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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
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. 4
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: (614) 470-8000
Charles L. Booth
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 April 30, 1999
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, 5, and 9 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
Euro 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.
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 60 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.
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 U.K. 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 thirteen months or less at the date of acquisition. The
Pound Sterling Portfolio also maintains a value-weighted average portfolio
maturity of 60 days or less. 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 thirteen months 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.
EURO PORTFOLIO
The Euro Portfolio's investment objective is to seek to maintain a high
level of liquidity, to preserve capital and stability of principal expressed in
Euros and, consistent with those objectives, earn current income. The Euro
Portfolio will invest in Euro-denominated securities issued or guaranteed as to
principal and interest by any government of a country participating in the
European Monetary Union (the "EMU"), by its sub-divisions or their agencies or
by non-EMU governments or Supranational Organizations, as well as high-quality,
short-term Euro-denominated money market instruments such as bank certificates
of deposit and such short-term corporate debt securities as commercial paper.
The Euro Portfolio invests only in Euro-denominated high quality
securities as described in this paragraph. The Euro Portfolio's assets will
consist of the securities of EMU governments 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 Euro Portfolio invests have remaining
maturities of thirteen months or less at the date of acquisition. The Euro
Portfolio also maintains a value-weighted average portfolio maturity of 60 days
or less. The Euro Portfolio follows these policies in seeking to maintain a
constant net asset value of E1.00 per share, although there is no assurance it
can do so on a continuing basis.
The Euro Portfolio may invest in Euro-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.
Under normal market conditions, the Euro Portfolio will have more than 25% of
its total assets invested in the obligations of issuers in the banking
industry.
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 Canadian 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.
All securities in which the Canadian Dollar Portfolio invests have
remaining maturities of thirteen months or less at the date of acquisition. The
Canadian Dollar Portfolio also maintains a value-weighted average portfolio
maturity of 60 days or less. 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 thirteen months 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.
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OTHER SECURITIES AND RISKS - ALL PORTFOLIOS
Below are brief descriptions of other securities and practices in which the
Portfolios may, invest or engage, along with their associated risks.
SECURITIES RATINGS
When securities are rated by one or more independent rating agencies, a
Portfolio uses these ratings to determine credit quality. In cases where a
security has received a rating from only one independent rating agency, a
Portfolio may rely on that rating. If a security has received ratings from two
or more rating agencies and at least two of the ratings are equivalent, a
Portfolio may rely on the two equivalent ratings even if the other ratings are
lower. In cases where a security's two highest ratings are in conflicting
categories, a Portfolio must follow the lower rating. If a security is unrated,
a Portfolio may assign it to a given category based on its own credit research.
FOREIGN INVESTMENTS
Foreign money market instruments have more risk than their domestic
counterparts, in part because foreign markets can have higher political and
economic risk and because reliable information about foreign issuers may be less
available. In addition, it may be more difficult to purchase and sell securities
in foreign markets because of differing settlement and custody practices and
costs.
REPURCHASE AGREEMENTS
A Portfolio may buy securities with the understanding that the seller will buy
them back with interest at a later date. If the seller is unable to honor its
commitment to repurchase the securities, the Fund could lose money.
SYSTEMS-YEAR 2000
The services provided to a Portfolio and its shareholders by State Street Bank
and Trust Company ("State Street" or the "Adviser"), each Portfolio's
investment adviser, State Street Global Advisors United Kingdom Limited
("SSSAUK"), BISYS Fund Services Limited Partnership and other service providers
depend on the smooth functioning of their computer systems and those of their
own service providers. Many computer software systems in use today cannot
distinguish the year 2000 from the year 1900 because of the way dates are
encoded and calculated. This problem could have a negative impact on the
handling of securities trades, payment of interest and dividends and pricing
and account services, among other Fund operations. Although at this time there
can be no assurance that no harm to the Fund will result, State Street, SSgAUK,
BISYS and the Fund's other service providers have advised the Fund that they
have been actively working on necessary changes to their computer systems in
anticipation of the year 2000 and expect that their systems, and those of their
service providers, will be prepared for the event. Making the necessary
preparations, however, remains the responsibility of each service provider. The
Fund itself does not expect to incur any material expense to address the year
2000 problem.
ITEM 6. MANAGEMENT
INVESTMENT MANAGEMENT
State Street Bank and Trust Company (State Street), 225 Franklin Street,
Boston, MA 02110, through its division State Street Global Advisors, serves as
each Portfolio's investment manager. State Street has engaged State Street
Global Advisors United Kingdom Limited (SSgAUK), 1 Canada Square, Canary Wharf,
London E14 5AF, an indirect wholly owned subsidiary of State Street to be
responsible for day-to-day management of each Portfolio's investment program.
Each Portfolio pays an annual fee of .25% of its average daily net assets for
the services provided by State Street and SSgAUK. State Street currently pays
one-half of the fee it receives from each Portfolio to SSgAUK for acting as
sub-adviser.
