INVESTMENT ADVISORY AGREEMENT
Exhibit 29d1
This Investment Advisory Agreement (this “Agreement”) is made and entered into on May 20,
2011, to be effective upon the commencement of operations of the first of the Funds listed on
Schedule A attached hereto, by and between Precidian ETFs Trust, a Delaware statutory trust (the
“Trust”), and Precidian Funds LLC, a Delaware limited liability company (the “Advisor”).
WHEREAS, the Trust is an open-end management investment company, registered under the
Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust is authorized to issue shares of beneficial interest in separate series
with each such series representing interests in a separate portfolio of securities and other
assets;
WHEREAS, the Advisor is registered as an investment adviser under the Investment Advisers Act
of 1940, as amended (the “Advisers Act”), and engages in the business of asset management;
WHEREAS, the Trust desires to retain the Advisor to render certain investment management
services to the portfolios of the Trust, each a series of the Trust (each a “Fund” and,
collectively, the “Funds”), and the Advisor is willing to render such services; and
WHEREAS, capitalized terms not otherwise defined in this Agreement have the meanings assigned
to them in a Fund’s most recent prospectus.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto
agree as follows:
1. Obligations of Investment Advisor.
(a) Services. The Advisor shall provide a continuous program of investment management
for the Funds, subject to the general supervision of the Trust’s Board of Trustees and the
provisions of this Agreement. Specifically, and without limiting the generality of the foregoing,
the Advisor agrees to perform the following services (the “Services”) for each Fund:
(1) manage the investment and reinvestment of the assets of the Fund for the period and on the
terms set forth in this Agreement;
(2) continuously review, supervise, and administer the investment program of the Fund;
(3) determine, in its discretion, the securities to be purchased, retained or sold (and
implement those decisions) with respect to the Fund;
(4) with the assistance of the Fund’s distributor, determine the number of shares of the Fund
that will be created or redeemed each Business Day based on the purchase orders submitted by
Authorized Participants;
(5) provide, in a timely manner, such information as may be reasonably requested by the Trust
or its designated agents in connection with, among other things, information about the Fund
sufficient for a pricing service or other entity to calculate the Indicative Intra-Day Value of the
shares of the Fund every fifteen seconds each Business Day;
(6) provide the Trust and the Fund with records concerning the Advisor’s activities under this
Agreement which the Trust and the Fund are required to maintain;
(7) render regular reports to the Trust’s trustees and officers concerning the Advisor’s
discharge of the foregoing responsibilities; and
(8) arrange for other necessary services, including custodial, transfer agency and
administration.
(b) Control of the Trust. The Advisor shall discharge the responsibilities described
in subsection (a) subject to the control of the trustees and officers of the Trust and in
compliance with (i) such policies as the trustees may from time to time establish; (ii) the Fund’s
objectives, policies, and limitations as set forth in its prospectus and statement of additional
information, as the same may be amended from time to time; and (iii) with all applicable laws and
regulations.
(c) Sub-Advisor and Agents. All Services to be furnished by the Advisor under this
Agreement may be furnished through the medium of any managers, officers or employees of the Advisor
or through such other parties (including, without limitation, a sub-advisor) as the Advisor may
determine from time to time.
(d) Expenses and Personnel. The Advisor agrees, at its own expense or at the expense
of one or more of its affiliates, to render the Services and to provide the office space,
furnishings, equipment and personnel as may be reasonably required in the judgment of the trustees
and officers of the Trust to perform the Services on the terms and for the compensation provided
herein. The Advisor shall authorize and permit any of its officers, managers and employees, who
may be elected as trustees or officers of the Trust, to serve in the capacities in which they are
elected. Except to the extent expressly assumed by the Advisor herein and except to the extent
required by law to be paid by the Advisor, the Trust shall pay all costs and expenses in connection
with its operation.
(e) Books and Records. The Advisor hereby undertakes and agrees to maintain all
records not maintained by a service provider or sub-adviser pursuant to their agreements with the
Trust or the Advisor, in the form and for the period required by Rule 31a-2 under the 1940 Act.
All books and records prepared and maintained by the Advisor for the Trust and each Fund under this
Agreement shall be the property of the Trust and the Fund and, upon request therefor, the Advisor
shall surrender to the Trust and the Fund such of the books and records so requested. The Advisor
further agrees that it will not disclose or use any records or information obtained pursuant to
this Agreement in any manner whatsoever except as authorized in this Agreement
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and that it will keep confidential any information obtained pursuant to this Agreement and
disclose such information only if the Trust has authorized such disclosure, or if such disclosure
is required by federal or state regulatory authorities.
