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Exhibit 5
ADVISORY AGREEMENT
AGREEMENT made as of the 16th day of January, 1997 between Rothschild
International Asset Management Limited (the "Adviser"), and the International
Currency Fund, a Delaware business trust (the "Trust").
WHEREAS, the Adviser is engaged principally in the business of
rendering investment management services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust proposes to engage in business as an open-end
management investment company and is so registered under the Investment Company
Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue shares of beneficial interest
in separate series with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Trust intends to initially offer shares in four series,
the U.S. Dollar Portfolio, the Deutsche Xxxx Portfolio, the Pound Sterling
Portfolio, and the Canadian Dollar Portfolio, such series (the "Initial
Portfolios"), together with all other series subsequently established by the
Trust with respect to which the Adviser renders investment advisory services
pursuant to the terms of this Agreement, being herein collectively referred to
as the "Portfolios" and individually as a "Portfolio".
NOW THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF ADVISER.
(a) INITIAL PORTFOLIOS. The Trust hereby appoints the Adviser
to act as investment adviser to the Initial Portfolios for the period and on the
terms herein set forth. The Adviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
(b) ADDITIONAL PORTFOLIOS. In the event that the Trust
establishes one or more series of shares other than the Initial Portfolios with
respect to which it desires to retain the Adviser to render management and
investment advisory services hereunder, it shall so notify the Adviser in
writing, indicating the advisory fee to be payable with respect to the
additional series of shares. If the Adviser is willing to render such services
on the terms provided for herein, it shall so notify the Trust in writing,
whereupon such series of shares shall become a Portfolio hereunder.
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(c) REGULATORY STATUS. The Adviser is regulated by the
Investment Management Regulatory Organisation Limited ("IMRO"), a
self-regulatory organization, in the conduct of its investment business. The
Adviser will provide services hereunder on the basis that the Trust is a
"Non-private customer" under the rules of IMRO.
2. DUTIES OF ADVISER.
The Adviser, at its own expense, shall furnish the following services
and facilities to the Trust:
(a) INVESTMENT PROGRAM. The Adviser shall, subject to the
provisions of paragraph 11 hereof, (i) furnish continuously an investment
program for each Portfolio in compliance with that Portfolio's investment
objective and policies as set forth in the Trust's current Prospectus and
Statement of Additional Information, (ii) determine (subject to the overall
supervision and review of the Board of Trustees of the Trust) what investments
shall be purchased, held, sold or exchanged by each Portfolio and what portion
if any, of the assets of each Portfolio shall be held uninvested, and (iii) make
changes on behalf of the Trust in the investments of each Portfolio. The Adviser
shall also manage, supervise and conduct the other affairs and business of the
Trust and each Portfolio thereof and all matters incidental thereto, subject
always to the control of the Board of Trustees of the Trust and to the
provisions of the Trust's Agreement and Declaration of Trust and By-laws, as
amended, and the 1940 Act.
(b) INTERNAL REPORTS. The Adviser will advise the Trust's
custodian on a prompt basis of each purchase and sale of a portfolio security
specifying the name of the security purchased, the market price, commission and
gross or net price, trade date, settlement date and identity of the effecting
broker or dealer. From time to time as the Trustees of the Trust may reasonably
request, the Adviser will furnish or cause to be furnished to the Trust's
officers and to each of its Trustees reports on portfolio transactions and
reports on issues of securities held in the portfolio, all at such times (but
not less frequently than once every twelve months or such shorter period as may
from time to time be required by applicable law) and in such detail as the
Trustees may reasonably request. For the purpose of such reports, the value of
the securities held in the Portfolio will be calculated in accordance with the
procedures described in the applicable Prospectus and Statement of Additional
Information. The Adviser shall upon the request of the Trustees or the officers
of the Trust, supply or cause to be supplied reports which compare the
performance of the Portfolios with that of other mutual funds possessing similar
investment objectives and policies. The Adviser will also inform the Trust's
officers and Trustees promptly of changes in investment strategy or tactics and
may from time to time contact those persons in order to discuss the investments
of the Portfolios. The Adviser will make its officers and employees available to
meet with the Trust's officers and Trustees on due notice to review the
investments and investment program of a Portfolio in the light of current and
prospective economic and market conditions. Except as otherwise provided by
applicable law, the only restrictions on the amount of any one investment, or on
proportion of the Portfolios which any one investment or any particular kinds of
investment may contribute, are set forth in this
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Agreement and the applicable Prospectus and Statement of Additional Information,
or as otherwise established from time to time by the Trustees.
