Exhibit g (i)
AMENDED AND RESTATED CUSTODIAN AGREEMENT
This Agreement is made as of July 31, 2006 by and between USAA MUTUAL
FUNDS TRUST, a statutory trust organized and existing under the laws of the
State of Delaware (the "FUND"), and STATE STREET BANK and TRUST COMPANY, a
Massachusetts trust company (the "CUSTODIAN").
WITNESSETH:
WHEREAS, the Fund (formerly known as USAA State Tax-Free Trust) and the
Custodian entered into a Custodian Contract dated as of June 29, 1993;
WHEREAS, the Fund and the Custodian desire to replace such existing
Custodian Contract, as amended, with this Amended and Restated Custodian
Agreement;
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
Whereas, pursuant to three separate Agreements and Plans of Termination
and Conversion, each dated April 19, 2006, between the Fund and, respectively,
USAA Mutual Fund, Inc., USAA Tax-Exempt Fund, Inc. and USAA Investment Trust
(collectively, the "Terminating Funds"), each series of shares of each of the
Terminating Funds has been reorganized as of the date hereof as a series of the
Fund; and
WHEREAS, the Fund intends that this Agreement be applicable to 37
series, as set forth below (such series together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Section 18, shall be referred to herein as the "PORTFOLIO(S)").:
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Aggressive Growth Fund Money Market Fund
Balanced Strategy Fund Nasdaq-100 Index Fund
Capital Growth Fund New York Bond Fund
California Bond Fund New York Money Market Fund
California Money Market Fund Precious Metals and Minerals Fund
Cornerstone Strategy Fund Science & Technology Fund
Emerging Markets Fund Short-Term Bond Fund
First Start Growth Fund Small Cap Stock Fund
Florida Tax-Free Income Fund Tax Exempt Intermediate-Term Fund
Florida Tax-Free Money Market Fund Tax Exempt Long-Term Fund
GNMA Trust Tax Exempt Money Market Fund
Growth & Income Fund Tax Exempt Short-Term Fund
Growth and Tax Strategy Fund Treasury Money Market Trust
Growth Fund Total Return Strategy Fund
High-Yield Opportunities Fund Value Fund
Income Stock Fund Xxxxxxxx Xxxx Fund
Income Fund Virginia Money Market Fund
Intermediate-Term Bond Fund World Growth Fund
International Fund
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NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("DOMESTIC SECURITIES") and securities it desires to be held outside the United
States ("FOREIGN SECURITIES"). The Fund on behalf of the Portfolio(s) shall
deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
beneficial interest of the Fund representing interests in the Portfolios
("SHARES") as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian or which is delivered out in accordance with
Proper Instructions (as such term is defined in Section 6 hereof).
Upon receipt of Proper Instructions , the Custodian shall on behalf of the
applicable Portfolio(s) from time to time employ one or more sub-custodians
located in the country-regionplaceUnited States, but only in accordance with an
applicable vote by the Board of Trustees of the Fund (the "BOARD") on behalf of
the applicable Portfolio(s). The Custodian may employ as sub-custodian for the
Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign
banking institutions and foreign securities depositories designated in Schedules
A and B hereto but only in accordance with the applicable provisions of Sections
3 and 4. The Custodian shall have no more or less responsibility or liability to
the Fund on account of any actions or omissions of any sub-custodian so employed
than any such sub-custodian has to the Custodian.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States, including all domestic securities owned by such
Portfolio other than securities which are maintained pursuant to Section 2.8 in
a clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
SECURITIES SYSTEM").
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian only upon receipt of Proper
Instructions on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of
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payment therefor;
2) Upon the receipt of payment in connection with any repurchase a
greement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities System,
in accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Portfolio or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.7 or into the name or nominee
name of any sub-custodian appointed pursuant to Section 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; PROVIDED that, in any such case, the new securities are to
be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall have
no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or
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instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in
the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible
for the delivery of securities owned by the Portfolio prior to
the receipt of such collateral;
11) For delivery as security in connection with any borrowing by the
Fund on behalf of the Portfolio requiring a pledge of assets by
the Fund on behalf of the Portfolio, BUT ONLY against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of
1934 (the "EXCHANGE ACT") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio of
the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
futures commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission ("CFTC") and/or any contract
market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Portfolio
of the Fund;
14) Upon the sale or other delivery of such investments (including,
without limitation, to one or more (a) Special Sub-Custodians or
(b) additional custodians appointed by the Fund, and communicated
to the Custodian from time to time via a writing duly executed by
an authorized officer of the Fund, for the purpose of engaging in
repurchase agreement transactions(s), each a "REPO CUSTODIAN"),
and prior to receipt of payment therefor, as set forth in written
Proper Instructions (such delivery in advance of payment, along
with payment in advance of delivery made in accordance with
Section 2.6(7), as applicable, shall each be referred to herein
as a "FREE TRADE"), provided that such Proper Instructions shall
set forth (a) the securities of the Portfolio to be delivered and
(b) the person(s) to whom delivery of such securities shall be
made;
15) Upon receipt of instructions from the transfer agent for the Fund
(the "TRANSFER AGENT") for delivery to such Transfer Agent or to
the holders of Shares in connection with distributions in kind,
as may be described from time to time in the currently effective
prospectus and statement of additional information of the Fund
related to the Portfolio (the "PROSPECTUS"), in satisfaction of
requests by holders of Shares for repurchase or redemption;
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16) For delivery as initial or variation margin in connection with
futures or options on futures contracts entered into by the Fund
on behalf of the Portfolio; and
17) For any other purpose, BUT ONLY upon receipt of Proper
Instructions from the Fund on behalf of the applicable Portfolio
specifying the securities of the Portfolio to be delivered, and
naming the person or persons to whom delivery of such securities
shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, UNLESS the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.7 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Agreement shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended (the "1940 ACT"). Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as Custodian in
the banking department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable; PROVIDED,
however, that every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust company and the
funds to be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the Board. Such
funds shall be deposited by the Custodian in its capacity as Custodian and shall
be withdrawable by the Custodian only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Except with respect to Portfolio
property released and delivered pursuant to Section 2.2(14) or purchased
pursuant to Section 2.6(7), and subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments with
respect to registered domestic securities held hereunder to which each Portfolio
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Portfolio's custodian account.
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Without limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of the
income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options
on futures contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States or abroad
which is qualified under the 1940 Act to act as a custodian and
has been designated by the Custodian as its agent for this
purpose) registered in the name of the Portfolio or in the name
of a nominee of the Custodian referred to in Section 2.3 hereof
or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.8 hereof; (c) in the case of
repurchase agreements entered into between the Fund on behalf of
the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of
the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Portfolio; or
(d) for transfer to a time deposit account of the Fund in any
bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund as
defined herein;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5A hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of the Fund whether or not such expenses are to be in whole
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or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to
the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) Upon the purchase of domestic investments including, without
limitation, repurchase agreement transactions involving delivery
of Portfolio monies to Repo Custodian(s), and prior to receipt of
such investments, as set forth in written Proper Instructions
(such payment in advance of delivery, along with delivery in
advance of payment made in accordance with Section 2.2(14), as
applicable, shall each be referred to herein as a "FREE TRADE"),
provided that such Proper Instructions shall also set forth (a)
the amount of such payment and (b) the person(s) to whom such
payment is made; and
8) For payment as initial or variation margin in connection with
futures or options on futures contracts entered into by the Fund
on behalf of the Portfolio; and
9) For any other purpose, BUT ONLY upon receipt of Proper
Instructions from the Fund on behalf of the Portfolio specifying
the amount of such payment, and naming the person or persons to
whom such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN COUNTRY-REGIONPLACEU.S.
SECURITIES SYSTEMS. The Custodian may deposit and/or maintain securities owned
by a Portfolio in a U.S. Securities System in compliance with the conditions of
Rule 17f-4 of the 1940 Act, as amended from time to time.
SECTION 2.9 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the CFTC or any registered
contract market), or of any similar organization or organizations, regarding
escrow or other
7
arrangements in connection with transactions by the Portfolio, (ii) for purposes
of segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures contracts or
options thereon purchased or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release of the U.S. Securities and
Exchange Commission (the "SEC"), or interpretative opinion of the staff of the
SEC, relating to the maintenance of segregated accounts by registered investment
companies, and (iv) for any other purpose upon receipt of Proper Instructions
from the Fund on behalf of the applicable Portfolio.
SECTION 2.10 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
SECTION 2.11 PROXIES. Except with respect to Portfolio property
released and delivered pursuant to Section 2.2(14), or purchased pursuant to
Section 2.6(7), The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials and all notices relating
to such securities.
