Exhibit H.4
SUB-ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this __ day of _________, 2004, by and
between Constellation Investment Management Company, LP, a Pennsylvania
partnership (the "Administrator") and SEI Investments Global Funds Services, a
Delaware business trust (the "Sub-Administrator").
WHEREAS, the Administrator and Constellation Funds (the "Trust") have
entered into an Administration Agreement (the "Administration Agreement")
pursuant to which the Administrator will provide administrative services to the
Trust; and
WHEREAS, the Administrator desires to retain the Sub-Administrator to
assist in performing certain administrative and accounting services to each of
the portfolios of the Trust, which are identified in Schedule A hereto, as such
schedule may be amended from time to time to (individually a "Portfolio" and
collectively the "Portfolios") and the Sub-Administrator is willing to perform
such services on the terms and conditions hereinafter set forth herein;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, Administrator and the Sub-Administrator hereby agree as
follows:
ARTICLE 1. Retention of the Sub-Administrator. Administrator hereby
retains the Sub-Administrator to furnish the Portfolios with accounting and
administrative services as set forth in Article 2 below. The Sub-Administrator
hereby accepts such employment to perform the duties set forth below. The
Sub-Administrator shall, for all purposes herein, be deemed to be an independent
contractor.
ARTICLE 2. Sub-Administrative and Accounting Services. The
Sub-Administrator shall perform or supervise the performance by others of the
accounting and administrative services set forth in Schedule B hereto, and made
a part of this Agreement. The Sub-Administrator may sub-contract with third
parties to perform certain of the services to be performed by the
Sub-Administrator hereunder; provided, however, that the Sub-Administrator shall
remain principally responsible to Administrator for the acts and omissions of
such other entities. In meeting its duties hereunder, Sub-Administrator shall
have the general authority to do all acts deemed in the Sub-Administrator's good
faith belief to be necessary and proper to perform its obligations under this
Agreement.
ARTICLE 3. Compensation of the Sub-Administrator. The Administrator
shall pay to the Sub-Administrator compensation at the annual rate specified in
Schedule A to this Agreement until this Agreement is terminated in accordance
with Article 5. Such compensation shall be calculated and accrued daily, and
paid to the Sub-Administrator monthly. If this Agreement becomes effective
subsequent to the first day of a month or terminates before the last day of a
month, the Sub-Administrator's compensation for that part of the month in which
this Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. Payment of the Sub-Administrator's
compensation for the preceding month shall be made within 30 days after receipt
of invoice. In addition, the Administrator agrees to reimburse the
Sub-Administrator for the Sub-Administrator's reasonable out of pocket expenses
in providing services hereunder.
ARTICLE 4. Limitation of Liability of the Sub-Administrator. The duties
of the Sub-Administrator shall be confined to those expressly set forth herein,
and no implied duties are assumed by or may be asserted against the
Sub-Administrator hereunder. The Sub-Administrator shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties hereunder,
except a loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard of its
obligations and duties hereunder. (As used in this Article 4, the term
"Sub-Administrator" shall include Trustees, officers, employees and other agents
of the Sub-Administrator as well as that entity itself.) Under no circumstances
shall the Sub-Administrator be liable to Administrator for consequential,
indirect or punitive damages.
So long as the Sub-Administrator, or its agents, acts without willful
misfeasance, bad faith or gross negligence in the performance of its duties, and
without reckless disregard of its obligations and duties hereunder,
Administrator assumes full responsibility and shall indemnify the
Sub-Administrator and hold it harmless from and against any and all actions,
suits and claims, whether groundless or otherwise, and from and against any and
all losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of any act or omission of Sub-Administrator
in carrying out its duties hereunder. The indemnity and defense provisions set
forth herein shall indefinitely survive the termination of this Agreement.
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The indemnification rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. In order that the indemnification provisions contained
herein shall apply, however, it is understood that if in any case the
Administrator may be asked to indemnify or hold the Sub-Administrator harmless,
the Administrator shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood that the
Sub-Administrator will use all reasonable care to identify and notify the
Administrator promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification against the
Administrator, but failure to do so shall not affect the rights hereunder. In no
event and under no circumstances shall either party to this Agreement be liable
to anyone, including, without limitation, the other party, for special damages
for any act or failure to act under any provision of this Agreement if advised
of the possibility thereof.
