Exhibit 9(f)
SUB-ADMINISTRATION AGREEMENT
SUB-ADMINISTRATION AGREEMENT made this 11th day of June, 1997 between Waterhouse
Securities, Inc. ("Waterhouse"), a Delaware corporation, and Funds Distributor,
Inc. ("FDI"), a Massachusetts corporation.
WHEREAS, Waterhouse provides certain administrative services for certain
open-end management investment companies registered under the Investment Company
Act of 1940, as amended (the "1940 Act") (the "Funds"), and to certain
portfolios of the Funds (each a "Portfolio", collectively, the "Portfolios") as
listed on Schedule A, as such Schedule shall be automatically amended from time
to time, subject to Board of Director approval;
WHEREAS, Waterhouse serves as administrator for the Funds pursuant to an
Administration Agreement dated as of June 11, 1997, as amended from time to
time;
WHEREAS, Waterhouse desires to retain FDI to assist it in performing
administrative services with respect to the shares of the common stock (the
"Shares") of the Fund and FDI is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
parties agree as follows:
1. Services Provided by FDI. FDI will assist Waterhouse by providing services to
the Portfolios of the Fund, as listed in Exhibit A.
2. Services Provided by Waterhouse. In furtherance of the responsibilities under
this Agreement Waterhouse will:
(a) cause the Fund's service providers to furnish any and all
information and assist FDI in taking any other actions that may be
reasonably necessary in connection with FDI providing those services
listed in Exhibit A;
(b) cause the Fund's blue sky administrator to monitor sales of
the Shares to assure compliance with applicable state securities and
Blue Sky laws;
(c) cause the Fund's transfer agent to give necessary information for
the preparation of quarterly reports in a form satisfactory to FDI
regarding Rule 12b-1 fees, front-end sales loads, back-end sales loads,
if applicable, and other data regarding sales and sales loads as
required by the 1940 Act or as requested by the Board of Directors of
the Fund;
(d) cause the Fund's transfer agent to provide FDI with all necessary
historical information so that FDI can calculate the maximum sales
charges payable by the Fund pursuant to the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD") and the
actual sales charges paid by the Fund, if applicable; cause the Fund's
transfer agent to provide FDI with all of the necessary information so
that FDI can calculate the maximum sales charges payable by the Fund
pursuant to the Rules of Fair Practice of the NASD and the actual sales
charges paid by the Fund, if applicable; and cause the
Fund's transfer agent to provide such information in a form
satisfactory to FDI no less often than monthly for every Fund and on a
daily basis for any Fund where FDI determines that the remaining limit
is approaching zero, if applicable; and
(e) provide FDI with copies of, or access to, any documents that
FDI may reasonably request and will notify FDI as soon as possible of
any matter materially affecting FDI's performance of its services under
this Agreement.
3. Compensation; Reimbursement of Expenses. Waterhouse shall pay FDI the
following fee for the services provided under this Agreement:
(a) an annual fee of $250,000 for Routine Administrative Services, as
defined in Exhibit A, payable in equal monthly installments on the
second business day of each month; and
(b) for Extraordinary Administrative Services, as defined in Exhibit A:
(i) a flat fee to be negotiated after the scope of the project
has been accurately and completely defined; or
(ii) a fee for a particular project based on a blended hourly
rate of $75.00 per person. Only personnel with an Assistant
Vice President title or higher with FDI would xxxx on an
hourly basis.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly in arrears. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above. In
addition, Waterhouse agrees to reimburse FDI for FDI's reasonable out-of-pocket
expenses as mutually agreed to by the parties from time to time.
4. Effective Date and Term. This Agreement shall become effective with respect
to a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date Funds Distributor, Inc. becomes
sub-administrator to the Fund; Schedule A to this Agreement shall be deemed
amended to include such Fund from and after such date).
This Agreement shall become effective as of the date hereof and will continue
until December 12, 1997 and will continue thereafter so long as such continuance
is specifically approved at least annually (i) by the Fund's Board or (ii) by a
vote of a majority (as defined in the 0000 Xxx) of the Shares of the Fund or the
relevant Portfolio, as the case may be, provided that in either event its
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to this Agreement and
who have no direct or indirect financial interest in this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable with respect to any Portfolio
or any Fund, without penalty, on not less than sixty days' notice, by the Fund's
Board of Directors, by vote of a majority (as defined in the 0000 Xxx) of the
outstanding voting securities of such Fund, or by you. This Agreement shall
terminate automatically in the event of its "assignment" (as defined in the 1940
Act). This Agreement may be terminated by either party, on not less than 60 days
written notice, upon any material breach of this Agreement by the other party.