SECTION 2.12 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Except
with respect to Portfolio property released and delivered pursuant to Section
2.2(14), or purchased pursuant to Section 2.6(7), and subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency of
calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options written by
the Fund on behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from issuers of
the securities being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or its agents) making the
tender or exchange offer. Provided that the Custodian's own negligence, bad
faith or willful misconduct has not solely or directly prevented any of the
following conditions from occurring, the Custodian shall not be liable for any
untimely exercise of any tender, exchange or other right or power in connection
with domestic securities or other property of the Portfolios at any time held by
it unless (i) the Custodian is in actual possession of such domestic securities
or property and (ii) the Custodian receives Proper Instructions with regard to
the exercise of any such right or power, and both (i) and (ii) occur at least
three business days prior to the date on which the Custodian is to take action
to exercise such right or power. The Custodian shall also transmit promptly to
the Fund for each applicable Portfolio all written information received by the
Custodian regarding any class action or other litigation in connection with
Portfolio securities or other assets issued in the United States and then held,
or previously held, during the term of this Agreement by the Custodian for the
account of the Fund for such Portfolio, including, but not limited to, opt-out
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notices and proof-of-claim forms.
SECTION 3. PROVISIONS RELATING TO RULES 17F-5 AND 17F-7
SECTION 3.1. DEFINITIONS. Capitalized terms in this Section 3 shall
have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment, economic and financial infrastructure
(including any Eligible Securities Depository operating in the country),
prevailing or developing custody and settlement practices, and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned direct or indirect subsidiary of a U.S. Bank
(as defined in Rule 17f-5), a bank holding company meeting the requirements of
an Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other
appropriate action of the SEC , or a foreign branch of a Bank (as defined in
Section 2(a)(5) of the 0000 Xxx) meeting the requirements of a custodian under
Section 17(f) of the 1940 Act; the term does not include any Eligible Securities
Depository.
"Eligible Securities Depository" has the meaning set forth in section (b)(1) of
Rule 17f-7.
"Foreign Assets" means any of the Portfolios investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Rule 17f-5" means Rule 17f-5 promulgated under the 1940 Act.
"Rule 17f-7" means Rule 17f-7 promulgated under the 1940 Act.
SECTION 3.2. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
3.2.1 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by its Board, hereby delegates to the Custodian,
subject to Section (b) of Rule 17f-5, the responsibilities set forth in this
Section 3.2 with respect to Foreign Assets of the Portfolios held outside the
country-regionplaceUnited States, and the Custodian hereby accepts such
delegation as Foreign Custody Manager with respect to the Portfolios.
3.2.2 COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A to this Agreement, , which list of countries may be amended
from time to time by the Fund with the agreement of the Foreign Custody Manager.
The Foreign Custody Manager shall list on Schedule A the Eligible Foreign
Custodians selected by the Foreign Custody Manager to maintain the assets of the
Portfolios, which list of Eligible Foreign Custodians may be amended from time
to time in the sole
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discretion of the Foreign Custody Manager. The Foreign Custody Manager will
provide amended versions of Schedule A in accordance with Section 3.2.5 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund, on behalf of the Portfolios, of the
applicable account opening requirements for such country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board on behalf of the
Portfolios responsibility as Foreign Custody Manager with respect to that
country and to have accepted such delegation. Execution of this Agreement by the
Fund shall be deemed to be a Proper Instruction to open an account, or to place
or maintain Foreign Assets, in each country listed on Schedule A in which the
Custodian has previously placed or currently maintains Foreign Assets pursuant
to the terms of this Agreement. Following the receipt of Proper Instructions
directing the Foreign Custody Manager to close the account of a Portfolio with
the Eligible Foreign Custodian selected by the Foreign Custody Manager in a
designated country, the delegation by the Board on behalf of the Portfolios to
the Custodian as Foreign Custody Manager for that country shall be deemed to
have been withdrawn and the Custodian shall immediately cease to be the Foreign
Custody Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty (30) days (or such longer period to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility in its capacity as Foreign Custody Manager to the Fund
with respect to the country as to which the Custodian's acceptance of delegation
is withdrawn.
3.2.3 SCOPE OF DELEGATED RESPONSIBILITIES:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the provisions
of this Section 3.2, the Foreign Custody Manager may place and maintain the
Foreign Assets in the care of the Eligible Foreign Custodian selected by the
Foreign Custody Manager in each country listed on Schedule A, as amended from
time to time. In performing its delegated responsibilities as Foreign Custody
Manager to place or maintain Foreign Assets with an Eligible Foreign Custodian,
the Foreign Custody Manager shall determine that the Foreign Assets will be
subject to reasonable care, based on the standards applicable to custodians in
the country in which the Foreign Assets will be held by that Eligible Foreign
Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation the factors specified in Rule 17f-5(c)(1).
(b) CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody
Manager shall determine that the contract governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).
(c) MONITORING. In each case in which the Foreign Custody Manager
maintains
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Foreign Assets with an Eligible Foreign Custodian selected by the Foreign
Custody Manager, the Foreign Custody Manager shall establish a system to
monitor, in accordance with Rule 17f-5(c)(3), (i) the appropriateness of
maintaining the Foreign Assets with such Eligible Foreign Custodian and (ii) the
performance of the contract governing the custody arrangements established by
the Foreign Custody Manager with the Eligible Foreign Custodian. In the event
the Foreign Custody Manager determines that the custody arrangements with an
Eligible Foreign Custodian it has selected are no longer appropriate, the
Foreign Custody Manager shall notify the Board in accordance with Section 3.2.5
hereunder.
3.2.4 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3.2, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of the Portfolios.
3.2.5 REPORTING REQUIREMENTS. The Foreign Custody Manager
shall report the withdrawal of the Foreign Assets from an Eligible Foreign
Custodian and the placement of such Foreign Assets with another Eligible Foreign
Custodian by providing to the Board an amended Schedule A at the end of the
calendar quarter in which an amendment to such Schedule has occurred. The
Foreign Custody Manager shall make written reports notifying the Board of any
other material change in the foreign custody arrangements of the Portfolios
described in this Section 3.2 after the occurrence of the material change.
3.2.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A
PORTFOLIO. In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
3.2.7 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that the
Board has determined that it is reasonable for the Board to rely on the
Custodian to perform the responsibilities delegated pursuant to this Agreement
to the Custodian as the Foreign Custody Manager of the Portfolios.
3.2.8 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS
FOREIGN CUSTODY MANAGER. The Board's delegation to the Custodian as Foreign
Custody Manager of the Portfolios shall be effective as of the date hereof and
shall remain in effect until terminated at any time, without penalty, by written
notice from the terminating party to the non-terminating party. Termination will
become effective thirty (30) days after receipt by the non-terminating party of
such notice. The provisions of Section 3.2.2 hereof shall govern the delegation
to and termination of the Custodian as Foreign Custody Manager of the Portfolios
with respect to designated countries.
SECTION 3.3 ELIGIBLE SECURITIES DEPOSITORIES.
11
3.3.1 ANALYSIS AND MONITORING. The Custodian shall (a) provide
the Fund (or its duly-authorized investment manager or investment adviser or
sub-adviser, as identified in Proper Instructions) with an analysis of the
custody risks associated with maintaining assets with the Eligible Securities
Depositories set forth on Schedule B hereto in accordance with Rule
17f-7(a)(1)(i)(A), and (b) monitor such risks on a continuing basis, and
promptly notify the Fund (or its duly-authorized investment manager or
investment adviser or sub-adviser) of any material change in such risks, in
accordance with Rule 17f-7(a)(1)(i)(B).
3.3.2 STANDARD OF CARE. The Custodian agrees to exercise
reasonable care, prudence and diligence in performing the duties set forth in
Section 3.3.1.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
PORTFOLIOS HELD OUTSIDE THE UNITED STATES
SECTION 4.1 DEFINITIONS. As used throughout this Agreement, the
capitalized terms set forth below shall have the indicated meanings:
"Foreign Securities System" means an Eligible Securities Depository listed on
Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
SECTION 4.2. HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, provided however, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii), to the extent permitted and customary in the market in
which the account is maintained, the Custodian shall require that securities so
held by the Foreign Sub-Custodian be held separately from any assets of such
Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country through
arrangements implemented by the Custodian or a Foreign Sub-Custodian, as
applicable, in such country.
SECTION 4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN ASSETS. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Portfolios
held by the Custodian or such Foreign Sub-Custodian, or in a Foreign Securities
System account, only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and only in the
following cases:
12
(i) upon the sale of such foreign securities for the Portfolio in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivery against
expectation of receiving later payment; or (B) in the case of
a sale effected through a Foreign Securities System, in
accordance with the rules governing the operation of the
Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise become
payable;
(v) to the issuer thereof, or its agent, for transfer into the
name of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian or such
Foreign Sub-Custodian) or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market
custom; provided that in any such case the Foreign
Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from
the Foreign Sub-Custodian's own negligence or willful
misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowing by
the Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
13
(xii) for any other purpose, but only upon receipt of Proper
Instructions specifying the foreign securities to be delivered
and naming the person or persons to whom delivery of such
securities shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out, or direct the respective Foreign
Sub-Custodian or the respective Foreign Securities System to pay out, monies of
a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio,
unless otherwise directed by Proper Instructions, by (A)
delivering money to the seller thereof or to a dealer therefor
(or an agent for such seller or dealer) against expectation of
receiving later delivery of such foreign securities; or (B) in
the case of a purchase effected through a Foreign Securities
System, in accordance with the rules governing the operation
of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees
under this Agreement, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign
exchange contracts for the Portfolio, including transactions
executed with or through the Custodian or its Foreign
Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in
respect of securities sold short;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other purpose, but only upon receipt of Proper
Instructions specifying the amount of such payment and naming
the person or persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS. Notwithstanding any provision of
this Agreement to the contrary, settlement and payment for Foreign Assets
received for the account of the Portfolios and delivery of Foreign Assets
maintained for the account of the Portfolios may be effected in accordance with
the customary established securities trading or processing practices
14
and procedures in the country or market in which the transaction occurs,
including, without limitation, delivering Foreign Assets to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or dealer) with
the expectation of receiving later payment for such Foreign Assets from such
purchaser or dealer.