Administrator shall be entitled to participate at its own expense or,
if it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If Administrator elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
Administrator and satisfactory to the Sub-Administrator, whose approval shall
not be unreasonably withheld. In the event that Administrator elects to assume
the defense of any suit and retain counsel, the Sub-Administrator shall bear the
fees and expenses of any additional counsel retained by it. If Administrator
does not elect to assume the defense of a suit, it will reimburse the
Sub-Administrator for the fees and expenses of any counsel retained by the
Sub-Administrator.
The Sub-Administrator may apply to Administrator at any time for
instructions and may consult counsel for Administrator or its own counsel and
with accountants and other experts with respect to any matter arising in
connection with the Sub-Administrator's duties, and the Sub-Administrator shall
not be liable or accountable for any action taken or omitted by it in good faith
in accordance with such instruction or with the opinion of such counsel,
accountants or other experts.
Also, the Sub-Administrator shall be protected in acting upon any
document which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons. Nor shall the Sub-Administrator be
held to have notice of any change of authority of any officers, employee or
agent of Administrator until receipt of written notice thereof from
Administrator.
Nothing herein shall make Sub-Administrator liable for the performance
or omissions of unaffiliated third parties not under Sub-Administrator's
reasonable control such as, by way of example and not limitation, transfer
agents, custodians, investment advisers or sub-advisers, postal or delivery
services, telecommunications providers and processing and settlement services.
ARTICLE 5. Duration and Termination of this Agreement. This Agreement
shall become effective on the date set forth in Schedule A hereto and shall
remain in effect for the full duration of the Initial Term and each Renewal
Term, each as set forth in Schedule A, unless terminated in accordance with the
provisions of this Article 5. This Agreement may be terminated only: (a) by
either party at the end of the Initial Term or the end of any Renewal Term on 90
days' prior written notice; provided, however, that after such termination for
so long as the Sub-Administrator in fact continues to perform any one or more
services contemplated by this Agreement, the provisions of this Agreement,
including without limitation the provisions regarding limitation of liability
and indemnification, shall continue in full force and effect; (b) by either
party hereto on such date as is specified in written notice given by the
terminating party, in the event of a material breach of this Agreement by the
other party, provided the terminating party has notified the other party of such
material breach at least 45 days prior to the specified date of termination and
the breaching party has not remedied such breach by the specified date; or (c)
as to any Portfolio or the Trust, effective upon the liquidation of such
Portfolio or the Trust, as the case may be. For purposes of this paragraph, the
term "liquidation" shall mean a transaction in which the assets of the Trust or
a Portfolio are sold or otherwise disposed of and proceeds therefrom are
distributed in cash to the shareholders in complete liquidation of the interests
of such shareholders in the entity.
Notwithstanding the foregoing, this Agreement shall terminate
automatically upon termination of the Administration Agreement; provided,
however, that no such termination of this Agreement shall occur if and to the
extent the Administrator or any control affiliate thereof is named as, or
otherwise becomes, the successor administrator to the Trust. If this Agreement
is terminated pursuant to this paragraph, and the Administrator proposes or
causes, directly or indirectly, the Trust to retain a third party other than the
Sub-Administrator to serve as successor administrator or sub-administrator to
the Trust, Sub-Administrator will be entitled to a one time cash payment equal
to the net present value of the profits Sub-Administrator would have earned
during the remainder of the then-current term
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of the contract based on the fee rate set forth in Schedule A hereto applied to
the average daily net assets of the Trust during the six month period
immediately preceding such termination.
ARTICLE 6. Activities of the Sub-Administrator. The services of the
Sub-Administrator rendered to Administrator are not to be deemed to be
exclusive. The Sub-Administrator is free to render such services to others and
to have other businesses and interests.
ARTICLE 7. Confidentiality. The Sub-Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Administrator and the Trust and its shareholders
received by the Sub-Administrator in connection with this Agreement, including
any non-public personal information as defined in Regulation S-P, and that it
shall not use or disclose any such information except for the purpose of
carrying out the terms of this Agreement; provided, however, that
Sub-Administrator may disclose such information as required by law or after
prior notification to and approval in writing by the Administrator or the Trust,
which approval may not be withheld where the Sub-Administrator may be exposed to
civil or criminal contempt proceedings or penalties for failure to comply.
ARTICLE 8. Certain Records. The Sub-Administrator shall maintain
customary records in connection with its duties as specified in this Agreement.