(c) REGULATORY REPORTS. The Adviser shall furnish to the
Trust necessary assistance in:
(i) the preparation of all reports now or hereafter
required by federal or other laws; and
(ii) the preparation of prospectuses, registration
statements and amendments thereto that may be required by federal or
other laws or by the rules or regulations of any duly authorized
commission or administrative body.
(d) SERVICES OF PERSONNEL. To the extent the Trust shall
compensate personnel, officers and Trustees of the Trust, the Adviser shall bear
the expense of compensating such persons who are also employees of the Adviser
or its affiliates.
(e) FIDELITY BOND. The Adviser shall arrange for providing and
maintaining a bond issued by a reputable insurance company authorized to do
business in the place where the bond is issued against larceny and embezzlement
covering each officer and employee of the Trust, the Adviser and/or any
sub-adviser who may singly or jointly with others have access to funds or
securities of the Trust, with direct or indirect authority to draw upon such
funds or to direct generally the disposition of such funds. The bond shall be in
such reasonable amount as a majority of the Trustees who are not "interested
persons" of the Trust, as defined in the 1940 Act, shall determine, with due
consideration to the aggregate assets of the Trust to which any such officer or
employee may have access. The premium, or portion thereof pursuant to an
agreement among the insured parties in the case of a joint insured bond, for the
bond shall be payable by the Trust in accordance with paragraph 3(17).
3. ALLOCATION OF EXPENSES.
Except for the services or facilities to be provided by the Adviser set
forth in Paragraph 2 above, the Trust assumes and shall pay all expenses for all
other Trust operations and activities and shall reimburse the Adviser for any
such expense incurred by the Adviser (it being understood that the Trust shall
allocate such expenses between or among its Portfolios to the extent
contemplated by its Master Trust Agreement). The expenses to be borne by the
Trust shall include, without limitation:
(1) all expenses of organizing the Trust or forming any
series thereof;
(2) all expenses (including information, materials and
services other than services of the Adviser) of preparing, printing and mailing
all annual, semiannual and periodic reports, proxy materials and other
communications (including registration statements, prospectuses
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and amendments and revisions thereto) furnished to existing shareholders of the
Trust and/or regulatory authorities;
(3) fees involved in registering and maintaining registration
of the Trust and its shares with the Securities and Exchange Commission and
state regulatory authorities;
(4) any other registration, filing or other fees in connection
with requirements of regulatory authorities;
(5) expenses, including the cost of printing of certificates
relating to the issuance of shares of the Trust;
(6) to the extent not paid by the Trust's distributor, the
expenses of maintaining a shareholder account and furnishing, or causing to be
furnished, to each shareholder a statement of his account, including the expense
of mailing such statements;
(7) taxes and fees payable by the Trust to federal, state or
other governmental agencies;
(8) expenses related to the redemption of its shares,
including expenses attributable to any program of periodic redemption;
(9) all issue and transfer taxes, brokers' commissions and
other costs chargeable to the Trust in connection with securities transactions
to which the Trust is a party, including any portion of such commissions
attributable to research and brokerage services as defined by Section 28(e) of
the Securities Exchange Act of 1934, as amended from time to time;
(10) the charges and expenses of the custodian appointed by
the Trust, or any depository utilized by such custodian, for the safekeeping of
its property;
(11) charges and expenses of any shareholder servicing agents,
transfer agents and registrars appointed by the Trust, including costs of
servicing shareholder investment accounts;
(12) charges and expenses of independent accountants retained
by the Trust;
(13) legal fees and expenses in connection with the affairs of
the Trust, including legal fees and expenses in connection with registering and
qualifying its shares with federal and state regulatory authorities;
(14) compensation of Trustees of the Trust who are not
"interested persons" of the Trust (as defined in the 1940 Act);
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(15) expenses of shareholders' and Trustees' meetings,
including, without limitation, reasonable out-of-pocket expenses incurred by
Trustees in connection with attendance at Trustees' meetings (regardless of
whether such Trustees are also employees of the Adviser or its affiliates or are
otherwise "interested persons" of the Trust);
(16) membership dues in, and assessments of, the Investment
Company Institute or similar organizations;
(17) insurance premiums on fidelity, errors and omissions and
other coverages;
(18) expenses incurred in connection with any distribution
plan adopted by the Trust in compliance with Rule 12b-1 of the 1940 Act; and
(19) such other non-recurring expenses of the Trust as may
arise, including, without limitation, expenses of actions, suits, or proceedings
to which the Trust is a party and the legal obligation which the Trust may have
to indemnify its Trustees or shareholders with respect thereto.