The Custodian shall provide to each Portfolio's adviser (and sub-adviser, where
applicable), as identified in Proper Instructions, the information with respect
to custody and settlement practices in countries in which the Custodian employs
a Foreign Sub-Custodian, including without limitation information relating to
Foreign Securities Systems, described on Schedule C hereto at the time or times
set forth on such Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board being provided
with substantively less information than had been previously provided hereunder.
SECTION 4.5. REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Sub-Custodian (other than bearer
securities) shall be registered in the name of the applicable Portfolio or in
the name of the Custodian or in the name of any Foreign Sub-Custodian or in the
name of any nominee of the foregoing, and the Fund on behalf of such Portfolio
agrees to hold any such nominee harmless from any liability as a holder of
record of such foreign securities. The Custodian or a Foreign Sub-Custodian
shall not be obligated to accept securities on behalf of a Portfolio under the
terms of this Agreement unless the form of such securities and the manner in
which they are delivered are in accordance with reasonable market practice.
SECTION 4.6 BANK ACCOUNTS. The Custodian shall identify on its books as
belonging to the Fund cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to maintain, or
market practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts shall be opened and maintained
outside the country-regionplaceUnited States on behalf of a Portfolio with a
Foreign Sub-Custodian. All accounts referred to in this Section shall be subject
only to draft or order by the Custodian (or, if applicable, such Foreign
Sub-Custodian) acting pursuant to the terms of this Agreement to hold cash
received by or from or for the account of the Portfolio. Cash maintained on the
books of the Custodian (including its branches, subsidiaries and affiliates),
regardless of currency denomination, is maintained in bank accounts established
under, and subject to the laws of, The Commonwealth of Massachusetts.
SECTION 4.7. COLLECTION OF INCOME. The Custodian shall use reasonable
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities
held pursuant to this Section 4, the Custodian will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder rights,
subject always to the laws, regulations and
15
practical constraints that may exist in the country where such securities are
issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other factors may
have the effect of severely limiting the ability of the Fund to exercise
shareholder rights.
SECTION 4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Fund written information with respect
to materials received by the Custodian via the Foreign Sub-Custodians from
issuers of the foreign securities being held for the account of the Portfolios
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith). With respect to
tender or exchange offers, the Custodian shall transmit promptly to the Fund
written information with respect to materials so received by the Custodian from
issuers of the foreign securities whose tender or exchange is sought or from the
party (or its agents) making the tender or exchange offer. The Custodian shall
not be liable for any untimely exercise of any tender, exchange or other right
or power in connection with foreign securities or other property of the
Portfolios at any time held by it unless (i) the Custodian or the respective
Foreign Sub-Custodian is in actual possession of such foreign securities or
property and (ii) the Custodian receives Proper Instructions with regard to the
exercise of any such right or power, and both (i) and (ii) occur at least three
business days prior to the date on which the Custodian is to take action to
exercise such right or power. The Custodian shall also transmit promptly to the
Fund all written information received by the Custodian via the Foreign
Sub-Custodians from issuers of the foreign securities being held for the account
of the Portfolios regarding any class action or other litigation in connection
with Portfolio foreign securities or other assets issued outside the United
States and then held, or previously held, during the term of this Agreement by
the Custodian via a Foreign Sub-Custodian for the account of the Fund for such
Portfolio, including, but not limited to, opt-out notices and proof-of-claim
forms.
SECTION 4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement
pursuant to which the Custodian employs a Foreign Sub-Custodian shall, to the
extent possible, require the Foreign Sub-Custodian to exercise reasonable care
in the performance of its duties, and to indemnify, and hold harmless, the
Custodian from and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the Foreign Sub-Custodian's performance of
such obligations. At the Fund's election, the Portfolios shall be entitled to be
subrogated to the rights of the Custodian with respect to any claims against a
Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolios have not been made
whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11 TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
country-regionplaceUnited States or of any state or political subdivision
thereof. Except for taxes attributable to the domicile of the Custodian in
Massachusetts, of which the Custodian will notify the Fund, it shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with respect to the Portfolios or the Custodian as custodian of the
Portfolios by the tax law of countries other than those mentioned in the above
sentence, including responsibility for withholding and other taxes, assessments
or other
16
governmental charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
SECTION 4.12. LIABILITY OF CUSTODIAN. Except as may arise from the
Custodian's own negligence or willful misconduct or the negligence or willful
misconduct of a Foreign Sub-Custodian, the Custodian shall be without liability
to the Fund for any loss, liability, claim or expense resulting from or caused
by anything which is part of Country Risk.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian to the same extent as set forth with respect to sub-custodians
generally in this Agreement and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Custodian or a Foreign Securities System, the
Custodian shall not be liable for any loss, damage, cost, expense, liability or
claim resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism, or any other loss where the Sub-Custodian has
otherwise acted with reasonable care.
SECTION 5. SPECIAL SUB-CUSTODIANS.
Upon receipt of Special Instructions (as such term is defined in Section 6
hereof), the Custodian shall, on behalf of one or more Portfolios, appoint one
or more banks, trust companies or other entities designated in such Special
Instructions to act as a sub-custodian for the purposes of effecting such
transaction(s) as may be designated by the Fund in Special Instructions. Each
such designated sub-custodian is referred to herein as a "SPECIAL
SUB-CUSTODIAN." Each such duly appointed Special Sub-Custodian shall be listed
on Schedule D hereto, as it may be amended from time to time by the Fund, with
the acknowledgement of the Custodian. In connection with the appointment of any
Special Sub-Custodian, and in accordance with Special Instructions, the
Custodian shall enter into a sub-custodian agreement with the Fund and the
Special Sub-Custodian in form and substance approved by the Fund, provided that
such agreement shall in all events comply with the provisions of the 1940 Act
and the rules and regulations thereunder and the terms and provisions of this
Agreement.
SECTION 5A PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the account of the appropriate Portfolio such
payments as are received for Shares thereof issued or sold from time to time by
the Fund. The Custodian will provide timely notification to the Fund on behalf
of each such Portfolio and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.
From such funds as may be available for the purpose, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank
17
designated by the redeeming shareholders. In connection with the redemption or
repurchase of Shares, the Custodian shall honor checks drawn on the Custodian by
a holder of Shares, which checks have been furnished by the Fund to the holder
of Shares, when presented to the Custodian in accordance with such procedures
and controls as are mutually agreed upon from time to time between the Fund and
the Custodian.
SECTION 6. PROPER INSTRUCTIONS
"PROPER INSTRUCTIONS," which may also be standing instructions, as such term is
used throughout this Agreement shall mean instructions received by the Custodian
from the Fund, the Fund's duly authorized investment manager or investment
adviser, or a person or entity duly authorized by either of them. Such
instructions may be in writing signed by the authorized person or persons or may
be in a tested communication or in a communication utilizing access codes
effected between electro-mechanical or electronic devices or may be by such
other means and utilizing such intermediary systems and utilities as may be
agreed from time to time by the Custodian and the person(s) or entity giving
such instruction, provided that the Fund has followed any security procedures
agreed to from time to time by the Fund and the Custodian including, but not
limited to, the security procedures selected by the Fund via the form of Funds
Transfer Addendum hereto. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to provide such instructions with respect to the transaction
involved; the Fund shall cause all oral instructions to be confirmed in writing.
For purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any multi-party agreement which requires a
segregated asset account in accordance with Section 2.9 hereof.
Special Instructions as used throughout this Agreement means Proper Instructions
executed by at least two officers of the Fund holding the office of Vice
President or higher.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the Fund on
behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Agreement, PROVIDED that all such payments shall be
accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board.
18
SECTION 8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a copy of a resolution of the Board certified
by the Secretary or an Assistant Secretary of the Fund ("CERTIFIED RESOLUTION")
as conclusive evidence (a) of the authority of any person to act in accordance
with such resolution or (b) of any determination or of any action by the Board
as described in such resolution, and such resolution may be considered as in
full force and effect until receipt by the Custodian of written notice to the
contrary.
SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board to keep the books of account of each
Portfolio and/or compute the net asset value per Share of the outstanding Shares
or, if directed in writing to do so by the Fund on behalf of the Portfolio,
shall itself keep such books of account and/or compute such net asset value per
Share. If so directed, the Custodian shall also calculate daily the net income
of the Portfolio as described in the Prospectus and shall advise the Fund and
the Transfer Agent daily of the total amounts of such net income and, if
instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its various
components. The calculations of the net asset value per Share and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Prospectus. The Fund acknowledges that, in keeping the books of
account of the Portfolio and/or making the calculations described herein with
respect to Portfolio property released and delivered pursuant to Section
2.2(14), or purchased pursuant to Section 2.6(7) hereof, the Custodian is
authorized and instructed to rely upon information provided to it by the Fund,
the Fund's counterparty(ies), or the agents of either of them.
SECTION 10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Agreement in such
manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the SEC. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by each Portfolio and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate numbers in
such tabulations. The Fund acknowledges that, in creating and maintaining the
records as set forth herein with respect to Portfolio property released and
delivered pursuant to Section 2.2(14), or purchased pursuant to
19
Section 2.6(7) hereof, the Custodian is authorized and instructed to rely upon
information provided to it by the Fund, the Fund's counterparty(ies), or the
agents of either of them.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of each
applicable Portfolio may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants with respect to its
activities hereunder in connection with the preparation of the Fund's Form N-1A,
and Form N-SAR or other annual reports to the SEC and with respect to any other
requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the Portfolios at
such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a U.S. Securities
System or a Foreign Securities System, relating to the services provided by the
Custodian under this Agreement; such reports, shall be of sufficient scope and
in sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services and
expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care, the
Custodian shall not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement and shall be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and to be signed by the proper party or parties, including any futures
commission merchant acting pursuant to the terms of a three-party futures or
options agreement. The Custodian shall be held to the exercise of reasonable
care in carrying out the provisions of this Agreement, but shall be kept
indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence including, without limitation,
acting in accordance with any Proper Instruction. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. The Custodian shall be without liability to the
Fund and the Portfolios for any loss, liability, claim or expense resulting from
or caused by anything which is (A) part of Country Risk (as defined in Section 3
hereof),
20
including without limitation nationalization, expropriation, currency
restrictions, or acts of war, revolution, riots or terrorism, or (B) part of the
"prevailing country risk" of the Portfolios, as such term is used in SEC Release
Nos. IC-22658; IS-1080 (May 12, 1997) or as such term or other similar terms are
now or in the future interpreted by the SEC or by the staff of the Division of
Investment Management thereof.
Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence or willful misconduct of a sub-custodian or agent, the Custodian
shall be without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by; (i) events or circumstances beyond the reasonable
control of the Custodian or any sub-custodian or Securities System or any agent
or nominee of any of the foregoing, including, without limitation, the
interruption, suspension or restriction of trading on or the closure of any
securities market, power or other mechanical or technological failures or
interruptions, computer viruses or communications disruptions, work stoppages,
natural disasters, or other similar events or acts; (ii) errors by the Fund or
its duly authorized investment manager, investment adviser or sub-adviser. in
their instructions to the Custodian provided such instructions have been in
accordance with this Agreement; (iii) the insolvency of or acts or omissions by
a Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Fund on behalf of a Portfolio requires the Custodian to take any action
with respect to securities, which action involves the payment of money or which
action may, in the opinion of the Custodian, result in the Custodian or its
nominee assigned to the Fund or the Portfolio being liable for the payment of
money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominee's own negligent
21
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
In no event shall the Custodian or the Fund be liable to the other for indirect,
special or consequential damages.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; PROVIDED, however, that the Fund
shall not amend or terminate this Agreement in contravention of any applicable
federal or state regulations, or any provision of the Fund's Declaration of
Trust, By-Laws, or other governing documents and further provided, that the Fund
on behalf of one or more of the Portfolios may at any time by action of its
Board (i) substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Agreement, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be appointed by the
Board, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities of each applicable Portfolio then held by it hereunder
and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in like
manner, upon receipt of a Certified Resolution, deliver at the office of the
Custodian and transfer such securities, funds and other properties in accordance
with such resolution. In the event that no written order designating a successor
custodian or Certified Resolution shall have been delivered to the Custodian on
or before the date when such termination shall become effective, then the
Custodian shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the 1940 Act, doing business in Boston, Massachusetts, or
New York, New York, of its own selection, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties
22
held by the Custodian on behalf of each applicable Portfolio and all instruments
held by the Custodian relative thereto and all other property held by it under
this Agreement on behalf of each applicable Portfolio, and to transfer to an
account of such successor custodian all of the securities of each such Portfolio
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the Fund
on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Agreement as
may in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Fund's Declaration of Trust, By-Laws
or other governing documents. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
SECTION 18. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in addition
to those listed in the preamble to the Agreement with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted under
and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 20. PRIOR AGREEMENTS
This Agreement supersedes and terminates, as of the date hereof, all prior
agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
SECTION 21. NOTICES.
23
Any notice, instruction or other instrument required to be given hereunder may
be delivered in person to the offices of the parties as set forth herein during
normal business hours or delivered prepaid registered mail or by telex, cable or
telecopy to the parties at the following addresses or such other addresses as
may be notified by any party from time to time.
To the Fund: USAA MUTUAL FUNDS TRUST
0000 Xxxxxxxxxxxxxx Xxxx, X00X
Xxx Xxxxxxx, XX 00000
Attention: Xxx Xxxxxxx, Assistant Treasurer
Telephone: 000-000-0000
Telecopy: 000-000-0000
To the Custodian: STATE STREET BANK AND TRUST COMPANY
000 Xxxxxxx Xxxxxx, XXX/0
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, addenda, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 23. REMOTE ACCESS SERVICES ADDENDUM
The Custodian and the Fund agree to be bound by the terms of the Remote Access
Services Addendum attached hereto.
SECTION 24. SHAREHOLDER COMMUNICATIONS ELECTION
24
SEC Rule 14b-2 requires banks which hold securities for the account of customers
to respond to requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the Custodian needs the Fund to
indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name, address, and
share positions.
NO [X] The Custodian is not authorized to release the Fund's name, address,
and share positions.
[Signature page follows.]
25
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative under
seal as of the date first above written.
USAA MUTUAL FUNDS TRUST. FUND SIGNATURE ATTESTED TO BY:
By: /S/ XXXXXXX XXXXXXX, XX. By: /S/ XXXXXX X. XXXXXX
-------------------------- --------------------
Name: XXXXXXX XXXXXXX, XX. Name: XXXXXX X. XXXXXX
-------------------- -----------------
Title: ASSISTANT TREASURER Title: ASSISTANT SECRETARY
------------------- --------------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: /S/ XXXXXX X. XXXXXX By: /S/ XXXXXXX X. XXXXXX
-------------------- ---------------------
Name: XXXXXX X. XXXXXX Name: XXXXXXX X. XXXXXX
------------------------------ ------------------------
Title: EXECUTIVE VICE PRESIDENT Title: VICE PRESIDENT AND COUNSEL
--------------------------- --------------------------
00
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
Argentina Citibank, N.A.
Australia Westpac Banking Corporation
Citibank Pty. Limited
Austria Erste Bank der Osterreichischen Sparkassen AG
Bahrain HSBC Bank Middle East
(as delegate of the Hongkong and Shanghai Banking
Corporation Limited)
Bangladesh Standard Chartered Bank
Belgium BNP Paribas Securities Services, S.A.
Benin via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
Bermuda The Bank of Bermuda Limited
Botswana Barclays Bank of Botswana Limited
Brazil Citibank, N.A.
Bulgaria ING Bank N.V.
Burkina Faso via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
Canada State Street Trust Company Canada
Cayman Islands Scotiabank & Trust (Cayman) Limited
Chile BankBoston, N.A.
0
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
People's Republic The Hongkong and Shanghai Banking Corporation Limited,
of China Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. Sociedad Fiduciaria
Costa Rica Banco BCT S.A.
Croatia Privredna Banka Zagreb d.d
Cyprus Cyprus Popular Bank Public Company Ltd.
Czech Republic Eeskoslovenska Obchodni Banka, A.S.
Denmark Skandinaviska Enskilda Bankken StateAB, Sweden (operating
through its Copenhagen branch)
Ecuador Banco de la Produccion S.A. PRODUBANCO
Egypt HSBC Bank Egypt S.A.E.
(as delegate of The Hongkong and Shanghai Banking
Corporation Limited)
Estonia AS Hansabank
Finland Nordea Bank Finland Plc.
France BNP Paribas Securities Services, S.A.
Deutsche Bank AG, Netherlands (operating through its Paris
branch)
Germany Deutsche Bank AG
Ghana Barclays Bank of Ghana Limited
Greece National Bank of Greece S.A.
0
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
Guinea-Bissau via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
Hong Kong Standard Chartered Bank (placeHong Kong) Limited
Hungary HVB Bank Hungary Rt.
Iceland Kaupthing Bank hf.
India Deutsche Bank AG
The Hongkong and Shanghai Banking Corporation Limited
Indonesia Deutsche Bank AG
Ireland Bank of Ireland
Israel Bank Hapoalim B.M.
Italy BNP Paribas Securities Services, S.A.
Deutsche Bank S.p.A.