Any records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the
Sub-Administrator on behalf of the Trust shall be prepared and maintained at the
expense of the Sub-Administrator, but shall be the property of the Trust and
will be made available to or surrendered promptly to Administrator or the Trust
on request.
In case of any request or demand for the inspection of such records by
another party, the Sub-Administrator shall notify the Administrator and follow
the Administrator's instructions as to permitting or refusing such inspection;
provided that the Sub-Administrator may exhibit such records to any person in
any case where it is advised by its counsel that it may be held liable for
failure to do so, unless (in cases involving potential exposure only to civil
liability) the Administrator has agreed to indemnify the Sub-Administrator
against such liability.
ARTICLE 9. Compliance With Governmental Rules and Regulations. The
Sub-Administrator undertakes to comply in all material respects with applicable
requirements of the 1933 Act, the 1934 Act, the 1940 Act and any laws, rules and
regulations of governmental authorities having jurisdiction with respect to the
duties to be performed by the Sub-Administrator hereunder.
ARTICLE 10. Representations of the Administrator. The Administrator
certifies to the Sub-Administrator that this Agreement has been duly authorized
by the Administrator and, when executed and delivered by the Administrator, will
constitute a legal, valid and binding obligation of the Administrator,
enforceable against the Administrator in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
ARTICLE 11. Entire Agreement; Amendments. This Agreement constitutes
the entire agreement between the parties hereto and supersedes any prior
agreement, draft or proposal with respect to the subject matter hereof. This
Agreement or any part hereof may be changed or waived only by an instrument in
writing signed by the party against which enforcement of such change or waiver
is sought.
ARTICLE 12. Assignment. This Agreement shall not be assignable by
either party without the prior written consent of the other party.
ARTICLE 13. Waiver. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by written
instrument executed by such party. No failure of either party hereto to exercise
any power or right granted hereunder, or to insist upon strict compliance with
any obligation hereunder, and no custom or practice of the parties with regard
to the terms of performance hereof, will constitute a waiver of the rights of
such party to demand full and exact compliance with the terms of this Agreement.
ARTICLE 14. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, federal express (or substantially similar delivery service),
postage prepaid, addressed by the party giving notice to the other party at the
last address furnished by the other party to the party giving notice: if to
Administrator, at [1205 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX 00000]; and if to
the Sub-Administrator at Xxx Xxxxxxx Xxxxxx Xxxxx, Xxxx, Xxxxxxxxxxxx, 00000.
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ARTICLE 15. Force Majeure. No breach of any obligation of a party to
this Agreement will constitute an event of default or breach to the extent it
arises out of a cause, existing or future, that is beyond the control and
without negligence of the party otherwise chargeable with breach or default,
including without limitation: work action or strike; lockout or other labor
dispute; flood; war; riot; theft; earthquake or natural disaster. Either party
desiring to rely upon any of the foregoing as an excuse for default or breach
will, when the cause arises, give to the other party prompt notice of the facts
which constitute such cause; and, when the cause ceases to exist, give prompt
notice thereof to the other party.
ARTICLE 16. Equipment Failures. In the event of equipment failures
beyond the Sub-Administrator's control, the Sub-Administrator shall, at no
additional expense to Administrator, take reasonable and prompt steps to
minimize service interruptions but shall have no liability with respect thereto.
The Administrator shall develop and maintain a plan for recovery from equipment
failures which may include contractual arrangements with appropriate parties
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
ARTICLE 17. Definitions of Certain Terms. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 18. Headings. All Article headings contained in this Agreement
are for convenience of reference only, do not form a part of this Agreement and
will not affect in any way the meaning or interpretation of this Agreement.
Words used herein, regardless of the number and gender specifically used, will
be deemed and construed to include any other number, singular or plural, and any
other gender, masculine, feminine, or neuter, as the contract requires.
ARTICLE 19. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 20. Multiple Originals. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 21. Binding Agreement. This Agreement, and the rights and
obligations of the parties hereunder, shall be binding on, and inure to the
benefit of, the parties and their respective successors and assigns.