4. ADVISORY FEE.
For the services to be provided by the Adviser, the Trust shall pay to
the Adviser investment advisory fees as set forth in Appendix A hereto. The
Adviser may from time to time and for such periods as it deems appropriate
reduce its compensation hereunder to the extent the Adviser may, by notice to
the Trust, voluntarily declare.
5. EXPENSE LIMITATION.
The Adviser agrees that if the total expenses of any Portfolio
(exclusive of interest, taxes, brokerage expenses, distribution expenses,
extraordinary items and any other items allowed to be excluded by applicable
state law) for any fiscal year of the Trust exceed the lowest expense limitation
validly imposed in any jurisdiction in which that Portfolio is then making sales
of its shares or in which its shares are then qualified for sale, the Adviser
will pay or reimburse such Portfolio for that excess up to the amount of its
advisory fee payable with respect to that Portfolio during that fiscal year. The
amount of the monthly advisory fee payable under Paragraph 4 hereof shall be
reduced to the extent that the monthly expenses of that Portfolio, on an
annualized basis, would exceed the foregoing limitation. At the end of each
fiscal year of the Trust, if the aggregate annual expenses chargeable to any
Portfolio for that year exceed the foregoing limitation based upon the average
of the monthly average net asset value of that Portfolio for the year, the
Adviser will promptly reimburse that Portfolio for the amount of such excess to
the extent not already reimbursed by reduction of the monthly advisory fee, but
if such expenses are within the foregoing limitation, any excess amount
previously withheld from the advisory fee during that fiscal year will be
promptly paid over to the Adviser.
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In the event that this Agreement (i) is terminated with respect to any
one or more Portfolios as of a date other than the last day of the fiscal year
of the Trust or (ii) commences with respect to one or more Portfolios as of a
date other than the first day of the fiscal year of the Trust, then the expenses
of such Portfolio or Portfolios shall be annualized and the Adviser shall pay
to, or receive from, the applicable Portfolio or Portfolios a pro rata portion
of the amount that the Adviser would have been required to pay or would have
received, if any, had this Agreement remained in effect with respect to such
Portfolio or Portfolios for the full fiscal year.
6. PORTFOLIO TRANSACTIONS.
In connection with the management of the investment and reinvestment of
the assets of the Trust, the Adviser, acting by its own officers, directors or
employees or by a duly authorized subcontractor, is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Trust. In executing portfolio transactions and selecting brokers or dealers, if
any, the Adviser will use its best efforts to seek on behalf of a Portfolio the
best overall terms available. In assessing the best overall terms available for
any transaction, the Adviser shall consider all factors it deems relevant,
including the breadth of the market in and the price of the security, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any (for the specific transaction and on a
continuing basis). In evaluating the best overall terms available, and in
selecting the broker or dealer, if any, to execute a particular transaction, the
Adviser may also consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to
any Portfolio of the Trust and/or other accounts over which the Adviser or an
affiliate of the Adviser exercises investment discretion. With the prior
approval of the Trustees, the Adviser may pay to a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only if, the
Adviser determines in good faith that such commission was reasonable in relation
to the value of the brokerage and research services provided. Such prior
approval may be obtained from the Trustees with respect to the Adviser's
investment program and need not be obtained on a transaction-by-transaction
basis. In the event that the Adviser wishes to enter into an arrangement with
any person pursuant to which it undertakes to place business with such person or
any of its associates or any other person at such person's discretion in return
for brokerage or research services provided by such person to the Adviser, or
enters into any other Soft Commission Arrangement as defined by IMRO Rules as in
effect from time to time, the Sub-Adviser will identify to the Trust in writing
each such broker-dealer, or other person and the nature of such services and
will obtain the consent of the Trust to the placing of business with such
broker/dealer. The Adviser will not, without the Trust's prior consent, invest
on behalf of any Portfolio in securities of which an issue or offer for sale was
underwritten, managed or arranged by the Adviser during the preceding twelve
months.
7. FURTHER INFORMATION CONCERNING ADVISORY SERVICES
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(a) The services provided by the Adviser may relate to investments or
assets denominated in various currencies. The Adviser and the Trust recognize
that movements of currency exchange rates may have an effect, favorable or
unfavorable, on the gain or loss otherwise experienced with respect to the
investments or assets of the Portfolios.
(b) In accordance with the provisions of the Investment Company Act of
1940, the Adviser may from time to time cause the Portfolios' assets to be held
in bank accounts outside the U.S. and the U.K. However, the Adviser will not
itself hold money or assets on behalf of the Portfolio.