Ivory Coast Societe Generale de Banques en Cote d'Ivoire
Jamaica Bank of Nova Scotia Jamaica Ltd.
Japan Mizuho Corporate Bank Ltd.
Sumitomo Mitsui Banking Corporation
Jordan HSBC Bank Middle East
(as delegate of the Hongkong and Shanghai Banking
Corporation Limited)
0
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
Kazakhstan HSBC Bank Kazakhstan
(as delegate of the Hongkong and Shanghai Banking
Corporation Limited)
Kenya Barclays Bank of Kenya Limited
Republic of Korea Deutsche Bank AG
The Hongkong and Shanghai Banking Corporation Limited
Latvia A/s Hansabanka
Lebanon HSBC Bank Middle East
(as delegate of The Hongkong and Shanghai Banking
Corporation Limited)
Lithuania SEB Vilniaus Bankas AB
Malaysia Standard Chartered Bank Malaysia Berhad
Mali via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
Malta The Hongkong and Shanghai Banking Corporation Limited
Mauritius The Hongkong and Shanghai Banking Corporation Limited
Mexico Banco Nacional de Mexico S.A.
Morocco Attijariwafa bank
Namibia Standard Bank Namibia Limited
Netherlands Deutsche Bank AG
0
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
New Zealand Westpac Banking Corporation
Niger via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
Nigeria Stanbic Bank Nigeria Limited
Norway Nordea Bank Norge ASA
Oman HSBC Bank Middle East Limited
(as delegate of The Hongkong and Shanghai Banking
Corporation Limited)
Pakistan Deutsche Bank AG
Palestine HSBC Bank Middle East Limited
(as delegate of The Hongkong and Shanghai Banking
Corporation Limited)
Panama HSBC Bank (Panama) S.A.
Peru Citibank del Peru, S.A.
Philippines Standard Chartered Bank
Poland Bank Handlowy w Warszawie country-regionplaceS.A.
Portugal Banco Comercial Portugues S.A.
Puerto Rico Citibank N.A.
Qatar HSBC Bank Middle East Limited
(as delegate of The Hongkong and Shanghai Banking
Corporation Limited)
Romania ING Bank N.V.
0
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
Russia ING Bank (Eurasia) ZAO, Moscow
Senegal via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
Serbia HVB Bank Serbia and Montenegro a.d.
Singapore DBS Bank Limited
United Overseas Bank Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S., pobocka zahranicnej
banky v SR
Slovenia Bank Austria Creditanstalt d.d. - Ljubljana
South Africa Nedbank Limited
Standard Bank of South Africa Limited
Spain Deutsche Bank S.A.E.
Sri Lanka The Hongkong and Shanghai Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited
Sweden Skandinaviska Enskilda Xxxxxx XX
Switzerland UBS AG
Taiwan - R.O.C. Central Trust of China
Thailand Standard Chartered Bank (Thai) Public Company Limited
Togo via Societe Generale de Banques en Cote d'Ivoire, Abidjan,
Ivory Coast
0
XXXXX XXXXXX SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS
COUNTRY SUBCUSTODIAN
Trinidad & Tobago Republic Bank Limited
Tunisia Banque Internationale Arabe de Tunisie
Turkey Citibank, A.S.
Uganda Barclays Bank of Uganda Limited
Ukraine ING Bank placecountry-regionUkraine
United Arab
Emirates HSBC Bank Middle East Limited
(as delegate of The Hongkong and Shanghai Banking
Corporation Limited)
United Kingdom State Street Bank and Trust Company, United kingdom Branch
Uruguay BankBoston, N.A.
Venezuela Citibank, N.A.
Vietnam The Hongkong and Shanghai Banking Corporation Limited
Zambia Barclays Bank of Zambia Plc.
Zimbabwe Barclays Bank of Zimbabwe Limited
0
XXXXX XXXXXX SCHEDULE B
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Bahrain Clearing, Settlement, and Depository System of the Bahrain
Stock Exchange
Bangladesh Central Depository Bangladesh Limited
Belgium Banque Nationale de Belgique
Euroclear Belgium
Benin Depositaire Central - Banque de Reglement
Bermuda Bermuda Securities Depository
Brazil Central de Custodia e de Liquidacao Financeira de Titulos
Privados (CETIP)
Companhia Brasileira de Liquidacao e Custodia
Sistema Especial de Liquidacao e de Custodia (SELIC)
Bulgaria Bulgarian National Bank
Central Depository AD
Burkina Faso Depositaire Central - Banque de Reglement
Canada The Canadian Depository for Securities Limited
Chile Deposito Central de Valores S.A.
0
XXXXX XXXXXX SCHEDULE B
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
People's Republic China Securities Depository and Clearing Corporation Limited
of China Shanghai Branch
China Securities Depository and Clearing Corporation Limited
Shenzhen Branch
Colombia Deposito Central de Valores
Deposito Centralizado de Valores de Colombia S..A. (DECEVAL)
Costa Rica Central de Valores S.A.
Croatia Sredisnja Depozitarna Agencija d.d.
Cyprus Central Depository and Central Registry
Czech Republic Czech National Bank
Stredisko cennych papiru - Ceska republika
Denmark Vaerdipapircentralen (Danish Securities Center)
Egypt Misr for Clearing, Settlement, and Depository S.A.E.
Central Bank of Egypt
Estonia AS Eesti Vaartpaberikeskus
Finland Suomen Arvopaperikeskus Oy
France Euroclear France
Germany Clearstream Xxxxxxx XX, Xxxxxxxxx
0
XXXXX XXXXXX XXXXXXXX X
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Greece Apothetirion Titlon AE - Central Securities Depository
Bank of Greece,
System for Monitoring Transactions in Securities in
Book-Entry Form
Guinea-Bissau Depositaire Central - Banque de Reglement
Hong Xxxx Xxxxxxx Xxxxxxxxxxxx Xxxx
Xxxx Xxxx Securities Clearing Company Limited
Hungary Kozponti Elszamolohaz es Ertektar (Budapest) Rt. (KELER)
Iceland Icelandic Securities Depository Limited
India Central Depository Services (India) Limited
National Securities Depository Limited
Reserve Bank of India
Indonesia Bank Indonesia
PT Kustodian Sentral Efek Indonesia
Israel Tel Aviv Stock Exchange Clearing House Ltd. (TASE
Clearinghouse)
Italy Monte Titoli S.p.A.
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica Jamaica Central Securities Depository
Japan Bank of Japan - Net System
Japan Securities Depository Center (JASDEC) Incorporated
0
XXXXX XXXXXX SCHEDULE B
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Jordan Securities Depository Center
Kazakhstan Central Securities Depository
Kenya Central Depository and Settlement Corporation Limited
Central Bank of Kenya
Republic of Korea Korea Securities Depository
Latvia Latvian Central Depository
Lebanon Banque du Liban
Custodian and Clearing Center of Financial Instruments
for Lebanon and the Middle East (Midclear) X.X.X.
Lithuania Central Securities Depository of Lithuania
Malaysia Bank Negara Malaysia
Bursa Malaysia Depository Sdn. Bhd.
Mali Depositaire Central - Banque de Reglement
Malta Central Securities Depository of the Malta Stock Exchange
Mauritius Bank of Mauritius
Central Depository and Settlement Co. Ltd.
Mexico S.D. INDEVAL, S.A. de C.V.
Morocco Maroclear
0
XXXXX XXXXXX SCHEDULE B
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Namibia Bank of Namibia
Netherlands Euroclear Nederland
New Zealand New Zealand Central Securities Depository Limited
Niger Depositaire Central - Banque de Reglement
Nigeria Central Securities Clearing System Limited
Norway Verdipapirsentralen (Norwegian Central Securities
Depository)
Oman Muscat Depository & Securities Registration Company, SAOC
Pakistan Central Depository Company of Pakistan Limited
State Bank of Pakistan
Palestine Clearing, Depository and Settlement, a department of the
Palestine Stock Exchange
Panama Central Latinoamericana de Valores, S.A. (LatinClear)
Peru Caja de Valores y Liquidaciones, Institucion de Compensacion
y Liquidacion de Valores S.A
Philippines Philippine Depository & Trust Corporation
Registry of Scripless Securities (XXXX) of the Bureau of
Treasury
5
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Poland Rejestr Papierow Wartooeciowych
Krajowy Depozyt Papierow Wartosciowych S.A.
Portugal INTERBOLSA - Sociedade Gestora de Sistemas de Liquidacao
e de Sistemas Centralizados de Valores Mobiliarios, S.A.
Qatar Central Clearing and Registration (CCR), a department of the
Doha Securities Market
Romania Bucharest Stock Exchange Registry Division
National Bank of Romania
Russia Vneshtorgbank, Bank for Foreign Trade of the Russian
Federation
Senegal Depositaire Central - Banque de Reglement
Serbia Central Registrar and Central Depository for Securities
Singapore The Central Depository (Pte) Limited
Monetary Authority of Singapore
Slovak Republic Naodna banka slovenska
Centralny depozitar cennych papierov SR, a.s.
Slovenia KDD - Centralna klirinsko depotna xxxxxx x.x.