ARTICLE 22. Severability. If any part, term or provision of this
Agreement is held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
CONSTELLATION INVESTMENT MANAGEMENT COMPANY, LP
By:/s/
Name:______________________
Title:_____________________
SEI INVESTMENTS GLOBAL FUNDS SERVICES
By:/s/
Name:______________________
Title:_____________________
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SCHEDULE A
TO THE SUB-ADMINISTRATION AGREEMENT
DATED AS OF ___________, 2004
BETWEEN
CONSTELLATION INVESTMENT MANAGEMENT COMPANY, LP
AND
SEI INVESTMENTS GLOBAL FUNDS SERVICES
Portfolios: This Agreement shall apply with respect to all Portfolios of
the Trust, either now existing or in the future created
(collectively, the "Portfolios"):
Fees: Pursuant to Article 4, Administrator shall pay the
Sub-Administrator a fee at the following annual rate,
calculated based upon the aggregate average daily net assets
of the Trust:
FEE ASSETS
0.04375% First $3.5 Billion
0.03375% Next $6.5 Billion
0.01875% All assets over $10 Billion
This fee schedule is subject to a Trust aggregate minimum
annual fee of $1,670,000 for all Portfolios and classes in
existence as of the effective date of this Agreement. The
Trust minimum fee shall be increased $70,000 for each
Portfolio and $85,000 for multi-manger funds created after the
effective date of this Agreement. The minimum will be
decreased by the same amounts for Portfolios that are closed
after the effective date of this Agreement. In addition, the
Trust minimum fee shall be increased $15,000 for each new
class added to a Portfolio of the Trust after the effective
date of this Agreement. In the event that the Trust's
aggregate net assets fall below $1,250,000,000 for the period
beginning with the effective date of this agreement and ending
___________, 200_, the complex minimum will be reduced to
$1,450,000 for all Portfolios and classes in existence as of
the effective date of this agreement
Term: This Agreement shall become effective on ____________, 2004
and shall remain in effect through ______________, 200_
("Initial Term") and, thereafter, for successive terms of 3
year(s) each (each a "Renewal Term"), unless and until this
Agreement is terminated in accordance with the provisions of
Article 5 hereof.
[END OF SCHEDULE A]
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SCHEDULE B
TO THE ADMINISTRATION AGREEMENT
DATED AS OF _____________, 2004
BETWEEN
CONSTELLATION INVESTMENT MANAGEMENT COMPANY, LP
AND
SEI INVESTMENTS GLOBAL FUNDS SERVICES
LIST OF SERVICES
1. CASH PROCESSING
Record Transfer Agent paid-in-capital activity using an automated
Transfer Agent feed
Reconcile shares and accruals with the Transfer Agent using
automated Transfer Agent feed
Resolve cash movement discrepancies
Provide 5-day cash projections
Provide advisor with daily cash projection
Track differences between accrual and actual cash received from
custodian using an automated custodian feed
Reconcile security balances with custodian using an automated custodian
feed
Identify failed trades and notify custodian
2. VALIDATION OF INCOME & EXPENSE ACCRUALS
Track and validate amortization, accretion, interest, and dividend
income for securities
Modify expense accrual changes at least twice per year
Process expense payments to service providers monthly
Process 12b-1 payments to service providers
Process payments to advisor, sub-advisor, and administrator
Ensure income and expense categories are properly classified for
reporting purposes
Maintain book / tax differences off-line to assist in tax return
preparation (where no special transactions are involved).
3. INCOME & CAPITAL GAIN DISTRIBUTIONS
Calculate and record income and capital gains as required by the Funds'
prospectus
Provide distribution [factors] to advisor and Transfer Agent
Reconcile distributions with Transfer Agent and resolve any differences
Coordinate estimated cash payments required for capital gains and
dividends not reinvested
4. SECURITY MASTER FILE & TRADE PROCESSING
Maintain one security master file with all indicative data elements
Receive automated feed of security trades from the Adviser not later
than T+1 in SEI 's standard format
Enter same-day settlement trades on Trade Date (T).
