FIFTH AMENDMENT TO AMENDED AND RESTATED ADMINSTRATIVE SERVICES AGREEMENT
Execution Copy
FIFTH AMENDMENT TO
AMENDED AND RESTATED ADMINSTRATIVE SERVICES AGREEMENT
This Fifth Amendment to Amended and Restated Administrative Services Agreement (the “Amendment”) is made as of May 29, 2012, by and among AMERICAN BEACON FUNDS, a Massachusetts business trust (the “Trust”), AMERICAN BEACON ADVISORS, INC., a Delaware corporation (“ABA”), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company (“State Street”).
WHEREAS, the Trust, American Beacon Master Trust, a Massachusetts business Trust, ABA, and State Street entered into an Amended and Restated Administrative Services Agreement dated as of March 1, 2005 (as amended, supplemented, restated or otherwise modified, the “Agreement”);
WHEREAS, the Agreement was terminated with respect to American Beacon Master Trust as of December 7, 2010; and
WHEREAS, the parties desire to amend certain provisions of the Agreement, as more particularly set forth below.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:
1. Amendment to Agreement.
Schedules A and B of the Agreement are hereby deleted in their entirety and replaced with Schedules A and B attached hereto.
2. Miscellaneous.
(a) Except as expressly amended by this Amendment, all provisions of the Agreement shall remain in full force and effect. Capitalized terms used herein without definition shall have the meanings ascribed thereto in the Agreement.
(b) This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
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on behalf of its series listed on Schedule B
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By:
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/s/
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Xxxx X. Needles, Jr.
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Xxxx X. Needles, Jr.
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President
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By:
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/s/
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Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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Treasurer
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AMERICAN BEACON ADVISORS, INC.
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By:
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/s/
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Xxxxxxxx Xxxxx
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Xxxxxxxx Xxxxx
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Secretary
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STATE STREET BANK AND TRUST COMPANY
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By:
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/s/
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Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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Executive Vice President
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2
SCHEDULE A
TO THE
AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT
Updated: May 29, 2012
Statement of Intent/Operating Procedures
State Street Bank and Trust Company (“State Street”) shall fulfill its duties set forth in the Amended and Restated Administrative Services Agreement dated March 1, 2005 (as amended, supplemented, restated or otherwise modified, the “Agreement”) by and among American Beacon Funds (the “Trust”), American Beacon Advisors, Inc. (“ABA”), and State Street in accordance with the following:
I. Scope of the Engagement.
The Trust is seeking to equitize the cash balances of certain of its mutual fund portfolios (each, a “Fund”). ABA, as authorized by the Trust, will manage the underlying cash balances and has directed State Street under the terms of the Agreement to purchase or sell futures or forwards contracts to maintain appropriate equity and currency exposure as directed by ABA under the Agreement. ABA hereby directs State Street to equitize ninety percent (90%) of the entire cash balance of each Fund in order to maintain exposure for each Fund’s liquid assets on a daily basis, and to purchase for each Fund, as needed, foreign exchange forwards contracts for the purpose of minimizing currency exposure, until otherwise directed in writing by ABA for each Fund. In determining the entire cash balance of a Fund, State Street is hereby instructed by ABA to exclude the dollar value of pending securities buys and include the dollar value of pending securities sells for such Fund.
For the Funds to be equitized, the equitized amounts, the futures contracts used, the list of approved futures commission merchants, and the benchmark for the use of forwards for currency exposure are listed below. ABA may in its judgment direct State Street to implement the equitization using futures or forwards contracts other than those listed below by providing written instruction to State Street.
II. Implementation.
For a new Account of a Fund, ABA will direct State Street to equitize any initial portfolio cash balances, and, on an ongoing basis, State Street will buy and/or sell the appropriate number of approved contracts to reflect changes in the underlying cash balances using the procedures listed in Section III of this Schedule A. Such procedures may be modified by the mutual written consent of ABA and State Street. With respect to the International Equity Fund, a portfolio of the Trust, ABA hereby instructs that contracts to be purchased from the list set forth in Section VI of this Schedule A be purchased substantially in proportion to the capitalization weights of the ten countries as they comprise the Xxxxxx Xxxxxxx Capital International Europe, Asia and Far East Index plus Canada, excluding U.S. (the “EAFE Index”).
III. Daily Operating Procedures
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Morning
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State Street’s Mutual Fund Custody Group (MFG) determines level of Liquid Assets and transmits information to State Street’s SSgA Operations (“SSgA”).
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Noon
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MFG transfers appropriate excess cash per standing instructions by the Trust on behalf of its Fund into a cash sweep investment vehicle selected by ABA
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A-1
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12:00pm
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MFG calls SSgA if spreadsheet will be delayed.
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12:00-1:00pm
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SSgA performs the following operational procedures on the document prepared by MFG:
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Values on spreadsheet are validated;
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Consistency checks are conducted;
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Amounts are confirmed with ABA if special notice re-balancing is requested.
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1:00pm
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SSgA forwards activity spreadsheet to SSgA’s futures manager (“Futures Manager”).
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1:00-1:30pm
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In accordance with the Agreement, the Trust’s standing instructions, and any subsequent ABA instruction, Futures Manager loads cash balance data into trading system which calculates the number of futures and/or forwards contracts to be purchased or sold. Futures volume is determined by asset pool. Forwards volume is determined by currency exposure in each applicable country.
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1:30pm
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Futures Manager sends trades to one or more FCMs as specified in Section V below. In addition, the Futures Manager sends any forward trades to the SSgA currency trading desk.
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4:45pm
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Futures Manager electronically receives trade confirmation data from FCMs. Prices are confirmed. Trade information is sent to MFG to process.
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8:00am(next day)
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SSgA sends daily calculations of variation margin to MFG which confirms these calculations with the statements received from the FCMs. International futures and forward trades are confirmed by SSgA.
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IV. Eligible Funds
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Trust
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Fund
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Balanced Fund
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Bridgeway Large Cap Value Fund
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Emerging Markets Fund
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Holland Large Cap Growth Fund
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International Equity Fund
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Large Cap Value Fund
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London Company Income Equity Fund (as of 05/29/12)
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Mid-Cap Value Fund
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Small Cap Value Fund
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Small Cap Value II Fund
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Xxxxxxxx Mid-Cap Growth Fund
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Xxxxxxxx Small Cap Growth Fund
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Zebra Large Cap Equity Fund
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Zebra Small Cap Equity Fund
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A-2
V. List of Approved Futures Contracts – American Beacon Funds
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Portfolio
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Futures Contract Used
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FCM
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Balanced
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S&P 500
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See Section VII
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Large Cap Value
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S&P 500
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International Equity
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Approved List of CFTC Futures Contracts – See Section VI
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Mid-Cap Value
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S&P 400
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Small Cap Value
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Xxxxxxx 2000
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Emerging Markets
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E-Mini MSCI Emerging Markets Index Futures
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Zebra Large Cap Equity
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S&P 500
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Zebra Small Cap Equity
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Xxxxxxx 2000
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Small Cap Value II Fund
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Xxxxxxx 2000
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Bridgeway Large Cap Value
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S&P 500
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Holland Large Cap Growth
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S&P 500
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Xxxxxxxx Mid-Cap Growth
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S&P 400
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Xxxxxxxx Small Cap Growth
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Xxxxxxx 2000
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London Company Income Equity Fund
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S&P 500
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VI. List of Approved Futures Contracts - American Beacon Funds/International Equity Fund
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Country
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Contract Name
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U.K.
Germany
France
Sweden
Italy
Spain
Japan
Hong Kong
Australia
Canada
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FTSE
DAX
CAC 40
OMX
MIB 30
IBEX 35
TOPIX
Hang Seng
All Ords
TSE 35
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VII.
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List of Approved Futures Commission Merchants
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X. Xxxxxxx, Xxxxx & Co.
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B. X.X. Xxxxxx Futures Inc.
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X. Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
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A-3
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ACCEPTED AND APPROVED BY:
On behalf of its series on Schedule B,
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By:
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/s/
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Xxxx X. Needles, Jr.
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Xxxx X. Needles, Jr.
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President
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By:
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/s/
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Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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Treasurer
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AMERICAN BEACON ADVISORS, INC.
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By:
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/s/
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Xxxxxxxx Xxxxx
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Xxxxxxxx Xxxxx
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Secretary
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ACCEPTED AND APPROVED BY:
STATE STREET BANK AND TRUST COMPANY
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By:
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/s/
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Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
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Title: Vice President
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DATED: May 29, 2012
A-4
SCHEDULE B
TO THE
AMENDED AND RESTATED
Updated: May 29, 2012
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Balanced Fund
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Bridgeway Large Cap Value Fund
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Emerging Markets Fund
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Holland Large Cap Growth Fund
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International Equity Fund
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Large Cap Value Fund
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London Company Income Equity Fund (as of 05/29/12)
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Mid-Cap Value Fund
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Small Cap Value Fund
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Small Cap Value II Fund
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Xxxxxxxx Mid-Cap Growth Fund
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Xxxxxxxx Small Cap Growth Fund
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Zebra Large Cap Equity Fund
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Zebra Small Cap Equity Fund
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B-1
