owners, the Plan Agent will administer the Plan on the basis of the number of
shares certified from time to time by such shareholders as representing and
limited to the total number of shares registered in the shareholder's name and
held for the account of beneficial owners who have elected to participate in
the Plan.
The Fund reserves the right to amend or terminate the Plan as applied
to any voluntary cash payment received and any dividend or distribution to be
paid subsequent to a date specified in a notice of the change sent to all
shareholders at least ninety days before such specified date. The Plan may
also be terminated on at least 90 days' written notice to all shareholders in
the Plan.
<PAGE> 1
EXHIBIT 99.2G(1)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE DESSAUER GLOBAL EQUITY FUND
AND
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
INVESTMENT ADVISORY AGREEMENT, dated as of ________, 1997, by
and between THE DESSAUER GLOBAL EQUITY FUND, a Delaware business trust (the
"Fund"), and GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED (the "Adviser").
W I T N E S S E T H
WHEREAS, the Fund is engaged in business as a closed-end
investment company registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "Act");
and
WHEREAS, the Adviser is an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Adviser is a member of the Investment Management
Regulatory Organization Limited ("IMRO") of the United Kingdom and is thereby
regulated by IMRO in the conduct of its investment business for United Kingdom
investors and engages in the business of acting as an investment adviser; and
WHEREAS, the Fund wishes to engage the Adviser to provide
certain investment advisory and certain other services for the Fund, and the
Adviser is willing to provide such services for the Fund on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is hereby agreed by and between the
parties hereto as follows:
<PAGE> 2
1. Appointment.
The Adviser agrees, all as more fully set forth herein, to act
as investment adviser to the Fund with respect to the investment of its assets
and to supervise and arrange the purchase of securities for and the sale of
securities held in that portion of the portfolio allocated to it by the Asset
Allocation Committee of the Fund and provide such other services as the Board of
Trustees may request.
2. Asset Allocation Committee
The Asset Allocation Committee shall allocate the assets of
the Fund among the markets in which the Fund will invest. Assets allocated by
the Committee to North America and Western Europe will be managed by Dessauer
Asset Management, Inc. ("Dessauer") (the "Dessauer Portfolio"). Assets allocated
to Asia and Japan will be managed by the Adviser (the "GFIM Portfolio"). The
Committee will consist of three members of which two members shall be
representatives of Dessauer and one member shall be a representative of the
Adviser. All decisions by the Committee shall be made by a majority vote of its
members.
3. Duties and Obligations of the Adviser With Respect
to the Investment of Assets of the Fund.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the Fund, the
Adviser shall:
(i) monitor continuously the investment program
of the Fund and the composition of its
portfolio;
(ii) determine what securities shall be purchased
or sold for the GFIM portfolio;
(iii) arrange for the purchase and the sale of
securities held in the GFIM portfolio of the
Fund;
(iv) provide information to the Board of Trustees
regarding the Fund's portfolio; and
(v) supervise, together with the Administrator,
the operations of the Fund.
(b) Any services furnished by the Adviser under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by:
(i) the provisions of the Act;
-2-
<PAGE> 3
(ii) any other applicable provisions of state and
Federal law;
(iii) the provisions of the Fund's Declaration of
Trust and By-Laws, as amended from time to
time;
(iv) any policies and determinations of the Board
of Trustees of the Fund; and
(v) the fundamental policies of the Fund, as
reflected in its Registration Statement
under the Act, as amended from time to time.
(c) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, and in connection therewith
the Adviser shall not be liable to the Fund or its security holders for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio transactions
for the Fund, except for wilful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this subsection (c), the term
"Adviser" shall include board members, officers and employees of the Adviser as
well as the entity referred to as the "Adviser" itself.
(d) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the Act) of the Adviser from acting as
investment adviser or manager for any other person, firm or corporation
(including other investment companies) and shall not in any way limit or
restrict the Adviser or any such affiliated person from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the Adviser
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Fund
under this Agreement. The Adviser agrees that it will not deal with itself, or
with the Trustees of the Fund or the Fund's principal underwriter or
distributor, as principals in making purchases or sales of securities or other
property for the account of the Fund, except as permitted by the Act, and will
comply with all other provisions of the Fund's Declaration of Trust and By-Laws
and the then-current prospectus and statement of additional information
applicable to the Fund relative to the Adviser and its board members and
officers.
(e) The Fund will supply the Adviser with certified copies of
the following documents: (i) the Fund's Declaration of Trust and By-Laws, as
amended; (ii) resolutions of the Fund's Board of Trustees and shareholders
authorizing the appointment of the Adviser and approving this Agreement; (iii)
the Fund's Registration Statement, as filed with the Securities and Exchange
Commission; and (iv) the Fund's most recent prospectus and statement of
additional information. The Fund will furnish the Adviser promptly with copies
of all amendments or supplements to the foregoing, if any, and all documents,
notices and reports filed with the Securities and Exchange Commission.
-3-
<PAGE> 4
(f) The Fund will supply, or cause its custodian bank to
supply, to the Adviser such financial information as is necessary or desirable
for the functions of the Adviser hereunder.
4. Broker-Dealer Relationships.
The Adviser is responsible for decisions to buy and sell
securities for the GFIM Portfolio of the Fund, broker-dealer selection and
negotiation of its brokerage commission rates. The Adviser's primary
consideration in effecting a security transaction will be execution at the most
favorable price. The Fund understands that many of the Fund's portfolio
transactions will be transacted with primary market makers acting as principal
on a net basis, with no brokerage commissions being paid by the Fund. Such
principal transactions may, however, result in a profit to the market makers. In
certain instances, the Adviser may make purchases of underwritten issues at
prices which include underwriting fees. In selecting a broker or dealer to
execute each particular transaction, the Adviser will take the following into
consideration: the best price available; the reliability, integrity and
financial condition of the broker or dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker or
dealer to the investment performance of the Fund on a continuing basis.
Accordingly, the price to the Fund in any transaction may be less favorable than
that available from another broker or dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered. Subject
to such policies as the Board of Trustees may determine, the Adviser shall not
be deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Fund to pay a
broker or dealer that provides brokerage and research services to the Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Adviser 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 Adviser's overall responsibilities
with respect to the Fund. The Adviser is further authorized to allocate the
orders placed by it on behalf of the Fund to an affiliated broker-dealer, if
any, or to such brokers and dealers who also provide research or statistical
material, or other services to the Fund (which material or services may also
assist the Adviser in rendering services to other clients). Such allocation
shall be in such amounts and proportions as the Adviser shall determine and the
Adviser will report on said allocations regularly to the Board of Trustees of
the Fund indicating the brokers to whom such allocations have been made and the
basis therefor.
5. Allocation of Expenses.
The Adviser agrees that it will furnish the Fund, at its
expense, all office space and facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser agrees
that it will supply to the Administrator of the Fund all necessary financial
information in connection with the Administrator's duties under any agreement
between the Administrator and the Fund on behalf of the Fund. All costs and
expenses associated with any administrative functions delegated by the Adviser
to the Administrator that are not pursuant
-4-
<PAGE> 5
to any agreement between the Administrator and the Fund or the Adviser and the
Fund will be paid by the Adviser. All other costs and expenses not expressly
assumed by the Adviser under this Agreement, by Dessauer under its Investment
Advisory Agreement with the Fund or by the Administrator under the
Administration Agreement between it and the Fund on behalf of the Fund shall be
paid by the Fund from the assets of the Fund, including, but not limited to (i)
fees paid to the Adviser, Dessauer and the Administrator; (ii) interest and
taxes; (iii) brokerage commissions; (iv) insurance premiums; (v) compensation
and expenses of the trustees other than those affiliated with the Adviser,
Dessauer or the administrator; (vi) legal, accounting and audit expenses; (vii)
fees and expenses of any transfer agent, distributor, registrar, dividend
disbursing agent or shareholder servicing agent of the Fund; (viii) expenses,
including clerical expenses, incident to the issuance, redemption or repurchase
of shares of the Fund, including issuance on the payment of, or reinvestment of,
dividends; (ix) fees and expenses incident to the registration under Federal or
state securities laws of the Fund or its shares; (x) expenses of preparing,
setting in type, printing and mailing prospectuses, statements of additional
information, reports and notices and proxy material to shareholders of the Fund;
(xi) all other expenses incidental to holding meetings of the Fund's trustees
and shareholders; (xii) expenses connected with the execution, recording and
settlement of portfolio securities transactions; (xiii) fees and expenses of the
Fund's custodian for all services to the Fund, including safekeeping of funds
and securities and maintaining required books and accounts; (xiv) expenses of
calculating net asset value of the shares of the Fund; (xv) industry membership
fees allocable to the Fund; and (xvi) such extraordinary expenses as may arise,
including litigation affecting the Fund and the legal obligations which the Fund
may have to indemnify the officers and directors with respect thereto.
6. Compensation of the Adviser.
For the services to be rendered, the Fund shall pay to the
Adviser from the assets of the Fund an investment advisory fee paid monthly at
an annual rate equal to .40% of the Fund's average weekly net assets for the
Fund's then-current fiscal year. Except as hereinafter set forth, compensation
under this Agreement shall be calculated and accrued daily and the amounts of
the daily accruals shall be paid monthly. If the Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be pro-rated in a manner consistent with the calculation of the fees as
set forth above. Payment of the Adviser's compensation for the preceding month
shall be made within five days after the end of that month.
7. Duration, Amendment and Termination.
(a) This Agreement shall go into effect as to the Fund on the
date set forth above (the "Effective Date") and shall, unless terminated as
hereinafter provided, continue in effect for two years from the Effective Date
and shall continue from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees
of the Fund, including the vote of a majority of the trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party cast in person at a meeting called
-5-
<PAGE> 6
for the purpose of voting on such approval, or by the vote of the holders of a
"majority" (as so defined) of the outstanding voting securities of the Fund and
by such a vote of the trustees.
(b) This Agreement may be amended only if such amendment is
approved by the vote of the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the Fund.
(c) This Agreement may be terminated by the Adviser at any
time without penalty upon giving the Fund sixty (60) days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty (60) days' written notice (which
notice may be waived by the Adviser), provided that such termination by the Fund
shall be approved by the vote of a majority of all the trustees in office at the
time or by the vote of the holders of a "majority" (as defined in the Act) of
the voting securities of the Fund at the time outstanding and entitled to vote.
This Agreement shall automatically terminate in the event of its "assignment"
(as defined in the Act).
8. Board of Trustees' Meeting.
The Fund agrees that notice of each meeting of the Board of
Trustees of the Fund will be sent to the Adviser and that the Fund will make
appropriate arrangements for the attendance (as persons present by invitation)
of such person or persons as the Adviser may designate.
9. Notices.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
10. Questions of Interpretation.
Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act, as amended, shall be resolved by reference to such term or
provision of the Act and to interpretations thereof, if any, by the United
States Courts or in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement, is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
-6-
<PAGE> 7
11. Applicable Law.
This Agreement shall be construed in accordance with the laws
of the State of New York, without regard to the conflicts of law provisions
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE DESSAUER GLOBAL EQUITY FUND
By____________________________________________________
Title:
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
By____________________________________________________
Title:
-7-
<PAGE> 1
EXHIBIT 99.2(G)(2)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE DESSAUER GLOBAL EQUITY FUND
AND
DESSAUER ASSET MANAGEMENT, INC.
INVESTMENT ADVISORY AGREEMENT, dated as of ________, 1997, by
and between THE DESSAUER GLOBAL EQUITY FUND, a Delaware business trust (the
"Fund"), and DESSAUER ASSET MANAGEMENT, INC. ( "Dessauer").
W I T N E S S E T H
WHEREAS, the Fund is engaged in business as a closed-end
investment company registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "Act");
and
WHEREAS, Dessauer is an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Fund wishes to engage Dessauer to provide certain
investment advisory services for the Fund, and Dessauer is willing to provide
such services for the Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is hereby agreed by and between the
parties hereto as follows:
1. Appointment.
Dessauer agrees, all as more fully set forth herein, to act as
investment adviser to the Fund with respect to the investment of its assets and
to supervise and arrange the purchase of securities for and the sale of
securities held in that portion of the portfolio allocated to it by the Asset
Allocation Committee of the Fund.
<PAGE> 2
2. Asset Allocation Committee
The Asset Allocation Committee shall allocate the assets of
the Fund among the markets in which the Fund will invest. Assets allocated by
the Committee to North America and Western Europe will be managed by Dessauer
(the "Dessauer Portfolio"). Assets allocated to Asia and Japan will be managed
by Guinness Flight Investment Management Company (the "Adviser"). The Committee
will consist of three members of which two members shall be representatives of
Dessauer and one member shall be a representative of the Adviser. All decisions
by the Committee shall be made by a majority vote of its members.
3. Duties and Obligations of Dessauer With Respect
to the Investment of Assets of the Fund.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the Fund,
Dessauer shall:
(i) monitor continuously the investment program
of the Fund and the composition of its
portfolio;
(ii) determine what securities shall be purchased
or sold for the Dessauer Portfolio;
(iii) arrange for the purchase and the sale of
securities held in the Dessauer Portfolio of
the Fund; and
(iv) provide information to the Board of Trustees
regarding the Dessauer Portfolio.
(b) Any services furnished by Dessauer under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by:
(i) the provisions of the Act;
(ii) any other applicable provisions of state and
Federal law;
(iii) the provisions of the Fund's Declaration of
Trust and By-Laws, as amended from time to
time;
(iv) any policies and determinations of the Board
of Trustees of the Fund; and
-2-
<PAGE> 3
(v) the fundamental policies of the Fund, as
reflected in its Registration Statement
under the Act, as amended from time to time.
(c) Dessauer shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, and in connection therewith
Dessauer shall not be liable to the Fund or its security holders for any error
of judgment or mistake of law or for any loss arising out of any investment or
for any act or omission in the execution of portfolio transactions for the Fund,
except for wilful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder. As used in this subsection (c), the term "Dessauer" shall include
board members, officers and employees of Dessauer as well as the entity referred
to as the "Dessauer" itself.
(d) Nothing in this Agreement shall prevent Dessauer or any
affiliated person (as defined in the Act) of Dessauer from acting as investment
adviser or manager for any other person, firm or corporation (including other
investment companies) and shall not in any way limit or restrict Dessauer or any
such affiliated person from buying, selling or trading any securities for its or
their own accounts or for the accounts of others for whom it or they may be
acting; provided, however, that Dessauer expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Fund under this Agreement. Dessauer agrees
that it will not deal with itself, or with the Trustees of the Fund or the
Fund's principal underwriter or distributor, as principals in making purchases
or sales of securities or other property for the account of the Fund, except as
permitted by the Act, and will comply with all other provisions of the Fund's
Declaration of Trust and By-Laws and the then-current prospectus and statement
of additional information applicable to the Fund relative to Dessauer and its
board members and officers.
(e) The Fund will supply Dessauer with certified copies of the
following documents: (i) the Fund's Declaration of Trust and By-Laws, as
amended; (ii) resolutions of the Fund's Board of Trustees and shareholders
authorizing the appointment of Dessauer and approving this Agreement; (iii) the
Fund's Registration Statement, as filed with the Securities and Exchange
Commission; and (iv) the Fund's most recent prospectus and statement of
additional information. The Fund will furnish Dessauer promptly with copies of
all amendments or supplements to the foregoing, if any, and all documents,
notices and reports filed with the Securities and Exchange Commission.
(f) The Fund will supply, or cause its custodian bank to
supply, to Dessauer such financial information as is necessary or desirable for
the functions of Dessauer hereunder.
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<PAGE> 4
4. Broker-Dealer Relationships.
Dessauer is responsible for decisions to buy and sell
securities for the Dessauer Portfolio of the Fund, broker-dealer selection and
negotiation of its brokerage commission rates. Dessauer's primary consideration
in effecting a security transaction will be execution at the most favorable
price. The Fund understands that many of the Fund's portfolio transactions will
be transacted with primary market makers acting as principal on a net basis,
with no brokerage commissions being paid by the Fund. Such principal
transactions may, however, result in a profit to the market makers. In certain
instances, Dessauer may make purchases of underwritten issues at prices which
include underwriting fees. In selecting a broker or dealer to execute each
particular transaction, Dessauer will take the following into consideration: the
best price available; the reliability, integrity and financial condition of the
broker or dealer; the size of and difficulty in executing the order; and the
value of the expected contribution of the broker or dealer to the investment
performance of the Fund on a continuing basis. Accordingly, the price to the
Fund in any transaction may be less favorable than that available from another
broker or dealer if the difference is reasonably justified by other aspects of
the portfolio execution services offered. Subject to such policies as the Board
of Trustees may determine, Dessauer shall not be deemed to have acted unlawfully
or to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Fund to pay a broker or dealer that provides
brokerage and research services to Dessauer an amount of commission for
effecting a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction, if Dessauer 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 Dessauer's overall responsibilities with respect to the Fund.
Dessauer is further authorized to allocate the orders placed by it on behalf of
the Fund to an affiliated broker-dealer, if any, or to such brokers and dealers
who also provide research or statistical material, or other services to the Fund
(which material or services may also assist Dessauer in rendering services to
other clients). Such allocation shall be in such amounts and proportions as
Dessauer shall determine and Dessauer will report on said allocations regularly
to the Board of Trustees of the Fund indicating the brokers to whom such
allocations have been made and the basis therefor.
5. Allocation of Expenses.
Dessauer agrees that it will furnish the Fund, at its expense,
all office space and facilities, equipment and clerical personnel necessary for
carrying out its duties under this Agreement. Dessauer agrees that it will
supply to the Administrator of the Fund all necessary financial information in
connection with the Administrator's duties under any agreement between the
Administrator and the Fund on behalf of the Fund. All costs and expenses
associated with any administrative functions delegated by Dessauer to the
Administrator that are not pursuant to any agreement between the Administrator
and the Fund or Dessauer and the Fund will be paid by Dessauer. All other costs
and expenses not expressly assumed by Dessauer under this Agreement, by the
Adviser under its Investment Advisory Agreement with the Fund or by the
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<PAGE> 5
Administrator under the Administration Agreement between it and the Fund on
behalf of the Fund shall be paid by the Fund from the assets of the Fund,
including, but not limited to (i) fees paid to Dessauer, the Adviser and the
Administrator; (ii) interest and taxes; (iii) brokerage commissions; (iv)
insurance premiums; (v) compensation and expenses of the trustees other than
those affiliated with Dessauer, the Adviser or the Administrator; (vi) legal,
accounting and audit expenses; (vii) fees and expenses of any transfer agent,
distributor, registrar, dividend disbursing agent or shareholder servicing agent
of the Fund; (viii) expenses, including clerical expenses, incident to the
issuance, redemption or repurchase of shares of the Fund, including issuance on
the payment of, or reinvestment of, dividends; (ix) fees and expenses incident
to the registration under Federal or state securities laws of the Fund or its
shares; (x) expenses of preparing, setting in type, printing and mailing
prospectuses, statements of additional information, reports and notices and
proxy material to shareholders of the Fund; (xi) all other expenses incidental
to holding meetings of the Fund's trustees and shareholders; (xii) expenses
connected with the execution, recording and settlement of portfolio securities
transactions; (xiii) fees and expenses of the Fund's custodian for all services
to the Fund, including safekeeping of funds and securities and maintaining
required books and accounts; (xiv) expenses of calculating net asset value of
the shares of the Fund; (xv) industry membership fees allocable to the Fund; and
(xvi) such extraordinary expenses as may arise, including litigation affecting
the Fund and the legal obligations which the Fund may have to indemnify the
officers and directors with respect thereto.
6. Compensation of Dessauer.
For the services to be rendered, the Fund shall pay to
Dessauer from the assets of the Fund an investment advisory fee paid monthly at
an annual rate equal to .60% of the Fund's average weekly net assets for the
Fund's then-current fiscal year. Except as hereinafter set forth, compensation
under this Agreement shall be calculated and accrued daily and the amounts of
the daily accruals shall be paid monthly. If the Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be pro rated in a manner consistent with the calculation of the fees as
set forth above. Payment of Dessauer's compensation for the preceding month
shall be made within five days after the end of that month.
7. Duration, Amendment and Termination.
(a) This Agreement shall go into effect as to the Fund on the
date set forth above (the "Effective Date") and shall, unless terminated as
hereinafter provided, continue in effect for two years from the Effective Date
and shall continue from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees
of the Fund, including the vote of a majority of the trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party cast in person at a meeting called for the purpose of voting on such
approval, or by the vote of the holders of a "majority"
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<PAGE> 6
(as so defined) of the outstanding voting securities of the Fund and by such a
vote of the trustees.
(b) This Agreement may be amended only if such amendment is
approved by the vote of the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the Fund.
(c) This Agreement may be terminated by Dessauer at any time
without penalty upon giving the Fund sixty (60) days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving Dessauer sixty (60) days' written notice (which
notice may be waived by Dessauer), provided that such termination by the Fund
shall be approved by the vote of a majority of all the trustees in office at the
time or by the vote of the holders of a "majority" (as defined in the Act) of
the voting securities of the Fund at the time outstanding and entitled to vote.
This Agreement shall automatically terminate in the event of its "assignment"
(as defined in the Act).
8. Board of Trustees' Meeting.
The Fund agrees that notice of each meeting of the Board of
Trustees of the Fund will be sent to Dessauer and that the Fund will make
appropriate arrangements for the attendance (as persons present by invitation)
of such person or persons as Dessauer may designate.
9. Name.
The Fund hereby acknowledges that any and all rights in or to
the name "Dessauer" which exist on the date of this Agreement or which may arise
hereafter are, and under any and all circumstances shall continue to be, the
sole property of Dessauer; that Dessauer may assign any or all of such rights to
another party or parties without the consent of the Fund; and that Dessauer may
permit other parties, including other investment companies, to use the word
"Dessauer" in their names. If Dessauer, or its assignee as the case may be,
ceases to serve as an adviser to the Fund, the Fund hereby agrees to take
promptly any and all actions which are necessary or desirable to change its name
and the name of the Fund so as to delete the word "Dessauer".
10. Notices.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
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<PAGE> 7
11. Questions of Interpretation.
Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act, as amended, shall be resolved by reference to such term or
provision of the Act and to interpretations thereof, if any, by the United
States Courts or in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement, is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
12. This Agreement shall be construed in accordance with
the laws of the State of New York, without regard to the conflicts of law
provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE DESSAUER GLOBAL EQUITY FUND
By____________________________________________________
Title:
DESSAUER ASSET MANAGEMENT, INC.
By____________________________________________________
Title:
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<PAGE> 1
Draft of May 12, 1997
5,000,000
THE DESSAUER GLOBAL EQUITY FUND
SHARES OF BENEFICIAL INTEREST
UNDERWRITING AGREEMENT
WHEAT, FIRST SECURITIES, INC.
Riverfront Plaza
901 East Byrd Street
Richmond, Virginia 23219 ___________, 1997
Ladies and Gentlemen:
The Dessauer Global Equity Fund, a Delaware business trust (the "Fund"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to Wheat, First Securities, Inc. (the "Underwriter") an aggregate of 5,000,000
shares of beneficial interest, par value $0.01, of the Fund (the "Shares"), and
at the election of the Underwriter, an aggregate of 750,000 additional Shares.
The aggregate of 5,000,000 Shares to be sold by the Fund are herein called the
"Firm Securities," and the aggregate of 750,000 additional Shares to be sold by
the Fund are herein called the "Optional Securities." The Firm Securities and
the Optional Securities that the Underwriter elects to purchase pursuant to
Section 3 hereof are collectively called the "Securities."
1. REPRESENTATIONS AND WARRANTIES RELATING TO THE FUND. Each of the Fund,
Dessauer Asset Management, Inc. ("Dessauer") and Guinness Flight Investment
Management Limited ("Guinness Flight") (Dessauer and Guinness Flight
collectively, the "Investment Advisers") represents and warrants to, and agrees
with, the Underwriter that:
(a) A notification on Form N-8A (the "Notification") of
registration of the Fund as an investment company and a registration
statement in respect of the Securities on Form N-2 (File No. 333-7543),
and a preliminary prospectus as a part thereof, under the Securities Act
of 1933, as amended, and the rules and regulations thereunder
(collectively, the "1933 Act"), and the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder (collectively, the
"1940 Act"), in respect of the Securities have been filed with the
Securities and Exchange Commission (the "Commission") in the form
heretofore delivered to you; such registration statement, as amended,
has been declared
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<PAGE> 2
effective by the Commission; no other document with respect to such
registration statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has been
instituted or threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the Commission
pursuant to Rule 424 or Rule 497 under the 1933 Act, being hereinafter
called a "Preliminary Prospectus," the various parts of such
registration statement, including all exhibits thereto, and including
the information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) or Rule 497(b) under the 1933 Act in
accordance with Section 5(a) of this Agreement and deemed by virtue of
Rule 430A under the 1933 Act to be part of the registration statement at
the time it was declared effective, together with any related
registration statement filed with the Commission for registration of a
portion of the Securities, which registration statement became effective
pursuant to Rule 462(b) under the 1933 Act, being herein called
collectively the "Registration Statement," and the final prospectus, in
the form first filed pursuant to Rule 424(b) or Rule 497(b), being
hereinafter called the "Prospectus," provided, that if the Fund elects
to rely on Rule 434 under the 1933 Act, all references to the Prospectus
shall be deemed to include, without limitation, the form of prospectus
and the abbreviated term sheet, taken together, provided to the
Underwriter by the Fund in reliance on Rule 434);
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the 1933 Act and the 1940 Act, and did
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this representation
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing to
the Fund by the Underwriter expressly for use therein;
(c) The Registration Statement and the Notification conform, and
the Prospectus and any amendments or supplements thereto will conform,
in all material respects to the requirements of the 1933 Act and the
1940 Act, as applicable, and do not and will not as of the applicable
effective date as to the Registration Statement and any amendment
thereto and as of the applicable filing date as to the Prospectus and
any amendment or supplement thereto contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Fund by the Underwriter
expressly for use therein;
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
change in the capital stock or debt of the Fund or any material adverse
change, or any development involving a prospective material adverse
change, in or affecting the condition, financial or otherwise, of
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<PAGE> 3
the Fund or the Investment Advisers, or in the investment objectives,
investment policies, liabilities, business, prospects or operations of
the Fund otherwise than as set forth in the Prospectus, and there have
been no transactions entered into by the Fund that are material to the
Fund other than those in the ordinary course of its business or as
described in the Prospectus;
(e) The Fund has been duly formed and is validly existing as a
business trust in good standing under the laws of Delaware with power
and authority to own or lease its properties and conduct its business as
described in the Prospectus, and has been duly qualified to do business
as a foreign entity in good standing in all other jurisdictions in which
it owns or leases property, or conducts any business, so as to require
such qualification, except where the failure to so qualify would not
result in a material adverse effect on the Fund;
(f) The Fund is duly registered with the Commission as a
non-diversified, closed-end management investment company under the 1940
Act and no order of suspension or revocation of such registration has
been issued or proceedings therefor initiated or threatened by the
Commission. No person is serving or acting as an officer, director or
trustee of, or investment adviser to, the Fund except in accordance with
the provisions of the 1940 Act and the Investment Advisers Act of 1940,
as amended, and the rules and regulations of the Commission thereunder
(the "Advisers Act");
(g) The Fund has an authorized capitalization as set forth in the
Prospectus under the caption "Shares of Beneficial Interest in the Fund"
and otherwise; all of the issued shares of beneficial interest of the
Fund have been duly and validly authorized and issued, are fully paid
and nonassessable and conform to the description of the shares of
beneficial interest of the Fund contained in the Prospectus; there are
no preemptive or other similar rights to subscribe for or to purchase
any securities of the Fund; there are no warrants, options or other
rights to purchase any securities of the Fund; neither the filing of the
Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights for or relating
to the registration of any securities of the Fund with respect to such
filing, offering or sale, other than rights which have been waived or
satisfied;
(h) The Securities have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and nonassessable, and
will conform to the description of the Securities contained in the
Prospectus as amended or supplemented;
(i) The issue and sale of the Securities by the Fund and the
performance of this Agreement; the investment advisory agreement between
the Fund and Dessauer (the "Dessauer Advisory Agreement"); the
investment advisory agreement between the Fund and Guinness Flight (the
"Guinness Flight Advisory Agreement") (the Dessauer Advisory Agreement
and the Guinness Flight Advisory Agreement collectively, the "Advisory
Agreements"); the administration agreement between Investment Company
Administration
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<PAGE> 4
Corporation (the "Administrator") and the Fund (the "Administration
Agreement"); the custody agreement between Investors Bank and Trust
Company (the "Custodian") and the Fund (the "Custody Agreement"); the
transfer agency agreement between State Street Bank & Trust Company (the
"Transfer Agent") and the Fund (the "Transfer Agency Agreement") (this
Agreement, the Advisory Agreements, the Administration Agreement, the
Custody Agreement and the Transfer Agency Agreement are herein referred
to collectively as the "Fundamental Agreements") and the consummation by
the Fund of the transactions contemplated by the Fundamental Agreements
will not conflict with or result in a breach or violation of any terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Fund is a party or by which any of the property or assets
of the Fund is bound or to which any of the property or assets of the
Fund is subject, nor will such action result in any violation of the
provisions of the Declaration of Trust or Bylaws of the Fund or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Fund or any of its
properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the issuance and sale of the Securities or the
consummation by the Fund of the transactions contemplated by the
Fundamental Agreements or the Automatic Dividend Reinvestment and Cash
Purchase Plan (the "Plan"), except such consents, approvals,
authorizations, registrations or qualifications as may be required under
the 1933 Act, the 1940 Act and under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by
the Underwriter and the clearance of such offering with the National
Association of Securities Dealers, Inc.;
(j) There are no legal or governmental proceedings pending to
which the Fund is a party or of which any property of the Fund is the
subject, other than as set forth or contemplated in the Prospectus,
which, if determined adversely to the Fund, would individually or in the
aggregate have a material adverse effect on the Fund and, to the best of
the Fund's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or by others;
(k) The Declaration of Trust and Bylaws of the Fund, the
Fundamental Agreements and the Plan comply with the all applicable
provisions of the 1933 Act, the 1940 Act and the Advisers Act, and all
approvals of such documents required under the 1940 Act by the Fund's
shareholders and Board of Trustees have been obtained and are in full
force and effect;
(l) There are no material restrictions, limitations or
regulations with respect to the ability of the Fund to invest its assets
as described in the Prospectus, other than as described therein;
(m) The statement of assets and liabilities included in the
Registration Statement and the Prospectus presents fairly the financial
position of the Fund as at the date indicated and such statement has
been prepared in conformity with generally accepted accounting
principles;
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<PAGE> 5
(n) Ernst & Young has certified certain financial statements of
the Fund and is an independent public accountant as required by the 1933
Act and the rules and regulations of the Commission thereunder;
(o) The Fund has timely filed all necessary federal, state and
foreign income, franchise and excise tax returns and has paid all taxes
shown thereon as due, and there is no tax deficiency that has been or,
to the best knowledge of the Fund, might be asserted against the Fund
that might have a material adverse effect on the business, properties,
business prospects, condition (financial or otherwise), earnings or
results of operations of the Fund, and all tax liabilities are
adequately provided for on the books of the Fund taken as a whole;
(p) No relationship, direct or indirect, exists between or among
the Fund, on the one hand, and the trustees, officers, shareholders,
customers or suppliers of the Fund on the other hand, that is required
by the 1933 Act or the Securities Exchange Act of 1934, as amended, or
by the rules and regulations under either of such Acts to be described
in the Registration Statement and the Prospectus that is not so
described;
(q) The Fund has not taken and will not take, directly or
indirectly, any action that is designed to or that has constituted or
that might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Fund to facilitate the
sale or resale of the Securities;
(r) The Fund holds and is operating in compliance, in all
material respects, with all grants, authorizations, licenses, permits,
consents, certificates and orders (including exemptive orders) of and
from, and has made all declarations and filings with, all governmental
and self-regulatory bodies, courts and other tribunals required for the
conduct of its business as presently being conducted ("licenses") and
all licenses are valid and in full force and effect; and the Fund is in
compliance, in all material respects, with all laws, regulations, orders
and decrees applicable to it;
(s) The Fund maintains insurance of the types and in the amounts
that are reasonable or required for the business operated by it, all of
which insurance is in full force and effect;
(t) The Securities have been approved for listing, subject to
notice of issuance, on the New York Stock Exchange, and the Fund's
Registration Statement on Form 8-A under the Exchange Act is effective;
(u) Each of the Fundamental Agreements has been duly authorized,
executed and delivered by the Fund, and each Fundamental Agreement,
except this Agreement, assuming due authorization, execution and
delivery by the other parties thereto, and the Plan constitutes the
legal, valid and binding obligation of the Fund, enforceable in
accordance with its terms except as may be limited by bankruptcy,
insolvency, fraudulent
-5-
<PAGE> 6
transfer or other similar laws affecting the rights and remedies of
creditors generally and subject to general principles or equity;
(v) The Fundamental Agreements (other than this Agreement) are in
full force and effect and neither the Fund nor, to the Fund's knowledge,
any other party to any such agreement is in default thereunder and no
event has occurred that with the passage of time or the giving of notice
or both would constitute a default thereunder. The Fund is not currently
in breach of, or in default under, any other written agreement or
instrument to which it or its property is bound or affected;
(w) The Fund intends to direct the investment of the proceeds of
the offering described in the Prospectus in such manner as to comply
with the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), and the Fund is eligible to qualify as a
regulated investment company under Subchapter M of the Code;
(x) Each officer and trustee of the Fund has entered into
agreements with the Fund pursuant to which such persons agree not to
offer, sell, or contract to sell, or otherwise dispose of, any Shares
beneficially owned by them or any securities convertible into, or
exchangeable for, Shares, on or before the 180th day after the date of
this Agreement without your prior written consent;
(y) The Fund maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences;
(z) There is no statute, regulation, contract or other document
of a character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required, and all such
contracts to which the Fund is a party constitute valid and binding
agreements of the Fund and are enforceable against the Fund in
accordance with the terms thereof, except as may be limited by
bankruptcy, insolvency, fraudulent transfer or other similar laws
affecting the rights and remedies of creditors generally and subject to
general principles or equity;
(aa) Any advertisement used with the consent of the Fund in the
public offering of the Shares pursuant to Rule 482 under the 1933 Act
(an "Omitting Prospectus") complies with the requirements of Rule 482,
and does not contain an untrue statement of a material fact; and
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<PAGE> 7
(bb) The Fund does not own more than 5% of the equity interests
of any business entity.
2. REPRESENTATIONS AND WARRANTIES RELATING TO THE INVESTMENT ADVISERS. Each
of the Investment Advisers represents and warrants to and agrees with the
Underwriter that, with respect to such Investment Adviser:
(a) Such Investment Adviser has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
state of incorporation with power and authority to own or lease its
properties and conduct its business as described in the Prospectus, and
has been duly qualified to do business as a foreign entity in good
standing in all other jurisdictions in which it owns or leases
properties, or conducts any business, so as to require such
qualification, except where the failure to so qualify would not result
in a material adverse effect on the Investment Adviser;
(b) Such Investment Adviser is duly registered as an investment
adviser under the Advisers Act, and is not prohibited by the Advisers
Act or the 1940 Act or the rules or regulations thereunder from acting
under the applicable Advisory Agreement as an investment adviser to the
Fund as contemplated in the Prospectus, and no order of suspension or
revocation of such registration has been issued or proceedings therefor
initiated or threatened by the Commission;
(c) This Agreement and the applicable Advisory Agreement have
been duly authorized, executed and delivered by such Investment Adviser
and comply with all applicable provisions of the 1933 Act, the 1940 Act
and the Advisers Act. The applicable Advisory Agreement, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes the legal, valid and binding obligation of the Investment
Adviser, enforceable against the Investment Adviser in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
fraudulent transfer or other similar laws affecting the rights and
remedies of creditors generally and subject to general principles or
equity;
(d) The execution and delivery by such Investment Adviser of, and
the performance by the Investment Adviser of its obligations under, this
Agreement and the applicable Advisory Agreement do not and will not
conflict with or result in a breach or violation of any terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Investment Adviser is a party or by which any of the property or
assets of the Investment Adviser is bound or to which any of the
property or assets of the Investment Adviser is subject, nor will such
action result in any violation of the provisions of the Articles of
Incorporation or Bylaws of the Investment Adviser or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Investment Adviser or any of its
properties; and no consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or
body is required for the performance by such Investment Adviser of its
obligations under this Agreement or the applicable Advisory Agreement,
except such consents, approvals,
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<PAGE> 8
authorizations, registrations or qualifications as may be required under
the 1933 Act, the 1940 Act and under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by
the Underwriter and the clearance of such offering with the National
Association of Securities Dealers, Inc.;
(e) There are no legal or governmental proceedings pending to
which such Investment Adviser is a party or of which any property of
such Investment Adviser is the subject, other than as set forth or
contemplated in the Prospectus, which, if determined adversely to the
Investment Adviser, would individually or in the aggregate have a
material adverse effect on the Investment Adviser and, to the best of
the Investment Adviser's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or by others;
(f) Such Investment Adviser holds and is operating in compliance,
in all material respects, with all grants, authorizations, licenses,
permits, consents, certificates and orders (including exemptive orders)
of and from, and has made all declarations and filings with, all
governmental and self-regulatory bodies, courts and other tribunals
required for the conduct of its business as presently being conducted
("licenses") and all licenses are valid and in full force and effect;
and the Investment Adviser is in compliance, in all material respects,
with all laws, regulations, orders and decrees applicable to it;
(g) The Investment Adviser has the financial resources available
to it necessary for the performance of its services and obligations as
contemplated in the Prospectus;
(h) The applicable Advisory Agreement is in full force and effect
and neither the Investment Adviser nor the Fund is in default thereunder
and no event has occurred that with the passage of time or the giving of
notice or both would constitute a default thereunder;
(i) All information regarding such Investment Adviser in the
Registration Statement and Prospectus, including, without limitation,
the description of such Investment Adviser and such Investment Adviser's
past performance, does not, and on each Delivery Date will not, contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make such information
not misleading; and
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the business or operations of
such Investment Adviser from that set forth in the Prospectus.
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<PAGE> 9
3. PURCHASE AND SALE.
Subject to the terms and conditions herein set forth, (a) the Fund
agrees to sell to the Underwriter, and the Underwriter agrees to purchase from
the Fund at a purchase price per share of [$____], the Firm Securities and (b)
in the event and to the extent that the Underwriter shall exercise the election
to purchase Optional Securities as provided below, the Fund agrees to sell to
the Underwriter, and the Underwriter agrees to purchase from the Fund at the
purchase price set forth in clause (a) of this Section 3, that portion of the
number of Optional Securities as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractional securities).
The Fund hereby grants to the Underwriter the right to purchase at its
election up to 750,000 Optional Securities, at the purchase price per share set
forth in the paragraph above for the sole purpose of covering over-allotments in
the sale of the Firm Securities. Any such election to purchase Optional
Securities may be exercised no more than once by written notice from you to the
Fund, given within a period of 45 calendar days after the date of this
Agreement, setting forth the aggregate amount of Optional Securities to be
purchased and the date on which such Optional Securities are to be delivered, as
determined by you but in no event earlier than the First Delivery Date (as
defined in Section 5 hereof) or, unless you otherwise agree in writing, earlier
than two or later than 10 business days after the date of such notice.
4. OFFERING BY THE UNDERWRITER.
Upon the authorization by you of the release of the Firm Securities, the
Underwriter proposes to offer the Firm Securities for sale upon the terms and
conditions set forth in the Prospectus.
5. DELIVERY AND PAYMENT
[Certificates in definitive form] for the Securities to be purchased by
the Underwriter hereunder, in such denominations and registered in such names as
you may request upon at least two business days' prior notice to the Fund, shall
be delivered by or on behalf of the Fund to you, Wheat, First Securities, Inc.
Payment of the purchase price for the Securities shall be made by certified or
official bank check in next day funds or, at your option, by wire transfer of
immediately available funds, all at the offices of Wheat, First Securities,
Inc., Riverfront Plaza, 901 East Byrd Street, Richmond, Virginia. If payment is
made in immediately available funds, the Fund shall reimburse you, for your cost
of delivering immediately available funds, such cost to be computed at a daily
rate equal to your cost of overnight borrowings for each day from the Delivery
Date to the immediately following business day. The time and date of such
delivery and payment shall be, with respect to the Firm Securities, 10:00 a.m.,
Richmond, Virginia time, on [________, 1997] or at such other time and date as
you and the Fund may agree upon in writing, and, with respect to the Optional
Securities, 10:00 a.m., Richmond, Virginia time, on the date specified by you in
your written notice of your election to purchase such Optional Securities, or at
such other time and date as you and the Fund may agree upon in writing. Such
time and date for delivery of the Firm Securities is herein called the "First
Delivery Date," such time and date for delivery of the Optional
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<PAGE> 10
Securities, if not the First Delivery Date, is herein called the "Second
Delivery Date," and each such time and date for delivery is herein called a
"Delivery Date." Such certificates will be made available for checking and
packaging at least 24 hours prior to each Delivery Date at the offices of Wheat,
First Securities, Inc. at the address set forth above or such other location
that you designate to the Fund.
6. AGREEMENTS OF THE FUND AND THE INVESTMENT ADVISERS.
The Fund and each of the Investment Advisers agree with the Underwriter:
(a) To prepare the Prospectus in a form reasonably approved by you and
to file such Prospectus (or a term sheet as permitted by Rule 434(c)) pursuant
to Rule 424(b) or Rule 497(b) under the 1933 Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the 1933 Act; to make no amendment or
supplement to the Registration Statement or Prospectus prior to any Delivery
Date which shall be reasonably disapproved by you promptly after reasonable
notice thereof; to advise you, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish you with copies thereof; to file promptly all reports and
any definitive proxy or information statements required to be filed by the Fund
with the Commission subsequent to the date of the Prospectus and for so long as
the delivery of a Prospectus is required in connection with the offering or sale
of the Securities; to advise you, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, of any request by the Commission for the amending or supplementing of
the Registration Statement or Prospectus or for additional information or of the
issuance by the Commission of any notice or order pursuant to Section 8(e) of
the 1940 Act; and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or suspending any such qualification or of any order pursuant to
Section 8(e) of the 1940 Act, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Securities for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith the Fund shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) To furnish the Underwriter with copies of the Notification,
Registration Statement and the Prospectus in such quantities as you may from
time to time reasonably request during such period following the date hereof
that a prospectus is required to be delivered in connection with offers or sales
of Securities, and, if the delivery of a prospectus is required during this
period and if at such time any event shall have occurred as a result of which
the Prospectus as then amended or
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<PAGE> 11
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
during such period to amend or supplement the Prospectus to comply with the 1933
Act or the 1940 Act, to notify you and upon your request to file such document
and to prepare and furnish without charge to you and to any dealer in securities
as many copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement
or omission or effect such compliance;
(d) As soon as practicable after the effective date of the Registration
Statement, to make generally available to its shareholders and to deliver to
you, an earnings statement of the Fund, conforming with the requirements of
Section 11(a) of the 1933 Act and Rule 158 under the 1933 Act, covering a period
of at least 12 months beginning after the effective date of the Registration
Statement;
(e) For a period of 180 days from the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of any securities of the Fund
(other than the Securities), without your prior written consent;
(f) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Fund is listed; and (ii), such
additional information concerning the business and financial condition of the
Fund as you may from time to time reasonably request;
(g) To use best efforts to maintain the Fund's qualification as a
regulated investment company under Subchapter M of the Code;
(h) To apply the net proceeds from the sale of the Securities in the
manner set forth in the Prospectus under the caption "Use of Proceeds;" and
(i) To file timely and accurate reports on Form SR with the Commission
in accordance with Rule 463 under the 1933 Act or any successor provision.
