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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1997
File No. 811-07773
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 2
INTERNATIONAL CURRENCY FUND
(Exact Name of Registrant as Specified in Charter)
3435 Stelzer Road
Columbus, Ohio 43219
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (809) 949-2001
George O. Martinez
International Currency Fund
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Services)
With a copy to:
Geoffrey R.T. Kenyon, Esq.
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
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Dated February 4, 1997
EXPLANATORY NOTE
This Registration Statement on Form N-1A (the "Registration
Statement") has been filed by the Registrant pursuant to Section 8(b) of the
Investment Company Act of 1940, as amended. However, beneficial interests in
the series of the Registrant are not being registered under the Securities Act
of 1933, as amended (the "1933 Act"), because such interests will be issued
solely in transactions that are exempt from registration under the 1933 Act.
Investments in the Registrant's series may only be made by investment
companies, insurance company separate accounts, common or commingled trust
funds or similar organizations or entities that are "accredited investors"
within the meaning of Regulation D under the 1933 Act. The Registration
Statement does not constitute an offer to sell, or the solicitation of an
offer to buy, any beneficial interests in any series of the
Registrant.
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INTERNATIONAL CURRENCY FUND
PART A
THIS PART A DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, ANY BENEFICIAL INTERESTS IN THE INTERNATIONAL CURRENCY FUND.
Response to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
ITEM 4 GENERAL DESCRIPTION OF REGISTRANT.
International Currency Fund (the "Portfolio Trust") is an open-end
management investment company which is a Delaware business trust, which is
governed by the laws of the State of Delaware and was created on August 13,
1996. Beneficial interests in the Portfolio Trust are divided into separate
sub-trusts or series, each having distinct investment objectives and policies,
which are the U.S. Dollar Portfolio, the Pound Sterling Portfolio, the
Deutschemark Portfolio and the Canadian Dollar Portfolio (the "Portfolios").
Beneficial interests in each Portfolio are issued solely in transactions that
are exempt from registration under the Securities Act of 1933 (the "1933 Act").
Investments in the Portfolio Trust may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or
similar organizations or entities that are "accredited investors" within the
meaning of Regulation D under the 1933 Act. This Registration Statement does
not constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
The Portfolios' investment objectives are to seek to maintain a high
level of liquidity, preserve capital and stability of principal expressed in the
Portfolio's designated currency ("Designated Currency") and, consistent with
those objectives, earn current income. The Portfolios will seek to achieve their
investment objectives primarily through investing in a portfolio of high
quality, short-term instruments denominated in the Portfolio's Designated
Currency. Because of the uncertainty inherent in all investments, no assurance
can be given that the Portfolio will achieve its investment objectives.
The investment objectives of a Portfolio are not fundamental policy
and may be changed upon notice to, but without the approval of, the
Portfolio's investors. Investment policies which are not fundamental policies
may be changed by the Trustees of the Portfolio Trust, without the approval of
the Portfolios' investors. The Portfolios' investment policies are described
further in Part B.
INVESTMENT POLICIES AND RESTRICTIONS
Except as otherwise provided below, the Portfolios' investment policies
are not "fundamental policies" within the meaning of the 1940 Act and may,
therefore, be changed by the Portfolio Trust's Board of Trustees without a
shareholder vote.
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U.S. DOLLAR PORTFOLIO
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The U.S. Dollar Portfolio's investment objective is to seek to maintain
a high level of liquidity, to preserve capital and stability of principal
expressed in U.S. Dollars and, consistent with those objectives, earn current
income. The U.S. Dollar Portfolio will invest in securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
or instrumentalities or by foreign governments or Supranational Organizations
(such as the World Bank, the Inter-American Development Bank, the Asian
Development Bank and the European Bank for Reconstruction and Development) as
well as high-quality, short-term money market instruments such as bank
certificates of deposit, bankers' acceptances, and such short-term corporate
debt securities as commercial paper and master demand notes.
The U.S. Dollar Portfolio invests only in U.S. dollar-denominated high
quality securities as described in this paragraph. All of the U.S. Dollar
Portfolio's assets will consist of government securities and "first tier"
eligible securities as defined in Rule 2a-7 under the 1940 Act, which have been
(i) rated by at least two United States nationally recognized statistical rating
organizations ("NRSRO"s), such as Standard & Poor's Corporation or Moody's
Investors Service, Inc., in the highest rating category for short-term
obligations (or so rated by one such organization if it alone has rated the
security), (ii) issued by an issuer with comparable short-term obligations
that are rated in the highest rating category, or (iii) if unrated, determined
to be comparable to such securities. See Part B.
All securities in which the U.S. Dollar Portfolio invests have
remaining maturities of thirteen months or less at the date of acquisition. The
U.S. Dollar Portfolio also maintains a dollar-weighted average portfolio
maturity of 90 days or less. The U.S. Dollar Portfolio follows these policies in
seeking to maintain a constant net asset value of $1.00 per share, although
there is no assurance it can do so on a continuing basis.
The U.S. Dollar Portfolio may invest in U.S. dollar-denominated high
quality corporate debt securities such as commercial paper and bonds and
long-term unsecured debentures with remaining maturities of thirteen months or
less. These investments may include, for example, obligations issued by U.S. and
foreign corporations, Eurodollar bonds (which are U.S. dollar-denominated
obligations of foreign issuers), and Yankee bonds (which are U.S.
dollar-denominated bonds issued by foreign issuers in the U.S.). Under normal
market conditions, the U.S. Dollar Portfolio will have more than 25% of its
total assets invested in the obligations of issuers in the banking industry. See
"Special Investment Considerations and Risk Factors -- Concentration in
Obligations of Qualifying Banks." For further information concerning debt
securities ratings and permissible money market investments of the U.S. Dollar
Portfolio, see Part B.
Securities issued or guaranteed as to principal and interest by the
U.S. Government or its agencies or instrumentalities in which the U.S. Dollar
Portfolio may invest include direct obligations of the U.S. Treasury, including
bills, bonds and notes; and obligations issued or guaranteed as to principal and
interest by U.S. Government agencies or instrumentalities and supported by any
of (i) the full faith and credit of the U.S. Treasury (e.g., Government National
Mortgage Association participation certificates); (ii) the right of the issuer
to borrow a limited amount from the U.S. Treasury (e.g., securities of the
Farmers Home Administration); (iii) the discretionary authority of the U.S.
Government to purchase certain obligations of the agency or instrumentality
(e.g., securities of the Federal National Mortgage Association); or (iv) the
credit of the agency or instrumentality (e.g., securities of a Federal Home Loan
Bank).
POUND STERLING PORTFOLIO
The Pound Sterling Portfolio's investment objective is to seek to
maintain a high level of liquidity, to preserve capital and stability of
principal expressed in Pounds Sterling and, consistent with those objectives,
earn current income. The Pound Sterling Portfolio will invest in securities
issued or guaranteed as to principal and interest by the United Kingdom ("U.K.")
Government, local authorities, city corporations and county councils or their
agencies or by non-U.K. governments or Supranational Organizations as well as
high-quality,
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short-term money market instruments such as bank certificates of deposit,
bankers' acceptances and such short-term corporate debt securities as commercial
paper.
The Pound Sterling Portfolio invests only in Pound Sterling-denominated
high quality securities as described in this paragraph. The Pound Sterling
Portfolio assets will consist of government securities and other securities,
which have been (i) rated by at least two NRSROs in the highest rating category
for short-term obligations (or so rated by one such organization if it alone has
rated the security), (ii) issued by an issuer with comparable short-term
obligations that are rated in the highest rating category, or (iii) if unrated,
determined to be comparable to such securities.
All securities in which the Pound Sterling Portfolio invests have
remaining maturities of 60 days or less at the date of acquisition. The Pound
Sterling Portfolio follows these policies in seeking to maintain a constant net
asset value of (pound)1.00 per share, although there is no assurance it can do
so on a continuing basis.
The Pound Sterling Portfolio may invest in Pound Sterling-denominated
high quality corporate debt securities such as commercial paper and bonds and
long-term unsecured debentures with remaining maturities of 60 days or less.
Under normal market conditions, the Pound Sterling Portfolio will have more than
25% of its total assets invested in the obligations of issuers in the banking
industry. See "Special Investment Considerations and Risk Factors --
Concentration in Obligations of Qualifying Banks."
DEUTSCHEMARK PORTFOLIO
The Deutschemark Portfolio's investment objective is to seek to
maintain a high level of liquidity, to preserve capital and stability of
principal expressed in Deutschemarks and, consistent with those objectives, earn
current income. The Deutschemark Portfolio will invest in securities issued or
guaranteed as to principal and interest by the German Government, by its
sub-divisions or their agencies or by non-German governments or Supranational
Organizations, as well as high-quality, short-term money market instruments such
as bank certificates of deposit and such short-term corporate debt securities
as commercial paper.
The Deutschemark Portfolio invests only in Deutschemark-denominated
high quality securities as described in this paragraph. The Deutschemark
Portfolio's assets will consist of government securities and other securities,
which have been (i) rated by at least two NRSROs in the highest rating category
for short-term obligations (or so rated by one such organization if it alone has
rated the security), (ii) issued by an issuer with comparable short-term
obligations that are rated in the highest rating category, or (iii) if unrated,
determined to be comparable to such securities.
All securities in which the Deutschemark Portfolio invests have
remaining maturities of 60 days or less at the date of acquisition. The
Deutschemark Portfolio follows these policies in seeking to maintain a constant
net asset value of DM1.00 per share, although there is no assurance it can do so
on a continuing basis.
The Deutschemark Portfolio may invest in Deutschemark-denominated high
quality corporate debt securities such as commercial paper and bonds and
long-term unsecured debentures with remaining maturities of 60 days or less.
Under normal market conditions, the Deutschemark Portfolio will have more than
25% of its total assets invested in the obligations of issuers in the banking
industry. See "Special Investment Considerations and Risk Factors --
Concentration in Obligations of Qualifying Banks."
CANADIAN DOLLAR PORTFOLIO
The Canadian Dollar Portfolio's investment objective is to seek to
maintain a high level of liquidity, to preserve capital and stability of
principal expressed in Canadian Dollars and, consistent with those objectives,
earn current income. The Canadian Dollar Portfolio will invest in securities
issued or guaranteed as to principal and interest by the Canadian Government,
the Provinces of Canada, or their agencies or by non-Canadian
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governments or Supranational Organizations as well as high-quality, short-term
money market instruments such as bank certificates of deposit and such
short-term corporate debt securities as commercial paper.
The Canadian Dollar Portfolio invests only in Canadian
Dollar-denominated high-quality securities as described in this paragraph. The
Canadian Dollar Portfolio's assets will consist of government securities and
other securities which have been (i) rated by at least two NRSROs in the highest
rating category for short-term obligations (or so rated by one such organization
if it alone has rated the security), (ii) issued by an issuer with comparable
short-term obligations that are rated in the highest rating category by an NRSO,
or (iii) if not rated by an NRSO, determined to be comparable to such
securities. Presently many high quality Canadian Dollar-denominated securities
are rated only by one or more Canadian rating organizations, rather than by the
U.S. rating organizations which qualify as NRSROs. Accordingly, the Investment
Adviser anticipates that many of the securities held by the Canadian Dollar
Portfolio will be securities which are not rated by an NRSRO but are determined
to be comparable to high quality NRSRO-rated securities. In making this
determination the Investment Adviser may rely upon ratings given by one or more
Canadian rating organizations. For further information concerning the ratings
given by Canadian rating organizations, see Part B.
All securities in which the Canadian Dollar Portfolio invests have
remaining maturities of 60 days or less at the date of acquisition. The Canadian
Dollar Portfolio follows these policies in seeking to maintain a constant net
asset value of C$1.00 per share, although there is no assurance it can do so on
a continuing basis.
The Canadian Dollar Portfolio may invest in Canadian Dollar-denominated
high quality corporate debt securities such as commercial paper and bonds and
long-term unsecured debentures with remaining maturities of 60 days or less.
Under normal market conditions, the Canadian Dollar Portfolio will have more
than 25% of its total assets invested in the obligations of issuers in the
banking industry. See "Special Investment Considerations and Risk Factors --
Concentration in Obligations of Qualifying Banks."
ALL PORTFOLIOS
In seeking to obtain its investment objectives, each Portfolio may
invest in the types of securities described below.
Variable and Floating Rate Notes
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Each Portfolio may purchase variable and floating rate instruments.
These instruments may include variable amount master demand notes, which are
instruments under which the indebtedness, as well as the interest rate, varies.
These securities must have the requisite credit quality (as described above) in
order to be purchased by a Portfolio. Unless guaranteed by the U.S. Government
or one of its agencies or instrumentalities, variable or floating rate
instruments purchased by the U.S. Dollar Portfolio must permit such Portfolio
to demand payment of the instrument's principal at least once every thirteen
months. Variable or floating rate instruments purchased by each of the other
Portfolios must permit such Portfolio to demand payment of the instrument's
principal at least once every 60 days. Because of the absence of a market in
which to resell a variable or floating rate instrument, a Portfolio might have
trouble selling an instrument should the issuer default or during periods when
a Portfolio is not permitted by agreement to demand payment of the instrument,
and for this or other reasons a loss could occur with respect to the
instrument.
Repurchase Agreements
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Each Portfolio may invest in repurchase agreements. A repurchase
agreement arises when an investor purchases a security and simultaneously agrees
to resell it to the counterparty on the repurchase agreement at an agreed-upon
future date, normally one day or a few days later. The resale price is greater
than the purchase price, reflecting an agreed-upon rate which is effective for
the period of time the investor's money is invested in the security and which is
not related to the coupon rate on the purchased security. By providing a
flexible investment vehicle, repurchase agreements permit the Portfolios to
remain fully invested pending the purchase of appropriate longer-term
investments.
The Portfolios will enter into repurchase agreements only with
financial institutions rated by an NRSRO in the highest rating category for
short-term obligations and deemed to be creditworthy by the Investment Adviser,
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pursuant to guidelines established by the Portfolio Trust's Board of Trustees.
During the term of any repurchase agreement, the Investment Adviser will monitor
the creditworthiness of the seller, and the seller must maintain the value of
the securities subject to the agreement in an amount that is greater than the
repurchase price. Default or bankruptcy of the seller would, however, expose the
Portfolios to possible loss because of adverse market action or delays in
connection with the disposition of the underlying obligations. Because of the
seller's repurchase obligations, the securities subject to repurchase agreements
do not have maturity limitations.
When-Issued Securities
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Each Portfolio may purchase when-issued debt securities, which are
traded on a price or yield basis prior to actual issuance. Such purchases will
be made only to achieve the relevant Portfolio's investment objective and not
for leverage. The when-issued trading period generally lasts only from a few
days up to a month or more; during this period interest will not accrue. Such
transactions may involve a risk of loss if the value of the securities falls
below the price committed to prior to actual issuance. The Custodian will
establish a segregated account for a Portfolio when it purchases securities on a
when-issued basis consisting of cash or liquid securities equal to the amount of
the when-issued commitments.
Illiquid Securities
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Each Portfolio may invest up to 10% of its net assets in illiquid
securities (i.e. securities which a Portfolio could not reasonably expect to
sell within seven days at approximately the price at which they are valued).
Under the supervision of the Portfolio Trust's Board of Trustees the Investment
Adviser will determine the liquidity of each investment using various factors
such as (1) the frequency of trades and quotations, (2) the number of dealers
and prospective purchasers in the marketplace, (3) dealer undertakings to make a
market, (4) the nature of the security (including any demand or tender features)
and (5) the likelihood of continued marketability and credit quality of the
issuer. If they have a remaining maturity of more than seven days, time deposits
and repurchase agreements will be considered to be illiquid securities.
FUNDAMENTAL POLICIES
Each of the Portfolios have adopted certain fundamental policies which
may not be changed without the approval of that Portfolios' investors.
As a fundamental policy, no Portfolio may: (i) borrow money, except
from the Portfolio Trust's Custodian or from other banks in connection with
redemptions or for temporary or emergency purposes (borrowings by a Portfolio
may not exceed 20% of that Portfolio's net assets computed immediately after the
borrowing; no additional investments may be made while any borrowings exceed 5%
of the Portfolio's total assets), or (ii) make any investment which would cause
more than 25% of the value of such Portfolio's total assets to be invested in
securities of nongovernmental issuers principally engaged in any one industry,
except that under normal market conditions each Portfolio will invest more than
25% of its total assets in obligations of Qualifying Banks (as defined herein).
Additional fundamental policies of the Portfolios are set forth in Part B.
If a percentage restriction, including one that is a fundamental
policy, is adhered to at the time of investment, a later increase or decrease in
percentage resulting from a change in values or assets will not constitute a
violation of that restriction.
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SPECIAL INVESTMENT CONSIDERATIONS AND RISK FACTORS
Possible Changes in Net Asset Value and Yield
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Each Portfolio seeks to maintain a constant net asset value and
generally values its investments at amortized cost. However, the value of each
Portfolio may be affected by changes in interest rates and the credit standing
of issuers of the Portfolios' investments. The value of the investments held by
each of the Portfolios generally will vary inversely with changes in prevailing
interest rates, although this variance is expected to be minimal due to the
short maturities of the instruments held by the Portfolios.
Interest rates paid on instruments denominated in a given Designated
Currency may be higher or lower than those paid on instruments denominated in
other Designated Currencies. Investors should recognize that in periods of
declining short-term interest rates the inflow of net new money to a Portfolio
from the continuous sale of its shares will likely be invested in portfolio
instruments producing lower yields than the balance of such Portfolio's
investment portfolio, thereby reducing the current yield of the Portfolio. In
the periods of rising interest rates, the opposite can be true. The securities
in which the Portfolios invest may not produce as high a level of income as
could be obtained from securities with longer maturities or those having a
lesser degree of safety.
Investments in a Single Issuer
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Each Portfolio other than the U.S. Dollar Portfolio is non-diversified
under the 1940 Act. These Portfolios intend to comply, however, with the
diversification requirements applicable to regulated investment companies under
the United States Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"). Currently, those requirements provide that, as of the
last day of each fiscal quarter, each Portfolio's investments in the securities
of any one issuer must be limited to 25% of its total assets, provided that
with respect to at least 50% of its total assets, a Portfolio may not (a) have
invested more than 5% of its total assets in the securities of any one issuer
or (b) have invested more than 10% of the outstanding voting securities of any
one issuer. To the extent a Portfolio is not diversified under the 1940 Act, it
may be more susceptible than a fully diversified Portfolio to adverse
developments affecting a single issuer.
In addition to the foregoing, each of the Portfolios has adopted a
non-fundamental investment restriction which prevents it from investing (i) more
than 5% of the value of its total assets in the securities of any one issuer
(other than repurchase agreements and securities issued by a sovereign
government, its agencies and instrumentalities), (ii) more than 25% of the value
of its total assets in repurchase agreements with one counterparty or (iii) more
than 25% of the value of its total assets in securities issued by any sovereign
government, its agencies and instrumentalities (other than the federal
government of the United States). Securities held solely as collateral for
outstanding repurchase agreements shall be excluded for purposes of computing
compliance with restriction (iii). These restrictions may be eliminated or
modified at any time by the Trustees of the Portfolio Trust without a
shareholder vote.
Concentration in Obligations of Qualifying Banks
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Under normal market conditions, each Portfolio will have more than 25%
of its total assets invested in obligations of Qualifying Banks. For the
purposes of this Part A, Qualifying Banks are defined as U.S.
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banks (including savings banks or savings and loan associations) that are
members of the Federal Deposit Insurance Corporation ("FDIC") and "foreign
banks," as defined in Rule 3a-6 under the 1940 Act, provided that any such
institution has, at the date of investment, capital, surplus and undivided
profits (as of the date of its most recently published financial statements) in
excess of U.S.$100,000,000 or the non-U.S. dollar equivalent, as the case may
be. This concentration may result in increased exposure to risks pertaining to
the banking industry. These risks include: a sustained increase in interest
rates, which can adversely affect the availability and cost of funds for a
bank's lending activities; exposure to credit losses during times of economic
decline; concentration of loan portfolios in certain industries; national and
local regulatory developments; and competition within the banking industry as
well as from other financial institutions. In addition, investments in banks
located in foreign countries are subject to risks resulting from the combination
in those banks of banking and securities underwriting and similar activities.
Investments in Foreign Securities
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Investing in securities issued by entities domiciled in a country other
than an investor's country of residence or denominated in a currency other than
the currency of the investor's country of residence may involve considerations
and possible risks and opportunities not typically encountered by the investor
in making investments in its country of residence and in securities denominated
in that country's currency. These considerations include favorable or
unfavorable changes in interest rates, currency exchange rates and exchange
control regulations, and the costs that may be incurred in connection with
conversions between various currencies. In addition, investments in countries
other than the United States could be affected by other factors generally not
thought by investors to be present in the United States, including less liquid
and efficient securities markets, greater price volatility, less publicly
available information about issuers, the imposition of withholding or other
taxes, restrictions on the expatriation of funds or other assets of a Portfolio,
expropriation of assets, adverse diplomatic developments, higher transaction and
custody costs, delays attendant in settlement procedures and difficulties in
enforcing contractual obligations.
ITEM 5. MANAGEMENT
TRUSTEES
The Portfolios' are a separate investment series of the Portfolio
Trust, a Delaware business trust governed by the laws of the State of Delaware.
Under the terms of the Declaration of Trust, the affairs of the Portfolio are
managed under the supervision of the Trustees of the Portfolio Trust.
A majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) of the Portfolio Trust, as the case may be, have adopted
written procedures reasonably appropriate to deal with potential conflicts of
interests arising from the fact that the same individuals are trustees of the
Portfolio Trust and an investor in the Portfolio Trust, up to and including
creating separate boards to trustees. See "Management" in Part B for more
information about the Trustees and officers of the Portfolio Trust.
INVESTMENT ADVISER
Rothschild International Asset Management Limited (the "Investment
Adviser"), Five Arrows House, St. Swithin's Lane, London EC4N 8NR England,
serves as investment adviser to the Portfolios pursuant to a Master Investment
Advisory Agreement and manages the Portfolios' investments and affairs subject
to the
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supervision of the Trustees of the Portfolio Trust. The Investment Adviser is a
British corporation which was organized in 1975 and is a registered investment
adviser under the U.S. Investment Advisers Act of 1940, as amended. It is an
indirect, subsidiary of Rothschild Concordia AG of Zug, Switzerland, a holding
company whose subsidiaries manage approximately $28.5 billion in assets, spread
across equities, bonds and currencies.
Subject to the supervision and direction of the Trustees of the
Portfolio Trust, the Investment Adviser manages the Portfolios in accordance
with their stated investment objectives and policies, recommends investment
decisions for the Portfolios, places orders to purchase and sell securities on
behalf of the Portfolios. Pursuant to the Master Investment Advisory Agreement,
the Funds of the Five Arrows Short-Term Investment Trust, which invest all of
their investable assets in the Portfolios, are permitted to use the name "Five
Arrows" for as long as such agreement remains in effect. In consideration for
its services to the Portfolios, the Portfolio Trust has agreed to pay the
Investment Adviser an annual advisory fee with respect to each Portfolio. The
advisory fee for each Portfolio is calculated daily and payable monthly at an
annual rate of up to .20% of average daily net assets.
The portfolio manager for all of the Portfolios is Thomas Barman, who
has been employed by the Investment Adviser as its Director for Currency
Management since November 1994. He has been primarily responsible for the
day-to-day management of the Portfolios' portfolios since their commencement of
operations. He has over 25 years experience in fund management. From March 1993
to August 1994, Mr. Barman was a portfolio manager for Glaxo (Bermuda) Limited.
From April 1991 to February 1993, he was a portfolio manager for the U.S. Office
of Caisse des Depots et Consignations. Prior to that time, he served as Foreign
Exchange Officer at the Federal Reserve Bank of New York and was head of the
U.S. Treasury investments at Credit Suisse (New York).
The Investment Adviser has a Code of Ethics governing personal
securities transactions of certain of its employees. See the Statement of
Additional Information.
ADMINISTRATOR OF THE PORTFOLIO
BISYS Fund Services Limited Partnership, a wholly-owned subsidiary of
the BISYS Group, Inc. serves as the administrator to the Portfolio (the
"Administrator") pursuant to a written administration agreement with the
Portfolio Trust on behalf of each Portfolio. The Administrator provides the
Portfolio Trust with office space and with certain clerical services and
facilities. The Administrator receives a fee calculated daily and paid monthly
at an annual rate of .05% of the average daily net assets of all of the
Portfolios from the Portfolios for its services to the Portfolio Trust.
EXPENSES
The Portfolios are responsible for all of its costs and expenses not
expressly stated to be payable by Investment Adviser, the Administrator or the
Custodian. Among other expenses, the Portfolios pay investment advisory fees;
bookkeeping, share pricing and custodian fees and expenses; expenses of notices
and reports to interest holders. The Portfolios will also pay legal and auditing
fees; any registration and reporting fees and expenses; and Trustees, fees and
expenses. Expenses of the Portfolio Trust which relate to more than one of the
Portfolios are allocated among such Portfolios by the Investment Adviser and the
Portfolio Trust in an equitable manner, primarily on the basis of relative net
asset values.
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ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
Under the Portfolio Trust's Declaration of Trust, the Trustees are
authorized to issue beneficial interests in separate series of the Portfolio
Trust. Each investor is entitled to a vote in proportion to the amount of its
investment in a Portfolio. Investments in the Portfolios may not be transferred,
but an investor may withdraw all or any portion of his investment at any time at
net asset value. Investors in the Portfolios will not be liable for the
obligations of the Portfolios although they will bear the risk of loss of their
entire respective interests in the Portfolios in which they invest. However,
there is a risk that interest-holders in the Portfolios may be held personally
liable as partners for the Portfolios obligations. Because the Portfolio Trust's
Declaration of Trust disclaims interest-holder liability and provides for
indemnification against such liability, the risk of an investor in the
Portfolios incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and a Portfolio itself
was unable to meet its obligations.
Each Portfolio intends to pay redemption proceeds in cash for all
interests redeemed, but, under certain conditions, each Portfolio may make
payment wholly or partly in portfolio securities. In addition, the Portfolio
Trust has elected to be governed by the provisions of Rule 18f-1 under the 1940
Act which limits each Portfolio's obligation to make cash redemption payments to
any investor during any 90 day period to the lesser of $250,000 or 1% of such
Portfolio's net asset value at the beginning of such period.
The Portfolio Trust reserves the right to create and issue any number
of series, in which case investments in each series would participate equally in
earnings and assets of the particular series. Currently, the Portfolio Trust has
four series: the U.S. Dollar Portfolio, the Pound Sterling Portfolio, the
Deutschemark Portfolio and the Canadian Dollar Portfolio.
Investments in the Portfolios have no pre-emptive or conversion rights
and are fully paid and non-assessable, except as set forth above. The Portfolio
Trust is not required and has no current intention to hold annual meetings of
investors, but the Portfolio Trust will hold special meetings of investors when
in the judgment of the Trustees it is necessary or desirable to submit matters
for an investor vote. Changes in fundamental policies will be submitted to
investors for approval. Investors have under certain circumstances (e.g. upon
application and submission of certain specified documents to the Trustees by a
specified percentage of the aggregate value of the Portfolio Trust's outstanding
interests) the right to communicate with other investors in connection with
requesting a meeting of investors for the purpose of removing one or more
Trustees. Investors also have the right to remove one or more Trustees without a
meeting by a declaration in writing by a specified number of investors. Upon
liquidation of a Portfolio, investors in that Portfolio would be entitled to
share pro rata in the net assets of the Portfolio available for distribution to
investors.
As of the close of business on February 3, 1997, the U.S. Dollar Fund,
the Pound Sterling Fund, the Deutsche Mark Fund and the Canadian Dollar Fund
(the "Funds"), each a series of shares of Five Arrows Short-Term Investment
Trust, owned approximately 66% of the value of the outstanding interests in
their corresponding Portfolios. In addition, as of the same date, Five Arrows
Cash Management PLC, an Irish umbrella company (the "Irish Company") consisting
of numerous classes of shares of beneficial interest categorized as sub-funds
(the "Irish Funds"), owned approximately 33% of the outstanding interests of
the Portfolios. Because each Fund and Irish Fund controls its corresponding
Portfolio, it may take actions without the approval of any other investor in
such Portfolio.
Since, as of the approximate time of this Prospectus, Five Arrows House
Investments Limited an affiliated person of the Investment Adviser, was the
beneficial owner of all or a substantial amount of the outstanding shares of the
Funds it may also be deemed to be in control of the Portfolios as control is
defined in the 1940 Act. Such owners may acquire additional shares of the Funds.
Although sales of the Funds' shares to other investors will reduce its
percentage ownership in the Funds and the Portfolios, so long as 25% of a class
of shares of either a Fund or a Portfolio is so owned, the owner will be
presumed to be in control of such class of shares for purposes of voting on
certain matters submitted to a vote of shareholders.
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Inquiries concerning the Portfolios should be made by contacting the
Portfolios at the Portfolio Trust's registered office in care of the
Administrator.