(f) Additional Services Provided at the Expense of the Trust. The Advisor agrees, at
the expense of the Trust or the Advisor, as determined under Section 3(b) hereof, (i) to prepare
all required tax returns of the Trust and each Fund, (ii) to prepare and submit reports to existing
shareholders, (iii) to update periodically the prospectuses and statements of additional
information of the Trust and (iv) to prepare reports to be filed with the Securities and Exchange
Commission (“SEC”) and other regulatory authorities.
2. Fund Transactions.
(a) General. The Advisor is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each Fund. With respect to brokerage
selection, the Advisor shall seek to obtain the best overall execution for fund transactions, which
is a combination of price, quality of execution and other factors. As permitted by Section 28(e)
of the Securities Exchange Act of 1934, as amended (“Section 28(e)”), the Advisor may pay to a
broker which provides brokerage and research services (as such services are defined in Section
28(e)) to the Fund an amount of disclosed commission in excess of the commission which another
broker would have charged for effecting that transaction. Such practice is subject to a good faith
determination that such commission is reasonable in light of the services provided and to such
policies as the Trust’s trustees may adopt from time to time. Such services of brokers are used by
the Advisor in connection with all of its investment activities, and some of such services obtained
in connection with the execution of transactions for a Fund may be used in managing other
investment accounts.
(b) Mixed-Use Services. On occasion, a broker-dealer might furnish the Advisor with a
service which has a mixed use (i.e., the service is used both for investment and brokerage
activities and for other activities). Where this occurs, the Advisor will reasonably allocate the
cost of the service, so that the portion or specific component which assists in investment and
brokerage activities is obtained using portfolio commissions from a Fund or other managed accounts,
and the portion or specific component which provides other assistance (for example, administrative
or non-research assistance) is paid for by the Advisor from its own funds.
(c) Exclusivity. Where the Advisor deems the purchase or sale of a security to be in
the best interest of a Fund as well as its other customers (including any other fund or other
investment company or advisory account for which the Advisor acts as investment adviser), the
Advisor, to the extent permitted by applicable laws and regulations, may aggregate the securities
to be sold or purchased for a Fund with those to be sold or purchased for such other customers in
order to obtain the best net price and most favorable execution under the circumstances. In such
event, allocation of the securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Advisor, as applicable, in the manner it considers to be equitable
and consistent with its fiduciary obligations to such Fund and such other customers. In some
instances, this procedure may adversely affect the price and size of the position obtainable for
the Fund.
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(d) Reporting. The Advisor will promptly communicate to the officers and the trustees
of the Trust such information relating to portfolio transactions as they may reasonably request.
(e) Delegation. The Advisor may delegate or share responsibility for Fund
transactions and the terms of this Section 2 with a sub-advisor, pursuant to the terms of Section
1(c).
3. Compensation of the Advisor; Expense Allocation.
(a) For the services rendered, the facilities furnished and expenses assumed by the Advisor,
each Fund shall pay to the Advisor at the end of each calendar month a fee for the Fund calculated
as a percentage of the average daily net assets of the Fund at the annual rates set forth in
Schedule A of this Agreement. The Advisor’s fee is accrued daily at 1/365th of the applicable
annual rate set forth in Schedule A. Schedule A shall be amended from time to time to reflect the
addition and/or termination of any Fund as a Fund hereunder and to reflect any change in the
advisory fees payable with respect to any Fund duly approved in accordance with Section 8 hereof.
For the purpose of the fee accrual, the daily net assets of each Fund are determined in the manner
and at the times set forth in the Fund’s current prospectus and, on days on which the net assets
are not so determined, the net asset value computation to be used shall be as determined on the
immediately preceding day on which the net assets were determined. In the event of termination of
this Agreement, all compensation due through the date of termination will be calculated on a
pro-rated basis through the date of termination and paid within fifteen business days of the date
of termination. The Advisor may waive all or a portion of its fees provided for hereunder and such
waiver will be treated as a reduction in the purchase price of its services. The Advisor shall be
contractually bound under this Agreement by the terms of any publicly-announced waiver of its fee,
or any limitation of a Fund’s expenses, as if such waiver or limitation were fully set forth in
this Agreement. The waiver of any of the Advisor’s fee shall not obligate the Advisor to waive any
of its fee on a subsequent occasion.