If FDI ceases to be the Sub-Administrator of any Fund before the fifth
anniversary of the date the Fund began its investment activities, Waterhouse
shall reimburse FDI an amount equal to the number resulting from multiplying the
Fund's total unamortized organizational expenses by a fraction, the numerator of
which is equal to the number of initial shares redeemed by FDI or its affiliate
and the denominator of which is equal to the number of initial shares still
outstanding as of the date of such redemption, as long as the administrative
position of the staff of the Securities and Exchange Commission requires FDI to
reimburse the Fund such amount. (Initial shares shall mean the shares purchased
by FDI or an affiliate to provide the initial seed capital to a Fund pursuant to
Section 14 of the 1940 Act.)
5. Standard of Care and Indemnification.
(a) Waterhouse will indemnify and hold harmless FDI, its
officers, employees and agents and any persons who control FDI
(together "FDI and its employees") and hold each of them harmless from
any losses, claims, damages or liabilities, or actions in respect
thereof, to which FDI and its employees may become subject, including
amounts paid in settlement with the prior written consent of
Waterhouse, insofar as such losses, claims, damages or liabilities, or
actions in respect thereof, arise out of or result from the failure of
Waterhouse to comply with the terms of this Agreement;
(b) FDI will indemnify and hold harmless Waterhouse, its officers,
employees and agents and any persons who control Waterhouse (together
"Waterhouse and its employees") and hold each of them harmless from any
losses, claims, damages or liabilities, or actions in respect thereof,
to which Waterhouse and its employees may become subject, including
amounts paid in settlement with the prior written consent of FDI,
insofar as such losses, claims, damages or liabilities, or actions in
respect thereof, arise out of or result from the failure of FDI to
comply with the terms of this Agreement;
Waterhouse will reimburse FDI and its employees for reasonable legal or
other expenses reasonably incurred by FDI and its employees in
connection with investigating or defending against any such loss,
claim, damage, liability or action. Waterhouse shall not be liable to
FDI for any action taken or omitted by FDI in bad faith, with willful
misfeasance or gross negligence, or with reckless disregard by FDI of
its obligations and duties hereunder. The indemnities in this Section
shall, upon the same terms and conditions, extend to and inure to the
benefit of each of the employees of FDI that serve as officers or
directors of the Fund and to each of the directors and officers of FDI
and any person controlling FDI within the meaning of Section 15 of the
Securities Act of 1933 ("1933 Act") or Section 20 of the Securities
Exchange Act of 1934 ("1934 Act").
FDI will reimburse Waterhouse for reasonable legal or other expenses
reasonably incurred by Waterhouse in connection with investigating or
defending against any such loss, claim,
damage, liability or action. FDI shall not be liable to Waterhouse for
any action taken or omitted by Waterhouse in bad faith, with willful
misfeasance or gross negligence, or with reckless disregard by
Waterhouse of its obligations and duties hereunder. The indemnities in
this Section shall, upon the same terms and conditions, extend to and
inure to the benefit of each of the directors and officers of
Waterhouse and any person controlling Waterhouse within the meaning of
Section 15 for the 1933 Act or Section 20 of the 1934 Act.
(c) (i) Promptly after an indemnified party (or, if such indemnified
party is not a natural person, a responsible officer of such
indemnified party) receives notice or otherwise becomes aware of the
commencement of any action or other assertion of any losses, claims,
damages or liabilities by any third party, such indemnified party
shall, if a claim in respect thereof is to be made pursuant to this
Section 5, notify the indemnitor of the same in writing (such notice, a
"claim notice"); but the omission so to notify the indemnitor will not
relieve the indemnitor from any liability that it may have to such
indemnified party otherwise than under this Section 5. In the event
that the indemnified party notifies the indemnitor in writing of its
waiver of any right to indemnification pursuant to this Section 5 in
respect of any losses, claims, damages or liabilities or portion
thereof, the provisions of clause (ii) of this Section 5(c) shall not
apply.