Please see Item 7 for a discussion of the Portfolios' dividend
policies.
ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolios are issued solely in
transactions that are exempt from registration under the 1933 Act. See "General
Description of Registrant" above.
An investment in the Portfolios may be made without a sales load by
certain eligible investors. All investments are made at the net asset value next
determined after an order and payment for the investment is received by the
Portfolio Trust or its agent by the designated cutoff time for each investor.
There is no minimum initial or subsequent investment in the Portfolio.
However, because the Portfolio intends to be as fully invested at all times as
is reasonably practicable in order to enhance the yield on its assets,
investments must be made in disbursable funds in the relevant Portfolio's
Designated Currency (i.e., monies credited to the account of the Portfolio
Trust's custodian bank by a designated bank.)
The net asset value per share of each Portfolio, expressed in the
relevant Designated Currency, is determined by dividing the value of the
Portfolio's net assets (i.e., the value of its investments, including accrued
but undistributed net investment income, less liabilities) by the total number
of shares of the Portfolio outstanding. Such net asset values are determined
once every Trust Business Day at 2:00 p.m. U.S. Eastern Time for the U.S. Dollar
and Canadian Dollar Portfolios, 9:00 a.m. U.S. Eastern Time for the Pound
Sterling Portfolio and noon U.S. Eastern Time for the Deutschemark Portfolio. A
"Portfolio Trust Business Day" is defined as any day on which the New York Stock
Exchange (the "Exchange") is open for trading or banks in New York City are
open for business from 9:00 a.m. to 5:00 p.m. U.S. Eastern Time ("Portfolio
Trust Hours of Operation"). Thus, the Trust will be open for business every day
except for Saturdays, Sundays and holidays which are observed by both the
Exchange and New York City banks (scheduled holidays for 1997 are New Year's
Day, President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day). The value of the investments held by each Portfolio is
determined in its Designated Currency once every 24 hours during Portfolio Trust
Hours of Operation. maintain the following constant net asset value per share:
U.S. Dollar Portfolio U.S. $1.00
Pound Sterling Portfolio (pound)1.00
Deutschemark Portfolio DM1.00
Canadian Dollar Portfolio C$1.00
It is anticipated that each Portfolio's assets will utilize the
amortized cost method of valuation as a reasonable means of approximating each
Portfolio's market value. This method involves valuing an instrument at its cost
and thereafter assuming a constant amortization or accretion to maturity of any
premium or discount. If at any time, however, the market value of any
Portfolio's total assets deviates more than 1/2 of 1% from their value
determined on an amortized cost basis, the Portfolio Trust's Board of Trustees
will consider whether any action should be initiated to prevent any adverse
effects on the Portfolios' shareholders. The Portfolio Trust's Board of Trustees
will monitor the use of the amortized cost method of valuation in order to
ensure that this method continues to be in the best interest of the Portfolios'
shareholders. There may be periods during which the stated value of an
instrument determined under the amortized cost method of valuation is higher or
lower than the price the Portfolio would receive if the instrument were sold,
and the accuracy of amortized cost
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valuation can be affected by changes in interest rates and the credit standing
of issuers of the Portfolio's investments. There is no assurance that the
Portfolios will maintain a stable net asset value per share.
If in the view of the Portfolio Trust's Board of Trustees it is
inadvisable to continue maintaining a constant net asset value for any
Portfolio, the Board of Trustees may discontinue using the amortized cost method
of valuation for such Portfolio.
The Portfolio Trust reserves the right to cease accepting
investments in any Portfolio at any time or to reject any purchase order in
whole or in part. All of a shareholder's accounts will be subject to the
elections and instructions specified by the shareholder in the Application
Agreement covering the accounts. Shareholders of a Portfolio would be notified
of a decision by the Board of Trustees to discontinue the use of the amortized
cost method with respect to such Portfolio. The form of notification would
depend on the context of such a decision and could include, for example, the
mailing of written notifications and/or the issuance of a press release.
Ownership of interests in the Portfolio Trust will be reflected by
book-entry, and certificates for shares will not be issued. Investment in the
Portfolio Trust is not recommended for any investors who require a stock
certificate to evidence their shares.
Purchases of shares of a Portfolio will be effected on Portfolio Trust
Business Days in accordance with the procedures set forth below and only when
the wire system designated for use in transmitting money to the relevant
Portfolio permits the timely transmission of funds that are immediately
available to the Portfolio Trust for investment purposes ("Disburseable
Funds"). Additionally, on days when the relevant trading market and/or the
Portfolio Trust's Custodian close early due to a partial holiday or otherwise,
the Portfolio Trust reserves the right to advance the times at which purchase
and redemption orders must be received.
o Purchase orders for shares of the U.S. Dollar Portfolio
received prior to 11 a.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on that same day (or the
next New York Banking Day (as defined below) if such Portfolio
Trust Business Day is not a New York Banking Day).
o Purchase orders for shares of the Canadian Dollar Portfolio
received prior to 11 a.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on the same day (or the next
Toronto Banking Day (as defined below) if such Portfolio
Trust Business Day is not a Toronto Banking Day).
o Purchase orders for shares of the Pound Sterling Portfolio
received prior to 5 p.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on the following London
Banking Day (as defined below).
o Purchase orders for shares of the Deutschemark Portfolio
received prior to 10 a.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on the following Frankfurt
Banking Day (as defined below provided however that if such a
Portfolio Trust Business Day is not a Frankfurt Banking Day,
the purchase order will settle on its second following
Frankfurt Banking Day).
If a purchase order is not received prior to the applicable time listed
above, such purchase order shall be deemed to have been received on the next
following Portfolio Trust Business Day. Investors will be entitled to any
dividends declared or income earned on the day when their purchase orders are
processed, provided that Disbursable Funds are received in the relevant
Portfolio's Designated Currency in the appropriate bank account (details of
which are set out on the Application Agreement) by the close of business on that
same day. If Disbursable Funds, with respect to any purchase order, are not
received by this time by the Portfolio Trust, the Portfolio Trust reserves the
right, in its sole discretion, (a) to accept the order and assess interest on
the overdue payment, or (b) to cancel the order, and to hold the purchaser
responsible for any loss and other costs incurred by the Portfolio Trust.
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Under the anticipated method of operation of the Portfolios, it is
expected that each Portfolio will not be subject to any U.S. federal or state
income tax. However, any investor in the Portfolios that is subject to U.S. tax
will take into account its share (as determined in accordance with the governing
instruments of the relevant Portfolio) of that Portfolio's ordinary income and
capital gain in determining its income tax liability, if any. The determination
of such share will be made in accordance with the Internal Revenue Code.
It is intended that each Portfolio's assets, income and distributions
will be managed in such a way that an investor in any Portfolio will be able to
satisfy the requirements of Subchapter M of the Internal Revenue Code, assuming
that the investor invested all of its investment securities (as such phrase is
used in the 1940 Act) in the relevant Portfolio.
A "New York Banking Day" is every day except Saturdays, Sundays and
holidays observed by New York City banks (scheduled holidays for 1997 are New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day
and Christmas Day).
A "London Banking Day" is every day except Saturdays, Sundays and
holidays observed by London banks (scheduled holidays for 1997 are New Year's
Day, Good Friday, Easter Monday, May Holiday, Spring Holiday, Late Summer
Holiday, Christmas Day and Boxing Day).
A "Frankfurt Banking Day" is every day except Saturdays, Sundays and
holidays observed by Frankfurt banks (scheduled holidays for 1997 are New Year's
Day, Epiphany, Good Friday, Easter Monday, Labor Day, Ascension Day, Whit
Monday, Corpus Christii, Assumption Day, German Unity Day, All Saint's Day, Day
of Penance, Christmas Eve Holiday, Christmas Day, Boxing Day and New Year's
Holiday).
A "Toronto Banking Day" is every day except Saturdays, Sundays and
holidays observed by Toronto banks (scheduled holidays for 1997 are New Year's
Day, Good Friday, Easter Monday, Victoria Day, Canada Day, Labour Day,
Thanksgiving, Remembrance Day, Christmas Eve Holiday, Christmas Day and Boxing
Day).
ITEM 8. REDEMPTION.
Redemptions of shares of a Portfolio will be effected on Portfolio Trust
Business Days in accordance with the procedures set out below, and only when the
wire system designated for use in transmitting money from the relevant Portfolio
permits the timely transmission of redemption proceeds. Additionally, as for
purchases of shares, the Portfolio Trust reserves the right to advance the times
at which purchase and redemption orders must be received (see section headed
"Purchases Of Securities Being Offered" above).
o Redemption requests for shares of the U.S. Dollar Portfolio
received prior to 11 a.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on that same day (or the next
New York Banking Day if such Portfolio Trust Business Day is
not a New York Banking Day).
o Redemption requests for shares of the Canadian Dollar
Portfolio received prior to 11 a.m. U.S. Eastern Time on a
Portfolio Trust Business Day settle on that same day (or
the next Toronto Banking Day if such Portfolio Trust Business
Day is not a Toronto Banking Day).
o Redemption requests for shares of the Pound Sterling Portfolio
received prior to 5 p.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on the following London
Banking Day.
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o Redemption requests for shares of the Deutschemark Portfolio
received prior to 10 a.m. U.S. Eastern Time on a Portfolio
Trust Business Day will settle on the following Frankfurt
Banking Day provided, however, that if such a Portfolio Trust
Business Day is not a Frankfurt Banking Day , the redemption
request will settle on the second following Frankfurt Banking
Day.
If a redemption request is not received prior to the applicable time
listed above, such request shall be deemed to have been received on the next
following Portfolio Trust Business Day. Shareholders shall be entitled to any
dividends declared or income earned up to and including the day before the day
on which the redemption request is scheduled to be settle.
If the Investment Adviser believes that market conditions exist which
preclude the Portfolio Trust from making prompt payment in a Portfolio's
Designated Currency, the Portfolio Trust can elect to take up to seven days to
pay redemption proceeds or to pay redemption proceeds wholly or partly in
readily marketable portfolio securities. The Portfolio Trust is obligated to
effect a redemption in currency without regard to market conditions if
requested by a shareholder redeeming no more than either $250,000 (or in the
applicable Designated Currency equivalent thereof ) or 1% of a Portfolio's net
assets during any 90-day period.
Except as provided below, all redemptions in currency will be are
made by wire transfer on the settlement day in the Designated Currency of the
Portfolio whose shares are being redeemed through a recognized electronic funds
transfer system which handles such designated covering. A charge of $20 (or
the equivalent in the relevant Portfolio's Designated Currency) against the
shareholder's account will be imposed for each wire redemption. Banks receiving
redemption proceeds by wire may also impose a charge for doing so.
If a redemption request does not meet the minimum amount and other
requirements for sending currency through the electronic funds transfer system
employed by the Portfolio, redemption proceeds will be paid by check sent by
mail. Each shareholder may pre-designate one bank account per Portfolio to
which redemption proceeds can be directed.
When redemption proceeds are paid in portfolio securities, brokerage
costs may be incurred by the investor in converting the securities to currency.
For further information concerning redemptions in portfolio securities,
shareholders should telephone the Administrator. Redemption in portfolio
securities will be made by delivery to the shareholder, or to another party at
the shareholder's direction, of portfolio securities (together with a cash
payment in the Portfolio's Designated Currency equal to the value and in lieu of
any fractional securities required to be delivered) with a value determined at
the time the redemption is made to equal the aggregate net asset value of the
Portfolio shares being redeemed next determined following receipt of the
redemption request.
To the extent permitted by applicable law, the right of redemption with
respect to a Portfolio may be suspended or the date of payment postponed for
more than seven days when trading in the markets in which the Portfolio's
securities are traded is restricted or for a period during which an emergency
exists as a result of which disposal by the Portfolio of its securities is not
reasonably practicable or it is not reasonably practicable for the Portfolio
fairly to determine the value of its assets. In addition, the right of
redemption may be suspended or the date of payment postponed for such other
periods as the SEC by order may permit to protect the Portfolio Trust's
shareholders.
ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
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Dated January , 1997
INTERNATIONAL CURRENCY FUND
PART B
ITEM 10. COVER PAGE.
This Part B expands upon and supplements the information contained in Part A of
the International Currency Fund (the "Portfolio Trust") of which there are four
separate investment series: the U.S. Dollar Portfolio, the Pound Sterling
Portfolio, the Deutschemark Portfolio and the Canadian Dollar Portfolio. This
Part B should be read in conjunction with such Part A.
NEITHER PART A NOR THIS PART B CONSTITUTES AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO BUY, ANY BENEFICIAL INTERESTS IN THE INTERNATIONAL CURRENCY FUND.
ITEM 11. TABLE OF CONTENTS PAGE
GENERAL INFORMATION AND HISTORY..................................1
INVESTMENT OBJECTIVES AND POLICIES...............................2
MANAGEMENT......................................................10
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.............11
INVESTMENT ADVISORY AND OTHER SERVICES..........................12
BROKERAGE ALLOCATION AND OTHER PRACTICES........................13
CAPITAL STOCK AND OTHER SECURITIES..............................14
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING
OFFERED................................................14
TAX STATUS......................................................16
UNDERWRITERS....................................................16
CALCULATION OF PERFORMANCE DATA.................................16
FINANCIAL STATEMENTS............................................16
ITEM 12. GENERAL INFORMATION AND HISTORY.
The Portfolios are series of the Portfolio Trust, which is a
newly-formed business trust and an open-end management investment company under
the 1940 Act. The Portfolio Trust was organized as a Delaware business trust
under the laws of the State of Delaware on August 13, 1996.
Interests in the Portfolios have no preemptive or conversion rights,
and are fully paid and non-assessable, except as set forth below. The Portfolios
normally will not hold meetings of holders of such interests except as required
under the 1940 Act. The Portfolios would be required to hold a meeting of
holders in the event that at any time less than a majority of its Trustees
holding office had been elected by holders. The Trustees of the Portfolio Trust
continue to hold office until their successors are elected and have qualified. A
Trustee of the Portfolio Trust may be removed upon a majority vote of the
interests held by holders in the Portfolios Trust qualified to vote in the
election. The 1940 Act requires the Portfolios to assist their holders in
calling such a meeting. Upon liquidation of the Portfolios, holders in the
Portfolios would be entitled to share pro rata in the net assets of the
Portfolio Trust available for distribution to holders.
<PAGE> 17
Each holder in a Portfolio is entitled to vote in proportion to its
percentage interest in such Portfolio.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
Part A contains additional information about the investment objectives
and policies of the Portfolios. This Part B should be read only in conjunction
with Part A. This section contains supplemental information concerning the types
of securities and other instruments in which the Portfolios may invest, the
investment policies and portfolio strategies that the Portfolios may utilize and
certain risks attendant to those investments, policies and strategies.
All of the Portfolios' fundamental investment restrictions are set
forth below. These fundamental investment restrictions may not be changed except
by the affirmative vote of a majority of the Portfolios outstanding voting
securities as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Under the 1940 Act, a "vote of the majority of the outstanding
voting securities" means the vote, at the annual or a special meeting of
security holders duly called, (i) of 67% or more of the voting securities
present at the meeting if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy or (ii) of more than 50% of the
outstanding voting securities, whichever is less. Under these restrictions, it
is the policy of each Portfolio:
(1) not to invest in a security if the transaction would result in
the Portfolio owning more than 10% of any class of voting
securities of an issuer;
(2) not to issue senior securities, except that the Portfolio may
borrow money in accordance with Restriction 10 below;
(3) not to underwrite or participate in the marketing of
securities of other issuers;
(4) not to purchase or sell real estate in fee simple;
(5) not to invest in commodities or commodity contracts;
(6) not to make loans except that the Portfolio may purchase
bonds, debentures, notes and similar debt obligations,
including money market instruments, directly from the issuer
thereof or in the open market and may engage in repurchase
transactions;
(7) not to conduct arbitrage transactions;
(8) not to invest in interests in oil, gas or other mineral
exploration or development programs (provided that the
Portfolio may invest in securities which are based, directly
or indirectly, on the credit of companies which invest in or
sponsor such programs);
(9) not to make any investment which would cause more than 25% of
the value of such Portfolio's total assets to be invested in
securities of nongovernmental issuers principally engaged in
any one industry, except that under normal market conditions
each Portfolio will invest more than 25% of its total assets
in obligations of Qualifying Banks (as defined in Part A)
and further provided that in the event that the
diversification requirements of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code") are revised so
as to permit one or more of the Portfolios to invest more than
25% of its total assets in government obligations of the
country that issues the relevant Fund's Designated Currency,
then each such Portfolio will under normal market conditions
invest more than 25% of its total assets in such obligations;
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(10) not to borrow money except in connection with redemptions or
for temporary and emergency purposes and then not in an amount
in excess of 20% of the value of its net assets, provided that
additional investments will be suspended during any period
when borrowings exceed 5% of the Portfolio's total assets; and
(11) not to purchase securities on margin, make a short sale of any
securities or purchase or deal in puts, calls, straddles or
spreads with respect to any security, except that the
Portfolio may acquire puts in connection with enhancing the
liquidity of its securities.
The following investment restrictions may be changed by vote of a
majority of the Trustees of the Portfolio Trust. Under these restrictions, it is
the policy of each Portfolio:
(1) not to hypothecate, mortgage or pledge any of its assets
except as may be necessary in connection with permitted
borrowings;
(2) not to purchase a security issued by another investment
company if, immediately after such purchase, the Portfolio
would own, in the aggregate, (i) more than 3% of the total
outstanding voting stock of such other investment company;
(ii) securities issued by such other investment company having
an aggregate value in excess of 5% of the value of the
Portfolio's total assets; or (iii) securities issued by such
other investment company and all other investment companies
(other than treasury stock of the Portfolio) having an
aggregate value in excess of 10% of the value of the
Portfolio's total assets; provided, however, that the
Portfolio may purchase investment company securities without
limit for the purpose of completing a merger, consolidation or
other acquisition of assets;
(3) not to invest in companies for the purpose of exercising
control over their management;
(4) not invest more than 5% of the value of its total assets in
any issuer (other than repurchase agreements and securities
issued by a sovereign government, its agencies or
instrumentalities);
(5) not to invest more than 25% of its total assets in securities
issued by a sovereign government, its agencies or
instrumentalities (other than the U.S. federal government),
provided that securities held solely as collateral for
outstanding repurchase agreements shall be excluded for
purposes of computing compliance with this restriction; and
(6) not to invest more than 25% of its total assets in repurchase
agreements with any one counterparty.
MONEY MARKET INSTRUMENTS
U.S. Dollar Portfolio
---------------------
The following describes further the money market instruments in which
the U.S. Dollar Portfolio will invest and is provided as a supplement to the
discussion appearing in the Prospectus.
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Short-Term Corporate Debt Instruments
Short-term corporate debt instruments include commercial paper (i.e.,
short-term, unsecured promissory notes) issued by corporations (including bank
holding companies) to finance short-term credit needs. Commercial paper is
usually sold on a discounted basis and has a maturity at the time of issuance
not exceeding nine months.
Short-term corporate debt instruments also include master demand notes.
Master demand notes are obligations of companies that permit an investor to
invest fluctuating amounts at varying rates of interest pursuant to arrangements
between the investor, as lender, and the companies, as borrowers. The U.S.
Dollar Portfolio will have the right, at any time, to increase the amount lent
up to the full amount provided by a note. Because the U.S. Dollar Portfolio may
also decrease the amount lent at any time, such instruments are highly liquid
and in effect have a maturity of one business day. The borrower will have the
right, at any time, to prepay up to the full amount of the amount borrowed
without penalty. Because the notes are direct lending obligations between the
U.S. Dollar Portfolio and the borrowers, they are generally not traded and there
is no secondary market. Consequently, the U.S. Dollar Portfolio's ability to
receive repayment will depend upon the borrower's ability to pay principal and
interest on the U.S. Dollar Portfolio's demand. The U.S. Dollar Portfolio will
invest only in notes that either have the ratings described below for commercial
paper or (because notes are not typically rated by credit rating agencies)
unrated notes that are issued by companies having the ratings described below
for issuers of commercial paper. The Fund does not expect that the notes will be
backed by bank letters of credit. The Investment Adviser will monitor the value
of the U.S. Dollar Portfolio's investments in commercial paper and master demand
notes, taking into account such factors as the issuer's earning power, cash flow
and other liquidity ratios.
Commercial paper investments at the time of purchase will be rated in
the highest rating category by an NRSRO, such as A-1 by Standard & Poor's
Corporation ("S&P") or Prime-1 by Moody's Investors Service, Inc. ("Moody's"),
or, if not rated, issued by companies having an outstanding debt issue rated at
least AA by S&P or Aa by Moody's or equivalent or determined to be of comparable
quality. See "Information about Securities Ratings of NRSROs" below for further
information.
Under certain limited circumstances, the U.S. Dollar Portfolio may
invest in nonconvertible corporate debt securities (e.g., bonds and debentures
which may be issued by U.S. or non-U.S. corporations) with no more than thirteen
months remaining either to the date of maturity or the date on which, under the
indenture governing the security, it may be sold back to the issuer thereof for
payment of principal and accrued interest. Corporate debt securities with a
remaining maturity of thirteen months or less are liquid (and tend to become
more liquid as their maturities lessen) and are traded as money market
securities. Such securities also tend to have considerably less market value
fluctuation than longer term issues.
Corporate debt and other securities in which the U.S. Dollar Portfolio
invests must be U.S. dollar-denominated Eligible Securities (as defined in Rule
2a-7 under the 1940 Act) that are determined to present minimal credit risks. In
general, under Rule 2a-7, the term "Eligible Securities" is limited to:
(i) securities with remaining maturities of 13 months or less that
are rated (or have been issued by an issuer that is rated with
respect to a class of short-term debt obligations, or any
securities within that class, that are comparable in priority
and security with the relevant security) by the requisite
number (i.e., two, if two organizations have issued ratings
and one if only one has issued a rating) of NRSROs in one of
the two highest rating categories for short-term debt
obligations (within which there may be sub-categories or
gradations indicating relative standing), or
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(ii) securities that at the time of issuance were long-term
securities (i.e., that had remaining maturities greater than
397 calendar days) but that now have remaining maturities of
397 calendar days or less and which were issued by an issuer
that has received from the requisite NRSROs a rating, with
respect to a class of short-term debt obligations (or any
security within that class) that is comparable in priority and
security with the relevant security, in one of the two highest
rating categories for short-term debt obligations (within
which there may be sub-categories or gradations indicating
relative standing), or
(iii) securities which are "unrated" (as defined in Rule 2a-7) but
determined to be of comparable quality to the foregoing by the
Portfolio Trust's Board of Trustees or the Investment Adviser
under their supervision (provided that a security that at the
time of issuance was a long-term security but that has a
remaining maturity of 397 calendar days less and that is an
"unrated" security is not an "Eligible Security" if the
security has a long-term rating from any NRSRO that is not
within the NRSRO's three highest categories (within which
there may be sub-categories or gradations indicating relative
standing)).
As indicated in the Prospectus, the U.S. Dollar Portfolio will further
limit its investments to Eligible Securities that are government securities and
"first tier" Eligible Securities as defined in Rule 2a-7 under the 1940 Act.
Bank Money Investments
Bank money investments include but are not limited to certificates of
deposit, bankers' acceptances and time deposits. Certificates of deposit are
generally short-term (i.e., less than one year), interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations against
funds deposited in the issuing institution. A banker's acceptance is a time
draft drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction (to finance the import, export, transfer or
storage of goods). A banker's acceptance may be obtained from a domestic or
foreign bank including a U.S. branch or agency of a foreign bank. The borrower
is liable for payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are nontransferable deposits made for a fixed period of
time at a stated interest rate. The U.S. Dollar Portfolio will not invest in any
bank money investment unless the investment is issued by a U.S. bank that is a
member of the Federal Deposit Insurance Corporation ("FDIC"), including any
foreign branch thereof, a U.S. branch or agency of a "foreign bank", as defined
under Rule 3a-6 of the 1940 Act, a foreign branch of a foreign bank, or a
savings bank or savings and loan association that is a member of the FDIC and
which at the date of investment has capital, surplus and undivided profits (as
of the date of its most recently published financial statements) in excess of
$100 million or the equivalent in the relevant Portfolio's Designated Currency
(a "Qualifying Bank").
U.S. branches and agencies of foreign banks are offices of foreign
banks and are not separately incorporated entities. They are chartered and
regulated either federally or under state law. U.S. federal branches or agencies
of foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however, not
all such branches elect to obtain FDIC insurance. Unlike U.S. branches of
foreign banks, U.S. agencies of foreign banks may not accept deposits and thus
are not eligible for FDIC insurance. Both branches and agencies can maintain
credit balances, which are funds received by the office incidental to or arising
out of the exercise of their banking powers and can exercise other commercial
functions, such as lending activities.
U.S. Government Securities
5
<PAGE> 21
U.S. Government securities consist of various types of marketable
securities issued by the U.S. Treasury, i.e., bills, notes and bonds. Such
securities are direct obligations of the U.S. Government and differ mainly in
the lengths of their maturities. Treasury bills, the most frequently issued
marketable government security, have a maturity of up to one year and are issued
on a discount basis.
Government Agency Securities
Government agency securities consist of fixed income securities issued
or guaranteed by agencies and instrumentalities of the U.S. Government,
including the various types of instruments currently outstanding or which may be
offered in the future. Agencies and instrumentalities include, among others, the
Federal Housing Administration, Government National Mortgage Association
("GNMA"), Federal National Mortgage Association, Farmers Home Administration,
Export-Import Bank of the U.S., Federal Maritime Administration, General
Services Administration and Tennessee Valley Authority. Instrumentalities
include, for example, the Central Bank for Cooperatives, Federal Home Loan
Banks, Federal Farm Credit Banks, Student Loan Marketing Association, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks and the U.S. Postal Service. The U.S. Dollar Portfolio will purchase such
securities only so long as they are backed by any of (i) the full faith and
credit of the U.S. Treasury (e.g., U.S. Treasury bills, bonds and notes and GNMA
participation certificates), (ii) the right of the issuer to borrow a limited
amount from the U.S. Treasury (e.g., securities of the Farmers Home
Administration), (iii) the discretionary authority of the U.S. Government to
purchase certain obligations of the agency or instrumentality (e.g., securities
of the Federal National Mortgage Association) or (iv) the credit of the agency
or instrumentality (e.g., securities of a Federal Home Loan Bank).
Custodial Receipts
The U.S. Portfolio may acquire, subject to the limitations described
herein, custodial receipts that evidence ownership of future interest payments,
principal payments or both on certain U.S. Treasury notes or bonds in connection
with programs sponsored by banks and brokerage firms. Such notes and bonds are
held in custody by a bank on behalf of the owners of the receipts. These
custodial receipts are known by various names, including "Treasury Receipts"
("TRs"), "Treasury Investment Growth Receipts" ("TIGRs") and "Certificates of
Accrual on Treasury Securities" (CATS"), and may not be treated as U.S.
Government securities.
ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES FOR ALL PORTFOLIOS
Each Portfolio may invest in the securities or utilize the investment
techniques listed in this section:
Repurchase Agreements
A repurchase agreement is an agreement under which a Portfolio acquires
money market instruments (generally government securities, bankers' acceptances
or certificates of deposit) from a commercial bank, broker or dealer, subject to
resale to the seller at an agreed-upon price and date (normally the next
business day). The resale price reflects an agreed-upon interest rate effective
for the period the instruments are held by a Portfolio and is unrelated to the
interest rate on the instruments. The instruments acquired by a Portfolio
(including accrued interest) must have an aggregate market value in excess of
the resale price and will be held by the Custodian for such Portfolio until they
are repurchased. The Trustees of the Portfolio Trust will monitor the standards
which the Investment Adviser will use in reviewing the creditworthiness of any
party to a repurchase agreement with any of the Portfolios.
6
<PAGE> 22
The use of repurchase agreements involves certain risks. For example,
if the seller defaults on its obligation to repurchase the instruments acquired
by a Portfolio at a time when their market value has declined, such Portfolio
may incur a loss. If the seller becomes insolvent or subject to liquidation or
reorganization under bankruptcy or other laws, a court may determine that the
instruments acquired by such Portfolio are collateral for a loan by such
Portfolio and therefore are subject to sale by the trustee in bankruptcy.
Finally, it is possible that a Portfolio may not be able to substantiate its
interest in the instruments it acquires. While the Trustees of the Portfolio
Trust acknowledge these risks, it is expected that they can be controlled
through careful documentation and monitoring.
Illiquid Securities
No Portfolio may invest more than 10% of the value of its net assets in
securities that at the time of purchase have legal or contractual restrictions
on resale or are otherwise "illiquid". The Investment Adviser will monitor the
amount of illiquid securities in each Portfolio's portfolio, to ensure
compliance with such Portfolio's investment restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the 1933 Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and the Portfolio might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty in satisfying
redemption requests within seven days. The Portfolio might also have to register
such restricted securities in order to dispose of them, resulting in additional
expense and delay. Adverse market conditions could impede such a public offering
of securities.
In recent years, however, a large institutional market has developed
for certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.