(b) The Advisor agrees to pay all expenses of the Trust, except for: (i) brokerage expenses
and other expenses (such as stamp taxes) connected with the execution of portfolio transactions or
in connection with creation and redemption transactions; (ii) interest and tax expenses; (iii)
dividend and distribution expenses; (iv) legal fees or expenses in connection with any arbitration,
litigation or pending or threatened arbitration or litigation, including any settlements in
connection therewith; (v) compensation and expenses of the Trustees of the Trust who are not
officers, directors/trustees, partners or employees of the Advisor or its affiliates (the
“Independent Trustees”); (vi) compensation and expenses of counsel to the Independent Trustees;
(vii) distribution fees and expenses paid by the Trust under any distribution plan adopted pursuant
to Rule 12b-1 under the 1940 Act; (viii) extraordinary expenses, as determined under generally
accepted accounting principles; and (ix) the advisory fee payable to the Advisor hereunder. The
payment or assumption by the Advisor of any expense of the Trust that the Advisor is not required
by this Agreement to pay or assume shall not obligate the Advisor to pay or assume the same or any
similar expense of the Trust on any subsequent occasion.
4. Status of Investment Advisor. The services of the Advisor to the Trust and each
Fund are not to be deemed exclusive, and the Advisor shall be free to render similar services to
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others so long as its services to the Trust and the Funds are not impaired thereby. The
Advisor shall be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Trust or the Funds in any way
or otherwise be deemed an agent of the Trust or the Funds. Nothing in this Agreement shall limit
or restrict the right of any manager, officer or employee of the Advisor, who may also be a
trustee, officer or employee of the Trust, to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any other business, whether of a
similar nature or a dissimilar nature.
5. Permissible Interests. Trustees, agents, and shareholders of the Trust are or may
be interested in the Advisor (or any successor thereof) as managers, officers, members or
otherwise; and managers, officers, agents, and members of the Advisor are or may be interested in
the Trust as trustees, shareholders or otherwise; and the Advisor (or any successor) is or may be
interested in the Trust as a shareholder or otherwise.
6. Limits of Liability; Indemnification. The Advisor assumes no responsibility under
this Agreement other than to render the services called for hereunder. The Advisor shall not be
liable for any error of judgment or for any loss suffered by the Trust or a Fund in connection with
the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the 0000 Xxx) or a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in the performance
of, or from reckless disregard by it of its obligations and duties under, this Agreement. It is
agreed that the Advisor shall have no responsibility or liability for the accuracy or completeness
of the Trust’s registration statement under the 1940 Act or the Securities Act of 1933, as amended
(the “1933 Act”), except for information supplied by the Advisor for inclusion therein. The Trust
agrees to indemnify the Advisor to the full extent permitted by the Trust’s Declaration of Trust.
7. Term. This Agreement shall become effective as stated in the Recitals hereto.
Unless terminated as provided in this Agreement, this Agreement shall remain in full force and
effect for two years from the date of this Agreement. Subsequent to such initial period of
effectiveness, this Agreement shall continue in full force and effect for successive periods of one
year thereafter provided that such continuance with respect to the Funds is approved at least
annually (a) by either the trustees or by vote of a majority of the outstanding voting securities
(as defined in the 0000 Xxx) of the Funds, and (b) in either event, by the vote of a majority of
the trustees who are not parties to this Agreement or “interested persons” (as defined in the 0000
Xxx) of any such party, cast in person at a meeting called for the purpose of voting on such
proposal; provided, however, that:
(a) the Trust may, at any time and without the payment of any penalty, terminate this
Agreement upon 60 days written notice of a decision to terminate this Agreement by (i) the Trust’s
trustees; or (ii) the vote of a majority of the outstanding voting securities of the Funds;
(b) the Agreement shall immediately terminate in the event of its assignment (within the
meaning of the 1940 Act and the rules promulgated thereunder);
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(c) the Advisor may, at any time and without the payment of any penalty, terminate this
Agreement upon 60 days’ written notice to the Trust and the Funds; and
(d) the terms of paragraph 6 of this Agreement shall survive the termination of this
Agreement.
