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EXHIBIT 99.2G(1)
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE XXXXXXXX GLOBAL EQUITY FUND
AND
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
INVESTMENT ADVISORY AGREEMENT, dated as of ________, 1997, by
and between THE XXXXXXXX GLOBAL EQUITY FUND, a Delaware business trust (the
"Fund"), and GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED (the "Adviser").
W I T N E S S E T H
WHEREAS, the Fund is engaged in business as a closed-end
investment company registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "Act");
and
WHEREAS, the Adviser is an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment adviser; and
WHEREAS, the Adviser is a member of the Investment Management
Regulatory Organization Limited ("IMRO") of the United Kingdom and is thereby
regulated by IMRO in the conduct of its investment business for United Kingdom
investors and engages in the business of acting as an investment adviser; and
WHEREAS, the Fund wishes to engage the Adviser to provide
certain investment advisory and certain other services for the Fund, and the
Adviser is willing to provide such services for the Fund on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, it is hereby agreed by and between the
parties hereto as follows:
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1. Appointment.
The Adviser agrees, all as more fully set forth herein, to act
as investment adviser to the Fund with respect to the investment of its assets
and to supervise and arrange the purchase of securities for and the sale of
securities held in that portion of the portfolio allocated to it by the Asset
Allocation Committee of the Fund and provide such other services as the Board of
Trustees may request.
2. Asset Allocation Committee
The Asset Allocation Committee shall allocate the assets of
the Fund among the markets in which the Fund will invest. Assets allocated by
the Committee to North America and Western Europe will be managed by Xxxxxxxx
Asset Management, Inc. ("Xxxxxxxx") (the "Xxxxxxxx Portfolio"). Assets allocated
to Asia and Japan will be managed by the Adviser (the "GFIM Portfolio"). The
Committee will consist of three members of which two members shall be
representatives of Xxxxxxxx and one member shall be a representative of the
Adviser. All decisions by the Committee shall be made by a majority vote of its
members.
3. Duties and Obligations of the Adviser With Respect
to the Investment of Assets of the Fund.
(a) Subject to the succeeding provisions of this section and
subject to the direction and control of the Board of Trustees of the Fund, the
Adviser shall:
(i) monitor continuously the investment program
of the Fund and the composition of its
portfolio;
(ii) determine what securities shall be purchased
or sold for the GFIM portfolio;
(iii) arrange for the purchase and the sale of
securities held in the GFIM portfolio of the
Fund;
(iv) provide information to the Board of Trustees
regarding the Fund's portfolio; and
(v) supervise, together with the Administrator,
the operations of the Fund.
(b) Any services furnished by the Adviser under this section
shall at all times conform to, and be in accordance with, any requirements
imposed by:
(i) the provisions of the Act;
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(ii) any other applicable provisions of state and
Federal law;
(iii) the provisions of the Fund's Declaration of
Trust and By-Laws, as amended from time to
time;
(iv) any policies and determinations of the Board
of Trustees of the Fund; and
(v) the fundamental policies of the Fund, as
reflected in its Registration Statement
under the Act, as amended from time to time.
(c) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, and in connection therewith
the Adviser shall not be liable to the Fund or its security holders for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of portfolio transactions
for the Fund, except for wilful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. As used in this subsection (c), the term
"Adviser" shall include board members, officers and employees of the Adviser as
well as the entity referred to as the "Adviser" itself.
(d) Nothing in this Agreement shall prevent the Adviser or any
affiliated person (as defined in the Act) of the Adviser from acting as
investment adviser or manager for any other person, firm or corporation
(including other investment companies) and shall not in any way limit or
restrict the Adviser or any such affiliated person from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting; provided, however, that the Adviser
expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Fund
under this Agreement. The Adviser agrees that it will not deal with itself, or
with the Trustees of the Fund or the Fund's principal underwriter or
distributor, as principals in making purchases or sales of securities or other
property for the account of the Fund, except as permitted by the Act, and will
comply with all other provisions of the Fund's Declaration of Trust and By-Laws
and the then-current prospectus and statement of additional information
applicable to the Fund relative to the Adviser and its board members and
officers.
(e) The Fund will supply the Adviser with certified copies of
the following documents: (i) the Fund's Declaration of Trust and By-Laws, as
amended; (ii) resolutions of the Fund's Board of Trustees and shareholders
authorizing the appointment of the Adviser and approving this Agreement; (iii)
the Fund's Registration Statement, as filed with the Securities and Exchange
Commission; and (iv) the Fund's most recent prospectus and statement of
additional information. The Fund will furnish the Adviser promptly with copies
of all amendments or supplements to the foregoing, if any, and all documents,
notices and reports filed with the Securities and Exchange Commission.
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(f) The Fund will supply, or cause its custodian bank to
supply, to the Adviser such financial information as is necessary or desirable
for the functions of the Adviser hereunder.
4. Broker-Dealer Relationships.
The Adviser is responsible for decisions to buy and sell
securities for the GFIM Portfolio of the Fund, broker-dealer selection and
negotiation of its brokerage commission rates. The Adviser's primary
consideration in effecting a security transaction will be execution at the most
favorable price. The Fund understands that many of the Fund's portfolio
transactions will be transacted with primary market makers acting as principal
on a net basis, with no brokerage commissions being paid by the Fund. Such
principal transactions may, however, result in a profit to the market makers. In
certain instances, the Adviser may make purchases of underwritten issues at
prices which include underwriting fees. In selecting a broker or dealer to
execute each particular transaction, the Adviser will take the following into
consideration: the best price available; the reliability, integrity and
financial condition of the broker or dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the broker or
dealer to the investment performance of the Fund on a continuing basis.
Accordingly, the price to the Fund in any transaction may be less favorable than
that available from another broker or dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered. Subject
to such policies as the Board of Trustees may determine, the Adviser shall not
be deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Fund to pay a
broker or dealer that provides brokerage and research services to the Adviser an
amount of commission for effecting a portfolio investment transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Adviser's overall responsibilities
with respect to the Fund. The Adviser is further authorized to allocate the
orders placed by it on behalf of the Fund to an affiliated broker-dealer, if
any, or to such brokers and dealers who also provide research or statistical
material, or other services to the Fund (which material or services may also
assist the Adviser in rendering services to other clients). Such allocation
shall be in such amounts and proportions as the Adviser shall determine and the
Adviser will report on said allocations regularly to the Board of Trustees of
the Fund indicating the brokers to whom such allocations have been made and the
basis therefor.
5. Allocation of Expenses.
The Adviser agrees that it will furnish the Fund, at its
expense, all office space and facilities, equipment and clerical personnel
necessary for carrying out its duties under this Agreement. The Adviser agrees
that it will supply to the Administrator of the Fund all necessary financial
information in connection with the Administrator's duties under any agreement
between the Administrator and the Fund on behalf of the Fund. All costs and
expenses associated with any administrative functions delegated by the Adviser
to the Administrator that are not pursuant
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to any agreement between the Administrator and the Fund or the Adviser and the
Fund will be paid by the Adviser. All other costs and expenses not expressly
assumed by the Adviser under this Agreement, by Xxxxxxxx under its Investment
Advisory Agreement with the Fund or by the Administrator under the
Administration Agreement between it and the Fund on behalf of the Fund shall be
paid by the Fund from the assets of the Fund, including, but not limited to (i)
fees paid to the Adviser, Xxxxxxxx and the Administrator; (ii) interest and
taxes; (iii) brokerage commissions; (iv) insurance premiums; (v) compensation
and expenses of the trustees other than those affiliated with the Adviser,
Xxxxxxxx or the administrator; (vi) legal, accounting and audit expenses; (vii)
fees and expenses of any transfer agent, distributor, registrar, dividend
disbursing agent or shareholder servicing agent of the Fund; (viii) expenses,
including clerical expenses, incident to the issuance, redemption or repurchase
of shares of the Fund, including issuance on the payment of, or reinvestment of,
dividends; (ix) fees and expenses incident to the registration under Federal or
state securities laws of the Fund or its shares; (x) expenses of preparing,
setting in type, printing and mailing prospectuses, statements of additional
information, reports and notices and proxy material to shareholders of the Fund;
(xi) all other expenses incidental to holding meetings of the Fund's trustees
and shareholders; (xii) expenses connected with the execution, recording and
settlement of portfolio securities transactions; (xiii) fees and expenses of the
Fund's custodian for all services to the Fund, including safekeeping of funds
and securities and maintaining required books and accounts; (xiv) expenses of
calculating net asset value of the shares of the Fund; (xv) industry membership
fees allocable to the Fund; and (xvi) such extraordinary expenses as may arise,
including litigation affecting the Fund and the legal obligations which the Fund
may have to indemnify the officers and directors with respect thereto.