(ii) Promptly following receipt of a claim notice, the indemnitor, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party and any others the indemnitor may designate in contesting such
losses, claims, damages or liabilities and shall pay the reasonable
fees and disbursements of such counsel related to such contest. In any
such contest, any indemnified party shall have the right to retain its
own counsel, but the reasonable fees and expenses of such counsel shall
be at the expense of such indemnified party unless (A) the indemnitor
and the indemnified party shall have mutually agreed to the retention
of such counsel or (B) the named parties to any such contest (including
any impleaded parties) include both the indemnitor and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnitor shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees and expenses of more than one firm for
all such indemnified parties. The indemnitor may, at its option, at any
time upon written notice to the indemnified party, assume the
responsibility for contesting any losses, claims, damages or
liabilities and may designate counsel satisfactory to the indemnitor in
connection therewith provided that the counsel so designated would have
no actual or potential conflict of interest in connection with such
representation. Unless it shall assume the responsibility for
contesting any losses, claims, damages or liabilities, the indemnitor
shall not be liable for any settlement or compromise of such losses,
claims, damages or liabilities or portion thereof which settlement or
compromise is effected without its written consent, but if settled or
compromised with such consent or if there be a final judgment for the
plaintiff asserting such losses, claims or liabilities, the indemnitor
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement, compromise or judgment. If the
indemnitor assumes responsibility for contesting any losses, claims,
damages or liabilities, it shall be entitled to settle or compromise
such losses, claims, damages or liabilities or portion thereof with the
consent of the indemnified
party or, if such settlement or compromise provides for release of the
indemnified party in connection with all matters relating to such
losses, claims, damages or liabilities, or, with respect to the
settlement or compromise of a portion of such losses, claims, damages
or liabilities, all matters relating to such portion of such losses,
claims, damages or liabilities, that have been asserted against the
indemnified party by the other parties to such settlement or
compromise, without the consent of the indemnified party. In the event
that any expense paid by the indemnitor pursuant to this Section 6(c)
is subsequently determined to not be required to be borne by the
indemnitor, the indemnified party that received such payment shall
promptly refund the amount so paid to the indemnitor. If the indemnitor
assumes responsibility for contesting any losses, claims, damages or
liabilities, the indemnitor shall keep the indemnified party apprised,
on a current basis, of matters concerning such contest, including
without limitation (i) providing the indemnified party with reasonable
notice of and opportunity to be present in person and/or by counsel at
proceedings or discussions of settlement or compromise; (ii) providing
the indemnified party with copies of and opportunity to comment on
filings, papers or settlement agreements proposed to be filed or served
by or on behalf of the indemnitor; and (iii) providing the indemnified
party with copies of filings, papers and proposed settlement agreements
received by the indemnitor from or on behalf of persons asserting such
losses, claims, damages or liabilities.
(d) The obligation to indemnify and provide contribution pursuant to
this Section 6 shall survive the termination of this Agreement.
7. Record Retention and Confidentiality. FDI shall keep and maintain on
behalf of the Fund all books and records which the Fund and FDI are, or may be,
required to keep and maintain in connection with the services to be provided
hereunder pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the 1940 Act. FDI further agrees
that all such books and records shall be the property of the Fund and to make
such books and records available for inspection by the Fund, by Waterhouse, 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
Fund and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
8. Rights of Ownership. All computer programs and procedures developed to
perform the services to be provided by FDI under this Agreement are the property
of FDI.
9. Return of Records. FDI may at its option at any time, and shall promptly upon
the demand of Waterhouse and/or the Fund, turn over to Waterhouse and/or the
Fund and cease to retain FDI's files, records and documents created and
maintained by FDI pursuant to this Agreement so long as FDI shall be able to
retain photocopies of such documents to the extent needed by FDI in the
performance of its services or for its legal protection. If not so turned over
to Waterhouse and/or the Fund, such documents and records will be retained by
FDI for six years from the end of the fiscal year of the Fund for which they
were created. At the end of such six-year period, such records and documents
will be turned over to Waterhouse and/or the Fund unless the Fund authorizes in
writing the destruction of such records and documents.
10. Representations of Waterhouse. Waterhouse represents and warrants to FDI
that this Agreement has been duly authorized by Waterhouse and, when executed
and delivered by Waterhouse, will constitute a legal, valid and binding
obligation of Waterhouse, enforceable against Waterhouse 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.