South Africa Share Transactions Totally Electronic (STRATE) Ltd.
Spain IBERCLEAR
Sri Lanka Central Depository System (Pvt) Limited
0
XXXXX XXXXXX SCHEDULE B
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Sweden Vardepapperscentralen VPC AB
(Swedish Central Securities Depository)
Switzerland SegaIntersettle AG (SIS)
Taiwan - R.O.C. Taiwan Depository and Clearing Corporation
Thailand Thailand Securities Depository Company Limited
Togo Depositaire Central - Banque de Reglement
Trinidad and Tobago Trinidad and Tobago Central Bank
Tunisia Societe Tunisienne Interprofessionelle pour la Compensation
et de Depots des Valeurs Mobilieres (STICODEVAM)
Turkey Central Bank of Turkey
Central Registry Agency
Uganda Bank of Uganda
Ukraine Mizhregionalny Fondovy Souz
National Bank of Ukraine
United Arab Clearing and Depository System, a department of the Dubai
Emirates Financial Market
United Kingdom CrestCo.
Uruguay Xxxxx Xxxxxxx xxx Xxxxxxx
0
XXXXX XXXXXX XXXXXXXX X
GLOBAL CUSTODY NETWORK
DEPOSITORIES OPERATING IN NETWORK MARKETS
COUNTRY DEPOSITORIES
Venezuela Banco Central de Venezuela
Caja Venezolana de Valores
Vietnam Vietnam Securities Depository
Zambia Bank of Zambia
XxXX Central Shares Depository Limited
TRANSNATIONAL
Euroclear
Clearstream Banking, S.A.
8
SCHEDULE C
MARKET INFORMATION
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
(scheduled frequency)
THE GUIDE TO CUSTODY IN WORLD MARKETS An overview of settlement and
(hardcopy annually and regular website safekeeping procedures, custody
updates) practices and foreign investor
considerations for the markets in which
State Street offers custodial services.
GLOBAL CUSTODY NETWORK REVIEW Information relating to Foreign
(annually) Sub-Custodians in State Street's Global
Custody Network. The Review stands as an
integral part of the materials that
State Street provides to its U.S. mutual
fund clients to assist them in complying
with SEC Rule 17f-5. The Review also
gives insight into State Street's market
expansion and Foreign Sub-Custodian
selection processes, as well as the
procedures and controls used to monitor
the financial condition and performance
of our Foreign Sub-Custodian banks.
SECURITIES DEPOSITORY REVIEW Custody risk analyses of the Foreign
(annually) Securities Depositories presently
operating in Network markets. This
publication is an integral part of the
materials that State Street provides to
its U.S. mutual fund clients to meet
informational obligations created by SEC
Rule 17f-7.
GLOBAL LEGAL SURVEY With respect to each market in which
(annually) State Street offers custodial services,
opinions relating to whether local law
restricts (i) access of a fund's
independent public accountants to books
and records of a Foreign Sub-Custodian
or Foreign Securities System, (ii) a
fund's ability to recover in the event
of bankruptcy or insolvency of a Foreign
Sub-Custodian or Foreign Securities
System, (iii) a fund's ability to
recover in the event of a loss by a
Foreign Sub-Custodian or Foreign
Securities System, and (iv) the ability
of a foreign investor to convert cash
and cash equivalents to U.S. dollars.
SUBCUSTODIAN AGREEMENTS Copies of the contracts that State
(annually) Street has entered into with each
Foreign Sub-Custodian that maintains
U.S. mutual fund assets in the markets
in which State Street offers custodial
services.
GLOBAL MARKET BULLETIN Information on changing settlement and
(daily or as necessary) custody conditions in markets where
State Street offers custodial services.
Includes changes in market and tax
regulations, depository developments,
dematerialization information, as well
as other market changes that may impact
State Street's clients.
FOREIGN CUSTODY ADVISORIES For those markets where State Street
(as necessary) offers custodial services that exhibit
special risks or infrastructures
impacting custody, State Street issues
market advisories to highlight those
unique market factors which might impact
our ability to offer recognized custody
service levels.
MATERIAL CHANGE NOTICES Informational letters and accompanying
(presently on a quarterly basis or materials confirming State Street's
as otherwise necessary) foreign custody arrangements, including
a summary of material changes with
Foreign Sub-Custodians that have
occurred during the previous quarter.
The notices also identify any material
changes in the custodial risks
associated with maintaining assets with
Foreign Securities Depositories.
09/30/05
SCHEDULE D
TO
MASTER CUSTODIAN AGREEMENT
Special Sub-Custodians
None
i
REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
ADDENDUM to that certain Amended and Restated Custodian Agreement dated
as of July 31, 2006 (the "Custodian Agreement") between USAA Mutual Funds Trust
(the "Customer") and State Street Bank and Trust Company, including its
subsidiaries and affiliates ("State Street").
State Street has developed and utilizes proprietary accounting and
other systems in conjunction with the custodian services which State Street
provides to the Customer. In this regard, State Street maintains certain
information in databases under its control and ownership which it makes
available to its customers (the "Remote Access Services").
THE SERVICES
State Street agrees to provide the Customer, and its designated investment
advisors, consultants or other third parties authorized by State Street
("Authorized Designees") with access to In~SightSM as described in Exhibit A or
such other systems as may be offered from time to time (the "System") on a
remote basis.
SECURITY PROCEDURES
The Customer agrees to comply, and to cause its Authorized Designees to comply,
with remote access operating standards and procedures and with user
identification or other password control requirements and other security
procedures as may be issued from time to time by State Street for use of the
System and access to the Remote Access Services. The Customer agrees to advise
State Street immediately in the event that it learns or has reason to believe
that any person to whom it has given access to the System or the Remote Access
Services has violated or intends to violate the terms of this Addendum and the
Customer will cooperate with State Street in seeking injunctive or other
equitable relief. The Customer agrees to discontinue use of the System and
Remote Access Services, if requested, for any security reasons cited by State
Street.
FEES
Fees and charges for the use of the System and the Remote Access Services and
related payment terms shall be as set forth in the Custody Fee Schedule in
effect from time to time between the parties (the "Fee Schedule"). The Customer
shall be responsible for any tariffs, duties or taxes imposed or levied by any
government or governmental agency by reason of the transactions contemplated by
this Addendum, including, without limitation, federal, state and local taxes,
use, value added and personal property taxes (other than income, franchise or
similar taxes which may be imposed or assessed against State Street). Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
PROPRIETARY INFORMATION/INJUNCTIVE RELIEF
The System and Remote Access Services described herein and the databases,
computer programs, screen formats, report formats, interactive design
techniques, formulae, processes, systems, software, know-how, algorithms,
programs, training aids, printed materials, methods, books, records, files,
documentation and other information made available to the Customer by State
Street as part of the Remote Access Services and through the use of the System
and all copyrights, patents, trade secrets and other proprietary rights of State
Street related thereto are the exclusive, valuable and confidential property of
State Street and its relevant licensors (the "Proprietary Information"). The
Customer agrees
i
on behalf of itself and its Authorized Designees to keep the Proprietary
Information confidential and to limit access to its employees and Authorized
Designees (under a similar duty of confidentiality) who require access to the
System for the purposes intended. The foregoing shall not apply to Proprietary
Information in the public domain or required by law to be made public.
The Customer agrees to use the Remote Access Services only in connection with
the proper purposes of this Addendum. The Customer will not, and will cause its
employees and Authorized Designees not to, (i) permit any third party to use the
System or the Remote Access Services, (ii) sell, rent, license or otherwise use
the System or the Remote Access Services in the operation of a service bureau or
for any purpose other than as expressly authorized under this Addendum, (iii)
use the System or the Remote Access Services for any fund, trust or other
investment vehicle without the prior written consent of State Street, or (iv)
allow or cause any information transmitted from State Street's databases,
including data from third party sources, available through use of the System or
the Remote Access Services, to be published, redistributed or retransmitted for
other than use for or on behalf of the Customer, as State Street's customer.
The Customer agrees that neither it nor its Authorized Designees will modify the
System in any way; enhance or otherwise create derivative works based upon the
System; nor will the Customer or its Authorized Designees reverse engineer,
decompile or otherwise attempt to secure the source code for all or any part of
the System.
The Customer acknowledges that the disclosure of any Proprietary Information, or
of any information which at law or equity ought to remain confidential, will
immediately give rise to continuing irreparable injury to State Street
inadequately compensable in damages at law and that State Street shall be
entitled to obtain immediate injunctive relief against the breach or threatened
breach of any of the foregoing undertakings, in addition to any other legal
remedies which may be available.
LIMITED WARRANTIES
State Street represents and warrants that it is the owner of and has the right
to grant access to the System and to provide the Remote Access Services
contemplated herein. Because of the nature of computer information technology,
including but not limited to the use of the Internet, and the necessity of
relying upon third party sources, and data and pricing information obtained from
third parties, the System and Remote Access Services are provided "AS IS", and
the Customer and its Authorized Designees shall be solely responsible for the
investment decisions, results obtained, regulatory reports and statements
produced using the Remote Access Services. State Street and its relevant
licensors will not be liable to the Customer or its Authorized Designees for any
direct or indirect, special, incidental, punitive or consequential damages
arising out of or in any way connected with the System or the Remote Access
Services, nor shall either party be responsible for delays or nonperformance
under this Addendum arising out of any cause or event beyond such party's
control.