All of the Portfolios may buy or sell restricted securities in
accordance with Rule 144A under the 1933 Act ("Rule 144A Securities").
Securities may be resold pursuant to Rule 144A under certain circumstances only
to qualified institutional buyers as defined in the rule, and the markets and
trading practices for such securities are relatively new and still developing;
depending on the development of such markets, such Rule 144A Securities may be
deemed to be liquid as determined by or in accordance with methods adopted by
the Trustees of the Portfolio Trust. In all other cases, however, securities
subject to restrictions on resale will be deemed illiquid. Under such methods
the following factors are considered, among others: the frequency of trades and
quotes for the security, the number of dealers and potential purchasers in the
market, marketmaking activity, and the nature of the security and marketplace
trades. Investments in Rule 144A Securities could have the effect of increasing
the level of the relevant Portfolio's illiquidity to the extent that qualified
institutional buyers become, for a time, disinterested in purchasing such
securities. Also, the relevant Portfolio may be adversely impacted by the
possible illiquidity and subjective valuation of such securities in the absence
of a market for them.
7
<PAGE> 23
Concentration in Obligations of Qualifying Banks
Under normal market conditions, more than 25% of the total assets of
each Portfolio will be invested in obligations of Qualifying Banks as set forth
in Part A.
Obligations of non-U.S. branches of U.S. banks and of non-U.S. banks,
such as certificates of deposit and time deposits, may be general obligations of
the parent banks in addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation. Such obligations are
subject to different risks than are those of domestic U.S. banks or U.S.
branches of non-U.S. banks. These risks include foreign economic and political
developments, foreign governmental restrictions that may adversely affect
payment of principal and interest on the obligations, foreign exchange controls
and foreign withholding and other taxes on interest income. Non-U.S. branches of
U.S. banks are not necessarily subject to the same or similar regulatory
requirements that apply to U.S. banks such as mandatory reserve requirements,
loan limitations, and accounting, auditing and financial recordkeeping
requirements. In addition, less information may be publicly available about a
non-U.S. branch of a U.S. bank or about a non-U.S. bank than about a U.S. bank.
Investing in Non-U.S. Securities
Each of the Portfolios may invest in non-U.S. securities. Non-U.S.
securities markets generally are not as developed or as efficient as those in
the United States. Securities of some foreign issuers are less liquid and more
volatile than securities of comparable U.S. issuers. Similarly, volume and
liquidity in most foreign securities markets are less than in the United States
and, at times, volatility of prices can be greater than in the United States. In
addition, there may be less publicly available information about a non-U.S.
issuer, and non-U.S. issuers are not generally subject to uniform accounting and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. issuers.
The value of securities purchased with and payable in one Designated
Currency will be affected favorably or unfavorably relative to other currencies
by changes in currency exchange rates and exchange control regulations.
Furthermore, some of the securities may be subject to foreign transaction taxes
which could have the effect of increasing the cost of such investments and which
would reduce the realized gain or increase the realized loss on such securities
at the time of sale. Transaction costs and custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of U.S.
securities. Interest payments from certain foreign securities may be subject to
foreign withholding taxes on interest income payable on the securities.
U.S. Government policies have in the past, through taxation and other
restrictions, discouraged certain investments abroad by U.S. investors. While no
material restrictions of that type are currently in effect, they could be
reinstituted. In an extreme case, restrictions of that type could require the
liquidation of a Portfolio (other than the U.S. Dollar Portfolio).
Floating Rate and Variable Rate Demand Notes
Each Portfolio may purchase floating rate and variable rate demand
notes and bonds. These securities may have a stated maturity in excess of one
year, but permit a holder to demand payment of principal plus accrued interest
upon a specified number of days notice. Frequently, such obligations are secured
by letters of credit or other credit support arrangements provided by banks. The
issuer has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal of the obligation plus accrued interest
upon a specific number of days notice to the holders. The interest rate of a
floating rate instrument may be based on a known lending rate, such as a bank's
prime rate, and is reset whenever such rate is adjusted. The interest rate on a
variable rate demand note is reset at specified intervals at a market rate.
8
<PAGE> 24
Investing in Supranational Organizations
The supranational organizations in which each Portfolio may invest
include, without limitation, the organizations listed below:
The International Bank for Reconstruction and Development (the "World
Bank"), which was established in 1945, is an international institution having as
members a large portion of the world's sovereign governments. The principal
purposes of the World Bank are: (i) to assist in the reconstruction and
development of its member countries by facilitating the investment of capital
for productive purposes, thereby promoting the long-range growth of
international trade and the improvement of standards of living; (ii) to promote
private foreign investment by guarantees of and participation in loans and other
investments made by private investors; and (iii) when private capital is not
available on reasonable terms, to make loans for productive purposes out of its
own resources or funds borrowed by it.
The Inter-American Development Bank, which became effective in 1959,
has a membership comprised primarily of sovereign governments located in the
western hemisphere as well as a number of countries from outside that region.
The principal purposes of the Bank are: (i) to promote the investment of public
and private capital for development purposes in the Americas; (ii) to utilize
its own capital, funds raised by it in financial markets, and other available
resources, for financing development of member countries, giving priority to
those loans and guarantees that will contribute most effectively to their
economic growth; (iii) to encourage private investment in projects, enterprises,
and activities contributing to economic development and to supplement private
investment when private capital is not available on reasonable terms and
conditions; (iv) to cooperate with member countries to orient their development
policies toward a better utilization of their resources, in a manner consistent
with objectives of making their economics more complimentary, and of fostering
orderly growth of their foreign trade; and (v) to provide technical assistance
for preparation, financing and implementation of development plans and projects,
including the study of priorities and the formulation of specific project
proposals.
The Asian Development Bank was established in 1965 and has a membership
comprised primarily of sovereign governments located in Asia, as well as a
number of nations outside the region. The purposes of the Bank are: (i) to
encourage regional economic cooperation in the Asian and Pacific region and (ii)
to encourage economic growth of its developing members by lending funds,
promoting investment and providing technical assistance with special regard to
the needs of smaller or less developed countries.
The European Bank for Reconstruction and Development was established in
1991 and has a membership comprised primarily of sovereign governments, the
European Union and the European Investment Bank. The purpose of the Bank is to
provide project specific direct financing to foster the economic and democratic
transition process and to promote private and entrepreneurial initiatives in
those countries through the provision of loans, equity investments, guarantees
and technical cooperation.
9
<PAGE> 25
ITEM 14. MANAGEMENT.
TRUSTEES AND OFFICERS OF THE PORTFOLIO TRUST
The Trustees and executive officers of the Portfolio Trust, together
with information as to their principal business occupations during the last five
years, are shown below. All executive officers of the Portfolio Trust are
affiliates of Rothschild International Asset Management Limited, the Portfolios'
Investment Adviser (the "Investment Adviser"). Each Trustee who is an
"interested person" (as defined in the 1940 Act) of the Portfolio Trust is
indicated by an asterisk. Certain officers and members of the Board of Trustees
of the Portfolio Trust are not residents of the United States. Virtually all or
a substantial portion of the assets of such persons are located outside of the
United States. It may not be possible for shareholders to effect service of
process within the United States upon such persons or to enforce in courts
inside or outside the United States judgements obtained against such persons in
courts in jurisdictions outside the United States, in each case, in any action,
including actions predicated upon the civil liability provisions of the United
States securities laws. In addition, it may be difficult for shareholders to
enforce, in original actions brought in courts in jurisdictions outside the
United States, liabilities predicated solely upon the United States securities
laws.
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
NAME, ADDRESS AND POSITION HELD DURING PAST
DATE OF BIRTH WITH TRUST 5 YEARS
- ------------- ---------- -------
<S> <C> <C>
Peter B. Collacott* President and Trustee Managing Director,
Five Arrows House Rothschild, Asset
St. Swithin's Lane Management Limited;
London EC4N 8NR U.K. Director, International
Born June 19, 1944 Biotechnology Trust.
Paul R. Freeman* Senior Vice President Director, Rothschild
Five Arrows House and Trustee Asset Management Limited
St. Swithin's Lane (July 1994 to date);
London EC4N 8NR U.K. Product Development
Born September 30, 1955 Director,
Henderson Touche
Remnant Unit Trust
Management Limited
(Oct. 1993 - July 1994)
Prior to October 1993,
Company Secretary and
Head of Product
Development for GT
Management PLC.
Alan T. Jeffers Trustee Private Investor;
51 Clearwater Cove Consultant to Rothschild
Old Dunleary Road Asset Management Limited
Dun Laoghaire, from 1986 to September 1996;
County Dublin, Ireland Chairman, Dipcot Holdings Ltd.;
Born August 17, 1938 Chairman, Danfay Ltd; Director,
Hibernian Group Plc; Founder and
Director, Banking Automation Ltd.;
Chairman, Provita Europe Ltd.; Chairman,
Biotrin Holdings Ltd.; Chairman,
Capteur Sensors & Analysers Limited.
Bryan J. Walsh Trustee President and Managing
11 Lower Tuckahoe Road West Director of Salisbury
Richmond, Virginia Research 1991-date.
23233-6129 U.S.A.
Born November 6, 1944
Roger M. Kubarych Trustee General Manager - Henry
65 East 55th Street Kaufman & Company Inc.
New York, NY 10022 overseeing the firm's
Born November 19, 1944 international money
management activities and
financial and economic
consulting services.
Tony Mercure Vice President Director of Client Services,
BISYS Fund Services, Inc. BISYS Fund Services, Inc.
3435 Stelzer Road and has served in a variety
Columbus, OH 43219 of positions within
BISYS Fund Services, Inc.
since 1991.
Adrian Waters Treasurer Managing Director,
BISYS Fund Services BISYS Fund Services (Ireland) LTD.,
(Ireland) Limited Manager, Price Waterhouse,
Floor 2, Block 2 1989 - May 1993.
The Harcourt Centre
Dublin 2 Ireland
Mary Gamble Vice President Associate Director,
BISYS Fund Services, Inc. BISYS Fund Services, Inc.,
First and Market Building, March 1995 to present;
Suite 300 Assistant Vice President,
100 First Avenue Concord Financial Group,
Pittsburgh, PA 15222 July 1987 to March 1995.
Chuck Booth Vice President Vice President, BISYS Fund Services, Inc.
BISYS Fund Services, Inc. and has served in a
3435 Stelzer Road variety of positions within
Columbus, OH 43219 BISYS Fund Services, Inc.
since 1991.
Bill Tomko Vice President Senior Vice President,
BISYS Fund Services, Inc. BISYS Fund Services, Inc.
3435 Stelzer Road and has served in a
Columbus, OH 43219 variety of positions within
BISYS Fund Services, Inc.
since 1991.
Alaina Metz Assistant Secretary Chief Administrator,
BISYS Fund Services, Inc. Administrative and Regulatory Services,
3435 Stelzer Road BISYS Fund Services, Inc.
Columbus, OH 43219 June 1995 to present; Supervisor,
Mutual Fund Legal Department,
Alliance Capital Management,
May 1989 to June 1995.
Catherine Brady Assistant Treasurer Accounting Services Manager,
BISYS Fund Services BISYS Fund Services (Ireland) LTD.,
(Ireland) Limited March 1994 to present;
Floor 2, Block 2 Supervisor, Price Waterhouse,
The Harcourt Centre 1990 to March 1994.
Dublin 2 Ireland
Louise Egan Assistant Secretary Shareholder Servicing Manager,
BISYS Fund Services BISYS Fund Services (Ireland) LTD.,
(Ireland) Limited February 1994 to present;
Floor 2, Block 2 Financial Controller,
The Harcourt Centre ITI Services Limited,
Dublin 2 Ireland 1990 to February 1994.
</TABLE>
10
<PAGE> 26
COMPENSATION OF TRUSTEES AND OFFICERS
The Portfolio Trust pays no compensation to the Trustees of the
Portfolio Trust affiliated with the Adviser or to the Portfolio Trust's
officers.
The following is an estimate of the compensation to be paid to the
Portfolio Trust's Trustees for the period ending December 31, 1997.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Aggregate Aggregate Aggregate Aggregate Total
Compensation Compensation Compensation Compensation Compensation
Name of from U.S. from Pound from Deutschemark from Canadian from Fund
Trustee Dollar Portfolio Sterling Portfolio Portfolio Dollar Portfolio Complex (a)(b)
------- ---------------- ------------------ --------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Bryan J. Walsh $12,000 $12,000 $3,000 $3,000 $30,000
Roger M. Kubarych $10,000 $10,000 $2,500 $2,500 $25,000
Alan T. Jeffers $10,000 $10,000 $2,500 $2,500 $25,000
Peter B. Collacott $ 0 $ 0 $ 0 $ 0 $ 0
Paul R. Freeman $ 0 $ 0 $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------
<FN>
(a) Currently the U.S. Dollar Fund, the Pound Sterling Fund, the Deutsche Mark
Fund and the Canadian Dollar Fund of the Five Arrows Short-Term Investment
Trust (the "Trust") and their corresponding Portfolios in the Portfolio Trust
are the only funds in the fund complex. No other compensation, including
pension or other retirement benefits, is paid to the Trustees by the fund
complex. The Trustees receive no compensation for their service as Trustees of
the Trust.
(b) Trustees fees will be allocated among the Portfolios in proportion to their
respective net asset values. The allocation shown reflects an estimate of the
relative net asset values of the Portfolios for the period ending December 31,
1997.
</TABLE>
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of the close of business on February 3, 1997, the U.S. Dollar Fund, the
Pound Sterling Fund, the Deutsche Mark Fund and the Canadian Dollar Fund (the
"Funds"), series of shares of Five Arrows Short-Term Investment Trust,
owned approximately 66% of the value of the outstanding interests in their
corresponding Portfolios. In addition, as of the same date, Five Arrows Cash
Management PLC, an Irish umbrella company (the "Irish Company") consisting of
numerous classes of shares of beneficial interest categorized as sub-funds (the
"Irish Funds"), owned approximately 33% of the outstanding interests of the
Portfolios. Because each Fund and Irish Fund controls its corresponding
Portfolio, it may take actions without the approval of any other investor in
such Portfolio.
Since, as of the approximate time of this Prospectus, Five Arrows
House Investments Limited, an affiliated person of the Investment Adviser was
the beneficial owner of all or a substantial amount of the outstanding shares
of the Funds it may also be deemed to be in control of the Portfolios as
control is defined in the 1940 Act. Such owners may acquire additional shares
of the Funds. Although sales of the Funds' shares to other investors will
reduce its percentage ownership in the Funds and the Portfolios, so long as
25% of a class of shares of either a Funds or a Portfolio is so owned, the
owner will be presumed to be in control of such class of shares for purposes
of voting on certain matters submitted to a vote of shareholders.
Each Fund has informed the Portfolio Trust that whenever it is
requested to vote on matters pertaining to the fundamental policies of its
corresponding Portfolio, the relevant Fund will hold a meeting of shareholders
and will cast its votes as instructed by such Fund's shareholders. It is
anticipated that other registered investment companies investing in the
Portfolios will follow the same or a similar practice.
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<PAGE> 27
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
INVESTMENT ADVISER OF THE PORTFOLIO TRUST
Rothschild International Asset Management Limited (the "Investment
Adviser") serves as the Investment Adviser to the Portfolio pursuant to a
written investment advisory agreement with the Portfolio Trust (the "Investment
Advisory Agreement"). The Investment Adviser is a British corporation organized
in 1975 and is registered under the Investment Advisers Act of 1940.
The Investment Adviser is an indirect, wholly-owned subsidiary of
Rothschild Continuation Holdings AG, a Swiss corporation. Twenty percent (20%)
of the equity of such entity is held by Sun Alliance Group Limited, a British
insurance company. The remainder of the equity is held by Rothschild Concordia
A.G., a holding company controlled by members of the Rothschild family.
Certain services provided by the Investment Adviser under the Master
Investment Advisory Agreement are described in Part A. These services are
provided without reimbursement by the Portfolios for any costs incurred. Under
the Master Investment Advisory Agreement, the Investment Adviser is paid a fee
based upon a percentage of the Portfolios' average daily net asset value
computed as described in Part A. The fee is accrued daily and paid monthly.
Pursuant to the Investment Advisory Agreement, the Portfolios bear
expenses of their operations other than those incurred by the Investment Adviser
pursuant to the Investment Advisory Agreement. Among other expenses, the
Portfolios will pay share pricing expenses; custodian fees and expenses;
administration fees; legal and auditing fees and expenses; expenses of investor
notices and reports; registration and reporting fees and expenses; and Trustees,
fees and expenses.
Unless terminated as provided below, the Investment Advisory Agreement
continues in full force and effect with respect to each Portfolio until January
16, 1999 and for successive periods of one year thereafter, but only so long as
each such continuance is approved annually (i) by either the Trustees of the
Portfolio Trust or by the "vote of a majority of the outstanding voting
securities" of the Portfolio, and, in either event (ii) by vote of a majority of
the Trustees of the Portfolio Trust who are not parties to the Investment
Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any
such party, cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement may be terminated at any time
without the payment of any penalty by vote of the Trustees of the Portfolio
Trust or by the "vote of a majority of the outstanding voting securities" of any
Portfolio or by the Investment Adviser, on sixty days' written notice to the
other parties. The Investment Advisory Agreement terminates in the event of its
assignment as defined in the 1940 Act.
In an attempt to avoid any potential conflict with portfolio
transactions for the Portfolio, the Adviser and the Portfolio Trust have each
adopted extensive restrictions on personal securities trading by personnel of
the Adviser and its affiliates. These restrictions include: pre-clearance of all
personal securities transactions and a prohibition of purchasing initial public
offerings of securities. These restrictions are a continuation of the basic
principle that the interests of the Portfolio and its investors, come before
those of the Adviser, its affiliates and their employees.
The Investment Advisory Agreement also provides that, with respect to
the Portfolio to which it pertains, the Investment Adviser shall not be liable
for any mistake of judgment or in any event whatsoever in the performance of its
duties to the Portfolio Trust, except for liability resulting from willful
misfeasance, bad faith or gross negligence in the performance of the Investment
Adviser's duties or by reason of reckless disregard of its obligations and
duties under the Investment Advisory Agreement.
12
<PAGE> 28
The Investment Advisory Agreement provides that the Investment
Adviser may render advisory services to others.
In addition to receiving its advisory fee, the Investment Adviser may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in a Portfolio. In some instances the Investment
Adviser may elect to credit against any investment management fee received from
a client who is also a shareholder in the Portfolio Trust an amount equal to all
or a portion of the fees received by the Investment Adviser or any affiliate of
the Investment Adviser from a Portfolio with respect to the client's assets
invested in the Portfolio.
ADMINISTRATOR OF THE PORTFOLIO
BISYS Fund Services Limited Partnership, located at 3435 Stelzer Road,
Columbus, OH 43219, serves as the administrator to the Portfolios (the
"Administrator") pursuant to a written administration agreement with the
Portfolio Trust on behalf of the Portfolios. The Administrator provides the
Portfolio Trust with office space for managing its affairs and with certain
clerical services and facilities. The Administrator receives a fee calculated
daily and paid monthly at an annual rate of .05% of the Portfolios' average
daily net assets from the Portfolios for its services to the Portfolio Trust.
The Portfolios' administration agreement can be terminated by either
party on not more than sixty days' written notice.
CUSTODIAN
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY serves
as custodian of all cash and securities of the Portfolios.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. serves as independent accountants for the
Portfolio Trust and will audit each Portfolio's financial statements annually.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Portfolio securities are ordinarily purchased directly from the issuer
or from an underwriter or a market maker for the securities. Usually no
brokerage commissions are paid by any Portfolio for such purchases. Purchases
from underwriters of Portfolio securities include a concession paid by the
issuer to the underwriter and the purchase price paid to market makers for the
securities may include the spread between the bid and asked price.
A Portfolio may not always pay the lowest commission or spread
available. Rather, in determining the amount of commission paid in connection
with Portfolio transactions, the Investment Adviser takes into account such
factors as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the services described below) and any
risk assumed by the executing broker. The Investment Adviser may also take into
account payments made by brokers effecting transactions with or for a Portfolio
(i) to the Portfolio or (ii) to other persons on behalf of the Portfolio for
services provided to it for which it would be obligated to pay.
Investment decisions for the Portfolios will be made independently from
those for any other account or investment company that is or may in the future
become managed by the Investment Adviser or its affiliates. If, however, a
Portfolio and other investment companies or accounts managed by the Investment
Adviser are contemporaneously engaged in the purchase or sale of the same
security, the transactions may be averaged as
13
<PAGE> 29
to price and allocated equitably to each account. In some cases, this policy
might adversely affect the price paid or received by a Portfolio or the size of
the position obtainable for the Portfolio. In addition, when purchases or sales
of the same security for a Portfolio and for other investment companies and
accounts managed by the Investment Adviser occur contemporaneously, the purchase
or sale orders may be aggregated in order to obtain any price advantages
available to large denomination purchases or sales.
No Portfolio transactions are executed with the Investment Adviser or
any of its affiliates.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
The Portfolios are series of the International Currency Fund, an
open-end management investment company registered under the 1940 Act (the
"Portfolio Trust"). The Portfolio Trust was organized as a business trust under
the laws of the state of Delaware on August 13, 1996.
Interests in the Portfolios have no preemptive or conversion rights,
and are fully paid and non-assessable, except as set forth described in Part A.
The Portfolios normally will not hold meetings of holders of such interests
except as required under the 1940 Act or its Declaration of Trust. The
Portfolios would be required to hold a meeting of holders in the event that at
any time less than a majority of their Trustees holding office had been elected
by holders. The Trustees of each Portfolio continue to hold office until their
successors are elected and have qualified. Holders holding a specified
percentage of interests in a Portfolio may call a meeting of holders in the
relevant Portfolios for the purpose of removing any Trustee. A Trustee of any
Portfolio may be removed upon a majority vote of the interests held by holders
in that Portfolio qualified to vote in the election. The 1940 Act requires the
Portfolio to assist their holders in calling such a meeting. Upon liquidation of
any Portfolio, holders in such Portfolio would be entitled to share pro rata in
the net assets of such Portfolio available for distribution to holders.
Each holder in a Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED.
Beneficial interests in the Portfolios are issued solely in
transactions that are exempt from registration under the Securities Act of 1933.
See "General Description of Registrant," "Purchase of Securities Being Offered"
and "Redemption" in Part A.
The net asset value of the Portfolios is determined by the
Administrator (as agent for the Portfolios). The Portfolios will only price
their respective shares or interests on Trust Business Days (as defined in Part
A). With respect to the U.S. Dollar Portfolio, which is a "money market fund,"
as defined in the 1940 Act, the valuation of the instruments it holds at
amortized cost is permitted in accordance with Rule 2a-7 and certain procedures
established by the Trustees of the Portfolio Trust thereunder. With respect to
all other Portfolios, which are not money market funds, the use of the
amortized cost method as a reasonable means of approximating the market value
of each other Portfolio's assets is consistent with a long-standing practice
of many U.S. registered investment companies to value "high-quality" debt
securities with maturities of 60 days or less at amortized cost.
The amortized cost of an instrument is determined by valuing it at cost
originally and thereafter accreting any discount or amortizing any premium from
its face value at a constant rate until maturity, regardless of the effect of
fluctuating interest rates on the market value of the instrument. Although the
amortized cost method provides certainty in valuation, it may result at times in
determinations of value that are higher or lower than the price the Portfolios
would receive if the instruments were sold. Consequently, changes
14
<PAGE> 30
in the market value of instruments held by the Portfolios during periods of
rising or falling interest rates will not be reflected either in the computation
of net asset value of the Portfolios or in the daily computation of its net
investment income.
The procedures of the Portfolios are designed to facilitate, to the
extent reasonably possible, the maintenance of the price per share of registered
investment companies and other collective investment vehicles that invest in the
Portfolios, as computed for the purpose of the distribution and redemption of
shares, at $1.00 in the case of an investor investing in the U.S. Dollar
Portfolio, at (pound)1.00 in the case of an investor investing in the Pound
Sterling Portfolio, at DM 1.00 in the case of an investor investing in the
Deutschemark Portfolio and at C$1.00 in the case of an investor investing in the
Canadian Dollar Fund (the "Stabilized Prices"). These procedures include review
of the Portfolios' holdings by the Trustees of the Portfolio Trust and Trust, at
such intervals as they may deem appropriate, to determine whether the
Portfolios' net asset values calculated by using readily available market
quotations deviates from the valuation based on amortized cost, and, if so,
whether such deviation may result in material dilution or is otherwise unfair to
existing interest holders. In the event the Trustees of the Portfolio Trust and
Trust determine that such a deviation exists, they will take such corrective
action as they consider to be necessary or appropriate, which action could
include the sale of instruments held by the Portfolios prior to maturity (to
realize capital gains or loses); the shortening of average portfolio maturity;
withholding dividends; redemption of shares in kind; or establishing a net asset
value per share by using readily available market quotations.
Since the net investment incomes of each entity investing in a
Portfolio is declared as a dividend each time such income is determined, the net
asset value per share of each entity investing in a Portfolio remains at its
respective Stabilized Price immediately after such determination and dividend
declaration. It is expected that each such investing entity's net investment
income will be positive each time it is determined. However, if because of
realized losses on sales of portfolio investments, a sudden rise in interest
rates, default by an issuer of a portfolio security, or for any other reason the
net investment income of each Portfolio determined at any time is a negative
amount, such Portfolio will offset such amount allocable to each then interest
holder's account from dividends accrued with respect to such account. If at the
time of payment of a dividend (either at the regular dividend payment date, or,
in the case of an interest holder who is withdrawing all or substantially all of
its interest in an account, at the time of redemption), such negative amount
exceeds an interest holder's accrued dividends, the relevant Portfolio will
reduce the interest by treating the interest holder as having contributed to the
capital of that Portfolio that amount of its interest which represents the
amount of the excess. Each shareholder is deemed to have agreed to such
contribution in these circumstances by his or her investment in the relevant
entity investing in such Portfolio.
Should the Portfolios incur or anticipate any unusual or unexpected
significant expense, loss or depreciation which would affect disproportionately
their investors' net investment income for a particular period, the Trustees of
the Portfolio Trust would at that time consider whether to adhere to its daily
dividend policy or to revise it in the light of the then prevailing
circumstances. Such expenses, losses or depreciation may nevertheless result in
a shareholder's receiving no dividends for the period during which the shares
are held and in receiving upon redemption a price per share lower than the
purchase price of such shares.
Each Portfolio intends to pay redemption proceeds in cash for all
interests redeemed but, under certain conditions, each Portfolio may make
payment wholly or partly in portfolio securities. Each Portfolio will select
such securities in a manner it considers equitable, regardless of which
securities were deposited by the investor or the composition of such Portfolio's
portfolio at the time of the redemption in-kind. Portfolio securities paid upon
withdrawal or reduction of an interest-holder's investment in such Portfolio
will be valued at their then current market value. The Portfolio Trust has
elected to be governed by the provisions of Rule 18f-1 under the 1940 Act which
limits each Portfolio's obligation to make cash redemption payments to any
investor during any 90 day period to the lesser of $250,000 or 1% of such
Portfolio's net asset value at the beginning of such period. An investor may
incur brokerage costs in converting portfolio securities received upon
redemption to
15
<PAGE> 31
cash. Each Portfolio intends not to redeem an investor's interest in-kind except
in circumstances in which the particular investor is permitted to redeem in-kind
or in the event that the particular investor completely withdraws its interest
in the such Portfolio.
ITEM 20. TAX STATUS.
The Portfolio Trust is organized as a business trust under Delaware
law. Under the Portfolio Trust's current method of operation as a partnership,
no Portfolio will be subject to any income tax. However, each investor in a
Portfolio will be taxable on its share (as determined in accordance with the
governing instruments of the Portfolio Trust) of such Portfolio's ordinary
income and capital gain in determining its income tax liability. The
determination of such share will be made in accordance with the Internal Revenue
Code of 1986, as amended, and regulations promulgated thereunder.
The Portfolio Trust's taxable year-end is the last day of December.
Although the Portfolio Trust will not be subject to Federal income tax, it will
file appropriate federal income tax returns.
Each Portfolio's assets, income and distributions will be managed in
such a way that an investor in the Portfolio will be able to satisfy the
requirements of Subchapter M of the Code, assuming that the investor invested
all of its investable assets in the Portfolio. Investors are advised to consult
their own tax advisors as to the tax consequences of an investment in a
Portfolio.
ITEM 21. UNDERWRITERS.
Not applicable.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
Investors will receive the relevant Portfolio's unaudited semi-annual
reports and annual reports audited by the Portfolio's independent accountants.
16
<PAGE> 32
INFORMATION ABOUT SECURITIES RATINGS OF NATIONALLY
RECOGNIZED STATISTICAL RATING ORGANIZATIONS ("NRSROs")
Ratings of Short-Term Corporate Debt Securities
- ----------------------------------------------
MOODY'S INVESTORS SERVICE, INC. Moody's Commercial Paper ratings, which
are also applicable to municipal paper investments permitted to be made by the
Fund, are opinions of the ability of issuers to repay punctually their
promissory obligations not having an original maturity in excess of nine months.