7. PAYMENT OF EXPENSES.
The Fund covenants and agrees with the Underwriter that the Fund will
pay or cause to be paid the following: (i) the fees, disbursements and expenses
of the Fund's counsel and accountants in connection with the registration of the
Securities under the 1933 Act and the 1940 Act and all other expenses in
connection with the preparation, printing and filing of the Notification,
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriter and dealers; (ii) the cost of printing or reproducing
this Agreement, the Blue Sky Survey and any other documents in connection with
the offering, purchase, sale and delivery of the Securities; (iii) all
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<PAGE> 12
expenses in connection with the qualification of the Securities for offering and
sale under state securities laws as provided in Section 6(b) hereof, including
the fees and disbursements of counsel for the Underwriter in connection with
such qualification and in connection with the Blue Sky Survey; (iv) the filing
fees incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities; (v) the
cost of preparing stock certificates; (vi) the costs or expenses of any transfer
agent or registrar; (vii) 50% of all marketing expenses relating to the
development, production, printing, mailing, fulfillment (including, but not
limited to, in-bound 1-800 calls) and distribution of any marketing materials
used or proposed to be used in connection with the offering of the Securities
(the "Marketing Expenses") up to $400,000 and such amounts over and above
$400,000 as are jointly approved by the Investment Advisers and the Underwriter
and (viii) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section. It is understood, however, that except as provided in Section 9 and
Section 11 hereof, the Underwriter will pay all its own costs and expenses,
including the fees of its counsel, stock transfer taxes on resale of any of the
Securities by it and any advertising expenses connected with any offers it may
make.
8. CONDITIONS TO OBLIGATIONS OF UNDERWRITER.
The obligations of the Underwriter hereunder, as to the Securities to be
delivered at each Delivery Date, shall be subject, in their discretion, to the
condition that all representations and warranties and other statements of the
Fund and the Investment Advisers herein are, at and as of such Delivery Date,
true and correct, and the condition that the Fund and the Investment Advisers
shall have performed all of their respective obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission pursuant to
Rule 424(b) under the 1933 Act within the applicable time period prescribed for
such filing by the rules and regulations under the 1933 Act and in accordance
with Section 5(a) of this Agreement; no stop order suspending the effectiveness
of the Registration Statement shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission shall have
been complied with to your reasonable satisfaction;
(b) Hunton & Williams, counsel for the Underwriter, shall have furnished
to you such opinion or opinions, dated such Delivery Date, with respect to the
formation of the Fund, the validity of the Securities being issued at such
Delivery Date, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request, and such counsel shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(c) Kramer, Levin, Naftalis & Frankel, counsel for the Fund, shall have
furnished to you their written opinion, dated such Delivery Date, in form and
substance satisfactory to you, to the effect set forth in Annex A hereto;
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<PAGE> 13
(d) _______________, counsel for Guinness Flight, shall have furnished
to you their written opinion, dated such Delivery Date, in form and substance
satisfactory to you, to the effect set forth in Annex B hereto;
(e) Edwards & Angell, counsel for Dessauer, shall have furnished to you
their written opinion, dated such Delivery Date, in form and substance
satisfactory to you, to the effect set forth in Annex C hereto;
(f) At 10:00 a.m., Richmond, Virginia, time, on the date of this
Agreement and the effective date of the most recently filed post-effective
amendment to the Registration Statement and also at each Delivery Date, Ernst &
Young shall have furnished to you a letter or letters, dated the respective date
of delivery thereof, in form and substance satisfactory to you, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain financial information relating to the Fund contained in the Registration
Statement and the Prospectus;
(g) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in the
capital stock or debt of the Fund or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
condition, financial or otherwise, of the Fund or the Investment Advisers, or in
the investment objectives, investment policies, liabilities, business, prospects
or operations of the Fund otherwise than as set forth in the Prospectus, and
there have been no transactions entered into by the Fund that are material to
the Fund other than those in the ordinary course of its business or as described
in the Prospectus, the effect of which, in any such case in your reasonable
judgment so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Securities being
delivered at such Delivery Date on the terms and in the manner contemplated by
the Prospectus;
(h) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading of any of the
equity securities of the Fund on the New York Stock Exchange; (ii) any United
States federal or state statute, regulation, rule or order of any court,
legislative body, agency or other governmental authority shall have been
enacted, published, decreed or promulgated or any proceeding or investigation
shall have been commenced which, in your reasonable judgment, materially and
adversely affects the business or operations of the Fund; (iii) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange or the Nasdaq National Market; (iv) a general moratorium on commercial
banking activities in New York State declared by either federal or New York
State authorities; (v) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if any such event specified in this clause (v) would have such a materially
adverse effect, in your reasonable judgment, as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities being delivered at such Delivery Date on the terms and in the manner
contemplated in the Prospectus; or (vi) such a material adverse change in
general economic, political, financial or international conditions affecting
financial markets in the United States having a material adverse impact on
trading prices
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<PAGE> 14
of securities in general, as, in your reasonable judgment, makes it inadvisable
to proceed with the payment for and delivery of the Securities;
(i) The Fund shall have furnished to you copies of agreements between
the Fund and the trustees and officers of the Fund, in form and content
satisfactory to you, pursuant to which such persons agree not to offer, sell, or
contract to sell, or otherwise dispose of, any Shares beneficially owned by them
or any securities convertible into, or exchangeable for, Shares, on or before
the 180th day after the date of this Agreement without your prior written
consent;
(j) The Fund and the Investment Advisers shall have furnished or caused
to be furnished to you at such Delivery Date certificates of officers of the
Fund and of the Investment Advisers reasonably satisfactory to you as to the
accuracy of the respective representations and warranties of the Fund and the
Investment Advisers herein at and as of such Delivery Date, as to the
performance by the Fund and the Investment Advisers of all of their obligations
hereunder to be performed at or prior to such Delivery Date, as to the matters
set forth in subsections (a) and (g) of this Section and as to such other
matters as you may reasonably request;
(k) You shall have received on such Delivery Date a certificate from a
duly authorized officer of the Custodian certifying that the Custody Agreement
is in full force and effect and is the legal, valid, binding and enforceable
obligation of the Custodian, assuming that such Custody Agreement is a legal,
valid, binding and enforceable obligation of the other party thereto;
(l) You shall have received on such Delivery Date a certificate from a
duly authorized officer of the Administrator certifying that the Administration
Agreement is in full force and effect and is the legal, valid, binding and
enforceable obligation of the Administrator, assuming that such Administration
Agreement is a legal, valid, binding and enforceable obligation of the other
party thereto;
(m) You shall have received on such Delivery Date a certificate from a
duly authorized officer of the Transfer Agent certifying that the Transfer
Agency Agreement is in full force and effect and is the legal, valid, binding
and enforceable obligation of the Transfer Agent, assuming that such Transfer
Agency Agreement is a legal, valid, binding and enforceable obligation of the
other party thereto; and
(n) No proceedings shall have been instituted or threatened by the
Commission that would adversely affect the Fund's standing as a registered
investment company under the 1940 Act or the standing of either Investment
Adviser under the Advisers Act.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Fund and each of the Investment Advisers will indemnify and hold
harmless the Underwriter against any losses, claims, damages or liabilities,
joint or several, to which the Underwriter may become subject, under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus,
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<PAGE> 15
the Registration Statement, the Prospectus or the Notification, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Underwriter for any legal or other expenses reasonably incurred by the
Underwriter in connection with investigating, preparing to defend or defending,
or appearing as a third-party witness in connection with, any such action or
claim; provided, however, that the Fund shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement,
Prospectus or Notification or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Fund by the
Underwriter expressly for use therein; further provided, however, that the
indemnity agreement contained in this paragraph with respect to any Preliminary
Prospectus shall not inure to the benefit of the Underwriter if the Underwriter
failed to send or give a copy of the Prospectus at or prior to the written
confirmation of the sale of the Securities that are the subject thereof to the
person asserting any such losses, claims, damages (if such failure was not the
result of the Fund's failure to deliver the Prospectus to the Underwriter on a
timely basis to permit the Underwriter to so send or give a copy of the
Prospectus to such person at or prior to such time) and if the Prospectus did
not contain the untrue statement or alleged untrue statement or omission or
alleged omission giving rise to such loss, claim, damage or liability.
(b) The Underwriter will indemnify and hold harmless the Fund and each
Investment Adviser against any losses, claims, damages or liabilities to which
the Fund may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement, the Prospectus or the Notification, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in any Preliminary Prospectus, the Registration
Statement, the Prospectus or the Notification or any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Fund by such Underwriter through you expressly for use therein; and will
reimburse the Fund for any legal or other expenses reasonably incurred by the
Fund in connection with investigating, preparing to defend or defending, or
appearing as a third-party witness in connection with, any such action or claim.
The Fund acknowledges that the statements set forth in the last paragraph of the
cover page, the first paragraph on the inside front cover page and the first,
second, third, and sixth paragraphs under the heading "Underwriting" in the
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the Underwriter for inclusion in the
Preliminary Prospectus or the Prospectus, and you confirm that such statements
are correct.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
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<PAGE> 16
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under such subsection. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have been advised by counsel
that representation of such indemnified party and the indemnifying party may be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them, the indemnified party or parties
shall have the right to select separate counsel to defend such action on behalf
of such indemnified party or parties. It is understood that the indemnifying
party shall, in connection with any such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys together with appropriate local
counsel at any time for all indemnified parties unless such firm of attorneys
shall have reasonably concluded that one or more indemnified parties has actual
differing interests with other indemnified parties. Upon receipt of notice from
the indemnifying party to such indemnified party of its election so to appoint
counsel to defend such action and approval by the indemnified party of such
counsel, the indemnifying party will not be liable for any settlement entered
into without its consent and will not be liable to such indemnified party under
this Section 9 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence and the first
sentence of this paragraph, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(d) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Fund and the Investment Advisers on the
one hand and the Underwriter on the other from the offering of the Securities.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under
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<PAGE> 17
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Fund and the Investment Advisers on the one hand and the
Underwriter on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Fund and the Investment
Advisers on the one hand and the Underwriter on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (after
deducting the total underwriting discount, but before deducting offering
expenses) received by the Fund bear to the total underwriting discounts and
commissions received by the Underwriter, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Fund or the Investment Advisers on the
one hand or the Underwriter on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Fund, the Investment Advisers and the Underwriter
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Underwriter shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of
damages which the Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The obligations of the Fund and the Investment Advisers under this
Section 9 shall be in addition to any liability that the Fund and the Investment
Advisers may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Underwriter within the
meaning of the 1933 Act; and the obligations of the Underwriter under this
Section 9 shall be in addition to any liability that the Underwriter may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and trustee of the Fund and to each person, if any, who controls the
Fund within the meaning of Section 2(a) of the 1940 Act.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE.
The respective indemnities, agreements, representations, warranties and
other statements of the Fund, each of the Investment Advisers and the
Underwriter, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation (or any statement as to the results thereof) made by or on behalf
of the Underwriter or any controlling
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<PAGE> 18
person of the Underwriter, or the Fund, or any officer or trustee or controlling
person of the Fund, or either of the Investment Advisers, or any officer or
director or controlling person of either Investment Adviser, and shall survive
delivery of and payment for the Securities.
11. TERMINATION AND PAYMENT OF EXPENSES.
If this Agreement shall be terminated pursuant to any of the provisions
hereof, or if this Agreement shall be terminated by the Underwriter because of
any failure or refusal on the part of the Fund or either Investment Adviser to
comply with the terms or fulfill any of the conditions of this Agreement, the
Fund and the Investment Advisers agree to reimburse the Underwriter for all
out-of-pocket expenses (including travel expenses, due diligence expenses, and
reasonable fees and expenses of counsel) reasonably incurred by it in connection
herewith, up to a maximum of $200,000 plus 100% of all Marketing Expenses up to
$400,000 and such amounts over and above $400,000 as are jointly approved by the
Underwriter and the Investment Advisers.
12. NOTICES.
All statements, requests, notices and agreements hereunder shall be in
writing or by telegram if promptly confirmed in writing, and if to the
Underwriter shall be sufficient in all respects if delivered or sent by reliable
courier, first class mail, telex or facsimile transmission to Wheat, First
Securities, Inc., at Riverfront Plaza, 901 East Byrd Street, Richmond, Virginia
23219, Attention: Corporate Finance Department; if to the Fund and the
Investment Advisers shall be sufficient in all respects if delivered or sent by
reliable courier, first class mail, telex, or facsimile transmission to the
address of the Fund set forth in the Registration Statement, Attention:
____________. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. SUCCESSORS.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriter, the Fund and the Investment Advisers and, to the extent
provided in Sections 9 and 10 hereof, the officers and trustees of the Fund and
each person who controls the Fund, the Underwriter or either Investment Adviser,
and their respective heirs, executors, administrators, successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Securities from the Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. TIME OF THE ESSENCE.
Time shall be of the essence in this Agreement.
15. BUSINESS DAY.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
-18-
<PAGE> 19
16. APPLICABLE LAW.
This Agreement shall be construed in accordance with the laws of the
State of New YORK, without regard to the conflicts of law provisions thereof.
17. CAPTIONS.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
18. COUNTERPARTS.
This Agreement may be executed by any one or more of the parties in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
-19-
<PAGE> 20
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding agreement
among the Underwriter, the Fund, Dessauer and Guinness Flight.
Very truly yours,
THE DESSAUER GLOBAL EQUITY FUND
By:
----------------------------------
Name:
Title:
DESSAUER ASSET MANAGEMENT, INC.
By:
----------------------------------
Name:
Title:
GUINNESS FLIGHT INVESTMENT
MANAGEMENT LIMITED
By:
----------------------------------
Name:
Title:
Accepted as of the date hereof at Richmond, Virginia:
WHEAT, FIRST SECURITIES, INC.