State Street is one of the largest providers of securities processing and
recordkeeping services for US mutual funds and pension funds. State Street
Global Advisors is the investment management business of State Street, a 200
year old pioneer and leader in the world of financial services. State Street
Global Advisors is a wholly owned indirect subsidiary of State Street
Corporation, a publicly held bank holding company. State Street, with over
US$422 billion under management as of September 30, 1998, provides complete
global investment management services from offices in the United States and
worldwide.
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ITEM 7. PURCHASE OF SECURITIES BEING OFFERED.
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 5:30 a.m. 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. 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. Each Portfolio
seeks to maintain the following constant net asset value per share:
U.S. Dollar Portfolio U.S. $1.00
Pound Sterling Portfolio (pound)1.00
Euro Portfolio E1.00
Canadian Dollar Portfolio C$1.00
It is anticipated that each Portfolio's assets will utilize the
amortized cost method of valuation. This method involves valuing an instrument
at its cost and thereafter assuming a constant amortization or accretion to
maturity of any premium or discount. However, when a Portfolio believes that
use of amortized cost valuation may dilute or adversely affect its
shareholders, the Fund may take appropriate action to eliminate or reduce the
extent of any dilution or unfairness.
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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 ("Disbursable 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 Euro Portfolio received
prior to 5 p.m. U.S. Eastern Time on a Portfolio Trust
Business Day will settle on the following Paris/Frankfurt
Banking Day (as defined below provided however that if such a
Portfolio Trust Business Day is not a Paris/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.
A "London Banking Day" is every day except Saturdays, Sundays and
holidays observed by London banks.
A "Paris/Frankfurt Banking Day" is every day except Saturdays, Sundays
and holidays observed by banks in either city.
A "Toronto Banking Day" is every day except Saturdays, Sundays and
holidays observed by Toronto banks.
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 Euro Portfolio received
prior to 5 p.m. U.S. Eastern Time on a Portfolio Trust
Business Day will settle on the following Paris/Frankfurt
Banking Day provided, however, that if such a Portfolio Trust
Business Day is not a Paris/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 8. DISTRIBUTION ARRANGEMENTS
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.
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Dated April 30, 1999
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 Euro 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.
TABLE OF CONTENTS PAGE
HISTORY..........................................................1
DESCRIPTION OF THE PORTFOLIOS AND THEIR INVESTMENTS
AND RISKS................................................2
MANAGEMENT OF THE FUND..........................................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 SHARES......................14
TAXATION OF THE PORTFOLIOS......................................16
UNDERWRITERS....................................................16
CALCULATION OF PERFORMANCE DATA.................................16
FINANCIAL STATEMENTS............................................16
ITEM 11. HISTORY.
The Portfolios are series of the Portfolio Trust, which is 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.
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ITEM 12. DESCRIPTION OF THE PORTFOLIOS AND THEIR INVESTMENTS AND RISKS
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.
Euro Portfolio
The Euro Portfolio's investment objective is to maximize current
income, to the extent consistent with the preservation of capital and liquidity
and the maintenance of a stable E1.00 per share net asset value. The Euro
Portfolio will invest in Euro-denominated securities issued or guaranteed as to
principal and interest by any government of a country participating in the
European Monetary Union (the "EMU"), by its sub-divisions or their agencies or
by non-EMU governments or Supranational Organizations, as well as high-quality,
short-term Euro-denominated money market instruments such as bank certificates
of deposit and such short-term corporate debt securities as commercial paper.
The Euro Portfolio invests only in Euro-denominated high quality
securities as described in this paragraph. The Euro Portfolio's assets will
consist of the securities of EMU governments and other securities, which have
been (i) rated by at least two nationally recognized statistical rating
organizations ("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 Euro Portfolio invests have remaining
maturities of thirteen months or less at the date of acquisition. The Euro
Portfolio also maintains a value-weighted average portfolio maturity of 60 days
or less. The Euro Portfolio follows these policies in seeking to maintain a
constant net asset value of E1.00 per share, although there is no assurance it
can do so on a continuing basis.
The Euro Portfolio may invest in Euro-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. Under
normal market conditions, the Euro Portfolio will have more than 25% of its
total assets invested in the obligations of issuers in the banking industry. See
"Additional Information Concerning Certain Investment Techniques for all
Portfolios--Concentration in Obligations of Qualifying Banks."
U.S. Dollar Portfolio
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, to earn current
income. The U.S. Dollar Portfolio will invest in U.S. Dollar-denominated
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 U.S.
Dollar-denominated 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 United States government securities, and
other "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 NRSROs, 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)
of unrated, determined to be comparable to such securities.
<PAGE> 14
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 value-weighted average portfolio maturity
of 60 days or less. The U.S. Dollar Portfolio follows these policies in seeking
to maintain a constant net asset value of US$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 "Additional Information Concerning Certain Investment Techniques for all
Portfolios--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 "Money Market Instruments" below.
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).
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,
to earn current income. The Canadian Dollar Portfolio will invest in Canadian
dollar-denominated securities issued or guaranteed as to principal and interest
by the Canadian Government, the Provinces of Canada, or their agencies or by
non-Canadian governments or Supranational Organizations as well as high-quality,
short-term Canadian dollar-denominated money market instruments such as bank
certificates of deposit and such short-term corporate debt securities, as
commercial paper and master demand notes.