11. Representations of FDI. FDI represents and warrants that this Agreement has
been duly authorized by FDI and, when executed and delivered by FDI, will
constitute a legal, valid and binding obligation of FDI, enforceable against FDI
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.
12. Notices. All notices or other communications hereunder to either party shall
be in writing and shall be deemed sufficient if mailed to Waterhouse at the
following address: Waterhouse Securities, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: President; and to FDI at the following address: 00 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Attention: President with a copy to
General Counsel or at such other address as such party may designate by written
notice to the other, or in either case if sent by telex, telecopier, telegram or
similar means of same day delivery (with a confirming copy by mail as provided
herein).
13. Headings. Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
14. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party.
15. Governing Law. This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
WATERHOUSE SECURITIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------
Title: Senior Vice President
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-------------------------
Title: President and Chief Executive Officer
Dated: June 11, 1997
SCHEDULE A
TO THE AGREEMENT
BETWEEN
WATERHOUSE SECURITIES, INC.
AND
FUNDS DISTRIBUTOR, INC.
NAME OF FUND
WATERHOUSE INVESTORS CASH MANAGEMENT FUND, INC.
Money Market Portfolio
U.S. Government Portfolio
Municipal Portfolio
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Title: Senior Vice President
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------
Title: President and Chief Executive Officer
EXHIBIT A
Administrative Services
Funds Distributor will provide the following routine administrative services
("Routine Administrative Services"):
Corporate and Secretarial Services
o Provide Secretary and the necessary complement of Assistant
Secretaries for the fund. These services will be provided
consistent with the procedures listed in Exhibit B.
o Maintain general corporate calendar. Track all legal and
compliance requirements through annual cycles.
o Four quarterly board meetings per year:
o Prepare agenda and background materials for legal approval
o Make presentations o Monitor annual approval requirements
o Prepare extensive background material for annual review of
advisory fees
o Prepare minutes
o Follow-up on matters raised at meetings
o Maintain Articles of Incorporation and By-Laws of the Corporation
o Prepare organizational board meeting materials
o Draft contracts, assisting in negotiation and planning, as
appropriate. For example negotiate, draft and keep current the
following contracts: (i) investment advisory and sub-advisory
contracts; (ii) Distribution Agreement; (iii) Bank Agreements;
(iv) Broker Dealer Agreements; (v) Transfer Agency Agreement; (vi)
Custody Agreement; (vii) Administration Agreement and
Sub-Administration Agreement; (viii) 12b-1 Plans and related
agreements; (ix) Shareholder Servicing Plans and Related
Agreements; (x) XXX Custodian Agreements; (xi) Bi-Party Repurchase
Agreements; (xii) Tri-Party Repurchase Agreements; (xiii) Futures
Account Agreement and Procedural Safekeeping Agreement; (xiv) loan
agreements; and (xv) various other agreements and amendments.
SEC and Public Disclosure Assistance
o Prepare and file one annual amendment to the Fund's registration
statement, including updating prospectuses and SAIs.
o Coordinate/monitor, with assistance from the fund administrator
and fund accountant and any other relevant fund service providers,
XXXXX (Electronic Data Gathering Analysis and Retrieval System)
on-line filings related to post-effective amendments, N-SARs,
24f-2, annual and semi-annual shareholders reports.
o Review annual and semi-annual Shareholder Reports.
o Provide legal assistance for shareholder communications.
Legal Consulting and Planning
o Provide general legal advice on matters relating to portfolio
management, fund operations, mutual fund sales, development of
advertising materials, changing or improving prospectus
disclosure, and any potential changes in the fund's investment
policies, operations, or structure.
o Maintain a continuing awareness of significant emerging regulatory
and legislative developments which may affect the fund, update the
advisor on those developments, and provide related planning
assistance.
o Develop or assist in developing guidelines and procedures to
improve overall compliance by the fund and its various agents.
o Provide advice with regard to fund litigation matters, routine
fund examinations and investigations by regulatory agencies.
o Provide advice regarding long term planning for the Waterhouse
Funds including the creation of new funds or portfolios, corporate
structural changes, mergers, acquisitions, and other asset
gathering plans including new distribution methods.
o Maintain effective communications with fund counsel, counsel to
the "non-interested" board members and to the fund's local
counsel.
o Create and implement timing and responsibility system for outside
legal counsel when necessary to implement major projects and the
legal management of such projects.
o Monitor activities and billing practices of outside counsel
performing services for the fund or in connection with related
fund activities.