State Street will take reasonable steps to ensure that its products (and those
of its third-party suppliers) reflect the available state of the art technology
to offer products that are Year 2000 compliant, including, but not limited to,
century recognition of dates, calculations that correctly compute same century
and multi century formulas and date values, and interface values that reflect
the date issues arising between now and the next one hundred years, and if any
changes are required, State Street will make the changes to its products at no
cost to the Customer and in a commercially reasonable time frame and will
require third-party suppliers to do likewise. The Customer will do likewise for
its systems.
ii
EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET, FOR ITSELF AND ITS
RELEVANT LICENSORS, EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE
SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
INFRINGEMENT
State Street will defend or, at its option, settle any claim or action brought
against the Customer to the extent that it is based upon an assertion that
access to the System or use of the Remote Access Services by the Customer under
this Addendum constitutes direct infringement of any patent or copyright or
misappropriation of a trade secret, provided that the Customer notifies State
Street promptly in writing of any such claim or proceeding and cooperates with
State Street in the defense of such claim or proceeding. Should the System or
the Remote Access Services or any part thereof become, or in State Street's
opinion be likely to become, the subject of a claim of infringement or the like
under any applicable patent or copyright or trade secret laws, State Street
shall have the right, at State Street's sole option, to (i) procure for the
Customer the right to continue using the System or the Remote Access Services,
(ii) replace or modify the System or the Remote Access Services so that the
System or the Remote Access Services becomes noninfringing, or (iii) terminate
this Addendum without further obligation.
TERMINATION
Either party to the Custodian Agreement may terminate this Addendum (i) for any
reason by giving the other party at least one-hundred and eighty (180) days'
prior written notice in the case of notice of termination by State Street to the
Customer or thirty (30) days' notice in the case of notice from the Customer to
State Street of termination, or (ii) immediately for failure of the other party
to comply with any material term and condition of the Addendum by giving the
other party written notice of termination. This Addendum shall in any event
terminate within ninety (90) days after the termination of the Custodian
Agreement. In the event of termination, the Customer will return to State Street
all copies of documentation and other confidential information in its possession
or in the possession of its Authorized Designees. The foregoing provisions with
respect to confidentiality and infringement will survive termination for a
period of three (3) years.
MISCELLANEOUS
This Addendum and the exhibits hereto constitute the entire understanding of the
parties to the Custodian Agreement with respect to access to the System and the
Remote Access Services. This Addendum cannot be modified or altered except in a
writing duly executed by each of State Street and the Customer and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
By its execution of the Custodian Agreement, the Customer accepts responsibility
for its and its Authorized Designees' compliance with the terms of this
Addendum.
iii
EXHIBIT A
TO
REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
IN~SIGHT(SM)
System Product Description
In~SightSM provides bilateral information delivery, interoperability, and
on-line access to State Street. In~SightSM allows users a single point of entry
into State Street's diverse systems and applications. Reports and data from
systems such as Investment Policy MonitorSM, Multicurrency HorizonSM, Securities
Lending, Performance & Analytics, and Electronic Trade Delivery can be accessed
through In~SightSM. This Internet-enabled application is designed to run from a
Web browser and perform across low-speed data lines or corporate high-speed
backbones. In~SightSM also offers users a flexible toolset, including an ad-hoc
query function, a custom graphics package, a report designer, and a scheduling
capability. Data and reports offered through In~SightSM will continue to
increase in direct proportion with the customer roll out, as it is viewed as the
information delivery system will grow with State Street's customers.
[STATE STREET
LOGO OMITTED]
USAA California Bond Fund
USAA California Money Market Fund
USAA Florida Tax-Free Income Fund
USAA Florida Tax-Free Money Market Fund
USAA New York Bond Fund
USAA New York Money Market Fund
USAA Tax Exempt Intermediate-Term Fund
USAA Tax Exempt Long-Term Fund
USAA Tax Exempt Money Market Fund
USAA Tax Exempt Short-Term Fund
USAA Xxxxxxxx Xxxx Fund
USAA Virginia Money Market Fund
This document is to confirm State Street's and USAA's understanding of the use
and tracking of periodic overdrafts in the above named USAA Funds that invest in
tax exempt securities.
USAA may decide to periodically leave uninvested cash balances for several days
in the funds listed above. State Street will track these balances on a daily
basis and calculate a "credit" amount based on 100% of the uninvested balance.
These "credits" will accumulate daily until such time market conditions allow
USAA to purchase tax exempt securities.
USAA will then use the cumulative "credit" balance to purchase securities and
thereby overdraw the cash balance in the account. When USAA overdraws the
account, the accumulated "credits" will be reduced by the amount of the
overdraft. USAA will manage the size of the overdrafts, as well as their
duration. Daily overdrafts will be limited to 5% of a funds net assets, with a
fund level cap of $40 million.
For the listed funds, State Street will not pay earnings credits on uninvested
cash balances and will not charge the funds for overdraft balances as long as
the accumulated "credit" balance sufficiently covers the overdraft. Once all
accumulated "credits" reach zero, overdrafts will be charged at the stated
overdraft rate per the Fee Schedule.
USAA agrees that there will be no overdraft positions over March 31, June 30,
September 30 and December 31, as this would negatively affect State Street's
corporate balance sheet reporting to the Federal Reserve on these dates. Also,
all credits are to be used by calendar year end in the year which they were
earned. Any outstanding credits at December 31 will be applied as an earnings
credit on the fund's custody xxxx based on the arrangement stated in the Fee
Schedule. (Excess credits will not be carried over to the next year.)
The following is an example of the calculation of "credits" as described above:
End of Day Accumulated "Credits"
Cash Balance
Day 1 5,000,000 5,000,000
Day 2 6,000,000 11,000,000
Day 3 (8,000,000) 3,000,000
October 12, 2006
USAA Mutual Funds Trust
By: /s/ Xxxxxxx Xxxxxxx, Xx.
-------------------------------
Name: Xxxxxxx Xxxxxxx Xx.
Title: Assistant Treasurer
State Street Corporation
By: /s/ X. Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
Title: VP
STATE STREET BANK & TRUST COMPANY
CUSTODY AND ACCOUNTING FEE SCHEDULE
USAA MUTUAL FUNDS TRUST
--------------------------------------------------------------------------------
I. DOMESTIC CUSTODY
--------------------------------------------------------------------------------
Maintain custody of fund assets. Settle portfolio purchases and sales.
Report trade fails. Determine and collect portfolio income. Make cash
disbursements and report cash transactions. Monitor corporate actions.
Report portfolio positions.
The fee shown below is annualized, billed and payable monthly and based on
the aggregate assets of all USAA accounts serviced by State Street
First $20 billion 0.25 basis points
Next $20 billion 0.20 basis points
Excess 0.15 basis points
TRANSACTIONS
DTC (non-ETD) $12.00
DTC (ETD) $7.00
Fed Book Entry (non-ETD) $12.00
Fed Book Entry (ETD) $7.00
PTC (non-ETD) $20.00
PTC (ETD) $15.00
Physical Settlements $25.00
Maturity collections $8.00
In Kind Transfers (DTC) $7.00
Paydowns $2.00
Third party foreign exchange trades $50.00
Call Monitoring $5.00
Fund of Fund Trades $5.00
All other trades $16.00
Written options $25.00
Closed options $15.00
Futures transactions - no security movement $8.00
Margin payments $6.00
Fund trades $30.00
Affirmations $1.00
CWP (per check) .00
Xxxxx Xxxxxx Repo No charge
State Street FX No charge
1
--------------------------------------------------------------------------------
II. GLOBAL CUSTODY
--------------------------------------------------------------------------------
SUB-CUSTODIAN ASSET BASED FEES**
A fee payable monthly on a pro rata basis, based on the following percentages of
month end net assets.