8. Amendments. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no amendment of this
Agreement shall be effective with respect to a Fund until approved by (a) to the extent required by
applicable law, the vote of the holders of a majority of the Fund’s outstanding voting securities
and (b) a majority of those trustees of the Trust who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the purpose of voting
on such approval. Additional Funds may be added to Schedule A by written agreement of the Trust
and the Advisor.
9. Applicable Law. This Agreement shall be construed in accordance with, and governed
by, the laws of the State of New York without regard to the principles of the conflict of laws or
the choice of laws.
10. Representations and Warranties.
(a) Representations and Warranties of the Advisor. The Advisor hereby represents and
warrants to the Trust as follows:
(i) the Advisor is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder;
(ii) the Advisor is registered as an investment adviser with the SEC under the Advisers Act,
shall maintain such registration in effect at all times during the term of this Agreement, and
shall notify the Trust immediately if the Advisor ceases to be so registered; and
(iii) the Advisor has adopted a written code of ethics complying with the requirements of Rule
17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, and will provide the Trust with a
copy of that code, together with evidence of its adoption. Within 20 days of the end of each
calendar quarter during which this Agreement remains in effect, the chief compliance officer of the
Advisor shall certify to the Trust that the Advisor has complied with the requirements of Rule
17j-1 and Rule 204A-1 (each as amended from time to time) during the previous quarter and that
there have been no violations of the Advisor’s code of ethics or, if such a violation has occurred,
that appropriate action has been taken in response to such violation. Upon written request of the
Trust, the Advisor shall permit representatives of the Trust to examine the reports (or summaries
of the reports) required to be made to the Advisor by Rule 17j-1(c)(1) and other records evidencing
enforcement of the code of ethics.
(b) Representations and Warranties of the Trust. The Trust hereby represents and
warrants to the Advisor as follows: (i) the Trust has been duly organized as a trust under the laws
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of the State of Delaware and is authorized to enter into this Agreement and carry out its
terms; (ii) shares of the Fund are (or will be) registered for offer and sale to the public under
the 1933 Act; and (iii) such registrations will be kept in effect during the term of this
Agreement.
11. Liability of Trust and Funds. 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 as
provided in the Declaration of Trust. This Agreement shall not be deemed to have been made by any
of them individually or to impose any liability on them personally. With respect to any obligation
of the Trust or a Fund arising under this Agreement, the Advisor shall look for payment or
satisfaction of such obligation solely to the assets and property of the Fund to which such
obligation relates, and under no circumstances shall the Advisor have the right to set off claims
relating to such Fund by applying property of any other series of the Trust. The business and
contractual relationships created by this Agreement, consideration for entering into this
Agreement, and the consequences of such relationship and consideration relate solely to the Trust
and the Funds.
12. Use of Names. The Trust acknowledges that all rights to the names “Precidian”,
“Precidian ETFs” and “Precidian Funds” and any derivatives thereof (“Names”), as well as any logos
that are now or shall hereafter be associated with Names (“Logos”), belong to the Advisor, and that
the Trust is being granted a limited license to use such Names and Logos in its name, the name of
its series and the name of its classes of shares. In the event that this Agreement is terminated
and the Advisor no longer acts as investment adviser to the Trust, the Advisor reserves the right
to withdraw from the Trust and the Funds the uses of Names and Logos or any name or logo that would
imply a continuing relationship between the Trust or the Funds and the Advisor or any of its
affiliates.
13. Severability. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected
thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.
14. Notice. Notices of any kind to be given to the Trust hereunder by the Advisor
shall be in writing and shall be duly given if mailed or delivered to the Trust at 000 Xxxx Xx.,
Xxxxx 0, Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President, or to such other address or to such
individual as shall be so specified by the Trust to the Advisor. Notices of any kind to be given
to the Advisor hereunder by the Trust shall be in writing and shall be duly given if mailed or
delivered to the Advisor at the Trust at 000 Xxxx Xx., Xxxxx 0, Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President, or at such other address or to such individual as shall be so specified by
the Advisor to the Trust. Notices shall be deemed to have been given on the date delivered
personally or by courier service, or three days after sent by registered or certified mail, postage
prepaid, return receipt requested.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and the year first written above.
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| PRECIDIAN ETFS TRUST | PRECIDIAN FUNDS LLC | |||||||||
By:
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/s/ Xxxxxx X. XxXxxx
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By: | /s/ Xxxxxx X. XxXxxx
|
|||||||
| Title: President | Title: President | |||||||||
Attest |
||
/s/ J. Xxxxxx Xxxxxx
|
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