Compliance
o Review of all testing that is done by fund accountant to assist
the advisor in complying with fund prospectus guidelines and
limitations, 1940 Act requirements, and Internal Revenue Code
requirements.
o Review of monthly testing and compliance report created by fund
accountant including:
o Tax compliance testing for gross income, short three,
diversification, and single issuer,
o 5% diversification testing for tax and 1940 Act compliance based
on current market value and acquisition cost testing, if
required,
o Income available for distribution report, which includes capital
gains and interest income,
o Net investment income calculated on per-share basis each month,
and
o Prospectus and 1940 Act compliance testing-tests are tailored to
each individual fund's prospectus and tests against the type and
amount of securities held.
o Jointly create Compliance Manuals and workshops for advisory
personnel with the fund accountant.
o Consultation and advice for resolution of compliance questions
along with the investment advisor, the fund administrator, the
fund counsel and the fund accountant.
o Be actively involved with the management of SEC and other
regulatory examinations.
o Review with the investment advisor and fund administrator summary
reports created by the fund accountant of all compliance issues to
assure immediate compliance adjustments.
o Assist portfolio managers with compliance matters including
reviewing the Compliance Manual on a regular basis and attending
compliance meetings with the portfolio managers.
o Assist in developing guidelines and procedures to improve overall
compliance by the fund and its various agents.
o Maintain legal liaison with and provide legal advice and counsel
to fund regarding its relationships, contractual or otherwise,
with the various fund agents, such as the adviser, custodian,
transfer agents, and auditors with respect to their activities on
behalf of the fund.
o Advice regarding all fund distribution arrangements for compliance
with applicable banking and broker-dealer regulations.
o Provide other fund officers as requested (e.g. President and Vice
President).
o Maintaining the fund's code of ethics.
Treasury Services
o Providing the Fund's Treasurer and the appropriate complement of
Assistant Treasurers to assume certain specified responsibilities
(these functions will be based upon the day to day work completed
by knowledgeable staff assembled by Waterhouse including the fund
accountant).
o Determining properly chargeable expenses and authorizing payment
of bills for each fund.
o Monitoring and recommending changes to expense accrual rates.
o Coordinate/monitor, with assistance from the investment adviser,
the fund accountant and any other relevant fund service provider,
all required financial materials for review by the board (for
example, items required by SEC Rule 2a-7, 10f-3, 17a-7, and 17e-1
reports, repurchase agreements, dealer lists, securities
transactions).
o Recommending dividends to be voted by the board
o Reviewing and monitoring xxxx-to-market comparisons for money
market funds that are generated by the fund accountant.
o Reviewing, signing off and filing all fund tax returns after such
returns have been prepared and signed by the fund's independent
auditors.
o Assisting (along with the fund accountant) the fund's advisor in
valuing securities which are not readily salable.
o Function as a liaison with the fund's custodian, fund accountant,
outside auditors and regulators, including managing the planning
and conducting of audits and examinations.
Funds Distributor is willing to provide any extraordinary administration
services ("Extraordinary Administrative Services") to the Waterhouse Fund
Family. All of the extraordinary legal functions set forth below may be
accomplished wholly or partially by Funds Distributor depending upon the
circumstances surrounding each request. Extraordinary Administrative Services
may, depending upon the circumstances, include the following:
o Shareholder Meetings
o Draft Proxies
o Organize, attend and keep minutes
o Work with the Transfer Agent on Solicitations and Vote
Tabulation
o Provide legal presence at meetings
o Draft Proxy/Solicitation Documents on Form N-14 (Fund Mergers).
o An Annual Post-Effective Amendment that involves major prospectus
revisions or the addition of new investment portfolios.
o Board Meeting Materials for significant corporate restructuring or
other major changes as well as more than four board meetings
during a twelve month period.
o More than one Post-Effective Amendment in any twelve month period.
o Advice regarding conversion of pooled funds and certain other
bank specific advice.
o Monitor and participate in the preparation of documents for
Exemptive Orders (e.g., Joint Repurchase Account), Revenue Rulings
(e.g., Multi-Class) and other state specific regulatory orders
(e.g., Florida Request for Technical Assistance).
o Filing advertising and sales literature with the appropriate
regulatory entities and providing all compliance review of such
materials.