Moody's employs the following designations, all judged to be investment grade,
to indicate the relative repayment capacity of rated issuers:
P-1 (Prime-1): Superior capacity for repayment.
P-2 (Prime-2): Strong capacity for repayment.
S&P's
S&P's ratings are a current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded into four categories, ranging from "A" for the highest quality
obligations to "D" for the lowest. Issues within the "A" category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety, as
follows:
A-1: This designation indicates the degree of safety regarding timely payment is
very strong. A "plus" (+) designation indicates an even stronger likelihood of
timely payment.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as overwhelming as
for issues designated A-1.
A-3: Issues carrying this designation have an adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
IBCA LIMITED/IBCA INC. Short-term obligations, including commercial
paper, rated A-1+ by IBCA Limited or its affiliate IBCA Inc. are obligations
supported by the highest capacity for timely repayment. Obligations rated A-1
have a very strong capacity for timely repayment. Obligations rated A-2 have a
strong capacity for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial conditions.
FITCH INVESTORS SERVICES, INC. Fitch Investors Services, Inc. employs
the rating F-1+ to indicate issues regarded as having the strongest degree of
assurance for timely payment. The rating F-1 reflects an assurance of timely
payment only slightly less in degree than issues rated F-1+, while the rating
F-2 indicates a satisfactory degree of assurance for timely payment, although
the margin of safety is not as great as indicated by the F-1+ and F-1
categories.
DUFF & PHELPS INC. Duff & Phelps Inc. employs the designation of Duff 1
with respect to top grade commercial paper and bank money instruments. Duff 1+
indicates the highest certainty of timely payment; Short-term liquidity is
clearly outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations. Duff 1- indicates high certainty of time payment. Duff
2 indicates good certainty of timely payment: liquidity factors and company
fundamentals are sound.
THOMSON BANKWATCH, INC. ("BANKWATCH"). BankWatch will assign both
short-term debt ratings and issuer ratings to the issuers it rates. BankWatch
will assign a short-term ("TBW-1" "TBW-2," "TBW-3," or "TBW-4") to each class of
debt (e.g., commercial paper or non-convertible debt), having a maturity of
one-year or less, issued by a holding company structure or an entity within the
holding company structure that is rated by BankWatch. Additionally, BankWatch
will assign an issuer rating ("A" A/B," "B," "B/C," "C," "C/D" "D," "D/E," and
"E") to each issuer that it rates.
Certain NRSROs utilize rankings within rating categories indicated by a
+ or -. The Portfolios, in accordance with industry practice, recognize such
rankings with categories as graduations, viewing for example S&P's rating of
A-1+ and A-1 as being in S&P's highest rating category.
<PAGE> 33
Rating of Long-Term Corporate Debt Securities
- ----------------------------------------------
MOODY'S INVESTORS SERVICE, INC. Aaa-Best quality. These securities
carry the smallest degree if investment risk and are generally referred to as
"gilt edge." Interest payment are protected by a large, or by an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Aa-High quality by all
standards. They are rated lower than the best bond because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which made the long-term risks appear somewhat greater.
STANDARD & POOR'S CORPORATION. AAA-Highest grade. They possess the
ultimate degree of protection as to principal and interest. Marketwise, they
move with interest rates, and hence provide the maximum safety on all counts.
AA-High grade. Generally, these bonds differ from AAA issues only in a small
degree. Here, too, prices move with the long-term money market.
FITCH INVESTORS SERVICE, INC. AAA-High grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions, and liable to
but slight market fluctuation other than through changes in the money rate. The
prime feature of an "AAA" bond is the showing of earning several times or many
times interest requirements for such stability of applicable interest that
safety is beyond reasonable question whenever changes occur in conditions.
Other features may be considered, such as a wide margin of protection through
collateral, security or direct lien on specific property. Sinking funds or
voluntary reduction of debt by call or purchase are often factors, while
guarantee or assumption by parties other than the original debtor may influence
their rating. AA-Of safety virtually beyond question and readily salable. Their
merits are not greatly unlike those of "AAA" class but a bond so rated may be
junior though it has a strong lien, or the margin of safety may be less
strikingly broad. The issue may be the obligations of a small company, strongly
secured, but influenced as to rating by the lesser financial power of the
enterprise and more local type or market.
<PAGE> 34
INFORMATION ABOUT SECURITIES RATINGS OF CANADIAN
RATING ORGANIZATIONS
RATINGS OF LONG-TERM DEBT SECURITIES
CANADIAN BOND RATING SERVICE ("CBRS")
A++ - Highest Quality. This category encompasses bonds of outstanding quality.
They possess the highest degree of protection of principal and interest.
Companies with debt rated A++ are generally large national and/or multinational
corporations whose products or services are essential to the Canadian economy.
These companies are the acknowledged leaders in their respective industries and
have clearly demonstrated their ability to best withstand adverse economic or
trade conditions either national or international in scope. Characteristically,
these companies have had a long and credible history of superior debt
protection, in which the quality of their assets and earnings has been
constantly maintained or improved, with strong evidence that this will continue.
A+ - Very Good Quality. Bonds rated A+ are similar in characteristics to those
rated A++ and can also be considered superior in quality. These companies have
demonstrated a long and satisfactory history of growth and above-average
protection of principal and interest on their debt securities. These bonds are
generally rated lower in quality because the margin of assets or earnings
protection may not be as large or as stable as those rated A++. In both these
categories the nature and quality of the asset and earning coverages are more
important than numerical values of the ratios.
A - Good Quality. Bonds rated A are considered to be good quality securities
and to have favorable long-term investment characteristics. The main feature
that distinguishes them from the higher rated securities is that these
companies are more susceptible to adverse trade or economic conditions.
Consequently, the protection is lower than for the categories A++ and A+. In
all cases the A rated companies have maintained a history of adequate asset and
earnings protection. There may be certain elements that may impair this
protection sometime in the future. Confidence that the current overall
financial position will be maintained or improved is slightly lower than for
the securities rated above.
DOMINION BOND RATING SERVICE LIMITED ("DBRS")
AAA - highest credit quality. The degree of protection afforded principal and
interest is of the highest order. Earnings are relatively stable, the structure
of the industry in which the entity operates is very strong, and the outlook
for future profitability is extremely favorable. There are few qualifying
factors present which would detract from the performance of the entity, and the
strength of liquidity and coverage ratios is unquestioned.
AA - superior credit quality. Protection of interest and principal is considered
high. In many cases, they differ from bonds rated AAA to a small degree.
<PAGE> 35
A - upper medium grade credit quality. Protection of interest and principal is
still substantial, but the degree of strength is less than with AA rated
entities. Entities in the A category may be more susceptible to adverse
economic conditions and have greater cyclical tendencies.
Ratings of Short-Term Debt Securities
CBRS
A-1+ - Highest Quality. Corporate and government organizations with short-term
debt rated A-1+ are considered to be of outstanding credit quality. In general,
these organizations maintain a strong liquidity and capital position and have a
strong level of revenues/earnings/cash flow to meet all current and long-term
obligations. Characteristically, these organizations have a long and creditable
record of excellent performance. These organizations also have the ability to
maintain their performance over an extended period. Although these
organizations may experience a decline in revenues/earnings/cash flow during
recessionary periods, their ability to restore performance in subsequent
periods is very good. These organizations are generally well established and a
significant factor in their fields. Management has clearly demonstrated its
competence and reliability.
A-1 - Very Good Quality. Corporate and government organizations with short-term
debt rated A-1 are also very well established and have a creditable operating
history. However, their credit-risk profiles are not as strong as those
organizations in the A-1+ category. These organizations generally maintain very
good financial performance measurements throughout the economic cycle; however,
they are more vulnerable to economic and competitive conditions.
A-1 (Low) - Good Quality. Corporate and government organizations with
short-term debt rated A-1 (Low) have a creditable operating history. However,
their credit-risk profiles are not as strong as those organizations rated in
the A-1 or A-1+ category. These organizations generally maintain good financial
performance measurements throughout the economic cycle. However, they are more
vulnerable to economic and competitive conditions. Moreover, the level of debt
protection as measured by their access to capital, debt service coverage
ratios, and capital underpinning, is relatively lower.
DBRS
R-1 - high-grade prime credit. The entity's ability to repay its current
liabilities as they fall due is very high. The strength of the various liquidity
ratios is unquestioned, and alternative sources of funds to commercial paper
such as bank lines, ability to do long-term financing and a strong parent
exist. Furthermore, the outlook for future liquidity and the trend of these
ratios should be favorable. The level of profitability has been reasonable and
relatively stable, with only modest fluctuations. No substantial qualifying
negative factors exist, and the firm is of sufficient size to be a strong
influence in its industry.
2
<PAGE> 36
R-2 - medium grade credit. The liquidity ratios of entities in this
classification are not as strong as those in the R-1 category, and the past and
future trend may suggest some deterioration in the strength of these ratios.
Alternative sources of liquidity support are considered strong; however, even
the strongest liquidity support will not improve the commercial paper rating of
the issuer. The size of the entity may restrict its flexibility, and its
relative position in the industry is not as strong as an R-1. Profitability
trends, past and future, may be less favorable, earnings not as stable, and
there may be some negative qualifying factors present.
RATINGS OF GOVERNMENT-TERM DEBT SECURITIES
CBRS
AAA - Highest Quality. Debt securities rated AAA are considered to be of the
highest quality and have a history of excellent protection of both principal
and interest. The issuer has enjoyed excellent management with its debt load
well within its capacity to service debt even during periods of economic
decline.
AA - Very Good Quality. Issues rated AA are also considered to be of very good
quality and have recorded much of the same level of protection as those rated
AAA. However, the extent or margin of protection is slightly less than the
above category and there may be certain elements present which could cause a
decline in the quality.
A - Good Quality. Issues rated A are regarded as being good quality securities.
Management is also considered good and has recorded a history of providing good
protection and stewardship. However, there are weaknesses present which, under
adverse economic circumstances, would impair the issuer's ability to continue
to maintain a good level of protection for its debt.
NOTE: CBRS's Commercial Paper ratings refer to an issuer's commercial
paper, short-term promissory notes, short-term deposits, banker's
acceptances, letters of credit, treasury bills and/or other
short-term indebtedness with an original term of one year or less.
(High) and (Low) designations after a rating indicate an issuer's
relative strength within a rating category.
<PAGE> 37
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of International Currency Fund
We have audited the accompanying statements of assets and liabilities of each
series of International Currency Fund, comprised of the U.S. Dollar
Portfolio, Canadian Dollar Portfolio, Pound Sterling Portfolio and
Deutschemark Portfolio, (the "Portfolios"), as of January 20, 1997. These
financial statements are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits of the financial statements
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Portfolios enumerated
above as of January 20, 1997, in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
January 24, 1997
<PAGE> 38
INTERNATIONAL CURRENCY FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 20, 1997
<TABLE>
<CAPTION>
U.S. DOLLAR CANADIAN POUND STERLING DEUTSCHEMARK
PORTFOLIO DOLLAR PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------------- -------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Cash....................................................... $152,500 C$ 10 L 10 DM 10
Deferred organization costs (Note)......................... 75,000 100,000 45,000 121,000
-------- -------- ---------- ----------
TOTAL ASSETS............................................... 227,500 100,010 45,010 121,010
LIABILITIES
Payable to Manager (Note).................................. 75,000 100,000 45,000 121,000
-------- --------- ---------- ----------
NET ASSETS................................................. $152,500 C$ 10 L 10 DM 10
======== ========= ========== ==========
</TABLE>
NOTE:
The International Currency Fund (the "Portfolio Trust") is an open-end
Investment Company established as a "Delaware Business Trust" under a
Declaration of Trust dated August 13, 1996 and is registered under the
Investment Company Act of 1940, as amended. The U.S. Dollar Portfolio, Canadian
Dollar Portfolio, Pound Sterling Portfolio, and Deutschemark Portfolio (the
"Portfolios") are new series of the Portfolio Trust. The Declaration of Trust
permits the Trustees to issue redeemable, non-transferable interests in the
Portfolio Trust. For federal income tax purposes, the Portfolio Trust qualifies
as a partnership and each investor is treated as the owner of its proportionate
share of the net assets.
The Portfolios seek to invest in high quality, short-term instruments
denominated in the designated currency of the portfolio. Accordingly, the
Portfolios' statements of Assets and Liabilities are presented in their
functional currency as all related investment transactions are recorded in that
currency.
The deferred organization costs were incurred by the Portfolios in connection
with their organization. The Portfolios are expected to reimburse Rothschild
International Asset Management Limited (the "Manager"), for the payment of
these costs made in advance by the Manager. The costs have been deferred and
will be amortized on a straight-line basis over a five-year period beginning at
the commencement of operations of the Portfolios.
The cash is in a non-interest bearing account at the Portfolio's custodian bank
and will be held until the Portfolios become operational.
<PAGE> 39
PART C
------
To the Registration Statement of The International
Currency Fund (the "Trust")
Item 24. Financial Statements and Exhibits.
- -------- ----------------------------------
(a) Financial Statements:
(1) Financial Statements included in PART A of
this Registration Statement:
[None]
(2) Financial Statements included in PART B of
this Registration Statement:
Financial Statements for the U.S. Dollar
Portfolio, Pound Sterling Portfolio,
Deutschemark Portfolio and Canadian Dollar
Portfolio (collectively, the "Portfolios")
as of January 20, 1997.
Report of Independent Accountants
Statement of Assets and Liabilities
(b) Exhibits:
Exhibit No. Description
----------- -----------
1 Agreement and Declaration of Trust of the
Trust. Incorporated by reference to
Pre-Effective Amendment No. 1 to this
Registration Statement filed via EDGAR on
November 25, 1996.
2 By-Laws of the Trust. Incorporated by
reference to Pre-Effective Amendment No. 1
to this Registration Statement filed via
EDGAR on November 25, 1996.
3 Not Applicable.
4 Not applicable.
5 Investment Advisory Contract between
the International Currency Fund and
Rothschild International Asset Management
Limited.
6 Not applicable.
<PAGE> 40
Exhibit No. Description
----------- -----------
7 Not applicable.
8 Custody Agreement between the Trust and The
Chase Manhattan Bank.
9 (a) Administration Agreement between the
Trust and BISYS Fund Services Limited
Partnership.
(b) Fund Accounting Agreement between the
Trust and BISYS Fund Services, Inc.
10 Legal opinion and consent of Goodwin,
Procter & Hoar LLP with respect to the
Funds.
11 Consent of Coopers & Lybrand L.L. P. with
respect to the Funds.
12 Not applicable.
13 Purchase Agreement with respect to initial
capital.
14 Not applicable.
15 Not applicable.
16 Not applicable.
17 Financial Data Schedules for the Funds.
18 Not applicable.
19 Not applicable
Item 25. Persons Controlled by or Under Common Control with Trust.
- -------- ---------------------------------------------------------
As of the close of business on February 3, 1997 the U.S. Dollar Fund,
the Pound Sterling Fund, the Deutsche Mark Fund and the Canadian Dollar Fund
(the "Funds"), series of shares of Five Arrows Short-Term Investment Trust, an
investment company registered under the Investment Company act of 1940, owned
approximately 66% of the value of the outstanding interests in the corresponding
Portfolios of the Trust that invest in securities denominated in the Designated
Currencies of such Funds. In addition, as of the same date, Five Arrows Cash
Management PLC, an Irish umbrella company (the "Irish Company") consisting of
numerous classes of shares of beneficial interest categorized as sub-funds (the
"Irish Funds"), owned approximately 33% of the outstanding interests of the
Portfolios. Because each Fund and each Irish Fund controls its corresponding
Portfolio, it may take actions without the approval of any other investor in
such Portfolio.
Since, as of the approximate time of this Prospectus, Five Arrows House
Investments Limited, an affiliated person of the Investment Adviser, was the
beneficial owner of all or a substantial amount of the outstanding shares of the
Funds it may also be deemed to be in control of the Portfolios as control is
defined in the 1940 Act. Such owners may acquire additional shares of the Funds.
Although sales of the Funds' shares to other investors will reduce its
percentage ownership in the Funds and the Portfolios, so long as 25% of a class
of shares of either a Fund
<PAGE> 41
or a Portfolio is so owned, the owner will be presumed to be in control of such
class of shares for purposes of voting on certain matters submitted to a vote of
shareholders.
Item 26. Number of Holders of Securities.
- -------- --------------------------------
As of February 3, 1997, the record holders of each class of the
Trust's securities were as follows:
Title of Class Number of Record Holders
-------------- ------------------------
U.S. Dollar Portfolio 2
Pound Sterling Portfolio 2
Deutschemark Portfolio 2
Canadian Dollar Portfolio 2
Item 27. Indemnification.
- -------- ----------------
Under Article VIII of the Trust's Agreement and Declaration of
the Trust, any present or former Trustee, Officer, agent or employee or person
serving in such capacity with another entity at the request of the Trust
("Covered Person") shall be indemnified against all liabilities, including, but
not limited to, amounts paid in satisfaction of judgments, in compromises or as
fines or penalties, and expenses, including reasonable legal and accounting
fees, in connection with the defense or disposition of any proceeding by or in
the name of the Trust or any shareholder in his capacity as such if: (i) a
favorable final decision on the merits is made by a court or administrative
body; or (ii) a reasonable determination is made by a vote of the majority of a
quorum of disinterested Trustees or by independent legal counsel that the
Covered Person was not liable by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in his office
("Disabling Conduct"); or (iii) a determination is made to indemnify the Covered
Person under procedures approved by the Board of Trustees which in the opinion
of independent legal counsel are not inconsistent with the Investment Company
Act of 1940. Said Article VI further provides that the Trust shall indemnify any
Covered Person against any such liabilities and expenses incurred in connection
with the defense or disposition of any other type of proceeding except with
respect to any matter as to which the Covered Person shall have engaged in
Disabling Conduct or shall have been finally adjudicated not to have acted in
good faith and in the reasonable belief that such Covered Person's action was in
or not opposed to the best interests of the Trust.
Item 28. Business and Other Connections of Investment Adviser.
- -------- -----------------------------------------------------
Rothschild International Asset Management Limited (the
"Investment Adviser") is a registered investment adviser. The Investment
Adviser's offices are located at Five Arrows House, St. Swithin's Lane, London
EC4N 8NR England. The Investment Adviser is a British corporation that was
formed in 1975. It is an indirect subsidiary of Rothschild Concordia AG of Zug,
Switzerland, a holding company whose subsidiaries manage approximately $28.5
billion of assets, spread across equities, bonds and currencies. The Investment
Adviser offers a wide range of investment advisory services to both individuals
and institutions.
<PAGE> 42
The business and other connections of the officers and directors of
Rothschild International Asset Management Limited , the Investment Adviser to
all series of the Registrant, are listed on the Form ADV of the Investment
Adviser as currently on file with the Commission (File no. 801-15132), the text
of which is hereby incorporated by reference.
Item 29. Principal Underwriters.
- -------- -----------------------
(a) The shares of beneficial interest of the Trust are not publicly
offered and therefore the Trust does not utilize the services of a distributor
or principal underwriter.
(b) Not applicable
(c) Not applicable.
Item 30. Location of Accounts and Records.
- -------- ---------------------------------
The accounts and records of the Trust are maintained at the
offices of the Trust at 3435 Stelzer Road, Columbus, OH 43219-3035.
Item 31. Management Services.
- -------- --------------------
Not applicable.
Item 32. Undertakings.
- -------- -------------
(a) Not applicable.
(b) The Trust hereby undertakes to file a post-effective
amendment, using financial statements which do not have to be certified, within
four to six months from the effective date of the Trust's 1933 Act registration
statement.
(c) Trust hereby undertakes to furnish each person, upon
request and without charge, to whom a Prospectus with respect to a series of the
Trust is delivered with a copy of the latest annual report to shareholders with
respect to that series.
<PAGE> 43
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
registrant has duly caused this Pre-Effective Amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 3rd day of February, 1997.
INTERNATIONAL CURRENCY FUND
By: /s/ Peter B. Collacott
-----------------------------
Peter B. Collacott, President
<PAGE> 1
Exhibit 5
ADVISORY AGREEMENT
AGREEMENT made as of the 16th day of January, 1997 between Rothschild
International Asset Management Limited (the "Adviser"), and the International
Currency Fund, a Delaware business trust (the "Trust").
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust proposes to engage in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
in separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to initially offer shares in four series,
the U.S. Dollar Portfolio, the Deutschemark Portfolio, the Pound Sterling
Portfolio, and the Canadian Dollar Portfolio, such series (the "Initial
Portfolios"), together with all other series subsequently established by the
Trust with respect to which the Adviser renders investment advisory services
pursuant to the terms of this Agreement, being herein collectively referred to
as the "Portfolios" and individually as a "Portfolio".
NOW THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF ADVISER.
(a) INITIAL PORTFOLIOS. The Trust hereby appoints the Adviser
to act as investment adviser to the Initial Portfolios for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
(b) ADDITIONAL PORTFOLIOS. In the event that the Trust
establishes one or more series of shares other than the Initial Portfolios with
respect to which it desires to retain the Adviser to render management and
investment advisory services hereunder, it shall so notify the Adviser in
writing, indicating the advisory fee to be payable with respect to the
additional series of shares. If the Adviser is willing to render such services
on the terms provided for herein, it shall so notify the Trust in writing,
whereupon such series of shares shall become a Portfolio hereunder.
<PAGE> 2
(c) REGULATORY STATUS. The Adviser is regulated by the
Investment Management Regulatory Organisation Limited ("IMRO"), a
self-regulatory organization, in the conduct of its investment business. The
Adviser will provide services hereunder on the basis that the Trust is a
"Non-private customer" under the rules of IMRO.
2. DUTIES OF ADVISER.
The Adviser, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) INVESTMENT PROGRAM. The Adviser shall, subject to the
provisions of paragraph 11 hereof, (i) furnish continuously an investment
program for each Portfolio in compliance with that Portfolio's investment
objective and policies as set forth in the Trust's current Prospectus and
Statement of Additional Information, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) what investments
shall be purchased, held, sold or exchanged by each Portfolio and what portion
if any, of the assets of each Portfolio shall be held uninvested, and (iii) make
changes on behalf of the Trust in the investments of each Portfolio. The Adviser
shall also manage, supervise and conduct the other affairs and business of the
Trust and each Portfolio thereof and all matters incidental thereto, subject
always to the control of the Board of Trustees of the Trust and to the
provisions of the Trust's Agreement and Declaration of Trust and By-laws, as
amended, and the 1940 Act.
(b) INTERNAL REPORTS. The Adviser will advise the Trust's
custodian on a prompt basis of each purchase and sale of a portfolio security
specifying the name of the security purchased, the market price, commission and
gross or net price, trade date, settlement date and identity of the effecting
broker or dealer. From time to time as the Trustees of the Trust may reasonably
request, the Adviser will furnish or cause to be furnished to the Trust's
officers and to each of its Trustees reports on portfolio transactions and
reports on issues of securities held in the portfolio, all at such times (but
not less frequently than once every twelve months or such shorter period as may
from time to time be required by applicable law) and in such detail as the
Trustees may reasonably request. For the purpose of such reports, the value of
the securities held in the Portfolio will be calculated in accordance with the
procedures described in the applicable Prospectus and Statement of Additional
Information. The Adviser shall upon the request of the Trustees or the officers
of the Trust, supply or cause to be supplied reports which compare the
performance of the Portfolios with that of other mutual funds possessing similar
investment objectives and policies. The Adviser will also inform the Trust's
officers and Trustees promptly of changes in investment strategy or tactics and
may from time to time contact those persons in order to discuss the investments
of the Portfolios. The Adviser will make its officers and employees available to
meet with the Trust's officers and Trustees on due notice to review the
investments and investment program of a Portfolio in the light of current and
prospective economic and market conditions. Except as otherwise provided by
applicable law, the only restrictions on the amount of any one investment, or on
proportion of the Portfolios which any one investment or any particular kinds of
investment may contribute, are set forth in this
2
<PAGE> 3
Agreement and the applicable Prospectus and Statement of Additional Information,
or as otherwise established from time to time by the Trustees.
(c) REGULATORY REPORTS. The Adviser shall furnish to the
Trust necessary assistance in:
(i) the preparation of all reports now or hereafter
required by federal or other laws; and
(ii) the preparation of prospectuses, registration
statements and amendments thereto that may be required by federal or
other laws or by the rules or regulations of any duly authorized
commission or administrative body.
(d) SERVICES OF PERSONNEL. To the extent the Trust shall
compensate personnel, officers and Trustees of the Trust, the Adviser shall bear
the expense of compensating such persons who are also employees of the Adviser
or its affiliates.
(e) FIDELITY BOND. The Adviser shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized to do
business in the place where the bond is issued against larceny and embezzlement
covering each officer and employee of the Trust, the Adviser and/or any
sub-adviser who may singly or jointly with others have access to funds or
securities of the Trust, with direct or indirect authority to draw upon such
funds or to direct generally the disposition of such funds. The bond shall be in
such reasonable amount as a majority of the Trustees who are not "interested
persons" of the Trust, as defined in the 1940 Act, shall determine, with due
consideration to the aggregate assets of the Trust to which any such officer or
employee may have access. The premium, or portion thereof pursuant to an
agreement among the insured parties in the case of a joint insured bond, for the
bond shall be payable by the Trust in accordance with paragraph 3(17).
3. ALLOCATION OF EXPENSES.
Except for the services or facilities to be provided by the Adviser set
forth in Paragraph 2 above, the Trust assumes and shall pay all expenses for all
other Trust operations and activities and shall reimburse the Adviser for any
such expense incurred by the Adviser (it being understood that the Trust shall
allocate such expenses between or among its Portfolios to the extent
contemplated by its Master Trust Agreement). The expenses to be borne by the
Trust shall include, without limitation:
(1) all expenses of organizing the Trust or forming any
series thereof;
(2) all expenses (including information, materials and
services other than services of the Adviser) of preparing, printing and mailing
all annual, semiannual and periodic reports, proxy materials and other
communications (including registration statements, prospectuses
3
<PAGE> 4
and amendments and revisions thereto) furnished to existing shareholders of the
Trust and/or regulatory authorities;
(3) fees involved in registering and maintaining registration
of the Trust and its shares with the Securities and Exchange Commission and
state regulatory authorities;
(4) any other registration, filing or other fees in connection
with requirements of regulatory authorities;
(5) expenses, including the cost of printing of certificates
relating to the issuance of shares of the Trust;
(6) to the extent not paid by the Trust's distributor, the
expenses of maintaining a shareholder account and furnishing, or causing to be
furnished, to each shareholder a statement of his account, including the expense
of mailing such statements;
(7) taxes and fees payable by the Trust to federal, state or
other governmental agencies;
(8) expenses related to the redemption of its shares,
including expenses attributable to any program of periodic redemption;
(9) all issue and transfer taxes, brokers' commissions and
other costs chargeable to the Trust in connection with securities transactions
to which the Trust is a party, including any portion of such commissions
attributable to research and brokerage services as defined by Section 28(e) of
the Securities Exchange Act of 1934, as amended from time to time;
(10) the charges and expenses of the custodian appointed by
the Trust, or any depository utilized by such custodian, for the safekeeping of
its property;
(11) charges and expenses of any shareholder servicing agents,
transfer agents and registrars appointed by the Trust, including costs of
servicing shareholder investment accounts;
(12) charges and expenses of independent accountants retained
by the Trust;
(13) legal fees and expenses in connection with the affairs of
the Trust, including legal fees and expenses in connection with registering and
qualifying its shares with federal and state regulatory authorities;
(14) compensation of Trustees of the Trust who are not
"interested persons" of the Trust (as defined in the 1940 Act);
4
<PAGE> 5
(15) expenses of shareholders' and Trustees' meetings,
including, without limitation, reasonable out-of-pocket expenses incurred by
Trustees in connection with attendance at Trustees' meetings (regardless of
whether such Trustees are also employees of the Adviser or its affiliates or are
otherwise "interested persons" of the Trust);
(16) membership dues in, and assessments of, the Investment
Company Institute or similar organizations;
(17) insurance premiums on fidelity, errors and omissions and
other coverages;
(18) expenses incurred in connection with any distribution
plan adopted by the Trust in compliance with Rule 12b-1 of the 1940 Act; and
(19) such other non-recurring expenses of the Trust as may
arise, including, without limitation, expenses of actions, suits, or proceedings
to which the Trust is a party and the legal obligation which the Trust may have
to indemnify its Trustees or shareholders with respect thereto.
4. ADVISORY FEE.
For the services to be provided by the Adviser, the Trust shall pay to
the Adviser investment advisory fees as set forth in Appendix A hereto. The
Adviser may from time to time and for such periods as it deems appropriate
reduce its compensation hereunder to the extent the Adviser may, by notice to
the Trust, voluntarily declare.