By:
-------------------------------
Name:
Title:
-20-
<PAGE> 1
EXHIBIT 99.2J
CUSTODIAN AGREEMENT
BETWEEN
DESSAUER GLOBAL EQUITY FUND
AND
INVESTORS BANK & TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Bank Appointed Custodian....................................................................... 1
2. Definitions.................................................................................... 1
2.1 Authorized Person............................................................ 1
2.2 Board .................................................................... 1
2.3 Security .................................................................... 1
2.4 Portfolio Security........................................................... 1
2.5 Officers' Certificate........................................................ 1
2.6 Book-Entry System............................................................ 2
2.7 Depository................................................................... 2
2.8 Proper Instructions.......................................................... 2
3. Separate Accounts ............................................................................. 2
4. Certification as to Authorized Persons......................................................... 2
5. Custody of Cash ............................................................................. 3
5.1 Purchase of Securities....................................................... 3
5.2 Redemptions ............................................................ 3
5.3 Distributions and Expenses of Fund........................................... 3
5.4 Payment in Respect of Securities............................................. 3
5.5 Repayment of Loans........................................................... 3
5.6 Repayment of Cash............................................................ 3
5.7 Foreign Exchange Transactions................................................ 4
5.8 Other Authorized Payments.................................................... 4
5.9 Termination.................................................................. 4
6. Securities..................................................................................... 4
6.1 Segregation and Registration................................................. 4
6.2 Voting and Proxies........................................................... 5
6.3 Corporate Action ............................................................ 5
6.4 Book-Entry System............................................................ 6
6.5 Use of a Depository.......................................................... 6
6.6 Use of Book-Entry System for Commercial Paper................................ 7
6.7 Use of Immobilization Programs............................................... 8
6.8 Eurodollar CDs ............................................................ 8
6.9 Options and Futures Transactions............................................. 8
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.......................................... 8
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges............................................ 9
6.10 Segregated Account........................................................... 9
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
6.11 Interest Bearing Call or Time Deposits....................................... 10
6.12 Transfer of Securities....................................................... 10
7. Redemptions ............................................................................. 12
8. Merger, Dissolution, etc. of Fund ............................................................ 12
9. Actions of Bank Without Prior Authorization.................................................... 12
10. Collection and Defaults........................................................................ 13
11. Maintenance of Records and Accounting Services................................................. 13
12. Fund Evaluation and Yield Calculation.......................................................... 13
12.1 Fund Evaluation.............................................................. 13
12.2 Yield Calculation............................................................ 14
13. Additional Services .................................................................... 15
14. Duties of the Bank .................................................................... 15
14.1 Performance of Duties and
Standard of Care ............................................................ 15
14.2 Agents and Subcustodians with Respect to Property
of the Fund Held in the United States........................................ 15
14.3 Duties of the Bank with Respect to Property
Held Outside of the United States............................................ 16
14.4 Insurance.................................................................... 18
14.5 Fees and Expenses of Bank.................................................... 18
14.6 Advances by Bank............................................................ 18
15. Limitation of Liability........................................................................ 19
16. Termination.................................................................................... 20
17. Confidentiality................................................................................ 21
18. Notices ..................................................................................... 21
19. Amendments..................................................................................... 21
20. Parties ...................................................................................... 21
21. Governing Law.................................................................................. 22
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
22. Counterparts................................................................................... 22
23. Entire Agreement............................................................................... 22
24. Limitation of Liability........................................................................ 22
25. Several Obligations of the Portfolios.......................................................... 22
APPENDICES
Appendix A ................................... Fee Schedule
Appendix B ................................... Portfolios
Appendix C ................................... Additional Services (if any)
Appendix D ................................... Foreign Sub-Custodians & Sub-Custodian
Agreement
</TABLE>
4
<PAGE> 5
CUSTODIAN AGREEMENT
AGREEMENT made as of this ___ day of __________, 199__, between
DESSAUER GLOBAL EQUITY FUND, a management investment company organized under the
laws of the State of Delaware (the "Fund"), and INVESTORS BANK & TRUST COMPANY,
a Massachusetts trust company (the "Bank").
The Fund, a management investment company, on behalf of the portfolios
listed on Appendix B hereto (as such Appendix B may be amended from time to
time) (each a "Portfolio" and collectively, the "Portfolios"), desires to place
and maintain all of its portfolio securities and cash in the custody of the
Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940 (the "1940 Act") to act as
custodian of the portfolio securities and cash of the Fund, and has indicated
its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. For the services rendered pursuant to this
Agreement the Fund agrees to pay to the Bank the fees set forth on Appendix A
hereto.
2. Definitions. Whenever used herein, the terms listed below will have
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board, and set forth in a
certificate as required by Section 4 hereof.
2.2 Board. Board will mean the Board of Directors or the Board of
Trustees of the Fund, as the case may be.
2.3 Security. The term security as used herein will have the same
meaning assigned to such term in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
2.5 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
<PAGE> 6
2.6 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.8 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
The Fund shall cause all oral instructions to be promptly confirmed in writing.
The Bank shall act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank with respect to
any follow-up or confirmatory instruction shall be to make reasonable efforts to
detect any discrepancy between the original instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any such discrepancy or error, and to the extent such action requires
the Bank to act, the Fund shall give the Bank specific Proper Instructions as to
the action required. Upon receipt by the Bank of an Officers' Certificate as to
the authorization by the Board accompanied by a detailed description of
procedures approved by the Fund, Proper Instructions may include communication
effected directly between electro-mechanical or electronic devices provided that
the Board and the Bank agree in writing that such procedures afford adequate
safeguards for the Fund's assets.
3. Separate Accounts. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon). Unless the context otherwise requires, any reference in this
Agreement to any actions to be taken by the Fund shall be deemed to refer to the
Fund acting on behalf of one or more of its series, any reference in this
Agreement to any assets of the Fund, including, without limitation, any
portfolio securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the Bank
hereunder to the Fund shall be deemed to refer to duties and obligations with
respect to such individual series and any obligation or liability of the Fund
hereunder shall be binding only with respect to such individual series, and
shall be discharged only out of the assets of such series.
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. The Bank will be
entitled to rely and act upon any
2
<PAGE> 7
Officers' Certificate given to it by the Fund which has been signed by
Authorized Persons named in the most recent certification received by the Bank.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Sections 14.2 or 14.3 hereof, including borrowed funds,
delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Pursuant to the Bank's internal
policies regarding the management of cash accounts, the Bank may segregate
certain portions of the cash of the Fund into a separate savings deposit account
upon which the Bank reserves the right to require seven (7) days notice prior to
withdrawal of cash from such an account. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Fund, notification from the Fund's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank or against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper (as
that term is defined in Section 6.6 hereof)) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Fund offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the
account of the Fund of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, fees of the Bank for its services hereunder
and reimbursement of the expenses and liabilities of the Bank as provided
hereunder, fees of any transfer agent, fees for legal, accounting, and auditing
services, or other operating expenses of the Fund.
5.4 Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
3
<PAGE> 8
5.7 Foreign Exchange Transactions.
(a) For payments in connection with foreign exchange contracts
or options to purchase and sell foreign currencies for spot and future delivery
(collectively, "Foreign Exchange Agreements")which may be entered into by the
Bank on behalf of the Fund upon the receipt of Proper Instructions, such Proper
Instructions to specify the currency broker or banking institution (which may be
the Bank, or any other subcustodian or agent hereunder, acting as principal)
with which the contract or option is made, and the Bank shall have no duty with
respect to the selection of such currency brokers or banking institutions with
which the Fund deals or for their failure to comply with the terms of any
contract or option.
(b) In order to secure any payments in connection with Foreign
Exchange Agreements which may be entered into by the Bank pursuant to Proper
Instructions, the Fund agrees that the Bank shall have a continuing lien and
security interest, to the extent of any payment due under any Foreign Exchange
Agreement, in and to any property at any time held by the Bank for the Fund's
benefit or in which the Fund has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Fund authorizes the Bank, in the Bank's sole
discretion, at any time to charge any such payment due under any Foreign
Exchange Agreement against any balance of account standing to the credit of the
Fund on the Bank's books.
5.8 Other Authorized Payments. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.
5.9 Termination: Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 16 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Sections 14.2 or 14.3 hereof, the Bank as custodian will receive and
hold pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Fund. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Fund
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Fund.
4
<PAGE> 9
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund all notices, proxies
and proxy soliciting materials delivered to the Bank with respect to such
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
6.3 Corporate Action. If at any time the Bank is notified that an
issuer of any Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of a Portfolio Security, including without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the Fund promptly of the Corporate Action, the Response required in
connection with the Corporate Action and the Bank's deadline for receipt from
the Fund of Proper Instructions regarding the Response (the "Response
Deadline"). The Bank shall forward to the Fund via telecopier and/or overnight
courier all notices, information statements or other materials relating to the
Corporate Action within twenty-four (24) hours of receipt of such materials by
the Bank.
(a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Fund no later than 5:00 p.m.
on the date specified as the Response Deadline and only if the Bank (or its
agent or subcustodian hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00 p.m. on the date
specified as the Response Deadline.
(b) The Bank shall have no duty to act upon a required
Response if Proper Instructions relating to such Response and all necessary
Securities, consents and other materials are not received by and in the
possession of the Bank no later than 5:00 p.m. on the date specified as the
Response Deadline. Notwithstanding, the Bank may, in its sole discretion, use
its best efforts to act upon a Response for which Proper Instructions and/or
necessary Securities, consents or other materials are received by the Bank after
5:00 p.m. on the date specified as the Response Deadline, it being acknowledged
and agreed by the parties that any undertaking by the Bank to use its best
efforts in such circumstances shall in no way create any duty upon the Bank to
complete such Response prior to its expiration.
(c) In the event that the Fund notifies the Bank of a
Corporate Action requiring a Response and the Bank has received no other notice
of such Corporate Action, the Response Deadline shall be 48 hours prior to the
Response expiration time set by the depository processing such Corporate Action.
(d) Section 14.3(g) of this Agreement shall govern any
Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Sub-Custodian.
6.4 Book-Entry System. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
5
<PAGE> 10
(a) The Bank may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio Securities are represented in an
account ("Account") of the Bank (or its agent) in such System which shall not
include any assets of the Bank (or such agent) other than assets held as a
fiduciary, custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with
respect to the Fund's participation in the Book-Entry System through the Bank
(or any such agent) will identify by book entry the Portfolio Securities which
are included with other securities deposited in the Account and shall at all
times during the regular business hours of the Bank (or such agent) be open for
inspection by duly authorized officers, employees or agents of the Fund. Where
securities are transferred to the Fund's account, the Bank shall also, by book
entry or otherwise, identify as belonging to the Fund a quantity of securities
in a fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities
purchased for the account of the Fund or shall pay cash collateral against the
return of Portfolio Securities loaned by the Fund upon (i) receipt of advice
from the Book-Entry System that such Securities have been transferred to the
Account, and (ii) the making of an entry on the records of the Bank (or its
agent) to reflect such payment and transfer for the account of the Fund. The
Bank (or its agent) shall transfer securities sold or loaned for the account of
the Fund upon
(i) receipt of advice from the Book-Entry System
that payment for securities sold or payment of the initial cash collateral
against the delivery of securities loaned by the Fund has been transferred to
the Account; and
(ii) the making of an entry on the records of the
Bank (or its agent) to reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Fund shall identify the Fund, be maintained
for the Fund by the Bank and shall be provided to the Fund at its request. The
Bank shall send the Fund a confirmation, as defined by Rule 17f-4 of the 1940
Act, of any transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any
report obtained by the Bank or its agent on the Book-Entry System's accounting
system, internal accounting control and procedures for safeguarding securities
deposited in the Book-Entry System;
6.5 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive,
exchange, release, lend, deliver and otherwise deal with Portfolio Securities
including stock dividends, rights and other items of like nature, and to receive
and remit to the Bank on behalf of the Fund all income and other payments
thereon and to take all steps necessary and proper in connection with the
collection thereof;
(b) Registration of Portfolio Securities may be made in
the name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any
6
<PAGE> 11
purchase of Portfolio Securities, payment will be made only upon delivery of the
securities to or for the account of the Fund and the Fund shall pay cash
collateral against the return of Portfolio Securities loaned by the Fund only
upon delivery of the Securities to or for the account of the Fund; and upon any
sale of Portfolio Securities, delivery of the Securities will be made only
against payment therefor or, in the event Portfolio Securities are loaned,
delivery of Securities will be made only against receipt of the initial cash
collateral to or for the account of the Fund; and
(d) The Bank shall use its best efforts to provide that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;
(ii) Proxy materials received by a Depository
with respect to Portfolio Securities deposited with such Depository are
forwarded immediately to the Bank for prompt transmittal to the Fund;
(iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the
Bank such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Fund to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Fund may reasonably
request in order to verify the Portfolio Securities held by such Depository.
6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Fund has purchased such Issuer's Book-Entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining procedures for Book-Entry
Paper, the Bank agrees that:
(a) The Bank will maintain all Book-Entry Paper held by
the Fund in an account of the Bank that includes only assets held by it for
customers;
(b) The records of the Bank with respect to the Fund's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to the Fund which is included in the Book-Entry
System and shall at all times during the regular business hours of the Bank be
open for inspection by duly authorized officers, employees or agents of the
Fund;
(c) The Bank shall pay for Book-Entry Paper purchased for
the account of the Fund upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the making
of an entry on the records of the Bank to reflect such payment and transfer for
the account of the Fund;
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(d) The Bank shall cancel such Book-Entry Paper
obligation upon the maturity thereof upon contemporaneous (i) receipt of advice
that payment for such Book-Entry Paper has been transferred to the Fund, and
(ii) the making of an entry on the records of the Bank to reflect such payment
for the account of the Fund; and
(e) The Bank will send to the Fund such reports on its
system of internal accounting control with respect to the Book-Entry Paper as
the Fund may reasonably request from time to time.
.
6.7 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Portfolio Securities are identified on the books of the Bank
as belonging to the Fund and that the books of the Bank identify the European
Branch holding such Portfolio Securities. Notwithstanding any other provision of
this Agreement to the contrary, except as stated in the first sentence of this
subsection 6.8, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund.
6.9 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over-the-Counter.
(i) The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions among the Bank,
any broker-dealer registered with the National Association of Securities
Dealers, Inc. (the "NASD"), and, if necessary, the Fund, relating to the
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations.
(ii) Unless another agreement requires it to do
so, the Bank shall be under no duty or obligation to see that the Fund has
deposited or is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Bank be under duty or obligation to
present such option to the broker for exercise unless it receives Proper
Instructions from the Fund. The Bank shall have no responsibility for the
legality of any put or call purchased or sold on behalf of the Fund, the
propriety of any such purchase or sale, or the adequacy of any collateral
delivered to a broker in connection with an option or deposited to or withdrawn
from a Segregated Account (as defined in subsection 6.10 below). The Bank
specifically, but not by way of limitation, shall not be under any duty or
obligation to: (i) periodically check or notify the Fund that the amount of such
collateral held by a broker or held in a Segregated Account is sufficient to
protect such broker or the Fund against any loss; (ii) effect the return of any
collateral delivered to a broker; or (iii) advise the Fund that any option it
holds, has or is about to expire. Such duties or obligations shall be the sole
responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities
Exchanges
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(i) The Bank shall take action as to puts, calls
and futures contracts ("Futures") purchased or sold by the Fund in accordance
with the provisions of any agreement entered into upon the receipt of Proper
Instructions among the Fund, the Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Fund.
(ii) The responsibilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subparagraph (a)(2) of this Section 6.8 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts and calls
thereon instead of options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund.
(a) Cash and/or Portfolio Securities may be transferred into
a Segregated Account upon receipt of Proper Instructions in the following
circumstances:
(i) in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer registered under the
Exchange Act and a member of the NASD or any Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Options Clearing Corporation and of any registered national
securities exchange or the Commodity Futures Trading Commission or any
registered Contract Market, or of any similar organizations regarding escrow or
other arrangements in connection with transactions by the Fund;
(ii) for the purpose of segregating cash or
securities in connection with options purchased or written by the Fund or
commodity futures purchased or written by the Fund;
(iii) for the deposit of liquid assets, such as
cash, U.S. Government securities or other high grade debt obligations, having a
market value (marked to market on a daily basis) at all times equal to not less
than the aggregate purchase price due on the settlement dates of all the Fund's
then outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms;
(iv) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(v) for other proper corporate purposes, but
only, in the case of this clause (e), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the executive
committee of the Board signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such Segregated Account and declaring such purposes to be proper corporate
purposes.