BASIS POINT
COUNTRY CHARGES TRANSACTION FEES
Argentina 12.0 $ 50
Australia 1.0 $ 20
Austria 8.0 $ 50
Bahrain 40.0 $100
Bangladesh 40.0 $100
Belgium 1.0 $ 20
Bermuda 12.0 $ 75
Bolivia 40.0 $100
Botswana 40.0 $ 75
Brazil 12.0 $ 00
Xxxxxxxx 20.0 $ 75
Canada 3.0 $ 00
Xxxxx 20.0 $ 75
China 20.0 $100
Colombia 40.0 $100
Croatia 40.0 $ 75
Cyprus 40.0 $100
Czech Rep 12.0 $ 00
Xxxxxxx 1.0 $ 00
Xxxxxxx 40.0 $ 75
Egypt 12.0 $ 50
Estonia 40.0 $ 40
Euroclear 3.0 $ 20
Finland 1.0 $ 20
France 3.0 $ 20
Germany 3.0 $ 20
Ghana 40.0 $ 75
Greece 12.0 $ 40
Hong Kong 8.0 $ 40
Hungary 12.0 $ 75
Iceland 12.0 $ 25
India 20.0 $100
Indonesia 12.0 $ 75
Ireland 8.0 $ 50
Israel 12.0 $ 50
Italy 3.0 $ 20
Ivory Coast 40.0 $ 75
Jamaica 40.0 $ 00
Xxxxx 3.0 $ 20
Jordan 12.0 $100
Kenya 20.0 $ 00
Xxxxxx 40.0 $ 50
2
Lebanon 40.0 $100
Lithuania 12.0 $ 50
Malaysia 8.0 $ 50
Mauritius 20.0 $ 75
Mexico 8.0 $ 25
Morocco 20.0 $ 75
Namibia 20.0 $ 00
Xxxxxxxxxxx 1.0 $ 20
New Zealand 1.0 $ 20
Norway 1.0 $ 20
Oman 40.0 $100
Pakistan 20.0 $100
Peru 40.0 $100
Philippines 8.0 $ 75
Poland 20.0 $ 50
Portugal 8.0 $ 75
Puerto Rico 8.0 $ 50
Romania 12.0 $ 75
Russia 20.0 $ 00
X Xxxxxx 8.0 $ 25
Singapore 8.0 $ 40
Slovak Rep 20.0 $ 00
Xxxxxxxx 00.0 x 00
Xxxxx Xxxxx 1.0 $ 20
Spain 8.0 $ 00
Xxx Xxxxx 12.0 $ 75
Swaziland 40.0 $ 75
Sweden 3.0 $ 20
Switzerland 1.0 $ 20
Taiwan 12.0 $ 40
Thailand 8.0 $ 00
Xxxx & Xxxxxx 40.0 $ 75
Tunisia 40.0 $ 00
Xxxxxx 40.0 $ 40
UK 3.0 $ 20
Ukraine 40.0 $100
Uruguay 40.0 $ 75
Venezuela 40.0 $100
Viet Nam 40.0 $100
Zambia 40.0 $100
Zimbabwe 40.0 $100
**Excludes: Agent, depository and local auditing fees, stamp duties and
registration fees
3
--------------------------------------------------------------------------------
III. SECURITIES LENDING (PROGRAM RUN BY THIRD PARTY)
Securities Lending Fees have been moved to Attachment A, as third party
lending agent is paying fees directly to State Street
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
IV. FUND ACCOUNTING
--------------------------------------------------------------------------------
RECORDKEEPING
Maintain investment ledgers, provide selected portfolio transactions,
position and income reports. Maintain general ledger and capital stock
accounts. Prepare daily trial balance. Calculate Net Asset Value daily.
Provide selected general ledger reports. The fee shown below is annualized,
billed and payable monthly and based on the aggregate assets of the Mutual
Funds.
NON-MONEY MARKET FUNDS
First $18 billion 0.90 basis points
Excess 0.60 basis points
Minimum monthly charge Waived
MONEY MARKET FUNDS
First $8 billion 0.70 basis points
Excess 0.50 basis points
Minimum monthly charge Waived
ADVERTISED YIELD
For each portfolio maintain, monthly charge is based on the number of
holdings as followed:
HOLDINGS PER PORTFOLIO MONTHLY FEE
0 to 50 $250.00
50 to 100 $300.00
Over 100 $350.00
AUTOMATED PRICING VIA NAVIGATOR (EXCLUDES FUND OF FUNDS)
Quote Charge (based on month end positions)
Base fee--domestic, including Money Market Funds $300.00
Base fee--more than 20% global $375.00
Municipal Bonds via Xxxxxx Data $10.00
Municipal Bonds via Xxxxx Information Systems $16.00
Government, corporate, and conv. bonds via Bridge $11.00
Corporate and government bonds via Bridge $11.00
Government, corporate, and conv. bonds via FT Interactive $16.00
Corporate and government bonds via FT Interactive $16.00
Options, futures and private placements $6.00
Foreign equities and bonds $6.00
Listed equities, OTC equities and bonds $6.00
Corporate, municipal, convertible, and government
Bonds, adjustable rate preferred stocks via IDSI $12.00
MULTI-MANAGED FUNDS
For each additional portfolio, the fund will be charged $15,000
4
--------------------------------------------------------------------------------
V. ENHANCED ACCOUNTING SERVICES - FUND ADMINISTRATION
--------------------------------------------------------------------------------
The following fees are for limited fund administration services or remote
access to technology platforms. All fees quoted are expressed in annual
terms unless expressly noted.
o Performance calculations on multi-managed portfolios $2,000
(fee applies to each multi-manager portfolio)
o Specialized fund administration reporting $250
(fee is per report per fund)
- NSAR Broker
- Top ten holdings
- Series Broker allocation
- Dividend received deduction
- 45 day dividend reporting
- Government income breakdown/income by state
(fee waived for this report)
- Massachusetts State reporting
o Specialized fund administration system applications
- Fund Administration Workstation
(remote access for all funds) $75,000
Before/After tax return module (waived)
(the waiver relates to returns module only.
Use of other FA workstation functions will
require additional fees)
- Wash Sale System
(On demand reporting)
- Equity Fund (per fund) $5,000
- Fixed Income Fund (per fund) $3,000
- iTELS - tax efficient lot selection application $2,500
(service performed by State Street) per fund
--------------------------------------------------------------------------------
VI. SPECIAL SERVICES
--------------------------------------------------------------------------------
Fees for activities of a non-recurring nature such as fund consolidations
or reorganizations, extraordinary security shipments and the preparation of
special reports will be subject to negotiation.
--------------------------------------------------------------------------------
VII. BALANCE CREDITS AND OVERDRAFT CHARGES
--------------------------------------------------------------------------------
For the Mutual Funds only, a balance credit will be applied against the
custody fees or other fees as directed by USAA (excluding out-of-pocket
expenses). The credit is based on 90% of the average Fed Funds rate for the
month, times the average collected balance (collected balance is positive
balance).
Overdrafts due to overspending/client errors or third party agent errors
will be charged at a rate of Fed Funds plus 50 basis points. Total
overdraft charges will be applied to the monthly custody bills.
5
--------------------------------------------------------------------------------
VIII. OUT-OF-POCKET EXPENSES
--------------------------------------------------------------------------------
A billing for the recovery of applicable out-of-pocket expenses will be
made as of the end of each month. These expenses have been separated into 2
categories; recurring and variable.
RECURRING OUT-OF-POCKET EXPENSES
Out-of-pocket expenses related to duplicating, courier service,
postage/insurance, supplies related to fund records,
communication/equipment costs (telephone, lease lines, etc.), and
third-party internal control review will be charged back to the funds at a
fixed monthly fee.
$420.00/month per fund
VARIABLE OUT-OF-POCKET EXPENSES
Variable out-of-pocket expenses will be billed as they occur. These
out-of-pocket expenses include, but are not limited to the following:
- Proxy Fees
- Transfer fees
- Sub-Custodian out-of-pocket charges, market fees, registration fees,
stamp duties, etc.
- Customized programming/transmissions @ $175 per hour) (100 hours for
free)
- Annual fee for each customized program/transmission ($3,000)--1st
three are free
- Non recurring legal fees
- Wires ($5.00)
All fees above will be charged against the Fund's custodian account five (5)
business days after the invoice is sent to the Fund's offices. Payment does not
preclude any required billing adjustments that will be made to the following
months xxxx.
--------------------------------------------------------------------------------
STATE STREET USAA MUTUAL FUNDS TRUST
By /s/ X. Xxxxxx By /s/ Xxxxxxx Xxxxxxx, Xx.
--------------------------------- -------------------------------
Title VP Title Assistant Treasurer
Date November 28, 2006 Date November 28, 2006
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
ATTACHMENT A
--------------------------------------------------------------------------------
THIRD PARTIES SECURITIES LENDING-FEE SCHEDULE
(PROGRAM RUN BY METROPOLITAN WEST SECURITIES)
ADMINISTRATION FEE
For reporting of fails, cash collateral, shares on loan, past due income.
Services related to income collection and corporate action support. The fee
shown below is annualized, billed and payable monthly.
Prime Meridian access* $1,080.00
*for accounts NOT already billed by SSC's Cash Management group
DOMESTIC (DTC, FED)
Deliver/Receive loaned securities versus cash/securities collateral
(ETD) 7.00
Loan Administration--DTC SPO $5.00
Wire transfer $5.00
Non-US (sleeves used in Section V)
Deliver/Receive loaned securities versus cash/securities collateral
Group I $25.00
Group II $40.00
Group III $50.00
Group IV $75.00
Group V $100.00
OTHER CUSTODY CHARGES
Domestic Collateral Account Holdings* .4 basis point
Collateral transactions:
DTC, Fed Buy/Sell/Maturity $7.00
Wire in/out 5.00
*based on month end market values of collateral accounts
TRANSMISSION OF CUSTODY POSITIONS AND ACTIVITY
Programming for standard transmission. Transmission set up, integration testing
and maintenance. $175.00 per hour
1A