EXHIBIT B
1
SIGNATURE/OVERSIGHT PROCEDURES
RULE 24e(2)/24f(2) SHARE REGISTRATION
Documents pertaining to filing of fund share registration statements pursuant to
Rule 24e(2) or 24f(2) will be prepared by the fund accountant. The fund
accountant will provide FDI with certain financial information contained in such
filing. After the filing documents have been prepared and reviewed by
Waterhouse, the following will occur:
o Filing documents, accompanied by a completed signature request
form (see copy attached), will be forwarded to appropriate fund
officer for signature.*
o Financial statements providing the basis for the financial
information contained in the filing documents will be provided in
"blueprint" form to Funds Distributor by the fund accountant.
o Documents will be reviewed by Funds Distributor utilizing the
financial statements.
o Completed signature request form will be reviewed by Funds
Distributor for proper authorization.
o Any questions that may arise during review will be directed to
Waterhouse or the fund accountant as appropriate.
o If not in order, Funds Distributor will contact the appropriate
entities or persons with an explanation and, if necessary,
documents will be returned to Waterhouse and/or the fund
accountant, as appropriate, with explanation.
o If in order, documents will be signed by fund officer and returned
to the Waterhouse Legal Department by the request date specified
in the completed signature request form.
o To the extent that Funds Distributor must provide an opinion
letter to which another Fund service provider is the source of
knowledge, that service provider must provide Funds Distributor
with an opinion letter supporting the data that it provides Funds
Distributor.
*Contact Persons:
2
SIGNATURE/OVERSIGHT PROCEDURES
FORM N-SAR SEMI-ANNUAL REPORT
Semi-annual report on form N-SAR will be prepared for filing by the fund
accountant. The fund accountant will provide Waterhouse and Funds Distributor
with certain financial information required on Form N-SAR. After form has been
completed, the following will occur:
o Form N-SAR, accompanied by completed signature request form (see
copy attached), will be forwarded to Funds Distributor for fund
officer signature.*
o Form will be reviewed by Funds Distributor and Waterhouse.
o Completed Signature Request form will be reviewed for proper
authorization.
o Any questions that may arise during review will be directed to
Waterhouse or the fund accountant appropriate.
o If not in order, Funds Distributor will contact the appropriate
entities or persons with an explanation and, if necessary, form
will be returned to Waterhouse and/or the fund accountant, as
appropriate, with explanation.
o If in order, form will be signed by fund officer and returned to
Waterhouse by the request date specified in the completed
signature request form.
*Contact Person:
3
SIGNATURE/OVERSIGHT PROCEDURES
TAX RETURNS
All tax and information returns will be prepared and reviewed by the fund's
auditor. When returns are completed and reviewed, the following will occur:
o Tax and information returns, signed by independent auditors and
accompanied by a completed signature request form (see copy
attached), will be forwarded to Funds Distributor for fund officer
signature.*
o All returns will be reviewed by Funds Distributor and Waterhouse.
o Completed signature request form will be reviewed for proper
authorization.
o Any questions that arise during review will be directed to the
funds auditor.
o In not in order, returns will be returned to the funds auditor
with explanation.
o If in order, returns will be signed by fund officer and returned
to the fund auditor.
*Contact Persons:
4
SIGNATURE/OVERSIGHT PROCEDURES
SEC EXAMINATION/INQUIRIES
When the Securities and Exchange Commission conducts a periodic examination of
the Funds or makes written inquiries for specific information, the following
will occur:
o Waterhouse* will promptly inform Funds Distributor* of such
examination or written inquiry.
o Waterhouse will inform Funds Distributor of the specific nature of
the information requested for examination or by inquiry.
o Funds Distributor will be actively involved with any SEC
examinations.
o Waterhouse will submit to Funds Distributor the response to
SEC-written inquiries.
o Waterhouse will forward to Funds Distributor and each fund officer
a copy of the comment letter received from the SEC upon completion
of examination.
o Waterhouse will forward to Funds Distributor and each fund officer
a copy of the response to the comment letter.