(b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the following
circumstances:
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<PAGE> 14
(i) with respect to assets deposited in
accordance with the provisions of any agreements referenced in (a)(i) or (a)(ii)
above, in accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to
(a)(iii) or (a)(iv) above, for sale or delivery to meet the Fund's obligations
under outstanding forward commitment or when-issued agreements for the purchase
of Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal
or greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding
forward commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase agreements are sold to other parties or the
Fund's obligations thereunder are met from assets of the Fund other than those
in the Segregated Account;
(v) for delivery upon settlement of a forward
commitment or when-issued agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant
to (e) above, in accordance with the purposes of such account as set forth in
Proper Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
6.12 Transfer of Securities. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section only upon receipt of
Proper Instructions. The Proper Instructions shall state that such transfer,
exchange or delivery is for a purpose permitted under the terms of this Section
6.11, and shall specify the applicable subsection, or describe the purpose of
the transaction with sufficient particularity to permit the Bank to ascertain
the applicable subsection. After receipt of such Proper Instructions, the Bank
will transfer, exchange, deliver or release Portfolio Securities only in the
following circumstances:
(a) Upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
or against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale received by the Bank before such payment is made,
as confirmed in the Proper Instructions received by the Bank before such payment
is made;
(b) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the
10
<PAGE> 15
event of a tender offer therefor, provided, however, that in the event of an
offer of exchange, tender offer, or other exercise of rights requiring the
physical tender or delivery of Portfolio Securities, the Bank shall have no
liability for failure to so tender in a timely manner unless such Proper
Instructions are received by the Bank at least two business days prior to the
date required for tender, and unless the Bank (or its agent or subcustodian
hereunder) has actual possession of such Security at least two business days
prior to the date of tender;
(c) Upon conversion of Portfolio Securities pursuant to
their terms into other securities;
(d) For the purpose of redeeming in-kind shares of the
Fund upon authorization from the Fund;
(e) In the case of option contracts owned by the Fund,
for presentation to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed
or retired or otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Fund of
the moneys borrowed, provided further, however, that in cases where additional
collateral is required to secure a borrowing already made, and such fact is made
to appear in the Proper Instructions, Portfolio Securities may be released for
that purpose without any such payment. In the event that any pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender and any loan agreement between the fund and the
lender that an event of deficiency or default on the loan has occurred, the Bank
may deliver such pledged Portfolio Securities to or for the account of the
lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Fund
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 16 of this Agreement.
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<PAGE> 16
As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles of Incorporation or Declaration of Trust
and By-laws of the Fund (the "Articles"), from assets available for said
purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate and the
Bank shall be released from any and all obligations hereunder.
9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, the Bank will take the following actions without
prior authorization or instruction of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name
of the Fund all checks, drafts, or other negotiable or transferable instruments
or other orders for the payment of money received by it for the account of the
Fund and hold for the account of the Fund all income, dividends, interest and
other payments or distributions of cash with respect to the Portfolio Securities
held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
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<PAGE> 17
10. Collections and Defaults. The Bank will use reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal.
11. Maintenance of Records and Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act.. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act.
The Bank shall perform fund accounting and shall keep the books of
account and render statements or copies from time to time as reasonably
requested by the Treasurer or any executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Fund Evaluation and Yield Calculation
12.1 Fund Evaluation. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of the Fund, such determination to be made in accordance with the
provisions of the Articles and By-laws of the Fund and the Confidential Offering
Circular relating to the Fund, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board or that no such reserves have
been authorized, (iii) the source of the quotations to be used in computing the
net asset value, (iv) the value to be assigned to any security for which no
price quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
12.2. Yield Calculation. The Bank will compute the performance
results of the Fund (the "Yield Calculation") in accordance with the provisions
of Release No. 33-6753 and Release No. IC-16245 (February 2, 1988) (the
"Releases") promulgated by the Securities and Exchange Commission, and any
subsequent amendments to, published interpretations of or general conventions
accepted by the staff of the Securities and Exchange Commission with respect to
such releases or the subject matter thereof ("Subsequent Staff Positions"),
subject to the terms set forth below:
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<PAGE> 18
(a) The Bank shall compute the Yield Calculation for the Fund
for the stated periods of time as shall be mutually agreed upon, and communicate
in a timely manner the result of such computation to the Fund.
(b) In performing the Yield Calculation, the Bank will derive
the items of data necessary for the computation from the records it generates
and maintains for the Fund pursuant Section 11 hereof. The Bank shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Fund, any of the Fund's designated agents or any of the Fund's designated
third party providers.
(c) At the request of the Bank, the Fund shall provide, and
the Bank shall be entitled to rely on, written standards and guidelines to be
followed by the Bank in interpreting and applying the computation methods set
forth in the Releases or any Subsequent Staff Positions as they specifically
apply to the Fund. In the event that the computation methods in the Releases or
the Subsequent Staff Positions or the application to the Fund of a standard or
guideline is not free from doubt or in the event there is any question of
interpretation as to the characterization of a particular security or any aspect
of a security or a payment with respect thereto (e.g., original issue discount,
participating debt security, income or return of capital, etc.) or otherwise or
as to any other element of the computation which is pertinent to the Fund, the
Fund or its designated agent shall have the full responsibility for making the
determination of how the security or payment is to be treated for purposes of
the computation and how the computation is to be made and shall inform the Bank
thereof on a timely basis. The Bank shall have no responsibility to make
independent determinations with respect to any item which is covered by this
Section, and shall not be responsible for its computations made in accordance
with such determinations so long as such computations are mathematically
correct.
(d) The Fund shall keep the Bank informed of all publicly
available information and of any non-public advice, or information obtained by
the Fund from its independent auditors or by its personnel or the personnel of
its investment adviser, or Subsequent Staff Positions related to the
computations to be undertaken by the Bank pursuant to this Agreement and the
Bank shall not be deemed to have knowledge of such information (except as
contained in the Releases) unless it has been furnished to the Bank in writing.
13. Additional Services. The Bank shall perform the additional services
(if any) for the Fund as are set forth on Appendix C hereto. Appendix C may be
amended from time to time upon agreement of the parties to include further
additional services to be provided by the Bank to the Fund, at which time the
fees set forth in Appendix A shall be appropriately increased.
14. Duties of the Bank.
14.1 Performance of Duties and Standard of Care. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Fund, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
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<PAGE> 19
(b) the legality of any sale of any Portfolio Securities
by or for the Fund or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares
of the Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares
of the Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by
the Fund or the legality of the distribution of any Portfolio Securities as
payment in kind of such dividend; and
(f) any property or moneys of the Fund unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
14.2 Agents and Subcustodians with Respect to Property of the Fund
Held in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder. Without limiting the foregoing,
certain duties of the Bank hereunder may be performed by one or more affiliates
of the Bank.
Upon receipt of Proper Instructions, the Bank may employ
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Fund's assets with respect to property of the Fund held in the
United States. The Bank shall have no liability to the Fund or any other person
by reason of any act or omission of any subcustodian and the Fund shall
indemnify the Bank and hold it harmless from and against any and all actions,
suits and claims, arising directly or indirectly out of the performance of any
subcustodian. Upon request of the Bank, the Fund shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity. The Fund shall
pay all fees and expenses of any subcustodian.
14.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Bank to employ as sub-custodians for the Fund's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Fund's Board of Trustees, the Bank and the Fund may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Fund may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-Custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise
be agreed upon in writing by the Bank and the Fund, assets of the Fund shall be
maintained in foreign securities depositories
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<PAGE> 20
only through arrangements implemented by the foreign banking institutions
serving as Selected Foreign Sub-Custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing the
provisions set forth in subparagraph (d) hereof. Notwithstanding the foregoing,
except as may otherwise be agreed upon in writing by the Bank and the Fund, the
Fund authorizes the deposit in Euro-clear, the securities clearance and
depository facilities operated by Morgan Guaranty Trust Company of New York in
Brussels, Belgium, of Foreign Portfolio Securities eligible for deposit therein
and the use of Euro-clear in connection with settlements of purchases and sales
of securities and deliveries and returns of securities, until notified to the
contrary pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its
books as belonging to the Fund the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
establish a custody account for the Bank and hold in that account Foreign
Portfolio Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub-Custodian Agreement") shall be substantially in the
form attached as Appendix D hereto and shall provide that: (a) the Fund's assets
will not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration (including,
without limitation, any fees or taxes payable upon transfers or reregistration
of securities); (b) beneficial ownership of the Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c) adequate records will be
maintained identifying the assets as belonging to the Bank; (d) officers of or
auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the independent public accountants for
the Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Bank; and (e)
assets of the Fund held by the Selected Foreign Sub-Custodian will be subject
only to the instructions of the Bank or its agents.
(e) Access of Independent Accountants of the Fund. Upon
request of the Fund, the Bank will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Sub-Custodian insofar as such books and records relate to the performance of
such foreign banking institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the securities
and other assets of the Fund held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Portfolio Securities and other assets of the Fund.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund to the Bank and shall
be effected in accordance with the applicable Foreign Sub-Custodian Agreement.
If at any time any Foreign Portfolio Securities shall be registered in the name
of the nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold
any such nominee harmless from any liability by reason of the registration of
such securities in the name of such nominee.
16
<PAGE> 21
Notwithstanding any provision of this Agreement to
the contrary, settlement and payment for Foreign Portfolio Securities received
for the account of the Fund and delivery of Foreign Portfolio Securities
maintained for the account of the Fund may be effected in accordance with the
customary established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such securities from
such purchaser or dealer.
In connection with any action to be taken with
respect to the Foreign Portfolio Securities held hereunder, including, without
limitation, the exercise of any voting rights, subscription rights, redemption
rights, exchange rights, conversion rights or tender rights, or any other action
in connection with any other right, interest or privilege with respect to such
Securities (collectively, the "Rights"), the Bank shall promptly transmit to the
Fund such information in connection therewith as is made available to the Bank
by the Foreign Sub-Custodian, and shall promptly forward to the applicable
Foreign Sub-Custodian any instructions, forms or certifications with respect to
such Rights, and any instructions relating to the actions to be taken in
connection therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Fund from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Fund. The Fund acknowledges that pursuant to such Terms and
Conditions, Morgan Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(i) Monitoring Responsibilities. The Bank shall furnish
annually to the Fund information concerning the Selected Foreign Sub-Custodians
employed hereunder for use by the Fund in evaluating such Selected Foreign
Sub-Custodians to ensure compliance with the requirements of Rule 17f-5 of the
Act. In addition, the Bank will promptly inform the Fund in the event that the
Bank is notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below US$200
million (or the equivalent thereof) or that its shareholders' equity has
declined below US$200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Fund held by a Foreign Sub-Custodian.
(j) Tax Law. The Bank shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund or the Bank
as custodian of the Fund by the tax laws of any jurisdiction, and it shall be
the responsibility of the Fund to notify the Bank of the obligations imposed on
17
<PAGE> 22
the Fund or the Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Selected Foreign Sub-custodian with
regard to such tax law shall be to use reasonable efforts to assist the Fund
with respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
14.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
14.5. Fees and Expenses of the Bank. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made hereunder, and for all necessary proper disbursements,
expenses and charges made or incurred by the Bank in the performance of this
Agreement (including any duties listed on any Schedule hereto, if any) including
any indemnities for any loss, liabilities or expense to the Bank as provided
above. For the services rendered by the Bank hereunder, the Fund will pay to the
Bank such compensation or fees at such rate and at such times as shall be agreed
upon in writing by the parties from time to time. The Bank will also be entitled
to reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement.
14.6 Advances by the Bank. The Bank may, in its sole discretion,
advance funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by the Fund. Should such a payment or payments, with advanced
funds, result in an overdraft (due to insufficiencies of the Fund's account with
the Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtedness a loan made by the Bank to the Fund payable on demand. Such
overdraft shall bear interest at the current rate charged by the Bank for such
loans unless the Fund shall provide the Bank with agreed upon compensating
balances. The Fund agrees that the Bank shall have a continuing lien and
security interest to the extent of any overdraft or indebtedness, in and to any
property at any time held by it for the Fund's benefit or in which the Fund has
an interest and which is then in the Bank's possession or control (or in the
possession or control of any third party acting on the Bank's behalf). The Fund
authorizes the Bank, in the Bank's sole discretion, at any time to charge any
overdraft or indebtedness, together with interest due thereon, against any
balance of account standing to the credit of the Fund on the Bank's books.
15. Limitation of Liability.
15.1 Notwithstanding anything in this Agreement to the contrary, in
no event shall the Bank or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Bank and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including legal fees, (a "Claim") arising as
a result of any act or omission of the Bank or any Indemnified Party under this
Agreement, except for any Claim resulting solely from the gross negligence,
willful misfeasance or bad faith of the Bank or any Indemnified Party. Without
limiting the foregoing, neither the Bank nor the Indemnified Parties shall be
liable for, and the Bank and the Indemnified Parties shall be indemnified
against, any Claim arising as a result of:
(a) Any act or omission by the Bank or any Indemnified Party
in good faith reliance upon the terms of this Agreement, any Officer's
Certificate, Proper Instructions, resolution of the Board, telegram, telecopier,
notice, request, certificate or other instrument reasonably believed by the Bank
to genuine;
18
<PAGE> 23
(b) Any act or omission of any subcustodian selected by
or at the direction of the Fund;
(c) Any act or omission of a Selected Foreign Sub-
Custodian for to the extent which such Selected Foreign Sub-Custodian is not
liable to the Bank;
(d) Any Corporate Action requiring a Response for which the
Bank has not received Proper Instructions or obtained actual possession of all
necessary Securities, consents or other materials by 5:00 p.m.
on the date specified as the Response Deadline;
(e) Any act or omission of any European Branch of a U.S.
banking institution that is the issuer of Eurodollar CDs in connection with any
Eurodollar CDs held by such European Branch;
(f) Information relied on in good faith by the Bank and
supplied by any Authorized Person in connection with the calculation of (i) the
net asset value and public offering price of the shares of capital stock of the
Fund or (ii) the Yield Calculation; or
(g) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers (hardware or software) and
computer facilities, the unavailability of energy sources and other similar
happenings or events.
15.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall the total liability of the Bank and the Indemnified Parties
hereunder exceed in general money damages a total cumulative maximum amount of
one hundred percent of the amounts actually paid by the Fund to the Bank under
this Agreement. The existence of more than one Claim will not enlarge or
extend this limit.
15.3 Notwithstanding anything to the contrary in this Agreement, in
no event shall the Bank or the Indemnified Parties be liable to the Fund or any
third party for lost profits or lost revenues or any special, consequential,
punitive or incidental damages of any kind whatsoever in connection with this
Agreement or any activities hereunder.
16. Termination.
16.1 The term of this Agreement shall be one year commencing upon
the effective date of the Fund's registration statement (the "Initial Term"),
unless earlier terminated as provided herein. After the expiration of the
Initial Term, the term of this Agreement shall automatically renew for
successive one-year terms (each a "Renewal Term") unless notice of non-renewal
is delivered by the non-renewing party to the other party no later than sixty
days prior to the expiration of the Initial Term or any Renewal Term, as the
case may be.
(a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.
(b) Either party may terminate this Agreement during any
Renewal Term upon sixty days written notice to the other party. Any termination
pursuant to this paragraph 16.1(b) shall be effective upon expiration of such
sixty days, provided, however, that the effective date of such termination may
be postponed to a date not more than ninety days after delivery of the written
notice: (i)
19
<PAGE> 24
at the request of the Bank, in order to prepare for the transfer by
the Bank of all of the assets of the Fund held hereunder; or (ii) at the request
of the Fund, in order to give the Fund an opportunity to make suitable
arrangements for a successor custodian.
16.2 In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (16.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of the Bank's own selection
which meets the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Fund under terms similar to those
on which they were held by the Bank, whereupon such bank or trust company so
selected by the Bank will become the successor custodian of such assets of the
Fund with the same effect as though selected by the Board. Thereafter, the Bank
shall be released from any and all obligations under this Agreement.
16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank. Thereafter,
the Bank shall be released from any and all obligations under this Agreement.
16.4 The Fund shall reimburse the Bank for any reasonable expenses
incurred by the Bank in connection with the termination of this Agreement.
16.5 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of the Bank
relating to its performance of its duties as custodian.
17. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency. The
parties further agree that a breach of this provision would irreparably damage
the other party and accordingly agree that each of them is entitled, in addition
to all other remedies at low or in equal to an injunction or injunctions without
bond or other security to prevent breaches of this provision.
20
<PAGE> 25
18. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (I) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) had delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
Dessauer Global Equity Fund
c/o Guinness Flight Investment Management, Ltd.
225 South Lake Avenue, Suite 777
Pasadena, CA 91101
Attention: James J. Atkinson, Jr., Director
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Geoffrey O'Connell, Client Manager
With a copy to: John E. Henry, General Counsel
or at such other place as such party may from time to time designate in
writing.
19. Amendments. This Agreement may not be altered or amended, except
by an instrument in writing, executed by both parties.
20. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 16 hereof will not be deemed to
be an assignment within the meaning of this provision.
21. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
23. Entire Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
24. Limitation of Liability. The Bank agrees that the obligations
assumed by the Fund hereunder shall be limited in all cases to the assets of the
Fund and that the Bank shall not seek satisfaction of any such obligation from
the officers, agents, employees, trustees, or shareholders of the Fund.
21
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
DESSAUER GLOBAL EQUITY FUND
By:__________________________________________
Name:
Title:
Date:
INVESTORS BANK & TRUST COMPANY
By:__________________________________________
Name:
Title:
Date:
22
<PAGE> 27
APPENDIX A
THE DESSAUER GLOBAL EQUITY FUND
FUND FEE SCHEDULE
================================================================================
FUND ACCOUNTING, CALCULATION OF N.A.V. & CUSTODY
================================================================================
A. FUND ACCOUNTING & CALCULATION OF N.A.V
o There will be a per fund fee for Fund Accounting and Calculation of
NAV as follows:
<TABLE>
<S> <C>
First year or up to $25 million in assets $30,000 per fund
Second year or up to $50 million in assets $40,000 per fund
Third year and beyond or over $50 million $50,000 per fund
</TABLE>
B. DOMESTIC & FOREIGN CUSTODY
o Asset based fees and transaction fees vary by country, based upon the
attached Global Custody Fee Schedule. Local duties, script fees,
registration and exchange fees are out-of-pocket.
o Investors Bank will require the fund to hold all international assets
at the subcustodian of our choice.
o U.S. Domestic assets will be charged at 3 Basis Points with domestic
transactions charged according to Section C below.
C. DOMESTIC TRANSACTION COSTS
o DTC/Fed Book Entry $12
o Physical Securities 35
o Options and Futures 18
o GNMA Securities 40
o Principal Paydown 5
o Foreign Currency 18**
o Outgoing Wires 8
o Incoming Wires 6
** There are no transaction charges for F/X contracts executed by Investors
Bank. There are also no charges for use of IBT cash management vehicles.
<PAGE> 28
================================================================================
MISCELLANEOUS
================================================================================
A. OUT-OF-POCKET
o These charges consist of:
-Pricing & Verification Services -Legal Costs
-Printing, Delivery & Postage -Third Party Review
-Telecommunications -Forms and Supplies
-Extraordinary Travel Expenses -Customized Development
B. DOMESTIC BALANCE CREDIT
o We allow balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship.
The credit is based on collected balances reduced by balances
required to support the activity charges of the accounts. The
monthly earnings allowance is equal to 75% of the 90-day T-bill
rate.
C. SYSTEMS
o The details of any systems work will be determined after a thorough
business analysis. System's work will be billed on a time and
material basis.
D. PAYMENT
o The above fees will be charged against the fund's custodian account
five business days after the invoice is mailed. All fee amounts will
be calculated monthly as of the 20th of the month.
E. SECURITIES LENDING & FOREIGN EXCHANGE
o The assumption was made that Investors Bank would perform securities
lending and foreign exchange services for the portfolios. Securities
Lending revenue is split with the fund and Investors Bank on a
60/40% basis: 60% going to the fund.
<PAGE> 29
APPENDIX A (CONT'D)
GLOBAL CUSTODY FEE SCHEDULE FOR THE DESSAUER GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
================================================================================
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
================================================================================
<S> <C> <C>
ARGENTINA * 24.00 $100.00
AUSTRALIA 8.00 60.00
AUSTRIA ** 8.00 60.00
BANGLADESH 41.00 150.00
BELGIUM ** 8.00 50.00
BAHRAIN 41.00 140.00
BOTSWANA 50.00 175.00
BRAZIL ** 31.00 110.00
CANADA 8.00 20.00
CHILE ** 24.00 100.00
CHINA ** 20.00 60.00
COLOMBIA 24.00 100.00
CYPRUS 50.00 150.00
CZECH REPUBLIC 20.00 75.00
DENMARK ** 8.00 30.00
ECUADOR 45.00 100.00
EGYPT 41.00 100.00
EUROCLEAR - EUROBONDS 8.00 20.00
EUROCLEAR - NON-EUROBOND ISSUES 8.00 55.00
FINLAND ** 8.00 40.00
FRANCE ** 8.00 45.00
FRANCE DEBT ** 8.00 45.00
GERMANY ** 8.00 20.00
GHANA 50.00 200.00
GREECE 31.00 110.00
HONG KONG 12.00 60.00
HUNGARY 42.00 120.00
INDIA *** 45.00 50 BP
INDONESIA 15.00 60.00
IRELAND 20.00 60.00
ISRAEL 50.00 150.00
ITALY DEBT 8.00 60.00
ITALY EQUITY 8.00 60.00
JAPAN 8.00 20.00
JORDAN 42.00 120.00
KENYA 50.00 200.00
KOREA 15.00 60.00
LEBANON 41.00 140.00
LITHUANIA 20.00 75.00
LITHUANIAN T-BILLS 25.00 75.00
LUXEMBOURG 8.00 20.00
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
================================================================================
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
================================================================================
<S> <C> <C>
MALAYSIA 15.00 120.00
MAURITIUS 41.00 140.00
MEXICO 20.00 60.00
MOROCCO 40.00 150.00
NAMIBIA 50.00 200.00
NETHERLANDS ** 8.00 45.00
NEW ZEALAND 8.00 60.00
NORWAY ** 8.00 70.00
OMAN 41.00 140.00
PAKISTAN 42.00 120.00
PERU 45.00 120.00
PHILIPPINES 15.00 60.00
POLAND 50.00 150.00
POLAND T-BILLS 29.00 110.00
PORTUGAL 8.00 20.00
RUSSIA - EQUITIES 41.00 250.00
RUSSIA - MIN FINS 35.00 140.00
SINGAPORE 15.00 120.00
SLOVAKIA 20.00 75.00
SLOVENIA 41.00 100.00
SOUTH AFRICA 7.00 40.00
SPAIN - EQUITY & CORP DEBT ** 8.00 35.00
SPAIN - GOV'T DEBT ** 8.00 35.00
SRI LANKA 15.00 60.00
SWAZILAND 50.00 200.00
SWEDEN ** 8.00 40.00
SWEDEN DEBT ** 8.00 40.00
SWITZERLAND 8.00 60.00
TAIWAN 15.00 60.00
THAILAND 15.00 60.00
TURKEY 42.00 120.00
UK 8.00 60.00
URUGUAY 50.00 150.00
VENEZUELA ** 24.00 100.00
ZAMBIA 50.00 200.00
ZIMBABWE 50.00 175.00
</TABLE>
* Asset based charges based on Face Value not Market Value
** Local Administration Fee Included in Transaction Charge
*** Trades Billed at 50 BP
Out-of-Pocket charges are passed through as actuals in all markets.
<PAGE> 1
EXHIBIT 99.2K(1)
ADMINISTRATION AGREEMENT
AGREEMENT made this _____ day of ______________, 1997 by and
between The Dessauer Global Equity Fund (the "Fund") a Delaware Business trust
(the "Trust"), and INVESTMENT COMPANY ADMINISTRATION CORPORATION, a Delaware
Corporation (the "Administrator").
W I T N E S S E T H
WHEREAS, the Trust is registered as a closed-end management
investment company under the Investment Company Act of 1940 (the "1940 Act"),
and
WHEREAS, the Trust wishes to retain the Administrator to
provide certain administrative services in connection with the management of the
operations of the Fund and the Administrator is willing to furnish such
services:
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Administrator to
provide certain administrative services, hereinafter enumerated, in connection
with the management of the Fund's operations for the period and on the terms set
forth in this Agreement. The Administrator agrees to comply with all relevant
provisions of the 1940 Act, applicable rules and regulations thereunder, and
other applicable law.
2. Services on a Continuing Basis. The Administrator will
perform the following services on a regular basis which would be daily, weekly
or as otherwise appropriate:
(A) prepare and coordinate reports and other
materials to be supplied to the Board of Trustees of the Trust;
(B) prepare and/or supervise the preparation and
filing of all securities filings, periodic financial reports,
prospectuses, statements of additional information, marketing
materials, tax returns, shareholder reports and other regulatory
reports or filings required of the Trust and the Fund.
(C) prepare all required filings necessary to
maintain the Trust's and Fund's qualification and/or registration to
sell shares in all states where the Trust and the Fund currently do, or
intend to do business;
(D) coordinate the preparation, printing and mailing
of all materials (e.g., Annual Reports) required to be sent to
shareholders;
(E) coordinate the preparation and payment of Trust
and Fund related expenses;
<PAGE> 2
(F) conduct relations with, and monitor and oversee
the activities of the Trust's and the Fund's servicing agents (i.e.,
transfer agent, custodian, fund accounting agent, attorneys,
underwriters, brokers and dealers, corporate fiduciaries, banks and
such other persons in any such other capacity deemed to be necessary or
desirable;
(G) review and adjust as necessary the Fund's daily
expense accruals;
(H) maintain and keep such books and records of the
Trust as required by law or for the proper operation of the Trust and
the Fund other than those maintained and kept by the Trust's Investment
Adviser and servicing agents;
(I) provide the Trust with (i) the services of
persons competent to perform the administrative and clerical functions
described herein, and (ii) personnel to serve as officers of the Trust;
(J) provide the Fund with office space as well as
administrative offices and such data processing facilities as are
necessary for the performance of its duties under this Agreement.
(K) monitor the Fund's compliance with investment
policies and restrictions as set forth in the Fund's currently
effective Prospectus and Statement of Additional Information under the
Securities Act of 1933.
(L) perform such additional services as may be agreed
upon by the Trust and the Administrator.
3. Responsibility of the Administrator. The Administrator
shall be under no duty to take any action on behalf of the Trust or the Fund
except as set forth herein or as may be agreed to by the Administrator in
writing. In the performance of its duties hereunder, the Administrator shall be
obligated to exercise reasonable care and diligence and to act in good faith and
to use its best efforts. Without limiting the generality of the foregoing or any
other provision of this Agreement, the Administrator shall not be liable for
delays or errors or loss of data occurring by reason of circumstances beyond the
Administrator's control.
4. Reliance Upon Instructions. The Trust agrees that the
Administrator shall be entitled to rely upon any instructions, oral or written,
actually received by the Administrator from the Board of Trustees of the Trust
and shall incur no liability to the Trust or the investment adviser to the Fund
in acting upon such oral or written instructions, provided such instructions
reasonably appear to have been received from a person duly authorized by the
Board of Trustees of the Trust to give oral or written instructions on behalf of
the Trust or the Fund.
5. Confidentiality. The Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Trust and the Fund and all prior, present or
potential shareholders of the Fund, except after prior notification to, and
approval of release of information in writing by, the Trust, which approval
shall not be unreasonably withheld
2
<PAGE> 3
where the Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust or the Fund.
6. Equipment Failures. In the event of equipment failures or
the occurrence of events beyond the Administrator's control which render the
performance of the Administrator's functions under this Agreement impossible,
the Administrator shall take reasonable steps to minimize service interruptions
and is authorized to engage the services of third parties to prevent or remedy
such service interruptions.
7. Compensation. As compensation for services rendered by the
Administrator during the term of this Agreement, the Trust will cause the Fund
to pay to the Administrator a monthly fee at the annual rate of 0.10% of average
daily net assets, until such time as the Fund converts to an open-end fund at
which time the fee shall be at the annual rate of 0.25% of average daily net
assets.
8. Indemnification. The Trust and the Fund agree to indemnify
and hold harmless the Administrator from all taxes, filing fees, charges,
expenses, assessments, claims and liabilities (including without limitation,
liabilities arising under the Securities Act of 1933, the Securities Exchange
Act of 1934, the 1940 Act, and any state and foreign securities laws, all as
amended from time to time) and expenses, including (without limitation)
reasonable attorneys fees and disbursements, reasonably arising directly or
indirectly from any action or thing which the Administrator takes or does or
omits to take or do at the request of or in reliance upon the advice of the
Board of Trustees of the Trust, provided that the Administrator will not be
indemnified against any liability to the Fund or to shareholders (or any
expenses incident to such liability) arising out of the Administrator's own
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties and obligations under this Agreement. The Administrator agrees to
indemnify and hold harmless the Trust and each of its Trustees from all claims
and liabilities (including without limitation, liabilities under the Securities
Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and any state
and foreign securities laws, all as amended from time to time) and expenses,
including (without limitation) reasonable attorneys fees and disbursements,
arising directly or indirectly from any action or thing which the Administrator
takes or does or omits to take or do which is in violation of this Agreement or
not in accordance with instructions properly given to the Administrator, or
arising out of the Administrator's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations under this
Agreement.
9. Duration and termination. This Agreement shall continue
until termination by the Trust on behalf of the Fund (by resolution of the Board
of Trustees) or the Administrator on 60 days' written notice to the other party.
All notices and other communications hereunder shall be in writing.
10. Amendments. This Agreement or any part hereof may be
changed or waived only by instrument in writing signed by the party against
which enforcement of such change or waiver is sought, provided such amendment
is specifically approved by the Board of Trustees of the Trust.
11. Miscellaneous. This Agreement embodies the entire
agreement and understanding
3
<PAGE> 4
between the parties thereto with respect to the services to be performed
hereunder, and supersedes all prior agreements and understandings, relating to
the subject matter hereof. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in California and governed by
California law. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement
will not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the date first
written above.
By:________________________________________
Name:
Title:
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By:________________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 99.2K(2)
REGISTRAR,
TRANSFER AGENCY AND SERVICE AGREEMENT
BETWEEN
THE DESSAUER GLOBAL EQUITY FUND
AND
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK 2
ARTICLE 2 FEES AND EXPENSES 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BANK 4
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND 5
ARTICLE 5 DATA ACCESS AND PROPRIETARY INFORMATION 5
ARTICLE 6 INDEMNIFICATION 7
ARTICLE 7 STANDARD OF CARE 8
ARTICLE 8 COVENANTS OF THE FUND AND THE BANK 8
ARTICLE 9 TERMINATION OF AGREEMENT 9
ARTICLE 10 ASSIGNMENT 10
ARTICLE 11 AMENDMENT 10
ARTICLE 12 MASSACHUSETTS LAW TO APPLY 10
ARTICLE 13 FORCE MAJEURE 11
ARTICLE 14 CONSEQUENTIAL DAMAGES 11
ARTICLE 15 MERGER OF AGREEMENT 11
ARTICLE 16 SURVIVAL 11
ARTICLE 17 SEVERABILITY 11
ARTICLE 18 COUNTERPARTS 12
</TABLE>
1
<PAGE> 3
REGISTRAR, TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the DATE~ day of MONTH~, 1997, by and between The
Dessauer Global Equity Fund, a Delaware business trust, having its principal
office and place of business at 2025 East Financial Way, Suite 101, Glendora,
California 91741, (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company having its principal office and place of business at
225 Franklin Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its registrar,
transfer agent, dividend disbursing agent and agent in connection with certain
other activities and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as registrar, transfer agent for the Fund's authorized and issued
shares of beneficial interest ("Shares"), dividend disbursing agent and agent in
connection with any dividend reinvestment plan as set out in the prospectus of
the Fund, corresponding to the date of this Agreement.
1.02 The Bank agrees that it will perform the following
services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and the Bank, the Bank shall:
(i) Issue and record the appropriate number of Shares
as authorized and hold such Shares in the
appropriate Shareholder account;
(ii) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate documentation;
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<PAGE> 4
(iii) Prepare and transmit payments for dividends and
distributions declared by the Fund;
(iv) Act as agent for Shareholders pursuant to the
dividend reinvestment and cash purchase plan as
amended from time to time;
(v) Issue replacement certificates for those
certificates alleged to have been lost, stolen or
destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank
at its option, may issue replacement certificates
in place of mutilated stock certificates upon
presentation thereof and without such indemnity.
(b) In addition to and neither in lieu nor in contravention
of the services set forth in the above paragraph (a), the Bank shall: (i)
perform all of the customary services of a registrar, transfer agent, dividend
disbursing agent and agent of the dividend reinvestment and cash purchase plan
as described in Article 1 consistent with those requirements in effect as of the
date of this Agreement. The detailed definition, frequency, limitations and
associated costs (if any) set out in the attached fee schedule, include but are
not limited to: maintaining all Shareholder accounts, preparing Shareholder
meeting lists, and mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all registered Shareholders.
(c) The Bank shall provide additional services on behalf
of the Fund (i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
ARTICLE 2 FEES AND EXPENSES
2.01 For the performance by the Bank pursuant to this
Agreement, the Fund agrees to pay the Bank an annual maintenance fee as set out
in the initial fee schedule attached
3
<PAGE> 5
hereto. Such fees and out-of-pocket expenses and advances identified under
Section 2.02 below may be changed from time to time subject to mutual written
agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01 above,
the Fund agrees to reimburse the Bank for out-of-pocket expenses, including but
not limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, mailing and tabulating proxies, records storage, or advances
incurred by the Bank for the items set out in the fee schedule attached hereto.
In addition, any other expenses incurred by the Bank at the request or with the
consent of the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable
expenses within five days following the receipt of the respective billing
notice. Postage and the cost of materials for mailing of dividends, proxies,
Fund reports and other mailings to all Shareholder accounts shall be advanced to
the Bank by the Fund at least seven (7) days prior to the mailing date of such
materials.
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and
in good standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its
Charter and By-Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the
necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
4
<PAGE> 6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and
in good standing under the laws of the State of Delaware.
4.02 It is empowered under applicable laws and by its Trust
Instrument and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said Trust
Instrument and By-Laws have been taken to authorize it to enter into and perform
this Agreement.
4.04 It is a closed-end, diversified investment company
registered under the Investment Company Act of 1940, as amended.
4.05 To the extent required by federal securities laws a
registration statement under the Securities Act of 1933, as amended is currently
effective and appropriate state securities law filings have been made with
respect to all Shares of the Fund being offered for sale; information to the
contrary will result in immediate notification to the Bank.
4.06 It shall make all required filings under federal and
state securities laws.
ARTICLE 5 DATA ACCESS AND PROPRIETARY INFORMATION
5.01 The Fund acknowledges that the data bases, computer
programs, screen formats, report formats, interactive design techniques, and
other information furnished to the Fund by the Bank are provided solely in
connection with the services rendered under this Agreement and constitute
copyrighted trade secrets or proprietary information of substantial value to the
Bank. Such databases, programs, formats, designs, techniques and other
information are collectively referred to below as "Proprietary Information". The
Fund agrees that it shall treat all Proprietary Information as proprietary to
the Bank and further agrees that it shall not divulge any Proprietary
Information to any person or organization except as expressly permitted
hereunder. The Fund agrees for itself and its employees and agents:
5
<PAGE> 7
(a) to use such programs and databases (i) solely on the Fund
computers, or (ii) solely from equipment at the locations
agreed to between the Fund and the Bank and (iii) in
accordance with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way (other
than in the normal course of performing processing on the
Funds' computers) any part of any Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
programs, data or other information not owned by the Fund,
and if such access is accidentally obtained, to respect and
safeguard the same Proprietary Information;
(d) to refrain from causing or allowing information transmitted
from the Bank's computer to the Funds' terminal to be
retransmitted to any other computer terminal or other device
except as expressly permitted by the Bank, (such permission
not to be unreasonably withheld);
(e) that the Fund shall have access only to those authorized
transactions as agreed to between the Fund and the Bank; and
(f) to honor reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law and under applicable
statues.
5.02 If the transactions available to the Fund include the
ability to originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information, then in such event the Bank shall be entitled
to rely on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Bank from time to time.
6
<PAGE> 8
ARTICLE 6 INDEMNIFICATION
6.01 The Bank shall not be responsible for, and the Fund
shall indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer agent or
registrar.
(d) The reliance on, or the carrying out by the Bank or
its agents or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered in such state or
in violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the
Fund for instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Bank under
this Agreement, and the Bank and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund for any action taken or omitted by
it in reliance upon such instructions or upon the opinion of such counsel. The
Bank, its agents and subcontractors shall be protected and indemnified in acting
upon any paper or document furnished by or on behalf of the Fund, reasonably
believed to be genuine and to have
7
<PAGE> 9
been signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its agents or
subcontractors by telephone, in person, machine readable input, telex, CRT data
entry or other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Fund. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
officers of the Fund, and the proper countersignature of any former transfer
agent or former registrar, or of a co-transfer agent or co-registrar.
6.04 In order that the indemnification provisions contained
in this Article 6 shall apply, upon the assertion of a claim for which the Fund
may be required to indemnify the Bank, the Bank shall promptly notify the Fund
of such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend against said
claim in its own name or in the name of the Bank. The Bank shall in no case
confess any claim or make any compromise in any case in which the Fund may be
required to indemnify the Bank except with the Fund's prior written consent.
ARTICLE 7 STANDARD OF CARE
7.01 The Bank shall at all times act in good faith and
agrees to use its best efforts within reasonable limits to insure the accuracy
of all services performed under this Agreement, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct of that of its
employees.
ARTICLE 8 COVENANTS OF THE FUND AND THE BANK
8.01 The Fund shall promptly furnish to the Bank the
following:
(a) A certified copy of the resolution of the Board of
Directors of the Fund authorizing the appointment of the Bank and the execution
and delivery of this Agreement.
8
<PAGE> 10
(b) A copy of the Trust Instrument and By-Laws of the
Fund and all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain
facilities and procedures reasonably acceptable to the Fund for safekeeping of
stock certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.03 The Bank shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In cases of any requests or demands for the inspection
of the Shareholder records of the Fund, the Bank will endeavor to notify the
Fund and to secure instructions from an authorized officer of the Fund as to
such inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel that it
may be held liable for the failure to exhibit the Shareholder records to such
person.
ARTICLE 9 TERMINATION OF AGREEMENT
9.01 This Agreement may be terminated by either party upon
one hundred twenty (120) days written notice to the other.
9
<PAGE> 11
9.02 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, the Bank reserves the right to charge for
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) month's fees.
ARTICLE 10 ASSIGNMENT
10.01 Except as provided in Section 10.03 below, neither
this Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of
the Fund, subcontract for the performance hereof with (i) Boston EquiServe
Limited Partnership, a Delaware limited partnership ("Boston EquiServe"), which
is duly registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934 ("Section 17A(c)(2)"), or (ii) a Boston
EquiServe affiliate duly registered as a transfer agent pursuant to Section
17A(c)(2), provided, however, that the Bank shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor as it is for its own acts
and omissions.
ARTICLE 11 AMENDMENT
11.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Trustees of the Fund.
ARTICLE 12 MASSACHUSETTS LAW TO APPLY
12.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
10
<PAGE> 12
ARTICLE 13 FORCE MAJEURE
13.01 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.
ARTICLE 14 CONSEQUENTIAL DAMAGES
14.01 Neither party to this Agreement shall be liable to the
other party for consequential damages under any provision of this Agreement or
for any consequential damages arising out of any act or failure to act
hereunder.
ARTICLE 15 MERGER OF AGREEMENT
15.01 This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject hereof whether oral or written.
ARTICLE 16 SURVIVAL
16.01 All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
ARTICLE 17 SEVERABILITY
17.01 If any provision or provisions of this Agreement shall
be held to be invalid, unlawful, or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
11
<PAGE> 13
ARTICLE 18 COUNTERPARTS
18.01 This Agreement may be executed by the parties hereto
on any number of counterparts, and all of said counterparts taken together shall
be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
THE DESSAUER GLOBAL EQUITY FUND
BY: ______________________________
ATTEST:_______________________________
STATE STREET BANK AND TRUST COMPANY
BY:________________________________
Executive Vice President
ATTEST:
_______________________________________
12
<PAGE> 1
[KRAMER, LEVIN, NAFTALIS & FRANKEL LETTERHEAD]
May 28, 1997
The Dessauer Global Equity Fund
5 Bay State Court
Orleans, MA 02653
RE: THE DESSAUER GLOBAL EQUITY FUND
Dear Ladies/Gentlemen:
We have acted as counsel for The Dessauer Global Equity Fund, a
Delaware business trust (the "Fund"), in connection with the proposed public
offering of shares of beneficial interest, $.01 par value (the "Shares") of the
Fund pursuant to a registration statement on Form N-2 (File No. 333-7543) (the
"Registration Statement"), filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended.
We have reviewed the Fund's Certificate of Trust, its Delaware Trust
Instrument and its By-Laws, resolutions of the Board of Trustees of the Fund,
and the Registration Statement (including exhibits thereto). We have also made
such inquires and have examined originals, certified copies or copies otherwise
identified to our satisfaction of such documents, records and other instruments
as we have deemed necessary or appropriate for the purposes of this opinion.
For purposes of such examination, we have assumed the genuineness of all
signatures on original documents and the conformity to the original documents
of all copies submitted.
<PAGE> 2
KRAMER, LEVIN, NAFTALIS & FRANKEL
The Dessauer Global Equity Fund
May 28, 1997
Page 2
Based upon and subject to the foregoing, we are of the opinion, and so
advise you as follows:
i. The Fund is duly organized and validly existing as a business
trust in good standing under the laws of the State of Delaware.
ii. The shares of the Fund to be offered for sale pursuant to the
Registration Statement are duly authorized and, when sold, issued
and paid for as contemplated by the Registration Statement, will
have been validly and legally issued and will be fully paid and
nonassessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
KRAMER, LEVIN, NAFTALIS & FRANKEL
<PAGE> 1
[KRAMER, LEVIN, NAFTALIS & FRANKEL LETTERHEAD]
May ___, 1997
The Dessauer Global Equity Fund
225 South Lake Avenue, Suite 777
Pasadena, Californi
Re: The Dessauer Global Equity Fund
Registration Statement on Form N-2
(ICA No. 811-7691; File No. 333-7543)
Gentlemen:
We hereby consent to the reference of our firm as Counsel in this
Pre-Effective Amendment No. 2 the Registration Statement on Form N-2.
Very truly yours,
/s/ Kramer, Levin, Naftalis & Frankel
<PAGE> 1
EXHIBIT 99.2N2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Accountants", and
to the use of our report dated May 23, 1997, in Pre-Effective Amendment No. 2
to the Registration Statement (Form N-2 No. 333-7543) and the related
prospectus of The Dessauer Global Equity Fund for the registration of
5,750,000 shares of its common stock.
ERNST & YOUNG LLP
Los Angeles, California
May 28, 1997
<PAGE> 1
EXHIBIT 99.2P(1)
[GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED LETTERHEAD]
May 23, 1997
The Dessauer Global Equity Fund
____________________
____________________
Ladies/Gentlemen:
Guinness Flight Investment Management Limited ("Guinness
Flight") hereby offers to purchase ____ shares of The Dessauer Global Equity
Fund (the "Trust") (the "Seed Capital Shares"). This letter will confirm that
Guinness Flight is purchasing the Seed Capital Shares for its own account for
investment purposes only and not with a view to reselling or otherwise
distributing such shares.
Guinness Flight agrees and hereby undertakes that, in the
event any of the Seed Capital Shares are sold or redeemed during the period of
amortization of the Trust's organizational expenses, the proceeds of sale or
redemption will be reduced by any unamortized organizational expenses in the
same proportion as the number of Seed Capital Shares being redeemed bears to the
number of Seed Capital Shares outstanding at the time of redemption.
Sincerely,
<PAGE> 1
EXHIBIT 99.2P(2)
[DESSAUER ASSET MANAGEMENT, INC. LETTERHEAD]
May 23, 1997
The Dessauer Global Equity Fund
____________________
____________________
Ladies/Gentlemen:
Dessauer Asset Management, Inc. ("Dessauer") hereby offers to
purchase ____ shares of The Dessauer Global Equity Fund (the "Trust") (the "Seed
Capital Shares"). This letter will confirm that Dessauer is purchasing the Seed
Capital Shares for its own account for investment purposes only and not with a
view to reselling or otherwise distributing such shares.
Dessauer agrees and hereby undertakes that, in the event any
of the Seed Capital Shares are sold or redeemed during the period of
amortization of the Trust's organizational expenses, the proceeds of sale or
redemption will be reduced by any unamortized organizational expenses in the
same proportion as the number of Seed Capital Shares being redeemed bears to the
number of Seed Capital Shares outstanding at the time of redemption.
Sincerely,