5. EXPENSE LIMITATION.
The Adviser agrees that if the total expenses of any Portfolio
(exclusive of interest, taxes, brokerage expenses, distribution expenses,
extraordinary items and any other items allowed to be excluded by applicable
state law) for any fiscal year of the Trust exceed the lowest expense limitation
validly imposed in any jurisdiction in which that Portfolio is then making sales
of its shares or in which its shares are then qualified for sale, the Adviser
will pay or reimburse such Portfolio for that excess up to the amount of its
advisory fee payable with respect to that Portfolio during that fiscal year. The
amount of the monthly advisory fee payable under Paragraph 4 hereof shall be
reduced to the extent that the monthly expenses of that Portfolio, on an
annualized basis, would exceed the foregoing limitation. At the end of each
fiscal year of the Trust, if the aggregate annual expenses chargeable to any
Portfolio for that year exceed the foregoing limitation based upon the average
of the monthly average net asset value of that Portfolio for the year, the
Adviser will promptly reimburse that Portfolio for the amount of such excess to
the extent not already reimbursed by reduction of the monthly advisory fee, but
if such expenses are within the foregoing limitation, any excess amount
previously withheld from the advisory fee during that fiscal year will be
promptly paid over to the Adviser.
5
<PAGE> 6
In the event that this Agreement (i) is terminated with respect to any
one or more Portfolios as of a date other than the last day of the fiscal year
of the Trust or (ii) commences with respect to one or more Portfolios as of a
date other than the first day of the fiscal year of the Trust, then the expenses
of such Portfolio or Portfolios shall be annualized and the Adviser shall pay
to, or receive from, the applicable Portfolio or Portfolios a pro rata portion
of the amount that the Adviser would have been required to pay or would have
received, if any, had this Agreement remained in effect with respect to such
Portfolio or Portfolios for the full fiscal year.
6. PORTFOLIO TRANSACTIONS.
In connection with the management of the investment and reinvestment of
the assets of the Trust, the Adviser, acting by its own officers, directors or
employees or by a duly authorized subcontractor, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Trust. In executing portfolio transactions and selecting brokers or dealers, if
any, the Adviser will use its best efforts to seek on behalf of a Portfolio the
best overall terms available. In assessing the best overall terms available for
any transaction, the Adviser shall consider all factors it deems relevant,
including the breadth of the market in and the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best overall terms available, and in
selecting the broker or dealer, if any, to execute a particular transaction, the
Adviser may also consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
any Portfolio of the Trust and/or other accounts over which the Adviser or an
affiliate of the Adviser exercises investment discretion. With the prior
approval of the Trustees, the Adviser may pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only if, the
Adviser determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided. Such prior
approval may be obtained from the Trustees with respect to the Adviser's
investment program and need not be obtained on a transaction-by-transaction
basis. In the event that the Adviser wishes to enter into an arrangement with
any person pursuant to which it undertakes to place business with such person or
any of its associates or any other person at such person's discretion in return
for brokerage or research services provided by such person to the Adviser, or
enters into any other Soft Commission Arrangement as defined by IMRO Rules as in
effect from time to time, the Sub-Adviser will identify to the Trust in writing
each such broker-dealer, or other person and the nature of such services and
will obtain the consent of the Trust to the placing of business with such
broker/dealer. The Adviser will not, without the Trust's prior consent, invest
on behalf of any Portfolio in securities of which an issue or offer for sale was
underwritten, managed or arranged by the Adviser during the preceding twelve
months.
7. FURTHER INFORMATION CONCERNING ADVISORY SERVICES
6
<PAGE> 7
(a) The services provided by the Adviser may relate to investments or
assets denominated in various currencies. The Adviser and the Trust recognize
that movements of currency exchange rates may have an effect, favorable or
unfavorable, on the gain or loss otherwise experienced with respect to the
investments or assets of the Portfolios.
(b) In accordance with the provisions of the Investment Company Act of
1940, the Adviser may from time to time cause the Portfolios' assets to be held
in bank accounts outside the U.S. and the U.K. However, the Adviser will not
itself hold money or assets on behalf of the Portfolio.
(c) The Adviser may commit the Trust to a contract the performance of
which may require it to supplement the assets of the Portfolios, and may commit
the Trust to supplement the assets of the Portfolios by borrowing on their
behalf, but only the extent permitted under the terms of the Trust's
registration statement then in effect with the Securities and Exchange
Commission.
8. RELATIONS WITH TRUST.
(a) Subject to and in accordance with the Master Trust Agreement and
By-laws of the Trust and the Memorandum and Articles of Association of the
Adviser, it is understood that Trustees, officers, agents and shareholders of
the Trust are or may be interested in the Adviser (or any successor thereof) as
directors, officers, or otherwise, that directors, officers, agents and
shareholders of the Adviser (or any successor) are or may be interested in the
Trust as Trustees, officers, shareholders or otherwise, that the Adviser (or any
such successor thereof) is or may be interested in the Trust as a shareholder or
otherwise and that the effect of any such adverse interests shall be governed by
said Agreement and Declaration of Trust, Articles of Organization and By-laws.
(b) CONFLICTS OF INTEREST. To the extent permissible under the 1940 Act
or any other applicable law, the Adviser may, without prior reference to the
Trust, effect any transaction in investments in which it or any affiliated
person has or will have:
(i) bought the investment from or sold the investment to the Trust
when acting as principal (in the case of the Adviser only for
currency transactions or in respect of transactions effected
for the purpose of realizing capital gains of a particular
amount within a specific tax year); or
(ii) acted in the same transaction as both an agent for the Trust
and also as an agent for any other person, which may be a
customer of the Adviser or of an affiliated person;
(iii) directly or indirectly a material interest of any description,
or has or will have a relationship of any description with
another person such as to place it in a position where its
duty to or interest in relation to that other person conflicts
or may
7
<PAGE> 8
conflict with its duty to the Trust. For example, such
potential conflicting interests or duties may arise because:
(aa) the Adviser or an affiliated person undertakes
investment business for other customer;
(bb) any of the Adviser's directors or employees, or those
of an affiliated person, is a director of, holds or
deals in securities of, or is otherwise interested in
any company whose securities are held or dealt in on
behalf of the Trust;
(cc) the transaction is in securities issued by an
affiliated person or by a customer of the Adviser or
an affiliated person;
(dd) the Adviser and/or the Custodian(s) may, acting as
principal, sell to or purchase from the Trust
currency;
(ee) the transaction is in securities underwritten or
sub-underwritten by the Adviser or an affiliated
person in the previous twelve months;
(ff) the transaction is in units or shares of any company
of which the Adviser or any affiliated person is the
manager, operator, banker, adviser or trustee;
(gg) the Adviser or an affiliated person may receive
remuneration or other benefits by reason of acting in
corporate finance or similar transactions involving
companies whose securities held by the Trust; and
(hh) the transaction is in securities in respect of which
the Adviser or an affiliated person, or a director or
employee of an affiliated person, or a director or
employee of an affiliated person, is
contemporaneously trading or has traded on its own
account or has either a long or short position.
9. LIABILITY OF ADVISER.
Neither the Adviser nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or its shareholders in
connection with the matters to which this Agreement relates; provided that no
provision of this Agreement shall be deemed to protect the Adviser against any
liability to the Trust or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of its duties of its obligations and duties under this
Agreement. Nor shall any provision hereof be deemed to protect any Trustee or
officer of the Trust against any such liability to which he might otherwise be
subject
8
<PAGE> 9
by reason of any willful misfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his obligations and
duties.
10. LIABILITY OF THE TRUST AND THE PORTFOLIOS
The term "The International Currency Fund" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the
International Currency Fund, a Delaware business trust, as the same may be
amended from time to time. It is expressly agreed that the obligations of the
International Currency Fund hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the
International Currency Fund personally, but shall bind only the trust property
of the International Currency Fund, as provided in the Master Trust Agreement.
The execution and delivery of this Agreement have been authorized by the
Trustees and signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Master Trust Agreement.
With respect to any obligation of the International Currency Fund on
behalf of any Portfolio arising hereunder, the Adviser shall look for payment or
satisfaction of such obligations solely to the assets and property of the
Portfolio to which such obligation relates as though the International Currency
Fund had separately contracted with the Adviser by separate written instrument
with respect to each Portfolio. In addition, this Agreement may be terminated
with respect to one or more Portfolios without affecting the rights, duties or
obligations of any of the other Portfolios.
11. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective with
respect to the Initial Portfolio on the date hereof and, with respect to any
additional Portfolio, on the date of receipt by the Trust of notice from the
Adviser in accordance with paragraph 1(b) hereof that the Adviser is willing to
serve as Adviser with respect to such Portfolio. Unless terminated as herein pro
vided, this Agreement shall remain in full force and effect for two years from
the date hereof with respect to the Initial Portfolios and, with respect to each
additional Portfolio, for two years from the date on which such Portfolio
becomes a Portfolio hereunder. Subsequent to such initial periods of
effectiveness, this Agreement shall continue in full force and effect for
periods of one year thereafter with respect to each Portfolio so long as such
continuance with respect to such Portfolio is approved at least annually (a) by
either the Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 1940 Act) of such Portfolio, and (b), in
either event, by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
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<PAGE> 10
(b) AMENDMENT. Any amendment to this Agreement shall become
effective with respect to a Portfolio upon approval of the Adviser and a
majority of the outstanding voting securities (as defined in the 1940 Act) of
that Portfolio.
(c) TERMINATION. This Agreement may be terminated with respect
to any Portfolio at any time, without payment of any penalty, by vote of the
Trustees or by vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of that Portfolio, or by the Adviser, in each case on
sixty (60) days' prior written notice to the other party. Any termination of
this Agreement will be without prejudice to the completion of transactions
already initiated by the Adviser on behalf of the Trust at the time of such
termination. The Adviser shall take all steps reasonably necessary after such
termination to complete any such transactions and is hereby authorization to
take such steps.
(d) AUTOMATIC TERMINATION. This Agreement shall automatically
and immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) APPROVAL, AMENDMENT OR TERMINATION BY INDIVIDUAL
PORTFOLIO. Any approval, amendment or termination of this Agreement by the
holders of a majority of the outstanding voting securities (as defined in the
1940 Act) of any Portfolio shall be effective to continue, amend or terminate
this Agreement with respect to any such Portfolio notwithstanding (i) that such
action has not been approved by the holders of a majority of the outstanding
voting securities of any other Portfolio affected thereby, and (ii) that such
action has not been approved by the vote of a majority of the outstanding voting
securities of the Trust, unless such action shall be required by any applicable
law or otherwise.
12. SERVICES NOT EXCLUSIVE.
The services of the Adviser to the Trust hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
13. MISCELLANEOUS.
(a) NOTICE. Any notice under this Agreement shall be in
writing, addressed and delivered or mailed, postage prepaid, to the other party
at such address as such other party may designate in writing for the receipt of
such notices.
(b) SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
(c) APPLICABLE LAW. This Agreement shall be construed in
accordance with and governed by the laws of England.
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<PAGE> 11
(d) IMRO. The Adviser has in operation a written procedure in
accordance with the IMRO Rules for the effective consideration and proper
handling of complaints from customers. Any complaint by the Trust under this
Mandate should be sent in writing and addressed to the Compliance Officer. The
Trust also has the right to complain to the Investment Ombudsman. The Trust may
request a statement describing the Trust's rights to compensation in the event
of the Adviser inability to meet any liabilities to the Trust.
[Remainder of the page intentionally left blank.]
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
ATTEST: INTERNATIONAL CURRENCY FUND
By: /s/ Paul R. Freeman By: /s/ Peter B. Collacott
------------------------------- ---------------------------------
Senior Vice President President
ATTEST: ROTHSCHILD INTERNATIONAL ASSET
MANAGEMENT LIMITED
By: /s/ Sandy MacPhee By: /s/ Peter Troughton
------------------------------- ----------------------------------
Secretary Chairman
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<PAGE> 13
APPENDIX A
FEE SCHEDULE
------------
For the services to be provided by the Adviser hereunder, the Trust agrees
that each Initial Portfolio shall pay to the Manager a monthly fee as soon as
practical after the last day of each calendar month, which fee shall be paid at
a rate equal to twenty one hundredths of one percent (.20%) on an annual basis
of the average daily net asset value of such Portfolio for such calendar month,
commencing as of the date on which this Agreement becomes effective with respect
to such Portfolio.
In case of commencement or termination of this Agreement with respect to
any Portfolio during any calendar month, the fee with respect to such Portfolio
for that month shall be reduced proportionately based upon the number of
calendar days during which this agreement is in effect with respect to such
Portfolio, and the fee shall be computed based upon the average daily net asset
value of such Portfolio during such period.
317406.c4
13
<PAGE> 1
File "348524" Exhibit 8
[CHASE LOGO]
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective January 16, 1997, and is between THE CHASE
MANHATTAN BANK ("Bank") and THE INTERNATIONAL CURRENCY FUND ("Customer").
1. CUSTOMER ACCOUNTS.
Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of Customer ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same or evidencing or representing any other rights or
interests therein and other similar property whether certificated or
uncertificated as may be received by Bank or its Subcustodian (as defined in
Section 3) for the account of Customer ("Securities"); and
(b) A deposit account in the name of Customer ("Deposit Account") for
any and all cash in any currency received by Bank or its Subcustodian for the
account of Customer, which cash shall not be subject to withdrawal by draft or
check.
Customer warrants its authority to: 1) deposit the cash and Securities
("Assets") received in the Accounts and 2) give Instructions (as defined in
Section 11) concerning the Accounts. Bank may deliver securities of the same
class in place of those deposited in the Custody Account.
Upon written agreement between Bank and Customer, additional Accounts
may be established and separately accounted for as additional Accounts
hereunder.
2. MAINTENANCE OF SECURITIES AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to
Bank:
(a) Securities shall be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash shall be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
<PAGE> 2
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and Bank can comply with such
Instructions, Bank is authorized to maintain cash balances on deposit for
Customer with itself or one of its "Affiliates" at such reasonable rates of
interest as may from time to time be paid on such accounts, or in non-interest
bearing accounts as Customer may direct, if acceptable to Bank. (For purposes
hereof, the term "Affiliate" shall mean an entity controlling, controlled by, or
under common control with, Bank)
If Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by Bank and Customer.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
Bank may act hereunder through the subcustodians listed in Schedule A
hereof with which Bank has entered into subcustodial agreements
("Subcustodians"). Customer authorizes Bank to hold Assets in the Accounts in
accounts which Bank has established with one or more of its branches or
Subcustodians. Bank and Subcustodians are authorized to hold any of the
Securities in their account with any securities depository in which they
participate.
Bank reserves the right to add new, replace or remove Subcustodians.
Customer shall be given reasonable notice by Bank of any amendment to Schedule
A. Upon request by Customer, Bank shall identify the name, address and principal
place of business of any Subcustodian of Customer's Assets and the name and
address of the governmental agency or other regulatory authority that supervises
or regulates such Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) Bank shall identify the Assets on its books as belonging to
Customer.
(b) A Subcustodian shall hold such Assets together with assets belonging
to other customers of Bank in accounts identified on such Subcustodian's books
as custody accounts for the exclusive benefit of customers of Bank.
(c) Any Assets in the Accounts held by a Subcustodian shall be subject
only to the instructions of Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian shall be subject only to
the instructions of such Subcustodian.
(d) Any agreement Bank enters into with a Subcustodian for holding its
customer's assets shall provide that such assets shall not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets shall be freely transferable without the payment of
money or value other than for safe custody or administration. Where Securities
are deposited by a Subcustodian with a securities depository, Bank shall cause
the Subcustodian to identify on its books as belonging to Bank, as agent, the
Securities shown on the Subcustodian's account on the books of such securities
depository. The foregoing shall not apply to the extent of any special agreement
or arrangement made by Customer with any particular Subcustodian.
(e) As long as Securities and Exchange Commission Rule 17f-5 or the 1981
Chase SEC Order requires the Board of Directors/Trustees of a registered
investment company directly to approve its foreign custody arrangements, the
Bank shall furnish annually to the Customer information concerning Subcustodians
similar in kind and scope as that furnished to the Customer in connection with
the initial approval hereof. The Bank
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<PAGE> 3
shall timely advise the Customer of any material adverse change in the facts or
circumstances upon which such information is based where such changes would
affect the eligibility of the Subcustodian under Rule 17f-5 as soon as
practicable after it becomes aware of any such material adverse change in the
normal course of its custodial activities.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) Bank or its Subcustodians shall make payments from the Deposit
Account upon receipt of Instructions which include all information required by
Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, Bank, in its discretion, may
advance Customer such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by Bank on similar
loans (or as otherwise agreed in writing by Customer and Bank) from the date of
the advance to the date of payment (both after as well a before judgment) and
otherwise on the terms on which Bank makes similar overdrafts available from
time to time.
(c) If Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due ("AutoCredit"),
Customer shall promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary course
of business or (ii) that such amount was incorrectly credited. If Customer does
not promptly return any amount upon such notification, Bank shall be entitled,
upon oral or written notification to Customer, to reverse such credit by
debiting the Deposit Account for the amount previously credited. Bank or its
Subcustodian shall have no duty or obligation to institute legal proceedings,
file a claim or a proof of claim in any insolvency proceeding or take any other
action with respect to the collection of such amount, but may act for Customer
upon Instructions after consultation with Customer.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Securities shall be transferred, exchanged or delivered by Bank or
its Subcustodian upon receipt by Bank of Instructions which include all
information required by Bank. Settlement and payment for Securities received
for, and delivery of Securities out of, the Custody Account shall, where
reasonably feasible, be made in such manner as set forth in Instructions from
Customer, it being understood, however, that settlement and payment shall be
made in accordance with customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Securities to a purchaser, dealer or their agents against a receipt with the
expectation of receiving later payment and free delivery. Chase shall promptly
advise Customer in writing (which advice may consist of applicable market
reports) as to those markets, in which securities are held as of the date
hereof, where it is local market practice to release and deliver securities
prior to the receipt of payment therefor and Chase shall provide information as
to additional such markets after Chase first has knowledge that Securities are
being purchased therein by Customer. Delivery of Securities out of the Custody
Account may also be made in any manner specifically required by Instructions
reasonably acceptable to Bank.
(b) Bank, in its discretion, may effect the following book-entries with
respect to the settlement of trades:
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<PAGE> 4
(i) On sales: on the contractual settlement due for the sale,
credit the Cash Account with the sale proceeds of the sale and transfer
the relevant Securities to an account pending settlement of the trade if
not already delivered.
(ii) On purchases: on or before the contractual settlement date
for the purchase, debit the Cash Account with the settlement monies and
credit a separate account. At the same time Bank will post the
Securities Accounts with the expected Securities with a note to the
effect that Bank is awaiting receipt, pending actual receipt of such
Securities. The Customer shall not be entitled to the delivery of
settlement monies in respect of Securities which are awaiting receipt
until they have actually been received by Bank or a Subcustodian.
(c) Bank may (in its absolute discretion) reverse any debit or credit
made pursuant to subparagraph (b). Customer shall be responsible for any direct
or indirect costs or liabilities resulting from such reversal, unless due to the
negligence, fraud or willful default of Bank, and will indemnify Bank
accordingly. Customer acknowledges that the procedures described in this
sub-clause are of an administrative nature and do not amount to an agreement by
Bank to make loans and/or Securities available to Customer.
(d) Unless the Cash Account is debited or credited (as the case
may be) on the contractual settlement date as referred to in
subparagraph (b), Bank shall credit the Cash Account with the proceeds
of any sale or exchanges of Securities and debit the Cash Account for
the cost of the Securities purchased or acquired only on the date cash
or Securities are actually received by Bank and reconciled to the
Account.
7. ACTIONS OF BANK.
Bank shall follow Instructions received regarding assets held in the
Accounts. However, until it receives Instructions to the contrary, Bank will:
(i) Present for payment any Securities which are called, redeemed
or retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, to the extent that Bank
or Subcustodian is actually aware of such opportunities.
(ii) Execute in the name of Customer such ownership and other
certificates as may be required to obtain payments in respect of
Securities.
(iii) Exchange interim receipts or temporary Securities for
definitive Securities.
(iv) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, Affiliates of Bank or any
Subcustodian.
(v) Issue statements to Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
Bank shall send Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets. [Unless the
Customer sends the Bank a written exception or objection to any Bank statement
within 60 days after its next annual audit covering any period included in the
statement, the Customer shall be deemed to have approved such statement;
provided that, if such written exception or objection is received by Chase more
than 90 days from the statement, advice or notification date, Chase's obligation
to Customer in regard to any transactions covered
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<PAGE> 5
thereby shall be reduced to the extent that Chase's ability to mitigate any
damages in connection with any such transaction is compromised.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of
Customer. Bank shall have no liability for any loss occasioned by delay in the
actual receipt of notice by Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which Bank has agreed to take any action hereunder. With respect to
income on Securities which are not subject to AutoCredit, Bank shall advise
Customer of failure to receive such income in the ordinary course of business,
but a failure to provide sufficient notice shall not render Bank liable for such
amount except to the extent the failure directly results in Customer's inability
to recover such income.
8. CORPORATE ACTIONS; PROXIES; TAX RECLAIMS.
(a) CORPORATE ACTIONS. Whenever Bank receives information concerning the
Securities which requires discretionary action by the beneficial owner of the
Securities (other than a proxy), such as subscription rights, bonus issues,
stock repurchase plans and rights offerings, or legal notices or other material
intended to be transmitted to securities holders ("Corporate Actions"), Bank
shall give Customer notice of such Corporate Actions to the extent that Bank's
central corporate actions department has actual knowledge of a Corporate Action
in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, Bank shall endeavor to obtain
Instructions from Customer or its Authorized Person, but if Instructions are not
received in time for Bank to take timely action, or actual notice of such
Corporate Action was received too late to seek Instructions, Bank is authorized
to sell such rights entitlement or fractional interest and to credit the Deposit
Account with the proceeds or take any other action it deems, , to be appropriate
in which case it shall be held harmless for any such action taken in good faith
and without negligence.
(b) PROXY VOTING. Bank shall provide proxy voting services, if elected
by Customer, in accordance with the terms of the proxy voting services rider
hereto. Proxy voting services may be provided by Bank or, in whole or in part,
by one or more third parties appointed by Bank (which may be Affiliates of
Bank).
(c) TAX RECLAIMS.
(i) Subject to the provisions hereof, Bank shall apply for a
reduction of withholding tax and any refund of any tax paid or tax
credits which apply in each applicable market in respect of income
payments on Securities for the benefit of Customer which Bank believes
may be available to such Customer.
(ii) The provision of tax reclaim services by Bank is conditional
upon Bank receiving from the beneficial owner of Securities (A) a
declaration of its identity and place of residence and (B) certain other
documentation (PRO FORMA copies of which are available from Bank).
Customer acknowledges that, if Bank does not receive such declarations,
documentation and information, additional United Kingdom taxation shall
be deducted from all income received in respect of Securities issued
outside the United Kingdom and that U.S. non-resident alien tax or U.S.
backup withholding tax shall be deducted from U.S.
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<PAGE> 6
source income. Customer shall provide to Bank such documentation and
information as it may require in connection with taxation, and warrants
that, when given, this information shall be true and correct in every
material respect, not misleading in any way, and contain all material
information. Customer undertakes to notify Bank immediately if any such
information requires updating or amendment.
(iii) Bank shall not be liable to Customer or any third party for
any tax, fines or penalties payable by Bank or Customer, and shall be
indemnified accordingly, whether these result from the inaccurate
completion of documents by Customer or any third party, or as a result
of the provision to Bank or any third party of inaccurate or misleading
information or the withholding of material information by Customer or
any other third party, or as a result of any delay of any revenue
authority or any other matter beyond the control of Bank.
(iv) Customer confirms that Bank is authorized to deduct from any
cash received or credited to the Deposit Account any taxes or levies
required by any revenue or governmental authority for whatever reason in
respect of the Securities or Cash Accounts.
(v) Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to
Customer from time to time and Bank may, by notification in writing, at
its absolute discretion, supplement or amend the markets in which the
tax reclaim services are offered. Other than as expressly provided in
this sub-clause, Bank shall have no responsibility with regard to
Customer's tax position or status in any jurisdiction, it being
understood that Bank shall use reasonable care to assure that, in
performing its services, such performance does not, in and of itself,
cause Customer to become resident for tax purposes in any jurisdiction.
(vi) Customer confirms that Bank is authorized to disclose any
information requested by any revenue authority or any governmental body
in relation to Customer or the Securities and/or Cash held for Customer.
(vii) Tax reclaim services may be provided by Bank or, in whole
or in part, by one or more third parties appointed by Bank (which may be
Affiliates of Bank); provided that Bank shall be liable for the
performance of any such third party to the same extent as Bank would
have been if it performed such services itself.
9. NOMINEES.
Securities which are ordinarily held in registered form may be
registered in a nominee name of Bank, Subcustodian or securities depository, as
the case may be. Bank may without notice to Customer cause any such Securities
to cease to be registered in the name of any such nominee and to be registered
in the name of Customer. In the event that any Securities registered in a
nominee name are called for partial redemption by the issuer, Bank may allot the
called portion to the respective beneficial holders of such class of security in
any manner Bank deems to be fair and equitable. Customer shall hold Bank,
Subcustodians, and their respective nominees harmless from any liability arising
directly or indirectly from their status as a mere record holder of Securities
in the Custody Account.
10. AUTHORIZED PERSONS.
As used herein, the term "Authorized Person" means employees or agents
including investment managers as have been designated by written notice from
Customer or its designated agent to act on behalf of Customer
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hereunder. Such persons shall continue to be Authorized Persons until such time
as Bank receives Instructions from Customer or its designated agent that any
such employee or agent is no longer an Authorized Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by Bank, via telephone, telex, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to Bank which Bank believes in good faith and in the absence of
negligence to have been given by Authorized Persons or which are transmitted
with proper testing or authentication pursuant to terms and conditions which
Bank may specify. Unless otherwise expressly provided, all Instructions shall
continue in full force and effect until canceled or superseded.
Any Instructions delivered to Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but Customer shall hold Bank
harmless for the failure of an Authorized Person to send such confirmation in
writing, the failure of such confirmation to conform to the telephone
instructions received or Bank's failure to produce such confirmation at any
subsequent time. Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which Bank shall make available
to Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) Bank shall be responsible for the performance of only such duties as
are set forth herein or expressly contained in Instructions which are consistent
with the provisions hereof as follows:
(i) Bank shall use reasonable care with respect to its
obligations hereunder and the safekeeping of Assets. Bank shall be
liable to Customer for any loss which shall occur as the result of the
failure of a Subcustodian to exercise reasonable care with respect to
the safekeeping of such Assets to the same extent that Bank would be
liable to Customer if Bank were holding such Assets in New York. In the
event of any loss to Customer by reason of the failure of Bank or its
Subcustodian to utilize reasonable care, Bank shall be liable to
Customer only to the extent of Customer's direct damages, to be
determined based on the market value of the property which is the
subject of the loss at the date of notification of such loss to Customer
and without reference to any special conditions or circumstances.
Alternatively, Customer may, at its election and its sole expense, be
subrogated to the rights of Bank in respect of any Subcustodian in
connection with such a loss. Bank shall have no liability whatsoever for
any consequential, special, indirect or speculative loss or damages
(including, but not limited to, lost profits) suffered by Customer in
connection with the transactions contemplated hereby and the
relationship established hereby even if Bank has been advised as to the
possibility of the same and regardless of the form of the action. As
long as Bank shall have been in compliance with its obligations pursuant
to Section 4(e) hereof, Bank shall not be responsible for the insolvency
of any Subcustodian which is not a branch or Affiliate of Bank
(ii) Bank shall not be responsible for any act, omission, default
or the solvency of any broker or agent which it or a Subcustodian
appoints unless such appointment was made negligently or in bad faith;
it being understood that the appointees covered by this section shall be
limited to those performing ministerial functions such as the sale of
fractional shares and the provision of pricing information.
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(iii) Bank shall be indemnified by, and without liability to
Customer for any action taken or omitted by Bank whether pursuant to
Instructions or otherwise within the scope hereof if such act or
omission was in good faith, without negligence and in compliance
herewith. In performing its obligations hereunder, Bank may rely on the
genuineness of any document which it believes in good faith to have been
validly executed.
(iv) Customer agrees to pay for and hold Bank harmless from any
liability or loss resulting from the imposition or assessment of any
taxes or other governmental charges, and any related expenses with
respect to income from or Assets in the Accounts.
(v) Bank shall be entitled to rely, and may act, upon the advice
of counsel (who may be counsel for Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice.
(vi) Bank need not maintain any insurance for the benefit of
Customer.
(vii) Without limiting the foregoing, Bank shall not be liable
for any loss which results from: 1) the general risk of investing, or 2)
investing or holding Assets in a particular country including, but not
limited to, losses resulting from malfunction, interruption of or error
in the transmission of information caused by any machines or system or
interruption of communication facilities not within the control of Bank
or its Subcustodians, nationalization, expropriation or other
governmental actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and market
conditions which prevent the orderly execution of securities
transactions or affect the value of Assets.