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 Canadian 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 NRSRO, or (iii) if not rated by an NRSRO, 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 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 Adviser may rely upon ratings given by one or
more Canadian rating organizations.
All securities in which the Canadian Dollar Portfolio invests have
remaining maturities of thirteen months or less at the date of acquisition. The
Canadian Dollar Portfolio also maintains a value-weighted average portfolio
maturity of 60 days or less. 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 thirteen months 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 "Additional Information Concerning Certain Investment
Techniques for all Portfolios--Concentration in Obligations of Qualifying
Banks."
<PAGE> 15
Pound Sterling Portfolio
The Pound Sterling Fund is not currently offered to the public.
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, to
earn current income. The Pound Sterling Portfolio will invest in Pound
Sterling-denominated 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, short-term Pound
Sterling-denominated 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 U.K. 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 thirteen months or less at the date of acquisition. The
Sterling Portfolio also maintains a value-weighted average portfolio maturity of
60 days or less. The Pound Sterling Portfolio
follows these policies in seeking to maintain a constant net asset value of
(pound)l.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 thirteen months 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 "Additional Information Concerning Certain Investment
Techniques for all Portfolios--Concentration in Obligations of Qualifying
Banks."
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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<PAGE> 16
(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 Designated
Government Securities (defined as (a) any security issued or
guaranteed by (i) in the case of the Euro Portfolio, the
government of any country that participates in the European
Monetary Union (provided that the applicable government, as to
its Euro-denominated short-term obligations, has a First Tier
rating from the Requisite NRSROs (as defined in SEC Rule 2a-7)
and that in all other respects such securities are of
sufficient credit quality to qualify as First Tier
Securities); (ii) in the case of the U.S. Dollar Portfolio,
the U.S. federal government, (iii) in the case of the Canadian
Dollar Portfolio, the Canadian federal government, and (iv) in
the case of the Pound Sterling Portfolio, the U.K. government,
and (b) any security issued or guaranteed by a person
controlled or supervised by and acting as an instrumentality
of such government pursuant to authority granted by the
appropriate legislative or executive body in such countries
if, in each case, such Portfolio's investment adviser shall
have determined that such security has a creditworthiness
substantially equivalent to that of a direct obligation of the
applicable government; or (c) any certificate of deposit for
any of the foregoing); and
(5) 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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<PAGE> 17
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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<PAGE> 18
(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
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<PAGE> 19
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.
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<PAGE> 20
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. 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.
The Investment Adviser will determine the liquidity of Rule 144A Securities
under the supervision of the Portfolio Trust's Board of Trustees 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.
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> 21
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> 22
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> 23
ITEM 13. MANAGEMENT OF THE FUND.
TRUSTEES AND OFFICERS OF THE PORTFOLIO TRUST
Each Portfolio is a separate investment series of the Portfolio Trust,
which is a Delaware business trust under the terms of the Master Trust
Agreement establishing the Portfolio Trust, which is governed by the laws of
Delaware. Under the terms of the Portfolio Trust's Declaration of Trust, the
affairs of the Portfolio are managed under the supervision of the Trustees of
the Portfolio Trust.
The Boards of Trustees of the Portfolio Trust establish the Portfolio
Trust's policies and supervise and review the operations and management of the
Portfolio Trust. The day-to-day operations of the Portfolio Trust are
administered by officers elected by the Board of Trustees. 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 interest arising from the fact
that the same individuals are Trustees of the Trust and of the Portfolio Trust,
up to and including creating separate Boards of Trustees.
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
State Street Global Advisors Director of Product
United Kingdom, Ltd. Development, State Street
Almack House Global Advisors
28 King Street United Kingdom, Ltd.,
London SW1 Y6QW U.K. Managing Director,
Born June 19, 1944 Rothschild, Asset
Management Limited;
Director, International
Biotechnology Trust.
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.
Patrick J. Riley Trustee Partner - Riley,
21 Custom House Burke & Donahue
Boston, MA 02110 (law firm).
Born November 30, 1948
Bruce D. Taber Trustee Computer Simulation
26 Round Top Road Consultant, General Electric
Boxford, MA 01921 Industrial Controls; prior to
Born April 25, 1943 that, President, A.B. Reed,
Inc. - Engineers, Architects,
Planners; prior to that, Vice
President, Instrumentation
and Controls, A.B. Reed,
Inc.
Henry W. Todd Trustee President and Director,
111 Commerce Drive Zink & Triest Co., Inc.
Montgomeryville, PA 18936 (dealer in vanilla flavor
Born May 4, 1947 materials); Director, A.M.
Todd Co., and Flavorite
Laboratories.
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 C 1989 - May 1993.
Balisbridge,
Shelburne Road
Dublin 4 Ireland
Charles L. Booth Vice President Vice President, BISYS Fund Services, Inc.
BISYS Fund Services, Inc. and Secretary and has served in a
3435 Stelzer Road variety of positions within
Columbus, OH 43219 BISYS Fund Services, Inc.
since 1991.
William J. 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 C Supervisor, Price Waterhouse,
Balisbridge, 1990 to March 1994.