*Contact Person:
5
SIGNATURE/OVERSIGHT PROCEDURES
AUDIT REPRESENTATION LETTER
The process of examining financial statements of the Funds by independent
auditors includes the receipt of a letter from the Funds in which various
representations are made. This letter will be prepared by the independent
auditors. Upon completion of this letter, the following will occur:
o Letter will be reviewed and signed by Waterhouse authorized
signatory.
o Letter will be sent to Funds Distributor for review and fund
officer signature.*
o Letter will be reviewed by Funds Distributor.
o To the extent that Funds Distributor must provide an audit
representation letter to which another Fund service provider is
the source of knowledge (i.e. the fund auditor), that service
provider must provide Funds Distributor with an opinion letter
supporting the audit representation letter or any other data that
it provides Funds Distributor.
o If not in order, letter will be returned to Waterhouse or the fund
auditor with explanation.
o If in order, letter will be signed by fund officer and returned to
independent auditors.
*Contact Persons:
6
SIGNATURE/OVERSIGHT PROCEDURES
VALUATION OF MUTUAL FUND PORTFOLIO SECURITIES
In connection with the valuation of mutual fund portfolio securities, it is
sometimes necessary to convene a meeting of the Fund's Portfolio Securities
Pricing Committee to place a value on a portfolio security for the purpose of
calculating NAV per share.
o Funds Distributor and a fund officer will be present at meeting,
either in person or by conference call.
o Meeting minutes or memo of Pricing Committee decisions will be
sent to Funds Distributor.
In addition, because of the complexities or large universe of various portfolio
securities (i.e., GNMA and Tax-Exempt Securities), an independent pricing
service is utilized to price such securities.
o Waterhouse will inform Funds Distributor of any change of
independent pricing service.
In connection with money market funds, it is necessary to monitor any deviation
of a fund's net asset value per share calculated using market values from the
fund's net asset value per share calculated using amortized cost prices.
o Waterhouse or the fund accountant will send Funds Distributor,* on
a daily basis, a schedule that indicates each money market fund's
net asset value per share calculated at amortized cost and market
value.
o Waterhouse or the fund accountant will send Funds Distributor,* on
a monthly basis, a schedule for each fund, indicating the fund's
total net assets, dividend per share and net asset value per share
calculated at amortized cost and market value.
o Waterhouse will notify Funds Distributor* when Waterhouse intends
to apprise a fund's Board of Directors of information concerning
the fund's net asset value per share.
*Contact Persons:
7
SIGNATURE/OVERSIGHT PROCEDURES
CHANGE IN NET ASSET VALUE PER SHARE
If a fund's net asset value per share changes after the day of calculation and
shareholder account processing, the following will occur:
o Waterhouse or the fund accountant will send Funds Distributor* a
schedule that will indicate the fund and change in net asset value
per share.
o Waterhouse or the fund accountant will document the change in net
asset value per share and forward the documentation to Funds
Distributor* accompanied by completed signature request form (see
copy attached).
*Contact Persons:
CHANGE IN NET ASSET VALUE PER SHARE
SIGNATURE REQUEST FORM
To:
----------------------
From:
--------------------
Tel. #: Fax #
----------------- ------------------------
Date:
--------------------
RIC/Fund Name:
--------------------------------------
Restated NAV Per Share:
-----------------------------
Documentation of Change in NAV:
-------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Waterhouse Approval:
Signature: Date:
--------------------------------- --------------------------
Name:
Title:
Funds Distributor Approval:
Signature: Date:
--------------------------------- --------------------------
Fund Officer
Waterhouse Authorized Signatories Funds Distributor Contact Persons
8
SIGNATURE/OVERSIGHT PROCEDURES
RECLAIM OF TAXES WITHHELD FROM
DIVIDENDS ON FOREIGN SECURITIES
Forms necessary to reclaim taxes withheld from dividends paid on foreign
securities are coordinated by the fund's auditor. When these forms require the
signature of a fund officer, the following will occur:
o Completed forms, accompanied by completed signature request form
(see copy attached), will be forwarded to Funds Distributor for
fund officer signature.*
o Funds Distributor will review the form.
o Funds Distributor will review the completed form for proper
authorization.
o Any questions that arise during review will be directed to the
fund's auditor.
o If not in order, form will be returned to the fund's auditor with
explanation.
o If in order, form will be signed by fund officer and returned to
the fund's auditor.
*Contact Persons:
