Reg. ICA No. 811-8360
File No. 33-75340
AS FILED VIA EDGAR WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 28,
1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [_]
Post-Effective Amendment No. 12 [X]
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 12
GUINNESS FLIGHT INVESTMENT FUNDS
(Exact Name of Registrant as Specified in Charter)
225 South Lake Avenue, Suite 777
Pasadena, California 91101
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (818) 795-0039
Susan Penry-Williams, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
(Name and Address of Agent for Service)
Copy to:
Mr. James Atkinson
Guinness Flight Investment Funds
225 South Lake Avenue, Suite 777
Pasadena, California 91101
It is proposed that this filing will become effective:
[_] Immediately upon filing pursuant to [X] on September 2, 1998
paragraph (b) pursuant to paragraph (b)
[_] 60 days after filing pursuant to [_] on (date) pursuant to
paragraph (a)(1) paragraph (a)(1)
[_] 75 days after filing pursuant to [_] on (date) pursuant to
paragraph (a)(2) paragraph (a)(2), of rule
485(b).
If appropriate, check the following box:
[X] this post-effective amendment designates a new effective date for a
previously filed post- effective amendment.
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CROSS-REFERENCE SHEET
(Pursuant to Rule 404 showing location in each form of Prospectus of
the responses to the Items in Part A and location in each form of Prospectus and
the Statement of Additional Information of the responses to the Items in Part B
of Form N-1A).
GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT INDEX FUND
Item Number
Form N-1A, Statement of Additional
Part A Prospectus Caption Information Caption
------ ------------------ -------------------
The Registrant has filed the information required in the prospectus in the
Post-Effective Amendment No. 11 to its Registration Statement on Form N-1A on
June 17, 1998, (accession number 0000922423-98-000615) and is hereby
incorporated by reference. The Registrant has not amended its prospectus.
1(a) Front Cover Page *
(b) Back Cover Page *
2(a) Risk/Return Summary: *
Investment Objective
(b) Investment Strategies *
(c) Principal Risks; Risk Return *
Bar Chart and Performance
Table
3 Fees and Expenses *
4(a) Risk/Return Summary: *
Investment Objective
(b) Investment Strategies *
(c) Risk/Return Summary: *
Principal Risks; Risks of
Investing
5 Not Applicable *
6(a) Guinness Flight Management *
(b) Not Applicable *
7(a) Finances - Net Asset Value *
(b) Shareholder Guide: Your *
Account with Guinness Flight -
Investment Minimums, How to
Purchase, Exchange and Sell
Shares, Subsequent Investments
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(c) Shareholder Guide: Your *
Account with Guinness Flight -
Investment Minimums, How to
Exchange and Redeem Shares,
Exchanges and Redemption
Issues
(d) Finances - Dividends and *
Capital Gains Distributions
(e) Finances - Tax Issues *
(f) Not Applicable *
8(a) Not Applicable *
(b) Guinness Flight Management - *
Distribution Plan
(c) Not Applicable *
9 Financial Highlights *
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GUINNESS FLIGHT ASIA BLUE CHIP FUND
GUINNESS FLIGHT ASIA SMALL CAP FUND
GUINNESS FLIGHT CHINA & HONG KONG FUND
GUINNESS FLIGHT MAINLAND CHINA FUND
GUINNESS FLIGHT GLOBAL GOVERNMENT BOND FUND
GUINNESS FLIGHT NEW EUROPE FUND
GUINNESS FLIGHT INDEX FUND
Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
------ ------------------ -------------------
The Registrant has filed the information required in the statement of additional
information in the Post-Effective Amendment No. 11 to its Registration Statement
on Form N-1A on June 17, 1998, (accession number 0000922423-98-000615) and is
hereby incorporated by reference. The Registrant has not amended its statement
of additional information.
10 * Front Cover Page
11 * General Information and
History
12(a) * General Information and
History
12(b) Investment Strategies; Principal Investment Strategies and
Risks; Risks of Investing Risks
12(c) * Investment Restrictions
and Policies
12(d) * Investment Objective and
Policies
12(e) Risks of Investing Not Applicable
13(a) * Management of the Funds
13(b) * Management of the Funds
13(c) * Management of the Funds
13(d) * Management of the Funds
13(e) * Not Applicable
14(a) * Not Applicable
14(b) * Shareholder Reports -
Principal Holders
14(c) * Management of the Funds
15(a) Guinness Flight Management The Investment Adviser and
Advisory Agreements
(b) * Not Applicable
(c) Guinness Flight Management The Investment Adviser and
Advisory Agreements
(d) * The Administrator;
Administration Agreement,
Distribution Agreement and
Distribution Plan
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<PAGE>
Item Number
Form N-1A, Statement of Additional
Part B Prospectus Caption Information Caption
------ ------------------ -------------------
(e) * Not Applicable
(f) * Not Applicable
(g) * Administration Agreement,
Distribution Agreement and
Distribution Plan
(h) * Not Applicable
16(a) * Portfolio Transactions
(b) * Portfolio Transactions
(c) * Portfolio Transactions
(d) * Not Applicable
(e) * Not Applicable
17(a) * Description of the Funds
(b) * Not Applicable
18(a) How to Purchase, Exchange Additional Purchase and
and Sell Shares Redemption Information
(b) * Not Applicable
(c) Finances - Net Asset Value Computation of Net Asset
Value
(d) * Additional Purchase and
Redemption Information
19(a) * Tax Matters
(b) * Tax Matters
20(a) * Not Applicable
(b) * Not Applicable
(c) * Not Applicable
21(a) * Not Applicable
(b) * Performance Information
22(a) * Financial Statements
(b) * Financial Statements
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<PAGE>
(c) * Financial Statements
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.
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EXPLANATORY NOTE
THE PURPOSE OF THIS FILING IS SOLEY TO DESIGNATE A NEW EFFECTIVE DATE FOR
POST-EFFECTIVE AMENDMENT NO. 11 TO REGISTRATION STATEMENT ON FORM N-1A OF THE
REGISTRANT AND TO FILE CURRENT EXHIBITS TO THE REGISTRANT'S REGISTRATION
STATEMENT. THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION FOR FUNDS
SUBJECT TO SUCH POST-EFFECTIVE AMENDMENT HAVE NOT BEEN AMENDED AND ARE
INCORPORATED BY REFERENCE HEREIN IN THEIR ENTIRETY.
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a)(1) Certificate of Trust. (2)
(a)(2) Trust Instrument. (2)
(b) By-laws. (2)
(c) None.
(d) Investment Advisory Agreement between Registrant and Guinness
Flight Investment Management Limited. (5)
(e) General Distribution Agreement between Registrant and First Fund
Distributors, Inc. (5)
(f) None.
(g) Amended Custodian Agreement between Registrant and Investors Bank
& Trust Company. (5)
(h)(1) Amended Transfer Agency and Service Agreement between
Registrant and State Street Bank and Trust Company. (5)
(h)(2) Amended Administration Agreement between Registrant and
Investment Company Administration Corporation. (5)
(i)(1) Opinion of Kramer, Levin, Naftalis & Frankel as to legality
of securities being registered. (4)
(i)(2) Opinion of Morris, Nichols, Arsht & Tunnell. (3)
(j)(1) Consent of Kramer, Levin, Naftalis & Frankel, Counsel for the
Registrant. (5)
(j)(2) Consent of Ernst & Young LLP, Independent Auditors for the
Registrant. (5)
(k) Annual Report for the year ended December 31, 1997 is
incorporated by reference from the Rule 30D filing made by the
Registrant on March 6, 1998 (Accession number 0001047469-98-
008899).
(l) Investment Letters. (3)
(m) Distribution and Service Plan. (5)
(n) None
(o) None
- -----------------------------
(1) Filed as an Exhibit to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-1A filed
electronically on February 14, 1996, accession number
0000922423-96-000062 and incorporated herein by reference.
(2) Filed as an Exhibit to Post-Effective Amendment No. 7 to
Registrant's Registration Statement on Form N-1A filed
electronically on March 20, 1997, accession number 0000922423-96-
000220 and incorporated herein by reference.
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(3) Filed as an Exhibit to Post-Effective Amendment No. 8 to
Registrant's Registration Statement on Form N-1A filed
electronically on April 25, 1997, accession number 0000922423-
97-000401 and incorporated herein by reference.
(4) Filed as an Exhibit to Post-Effective Amendment No. 11 to
Registrant's Registration Statement on Form N-1A filed
electronically on June 17, 1998, accession number 0000922423-
98-000615 and incorporated herein by reference.
(5) Filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 25. INDEMNIFICATION
Article X, Section 10.02 of the Registrant's Delaware Trust
Instrument, incorporated herein by reference to Exhibit 1(b) to
Post-Effective Amendment No. 7 to Registrant's Registration Statement
on Form N-1A filed electronically on March 20, 1997, provides for the
indemnification of Registrant's Trustees and officers, as follows:
"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
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
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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 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 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."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to trustees, officers, and controlling
persons or Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Investment Company Act of 1940, as
amended, and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a trustee, officer, or
controlling person of Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Guinness Flight Investment Management Limited provides
management services to the Registrant and its series. To the best of the
Registrant's knowledge, the directors and officers have not held at any time
during the past two fiscal years or been engaged for his own account or in the
capacity of director, officer, employee, partner or trustee in any other
business, profession, vocation or employment of a substantial nature.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) First Fund Distributors, Inc., the Registrant's principal
underwriter, also acts as the principal underwriter for the following investment
companies:
(1) Jurika & Voyles Fund Group;
(2) RNC Mutual Fund Group, Inc.;
(3) PIC Investment Trust;
(4) Hotchkis & Wiley Funds;
(5) Masters' Select Equity Fund;
(6) O'Shaughnessy Funds Inc.;
(7) Professionally Managed Portfolios;
- Avondale Total Return Fund
- Osterweis Fund
- Perkins Opportunity Fund
- Pro Conscience Women's Equity Mutual Fund
- Academy Value Fund
- Trent Equity Fund
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- Leonetti Balanced Fund
- Lighthouse Growth Fund
- U.S. Global Leaders Growth Fund
- Boston Managed Growth Fund
- Harris Bretall & Sullivan & Smith Growth Fund
- Pzena Growth Fund
- Titan Investment Trust
(8) Rainier Investment Management Mutual Funds;
(9) Kayne Anderson Mutual Funds;
(10) The Purisima Total Return Fund;
(11) Advisor's Series Trust;
- American Trust Allegiance Fund
- Information Tech 100 Mutual Fund
- Kaminski Poland Fund
- Ridgeway Helms Millenium Fund
(b) The following information is furnished with respect to the officers
and directors of First Fund Distributors, Inc., Registrant's principal
underwriter:
Name and Principal Position and Offices with Position and Offices
Business Address Principal Underwriter with Registrant
- ---------------- --------------------- ---------------
Robert H. Wadsworth President/Treasurer Asstistant
4455 East Camelback Road Treasurer
Suite 261E
Phoenix, AZ 85014
Steven J. Paggioli Vice President/Secretary Secretary
479 West 22nd Street
New York, NY 10011
Eric M. Banhazl Vice President Treasurer
2020 East Financial Way
Suite 100
Glendora, CA 91741
(c) not applicable
ITEM 28. 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, 2020 East Financial
Way, Suite 100, Glendora, CA 91741, except for those maintained by the Funds'
Custodian.
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
(1) Registrant undertakes to furnish each person to whom a prospectus
is delivered, a copy of the Fund's latest annual report to shareholders which
will include the information required by Item 5A, upon request and without
charge.
(2) Registrant undertakes to call a meeting of shareholders for the
purpose of voting upon the question of removal of a trustee or trustees if
requested to do so by theholders of at least 10% of the Registrant's outstanding
voting securities, and to assist in communications with other shareholders as
required by Section 16(c) of the 1940 Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the reqirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to its Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, and the State of New York on this 28th day of August, 1998.
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/ Robert H. Wadsworth
------------------------
Robert H. Wadsworth
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Post-Effective Amendment to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Eric M. Banhazl Treasurer August 28, 1998
- ----------------------------- -----------------
Eric M. Banhazl
/s/ Dr. Gunter Dufey Trustee August 28, 1998
- ----------------------------- -----------------
Dr. Gunter Dufey
/s/ J. I. Fordwood Trustee August 28, 1998
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J. I. Fordwood
/s/ Bret A. Herscher Trustee August 28, 1998
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Bret A. Herscher
/s/ J. Brooks Reece, Jr. Trustee August 28, 1998
- ------------------------------ -----------------
J. Brooks Reece, Jr.
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EXHIBIT INDEX
EX- 99.invadvagmt Investment Advisory Agreement between Registrant and
Guinness Flight Investment Management Limited
EX-99.distagmt General Distribution Agreement between Registrant and First
Fund Distributors, Inc.
EX-99.custagmt Amended Custodian Agreement between Registrant and Investors
Bank & Trust Company
EX-99.taagmt Amended Transfer Agency and Service Agreement between
Registrant and State Street Bank and Trust Company
EX-99.adminagmt Amended Administration Agreement between Registrant and
Investment Company Administration Corporation
EX-99.counselcons Consent of Kramer, Levin, Naftalis & Frankel, Counsel for
the Registrant
EX- 99.auditorcons Consent of Ernst & Young LLP, Independent Auditors for the
Registrant
EX-99.distplan Distribution and Service Plan
INVESTMENT ADVISORY AGREEMENT
BETWEEN
GUINNESS FLIGHT INVESTMENT FUNDS
AND
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
INVESTMENT ADVISORY AGREEMENT, dated as of April 28, 1997, and amended
as of September 5, 1997, by and between GUINNESS FLIGHT INVESTMENT FUNDS, a
Delaware business trust which may issue one or more series of shares of
beneficial interest (the "Trust"), and GUINNESS FLIGHT INVESTMENT MANAGEMENT
LIMITED (the "Adviser").
W I T N E S S E T H
WHEREAS, the Trust is engaged in business as an open-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 Trust wishes to engage the Adviser to provide certain
investment advisory services to the series of the Trust listed on Schedule A
(each, a "Fund" and collectively, the "Funds"), and the Adviser is willing to
provide such investment advisory services for the Funds 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.
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Funds with respect to the investment of their assets
and to supervise and arrange the purchase of securities for and the sale of
securities held in the portfolios of the Funds.
<PAGE>
2. Duties and Obligations of the Adviser With Respect to the Investment
of Assets of the Funds.
(a) Subject to the succeeding provisions of this section and subject to
the direction and control of the Board of Trustees of the Trust, the Adviser
shall:
(i) supervise continuously the investment program of each Fund and
the composition of its portfolio;
(ii) determine what securities be purchased or sold by each Fund; and
(iii)arrange for the purchase and the sale of securities held in the
portfolio of each Fund; and
(b) Any investment program 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 and of any rules or regulations in
force thereunder;
(ii) any other applicable provisions of state and Federal law;
(iii)the provisions of the Trust's Trust Instrument and By-Laws, as
amended from time to time;
(iv) any policies and determinations of the Board of Trustees of the
Trust; and
(v) the fundamental policies of each Fund, as reflected in its
Registration Statement under the Act, as amended from time to
time.
(c) The Adviser shall give each Fund the benefit of its best judgment
and effort in rendering services hereunder, and in connection therewith the
Adviser shall not be liable to any 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 such 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 Funds
under this Agreement. The Adviser agrees that it will not deal with itself, or
with the Trustees of the Trust or the Funds' principal underwriter or
distributor, as principals in making purchases or sales of securities or other
property for the account of the Funds, except as permitted by the Act, and will
comply with all other provisions of the Trust's Trust Instrument and By-Laws and
the then-current prospectus and statement of additional information applicable
to each Fund relative to the Adviser and its board members and officers.
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(e) The Funds will supply the Adviser with certified copies of the
following documents: (i) the Trust's Trust Instrument and By-Laws; (ii)
resolutions of the Trust's Board of Trustees and shareholders authorizing the
appointment of the Adviser and approving this Agreement; (iii) the Funds'
Registration Statement, as filed with the Securities and Exchange Commission;
and (iv) the Funds' most recent prospectus and statement of additional
information. The Funds will furnish the Adviser from time to time 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 Funds will supply, or cause their custodian bank to supply, to
the Adviser such financial information as is necessary or desirable for the
functions of the Adviser hereunder.
3. Broker-Dealer Relationships.
The Adviser is responsible for decisions to buy and sell securities for
each 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. Each Fund understands that many
of its 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 a Fund on a continuing
basis. Accordingly, the price to a 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 a 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 a 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 indicating the brokers to whom such
allocations have been made and the basis therefor.
4. Allocation of Expenses.
The Adviser agrees that it will furnish each 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 any administrator (the "Administrator") of the Funds all necessary
financial information in connection with the Administrator's duties under any
agreement between the Administrator and the Trust on behalf of the Funds. All
costs and expenses associated with any administrative functions delegated by the
Adviser to the Administrator that are not pursuant to any agreement between the
Administrator and a Fund or the Adviser and a Fund will be paid by the Adviser.
All other costs and expenses not expressly assumed by the Adviser under this
Agreement or by the Administrator under the administration agreement between it
and the Trust on behalf of a Fund shall be paid by the Fund from the assets of
the Fund, including, but not limited to (i) fees paid to the Adviser and the
Administrator; (ii) interest and taxes; (iii) brokerage commissions; (iv)
insurance premiums; (v) compensation and expenses of the directors other than
those affiliated with 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
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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 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
trustees with respect thereto.
5. Compensation of the Adviser.
For the services to be rendered, each Fund shall pay to the Adviser
from the assets of the Fund an investment advisory fee paid monthly at an annual
rate set forth opposite each Fund's name on Schedule A which shall be a
percentage of the Fund's average daily 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
prorated in a manner consistent with the calculation of the fees as set forth
above. Subject to the provisions of subsection (b) hereof, payment of the
Adviser's compensation for the preceding month shall be made as promptly as
possible after completion of the computations contemplated by subsection (b)
hereof.
6. Duration Amendment and Termination.
(a) This Agreement shall go into effect as to each 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, 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" (as so defined) of the outstanding voting securities
of a 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 a Fund.
(c) This Agreement may be terminated as to a Fund by the Adviser at any
time without penalty upon giving such Fund sixty (60) days' written notice
(which notice may be waived by the Fund) and may be terminated by a 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
such 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).
7. Board of Trustees' Meeting.
Each Fund agrees that notice of each meeting of the Board of Trustees
will be sent to the Adviser and that each Fund will make appropriate
arrangements for the attendance (as persons present by invitation) of such
person or persons as the Adviser may designate.
-4-
<PAGE>
8. Use of the Name "Guinness Flight".
Each Fund acknowledges that it is adopting its name through permission
of the Adviser, and agrees that the Adviser reserves to itself and any successor
to its business the right to withdraw the right to use the name "Guinness
Flight" from a Fund if the Adviser no longer advises the Fund. The Adviser also
reserves the right to grant the nonexclusive right to use the name "Guinness
Flight" or any similar name to any other corporation or entity, including, but
not limited to, any investment company. In the event this Agreement is
terminated, each Fund shall immediately delete "Guinness Flight" from its name
and may not use the name "Guinness Flight" in any manner thereafter.
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.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
GUINNESS FLIGHT INVESTMENT FUNDS
By___________________________________________
Title:
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
By__________________________________________
Title:
-6-
<PAGE>
Schedule A
amended as of August 14, 1998
Name of Fund Fee*
- ------------ ----
1. Guinness Flight Asia Blue Chip Fund 1.00%
2. Guinness Flight Asia Small Cap Fund 1.00%
3. Guinness Flight China & Hong Kong Fund 1.00%
4. Guinness Flight Global Government Bond Fund .75%
5. Guinness Flight Mainland China Fund 1.00%
6. Guinness Flight New Europe Fund 1.00%
7. Guinness Flight Index Fund .70%
- --------------
* As a percentage of average daily net assets. Note, however, that the
Adviser shall have the right, but not the obligation, to voluntarily
waive any portion of the advisory fee from time to time.
-7-
GENERAL DISTRIBUTION AGREEMENT
AGREEMENT made April 28, 1997, and amended as of September 5, 1997, by
and between the Guinness Flight Investment Funds, a Delaware business trust
which may issue one or more series of shares (the "Guinness Funds"), and First
Fund Distributors, Inc., a Delaware corporation having its principal place of
business at 4455 E. Camelback Road, 261-E, Phoenix, Arizona 85018 (the
"Distributor").
WHEREAS, the Guinness Funds wishes to employ the services of the
Distributor in connection with the promotion and distribution of shares of the
funds listed on Schedule A (each, a "Fund" and collectively, the "Funds")
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained, the parties agree as follows:
1. Documents. The Guinness Funds has furnished the Distributor with
copies of its Certificate of Trust, Trust Instrument, By Laws, Investment
Advisory Agreement, Custodian Agreement, current Prospectus and Statement of
Additional Information, and all forms relating to any plan, program or service
offered by the Guinness Funds. The Guinness Funds shall furnish promptly to the
Distributor a copy of any amendment or supplement to any of the above mentioned
documents. The Guinness Funds shall furnish promptly to the Distributor any
additional documents necessary or advisable to perform its functions hereunder.
2. Sale of Shares. The Guinness Funds grants to the Distributor the
right to sell shares as agent on behalf of the Guinness Funds (the "Shares"),
during the term of this Agreement, subject to the registration requirements of
the Securities Act of 1933, as amended ("1933 Act"), and of the laws governing
the sale of securities in the various states ("Blue Sky Laws"), under the terms
and conditions set forth in this agreement. The Distributor (i) shall have the
right to sell, as agent on behalf of the Guinness Funds, shares authorized for
issue and registered under the 1933 Act, and (ii) may sell shares under offers
of exchange, if available, between and among other funds or portfolios advised
by Guinness Flight Investment Management Limited ("Guinness Flight").
3. Sale of Shares by the Guinness Funds. The rights granted to the
Distributor shall be nonexclusive in that the Guinness Funds reserves the right
to sell the Shares to investors on applications received and accepted by the
Guinness Funds. Further, the Guinness Funds reserves the right to issue Shares
in connection with the merger, consolidation or other combination by the
Guinness Funds through purchase or otherwise, with any other entity.
4. Public Offering Price. Except as otherwise noted in the Guinness
Funds' current Prospectus and/or Statement of Additional Information, all Shares
sold to investors by the Distributor or the Guinness Funds will be sold at the
public offering price.
<PAGE>
The public offering price for all accepted subscriptions will be the net asset
value per share, as determined in the manner described in the Guinness Funds'
current Prospectus and/or Statement of Additional Information, plus a sales
charge (if any) described in the Guinness Funds' current Prospectus and/or
Statement of Additional Information. The Guinness Funds shall in all cases
receive the net asset value per share on all sales. If a sales charge is in
effect, the Distributor shall have the right, subject to such rules or
regulations of the Securities and Exchange Commission as may then be in effect
pursuant to Section 22 of the Investment Company Act of 1940, to pay a portion
of the sales charge to dealers who have sold shares of the Guinness Funds. If a
fee in connection with shareholder redemptions is in effect, the Guinness Funds
shall collect the fee on behalf of the Distributor and, unless otherwise agreed
upon by the Guinness Funds and the Distributor, the Distributor shall be
entitled to receive all of such fees.
5. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be processed by the Distributor except such unconditional
orders as may have been placed with the Distributor before it had knowledge of
the suspension. In addition, the Guinness Funds reserves the right to suspend
sales and the Distributor's authority to process orders for Shares on behalf of
the Guinness Funds if, in the judgment of the Guinness Funds, it is in the best
interests of the Guinness Funds to do so. Suspension will continue for such
period as may be determined by the Guinness Funds.
6. Solicitation of Sales. In consideration of these rights granted to
the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to secure purchasers for Shares of the
Guinness Funds. This shall not prevent the Distributor from entering into like
arrangements (including arrangements involving the payment of underwriting
commissions) with other issuers. While the Distributor is registered as a broker
or dealer under the Blue Sky Laws of certain United States jurisdictions, it
shall not be required to maintain its registration in any jurisdiction in which
it is now registered. If a sales charge is in effect, the Distributor shall have
the right to enter into sales agreements with dealers of its choice for the sale
of shares of the Guinness Funds to the public at the public offering price only
and fix in such agreements the portion of the sales charge which may be retained
by dealers, provided that the Guinness Funds shall approve the form of the
dealer agreement and the dealer discounts set forth therein and shall evidence
such approval by filing said form of dealer agreement and amendments thereto as
an exhibit to its currently effective Registration Statement under the 1933 Act.
7. Authorized Representations. The Distributor is not authorized by the
Guinness Funds to give any information or to make any representations other than
those contained in the appropriate registration statements or Prospectuses and
Statements of Additional Information filed with the Securities and Exchange
Commission under the 1933 Act (as these registration statements, Prospectuses
and Statements of Additional Information may be amended from time to time), or
contained in shareholder reports or other material that may be prepared by or on
behalf of the Guinness Funds for the Distributor's use. Consistent with the
foregoing, the Distributor may prepare and distribute sales literature or
- 2 -
<PAGE>
other material as it may deem appropriate, provided such sales literature
complies with applicable law and regulation.
8. Registration of Shares. The Guinness Funds agrees that it will take
all action necessary to register Shares under the 1933 Act (subject to the
necessary approval of its shareholders) so that there will be available for sale
the number of Shares the Distributor may reasonably be expected to sell. The
Guinness Funds shall make available to the Distributor such number of copies of
its currently effective Prospectus and Statement of Additional Information as
the Distributor may reasonably request at the Distributor's expense. The
Guinness Funds, at its expense, shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of shares of the
Guinness Funds.
9. Distribution Expenses. The Distributor shall bear all expenses in
connection with the performance of its services hereunder, including, but not
limited to, (a) printing and distributing any Prospectuses and Statements of
Additional Information or reports prepared for its use in connection with the
offering of shares for sale to the public other than to existing shareholders of
the Guinness Funds determined at the time of mailing any such Prospectuses and
Statements of Additional Information or reports, (b) any other literature used
by the Distributor in connection with such offering, and (c) advertising and
promotional activities in connection with such Offering.
10. Guinness Funds Expenses. The Guinness Funds shall pay all fees and
expenses (a) in connection with the preparation, setting in type and filing of
any registration statement, Prospectus and Statement of Additional Information
under the 1933 Act and amendments for the issue of its shares, (b) in connection
with the registration and qualification of shares for sale in the various states
in which the Board of Trustees of the Guinness Funds shall determine it
advisable to qualify such shares for sale (including registering the Guinness
Funds as a broker or dealer or any officer of the Guinness Funds as agent or
salesman in any state), (c) of preparing, setting in type, printing and mailing
any report or other communication to shareholders of the Guinness Funds in their
capacity as such, and (d) of preparing, setting in type, printing and mailing
Prospectuses, Statements of Additional Information and any supplements thereto
sent to existing shareholders.
The Distributor shall bear all expenses in connection with the
performance of its services hereunder and shall have no obligation to pay or to
reimburse the Guinness Funds for any other expenses incurred by or on behalf of
the Funds, including any expenses which may be in excess of expense limitations
imposed by any state.
11. Use of the Distributor's Name. The Guinness Funds shall not use the
name of the Distributor, or any of its affiliates, in any Prospectus or
Statement of Additional Information, sales literature, and other material
relating to the Guinness Funds in any manner without the prior written consent
of the Distributor (which shall not be unreasonably withheld); provided,
however, that the Distributor hereby approves all lawful uses of the names of
the Distributor and its affiliates in the Prospectus and Statement of Additional
Information of the Guinness Funds and in all other materials which merely refer
in accurate
- 3 -
<PAGE>
terms to their appointments hereunder or which are required by the Securities
and Exchange Commission or any state securities authority.
12. Use of the Guinness Funds' Name. Neither the Distributor nor any of
its affiliates shall use the name of the Guinness Funds in any Prospectuses or
Statements of Additional Information, sales literature, or other material
relating to the Guinness Funds on any forms for other than internal use in any
manner without the prior consent of the Guinness Funds (which shall not be
unreasonably withheld); provided, however, that the Guinness Funds hereby
approves all uses of its name in the Prospectus and Statement of Additional
Information of the Guinness Funds and in sales literature and all other
materials which are required by the Distributor in the discharge of its duties
hereunder which merely refer in accurate terms to the appointment of the
Distributor hereunder, or which are required by the Securities and Exchange
Commission or any state securities authority.
13. Insurance. The Distributor agrees to maintain fidelity bond and
liability insurance coverages which are, in scope and amount, consistent with
coverages customary for distribution activities. The Distributor shall notify
the Guinness Funds upon receipt of any notice of material, adverse change in the
terms or provisions of its insurance coverage. Such notification shall include
the date of change and the reason or reasons therefor. The Distributor shall
notify the Guinness Funds of any material claim against it, whether or not
covered by insurance, and shall notify the Guinness Funds, from time to time as
may be appropriate, of the total outstanding claims made by it under its
insurance coverage.
14. Indemnification. The Guinness Funds agrees to indemnify and hold
harmless the Distributor and each of its directors and officers and each person,
if any, who controls the Distributor within the meaning of Section 15 of the
1933 Act against any loss, liability, claim, damages or expense (including the
reasonable cost of investigating or defending any alleged loss, liability,
claim, damages, or expense and reasonable counsel fees incurred in connection
therewith) arising by reason of any person acquiring any shares, based upon the
ground that the registration statement, Prospectus, Statement of Additional
Information, shareholder reports or other information filed or made public by
the Guinness Funds (as from time to time amended) included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements not misleading under the 1933 Act, or
any other statute or the common law. However, the Guinness Funds does not agree
to indemnify the Distributor or hold it harmless to the extent that the
statement or omission was made in reliance upon, and in conformity with,
information furnished to the Guinness Funds by or on behalf of the Distributor.
In no case (i) is the indemnity of the Guinness Funds in favor of the
Distributor or any person indemnified to be deemed to protect the Distributor or
any person against any liability to the Guinness Funds or its security holders
to which the Distributor or such person would otherwise be subjected by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
under this Agreement, or (ii) is the Guinness Funds to be liable under its
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
person, as the case may be, shall have
- 4 -
<PAGE>
notified the Guinness Funds in writing of the claim within a reasonable time
after the summons or other first written notification giving information of the
nature of the claim shall have been served upon the Distributor or any such
person (or after the Distributor or such person shall have received notice of
service on any designated agent). However, failure to notify the Guinness Funds
of any claim shall not relieve the Guinness Funds from any liability which it
may have to the Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Guinness Funds shall be entitled to participate at its own
expense in the defense, or, if it so elects, to assume the defense of any suit
brought to enforce any claims, but if the Guinness Funds elects to assume the
defense, the defense shall be conducted by counsel chosen by it and satisfactory
to the Distributor or person or persons, defendant or defendants in the suit. In
the event the Guinness Funds elects to assume the defense of any suit and retain
counsel, the Distributor, officers or directors or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them. If the Guinness Funds does not elect
to assume the defense of any suit, it will reimburse the Distributor, officers
or directors or controlling person or persons, defendant or defendants in the
suit for the reasonable fees and expenses of any counsel retained by them. The
Guinness Funds agrees to notify the Distributor promptly of the commencement of
any litigation or proceedings against it or any of its officers or directors in
connection with the issuance or sale of any of the shares.
The Distributor also covenants and agrees that it will indemnify and
hold harmless the Guinness Funds and each of its Board members and officers and
each person, if any, who controls the Guinness Funds within the meaning of
Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith) arising by reason of any person acquiring any Shares,
based upon the 1933 Act or any other statute or common law, alleging any
wrongful act of the Distributor or any of its employees or alleging that the
registration statement, Prospectus, Statement of Additional Information,
shareholder reports or other information filed or made public by the Guinness
Funds (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements not misleading, insofar as the statement or
omission was made in reliance upon, and in conformity with information furnished
to the Guinness Funds by or on behalf of the Distributor. In no case (i) is the
indemnity of the Distributor in favor of the Guinness Funds or any person
indemnified to be deemed to protect the Guinness Funds or any person against any
liability to which the Guinness Funds or such person would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Guinness Funds or any person indemnified unless the
Guinness Funds or person, as the case may be, shall have notified the
Distributor in writing of the claim within a reasonable time after the summons
or other first written notification giving information of the nature of the
claim shall have been served upon the Guinness Funds or any such person (or
after the Guinness Funds or such person shall have received notice of service on
any
- 5 -
<PAGE>
designated agent). However, failure to notify the Distributor of any claim shall
not relieve the Distributor from any liability which it may have to the Guinness
Funds or any person against whom such action is brought otherwise than on
account of its indemnity agreement contained in this paragraph. In the case of
any notice to the Distributor, it shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the defense of any suit
brought to enforce any claim, but if the Distributor elects to assume the
defense, the defense shall be conducted by counsel chosen by it and satisfactory
to the Guinness Funds, to its officers and Board and to any controlling person
or persons, defendant or defendants in the suit. In the event the Distributor
elects to assume the defense of any suit and retain counsel, the Guinness Funds
or controlling persons, defendant or defendants in the suit, shall bear the fees
and expenses of any additional counsel retained by them. If the Distributor does
not elect to assume the defense of any suit, it will reimburse the Guinness
Funds, officers and Board or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Distributor agrees to notify the Guinness Funds promptly
of the commencement of any litigation or proceedings against it in connection
with the issue and sale of any of the shares.
15. Liability of the Distributor. The Distributor shall not be liable
for any damages or loss suffered by the Guinness Funds in connection with the
matters to which this Agreement relates, except for damages or loss resulting
from willful misfeasance, reckless disregard, bad faith or gross negligence on
the Distributor's part in the performance of its duties under this Agreement.
Any person, even though also an officer, partner, employee or agent of the
Distributor, or any of its affiliates, who may be or become an officer of the
Guinness Funds, shall be deemed, when rendering services to or acting on any
business of the Guinness Funds in any such capacity (other than services or
business in connection with the Distributor's duties under this Agreement), to
be rendering such services to or acting solely for the Guinness Funds and not as
an officer, partner, employee or agent or one under the control or direction of
the Distributor or any of its affiliates, even if paid by the Distributor or an
affiliate thereof.
16. Acts of God, Etc. The Distributor shall not be liable for delays or
errors occurring by reason of circumstances not reasonably foreseeable and
beyond its control, including, but not limited to, acts of civil or military
authority, national emergencies, work stoppages, fire, flood, catastrophe, acts
of God, insurrection, war, riot or failure of communication or power supply. In
addition, in the event of equipment breakdowns which are (i) beyond the
reasonable control of the Distributor and (ii) not primarily attributable to the
failure of the Distributor to reasonably maintain or provide for the maintenance
of such equipment, the Distributor shall, at no additional expense to the
Guinness Funds, take reasonable steps in good faith to minimize service
interruptions but shall have no liability with respect thereto.
17. Supplemental Information. The Distributor and the Guinness Funds
shall regularly consult with each other regarding the Distributor's performance
of its obligations under this Agreement. In connection therewith, the Guinness
Funds shall submit to the Distributor at a reasonable time in advance of filing
with the Securities and Exchange Commission copies of any amended or
supplemented registration statements (including
- 6 -
<PAGE>
exhibits) under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, and, at a reasonable time in advance of their
proposed use, copies of any amended or supplemented forms relating to any plan,
program or service offered by the Guinness Funds. Any change in such material
which would require any change in the Distributor's obligations under the
foregoing provisions shall be subject to the Distributor's approval, which shall
not be unreasonably withheld.
18. Term. This Agreement shall become effective on April 28, 1997 or
such later date as may be agreed upon by the parties hereto, and shall continue
through April 27, 1999, and thereafter shall continue automatically for
successive annual periods, provided such continuance is specifically approved at
least annually (i) by the Guinness Funds' Board of Trustees or (ii) by a vote of
a majority of the outstanding Shares of the Guinness Funds (as defined in the
Investment Company Act of 1940), provided that in either event the continuance
is also approved by the majority of the Guinness Funds' Trustees who are not
parties to the Agreement or "interested persons" (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without penalty
on not less than sixty days' notice by the Guinness Funds' Board of Trustees, by
vote of a majority of the outstanding Shares of the Guinness Funds (as defined
by the 1940 Act) or by the Distributor. Any termination shall not affect the
rights and obligations of the parties under Sections 9, 14, 15, and 16, hereof.
Upon termination of this Agreement in whole, at the Guinness Funds'
expense and direction, the Distributor shall transfer to such successor as the
Guinness Funds shall specify all relevant books, records and other data
established or maintained by the Distributor under this Agreement.
19. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by (i) telex, (ii)
telecopier, or (iii) registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address furnished by the
other party to the party giving notice: if to the Guinness Funds, at Guinness
Flight Investment Funds, Attention: James Atkinson, 225 South Lake Avenue, Suite
777, Pasadena, CA 91101, Telecopy No. (818) 795-0593; and if to the Distributor,
First Fund Distributors, Attention: Robert Wadsworth, 4455 E. Camelback Road,
Suite 261E, Phoenix, AZ 85018, Telecopy No. (602) 952-8520, or such other
telecopy number or address as may be furnished by one party to the other.
20. Confidential Information. The Distributor will treat confidentially
and as proprietary information of the Guinness Funds all records and other
information relative to the Guinness Funds and to prior or present shareholders
or to those persons or entities who respond to the Distributor's inquiries
concerning investment in the Guinness Funds, and will not use such records and
information for any purposes other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Guinness Funds, which approval shall not be unreasonably withheld and may
not be withheld if the Distributor might, in its sole judgment exercised in good
faith, be exposed to
- 7 -
<PAGE>
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 Guinness Funds.
21. Limitation of Liability. The Distributor is expressly put on notice
of the limitation of shareholder liability as set forth in the Trust Instrument
of the Guinness Funds and agrees that the obligations assumed by the Guinness
Funds under this contract shall be limited in all cases to the Guinness Funds
and its assets. The Distributor shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Guinness Funds. Nor
shall the Distributor seek satisfaction of any such obligation from the Trustees
or any individual Trustee of the Guinness Funds. The Distributor understands
that the rights and obligations of each series of shares of the Guinness Funds
under the Guinness Funds' Trust Instrument are separate and distinct from those
of any and all other series.
22. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts to the extent federal
law does not govern. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. Except as otherwise provided
herein or under the Investment Company Act of 1940, this Agreement may not be
changed, waived, discharged or amended except by written instrument which shall
make specific reference to this Agreement and which shall be signed by the party
against which enforcement of such change, waiver, discharge or amendment is
sought. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
- 8 -
<PAGE>
IN WITNESS WHEREOF, the Guinness Funds has executed this instrument in
its name and behalf, and its seal affixed, by one of its officers duly
authorized, and the Distributor has executed this instrument in its name and
behalf, and its corporate seal affixed, by one of its officers duly authorized,
as of the day and year first above written.
Guinness Flight Investment Funds with respect to
its series of funds listed on Schedule A
Attest:
By:
-------------------
President
FIRST FUND DISTRIBUTORS, INC.
Attest:
By:
-------------------
Vice President and Secretary
- 9 -
<PAGE>
Schedule A
amended as of August 14, 1998
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
Guinness Flight Mainland China Fund
Guinness Flight New Europe Fund
Guinness Flight Index Fund
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ASSIGNMENT AND ASSUMPTION
WHEREAS, Guinness Flight Investment Funds, Inc., a Maryland
corporation (the "Company") and Investors Bank & Trust Company, a Massachusetts
trust company (the "Bank") have entered into a Custodian Agreement, dated the
1st day of July 1994 (the "Agreement"); and
WHEREAS, pursuant to the terms of an Agreement and Plan of Conversion
and Termination, the Company is converting to a Delaware business trust
("Guinness Flight Investment Funds" or the "Trust"); and
WHEREAS, the Company desires to obtain, and the undersigned desires to
grant, the undersigned's consent to the assignment of the Agreement.
NOW THEREFORE, the Bank, in consideration of and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound by the terms of this Assignment and
Assumption, hereby: (i) consents to the assignment of all rights and obligations
under the Agreement to the Trust by the Company, to become effective on April
28, 1997; and (ii) agrees that the Agreement by and between the Company is in
full force and effect, and that it is not aware of any default or event which,
after notice or the passage of time or both, could become a default under the
Agreement.
By signing this Agreement, the Trust acknowledges (i) that the
Agreement is in full force and effect, and that it is not aware of any default
or event which, after notice or the passage of time, or both, could become a
default under the Agreement, and (ii) hereby agrees to assume all of the rights,
duties and obligations of the Company under the Agreement effective April 28,
1997.
Dated: As of April 28, 1997 INVESTORS BANK & TRUST COMPANY
By: /s/ Robert D. Mancuso
---------------------
Name: Robert D. Mancuso
Title: Senior Vice President
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/ Steven J. Paggiole
----------------------
Name: Steven J. Paggiole
Title: Secretary
<PAGE>
(4/94)
CUSTODIAN AGREEMENT
Between
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Bank Appointed Custodian............................................... 1
2. Definitions............................................................ 1
2.1 Authorized Person............................................. 1
2.2 Security...................................................... 1
2.3 Portfolio Security............................................ 1
2.4 Officers' Certificate......................................... 2
2.5 Book-Entry System............................................. 2
2.6 Depository.................................................... 2
2.7 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............................................ 4
5.6 Repayment of Cash............................................. 4
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 Book-Entry System............................................. 5
6.4 Use of a Depository........................................... 6
6.5 Use of Book-Entry System for Commercial Paper................. 7
6.6 Use of Immobilization Programs................................ 8
6.7 Eurodollar CDs................................................ 8
6.8 Options and Futures Transactions.............................. 8
6.9 Segregated Account............................................ 9
6.10 Interest Bearing Call or Time Deposits........................ 11
6.11 Transfer of Securities........................................ 11
7. Redemptions............................................................ 13
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Page
8. Merger, Dissolution, etc. of Fund....................................... 13
9. Actions of Bank Without Prior Authorization............................. 13
10. Collection and Defaults................................................. 14
11. Maintenance of Records and Accounting Services.......................... 14
12. Fund Evaluation......................................................... 14
13. Concerning the Bank..................................................... 15
13.1 Performance of Duties and Standard of Care........................ 15
13.2 Agents and Subcustodians with Respect to Property of the Fund
Held in the United States......................................... 16
13.3 Duties of the Bank with Respect to Property of the Fund Held Outside
of the United States............................................. 16
13.4 Insurance......................................................... 19
13.5 Fees and Expenses of Bank......................................... 19
13.6 Advances by Bank.................................................. 20
14. Termination............................................................. 20
15. Confidentiality......................................................... 21
16. Notices................................................................. 21
17. Amendments.............................................................. 22
18. Parties................................................................. 22
19. Governing Law........................................................... 22
20. Counterparts............................................................ 22
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<PAGE>
CUSTODIAN AGREEMENT
AGREEMENT made as of this [1st] day of [July], 1994, between GUINNESS
FLIGHT INVESTMENT FUNDS, INC., a Maryland corporation (the "Fund") and INVESTORS
BANK & TRUST COMPANY (the "Bank")
The Fund, an open-end management investment company consisting of two
portfolios, Guinness Flight Hong Kong Fund and Guinness Flight Global Government
Bond Fund, 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.
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 of Directors (the "Board"),
and set forth in a certificate as required by Section 4 hereof.
2.2 Security. The term security as used herein will have the same
meaning as when such term is used 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.
2.3 Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
<PAGE>
2.4 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.
2.5 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.
2.6 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 United States or foreign 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.
2.7 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
as shall have been designated in an Officers' Certificate, 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 initiated by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. 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 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 are satisfied 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).
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
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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 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 Officers' Certificate given to it by the Fund which as been signed by
Authorized Persons named in the most recent certification.
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 Section 13.2 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. 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 a contemporaneous receipt of such securities by the Bank
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) 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 liability 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.
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<PAGE>
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.
5.7 Foreign Exchange Transactions. For payments in connection
with foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery 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.
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 termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 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 Section 13.2 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 Bank will use its best
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<PAGE>
efforts to the end that the specific Portfolio Securities held by it thereunder
will be at all times identifiable.
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.
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 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 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:
(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 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 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
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<PAGE>
(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;
(e) The Bank shall be liable to the Fund for any loss
or damage to the Fund resulting from use of the Book-Entry System by reason of
any gross negligence, willful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless disregard by the
Bank or any such agent of its duty to use its best efforts to enforce such
rights as it may have against the Book-Entry System; at the election of the
Fund, it shall be entitled to be subrogated for the Bank in any claim against
the Book-Entry System or any other person which the Bank or its agent may have
as a consequence of any such loss or damage if and to the extent that the Fund
has not been made whole for any loss or damage.
6.4 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 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 thereof or, in the
event Portfolio Securities are loaned, delivery
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<PAGE>
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 be liable to the Fund for any loss
or damage to the Fund resulting from use of a Depository by reason of any gross
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any reckless disregard by the Bank of its duty to use its best efforts to
enforce such rights as it may have against a Depository. In this connection, the
Bank shall use its best efforts to ensure 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) Any 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 immediately 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 and
the Fund 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.
6.5 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 its Book-Entry Paper
System, 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
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to the Fund which is included in the Book-Entry Paper 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;
(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;
(e) the Bank shall transmit to the Fund a transaction
journal confirming each transaction in Book-Entry Paper for the account of the
Fund on the next business day following the transaction; and
(f) the Bank will send to the Fund such reports on its
system of internal accounting control with respect to the Book-Entry Paper
System as the Fund may reasonably request from time to time.
6.6 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.
6.7 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 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 Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund, and shall have no liability to the Fund or
its shareholders with respect to the actions, inactions, whether negligent or
otherwise of such European Branch in connection with such Eurodollar CDs, except
for any loss or damage to the Fund resulting from the Bank's own gross
negligence, willful misfeasance or bad faith in the performance of its duties
hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.
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1. 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 between the Bank,
any broker-dealer registered under the Exchange Act and a member of 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.
2. 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 6.9 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 of 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
1. 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 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.
2. The responsibilities and liabilities 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.
6.9 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, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities;
(a) 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,
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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;
(b) 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;
(c) 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;
(d) for the deposit of any Portfolio Securities which
the Fund has agreed to sell on a forward commitment basis, all in accordance
with Investment Company Act Release No. 10666;
(e) 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;
(f) for other proper corporate purposes, but only, in
the case of this clause (f), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the Executive
Committee 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.
(g) Assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) in accordance with the provisions of any
agreements referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Fund's
obligations under outstanding firm 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
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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;
or
(v) for delivery upon settlement of a forward
commitment agreement for the sale of Portfolio
Securities.
6.10 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.
6.11 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 the Bank will receive
Proper Instructions requesting such transfer, exchange or delivery stating that
it is for a purpose permitted under the terms of this Section 6.11, specifying
the applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of Portfolio Securities for the account
of the Fund, against contemporaneous receipt by the Bank of payment therefor in
full, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the Portfolio 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;
(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 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;
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(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, except 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, further Portfolio Securities may be released for that
purpose without any such payment. In the event that any such 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, 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 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
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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
issue, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles and By-laws of the Fund, 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.
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, it will 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 distribution 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;
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<PAGE>
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.
10. Collection and Defaults. The Bank will use all 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 date on which it receives knowledge of such default
or refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any Portfolio Security held by it which is more than
ten days overdue on the date of such report and which has not previously been
reported.
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 and will furnish the Fund
daily with a statement of condition of the Fund. The Bank will furnish to the
Fund at the end of every month, and at the close of each quarter of the Fund's
fiscal year, a list of the Portfolio Securities and the aggregate amount of cash
held by it for the Fund. 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 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. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of business on the New York
Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other 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 Prospectus and Statement of Additional
Information 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
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<PAGE>
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.
13. Concerning the Bank.
13.1 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. In the performance of its duties hereunder, the Bank will be
protected and not be liable, and will be indemnified and held harmless for any
action taken or omitted to be taken by it in good faith reliance upon the terms
of this Agreement, any Officers' Certificate, Proper Instructions, resolution of
the Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Fund except in
the case of its gross negligence, willful misfeasance or bad faith in the
performance of its duties or reckless disregard of its obligations and duties
hereunder.
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;
(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
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<PAGE>
(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.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of
God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currently
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 except
as results from the Bank's own gross negligence; or
(b) for special, punitive or consequential damages arising from
the provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 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.
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.
13.3 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
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banking institutions and foreign securities depositories to act as Selected
Foreign Sub-Custodians hereunder. Upon the 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 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 to utilize such
securities depository 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 previously made available to the Fund 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
Fund; (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
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<PAGE>
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.
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
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<PAGE>
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) Liability of Bank. The Bank shall have no more or less
responsibility or liability on account of the acts of omissions of any Selected
Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank and, without limiting the foregoing, the Bank
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear incident or any loss where
the Selected Foreign Sub-Custodian has otherwise exercised reasonable care.
(j) 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 $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $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.
(k) 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 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 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.
13.4 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.
13.5 Fees and Expenses of Bank. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made
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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 by the Fund.
13.6 Advances by 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 and
bearing 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 its
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.
14. Termination.
14.1 This Agreement may be terminated at any time without penalty
upon sixty days written notice delivered by either party to the other by means
of registered mail, and upon the expiration of such sixty days this Agreement
will terminate; provided, however, that the effective date of such termination
may be postponed to a date not more than ninety days from the date of delivery
of such notice (i) by the Bank in order to prepare for the transfer by the Bank
of all of the assets of the Fund held hereunder, and (ii) by the Fund in order
to give the Fund an opportunity to make suitable arrangements for a successor
custodian. At any time after the termination of this Agreement, the Fund will,
at its request, have access to the records of the Bank relating to the
performance of its duties as custodian.
14.2 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 (14.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of its own selection
- 20 -
<PAGE>
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.
14.3 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 tot he Fund in form and content satisfactory to the Bank.
15. Confidentiality. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person 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, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. 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 mailed or delivered to it at
its office at the address set forth below, namely:
(a) In the case of notices sent to the Fund to
Guinness Flight Investment Funds, Inc.
201 South Lake Avenue, Suite 510
Pasadena, California 91101
Attention: Mr. Robert H. Wadsworth
(b) In the case of notices sent to the Bank to
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Mr. Henry N. Joyce
or at such other place as such party may from time to time designate in
writing.
- 21 -
<PAGE>
17. Amendments. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Board.
18. 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 14 hereof will not be deemed to
be an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. 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.
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.
Guinness Flight Investment Funds, Inc.
By: /s/Eric Banhazl
---------------------------
Name: Eric Banhazl
Title: Treasurer
ATTEST:/s/
- -----------------------------
Investors Bank & Trust Company
By: /s/Henry M. Joyce
---------------------------
Name: Henry M. Joyce
Title: Vice President
ATTEST:
- -----------------------------
Date______
- 22 -
<PAGE>
AMENDMENT AGREEMENT
between
GUINNESS FLIGHT INVESTMENT FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
AMENDMENT AGREEMENT
AGREEMENT, dated as of September 5, 1997, by and between GUINNESS
FLIGHT INVESTMENT FUNDS, a Delaware business trust (the "Fund") and INVESTORS
BANK & TRUST COMPANY, a Massachusetts trust company (the "Bank").
WHEREAS, the Fund and the Bank entered into a Custodian Agreement dated
as of July 1, 1994 (the "Custodian Agreement"); and
WHEREAS, the Fund and the Bank desire to amend the Custodian Agreement
pursuant to Section 17 (Amendments) of the Custodian Agreement as set forth
below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Amendment of the Custodian Agreement.
(A) The document attached as Appendix A to this Amendment Agreement
shall constitute the Appendix A to the Custodian Agreement.
(B) Paragraph 13.5, Fees and Expenses of the Bank; is hereby amended as
follows:
(i) Beginning in line 7, replace "shall be" with "defined in
Appendix B hereto, and as"
(C) The document attached as Appendix B to this Amendment Agreement
shall constitute the Appendix B to the Custodian Agreement.
(The remainder of this page intentionally left blank)
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer, as the case may be, as of the date and
year first above written.
INVESTORS BANK & TRUST COMPANY
By: /s/Geoffrey M. O'Conner
------------------------
Name: Geoffrey M. O'Conner
Title: Director
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/Eric M. Banhazl
-------------------
Name: Eric M. Banhazl
Title: Treasurer
<PAGE>
APPENDIX A
The portfolios covered by this Agreement as of September 6, 1997:
o Guinness Flight Asia Blue Chip Fund
o Guinness Flight Asia Small Cap Fund
o Guinness Flight China and Hong Kong Fund
o Guinness Flight Global Government Bond Fund
o Guinness Flight Mainland China Fund
Acknowledged: /s/ Geoffrey M. O'Connor Date: 1/20/98
------------------------ -------------
For the Bank
/s/Eric M. Banhazl Date: 1/26/98
------------------ -------------
For the Fund
<PAGE>
APPENDIX A
TO CUSTODIAN AGREEMENT
The portfolios covered by this Agreement as of August , 1998
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
Guinness Flight Mainland China Fund
Guinness Flight New Europe Fund
Guinness Flight Index Fund
Acknowledged: ___________________________ Date: ____________
For the Bank
___________________________ Date: ____________
For the Funds
<PAGE>
AMENDMENT AGREEMENT
between
GUINNESS FLIGHT INVESTMENT FUNDS
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
AMENDMENT AGREEMENT
AGREEMENT, dated as of February 4, 1998, by and between GUINNESS FLIGHT
INVESTMENT FUNDS, a Delaware business trust (the "Fund") and INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust company (the "Bank").
WHEREAS, the Fund and the Bank entered into a Custodian Agreement dated
as of July 1, 1994 (the "Custodian Agreement"); and
WHEREAS, the Fund and the Bank desire to amend the Custodian Agreement
pursuant to Section 17 (Amendments) of the Custodian Agreement as set forth
below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Amendment of the Custodian Agreement.
(A) The document attached as Appendix B to this Amendment Agreement supersedes
any and all existing fee schedules previously agreed to between the Bank and the
Fund and shall constitute the Appendix B to the Custodian Agreement effective
December 1, 1997.
(The remainder of this page intentionally left blank)
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer, as the case may be, as of the date and
year first above written.
INVESTORS BANK & TRUST COMPANY
By: /s/Geoffrey M. O'Connor
------------------------
Name: Geoffrey M. O'Connor
Title: Director
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/Eric M. Banhazl
-------------------
Name: Eric M. Banhazl
Title: Treasurer
<PAGE>
APPENDIX B
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
FEE SCHEDULE EFFECTIVE DECEMBER 1, 1997
FUND ACCOUNTING, CALCULATION OF N.A.V., & CUSTODY
A. FUND ACCOUNTING, CALCULATION OF N.A.V.
o There will be an annual per fund fee for Fund Accounting and
Calculation of NAV as follows:
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 in assets $50,000 per fund
This Fee Schedule shall apply to any new fund sponsored by Guinness Flight.
B. DOMESTIC CUSTODY
o The following basis point fees are based on all domestic assets for
which the Bank is custodian. This amount does not include
transactions. See Standard Transaction Costs (D).
ANNUAL FEE
All US. Domestic Assets 3.0 BASIS POINTS
C. FOREIGN SUBCUSTODIAN FEES
o Incremental basis point and transaction fees will be charged for all
foreign assets for which the Bank is custodian. The asset based fees
and transaction fees vary by country, based upon the attached global
custody fee schedule. Local duties, script fees, registration,
exchange fees, and other market charges are out-of-pocket.
o Investors Bank will require the fund to hold all international assets
at the subcustodian of our choice.
<PAGE>
D. 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.
MISCELLANEOUS
A. OUT-OF-POCKET
o These charges will consist of actual and reasonable expenses incurred
by the Bank associated with:
-Pricing and Verification Services -Legal Costs
-Printing, Delivery & Postage -Third Party Review
-Telecommunications -Forms & Supplies
-Extraordinary Travel Expenses -Customized Development
B. DOMESTIC BALANCE CREDIT
o We allow use of 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. Systems work will be billed on a time and material
basis.
D. PAYMENT
o The above fees will be charged against the fund's custodian checking
account five business days after the invoice is mailed.
<PAGE>
E. SECURITIES LENDING AND FOREIGN EXCHANGE
o The assumption is made that the Bank will perform securities lending,
foreign exchange and cash management for the portfolios. Securities
lending revenue is split with the funds and the Bank on a 60/40%
basis: 60% going to the funds.
(The remainder of this page intentionally left blank)
<PAGE>
APPENDIX B (CONT'D)
GLOBAL CUSTODY FEE SCHEDULE FOR GUINNESS FLIGHT INVESTMENT FUNDS
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
Argentina* 22.00 $75.00
Australia 5.00 60.00
Austria 7.00 60.00
Bangladesh (n) 41.00 150.00
Belgium 7.00 60.00
Bahrain (n) 41.00 140.00
Botswana (n) 50.00 175.00
Brazil** 29.00 80.00
Canada 5.00 30.00
Chile** 24.00 100.00
China 18.00 60.00
Colombia*** 24.00 100.00
Croatia (n) 45.00 125.00
Cyprus (n) 50.00 150.00
Czech Republic (n) 20.00 75.00
Denmark 5.00 55.00
Ecuador (n) 45.00 100.00
Egypt (n) 41.00 100.00
Estonia (n) 30.00 125.00
Euroclear - Internal 5.00 20.00
Euroclear - Cross Border 5.00 60.00
Finland 7.00 70.00
France 5.00 60.00
Germany 5.00 30.00
Ghana (n) 50.00 200.00
Greece 31.00 110.00
Hong Kong 8.00 60.00
Hungary 42.00 120.00
India**** 45.00 50BP
Indonesia 13.00 60.00
Ireland (n) 7.00 60.00
<PAGE>
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
Israel (n) 20.00 60.00
Italy 5.00 50.00
Japan 5.00 20.00
Jordan 41.00 120.00
Kenya(n) 50.00 200.00
Korea 13.00 60.00
Latvia (n) 30.00 125.00
Lebanon (n) 41.00 140.00
Lithuania (n) 20.00 75.00
Lithuanian T-Bills (n) 25.00 75.00
Luxembourg 7.00 60.00
Malaysia 10.00 70.00
Mauritius (n) 41.00 140.00
Mexico 10.00 40.00
Morocco (n) 40.00 150.00
Namibia (n) 50.00 200.00
Netherlands 5.00 40.00
New Zealand 5.00 60.00
Norway 7.00 90.00
Oman (n) 41.00 140.00
Pakistan 41.00 120.00
Peru 45.00 120.00
Philippines 13.00 60.00
Poland (n) 50.00 150.00
Poland T-Bills (n) 29.00 110.00
Portugal 8.00 125.00
Romania(n) 45.00 125.00
Russia - Equities (n) 41.00 250.00
Russia - Min Fins (n) 35.00 140.00
Singapore 10.00 65.00
Slovakia (n) 20.00 75.00
Slovenia (n) 41.00 100.00
South Africa (n) 7.00 40.00
Spain - Equity & Corp Debt 5.00 55.00
<PAGE>
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
Spain - Gov't Debt 5.00 55.00
Sri Lanka 13.00 60.00
Swaziland (n) 50.00 200.00
Sweden 5.00 40.00
Switzerland 5.00 60.00
Taiwan 13.00 60.00
Thailand 10.00 60.00
Turkey 15.00 100.00
UK 5.00 50.00
Uruguay (n) 50.00 150.00
Venezuela** 24.00 100.00
Zambia (n) 50.00 200.00
Zimbabwe (n) 50.00 175.00
* Bonds Billed at Residual Value
** Local Administration Fee Included in Custody Fee
*** 20 BP Local Administration Charge Applied to Trades
**** Trades Billed at 50 BP
(n) = New Country not Listed on Old Fee Schedule
Out-of-Pocket charges are passed through as actuals in all markets.
TRANSFER AGENCY AND SERVICE AGREEMENT
between
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment; Duties of the Bank........................2
Article 2 Fees and Expenses...............................................6
Article 3 Representations and Warranties of the Bank......................7
Article 4 Representations and Warranties of the Fund......................8
Article 5 Data Access and Proprietary Information.........................8
Article 6 Indemnification................................................11
Article 7 Standard of Care...............................................13
Article 8 Covenants of the Fund and the Bank.............................13
Article 9 Termination of Agreement.......................................15
Article 10 Additional Funds...............................................15
Article 11 Assignment.....................................................16
Article 12 Amendment......................................................16
Article 13 Massachusetts Law to Apply.....................................16
Article 14 Force Majeure..................................................17
Article 15 Consequential Damages..........................................17
Article 16 Merger of Agreement............................................17
Article 17 Counterparts...................................................17
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 1st day of July, 1994, by and between GUINNESS
FLIGHT INVESTMENT FUNDS, INC., a Maryland corporation, having its principal
office and place of business at 201 South Lake Avenue, Suite 510, Pasadena,
California 91101 (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 is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in two series,
Guinness Flight China & Hong Kong Fund and Guinness Flight Global Government
Bond Fund (each such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Article 10, being herein referred to, as a "Portfolio", and collectively as the
"Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the
Bank as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans 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:
<PAGE>
Article 1 Terms of Appointment; Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement,
the Fund, on behalf of the Portfolios, hereby employs and appoints the Bank to
act as, and the Bank agrees to act as its transfer agent for the authorized and
issued shares of capital stock of the Fund representing interests in each of the
respective Portfolios ("Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of each of the
respective Portfolios of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus") of
the Fund on behalf of the applicable Portfolio, including without limitation any
periodic investment plan or periodic withdrawal program.
1.2 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 on behalf of each of the Portfolios, as applicable
and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation
thereof to the Custodian of the Fund authorized pursuant to
the Articles of Incorporation of the Fund (the
"Custodian");
-2-
<PAGE>
(ii) Pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner
such monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio;
(viii) Issue replacement certificates for those certificates
alleged to have been lost,
-3-
<PAGE>
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;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of Shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total
number of Shares of the Fund which are authorized, based
upon data provided to it by the Fund, and issued and
outstanding. The Bank shall also provide the Fund on a
regular basis with the total number of Shares which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take cognizance
of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the
Fund.
(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 the
customary services of a
-4-
<PAGE>
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and, as relevant, agent in connection with accumulation, open-account or similar
plans (including without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, mailing
Shareholder reports and prospectuses to current Shareholders, withholding taxes
on U.S. resident and non-resident alien accounts, 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 Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information and (ii) provide
a system which will enable the Fund to monitor the total number of Shares sold
in each State.
(c) In addition, the Fund shall (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Bank for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by
-5-
<PAGE>
the Fund and the reporting of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Article 1 may be established from time to time by agreement between the Fund on
behalf of each Portfolio and the Bank per the attached service responsibility
schedule. The Bank may at times perform only a portion of these services and the
Fund or its agent may perform these services on the Fund's behalf.
(e) 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
2.1 For the performance by the Bank pursuant to this Agreement, the
Fund agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time subject to
mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund
agrees on behalf of each of the Portfolios to reimburse the Bank for
out-of-pocket expenses, including but not limited to confirmation production,
postage, forms, telephone, microfilm, microfiche, 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
-6-
<PAGE>
incurred by the Bank at the request or with the consent of the Fund, will be
reimbursed by the Fund on behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees
and reimbursable expenses within five days following the receipt of the
respective billing notice. Postage 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:
3.1 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth
of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
-7-
<PAGE>
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.1 It is a corporation duly organized and existing and in good
standing under the laws of Maryland.
4.2 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.4 It is an open-end and non-diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of the Fund being
offered for sale.
Article 5 Data Access and Proprietary Information
5.1 The Fund acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank on
data bases under the control and ownership of the Bank or other third party
("Data Access Services") constitute copyrighted,
-8-
<PAGE>
trade secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to the Bank or other third party. In no event
shall Proprietary Information be deemed Customer Data. The Fund agrees to 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 may be provided hereunder. Without limiting the foregoing, the Fund
agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as
may be designated in writing by the Bank and solely in accordance
with the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way
the Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data
acquired hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those
authorized transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by
the Bank to protect at the Bank's expense the rights of the Bank
-9-
<PAGE>
in Proprietary Information at common law, under federal copyright law and under
other federal or state law.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services
do not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner to
correct such failure. Organizations from which the Bank may obtain certain data
included in the Data Access Services are solely responsible for the contents of
such data and the Fund agrees to make no claim against the Bank arising out of
the contents of such third-party data, including, but not limited to, the
accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.3 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 (such transactions constituting a "COEFI"), then in such
event the Bank shall be entitled to rely on the validity and authenticity of
-10-
<PAGE>
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.
Article 6 Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall on behalf
of the applicable Portfolio 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 agent 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 on behalf of the
applicable Portfolio.
-11-
<PAGE>
(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.
6.2 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 on behalf of the applicable Portfolio 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 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
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
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<PAGE>
countersignature of any former transfer agent or former registrar, or of a
co-transfer agent or co-registrar.
6.3 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
7.1 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
8.1 The Fund shall on behalf of each of the Portfolios promptly furnish
to the Bank the following:
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<PAGE>
(a) A certified copy of the resolution of the Directors of the Fund
authorizing the appointment of the Bank and the execution and delivery of this
Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
8.2 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.
8.3 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.
8.4 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.
-14-
<PAGE>
8.5 In case 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
9.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
9.2 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 on behalf of the applicable Portfolio(s). Additionally, the Bank
reserves the right to charge for any other reasonable expenses associated with
such termination.
Article 10 Additional Funds
10.1 In the event that the Fund establishes one or more series of
Shares in addition to Guinness Flight China & Hong Kong Fund and Guinness Flight
Global Government Bond Fund with respect to which it desires to have the Bank
render services as transfer agent under the terms hereof, it shall so notify the
Bank in writing, and if the Bank agrees in writing to provide such services,
such series of Shares shall become a Portfolio hereunder.
-15-
<PAGE>
Article 11 Assignment
11.1 Except as provided in Section 11.3 below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate;
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 12 Amendment
12.1 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Directors of the Fund.
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<PAGE>
Article 13 Massachusetts Law to Apply
13.1 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 14 Force Majeure
14.1 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 15 Consequential Damages
15.1 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 16 Merger of Agreement
16.1 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
Article 17 Counterparts
17.1 This Agreement may be executed by the parties hereto on any number
of counterparts, and all of said
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<PAGE>
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.
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
BY: /s/Eric Banhazl
----------------
ATTEST:
/s/
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/
-----------------------------------
Executive Vice President
ATTEST:
/s/
- ------------------------------
-18-
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase X
of Shares.
2. Issue Shares and hold Shares in X
Shareholders accounts.
3. Receive redemption requests. X
4. Effect transactions 1-3 above X
directly with broker-dealers.
5. Pay over monies to redeeming X
Shareholders.
6. Effect transfers of Shares. X
7. Prepare and transmit dividends X
and distributions.
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and X
accurate control book for each
issue of securities.
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current X
Shareholders.
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<PAGE>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
15. Withhold taxes on U.S. resident X
and non-resident alien accounts.
16. Prepare and file U.S. Treasury X
Department forms.
17. Prepare and mail account and X
confirmation statements for
Shareholders.
18. Provide Shareholder account X
information.
19. Blue sky reporting. X
* Such services are more fully described in Article 1.02(a),
(b) and (c) of the Agreement.
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
BY: /s/Eric Banhazl
----------------
ATTEST:
/s/
- ----------------------
STATE STREET BANK AND TRUST COMPANY
BY:
-----------------------------------
Executive Vice President
ATTEST:
- ----------------------
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<PAGE>
ASSIGNMENT AND ASSUMPTION
WHEREAS, Guinness Flight Investment Funds, Inc., a Maryland corporation
(the "Company") and State Street Bank and Trust Company, a Massachusetts trust
company (the "Bank") have entered into a Transfer Agency and Service Agreement,
dated the 1st day of July, 1994, (the "Agreement"); and
WHEREAS, pursuant to the terms of an Agreement and Plan of Conversion
and Termination, the Company is converting to a Delaware business trust
("Guinness Flight Investment Funds" or the "Trust"); and
WHEREAS, the Company desires to obtain, and the undersigned desires to
grant, the undersigned's consent to the assignment of the Agreement.
NOW THEREFORE, the Bank, in consideration of and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound by the terms of this Assignment and
Assumption, hereby agrees as follows:
The Bank acknowledges that the Agreement by and between the Company and
the Transfer Agent is in full force and effect, and that it is not aware of any
default or event which, after notice or the passage of time or both, could
become a default under the Agreement. The Transfer Agent hereby consent to the
assignment of all rights and obligations under the Agreement to the Trust by the
Company, to become effective on April 28, 1997.
The Trust acknowledges that the Agreement is in full force and effect,
and that it is not aware of any default or event which, after notice or the
passage of time, or both, could become a default under the Agreement. The Trust
hereby agrees to assume all of the rights, duties and obligations of the Company
under the Agreement effective April 28, 1997.
Dated: April 28, 1997 STATE STREET BANK TRUST AND COMPANY
By: /s/Ronald E. Logue
-------------------
Name: Ronald E. Logue
Title: Executive Vice President
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/Eric Banhazl
----------------
Name: Eric Banhazl
Title: Treasurer
<PAGE>
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
GUINNESS FLIGHT FUNDS
Annual Account Service Fees
Daily Dividend Fund $ 14.00
Non-Daily Dividend Fund $ 12.00
Closed Account Fee $ 1.50
Minimum
Two Cusips $36,000/Cusip
Next Three Cusips $24,000/Cusip
New Cusips Thereafter $18,000/Cusip
Fees are billable on a monthly basis at the rate of 1/12 of the annual fee. A
charge is made for an account in the month that an account opens or closes.
Account service fees are the higher of: open account charges plus closed account
charges or the fund minimum.
Activity Based Fees
New Account Set-up $ 3.00/each
Manual Transactions $ 1.50/each
Telephone Calls $ 1.50/each
Correspondence $ 1.50/each
Banking Services
Checkwriting Setup $ 5.00
Checkwriting (per draft) $ 1.00
ACH $ .35
Other Fees
Investor Processing $ 1.80/Investor
12b-1 Commissions $ 1.20/account
IRA Custodial Fees
Acceptance & Setup $ 5.00/account
Annual Maintenance $10.00/account
Out-of-Pocket Expenses Billed as incurred
Out-of-Pocket expenses include but are not limited to: confirmation statements,
postage, forms, audio response, telephone, records retention, customized
programming/enhancements, federal wire, transcripts, microfilm, microfiche, and
expenses incurred at the specific direction of the fund.
These fees will be subject to an annual Cost of Living Adjusment based on
regional consumer price index.
GUINNESS FLIGHT STATE STREET BANK AND TRUST CO.
By: /s/Eric Banhazl By: /s/Michael J. Tobin
----------------------------- ---------------------------------
Title: Treasurer Title: Michael J. Tobin, Vice President
-------------------------- ---------------------------------
Date Date December 3, 1997
-------------------------- ------------------------------
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of the 1st day of July, 1994 by and between
Guinness Flight China & Hong Kong and Global Government Bond Funds (the
"Funds"), two separate series of the Guinness Flight Investment Funds, Inc., a
Maryland Corporation (the "Company"), and INVESTMENT COMPANY ADMINISTRATION
CORPORATION, a New Jersey Corporation (the "Administrator");
WITNESSETH:
WHEREAS, the Funds are non-diversified series of an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company wishes to retain the Administrator to provide
certain administrative services in connection with the management of the Funds'
operations 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 Company hereby appoints the Administrator to
provide certain administrative services, hereinafter enumerated, in connection
with the management of the Funds' operations for the period and on the terms set
forth in this Agreement. The Administrator accepts such appointment and 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. Subject to the overall supervision
of the Board of Directors of the Company and Guinness Flight Investment
Management Limited (the "Manager"), the Administrator will perform the following
services on a regular basis which would be daily, weekly or as otherwise
appropriate:
A) perform the services in Exhibit 1 attached; and
B) such additional services as may be agreed upon by the Funds and the
Administrator.
3. Responsibility of the Administrator. The Administrator shall be
under no duty to take any action on behalf of the Funds 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.
<PAGE>
4. Reliance Upon Instructions. The Company agrees that the
Administrator shall be entitled to rely upon any instructions, oral or written,
actually received by the Administrator from the Board of Directors of the
Company and shall incur no liability to the Company or the Company's Manager 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 Directors of the Company to give oral or written instructions on behalf
of the Funds.
5. Confidentiality. The Administrator agrees on behalf of itself and
its employees to treat confidentially all records and other information relative
to the Funds and all prior, present or potential shareholders of the Funds,
except after prior notification to, and approval of release of information in
writing by, the Funds, which approval shall not be unreasonably withheld 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 Funds.
6. Equipment Failures. In the event of equipment failure 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 (at the
Administrator's expense) to prevent or remedy such service interruptions.
7. Compensation. As compensation for services rendered by the
Administrator during the term of this Agreement, each Fund (the Guinness Flight
China & Hong Kong Fund and Guinness Flight Global Government Bond Fund) will pay
to the Administrator a minimum annual fee of $40,000 or .25%, whichever is
greater, payable monthly by the fifth day of the next month.
8. Indemnification. The Funds 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
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 at the request of or in
reliance upon the advice of the Board of Directors of the Company, provided,
that the Administrator will not be indemnified against any liability to the
Funds or to shareholders of the Funds (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 Funds, the Company, and each of its Directors from all 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, arising directly or indirectly from any action or thing which the
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<PAGE>
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. No fund or other series of the Company shall be liable for
any claim against, or expense of, any other fund or series of the Company.
9. Duration and Termination. This Agreement shall continue until
termination by the Funds (through the Board of Directors of the Company) or the
Administrator on 30 days' written notice to the other. All notices and other
communications hereunder shall be in writing. This Agreement cannot be assigned
without the prior written consent of the other party hereto.
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.
11. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties hereto 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 day and year first written
above.
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
By: /s/
------------------------------------------
Title: President
---------------------------------------
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By: /s/Steven J. Paggioli
------------------------------------------
Title: Vice President
------------------------------------------
-3-
<PAGE>
EXHIBIT 1
INVESTMENT COMPANY ADMINISTRATION CORPORATION ("ICAC")
ADMINISTRATIVE SERVICES
ICAC typically performs the following services on a regular basis which would be
daily, weekly or as otherwise appropriate:
1) prepare and coordinate reports and other materials to be supplied to
the Board of Directors of the Fund;
2) prepare and/or supervise the preparation and filing of all
securities filings (i.e., N- SARs, 24f-2 notices, etc.), periodic financial
reports, prospectuses, statements of additional information, marketing
materials, tax returns, shareholder reports and other regulatory reports and
filings required of the Fund;
3) supervise and monitor the preparation of all required filings
necessary to maintain the Fund's qualification and/or registration to sell
shares in all states where the Fund currently does, or intends to do business;
4) coordinate the preparation, printing and mailing of all materials
(e.g., Annual Reports) required to be sent to shareholders;
5) coordinate the preparation and payment of Fund-related expenses;
6) monitor and oversee the activities of the Fund's servicing agents
(i.e., transfer agent, custodian, fund accountants, etc.);
7) review and adjust as necessary the Fund's daily expense accruals;
8) monitor daily, monthly and periodic compliance with respect to SEC
(40' Act), IRS and prospectus guidelines and restrictions;
9) send periodic information (i.e., performance figures) to service
organizations that track investment company information; and
10) perform such additional services as may be agreed upon by the Fund
and ICAC.
-4-
<PAGE>
ASSIGNMENT AND ASSUMPTION
WHEREAS, Guinness Flight Investment Funds, Inc., a Maryland corporation
(the "Company") and Investment Company Administration Corporation, a New Jersey
Corporation (the "Administrator") have entered into a Administration Agreement,
dated the 1st day of July, 1994 (the "Agreement"); and
WHEREAS, pursuant to the terms of an Agreement and Plan of Conversion
and Termination, the Company is converting to a Delaware business trust
("Guinness Flight Investment Funds" or the "Trust"); and
WHEREAS, the Company desires to obtain, and the undersigned desires to
grant, the undersigned's consent to the assignment of the Agreement.
NOW THEREFORE, the Administrator, in consideration of and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound by the terms of this Assignment and
Assumption, hereby: (i) consents to the assignment of all rights and obligations
under the Agreement to the Trust by the Company, to become effective on April
28, 1997; and (ii) agrees that (x) the Agreement by and between the Company and
the Administrator is in full force and effect, and that it is not aware of any
default or event which, after notice or the passage of time or both, could
become a default under the Agreement, and (y) that Guinness Flight Asia Small
Cap Fund and Guinness Flight Asia Blue Chip Fund are both parties to the
Agreement as of April 29, 1996.
By signing this Agreement, the Trust (i) acknowledges that the
Agreement is in full force and effect, and that it is not aware of any default
or event which, after notice or the passage of time, or both, could become a
default under the Agreement; and (ii) agrees to assume all of the rights, duties
and obligations of the Company under the Agreement effective April 28, 1997.
Dated: As of April 28, 1997
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By: /s/Robert H. Wadsworth
----------------------
Name: Robert H. Wadsworth
Title: President
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/Steven J. Paggioli
----------------------
Name: Steven J. Paggioli
Title: Secretary
<PAGE>
FORM OF
AMENDMENT AGREEMENT
AGREEMENT, dated as of day of August, 1998 by and between Guinness
Flight Investment Funds, a Delaware business trust (the "Trust") and Investment
Company Administration Corporation, (the "Administrator").
WHEREAS, the Trust and the Administrator entered into an Administration
Agreement dated as of July 1, 1994, as amended from time to time; and
WHEREAS, the Trust and the Administrator desire to amend the
Administration Agreement pursuant to Paragraph 10 (Amendments) of the
Administration Agreement as set forth below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Amendment of the Administration Agreement
(A) Paragraph 7, Compensation; is deleted in its entirety and replaced
with "As compensation for services rendered by the Administrator, each Fund will
pay to the Administrator monthly, the fees set forth in Appendix A"
(B) The document attached as Appendix A to this Amendment Agreement
shall constitute the Appendix A to the Administration Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first written
above.
GUINNESS FLIGHT INVESTMENT FUNDS
By:_____________________
Title:__________________
INVESTMENT COMPANY ADMINISTRATION
CORPORATION
By:_____________________
Title:__________________
<PAGE>
APPENDIX A
Administration Fee Schedule
Effective August 31, 1998
FUNDS ANNUAL FEES
- ----- -----------
Guinness Flight China & Hong Kong Fund ("China 0.25% of the China &
& HK Fund") HK Fund's daily
average net assets,
subject to $40,000
annual minimum.
Guinness Flight Index Fund 0.10% of the Index
Fund's daily average
net assets, subject
to $20,000 annual
minimum.
All Other Funds: 0.25% of All Other
Guinness Flight Asia Blue Chip Fund Funds' combined
Guinness Flight Asia Small Cap Fund daily average net
Guinness Flight Mainland China Fund assets, subject to a
Guinness Flight New Europe Fund $20,000 annual
Guinness Flight Global Government Bond Fund minimum per fund.
Acknowledged: --------------------- Date:_________
For the Administrator
--------------------- Date:_________
For the Funds
[LETTERHEAD OF KRAMER, LEVIN, NAFTALIS & FRANKEL]
August 28, 1998
Guinness Flight Investment Funds
225 South Lake Avenue
Suite 777
Pasadena, California 91101
Re: Guinness Flight Investment Funds
Registration Statement on Form N-1A
File No. 33-75340; ICA No. 811-8360
-----------------------------------
Dear Gentlemen:
We hereby consent to the reference of our firm as Counsel in this
Registration Statement on Form N-1A.
Very truly yours,
/s/Kramer, Levin, Naftalis & Frankel
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", Independent Accountants", and "Financial Statements" in
Post-Effective Amendment No. 11 under the Securities Act of 1933 and Amendment
No. 11 under the Investment Company Act of 1940 to the Registration Statement
(Form N-1A No. 33-75340) and related Prospectus and Statement of Additional
Information of Guinness Flight Investment Funds which is incorporated by
reference in Post-Effective Amendment No. 12 under the Securities Act of 1933
and Amendment No. 12 under the Investment Company Act of 1940 to the
Registration Statement (Form N-1A No. 33-75340) of Guinness Flight Investment
Funds, and to the incorporation by reference therein of our report dated
February 6, 1998, with respect to the financial statements and financial
highlights of Guinness Flight Investment Funds included in its Annual Report for
the year ended December 31, 1997 filed with the Securities and Exchange
Commission.
/s/ERNST & YOUNG LLP
ERNST & YOUNG LLP
Los Angeles, California
August 27, 1998
DISTRIBUTION AND SERVICE PLAN
1. This Distribution and Service Plan (the "Plan") when effective in
accordance with its terms, shall be the written plan contemplated by Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"), of the
funds listed on Schedule A (the "Portfolios"), duly established series of shares
of Guinness Flight Investment Funds, a Delaware business trust, registered as an
open-end investment company under the 1940 Act (the "Guinness Funds").
2. Guinness Funds has entered into separate Administration
("Administration") and General Distribution ("Distribution") Agreements with
Investment Company Administration Corporation (the "Administrator") and First
Fund Distributors Inc. (the "Distributor"), respectively, with respect to the
Portfolios under which the Distributor uses all reasonable efforts, consistent
with its other business, to secure purchasers for each Portfolio's shares. Under
the Distribution Agreement, the Distributor pays the expenses of printing and
distributing any prospectuses, reports and other literature used by the
Distributor, advertising, and other promotional activities in connection with
the offering of shares of each Portfolio for sale to the public. Guinness Funds
has entered into an Investment Advisory Agreement with Guinness Flight
Investment Management Limited (the "Investment Adviser"). It is understood that
the Administrator may reimburse the Distributor for these expenses from any
source available to it, including the administration fee paid to the
Administrator by each Portfolio.
3. The Investment Adviser may, subject to the approval of the Trustees,
make payments to third parties who render shareholder support services,
including but not limited to, answering routine inquiries regarding the
Portfolios, processing shareholder transactions and providing such other
shareholder and administrative services as Guinness Funds may reasonably
request.
4. The Portfolios will not make separate payments as a result of this
Plan to the Investment Adviser, Administrator, Distributor or any other party,
it being recognized that each Portfolio presently pays, and will continue to
pay, an investment advisory fee to the Investment Adviser and an administration
fee to the Administrator. To the extent that any payments made by the Portfolios
to the Investment Adviser or Administrator, including payment of fees under the
Investment Advisory Agreement or the Administration Agreement, respectively,
should be deemed to be indirect financing of any activity primarily intended to
result in the sale of shares of the Portfolios within the context of Rule 12b-1
under the 1940 Act, then such payments shall be deemed to be authorized by this
Plan.
5. This Plan shall become effective on April 28, 1997, and was amended
as of September 5, 1997, having been approved by a vote of a majority of the
Trustees of Guinness Funds, including a majority of Trustees who are not
interested persons of Guinness Funds (as defined in the 1940 Act) and who have
no direct or indirect financial interest in the operation of this Plan or in any
agreements related to this Plan (the "Independent Trustees"), cast in person at
a meeting called for the purpose of voting on this Plan.
<PAGE>
6. This Plan shall, unless terminated as hereinafter provided, remain
in effect from April 28, 1997 through April 27, 1998, and from year to year
thereafter, provided, however, that such continuance is subject to approval
annually by a vote of a majority of the Trustees of Guinness Funds, including a
majority of the Independent Trustees, cast in person at a meeting called for the
purpose of voting on this Plan. This Plan may be amended at any time by the
Board of Trustees, provided that (a) any amendment to authorize direct payments
by a Portfolio to finance any activity primarily intended to result in the sale
of shares of a Portfolio, to increase materially the amount spent by a Portfolio
for distribution, or any amendment of the Investment Advisory Agreement or the
Administration Agreement to increase the amount to be paid by a Portfolio
thereunder shall be effective only upon approval by a vote of a majority of the
outstanding voting securities of such Portfolio, and (b) any material amendments
of this Plan shall be effective only upon approval in the manner provided in the
first sentence in this paragraph.
7. This Plan may be terminated at any time, with respect to a
Portfolio, without the payment of any penalty, by vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities of such Portfolio.
8. During the existence of this Plan, Guinness Funds shall require the
Investment Adviser and/or Distributor to provide Guinness Funds, for review by
Guinness Funds' Board of Trustees, and the Trustees shall review, at least
quarterly, a written report of the amounts expended in connection with financing
any activity primarily intended to result in the sale of shares of the
Portfolios (making estimates of such costs where necessary or desirable) and the
purposes for which such expenditures were made.
9. This Plan does not require the Investment Adviser or Distributor to
perform any specific type or level of distribution activities or to incur any
specific level of expenses for activities primarily intended to result in the
sale of shares of the Portfolios.
10. Consistent with the limitation of shareholder and Trustee liability
as set forth in the Guinness Funds' Trust Instrument, any obligations assumed by
a Portfolio pursuant to this Plan and any agreements related to this Plan shall
be limited in all cases to such Portfolio and its assets, and shall not
constitute obligations of any shareholder or other series of shares of Guinness
Funds or of any Trustee.
11. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
- 2 -
<PAGE>
Schedule A
amended as of August 14, 1998
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
Guinness Flight Mainland China Fund
Guinness Flight New Europe Fund
Guinness Flight Index Fund