Shelburne Road
Dublin 4 Ireland
</TABLE>
10
<PAGE> 24
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 the compensation paid to the Portfolio Trust's
Trustees for the period ending December 31, 1998.
- --------------------------------------------------------------------------------
<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
Patrick J, Riley $10,000 $10,000 $2,500 $2,500 $25,000
Bruce D. Taber $10,000 $10,000 $2,500 $2,500 $25,000
Henry W. Todd $10,000 $10,000 $2,500 $2,500 $25,000
Peter B. Collacott $ 0 $ 0 $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------
<FN>
(a) Currently the U.S. Dollar Fund, the Pound Sterling Fund, the Euro Fund and
the Canadian Dollar Fund of SSgA International Liquidity Fund (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 are allocated among the Portfolios in proportion to their
respective net asset values. The allocation shown reflects the relative net
asset values of the Portfolios for the period ending December 31, 1998.
</TABLE>
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
As of the close of business on April 7, 1999, SSgA Cash Management Fund Plc, an
Irish umbrella company consisting of classes of shares of beneficial interest
categorized as sub-funds corresponding to the portfolios (the "Irish Funds"),
and SSgA International Liquidity Fund, a Delaware business trust consisting of
classes of shares of beneficial interest categorized as sub-trusts corresponding
to the Portfolios, (the "U.S. Fund"), each owned more than 25% of the
outstanding interests of the Portfolios and were the sole shareholders of the
Portfolios. Because each Irish Fund and U.S. Fund controls its corresponding
Portfolio, it may take certain actions with respect that Portfolio without the
approval of any other shareholder.
As of April 1, 1999, the Trustees and officers of the Portfolio Trust
as a group owned less than 1% of the outstanding shares of any Portfolio.
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.
11
<PAGE> 25
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
Investment Adviser of the Portfolio Trust
State Street Bank and Trust Company ("State Street" or the "Investment
Adviser"), 225 Franklin Street, Boston, MA 02110, through its division State
Street Global Advisors, furnishes investment services to the Portfolios in which
the Funds invest all their investable assets and manages the Portfolios'
investments subject to the supervision of the Trustees of the Portfolio Trust
pursuant to an agreement dated September 22, 1998 (the "Advisory Agreement").
The Investment Adviser is a wholly owned subsidiary of State Street Corporation,
a bank holding company.
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 .25% of average daily net
assets. The Investment Adviser has currently agreed to limit each Fund's total
expenses to 0.50% of average daily net assets. This limitation is in effect
through December 31, 1999. After that date, the Investment Adviser may revise
or eliminate the limitation at any time without notice. Beginning with the
second anniversary of its inception, the Advisory Agreement will continue from
year to year with respect to a Portfolio provided that a majority of the
Trustees who are not interested persons of the Portfolio Trust and either a
majority of all Trustees or a majority of the shareholders of the Portfolio
approve its continuance. The Advisory Agreement with respect to a Portfolio may
be terminated by the Investment Adviser or the Portfolio without penalty upon
sixty days' notice and will terminate automatically upon its assignment.
From the U.S. Dollar Portfolio's inception through September 22, 1998,
Rothschild International Asset Management Limited ("RIAM") served as the
Portfolios' Investment Adviser for which RIAM was entitled to a fee at an annual
rate of .20% of the Portfolio's average daily net assets. For the period March
26, 1997 through December 31, 1997, RIAM waived its entire fee for the U.S.
Dollar Portfolio; without such waiver, such fees would have been $60,474.
For the period from January 1, 1998 to September 22, 1998 RIAM waived
its fees of $71,832 and [Pound]119,327 in the U.S. Dollar and Pound Sterling
Portfolios respectively, and State Street Bank and Trust Company waived its fees
of $12,843 and [Pound]49,520 in the U.S. Dollar and Pound Sterling Portfolios
respectively for the period from September 23, 1998 to December 31, 1998.
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
reports to be provided to existing shareholders; registration and reporting fees
and expenses; and Trustees' fees and expenses.
On September 22, 1998, State Street succeeded RIAM as the Portfolios'
Investment Adviser. For the period September 22, 1998 to November 30, 1998, RIAM
served as sub-adviser to the Portfolios pursuant to a Sub-Advisory Agreement
between State Street and RIAM and managed the Portfolios' investments and
affairs subject to the supervision of the Trustees of the Portfolio Trust and of
the Investment Adviser. RIAM 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. RIAM is an indirect, subsidiary of Rothschild Concordia
AG of Zug, Switzerland, a holding company whose subsidiaries manage
approximately $28.5 billion in asset, spread across equities, bond and
currencies. For the services provided by RIAM under the Sub-Advisory Agreement,
State Street paid RIAM an advisory fee with respect to each Portfolio payable
monthly at an annual rate of .05% of the Portfolio's average daily net assets.
The Glass-Steagall Act prohibits a depository state chartered member
bank such as the Investment Adviser from engaging in the business of issuing,
underwriting, selling or distributing certain securities. Any activities of the
Investment Adviser in informing its customers of the Funds, performing
investment and redemption services and providing custodian, transfer,
shareholder servicing, dividend disbursing and investment advisory services must
be evaluated under these provisions. The Investment Adviser has been advised by
its counsel that its activities in connection with the Fund are consistent with
its statutory and regulatory obligations. The Funds' shares are not endorsed or
guaranteed by State Street or its affiliates, are not deposits or obligations of
State Street or its affiliates, and are not insured by the Federal Deposit
Insurance Corporation or any other governmental agency, and have investment
risks, including possible loss of principal.