(viii) Neither party shall be liable to the other for any loss
due to forces beyond their control including, but not limited to strikes
or work stoppages, acts of war (whether declared or undeclared) or
terrorism, insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God; provided that in the event of the occurrence
of any of the foregoing events, the affected party shall, where
feasible, take such steps as are reasonable to restore service in a
reasonable time, but shall not be obligated thereby to settle any strike
or resolve any work stoppage.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to Customer or
an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) advise Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other than
as provided in Section 5(c) and the last paragraph of Section 7 hereof;
(iv) evaluate or report to Customer or an Authorized Person
regarding the financial condition of any broker, agent (other than a
Subcustodian) or other party to which Securities are delivered or
payments are made pursuant hereto, provided, however, that Bank shall
exercise reasonable care when appointing any broker, agent or other
party in its discretion ; and
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(v) review or reconcile trade confirmations received from
brokers. Customer or its Authorized Persons (as defined in Section 10)
issuing Instructions shall bear any responsibility to review such
confirmations against Instructions issued to and statements issued by
Bank.
(c) Customer authorizes Bank to act hereunder notwithstanding that Bank
or any of its divisions or Affiliates may have a material interest in a
transaction, or circumstances are such that Bank may have a potential conflict
of duty or interest including the fact that Bank or any of its Affiliates may
provide brokerage services to other customers, act as financial advisor to the
issuer of Securities, act as a lender to the issuer of Securities, act in the
same transaction as agent for more than one customer, have a material interest
in the issue of Securities, or earn profits from any of the activities listed
herein.
13. FEES AND EXPENSES.
Customer agrees to pay Bank for its services hereunder the fees set
forth in Schedule B hereto or such other amounts as may be agreed upon in
writing, together with Bank's reasonable out-of-pocket expenses, including, but
not limited to, the reasonable fees and disbursements of Bank's legal advisers
in relation to the amendment or modification of any documentation in relation to
the Customer. Bank shall have a lien on and is authorized to charge any Accounts
of Customer for any amount owing to Bank under any provision hereof (other than
pursuant to the indemnity section); provided that, Bank's security interest in a
particular Security shall terminate at the time Customer pays Bank the
settlement amount for such Security in immediately available funds. Bank shall
give Customer prompt subsequent advice of any charge against Cash made hereunder
and not less than two days' prior notice of the liquidation or other disposition
of any Securities subject to lien in connection with satisfaction of any amount
owing to Bank.
14. MISCELLANEOUS.
(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration of
Customer's trading and investment activity, Bank is authorized to enter into
spot or forward foreign exchange contracts with Customer or an Authorized Person
for Customer and may also provide foreign exchange through its subsidiaries,
Affiliates or Subcustodians. Instructions, including standing instructions, may
be issued with respect to such contracts but Bank may establish rules or
limitations concerning any foreign exchange facility made available. Except
where the parties have otherwise negotiated different terms and conditions, in
all cases where Bank, its subsidiaries, Affiliates or Subcustodians enter into a
foreign exchange contract related to Accounts, the terms and conditions of such
entity's foreign exchange contract and, to the extent not inconsistent, this
Agreement shall apply to such transaction.
(b) CERTIFICATION OF RESIDENCY, ETC. Customer certifies that it is
(i) not a United States citizen or resident and agrees to notify
the Bank of any changes in citizenship or residence. The Bank may
rely upon this certification or the certification of such other
facts as may be required to administer the Bank's obligations under
this Agreement. The Customer will indemnify the Bank against all
losses, liability, claims or demands arising directly or indirectly
from any such certifications, except to the extent attributable to
the Bank's failure to exercise reasonable care.
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(ii) In addition to the rights and obligations specified in the
Custody Agreement, the Bank shall have the following additional
rights and obligations:
(A) The Bank shall execute such ownership and other
certificates and affidavits as may be required by the Customer
from time to time for all federal and state tax purposes in
connection with investments of the Customer and shall make
such applications and reports as may be reasonably requested
by the Customer from time to time to all competent authorities
in order to permit the Customer to apply for and secure any
tax or other privileges and benefits to which the Customer is
or may be entitled in connection with such investments and the
Customer shall execute and provide on a timely basis to the
Bank such documents as may be required or appropriate for tax
purposes; the Bank, however, shall be required to prepare only
such reports and applications that require information
relating to the Bank's duties and obligations herein, and the
Bank shall not be responsible for preparation of any tax
return or tax analysis.
(B) In the event that the Bank (i) in its reasonable
judgment determines that it is necessary to withhold amounts
from any income deposited in the Custody Account or Deposit
Account in respect of United States withholding taxes
(including interest and penalties, if any) which may be or
become due and payable by the Bank on income generated by any
investment, and (ii) has not received satisfactory evidence
that such amounts have already been paid, the Bank may in its
sole discretion, upon notice to the Customer, withhold and
remit to the U.S. Internal Revenue Service such amounts.
(C) The Bank shall have no responsibility or liability for
any obligation now or hereafter imposed on the Customer or the
Bank as custodian of the Customer's assets by the tax law of
any state or political subdivision, it being understood,
however, that Bank shall use reasonable care to assure that,
in performing its services, such performance does not, in and
of itself, cause Customer to become resident for tax purposes
in any jurisdiction.. The Bank shall be kept indemnified by
and be without liability to the Customer to the extent of the
assets of the Customer for any such obligations including
taxes, withholding and reporting requirements, claims for
exemption or refund, additions for late payment, interest,
penalties and other expense (including legal expenses) that
may be assessed against the Customer or the Bank as custodian
of the Customer.
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(D) It shall be the responsibility of the Customer to
notify the Bank of the obligations imposed on the Customer by
the tax law of of its tax residence. The Bank shall use
reasonable efforts to assist the Customer with respect to any
claim for exemption or refund under the tax law of
jurisdictions for which the Customer has provided such
information. Nevertheless, the Bank shall be indemnified by
and shall be without liability to the Customer for any such
obligation of which it has not been notified in writing by the
Customer, or for which it has received directions not to
withhold taxes, including taxes, withholding and reporting
requirements, claims for exemptions or refund, additions for
late payment, interest, penalties and other expenses
(including legal expenses) that may be assessed against the
Customer or the Bank as custodian of the Customer.
(c) ACCESS TO RECORDS. Bank shall allow Customer's independent public
accountant reasonable access to the records of Bank relating to the Assets as is
required in connection with their examination of books and records pertaining to
Customer's affairs. Subject to restrictions under applicable law, Bank shall
also obtain an undertaking to permit Customer's independent public accountants
reasonable access to the records of any Subcustodian which has physical
possession of any Assets as may be required in connection with the examination
of Customer's books and records.
(d) GOVERNING LAW; SUCCESSORS AND ASSIGNS. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN NEW YORK and shall not be assignable by either party, but
shall bind the successors in interest of Customer and Bank.
(e) ENTIRE AGREEMENT; APPLICABLE RIDERS. Customer represents that the
Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
---
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
---
Commission ("SEC") rules and regulations;
Neither of the above.
---
This Agreement consists exclusively of this document together with
Schedules A and B, Exhibits I - _____ and the following Rider(s)
[Check applicable rider(s)]:
ERISA
---
X MUTUAL FUND
---
X PROXY VOTING
---
SPECIAL TERMS AND CONDITIONS
---
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There are no other provisions hereof and this Agreement supersedes any
other agreements, whether written or oral, between the parties. Any amendment
hereto must be in writing, executed by both parties.
(f) SEVERABILITY. In the event that one or more provisions hereof are
held invalid, illegal or unenforceable in any respect on the basis of any
particular circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions shall not in any way be
affected or impaired.
(g) WAIVER. Except as otherwise provided herein, no failure or delay on
the part of either party in exercising any power or right hereunder operates as
a waiver, nor does any single or partial exercise of any power or right preclude
any other or further exercise, or the exercise of any other power or right. No
waiver by a party of any provision hereof, or waiver of any breach or default,
is effective unless in writing and signed by the party against whom the waiver
is to be enforced.
(h) REPRESENTATIONS AND WARRANTIES. (i) Customer hereby represents and
warrants to Bank that: (A) it has full authority and power to deposit and
control the Securities and cash deposited in the Accounts; (B) it has all
necessary authority to use Bank as its custodian; (C) this Agreement is its
legal, valid and binding obligation, enforceable in accordance with its terms;
(D) it shall have sufficient authority and power to borrow moneys and enter into
foreign exchange transactions; and (E) it has not relied on any oral or written
representation made by Bank or any person on its behalf, and acknowledges that
this Agreement sets out to the fullest extent the duties of Bank. (ii) Bank
hereby represents and warrants to Customer that: (A) it has the power and
authority to perform its obligations hereunder, (B) this Agreement constitutes a
legal, valid and binding obligation on it; enforceable in accordance with its
terms; and (C) that it has taken all necessary action to authorize the execution
and delivery hereof.
(i) NOTICES. All notices hereunder shall be effective when actually
received. Any notices or other communications which may be required hereunder
are to be sent to the parties at the following addresses or such other addresses
as may subsequently be given to the other party in writing: (a) Bank: The Chase
Manhattan Bank, 4 Chase MetroTech Center, Brooklyn, NY 11245, Attention: Global
Custody Division; and (b) Customer: The International Currency Fund, c/o BISYS
Fund Services, 3435 Stelzer Rd, Columbus, OH 43219, attention: George Martinez,
with a copy to: Rothschild International Asset Management Limited, Five Arrows
House, St. Swithin's Lane, London, EC4N 8NR, United Kingdom, Attention: Paul R.
Freeman.
(j) TERMINATION. This Agreement may be terminated by Customer or Bank by
giving sixty (60) days written notice to the other, provided that such notice to
Bank shall specify the names of the persons to whom Bank shall deliver the
Assets in the Accounts. If notice of termination is given by Bank, Customer
shall, within sixty (60) days following receipt of the notice (or such other
period as specified by Customer pursuant to the final sentence of this
subparagraph (j)), deliver to Bank Instructions specifying the names of the
persons to whom Bank shall deliver the Assets. In either case Bank shall deliver
the Assets to the persons so specified, after deducting any amounts which Bank
determines in good faith to be owed to it under Section 13. If within sixty (60)
days following receipt of a notice of termination by Bank, Bank does not receive
Instructions from Customer specifying the names of the persons to whom Bank
shall deliver the Assets, Bank, at its election, may deliver the Assets to a
bank or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions hereof, or to Authorized Persons, or may
continue to hold the Assets until Instructions are provided to Bank; provided
that where Bank is the terminating party and Bank has not notified Customer that
termination was for breach by Customer or because, in Bank's reasonable
judgment, Customer has been subject to a material adverse change in its
financial condition, such sixty (60) day period shall be extended for an
additional period as requested by Customer in writing prior to the expiration of
the initial sixty (60) day period of up to sixty (60) days.
12
<PAGE> 13
(k) LIMITATION OF LIABILITY. The term "Customer" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of The
International Currency Fund, a Delaware business trust, as the same may be
amended from time to time. The obligations of Customer hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of Customer personally, but shall bind only the trust property of
Customer, as provided in the Master Trust Agreement. The execution and delivery
of this Agreement have been authorized by the Trustees and signed by an officer
of the Trust, acting as such, and neither such authorization by such Trustees
nor such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
its Master Trust Agreement.
(l) SEVERAL OBLIGATIONS OF THE PORTFOLIO. Customer is a series company
with multiple portfolios and has entered into this Agreement on behalf of those
portfolios identified in Exhibit __ hereto, as amended from time to time on
notice to Bank (each a "Portfolio"). With respect to any obligation of Customer
on behalf of any Portfolio arising hereunder, Bank shall look for payment or
satisfaction of such obligations solely to the assets and property of the
Portfolio to which such obligation relates as though Customer had separately
contracted with Bank by separate written instrument with respect to each
Portfolio. In addition, this Agreement may be terminated with respect to one or
more Portfolios without affecting the rights, duties or obligations of any of
the other Portfolios.
(m) MONEY LAUNDERING. Customer warrants and undertakes to Bank for
itself and its agents that all Customer's customers are properly identified in
accordance with U.S. Money Laundering Regulations as in effect from time to
time.
(n) IMPUTATION OF CERTAIN INFORMATION. Bank shall not be held
responsible for and shall not be required to have regard to information held by
any person by imputation or information of which Bank is not aware by virtue of
a 'Chinese Wall' arrangement. [If Bank becomes aware of confidential information
which in good faith it feels inhibits it from effecting a transaction hereunder
Bank may refrain from effecting it.]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first-above written.
THE INTERNATIONAL CURRENCY FUND
By: /s/ Peter B. Collacott
------------------------------
Title: Trustee and President
Date: 16 January, 1997
THE CHASE MANHATTAN BANK
By: /s/ M. P. Sullivan
------------------------------
Title: Vice President
Date: 13 January, 1997
85738
13
<PAGE> 14
Mutual Fund Rider to Global Custody Agreement
Between THE CHASE MANHATTAN BANK and
THE INTERNATIONAL CURRENCY FUND
effective January 16, 1997
Customer represents that the Assets being placed in Bank's custody are
subject to the Investment Company Act of 1940 (the Act), as the same may be
amended from time to time.
Except for the SEC Exemptive Order applicable to accounts of this nature
issued to Bank (1940 Act, Release No. 12053, November 20, 1981), as amended, or
for rules, regulations and interpretations promulgated by or under the authority
of the SEC which are generally applicable to custodians holding accounts of this
nature, or unless Bank has otherwise specifically agreed, Customer shall be
solely responsible to assure that the maintenance of Assets hereunder complies
with such rules, regulations, interpretations or exemptive order promulgated by
or under the authority of the SEC.
The following modifications are made to the Agreement:
Section 3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used herein shall
mean a branch of a qualified U.S. bank, an eligible foreign custodian or
an eligible foreign securities depository, which are further defined as
follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined in
Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution or
trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that country's
government or an agency thereof and that has shareholders' equity in
excess of $200 million in U.S. currency (or a foreign currency
equivalent thereof), (ii) a majority owned direct or indirect subsidiary
of a qualified U.S. bank or bank holding company that is incorporated or
organized under the laws of a country other than the United States and
that has shareholders' equity in excess of $100 million in U.S. currency
(or a foreign currency equivalent thereof) (iii) a banking institution
or trust company incorporated or organized under the laws of a country
other than the United States or a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States which has such other qualifications as shall be specified
in Instructions and approved by Bank; or (iv) any other entity that
shall have been so qualified by exemptive order, rule or other
appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws
of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling of
securities or equivalent book-entries.
1
1
<PAGE> 15
Customer represents that its Board of Directors has approved each of
the Subcustodians listed in Schedule A hereto and the terms of the subcustody
agreements between Bank and each Subcustodian, which are attached as Exhibits I
through ___________ of Schedule A, and further represents that its Board has
determined that the use of each Subcustodian and the terms of each subcustody
agreement are consistent with the best interests of the Fund(s) and its (their)
shareholders. Bank shall supply Customer with any amendment to Schedule A for
approval. Customer has supplied or shall supply Bank with certified copies of
its Board of Directors resolution(s) with respect to the foregoing prior to
placing Assets with any Subcustodian so approved.
Section 11. INSTRUCTIONS.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 hereof may be made only for the purposes listed
below. Instructions must specify the purpose for which any transaction
is to be made and Customer shall be solely responsible to assure that
Instructions are in accord with any limitations or restrictions
applicable to Customer by law or as may be set forth in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise become
payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses;
(g) In connection with any borrowings by Customer requiring a pledge of
Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to Customer;
(i) For the purpose of redeeming shares of the capital stock of Customer
and the delivery to, or the crediting to the account of, Bank, its
Subcustodian or Customer's transfer agent, such shares to be purchased
or redeemed;
(j) For the purpose of redeeming in kind shares of Customer against
delivery to Bank, its Subcustodian or Customer's transfer agent of such
shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among Customer, Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 and a member of The National
2
2
<PAGE> 16
Association of Securities Dealers, Inc., relating to compliance with the
rules of The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only
upon payment to Bank of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of the option,
or at expiration, Bank shall receive from brokers the Securities
previously deposited. Bank shall act strictly in accordance with
Instructions in the delivery of Securities to be held in escrow and
shall have no responsibility or liability for any such Securities which
are not returned promptly when due other than to make proper request for
such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions issued
by an officer of Customer which shall include a statement of the purpose
for which the delivery or payment is to be made, the amount of the
payment or specific Securities to be delivered, the name of the person
or persons to whom delivery or payment is to be made, and a
certification that the purpose is a proper purpose under the instruments
governing Customer; and
(o) Upon the termination hereof as set forth in Section 14(j).
Section 12. STANDARD OF CARE; LIABILITIES.
Add the following at the end of Section as 12:
(d) Bank hereby warrants to Customer that in its opinion, after due
inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified U.S. bank, each eligible foreign
custodian and each eligible foreign securities depository holding
Customer's Securities pursuant hereto afford protection for such
Securities at least equal to that afforded by Bank's established
procedures with respect to similar securities held by Bank and its
securities depositories in New York.
Section 14. ACCESS TO RECORDS.
ADD THE FOLLOWING LANGUAGE TO THE END OF SECTION 14(c):
Upon reasonable request from Customer, Bank shall furnish Customer such
reports (or portions thereof) of Bank's system of internal accounting
controls applicable to Bank's duties hereunder. Bank shall endeavor to
obtain and furnish Customer with such similar reports as it may
reasonably request with respect to each Subcustodian and securities
depository holding Assets.
3
3
<PAGE> 17
GLOBAL PROXY SERVICE RIDER
To Global Custody Agreement
Between
THE CHASE MANHATTAN BANK
AND
THE INTERNATIONAL CURRENCY FUND (the "Customer")
dated January 16, 1997.
1. Global Proxy Services (the "Services") shall be provided for the
countries listed in the procedures and guidelines ("Procedures")
furnished to Customer, as the same may be amended by Bank from time to
time on prior notice to Customer. The Procedures are incorporated by
reference herein and form a part of this Rider.
2. The Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by
Bank to Customer of the dates of pending shareholder meetings,
resolutions to be voted upon and the return dates as may be received by
Bank or provided to Bank by its Subcustodians or third parties, and (b)
voting by Bank of proxies based on Customer Directions. Original proxy
materials or copies thereof shall not be provided. Notifications shall
generally be in English and, where necessary, shall be summarized and
translated from such non-English materials as have been made available
to Bank or its Subcustodian. In this respect Bank's only obligation is
to provide information from sources it believes to be reliable and/or to
provide materials summarized and/or translated in good faith. Bank
reserves the right to provide Notifications, or parts thereof, in the
language received. Upon reasonable advance request by Customer, backup
information relative to Notifications, such as annual reports,
explanatory material concerning resolutions, management recommendations
or other material relevant to the exercise of proxy voting rights shall
be provided as available, but without translation.
3. While Bank shall attempt to provide accurate and complete Notifications,
whether or not translated, Bank shall not be liable for any losses or
other consequences that may result from reliance by Customer upon
Notifications where Bank prepared the same in good faith.
4. Notwithstanding the fact that Bank may act in a fiduciary capacity with
respect to Customer under other agreements or otherwise under the
Agreement, in performing Services Bank shall be acting solely as the
agent of Customer, and shall not exercise any discretion with regard to
such Services.
5. Proxy voting may be precluded or restricted in a variety of
circumstances, including, without limitation, where the relevant
Financial Assets are: (i) on loan; (ii) at registrar for registration or
reregistration; (iii) the subject of a conversion or other corporate
action; (iv) not held in a name subject to the control of Bank or its
Subcustodian or are otherwise held in a manner which precludes voting;
(v) not capable of being voted on account of local market regulations or
practices or restrictions by the issuer; or (vi) held in a margin or
collateral account.
6 Customer acknowledges that in certain countries Bank may be unable to
vote individual proxies but shall only be able to vote proxies on a net
basis (E.G., a net yes or no vote given the voting instructions received
from all customers).
1
1
<PAGE> 18
7. Customer shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered hereby, and shall
in no event sell, license, give or otherwise make the information
provided hereunder available, to any third party, and shall not directly
or indirectly compete with Bank or diminish the market for the Services
by provision of such information, in whole or in part, for compensation
or otherwise, to any third party.
8. The names of Authorized Persons for Services shall be furnished to Bank
in accordance with ss.10 of the Agreement. Fees for the Services shall
be agreed as set forth in ss.13 of the Agreement or separately agreed.
2
2
<PAGE> 19
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
GLOBAL CUSTODY AGREEMENT
WITH
---------------------------------
DATE
---------------------------------
1
1
<PAGE> 20
DOMESTIC ONLY
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
DOMESTIC CORPORATE ACTIONS AND PROXIES
- --------------------------------------
With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions shall apply rather than the provisions of Section
8 of the Agreement and the Global Proxy Service rider:
Bank shall send to Customer or the Authorized Person for a
Custody Account, such proxies (signed in blank, if issued in the
name of Bank's nominee or the nominee of a central depository)
and communications with respect to Securities in the Custody
Account as call for voting or relate to legal proceedings within
a reasonable time after sufficient copies are received by Bank
for forwarding to its customers. In addition, Bank shall follow
coupon payments, redemptions, exchanges or similar matters with
respect to Securities in the Custody Account and advise Customer
or the Authorized Person for such Account of rights issued,
tender offers or any other discretionary rights with respect to
such Securities, in each case, of which Bank has received notice
from the issuer of the Securities, or as to which notice is
published in publications routinely utilized by Bank for this
purpose.
FEES
- ----
The fees referenced in Section 13 hereof cover only domestic and euro-dollar
holdings. There shall be no Schedule A hereto, as there are no foreign assets in
the Accounts.
1
1
<PAGE> 21
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
----------------------------------
DOMESTIC CORPORATE ACTIONS AND PROXIES
- --------------------------------------
With respect to domestic U.S. and Canadian Securities (the latter if held in
DTC), the following provisions shall apply rather than the pertinent provisions
of Section 8 of the Agreement and the Global Proxy Service rider:
Bank shall send to Customer or the Authorized Person for a
Custody Account, such proxies (signed in blank, if issued in the
name of Bank's nominee or the nominee of a central depository)
and communications with respect to Securities in the Custody
Account as call for voting or relate to legal proceedings within
a reasonable time after sufficient copies are received by Bank
for forwarding to its customers. In addition, Bank shall follow
coupon payments, redemptions, exchanges or similar matters with
respect to Securities in the Custody Account and advise Customer
or the Authorized Person for such Account of rights issued,
tender offers or any other discretionary rights with respect to
such Securities, in each case, of which Bank has received notice
from the issuer of the Securities, or as to which notice is
published in publications routinely utilized by Bank for this
purpose.
1
1
<PAGE> 22
SCHEDULE A
NOVEMBER, 1996
SUB-CUSTODIANS EMPLOYED BY
--------------------------
THE CHASE MANHATTAN BANK, LONDON, GLOBAL CUSTODY
------------------------------------------------
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
ARGENTINA The Chase Manhattan Bank The Chase Manhattan
--------- Arenales 707, 5th Floor Bank
De Mayo 130/140 Buenos Aires
1061 Buenos Aires
ARGENTINA
AUSTRALIA The Chase Manhattan Bank The Chase Manhattan
--------- 36th Floor Bank
World Trade Center Sydney
Jamison Street
Sydney
New South Wales 2000
AUSTRALIA
AUSTRIA Creditanstalt - Bankverein Credit Lyonnais Bank
------- Julius Tandler Platz - 3 Vienna
A - 1011, Vienna
AUSTRIA
BAHRAIN The British Bank of the Middle National Bank of
------- East Bahrain
PO Box Manama
Manama
BAHRAIN
2
2
<PAGE> 23
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
BANGLADESH Standard Chartered Bank Standard Chartered
---------- 18-20 Motijheel C.A. Bank
Box 536, Dhaka
Dhaka-100
BANGLADESH
BELGIUM Generale Bank Credit Lyonnais Bank
------- 3 Montagne Du Parc Brussels
1000 Bruxelles
BELGIUM
BOTSWANA Barclays Bank of Botswana Barclays Bank of
-------- Limited Botswana
Barclays House Gaborone
Khama Crescent
Gaborone
BOTSWANA
BRAZIL Banco Chase Manhattan, S.A Banco Chase
------ Chase Manhattan Center Manhattan, S.A
Rua Verbo Divino, 1400 Sao Paulo
Sao Paulo, SP 04719-002
BRAZIL
CANADA The Royal Bank of Canada Royal Bank of Canada
------ Royal Bank Plaza Toronto
Toronto
Ontario M5J2J5
CANADA
Canada Trust Royal Bank of Canada
Canada Trust Tower Toronto
BCE Place
161 Bay at Front
Toronto
Ontario M5J2T2
CANADA
3
3
<PAGE> 24
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
CHILE The Chase Manhattan Bank, The Chase Manhattan
----- Agustinas 1235 Bank,
Casilla 9192 Santiago
Santiago
CHILE
COLOMBIA Cititrust Colombia S.A. Cititrust Colombia S.A.
-------- Sociedad Fiduciaria Sociedad Fiduciaria
Carrera 9a No 99-02 Santafe de Bogota
Santafe de Bogota, DC
COLOMBIA
CYPRUS Barclays Bank plc Barclays Bank plc
------ Cyprus Offshore Banking Unit Nicosia
2nd & 3rd Floor
88 Dighenis Akritas Avenue
PO Box 7320
1644 Nicosia
CYPRUS
CZECH Ceskoslovenska Obchodni Banka, Komercni Banka, A.S.,
----- A.S. Praha
REPUBLIC Na Prikope 14
-------- 115 20 Praha 1
CZECH REPUBLIC
DENMARK Den Danske Bank Den Danske Bank
------- 2 Holmens Kanala DK 1091 Copenhagen
Copenhagen
DENMARK
ECUADOR Citibank, N.A. Citibank, N.A.
------- Juan Leon Mera Quito
130 y Patria
Quito
ECUADOR
4
4
<PAGE> 25
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
EGYPT National Bank of Egypt National Bank of Egypt
----- 1187, Corniche El-Nile Plaza Cairo
Cairo
EGYPT
ESTONIA HansaBank Tallinna Bank
------- Liivalaia 8 Tallinn
EE0100 Tallinn
ESTONIA
EUROBONDS Cedel Bank S.A. ECU: Lloyds Bank PLC
--------- 67 Boulevard Grande Duchesse International Banking
Charlotte Division
LUXEMBOURG London
A/c The Chase Manhattan Bank, For all other currencies:
N.A. see relevant
London country
A/c No. 17817
EURO CD First Chicago Clearing Centre ECU: Lloyds Bank PLC
-------- 27 Leadenhall Street Banking Division London
London EC3A IAA For all other currencies:
UNITED KINGDOM see relevant
country
FINLAND Merita Bank Ltd Merita Bank Ltd
------- 2598 Custody Services Helsinki
Fabianinkaru 29B
Helsinki
FINLAND
FRANCE Banque Paribas Societe Generale
------ Ref 256 Paris
BP 141
3, Rue D'Antin
75078 Paris
Cedex 02
FRANCE
5
5
<PAGE> 26
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
GERMANY Chase Bank A.G. Chase Bank. A.G.
------- Alexanderstrasse 59 Frankfurt
Postfach 90 01 09
60441 Frankfurt/Main
GERMANY
GHANA Barclays Bank of Ghana Ltd Barclays Bank
----- Barclays House Accra
High Street
Accra
GHANA
GREECE Barclays Bank Plc National Bank of Greece
------ 1 Kolokotroni Street S.A.
10562 Athens Athens
GREECE A/c Chase Manhattan
Bank,
London A/c No.
040/7/921578-6
8
HONG KONG The Chase Manhattan Bank, The Chase Manhattan
--------- 40/F One Exchange Square Bank,
8, Connaught Place Hong Kong
Central, Hong Kong
HONG KONG
HUNGARY Citibank Budapest Rt. Citibank Budapest Rt.
------- Vaci Utca 19-21 Budapest
1052 Budapest V
HUNGARY
INDIA The Hongkong and Shanghai The Hongkong and
----- Banking Corporation Limited Shanghai
52/60 Mahata Gandhi Road Banking Corporation
Bombay 400 001 Limited
INDIA Bombay
6
6
<PAGE> 27
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
Deutsche Bank AG Deutsche Bank
Securities & Custody Services Bombay
Kodak House
222 D.N. Road, Fort
Bombay 400 001
INDIA
INDONESIA The Hongkong and Shanghai The Chase Manhattan
--------- Banking Corporation Limited Bank
World Trade Center Jakarta
J1. Jend Sudirman Kav. 29-31
Jakarta 10023
INDONESIA
IRELAND Bank of Ireland Allied Irish Bank
------- International Financial Services Dublin
Centre
1 Harbourmaster Place
Dublin 1
IRELAND
ISRAEL Bank Leumi Le-Israel B.M. Bank Leumi Le-Israel
------ 19 Herzl Street B.M.
61000 Tel Aviv Tel Aviv
ISRAEL
ITALY The Chase Manhattan Bank, The Chase Manhattan
----- Piazza Meda 1 Bank,
20121 Milan Milan
ITALY
JAPAN The Fuji Bank Ltd. The Chase Manhattan
----- 6-7 Nihonbashi-Kabutocho Bank
Chuo-Ku Tokyo
Tokyo
JAPAN
7
7
<PAGE> 28
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
JORDAN Arab Bank Limited Arab Bank Limited
------ PO Box 950544-5 Amman
Amman
Shmeisani
JORDAN
KENYA Barclays Bank of Kenya Barclays Bank of Kenya
----- Third Floor Nairobi
Queensway House
Nairobi
KENYA
LEBANON The British Bank of the Middle The Chase Manhattan
------- East Bank
Ras-Beirut Branch New York
PO Box 11-1380
Abdel Aziz,
Ras-Beirut
LEBANON
LUXEMBOURG Banque Generale du Luxembourg Banque Generale du
---------- S.A Luxembourg S.A
50 Avenue J.F. Kennedy Luxembourg
L-2951 LUXEMBOURG
MALAYSIA The Chase Manhattan Bank, The Chase Manhattan
-------- Pernas International Bank,
Jalan Sultan Ismail Kuala Lumpur
50250, Kuala Lumpur
MALAYSIA
MAURITIUS Hongkong and Shanghai Banking Hongkong and Shanghai
--------- Corporation Ltd Banking
Curepipe Road Corporation Ltd
Curepipe Curepipe
MAURITIUS
8
8
<PAGE> 29
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
MEXICO The Chase Manhattan Bank, S.A. No correspondent Bank
------ Prolongacion Paseo de la
Reforma no. 600,
PB Colonia Santa Fe Pena Blanca
01210 Mexico D.F.
MOROCCO Banque Commerciale du Marox Banque Commerciale du
------- 2 Boulevard Moulay Youssef Maroc
Casablanca 20000 Casablanca
MOROCCO
NAMIBIA Standard Bank Namibia Ltd. Standard Corporate &
------- Mutual Platz - 3rd Floor Merchant Bank
PO Box 3327 South Africa
Windhoek
NAMIBIA
NETHERLANDS ABN AMRO N.V. Generale Bank
----------- Securities Centre Nederland N.V.
PO Box 3200 Rotterdam
4800 De Breda
NETHERLANDS
NEW National Nominees Limited National Bank of New
--- Level 2 BNZ Tower Zealand
ZEALAND 125 Queen Street Wellington
------- Auckland
NEW ZEALAND
NORWAY Den Norske Bank Den Norske Bank
------ Stranden 21 Oslo
PO Box 1171 Sentrum
N-0107 Oslo
NORWAY
9
9
<PAGE> 30
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
OMAN The British Bank of the Middle Oman Arab Bank
---- East Ruwi, Muscar
Bait Al Falaj
Main Office
Ruwi, Muscat
SULTANATE OF OMAN
PAKISTAN Citibank N.A. Citibank N.A.
-------- AWT Plaza Karachi
11 Chundrigar Road
Karachi 74200
PAKISTAN
Deutsche Bank A.G. Deutsche Bank A.G.
Unitowers Karachi
I.I. Chundrigar Road
Karachi
PAKISTAN
PERU Citibank, N.A. Citibank, N.A.
---- Camino Real 457 Lima
CC Torre Real - 5th Floor
San Isidro, Lima 27
PERU
PHILIPPINES The Hongkong and Shanghai The Hongkong and
----------- Banking Corporation Limited Shanghai
33/F Tektite Tower B Banking Corporation
Exchange Road Limited
Ortigas Center Manila
Pasig City
PHILIPPINES
POLAND Bank Polska Kasa Opieki S.A. Bank Polska Kasa Opieki
------ Curtis Plaza, Woloska 18 S.A.
02-675 Warsaw Warsaw
POLAND
10
10
<PAGE> 31
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
Bank Handlowy W. Warszawie. Bank Handlowy W.
S.A. Warszawie. S.A.
Custody Dept. Warsaw
Capital Markets Centre
U1, Nowy Swiat 6/12
00-920 Warsaw
POLAND
PORTUGAL Banco Espirito Santo e Comercial Banco Nacional Ultra
-------- de Lisboa Marino
Servico de Gestaode Titulos Lisbon
R. Mouzinho da Silveira, 36 r/c
1200 Lisbon
PORTUGAL
RUSSIA Chase Manhattan Bank The Chase Manhattan
------ International ("CMBI") Bank
1st Tverskaya - Yamskaya, 23 New York
125047 Moscow A/c The Chase
Russia Manhattan
London (US$ Nostro
Account)
SHANGHAI The Hongkong and Shanghai Citibank
-------- Banking Corporation Limited New York
(CHINA) Corporate Banking Centre
------- Unit 504, 5/F Shanghai Centre
1376 Nanjing Xi Lu
Shanghai
THE PEOPLE'S REPUBLIC OF
CHINA
11
11
<PAGE> 32
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
SHENZHEN The Hongkong and Shanghai The Chase Manhattan
-------- Banking Corporation Limited Bank
(CHINA) 1st Floor Hong Kong
------- Century Plaza Hotel
No. 1 Chun Feng Lu
Shenzhen
THE PEOPLE'S REPUBLIC OF
CHINA
SINGAPORE The Chase Manhattan Bank, The Chase Manhattan
--------- Shell Tower Bank,
50 Raffles Place Singapore
Singapore 0104
SINGAPORE
SLOVAK Ceskoslovenska Obchodni Banka, Ceskoslovenska
------ A.S. Obchodni
REPUBLIC Michalska 18 Banka, A.S.
-------- 815 63 Bratislava Slovak Republic
SLOVAK REPUBLIC
SOUTH Standard Corporate and Merchant Standard Corporate and
----- Bank Merchant Bank
AFRICA 46 Marshall Street South Africa
------ Johannesburg 2001
SOUTH AFRICA
SOUTH The Hongkong & Shanghai The Hongkong &
----- Banking Corporation Shanghai
KOREA Limited Banking
----- 6/F Kyobo Building Corporation
#1 Chongro, 1-ka Chongro-Ku Limited
Seoul Seoul
SOUTH KOREA
SPAIN The Chase Manhattan Bank Chase Manhattan Bank,
----- Paseo de la Castellana, 51 Madrid
28046 Madrid
SPAIN
12
12
<PAGE> 33
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
SRI LANKA The Hongkong & Shanghai The Hongkong &
--------- Banking Corporation Shanghai
Limited Banking
Unit #02-02 West Block, World Corporation
Trade Center Limited,
Colombo 1, Colombo
SRI LANKA
SWAZILAND Stanbic Bank Swaziland Ltd. Standard Corporate and
--------- Stanbic House Merchant Bank,
P.O. Box A294, Swazi Plaza South Africa
Mbabane
SWAZILAND
SWEDEN Skandinaviska Enskilda Banken Svenska Handelsbanken,
------ Sergels Torg 2 Stockholm
S-106 40
Stockholm
SWEDEN
SWITZERLAND Union Bank of Switzerland Union Bank of
----------- 45 Bahnhofstrasse Switzerland,
8021 Zurich Zurich
SWITZERLAND
TAIWAN The Chase Manhattan Bank, 14th No correspondent bank
------ Floor
2, Tun Hwa S. Road Sec. 1
Taipei
TAIWAN
Republic of China
THAILAND The Chase Manhattan Bank The Chase Manhattan
-------- Bubhajit Building Bank, Bangkok
20 North Sathorn Road
Silom, Bangrak
Bangkok 10500
THAILAND
13
13
<PAGE> 34
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
TUNISIA Banque Internationale Arabe de Banque Internationale
------- Tunisie Arabe de
70-72 Avenue Habib Bourguiba Tunisie, Tunisia
P.O. Box 520
1080 Tunis Cedex
TUNISIA
TURKEY The Chase Manhattan Bank The Chase Manhattan
------ Emirhan Cad. No: 145 Bank, Istanbul
Atakule, A Blok Kat: 11
80700-Dikilitas/Besiktas
Istanbul
TURKEY
U.K. The Chase Manhattan Bank The Chase Manhattan
---- Woolgate House Bank, London
Coleman Street
London EC2P 2HD
UNITED KINGDOM
URUGUAY The First National Bank of Boston The First National Bank
------- Zabala 1463 of Boston,
Montevideo Montevideo
URUGUAY
U.S.A. The Chase Manhattan Bank The Chase Manhattan
------ 1 Chase Manhattan Plaza Bank, New York
New York, New York 10081
U.S.A.
VENEZUELA Citibank N.A. Citibank N.A., Caracas
--------- Carmelitas a Altagracia
Edificio Citibank
Caracas 1010
VENEZUELA
14
14
<PAGE> 35
COUNTRY SUB-CUSTODIAN CORRESPONDENT
------- ------------- -------------
BANK
----
ZAMBIA Barclays Bank of Zambia Barclays Bank of
------ Kafue House Zambia, Lusaka
Cairo Road
P.O. Box 31936
Lusaka
ZAMBIA
ZIMBABWE Barclays Bank of Zimbabwe Barclays Bank of
-------- Ground Floor Zimbabwe,
Tanganyika House Harare
Corner of 3rd Street & Union
Avenue
Harare
ZIMBABWE
15
15
<PAGE> 36
SCHEDULE B
FEE AGREEMENT
BETWEEN
THE INTERNATIONAL CURRENCY FUND
AND
CHASE MANHATTAN BANK
TRANSACTION FEES (per purchase or sale)
----------------
Domestic UK US$ 20
Domestic US US$ 30
Domestic Canada Can$ 25
Domestic Germany Dem 25
Cedel US$ 35
Euro CD's US$ 35/ UK(pound)20/ Can$ 25/ Dem 25
(depending on currency of Fund)
SAFEKEEPING FEES (calculated on the average value of the portfolio)
----------------
Domestic UK 1 basis point
Domestic US 1 basis point
Domestic Canada }
Domestic Germany} less than US$25,000,000 nil
Cedel } greater than US$25,000,000 2.5 basis points
Euro CD's }
THE ABOVE FEES ARE BASED ON 100% FIXED INCOME INSTRUMENTS
---------------------------------------------------------
For and on behalf of For and on behalf of
/s/ M. P. Sullivan /s/ Peter B. Collacott
The Chase Manhattan Bank The International Currency Fund
Dated: 13-01-97 Dated: 16-01-97
------------------------- -------------------------
348524.c1
16
16
<PAGE> 1
Exhibit 9(a)
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 16th day of January, 1997, by and
between the INTERNATIONAL CURRENCY FUND, a Delaware business trust
(the "Company"), and BISYS FUND SERVICES LIMITED PARTNERSHIP, d/b/a BISYS
FUND SERVICES (the "Administrator"), an Ohio limited partnership.
WHEREAS, the Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest
("Shares");
WHEREAS, Administrator is an affiliate of Five Arrows Fund Distributors,
Inc., BISYS Fund Services, Inc. and BISYS Fund Services (Ireland) Limited (each
such entity and any other entity providing services under a BISYS Agreement is
hereinafter referred to as a "BISYS Entity");
WHEREAS, concurrently herewith, Administrator and the other BISYS
Entities are entering into other agreements to provide services to the Company,
Five Arrows Short-Term Investment Trust, and Five Arrows Cash Management Fund
PLC (such agreements and any other comparable agreements in effect from time to
time being referred to collectively as the "BISYS Agreements"); and
WHEREAS, the Company desires the Administrator to provide, and the
Administrator is willing to provide, management and administrative services to
such series of the Company as the Company and the Administrator may agree on
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this Agreement, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Company and the Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Administrator. The Company hereby retains the
Administrator to act as the administrator of the Portfolios and to furnish the
Portfolios with the management and administrative services as set forth in
Article 2 below. The Administrator hereby accepts such employment to perform
the duties set forth below. The Company consents to the performance of certain
services hereunder by Administrator's affiliate, BISYS Fund Services (Ireland)
Limited ("BISYS Ireland"); provided, however, that Administrator shall be fully
responsible for the acts and omissions of BISYS Ireland and shall not be
relieved of any of its responsibilities hereunder by any such delegation.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Company in any way and
shall not be deemed an agent of the Company.
[/R]
<PAGE> 2
ARTICLE 2. Administrative Services. The Administrator shall perform
administrative services in connection with the operations of the Portfolios,
and, on behalf of the Company, will investigate, assist in the selection of,
supervise the performance by and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Portfolios' operations. The Administrator
shall provide the Trustees of the Company with such reports regarding
investment performance as they may reasonably request but shall have no
responsibility for supervising the performance by any investment adviser or
sub-adviser of its responsibilities.
The Administrator shall provide the Company with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings) for handling
the affairs of the Portfolios and such other services as the Administrator
shall, from time to time, determine to be necessary to perform its obligations
under this Agreement. In addition, at the request of the Board of Trustees, the
Administrator shall make reports to the Company's Trustees concerning the
performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(a) calculate contractual Company expenses and control all disbursements
for the Company, and, as appropriate, compute the Company's yields,
total return, expense ratios, portfolio, turnover rate and, if
required, portfolio average dollar-weighted maturity;
(b) assist Company counsel with the preparation of prospectuses,
statements of additional information, registration statements and
proxy materials;
(c) prepare such reports, applications and documents (including reports
regarding the sale and redemption of Shares as may be required in
order to comply with Federal and state securities law) as may be
necessary or desirable to register the Company's Shares with state
securities authorities, monitor the sale of Company Shares for
compliance with state securities laws, and file with the appropriate
state securities authorities the registration statements and reports
for the Company and the Company's Shares and all amendments thereto,
as may be necessary or convenient to register and keep effective the
Company and the Company's Shares with state securities authorities to
enable the Company to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Company's investment
adviser, communications to Shareholders, including the annual report
to Shareholders, coordinate the mailing of prospectuses, notices,
proxy statements, proxies and other reports to Company Shareholders,
and supervise and facilitate the proxy solicitation process for all
shareholder meetings, including the tabulation of shareholder votes;
<PAGE> 3
(e) administer contracts on behalf of the Company with, among others, the
Company's investment adviser, distributor, custodian, transfer agent
and fund accountant;
(f) supervise the Company's transfer agent with respect to the payment of
dividends and other distributions to Shareholders;
(g) calculate performance data of the Portfolios for dissemination to
information services covering the investment company industry
including, without limitation, calculation of one, five and ten year
total returns and such other measures of performance reasonably
requested by the Company;
(h) coordinate and supervise the preparation and filing of the Company's
tax returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Company or any Portfolio of
the Company, including, without limitation, the Company's investment
adviser, distributor, custodian, fund accountant, transfer agent,
outside legal counsel and independent public accountants, and, at the
request of the Board of Trustees, report to the Board on the
performance of organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing of the
Company's semi-annual and annual reports to Shareholders;
(k) assist with the design, development, and operation of the Portfolios,
including new classes, investment objectives, policies and structure;
(l) provide individuals reasonably acceptable to the Company's Board of
Trustees to serve as officers of the Company, who will be responsible
for the management of certain of the Company's affairs as determined
by the Company's Board of Trustees;
(m) advise the Company and its Board of Trustees on matters concerning the
Company and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Company in
accordance with the requirements of Rules 17g-1 and 17d-1(7) under the
1940 Act as such bonds and policies are approved by the Company's
Board of Trustees;
(o) monitor and advise the Company and its Portfolios on their registered
investment company status under the Internal Revenue Code of 1986, as
amended;
(p) perform all administrative services and functions of the Company and
each
<PAGE> 4
Portfolio to the extent administrative services and functions are not
provided to the Company or such Portfolio pursuant to the Company's or
such Portfolio's investment advisory agreement, custodian agreement
and fund accounting agreement;
(q) furnish advice and recommendations with respect to other aspects of
the business and affairs of the Portfolios as the Company and the
Administrator shall determine desirable; and
(r) prepare and file with the SEC the semi-annual report for the Company
on Form N-SAR and all required notices pursuant to Rule 24f-2.
The Administrator shall perform such other services for the Company that
are mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices
of Shareholders' meetings, proxies and proxy statements, for all of which the
Company will pay the Administrator's out-of-pocket expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own expense
the executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Company as well as all Trustees of the
Company who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Company retained by the Trustees of the
Company to perform services on behalf of the Company.
(B) The Company. The Company assumes and shall pay or cause to be paid all
other expenses of the Company not otherwise allocated herein, including,
without limitation, organization costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of
custodial services, the cost of initial and ongoing registration of the Shares
under Federal and state securities laws, fees and out-of-pocket expenses of
Trustees who are not affiliated persons of the Administrator or the Investment
Adviser to the Company or any affiliated corporation of the Administrator or
the Investment Adviser, insurance, interest, brokerage costs, litigation and
other extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers to the Company.
ARTICLE 4. Compensation of the Administrator.
(A) Administration Fee. For the services to be rendered, the facilities
furnished and
<PAGE> 5
the expenses assumed by the Administrator pursuant to this Agreement, the
Company shall pay to the Administrator compensation at an annual rate specified
in Schedule A attached hereto. Such compensation shall be calculated and
accrued daily, and paid to the Administrator monthly.
If this Agreement becomes effective subsequent to the first day of a month
or terminates before the last day of a month, the Administrator's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) Survival of Compensation Rights. All rights of compensation under this
Agreement for services performed as of the termination date shall survive the
termination of this Agreement.
ARTICLE 5. Limitation of Liability of the Administrator. The duties of the
Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. Administrator shall use its best efforts to ensure the accuracy of
all services performed under this Agreement, but shall not be liable to the
Company for any action taken or omitted by Administrator in the absence of bad
faith, willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. The Company agrees to indemnify and hold harmless
Administrator, its employees, agents, directors, officers and nominees from and
against any and all claims, demands, actions and suits, whether groundless or
otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Administrator's actions or
omissions with respect to the performance of services under this Agreement or
based, if applicable, upon reasonable reliance on information, records,
instructions or requests given or made to Administrator by the Company,
provided that this indemnification shall not apply to actions or omissions of
Administrator in cases of its own bad faith, willful misfeasance, negligence or
from reckless disregard by it of its obligations and duties.
For purposes of this Agreement, actions or omissions by any BISYS Entity
or its employees, agents, directors, officers or nominees made in any capacity
shall be deemed to be actions or omissions by Administrator. Any actions or
omissions by a person who is both an officer or employee of the Company and an
officer or employee of any BISYS Entity shall be deemed to have been committed
solely in such person's capacity as an officer or employee of such BISYS
Entity.
The Company's agreement to indemnify Administrator, its partners and
employees and any such controlling person, as aforesaid, is expressly
conditioned upon the Company being notified of any action brought against the
Administrator, its partners or employees, or any such controlling person, such
notification to be given in accordance with Article 12 hereof within 10 days
after the summons or other first legal process shall have been served. The
failure to so notify the Company of any such action shall not relieve the
Company from any liability which the Company may have to the person against
whom such action is brought by reason of any such
<PAGE> 6
untrue, or allegedly untrue, statement or omission, or alleged omission,
otherwise than with respect to incremental liabilities resulting from such
failure. The Company will be entitled to assume the defense of any suit brought
to enforce any such claim, demand or liability, but, in such case, such defense
shall be conducted by counsel of good standing chosen by the Company and
approved by the Administrator, which approval shall not be unreasonably
withheld. In the event the Company elects to assume the defense of any such
suit and retain counsel of good standing approved by the Administrator, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Company does not
elect to assume the defense of any such suit, or in case the Administrator
reasonably does not approve of counsel chosen by the Company, the Company will
reimburse the Administrator, its partners and employees, or the controlling
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by the Administrator or them.
The Administrator may apply to the Company at any time for instructions
and may consult counsel for the Company and with accountants and other experts
with respect to any matter arising in connection with the Administrator's
duties, and the Administrator shall not be liable or accountable for any
reasonable action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. The Administrator will not be held to have
notice of any change of authority of any officers, employees or agents of the
Company until receipt of written notice thereof from the Company.
ARTICLE 6. Activities of the Administrator. The services of the
Administrator rendered to the Company are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that directors, officers, employees
and Shareholders of the Company are or may be or become interested in the
Administrator, as officers, employees or otherwise and that partners, officers
and employees of the Administrator and its counsel are or may be or become
similarly interested in the Company, and that the Administrator may be or
become interested in the Company as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; the Administrator may
also at its expense, subcontract with any entity or person concerning the
provision of the services contemplated hereunder with the express prior written
consent of the Company, provided that, to the extent that the services
delegated involve only such ministerial tasks as are routinely and commonly
delegated by similarly situated service providers, such consent shall not be
unreasonably
<PAGE> 7
withheld. The Administrator shall not, however, be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that the Administrator shall be responsible, to the extent
provided in Article 5 hereof, for all acts of such subcontractor as if such
acts were its own. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
ARTICLE 9. Amendments. This Agreement may be amended by the parties by a
duly authorized written instrument.
ARTICLE 10. Certain Records. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Company shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Company and will be made
available to or surrendered promptly to the Company on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Company and follow the
Company's instructions as to permitting or refusing such inspection; provided
that the Administrator may exhibit such records to any person in any case where
it is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Company has agreed to indemnify the Administrator against such liability.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. Notice. Any notice, demand, request or other communication
which may be required or contemplated herein shall be sufficiently given if (i)
given either by facsimile transmission or telex, by reputable overnight
delivery service, postage prepaid, or by registered or certified mail, postage
prepaid and return receipt requested, to the address indicated below or to such
other address as any party hereto may specify as provided herein, or (ii)
delivered personally at such address.
If to the Company: c/o Rothschild International Asset Management Limited
Five Arrows House
St. Swithin's Lane
London EC4N 8NR United Kingdom
Attention: Peter B. Collacott
<PAGE> 8
with a copy to:
Geoffrey R.T. Kenyon
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
If to Administrator: 3435 Stelzer Road
Columbus, Ohio 43219.
Attention: George O. Martinez
ARTICLE 13. Limitation of Liability of the Trustees and Shareholders. It
is expressly agreed that the obligations of the Company hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Company personally, but shall bind only the trust property of
the Company. The execution and delivery of this Agreement have been authorized
by the Trustees, and this Agreement has been signed and delivered by an
authorized officer of the Company, acting as such, and neither such
authorization by the Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Company as provided in the Company's Agreement and Declaration of Trust.
ARTICLE 14. Several Obligations of the Portfolios. The Company is a series
company with multiple series, the Portfolios, and has entered into this
Agreement on behalf of those series, as amended from time to time on notice to
the Administrator. With respect to any obligation of the the Company on behalf
of any Portfolio arising hereunder, the Administrator shall look for payment or
satisfaction of such obligations solely to the assets and property of the
Portfolio to which such obligation relates as though the Company had separately
contracted with the Administrator by separate written instrument with respect
to each Portfolio. In addition, this Agreement may be terminated with respect
to one or more Portfolios without affecting the rights, duties or obligations
of any of the other Portfolios.
ARTICLE 15. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio and the applicable provisions of the 1940
Act. To the extent that the applicable laws of the State of Ohio, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control.
ARTICLE 16. Force Majeure. If the Administrator is prevented, hindered or
delayed from or in performing any of its obligations under this Agreement by a
Force Majeure Event (as defined below), then:
(a) (i) the Administrator's obligations under this Agreement shall
be suspended for so long as the Force Majeure Event
continues and to the extent that it is so prevented,
hindered or delayed;
<PAGE> 9
(ii) as soon as possible after the commencement of the Force
Majeure Event the Administrator shall notify the Company in
writing of the occurrence of the Force Majeure Event, the
date of commencement of the Force Majeure Event and the
effect of the Force Majeure Event on the Administrator's
ability to perform its obligations under this Agreement; and
(iii) as soon as possible after the cessation of the Force Majeure
Event the Administrator shall notify the Company in writing
of the cessation of the Force Majeure Event and shall resume
performance of its obligations under this Agreement.
(b) If the Force Majeure continues for more than one month after the
commencement of the Force Majeure Event either party may terminate
this Agreement by giving not less than seven days notice in writing to
the other party.
(c) "Force Majeure Event" means any event beyond the reasonable control of
a party including, without limitation, acts of God, war, riot, civil
commotion, malicious damage, compliance with any law or governmental
order, rule, regulation or direction, accident, breakdown of plant or
machinery, fire, flood or storm.
ARTICLE 17. Miscellaneous. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same
instrument. For purposes of this Agreement, no officer of the Company who is
an employee of any BISYS Entity shall be deemed to be an authorized
representative of the Company for the purposes of giving or receiving any
notice, consent, or other communication pursuant to Articles 5, 8, 10, 16 and
Schedule A of this Agreement or not in the ordinary course of business. No
provision of this Agreement shall be deemed to limit the duties or obligations
of Administrator or any other BISYS Entity under any other BISYS Agreement.
Paragraph headings in this Agreement are included for convenience only and are
not to be used to construe or interpret this Agreement.
[Remainder of the page intentionally left blank.]
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
INTERNATIONAL CURRENCY FUND
By: /s/ Peter B. Collacott
------------------------------
Attest: /s/ A. Shepherd
--------------------------
BISYS FUND SERVICES LIMITED
PARTNERSHIP
BY: BISYS FUND SERVICES, INC.,
GENERAL PARTNER
By: /s/ J. David Huber
------------------------------
Attest: /s/ Elise Elman
--------------------------
<PAGE> 11
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF JANUARY 16, 1997
BETWEEN INTERNATIONAL CURRENCY FUND
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios of the
International Currency Fund, either now or hereafter created.
The current portfolios of The International Currency Fund, are
set forth below: U.S. Dollar, Pound Sterling, Deutschemark and
Canadian Dollar (collectively, the "Portfolios").
Fees: Pursuant to Article 4, in consideration of services rendered
and expenses assumed pursuant to this Agreement, the Company
will pay the Administrator on the first business day of each
month, or at such time(s) as the Administrator shall request
and the parties hereto shall agree, a fee computed daily and
paid as specified below at the annual rate equal to .05% of
each Portfolio's average daily net assets. The fee for the
period from the day of the month this Agreement is entered into
until the end of that month shall be prorated according to the
proportion which such period bears to the full monthly period.
Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be prorated
according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of
termination of this Agreement.
For purposes of determining the fees payable to the
Administrator, the value of the net assets of a particular
Portfolio shall be computed in the manner described in the
Company's Declaration of Trust or in the Prospectus or
Statement of Additional Information respecting that Portfolio
as from time to time is in effect for the computation of the
value of such net assets in connection with the determination
of the liquidating value of the shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder
shall be applied to each Portfolio as a whole, and not to
separate classes of shares within the portfolios.
Term: Pursuant to Article 7, the term of this Agreement shall commence
on January 16, 1997 and shall remain in effect through January
16, 1999 ("Initial Term"). Thereafter, if not earlier terminated
as herein provided, it shall continue from year to year so long
as such continuance with respect to any such Portfolio is
approved at least annually by the Trustees of the Company.
Notwithstanding the foregoing, this Agreement may be terminated
by either party, without payment of any penalty, except for the
liquidated damages described below, at any time with respect to
any Portfolio upon not less than sixty (60)
<PAGE> 12
days' prior written notice to the other party.
If this Agreement is terminated without Cause during the
Initial Term hereof, or during any subsequent annual term, and
if the Administrator is not continuing to be compensated as
provided in Article 4 of this Agreement, then the Company shall
make a one-time cash payment, as liquidated damages, to the
Administrator equal to the balance due the Administrator for
the remainder of such term, assuming for purposes of
calculation of the payment that the asset level of the Company
on the effective date of such Termination would remain constant
for the balance of the contract term. Notwithstanding the
foregoing, the Company may terminate this Agreement at any time
for Cause, without incurring any additional cost and without
liquidated damages. For purposes of the Agreement, the term
"Cause" shall mean (i) dishonest statements or acts with
respect to the Company or any affiliate thereof; (ii) failure
to perform to the reasonable satisfaction of the Company's
Board of Trustees a substantial portion of the Administrator's
duties and responsibilities hereunder; (iii) gross negligence
or willful misconduct of the Administrator with respect to the
Company or any affiliate thereof; or (iv) material breach by
the Administrator of any of the Administrator's obligations
hereunder.
Notwithstanding the foregoing, after such termination for so
long as the Administrator, with the written consent of the
Company, in fact continues to perform any one or more of the
services contemplated by this Agreement or any schedule or
exhibit hereto, the provisions of this Agreement, including
without limitation the provisions dealing with indemnification,
shall continue in full force and effect. Compensation due the
Administrator and unpaid by the Company upon such termination
shall be immediately due and payable upon and notwithstanding
such termination. The Administrator shall be entitled to
collect from the Company, in addition to the compensation
described in this Schedule A, the amount of all of the
Administrator's cash disbursements for services in connection
with the Administrator's activities in effecting such
termination, including without limitation, the delivery to the
Company and/or its designees of the Company's property,
records, instruments and documents, or any copies thereof.
Subsequent to such termination, for a reasonable fee, the
Administrator will provide the Company with reasonable access
to any Company documents or records remaining in its
possession.
<PAGE> 1
Exhibit 9(b)
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 16th day of January, 1997, between the
INTERNATIONAL CURRENCY FUND (the "Trust"), a Delaware business trust and BISYS
FUND SERVICES, INC. ("Fund Accountant"), a corporation organized under the laws
of the State of Delaware.
WHEREAS, Fund Accountant is an affiliate of Five Arrows Fund
Distributors Inc., BISYS Fund Services Limited Partnership and BISYS Fund
Services (Ireland) Limited (each such entity and any other entity hereafter
providing services under a BISYS Agreement (as defined below) is hereinafter
referred to as a "BISYS Entity");
WHEREAS, concurrently herewith, Fund Accountant and the other BISYS
Entities are entering into other agreements to provide services to the Trust,
Five Arrows Short-Term Investment Trust and Five Arrows Cash Management Fund
PLC (such agreements and any other comparable agreements in effect from time to
time being referred to collectively as the "BISYS Agreements");
WHEREAS, the Trust desires that Fund Accountant perform certain fund
accounting services for each investment portfolio of the Trust, all as now or
hereafter may be established from time to time (individually referred to herein
as the "Portfolio" and collectively as the "Portfolios"); and
WHEREAS, Fund Accountant is willing to perform such services on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein set forth, the parties agree as follows:
1. SERVICES AS FUND ACCOUNTANT.
(a) MAINTENANCE OF BOOKS AND RECORDS. Fund Accountant
will keep and maintain the following books and
records of each Portfolio pursuant to Rule 31a-1
under the Investment Company Act of 1940 (the
"Rule"):
(i) Journals containing an itemized
daily record in detail of all
purchases and sales of securities,
all receipts and disbursements of
cash and all other debits and
credits, as required by subsection
(b)(1) of the Rule;
(ii) General and auxiliary ledgers
reflecting all asset, liability,
reserve, capital, income and expense
accounts, including interest accrued
and interest received, as required
by subsection (b)(2)(I) of the Rule;
[/R]
<PAGE> 2
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the
Rule; and
(iv) A monthly trial balance of all
ledger accounts (except shareholder
accounts) as required by subsection
(b)(8) of the Rule.
(b) PERFORMANCE OF DAILY ACCOUNTING SERVICES. In addition to
the maintenance of the books and records specified
above, Fund Accountant shall perform the following
accounting services daily for each Portfolio:
(i) Calculate the net asset value per share
using amortized cost pricing or utilizing
prices obtained from the sources described
in subsection 1(b)(ii) below, as
appropriate;
(ii) Obtain security prices from independent
pricing services, or if such quotes are
unavailable, then obtain such prices from
each Portfolio's investment adviser or its
designee, as approved by the Trust's Board
of Trustees;
(iii) Reconcile with the Portfolios' custodian all
daily trade activity;
(iv) Compute, as appropriate, each Portfolio's
net income and capital gains, dividend
payables, dividend factors, 7-day yields,
7-day effective yields, 30-day yields, and
weighted average portfolio maturity;
(v) Review daily the net asset value calculation
and dividend factor (if any) for each
Portfolio prior to release to shareholders,
check and confirm the net asset values and
dividend factors for reasonableness and
deviations, and distribute net asset values
and yields to NASDAQ;
(vi) Report to the Trust the daily market pricing of
securities in any Portfolio, with the
comparison to the amortized cost basis;
(vii) Determine unrealized appreciation and
depreciation on securities held in variable net
asset value Portfolios;
(viii) Amortize premiums and accrete discounts on
securities purchased at a price other than face
value, if requested by the Trust;
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<PAGE> 3
(ix) Update fund accounting system to reflect
rate changes, as received from a Portfolio's
investment adviser, on variable interest
rate instruments;
(x) Post Portfolio transactions to appropriate
categories;
(xi) Accrue expenses of each Portfolio according to
instructions received from the Trust's
Administrator;
(xii) Determine the outstanding receivables and
payables for all (1) security trades, (2)
Portfolio share transactions and (3) income and
expense accounts;
(xiii) Provide accounting reports in connection with
the Trust's regular annual audit and other
audits and examinations by regulatory agencies;
and
(xiv) Provide such periodic reports as the parties
shall agree upon, as set forth in a separate
schedule.
(c) SPECIAL REPORTS AND SERVICES.
(i) Fund Accountant may provide additional
special reports upon the request of the
Trust or a Portfolio's investment adviser,
which may result in an additional charge,
the amount of which shall be agreed upon
between the parties.
(ii) Fund Accountant may provide such other
similar services with respect to a Portfolio
as may be reasonably requested by the Trust,
which may result in an additional charge,
the amount of which shall be agreed upon
between the parties.
(d) ADDITIONAL ACCOUNTING SERVICES. Fund Accountant shall
also perform the following additional accounting
services for each Portfolio:
(i) Provide monthly a download (and hard copy
thereof) of the financial statements
described below, upon request of the Trust.
The download will include the following
items:
Statement of Assets and Liabilities,
Statement of Operations,
Statement of Changes in Net Assets, and
Condensed Financial Information;
3
<PAGE> 4
(ii) Provide accounting information for the following:
(A) U.S. federal and state income tax
returns, U.S. federal excise tax
returns, U.K. distributor filings and
such other similar regulatory filings as
are deemed necessary or appropriate by
the Trust;
(B) the Trust's semi-annual reports with the
Securities and Exchange Commission
("SEC") on Form N-SAR;
(C) the Trust's annual, semi-annual and
quarterly (if any) shareholder reports;
(D) registration statements on Form N-1A and
other filings relating to the
registration of shares;
(E) the Administrator's monitoring of
the Trust's status as a regulated
investment company under Subchapter
M of the Internal Revenue Code, as
amended;
(F) annual audit by the Trust's auditors;
and
(G) examinations performed by the SEC.
2. DELEGATION.
The Trust consents to the appointment of the Fund Accountant's
affiliate BISYS Fund Services (Ireland) Limited ("BISYS Ireland") to provide
certain services under this Agreement and the Trust further agrees that the Fund
Accountant may delegate the responsibility to perform certain services to be
provided under this agreement to non-affiliated third parties with the prior
express written consent of the Trust, provided that, to the extent that the
services delegated involve only such ministerial tasks as are routinely and
commonly delegated by similarly situated service providers, such consent shall
not be unreasonably withheld; provided, however, that Fund Accountant shall be
fully responsible for the acts and omissions of BISYS Ireland and its other
delegates and shall not be relieved of any of its responsibilities hereunder by
any such delegation.
3. COMPENSATION.
The Trust shall pay Fund Accountant for the services to be
provided by Fund Accountant under this Agreement in accordance with, and in the
manner set forth in, Schedule A hereto, as such Schedule may be amended from
time to time.
4. REIMBURSEMENT OF EXPENSES.
In addition to paying Fund Accountant the fees described in
Section 3 hereof, the Trust agrees to reimburse Fund Accountant for the
following out-of-pocket expenses incurred in providing services hereunder:
4
<PAGE> 5
(a) All freight and other delivery and bonding charges incurred by
Fund Accountant in delivering materials to and from the Trust;
(b) All direct telephone, telephone transmission and telecopy or
other electronic transmission expenses incurred by Fund
Accountant in fulfilling its obligations under this Agreement,
other than expenses incurred in communicating with the other
BISYS Entities and any other affiliates, or the Trust's
investment adviser;
(c) The cost of obtaining security market quotes pursuant to
Section l(b)(ii) above;
(d) The cost of microfilm or microfiche of records or other
materials; and
(e) Any expenses Fund Accountant shall incur at the written
direction of an officer of the Trust thereunto duly
authorized.
5. EFFECTIVE DATE.
This Agreement shall become effective with respect to a
Portfolio as of the date first written above (or, if a particular Portfolio is
not in existence on that date, on the date such Portfolio commences operation)
(the "Effective Date").
6. TERM.
This Agreement shall continue in effect with respect to a
Portfolio, unless earlier terminated by either party hereto as provided
hereunder, until January 16, 1999 (the "Initial Term"). Thereafter, if not
earlier terminated as herein provided, it shall continue from year to year so
long as such continuance with respect to any such Portfolio is approved at least
annually by the Trustees of the Trust. Notwithstanding the foregoing, this
Agreement may be terminated by either party, without payment of any penalty,
except for the liquidated damages described below, at any time with respect to
any Portfolio upon not less than sixty (60) days' prior written notice to the
other party. Notwithstanding the foregoing, after such termination for so long
as Fund Accountant, with the written consent of the Trust, in fact continues to
perform any one or more of the services contemplated by this Agreement or any
schedule or exhibit hereto, the provisions of this Agreement, including without
limitation the provisions dealing with indemnification, shall continue in full
force and effect. Compensation due Fund Accountant and unpaid by the Trust upon
such termination shall be immediately due and payable upon and notwithstanding
such termination. Fund Accountant shall be entitled to collect from the Trust,
in addition to the compensation described under Section 3 hereof, the amount of
all of Fund Accountant's cash disbursements for services in connection with Fund
Accountant's activities in effecting such termination, including without
limitation, the delivery to the Trust and/or its designees of the Trust's
property, records, instruments and documents, or any copies thereof. Subsequent
to such termination, for a reasonable fee, Fund Accountant shall deliver to the
Trust any Trust documents or records remaining in its possession.
5
<PAGE> 6
If this Agreement is terminated without Cause during the
Initial Term hereof, or during any subsequent annual term, and if the Fund
Accountant is not continuing to be compensated as provided in the foregoing
paragraph, then the Trust shall make a one time cash payment, as liquidated
damages, to the Fund Account equal to the unpaid balance due to the Fund
Accountant for the remainder of such term, assuming for purposes of calculation
of this payment that the asset level of the Trust on the effective date of such
termination would remain consistent for the balance of this contract term.
Notwithstanding the foregoing, the Trust may terminate this agreement at any
time for Cause, without incurring any additional cost and liquidated damages.
For purposes of this Agreement, the term "Cause" shall mean (i) dishonest
statements or acts with respect to the Trust or any affiliate thereof; (ii)
failure to perform to the reasonable satisfaction of the Trust's Board of
Trustees a substantial portion of the Fund Accountant's duties and
responsibilities hereunder; (iii) gross negligence or willful misconduct of the
Fund Accountant with respect to the Trust or any affiliate thereof; or (iv)
material breach by the Fund Accountant of any of the Fund Accountant's
obligations hereunder.
7. STANDARD OF CARE; RELIANCE ON RECORDS AND INSTRUCTIONS;
INDEMNIFICATION.
Fund Accountant shall use its best efforts to insure the
accuracy of all services performed under this Agreement, but shall not be liable
to the Trust for any action taken or omitted by Fund Accountant in the absence
of bad faith, willful misfeasance, negligence or from reckless disregard by it
of its obligations and duties. A Portfolio agrees to indemnify and hold harmless
Fund Accountant, its employees, agents, directors, officers and nominees from
and against any and all claims, demands, actions and suits, whether groundless
or otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Fund Accountant's actions
taken or nonactions with respect to the performance of services under this
Agreement with respect to such Portfolio or based, if applicable, upon
reasonable reliance on information, records, instructions or requests with
respect to such Portfolio given or made to Fund Accountant by a duly authorized
representative of the Trust; provided that this indemnification shall not apply
to actions or omissions of Fund Accountant in cases of its own bad faith,
willful misfeasance, negligence or from reckless disregard by it of its
obligations and duties. For purposes of this Agreement, actions or omissions by
any BISYS Entity or its employees, agents, directors, officers or nominees made
in any capacity shall be deemed to be actions or omissions by Fund Accountant.
Any actions or omissions by a person who is both an officer or employee of the
Trust and an officer or employee of any BISYS Entity shall be deemed to have
been committed solely in such person's capacity as an officer or employee of
such BISYS Entity.
The Trust's agreement to indemnify Fund Accountant, its partners and
employees and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust being notified of any action brought against Fund
Accountant, its partners or employees, or any such controlling person, such
notification to be given in accordance with Section 19 hereof within 10 days
after the summons or other first legal process shall have been served. The
failure to so notify the Trust of any such action shall not relieve the Trust
from any liability which the Trust may have to the
6
<PAGE> 7
person against whom such action is brought by reason of any such untrue, or
allegedly untrue, statement or omission, or alleged omission, otherwise than
with respect to incremental liabilities resulting from such failure. The Trust
will be entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability, but, in such case, such defense shall be conducted
by counsel of good standing chosen by the Trust and approved by Fund Accountant,
which approval shall not be unreasonably withheld. In the event the Trust elects
to assume the defense of any such suit and retain counsel of good standing
approved by Fund Accountant, the defendant or defendants in such suit shall bear
the fees and expenses of any additional counsel retained by any of them; but in
case the Trust does not elect to assume the defense of any such suit, or in case
Fund Accountant reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse Fund Accountant, its partners and employees, or the
controlling person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by Fund Accountant or them.
8. RECORD RETENTION AND CONFIDENTIALITY.
Fund Accountant shall keep and maintain on behalf of the Trust
all books and records which the Trust and Fund Accountant is, or may be,
required to keep and maintain pursuant to any applicable statutes, rules and
regulations, including without limitation Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), relating to the
maintenance of books and records in connection with the services to be provided
hereunder. Fund Accountant further agrees that all such books and records shall
be the property of the Trust and to make such books and records available for
inspection by the Trust or by the Securities and Exchange Commission at
reasonable times and otherwise to keep confidential all books and records and
other information relative to the Trust and its shareholders; except when
requested to divulge such information by duly-constituted authorities or court
process.
9. REPORTS.
Fund Accountant will furnish to the Trust and to its properly
authorized auditors, investment advisers, examiners, distributors, dealers,
underwriters, salesmen, insurance companies and others designated by the Trust
in writing, such reports and at such times as are prescribed pursuant to the
terms and the conditions of this Agreement to be provided or completed by Fund
Accountant, or as subsequently agreed upon by the parties pursuant to an
amendment hereto.
10. RIGHTS OF OWNERSHIP.
All computer programs and procedures developed to perform
services required to be provided by Fund Accountant under this Agreement are the
property of Fund Accountant. All records and other data except such computer
programs and procedures are the exclusive property
7
<PAGE> 8
of the Trust and all such other records and data will be furnished to the Trust
in appropriate form as soon as practicable after termination of this Agreement
for any reason.
11. RETURN OF RECORDS.
Fund Accountant may at its option at any time, and shall
promptly upon the Trust's demand, turn over to the Trust and cease to retain
Fund Accountant's files, records and documents created and maintained by Fund
Accountant pursuant to this Agreement which are no longer needed by Fund
Accountant in the performance of its services or for its legal protection. If
not so turned over to the Trust, such documents and records will be retained by
Fund Accountant for six years from the year of creation. At the end of such
six-year period, such records and documents will be turned over to the Trust
unless the Trust authorizes in writing the destruction of such records and
documents.
12. REPRESENTATIONS OF THE TRUST.
The Trust certifies to Fund Accountant that: (1) as of the
close of business on the Effective Date, each Portfolio that is in existence as
of the Effective Date has authorized unlimited shares, and (2) this Agreement
has been duly authorized by the Trust and, when executed and delivered by the
Trust, will constitute a legal, valid and binding obligation of the Trust,
enforceable against the Trust in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
13. REPRESENTATIONS OF FUND ACCOUNTANT.
Fund Accountant represents and warrants that: (1) the various
procedures and systems which Fund Accountant has implemented with regard to
safeguarding from loss or damage attributable to fire, theft, or any other cause
the records, and other data of the Trust and Fund Accountant's records, data,
equipment facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as are required for the secure performance of its obligations
hereunder, and (2) this Agreement has been duly authorized by Fund Accountant
and, when executed and delivered by Fund Accountant, will constitute a legal,
valid and binding obligation of Fund Accountant, enforceable against Fund
Accountant in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors and secured parties.
14. INSURANCE.
Fund Accountant shall notify the Trust should any of its
insurance coverage be canceled or reduced. Such notification shall include the
date of change and the reasons therefor. Fund Accountant shall notify the Trust
of any material claims against it with respect to services
8
<PAGE> 9
performed under this Agreement, whether or not they may be covered by insurance,
and shall notify the Trust from time to time as may be appropriate of the total
outstanding claims made by Fund Accountant under its insurance coverage.
15. INFORMATION TO BE FURNISHED BY THE TRUST AND PORTFOLIOS.
The Trust has furnished to Fund Accountant the following:
(a) Copies of the Declaration of Trust of the Trust and
of any amendments thereto, certified by the proper
official of the state in which such document has been
filed.
(b) Copies of the following documents:
(i) The Trust's Bylaws and any amendments
thereto; and
(ii) Certified copies of resolutions of the Board
of Trustees covering the approval of this
Agreement, authorization of a specified
officer of the Trust to execute and deliver
this Agreement and authorization for
specified officers of the Trust to instruct
Fund Accountant thereunder.
(c) A list of all the officers of the Trust, together
with specimen signatures of those officers who are
authorized to instruct Fund Accountant in all
matters.
(d) Two copies of the Prospectuses and Statements of
Additional Information for each Portfolio.
16. INFORMATION FURNISHED BY FUND ACCOUNTANT.
(a) Fund Accountant has furnished to the Trust the
following:
(i) Fund Accountant's Articles of Incorporation;
and
(ii) Fund Accountant's Bylaws and any amendments
thereto.
(b) Fund Accountant shall, upon request, furnish
certified copies of corporate actions covering the
following matters:
(i) Approval of this Agreement, and
authorization of a specified officer of Fund
Accountant to execute and deliver this
Agreement; and
9
<PAGE> 10
(ii) Authorization of Fund Accountant to act as
fund accountant for the Trust and to provide
accounting services for the Trust.
17. AMENDMENTS TO DOCUMENTS.
The Trust shall furnish Fund Accountant with written copies of
any amendments to, or changes in, any of the items referred to in Section 15
hereof forthwith upon such amendments or changes becoming effective. In
addition, the Trust agrees that no amendments will be made to the Prospectuses
or Statements of Additional Information of the Trust which might have the effect
of changing the procedures employed by Fund Accountant in providing the services
agreed to hereunder or which amendment might affect the duties of Fund
Accountant hereunder unless the Trust first obtains Fund Accountant's approval
of such amendments or changes, such approval not to be unreasonably withheld.
18. COMPLIANCE WITH LAW.
Except for the obligations of Fund Accountant set forth in
Section 7 hereof, the Trust assumes full responsibility for the preparation,
contents and distribution of each prospectus of the Trust as to compliance with
all applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), the 1940 Act and any other laws, rules and regulations of
governmental authorities having jurisdiction. Fund Accountant shall have no
obligation to take cognizance of any laws relating to the sale of the Trust's
shares. The Trust represents and warrants that no shares of the Trust will be
offered to the public until the Trust's registration statement under the
Securities Act and the 1940 Act has been declared or becomes effective.
19. NOTICES.
Any notice, demand, request or other communication which may
be required or contemplated herein shall be sufficiently given if (i) given
either by facsimile transmission or telex, by reputable overnight delivery
service, postage prepaid, or by registered or certified mail, postage prepaid
and return receipt requested, to the address indicated below or to such other
address as any party hereto may specify as provided herein, or (ii) delivered
personally at such address.
If to the Trust: c/o Rothschild International Asset Management Limited
Five Arrows House
St. Swithin's Lane
London EC4N 8NR United Kingdom
Attention: Peter B. Collacott
10
<PAGE> 11
with a copy to:
Geoffrey R.T. Kenyon
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
If to Fund Accountant 3435 Stelzer Road
Columbus, Ohio 43219.
Attention: George O. Martinez
21. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust.
22. SEVERAL OBLIGATIONS OF THE PORTFOLIOS.
The Trust is a series company with multiple series, the Portfolios, and
has entered into this Agreement on behalf of those series, as amended from time
to time on notice to the Fund Accountant. With respect to any obligation of the
Trust on behalf of any Portfolio arising hereunder, the Fund Accountant shall
look for payment or satisfaction of such obligations solely to the assets and
property of the Portfolios to which such obligation relates as though the Trust
had separately contracted with the Fund Accountant by separate written
instrument with respect to each Portfolio. In addition, this Agreement may be
terminated with respect to one or more Portfolios without affecting the rights,
duties or obligations of any of the other Portfolios.
23. ASSIGNMENT.
This Agreement and the rights and duties hereunder shall not
be assignable with respect to a Portfolio by either of the parties hereto except
by the specific written consent of the other party. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and permitted assigns.
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<PAGE> 12
24. GOVERNING LAW.
This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of the State of Ohio. No provision of this
Agreement shall be deemed to limit the duties or obligations of Fund Accountant
or any other BISYS Entity under any other BISYS Agreement.
25. FORCE MAJEURE.
If the Fund Accountant is prevented, hindered or delayed from
or in performing any of its obligations under this Agreement by a Force Majeure
Event (as defined below), then:
(a) (i) the Fund Accountant's obligations under
this Agreement shall be suspended for so
long as the Force Majeure Event continues
and to the extent that it is so prevented,
hindered or delayed;
(ii) as soon as possible after the commencement
of the Force Majeure Event the Fund
Accountant shall notify the Company in
writing of the occurrence of the Force
Majeure Event, the date of commencement of
the Force Majeure Event and the effect of
the Force Majeure Event on the Fund
Accountant's ability to perform its
obligations under this Agreement; and
(iii) as soon as possible after the cessation of
the Force Majeure Event the Fund Accountant
shall notify the Company in writing of the
cessation of the Force Majeure Event and
shall resume performance of its obligations
under this Agreement.
(b) If the Force Majeure continues for more than one
month after the commencement of the Force Majeure
Event either party may terminate this Agreement by
giving not less than seven days notice in writing to
the other party.
(c) "Force Majeure Event" means any event beyond the
reasonable control of a party including, without
limitation, acts of God, war, riot, civil commotion,
malicious damage, compliance with any law or
governmental order, rule, regulation or direction,
accident, breakdown of plant or machinery, fire,
flood or storm.
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<PAGE> 13
26. MISCELLANEOUS.
Paragraph headings in this agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
For purposes of this Agreement, no officer of the Trust who is an employee of
any BISYS Entity shall be deemed to be an authorized representative of the Trust
for the purposes of giving or receiving any notice, consent, or other
communication pursuant to Sections 2, 4(e), 6, 7, 11, 14, 23 or 25 of this
Agreement or not in the ordinary course of business. No provision of this
Agreement shall be deemed to limit the duties or obligations of Fund Accountant
or any other BISYS Entity under any other BISYS Agreement.
[Remainder of the page intentionally left blank]
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
INTERNATIONAL CURRENCY
FUND
By: /s/ Peter B. Collacott
____________________________
BISYS FUND SERVICES, INC.
By: /s/ J. David Huber
____________________________
J. David Huber
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<PAGE> 15
Dated: January 16, 1997
SCHEDULE A
TO THE FUND ACCOUNTING AGREEMENT
BETWEEN
INTERNATIONAL CURRENCY FUND
AND
BISYS FUND SERVICES, INC..
FEES
----
Fund Accountant shall be entitled to receive a fee from each Portfolio in
accordance with the following schedule:
FUND ACCOUNTING FEES: (PER PORTFOLIO)*
Assets Fee
------ ---
$0 - $500 million 2 basis points
$500 million - $1 billion 1 basis point
> $1 billion .75 basis point
* Plus out-of-pocket expenses.
OUT-OF-POCKET EXPENSES:
Fund Account shall be entitled to be reimbursed for all reasonable
out-of-pocket expenses authorized by section 4 of the Fund Accounting Agreement.
INTERNATIONAL BISYS FUND SERVICES, INC.
CURRENCY FUND
By: /s/ Peter B. Collacott By: /s/ J. David Huber
______________________________ _______________________________
J. David Huber
305166.c6
A-1
<PAGE> 1
Exhibit 10
[GOODWIN, PROCTER & HOAR LLP LETTERHEAD]
February 4, 1997
Five Arrows Short-Term Investment Trust
International Currency Fund
3435 Stelzer Road
Columbus, Ohio 43219
Gentlemen:
As counsel to Five Arrows Short-Term Investment Trust (the "Trust"), we
have been asked to render our opinion in connection with the issuance by the
Trust of shares of the U.S. Dollar Fund, the Pound Sterling Fund, the Deutsche
Mark Fund and the Canadian Dollar Fund (the "Funds"), the series of the Trust
which have been established and designated in Section 4.2 of the Trust's
Agreement and Declaration of Trust dated August 13, 1996, as amended to date,
and as more fully described in the Prospectus and Statement of Additional
Information contained in the Form N-1A Registration Statement filed by the
Trust.
We have examined the Agreement and Declaration of Trust dated August
13, 1996 of the Trust, as amended to date, the By-Laws of the Trust, certain
resolutions adopted by the Board of Trustees of the Trust, the Prospectus, the
Statement of Additional Information and such other documents as we deemed
necessary for purposes of this opinion.
As counsel to International Currency Fund (the "Portfolio Trust"), we
have also been asked to render our opinion in connection with the issuance by
the Portfolio Trust to the Trust of shares of the U.S. Dollar Portfolio, the
Pound Sterling Portfolio, the Deutschemark Portfolio and the Canadian Dollar
Portfolio (the "Portfolios"), the series of the Portfolio Trust which have been
established and designated in Section 4.2 of the Trust's Amended and Restated
Agreement and Declaration of Trust dated October 16, 1996, as amended to date,
and as more fully described in Part A and Part B contained in the Form N-1A
Registration Statement filed by the Portfolio Trust.
We have examined the Agreement and Declaration of Trust dated October
16, 1996 of the Portfolio Trust, as amended to date, the By-Laws of the
Portfolio Trust, as amended to date, certain resolutions adopted by the Board
of Trustees of the Portfolio Trust, the
<PAGE> 2
[GOODWIN, PROCTER & HOAR LLP]
Five Arrows Short-Term Investment Trust
February 4, 1997
Page 2
Registration Statement and such other documents as we deemed necessary for
purposes of this opinion.
Based upon the foregoing, we are of the opinion that the shares of the
Funds and Portfolios which are the subject of the foregoing Registration
Statements will, when sold in accordance with the terms of the Prospectus and
Statement of Additional Information and the procedures described therein, in the
case of the Trust, and Part A and Part B of the Registration Statement, in the
case of the Portfolio Trust, in effect at the time of the sale, be legally
issued, fully-paid and nonassessable by the Trust or the Portfolio Trust, as the
case may be.
We consent to being named in the Registration Statements for the Trust
and Portfolio Trust and to a copy of this opinion being filed as an exhibit to
the foregoing Registration Statements.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
GOODWIN, PROCTER & HOAR LLP
<PAGE> 1
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------
The Board of Trustees
of International Currency Fund
We consent to the inclusion in Amendment No. 2 to the Registration Statement of
International Currency Fund on Form N-1A (File No. 811-07773) of our report
dated January 20, 1997 on our audits of the statements of assets and liabilities
of each of the series of the International Currency Fund, which report is
included in the Registration Statement. We also consent to the reference to our
Firm under the caption "Independent Auditors."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 3, 1997
<PAGE> 1
Exhibit 13
SUBSCRIPTION
January 6, 1997
To: The Board of Trustees of International Currency Fund
Dear Sirs:
The undersigned hereby subscribes to one hundred thousand shares of
beneficial interest in the U.S. Dollar Portfolio series of International
Currency Fund at a price of $1.00 per share and agrees to pay therefor in cash
the amount of $100,000.
Very truly yours,
FIVE ARROWS SHORT-TERM INVESTMENT TRUST
By: /s/ Paul R. Freeman
---------------------------------
<PAGE> 2
SUBSCRIPTION
January 6, 1997
To: The Board of Trustees of International Currency Fund
Dear Sirs:
The undersigned hereby subscribes to ten shares of beneficial interest in
the Pound Sterling Portfolio series of International Currency Fund at a price
of (pound)1.00 per share and agrees to pay therefor in cash the amount of
(pound)10.00.
Very truly yours,
FIVE ARROWS SHORT-TERM INVESTMENT TRUST
By: /s/ Paul R. Freeman
---------------------------------
<PAGE> 3
SUBSCRIPTION
January 6, 1997
To: The Board of Trustees of International Currency Fund
Dear Sirs:
The undersigned hereby subscribes to ten shares of beneficial interest in
the Deutschemark Portfolio series of Five Arrows Managed Liquidity at a price
of DM1.00 per share and agrees to pay therefor in cash the amount of DM10.00.
Very truly yours,
FIVE ARROWS SHORT-TERM INVESTMENT TRUST
By: /s/ Paul R. Freeman
---------------------------------
<PAGE> 4
SUBSCRIPTION
January 6, 1997
To: The Board of Trustees of International Currency Fund
Dear Sirs:
The undersigned hereby subscribes to ten shares of beneficial interest in
the Canadian Dollar Portfolio series of International Currency Fund at a price
of C$1.00 per share and agrees to pay therefor in cash the amount of C$10.00.
Very truly yours,
FIVE ARROWS SHORT-TERM INVESTMENT TRUST
By: /s/ Paul R. Freeman
---------------------------------
<PAGE> 5
SUBSCRIPTION
January 6, 1997
To: The Board of Trustees of International Currency Fund
Dear Sirs:
The undersigned hereby subscribes to fifty two thousand five hundred
shares of beneficial interest in the U.S. Dollar Portfolio series of
International Currency Fund at a price of $1.00 per share and agrees to pay
therefor in cash the amount of $52,500.
Very truly yours,
FIVE ARROWS CASH MANAGEMENT FUND
PLC
By: /s/ Paul R. Freeman
---------------------------------
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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