6. Compensation of the Adviser.
For the services to be rendered, the Fund shall pay to the
Adviser from the assets of the Fund an investment advisory fee paid monthly at
an annual rate equal to .40% of the Fund's average weekly net assets for the
Fund's then-current fiscal year. Except as hereinafter set forth, compensation
under this Agreement shall be calculated and accrued daily and the amounts of
the daily accruals shall be paid monthly. If the Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be pro-rated in a manner consistent with the calculation of the fees as
set forth above. Payment of the Adviser's compensation for the preceding month
shall be made within five days after the end of that month.
7. Duration, Amendment and Termination.
(a) This Agreement shall go into effect as to the Fund on the
date set forth above (the "Effective Date") and shall, unless terminated as
hereinafter provided, continue in effect for two years from the Effective Date
and shall continue from year to year thereafter, but only so long as such
continuance is specifically approved at least annually by the Board of Trustees
of the Fund, including the vote of a majority of the trustees who are not
parties to this Agreement or "interested persons" (as defined in the Act) of any
such party cast in person at a meeting called
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for the purpose of voting on such approval, or by the vote of the holders of a
"majority" (as so defined) of the outstanding voting securities of the Fund and
by such a vote of the trustees.
(b) This Agreement may be amended only if such amendment is
approved by the vote of the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the Fund.
(c) This Agreement may be terminated by the Adviser at any
time without penalty upon giving the Fund sixty (60) days' written notice (which
notice may be waived by the Fund) and may be terminated by the Fund at any time
without penalty upon giving the Adviser sixty (60) days' written notice (which
notice may be waived by the Adviser), provided that such termination by the Fund
shall be approved by the vote of a majority of all the trustees in office at the
time or by the vote of the holders of a "majority" (as defined in the Act) of
the voting securities of the Fund at the time outstanding and entitled to vote.
This Agreement shall automatically terminate in the event of its "assignment"
(as defined in the Act).
8. Board of Trustees' Meeting.
The Fund agrees that notice of each meeting of the Board of
Trustees of the Fund will be sent to the Adviser and that the Fund will make
appropriate arrangements for the attendance (as persons present by invitation)
of such person or persons as the Adviser may designate.
9. Notices.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
10. Questions of Interpretation.
Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act, as amended, shall be resolved by reference to such term or
provision of the Act and to interpretations thereof, if any, by the United
States Courts or in the absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and Exchange Commission issued
pursuant to said Act. In addition, where the effect of a requirement of the Act,
reflected in any provision of this Agreement, is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
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11. Applicable Law.
This Agreement shall be construed in accordance with the laws
of the State of New York, without regard to the conflicts of law provisions
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
THE XXXXXXXX GLOBAL EQUITY FUND
By____________________________________________________
Title:
GUINNESS FLIGHT INVESTMENT MANAGEMENT LIMITED
By____________________________________________________
Title:
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