Changes in federal or state statutes and regulations relating to the
permissible activities of banks and their affiliates, as well as judicial or
administrative decisions or interpretations of such or future statutes and
regulations, could prevent the Investment Adviser from continuing to perform all
or a part of the above services for its customers and/or the Portfolio Trust. If
the Investment Adviser were prohibited from serving the Portfolio Trust in any
of its present capacities, the Board of Trustees of the Portfolio Trust would
seek an alternative provider(s) of such services. In such event, changes in the
operation of the Portfolio Trust may occur. It is not expected by the
Investment Adviser that existing shareholders would suffer any adverse
financial consequences (if another advisor with equivalent abilities is found)
as a result of any of these occurrences.
Sub-Adviser
Effective February 1, 1999, the Investment Adviser has entered into a
sub-advisory agreement with respect to the Portfolios (the "Sub-Advisory
Agreement") with State Street Global Advisors United Kingdom Limited (the
"Sub-Adviser"), which is also a wholly-owned indirect subsidiary of State
Street. Under the terms of the agreement, the Sub-Adviser will continuously
furnish an investment program for the Portfolios, will make investment decisions
for each Portfolio and place all orders for the purchase and sale of portfolio
securities and all other instruments. The activities of the Sub-Adviser are
subject to the supervision and control of the Trustees of the Portfolio Trust
and the Investment Adviser.
The initial term of the Sub-Advisory Agreement is two years from its
inception. Beginning with the second anniversary of its inception, the
Sub-Advisory Agreement will continue from year to year with respect to each
Portfolio provided that its continuance is approved in the same manner as for
the Advisory Agreement. Each Portfolio, the Investment Adviser and the
Sub-Adviser may terminate the Sub-Advisory Agreement with respect to that
Portfolio without penalty upon sixty days notice to the other parties.
For its services under the Sub-Advisory Agreement, the Sub-Adviser
receives from the Investment Adviser one half of the net fee paid to the
Investment Adviser with respect to the Portfolios pursuant to the Advisory
Agreement.
12
<PAGE> 26
ADMINISTRATOR OF THE PORTFOLIO
BISYS Fund Services Limited Partnership, 3435 Stelzer Road, Columbus,
OH 43219-3035 serves as the administrator to the Portfolios (the
"Administrator").
The Administrator provides the Portfolio Trust with office space for
managing its affairs and with certain clerical services and facilities. For the
services provided by the Administrator, each Portfolio pays an annual fee to
the Administrator, computer daily and payable monthly, based ont he Portfolio's
average daily net assets as follows:
<TABLE>
<CAPTION>
Asset size* Fee Rate
----------- --------
<S> <C>
Up to 500 million 0.05%
In excess of 500 million up to 1 billion 0.04%
In excess of 1 billion 0.03%
* In the Portfolio's designated currency.
</TABLE>
TRANSFER AND DIVIDEND PAYING AGENT
BISYS Fund Services, Inc., 3435 Stelzer Road, Columbus, OH 43219 serves
as the Portfolio Trust's transfer and dividend paying agent.
CUSTODIAN
The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY serves
as custodian of all cash and securities of the Portfolios.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, One Post Office Square, Boston, MA 02109,
serves as independent accountants for the Portfolio Trust and will audit each
Portfolio's financial statements annually.
ITEM 16. 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> 27
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 17. 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.
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.
Each holder in a Portfolio is entitled to a vote in proportion to its
percentage interest in the Portfolio.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SHARES.
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). The valuation of the instruments a Portfolio holds at amortized cost is
permitted in accordance with Rule 2a-7 and certain procedures established by
the Trustees of the Portfolio Trust thereunder and pursuant to "no-action"
letters from the Division of Investment Management of the Securities and
Exchange Commission.
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> 28
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 E 1.00 in the case of an investor investing in the
Euro 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. 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.
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> 29
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 19. TAXATION OF THE PORTFOLIOS.
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 20. UNDERWRITERS.
Not applicable.
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
The financial statements of the Portfolio Trust for the fiscal period ended
December 31, 1998 are incorporated herein by reference to the annual report of
the Portfolio Trust (File No. 811-07773) filed with the SEC on March 9, 1999.
16
<PAGE> 30
<PAGE> 31
PART C
------
To the Registration Statement of The International
Currency Fund (the "Trust")
Item 23. Exhibits.
- -------- ---------
Exhibit No. Description
----------- -----------
A1 Amended and Restated Master Trust Agreement
of the Trust incorporated by reference
to Exhibit 1 to Pre-Effective Amendment
No. 1 to this Registration Statement filed
via EDGAR on November 25, 1996.
A2 Amendment No. 1 to the Master Trust
Agreement.
B By-Laws of the Trust incorporated by
reference to Exhibit 2 to Pre-Effective
Amendment No. 1 to this Registration
Statement filed via EDGAR on November 25,
1996.