(c) The Adviser may commit the Trust to a contract the performance of
which may require it to supplement the assets of the Portfolios, and may commit
the Trust to supplement the assets of the Portfolios by borrowing on their
behalf, but only the extent permitted under the terms of the Trust's
registration statement then in effect with the Securities and Exchange
Commission.
8. RELATIONS WITH TRUST.
(a) Subject to and in accordance with the Master Trust Agreement and
By-laws of the Trust and the Memorandum and Articles of Association of the
Adviser, it is understood that Trustees, officers, agents and shareholders of
the Trust are or may be interested in the Adviser (or any successor thereof) as
directors, officers, or otherwise, that directors, officers, agents and
shareholders of the Adviser (or any successor) are or may be interested in the
Trust as Trustees, officers, shareholders or otherwise, that the Adviser (or any
such successor thereof) is or may be interested in the Trust as a shareholder or
otherwise and that the effect of any such adverse interests shall be governed by
said Agreement and Declaration of Trust, Articles of Organization and By-laws.
(b) CONFLICTS OF INTEREST. To the extent permissible under the 1940 Act
or any other applicable law, the Adviser may, without prior reference to the
Trust, effect any transaction in investments in which it or any affiliated
person has or will have:
(i) bought the investment from or sold the investment to the Trust
when acting as principal (in the case of the Adviser only for
currency transactions or in respect of transactions effected for
the purpose of realizing capital gains of a particular amount
within a specific tax year); or
(ii) acted in the same transaction as both an agent for the Trust and
also as an agent for any other person, which may be a customer of
the Adviser or of an affiliated person;
(iii) directly or indirectly a material interest of any description,
or has or will have a relationship of any description with
another person such as to place it in a position where its duty
to or interest in relation to that other person conflicts or may
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conflict with its duty to the Trust. For example, such potential
conflicting interests or duties may arise because:
(aa) the Adviser or an affiliated person undertakes
investment business for other customer;
(bb) any of the Adviser's directors or employees, or those of
an affiliated person, is a director of, holds or deals
in securities of, or is otherwise interested in any
company whose securities are held or dealt in on behalf
of the Trust;
(cc) the transaction is in securities issued by an affiliated
person or by a customer of the Adviser or an affiliated
person;
(dd) the Adviser and/or the Custodian(s) may, acting as
principal, sell to or purchase from the Trust currency;
(ee) the transaction is in securities underwritten or
sub-underwritten by the Adviser or an affiliated person
in the previous twelve months;
(ff) the transaction is in units or shares of any company of
which the Adviser or any affiliated person is the
manager, operator, banker, adviser or trustee;
(gg) the Adviser or an affiliated person may receive
remuneration or other benefits by reason of acting in
corporate finance or similar transactions involving
companies whose securities held by the Trust; and
(hh) the transaction is in securities in respect of which the
Adviser or an affiliated person, or a director or
employee of an affiliated person, or a director or
employee of an affiliated person, is contemporaneously
trading or has traded on its own account or has either a
long or short position.
9. LIABILITY OF ADVISER.
Neither the Adviser nor its officers, directors, employees, agents or
controlling persons or assigns shall be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or its shareholders in
connection with the matters to which this Agreement relates; provided that no
provision of this Agreement shall be deemed to protect the Adviser against any
liability to the Trust or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith or gross negligence in
the performance of its duties of its obligations and duties under this
Agreement. Nor shall any provision hereof be deemed to protect any Trustee or
officer of the Trust against any such liability to which he might otherwise
be subject
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by reason of any willful misfeasance, bad faith or gross negligence in the
performance of his duties or the reckless disregard of his obligations and
duties.
10. LIABILITY OF THE TRUST AND THE PORTFOLIOS
The term "The International Currency Fund" means and refers to the
Trustees from time to time serving under the Master Trust Agreement of the
International Currency Fund, a Delaware business trust, as the same may be
amended from time to time. It is expressly agreed that the obligations of the
International Currency Fund hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the
International Currency Fund personally, but shall bind only the trust property
of the International Currency Fund, as provided in the Master Trust Agreement.
The execution and delivery of this Agreement have been authorized by the
Trustees and signed by an officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Trust as provided in its Master Trust Agreement.
With respect to any obligation of the International Currency Fund on
behalf of any Portfolio arising hereunder, the Adviser shall look for payment or
satisfaction of such obligations solely to the assets and property of the
Portfolio to which such obligation relates as though the International Currency
Fund had separately contracted with the Adviser by separate written instrument
with respect to each Portfolio. In addition, this Agreement may be terminated
with respect to one or more Portfolios without affecting the rights, duties or
obligations of any of the other Portfolios.
11. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective with
respect to the Initial Portfolio on the date hereof and, with respect to any
additional Portfolio, on the date of receipt by the Trust of notice from the
Adviser in accordance with paragraph 1(b) hereof that the Adviser is willing to
serve as Adviser with respect to such Portfolio. Unless terminated as herein pro
vided, this Agreement shall remain in full force and effect for two years from
the date hereof with respect to the Initial Portfolios and, with respect to each
additional Portfolio, for two years from the date on which such Portfolio
becomes a Portfolio hereunder. Subsequent to such initial periods of
effectiveness, this Agreement shall continue in full force and effect for
periods of one year thereafter with respect to each Portfolio so long as such
continuance with respect to such Portfolio is approved at least annually (a) by
either the Trustees of the Trust or by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of such Portfolio, and (b), in
either event, by the vote of a majority of the Trustees of the Trust who are not
parties to this Agreement or "interested persons" (as defined in the 0000 Xxx)
of any such party, cast in person at a meeting called for the purpose of voting
on such approval.
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(b) AMENDMENT. Any amendment to this Agreement shall become
effective with respect to a Portfolio upon approval of the Adviser and a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
that Portfolio.
(c) TERMINATION. This Agreement may be terminated with respect
to any Portfolio at any time, without payment of any penalty, by vote of the
Trustees or by vote of a majority of the outstanding voting securities (as
defined in the 0000 Xxx) of that Portfolio, or by the Adviser, in each case on
sixty (60) days' prior written notice to the other party. Any termination of
this Agreement will be without prejudice to the completion of transactions
already initiated by the Adviser on behalf of the Trust at the time of such
termination. The Adviser shall take all steps reasonably necessary after such
termination to complete any such transactions and is hereby authorization to
take such steps.
(d) AUTOMATIC TERMINATION. This Agreement shall automatically
and immediately terminate in the event of its assignment (as defined in the 1940
Act).
(e) APPROVAL, AMENDMENT OR TERMINATION BY INDIVIDUAL
PORTFOLIO. Any approval, amendment or termination of this Agreement by the
holders of a majority of the outstanding voting securities (as defined in the
0000 Xxx) of any Portfolio shall be effective to continue, amend or terminate
this Agreement with respect to any such Portfolio notwithstanding (i) that such
action has not been approved by the holders of a majority of the outstanding
voting securities of any other Portfolio affected thereby, and (ii) that such
action has not been approved by the vote of a majority of the outstanding voting
securities of the Trust, unless such action shall be required by any applicable
law or otherwise.
12. SERVICES NOT EXCLUSIVE.
The services of the Adviser to the Trust hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others so
long as its services hereunder are not impaired thereby.
13. MISCELLANEOUS.
(a) NOTICE. Any notice under this Agreement shall be in
writing, addressed and delivered or mailed, postage prepaid, to the other party
at such address as such other party may designate in writing for the receipt of
such notices.
(b) SEVERABILITY. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder shall not be thereby affected.
(c) APPLICABLE LAW. This Agreement shall be construed in
accordance with and governed by the laws of England.
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(d) IMRO. The Adviser has in operation a written procedure in
accordance with the IMRO Rules for the effective consideration and proper
handling of complaints from customers. Any complaint by the Trust under this
Mandate should be sent in writing and addressed to the Compliance Officer. The
Trust also has the right to complain to the Investment Ombudsman. The Trust may
request a statement describing the Trust's rights to compensation in the event
of the Adviser inability to meet any liabilities to the Trust.
[Remainder of the page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
ATTEST: INTERNATIONAL CURRENCY FUND
By: /s/ Xxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------ --------------------------------
Senior Vice President President
ATTEST: ROTHSCHILD INTERNATIONAL ASSET
MANAGEMENT LIMITED
By: /s/ Xxxxx XxxXxxx By: /s/ Xxxxx Xxxxxxxxx
------------------------------ --------------------------------
Secretary Chairman
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APPENDIX A
FEE SCHEDULE
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For the services to be provided by the Adviser hereunder, the Trust agrees
that each Initial Portfolio shall pay to the Manager a monthly fee as soon as
practical after the last day of each calendar month, which fee shall be paid at
a rate equal to twenty one hundredths of one percent (.20%) on an annual basis
of the average daily net asset value of such Portfolio for such calendar month,
commencing as of the date on which this Agreement becomes effective with respect
to such Portfolio.
In case of commencement or termination of this Agreement with respect to
any Portfolio during any calendar month, the fee with respect to such Portfolio
for that month shall be reduced proportionately based upon the number of
calendar days during which this agreement is in effect with respect to such
Portfolio, and the fee shall be computed based upon the average daily net asset
value of such Portfolio during such period.
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