C Not Applicable.
D1 Advisory Agreement between the
International Currency Fund and State
Street Bank and Trust Company incorporated
by reference to Exhibit D1 to Post-Effective
Amendment No. 4 to the Registration
Statement of SSSA International Liquidity
Fund on Form N-1A filed with the SEC via
EDGAR on January 28, 1999.
D2 Form of Sub-Advisory Agreement between State
Street Bank and Trust Company and
State Street Global Advisors United Kingdom
Limited incorporated by reference to Exhibit
D1 to Post-Effective Amendment No. 4 to the
Registration Statement of SSSA International
Liquidity Fund on Form N-1A filed with the
SEC via EDGAR on January 28, 1999.
E Not applicable.
<PAGE> 32
Exhibit No. Description
----------- -----------
F Not applicable.
G Custody Agreement between the Trust and The
Chase Manhattan Bank incorporated herein by
reference to this Exhibit number in
Amendment No. 2 to this Registration
Statement (File No. 811-07773) filed
February 4, 1997.
H1 Administration Agreement between the
Trust and BISYS Fund Services Ohio, Inc.
H2 Fund Accounting Agreement between the
Trust and BISYS Fund Services, Inc.
H3 Transfer Agent Agreement between the
Portfolio Trust and BISYS Fund Services,
Inc.
I Not applicable.
J Not applicable.
K Not applicable.
L Purchase Agreement with respect to initial
capital incorporated herein by reference to
this Exhibit number in Amendment No. 2 to
this Registration Statement (File
No. 811-07773) filed February 4, 1997.
M Not applicable.
N Financial Data Schedules for the
Portfolio Trust.
O Not applicable.
Item 24. Persons Controlled by or Under Common Control with the
Portfolio Trust.
-------------------------------------------------------
Not applicable.
<PAGE> 33
Item 25. 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 26. Business and Other Connections of Investment Adviser.
- -------- -----------------------------------------------------
The Investment Management Division of State Street Bank and Trust
Company ("State Street") serves as adviser to the Registrant. State Street, a
Massachusetts bank, currently manages large institutional accounts and
collective investment funds. The business, profession, vocation or employment of
a substantial nature which each director or officer of the investment adviser is
or has been, at any time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner or trustee,
is as follows:
NAME CAPACITY BUSINESS NAME
WITH ADVISOR AND ADDRESS*
Tenley E. Albright, MD Director Chairman, Western
Resources, Inc.
Commonwealth Avenue
Boston, MA 02116-3134
I. MacAlister Booth Director Retired Chairman, President and
CEO, Polaroid Corporation
P.O. Box 428 - 68 Barnes Hill Road
Concord, MA 01742
Marshall N. Carter Chairman and CEO State Street Bank and Trust Company
225 Franklin Street - P.O. Box 351
Boston, MA 02110
Truman S. Casner Director Partner, Ropes & Gray
One International Place - 37th Floor
Boston, MA 02110
Nader F. Darehshori Director Chairman, President and CEO,
Houghton Mifflin Company
222 Berkeley - 5th Floor
Boston, MA 02116-3764
Arthur L. Goldstein Director Chairman and CEO, Ionics, Inc.
65 Grove Street
P.O. Box 9131
Watertown, MA 02272-9131
David P. Gruber Director President and CEO,
Wyman-Gordon Company
244 Worchester Street
N. Grafton, MA 01536-8001
Charles F. Kaye Director President, Transportation
Investments Inc.
101 Federal Street - Suite 1900
Boston, MA 02110
John M. Kucharski Director Chairman and CEO, EG&G, Inc.
45 William Street
Wellesley, MA 02181
Charles R. LaMantia Director President and CEO, Arthur D. Little,
Inc.
25 Acorn Park
Cambridge, MA 02140
David B. Perini Director Chairman and President, Perini
Corporation
73 Mt. Wayte Avenue
Framingham, MA 01701
Dennis J. Picard Director Chairman and CEO, Raytheon Company
141 Spring Street
Lexington, MA 02173
David A. Spina President and State Street Corporation
Chief Operating 225 Franklin Street - P.O. Box 351
Officer Boston, MA 02110
Diana Chapman Walsh Director President, Wellesley College
106 Central Street
Wellesley, MA 02181
State Street Global Advisors Ltd. United Kingdom (ssgAUK), an indirect
wholly-owned subsidiary of State Street, serves as sub-adviser to the
Portfolios. SSgAUK currently manages investment portfolios for and advises
pension funds, high net worth individuals and institutional and international
investors. The business, profession, vocation or employment or a substantial
nature which each executive director or officer of SSgAUK is or has been at
anytime during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner or trustee, as as follows:
Name, Business and Address Capacity with SSGAUK
--------------------------- ---------------------
Timothy B. Harbert Executive Director
Executive Vice President
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
John R. Serhant Executive Director
Principal
State Street Global Advisors
225 Franklin Street
Boston, MA 02110
Nigel Wightman Executive Director
Managing Director
State Street Global Advisors United Kingdom Limited
King Street Advisors Limited
almack House
28 King Street
London SWIY 6QW
Executive Director
State Street Bank Europe Limited
1 Royal Exchange Steps
Royal Exchange
London EC3V 3LE
Jean-Francois Schock Executive Director
Executive Director
State Street Global Advisors United Kingdom Limited
Almack House
28 King Street
London SWIY 6QW
Alan Brown Executive Director
Executive Director
State Street Global Advisors United Kingdom Limited
King Street Advisors Limited
Almack House
28 King Street
London SWIY 6QW
Executive Director
European Direct Capital Management
Plankengasse 4/4, A-1010
Vienna, Austria
Executive Director
Advanced International Technology
311 Park Place Blvd
Suite 250
Clearwater, florida 33759
Executive Director (until September 11, 1997)
State Street Unit Trust Management
One Canada Square
Canary Wharf
London
James Palmer Executive Director
Sales Director
LCF Edmond de Rothschild Fund Management Limited
Orion House
5 Upper St Martins Lane
London
Sales Director (until May 1998) Executive Director
American Baltic Securities Fund Limited
c/o Hemisphere Management Limited
P O Box HM 951, Hamilton HM DX, Bermuda
Paul Duncombe Executive Director
Kanesh Lakhani Executive Director
Patrick Waller Executive Director
<PAGE> 34
Item 27. 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 28. 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 29. Management Services.
- -------- --------------------
Not applicable.
Item 30. Undertakings.
- -------- -------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
registrant has duly caused this Amendment to its registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 28th day of April, 1999.
INTERNATIONAL CURRENCY FUND
By: /s/ Peter B. Collacott
-----------------------------
Peter B. Collacott, President
<PAGE> 36
EXHIBIT INDEX
99a.2 Amendment No. 1 to the Master Trust Agreement
99h.1 Administration Agreement between the Portfolio Trust and BISYS
Fund Services Ohio, Inc
99h.2 Fund Accounting Agreement between the Portfolio Trust and
BISYS Fund Services, Inc.
27 Financial Data Schedule
<PAGE> 1
EXHIBIT A2
----------
INTERNATIONAL CURRENCY FUND
AMENDMENT NO. 1 TO
THE MASTER TRUST AGREEMENT
AMENDMENT NO. 1 to the Amended and Restated Master Trust Agreement of
International Currency Fund (the "Trust") dated October 16, 1996, as amended
(the "Agreement").
W I T N E S S E T H
WHEREAS, Section 9.3 of the Agreement provides that the Agreement may
be amended at any time, so long as such amendment does not adversely affect the
rights of any shareholder, by an instrument in writing executed by an officer of
the Trust pursuant to the vote of a majority of the Trustees of the Trust and
setting forth such amendment, and shall be effective as of the time set forth in
the instrument;
WHEREAS, the amendment set forth below does not adversely affect the
rights of any shareholder of the Trust;
WHEREAS, a majority of the Trustees of the Trust at a meeting held on
August 20, 1998 approved the conversion of the "Deutschemark Portfolio"
Sub-Trust of the Trust to the "Euro Portfolio" Sub-Trust subject to the receipt
of any necessary regulatory relief from the Securities and Exchange Commission,
such conversion to take place in conjunction with the adoption of the Euro as
the official currency of the eleven European Union countries currently
participating in such adoption (the "Euro Adoption");
WHEREAS, by a letter dated December 2, 1998 the staff of the Securities
and Exchange Commission has granted the necessary regulatory relief.
<PAGE> 2
WHEREAS, the Euro Adoption became effective on January 1, 1999;
NOW, THEREFORE, the undersigned, being a duly elected and qualified
officer of the trust, certifies that, effective January 1, 1999, the Agreement
is amended to replace the portion of Section 4.2 immediately preceding Section
4.2(a) with the following:
" Section 4.2 ESTABLISHMENT AND DESIGNATION OF SUB-TRUSTS AND
CLASSES. Without limiting the authority of the Trustees set forth in
Section 4.1 to establish and designate any further Sub-Trusts, the
Trustees hereby establish and designate four Sub-Trusts: "U.S. Dollar
Portfolio," "Pound Sterling Portfolio," "Euro Portfolio" and "Canadian
Dollar Portfolio". The Designated Currency for the U.S. Dollar
Portfolio shall be the U.S. Dollar, the Designated Currency for the
Pound Sterling Portfolio shall be the Pound Sterling, the Designated
Currency for the Euro Portfolio shall be the Euro, and the Designated
Currency for the Canadian Dollar Portfolio shall be the Canadian
dollar. The Shares of such Sub-Trusts and any Shares of any further
Sub-Trust or class thereof that may from time to time be established
and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Sub-Trust at the time of
establishing and designating the same) have the following relative
rights and preferences:"
Dated: January 4, 1999
/s/ Geoffrey R.T. Kenyon
-------------------------------
Geoffrey R.T. Kenyon
Assistant Secretary
<PAGE> 1
Exhibit 99h.1
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of March, 1999, by and
between the INTERNATIONAL CURRENCY FUND, a Delaware business trust (the
"Company"), and BISYS FUND SERVICES OHIO, INC. (the "Administrator"), an Ohio
corporation.
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 BISYS Fund Services Limited
Partnership, 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,
SSgA International Liquidity Fund, and SSgA 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.
<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;
2
<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;
3
<PAGE> 4
(p) perform all administrative services and functions of the
Company and each 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.
4
<PAGE> 5
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and 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. The Company
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including, but not limited to, the travel and lodging expenses
incurred by officers and employees of the Administrator in connection with
attendance at Board meetings.
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
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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 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
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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 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 Trust: State Street Global Advisers
Almack House
28 King Street
London, England SW1Y6QW
Attention: Peter B. Collacott
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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: J. David Huber
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;
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(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.]
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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:
--------------------------------------
Title:
----------------------------------
BISYS FUND SERVICES OHIO, INC.
By:
-------------------------------------
Title:
----------------------------------
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF MARCH 1, 1999
BETWEEN INTERNATIONAL CURRENCY FUND
AND
BISYS FUND SERVICES OHIO, INC.
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, Euro 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 at
the annual rates specified below:
GROSS FEE PER PORTFOLIO*
Five one-hundredths of one percent (.05%) of
each Portfolio's average daily net assets up
to $500 million
Four one-hundredths of one percent (.04%) of
each Portfolio's average daily net assets in
excess of $500 million up to $1 billion
Three one-hundredths of one percent (.03%) of
each Portfolio's average daily net assets in
excess of $1 billion
* The average daily net asset value of a Portfolio refers to
the amount in the relevant designated currency. All fees are
incremental.
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, the applicable
rate will be applied on an annual basis to each Portfolio's
average daily net assets. The value of the net
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assets of a particular Portfolio shall be computed in the
manner described in the Company's then-current Prospectus
respecting that 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 March 1, 1999 and shall remain in effect through
March 1, 2000 ("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, at any time with respect to any
Portfolio upon not less than 120 days' prior written notice to
the other party.
The Company may terminate this Agreement at any time for
Cause, without incurring any additional cost. 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) a material breach by the Administrator of any
of the Administrator's obligations hereunder; provided,
however, that the Administrator shall have 30 days to cure any
such breach following a written notice from the Company
relating to such breach.
A-2
<PAGE> 1
Exhibit 99h.2
FUND ACCOUNTING AGREEMENT
AGREEMENT made this 1st day of March, 1999, 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 BISYS Fund Services Ohio,
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,
SSgA International Liquidity Fund, SSgA 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;
(iii) Separate ledger accounts required by
subsection (b)(2)(ii) and (iii) of the Rule;
and
<PAGE> 2
(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;
(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;
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(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;
(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;
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(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 Fund Accountant's
affiliate BISYS Fund Services (Ireland) Limited ("BISYS Ireland") to provide
certain services under this Agreement and the Trust further agrees that 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:
(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;
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(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;
(e) All systems-related expenses associated with the provision of
special reports and services pursuant to Section 1(c) herein;
and
(f) 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 March 1, 2000 (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, at
any time with respect to any Portfolio upon not less than 120 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.
Notwithstanding the foregoing, the Trust may terminate this
Agreement at any time for Cause, as defined below, without incurring any
additional cost. For purposes of this Agreement, the term "Cause" shall mean (i)
dishonest statements or acts with respect to the Trust or any affiliate
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<PAGE> 6
thereof; (ii) failure to perform to the reasonable satisfaction of the Trust's
Board of Trustees a substantial portion of Fund Accountant's duties and
responsibilities hereunder; (iii) gross negligence or willful misconduct of Fund
Accountant with respect to the Trust or any affiliate thereof; or (iv) a
material breach by Fund Accountant of any of Fund Accountant's obligations
hereunder; provided, however, that the Administrator shall have 30 days to cure
any such breach following a written notice from the Company relating to such
breach.
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 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
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<PAGE> 7
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 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.
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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 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.
8
<PAGE> 9
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
(ii) Authorization of Fund Accountant to act as
fund accountant for the Trust and to provide
accounting services for the Trust.
9
<PAGE> 10
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: State Street Global Advisers
Almack House
28 King Street
London, England SW1Y6QW
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: J. David Huber
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.
11
<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.
12
<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]
13
<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:
---------------------------------
Title:
------------------------------
BISYS FUND SERVICES, INC.
By:
---------------------------------
Title:
------------------------------
14
<PAGE> 15
Dated: March 1, 1999
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
- --------------------
GROSS FEE PER PORTFOLIO*
Two one-hundredths of one percent (.02%) of each Portfolio's
average daily net assets up to $500 million
One one-hundredths of one percent (.01%) of each Portfolio's
average daily net assets in excess of $500 million up to $1
billion
Three quarters one-hundredths of one percent (.0075%) of each
Portfolio's average daily net assets in excess of $1 billion
* The average daily net asset value of a Portfolio refers to the amount
in the relevant designated currency. All fees are incremental.
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.
A-1
<PAGE> 16
PRORATION OF FEES
- -----------------
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, the applicable rate will
be applied on an annual basis to each of the Portfolio's average daily
net assets, 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.
INTERNATIONAL BISYS FUND SERVICES, INC.
CURRENCY FUND
By: By:
----------------------------- -----------------------------
A-2
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