Validate trade information
Maintain tax lot records according to a default selected by advisor
Record all mandatory corporate actions, validating income and
adjustments
Receive and record voluntary corporate actions
Track international dividend reclaims
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5. FUND VALUATION
Follow SEI's standard pricing and valuation policies
Obtain security valuation quotes from reliable industry resources
Obtain broker quotes for securities whose prices cannot be obtained
from pricing vendors (limited to 5% of holdings)
Manage and respond to price challenges by advisor or sub-advisor
Investigate stale prices
Check for trading halts on securities at market close
Calculate Net Asset Value (NAV) of each fund
Validate prices that deviate from pre-established thresholds
Communicate NAVs to NASDAQ & Transfer Agent
6. PERFORMANCE REPORTING
Provide SEI standard reports in electronic format (FTP or email):
Provide (plot points) and total return data for financial regulatory
reporting (prospectuses, annuals, semi-annuals)
Provide conversion support
Provide After-Tax Return Reporting
Calculate Fund Performance within regulatory guidelines
7. TREASURY SERVICES
Set expense assumptions and review preliminary budgets for Funds
Adjust budget assumptions quarterly
Calculate monthly revenue
Generate 12b-1 Summary Reports
Create quarterly dividend payment report
Report on distribution plan expenditures
Provide accounting data for Statement of Additional Information
Complete expense section of prospectus
8. TAX SERVICES
Compute required capital gains distributions
Prepare estimated capital gain distributions twice per year (fiscal
year end and excise).
Prepare federal and state tax returns for the Funds
Coordinate foreign tax credit notification to shareholders
Prepare year-end 60-day notices
Prepare year-end provision and tax footnotes
Provide data for year end 1099 and supplemental tax letters
Calculate reallocations of income and notify Transfer Agent
Conduct required income qualification tests
Apply for TIN / EINs to commence business of new Portfolios
9. GENERAL BUSINESS CONSULTING
Recommend opportunities for asset gathering or asset growth
Identify best practices and suggest methods for improving internal
efficiencies
Conduct general business planning
Provide Blue Sky interface and registration assistance
10. FUND MANAGEMENT
Provide officers of the fund if requested
Assist in the documentation of portfolio compliance violations on a
quarterly basis
Attend board meetings as an interested party (1 SEI representative).
11. COMPLIANCE CONSULTING
Monitor regulatory developments and communicated material regulatory
changes
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12. INDUSTRY RESEARCH
Provide regulatory alerts and updates as necessary (electronic copy
only)
Provide SEI-created white papers and industry research
Organize and host annual executive conference
Conduct semi-annual market insights and trends brief
Conduct annual client satisfaction surveys
Negotiate reduced-rate subscriptions to industry publications
13. SHAREHOLDER SERVICES
Obtain toll free lines & call prompters for fund family
Respond to shareholder (S/H) questions regarding the fund family
product line
Respond to S/H account inquiries
Respond to S/H questions regarding financials and performance
information
Submit S/H requests for literature
Provide 2 monthly standard management reports on statistics around
inbound S/H calls
Conduct routine Q/A testing on all S/H services representatives
Coordinate set-up of toll free lines, call prompter services, and
consultation on best practices around call prompters
14. PERIPHONICS INTERACTIVE VOICE RESPONSE SUPPORT
Coordinate establishment of selected IVR model (priceline, price &
performance, or full service)
Receive financial data from named administrator / accountant
(electronic feed required)
Coordinate initial scripting services, in English
Coordinate scripting changes, up to 4 per year
Oversee maintenance and ongoing programming, as required, of the
service
Provide monthly usage reports to management
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15. PROXY COORDINATION
Coordinate with proxy vendor for distribution of proxies and tracking
of shareholder responses Identify distribution channels and shareholder
types
Provide client with status sheets on proxy votes, weekly, up to 2
weeks out, and then daily until final date
Coordinate with ADP to get information on omnibus accounts
Provide ADP with bulk materials for distribution to omnibus accounts
16. SHAREHOLDER (S/H) TAX COMMUNICATIONS
Facilitate communications with Transfer Agent during planning stages
Quality check fund profile forms prior to submission to the Transfer
Agent
Coordinate completion, review, and approval of special shareholder tax
inserts (only if administrator / accountant can provide data
electronically by January 15th)
Coordinate printing and delivery of special shareholder tax inserts for
fund direct S/Hs
Provide single copy of special S/H tax insert to client or other
interested party
Conduct on-site quality check to ensure that inserts are included with
proper tax forms
17. FINANCIAL STATEMENT PREPARATION ASSISTANCE
Contact Administrator to receive trades on trade date for financial
statement semi & year end
Review "shell" financial statements (prior year numbers, new
disclosures, etc.)
Identify non-income producing securities
Send Schedule of Investments
Incorporate ROCSOP adjustments into financial statements
Complete financial data schedules
Review "Blueline" with the Administrator
Complete N-SAR
18. ASSIST IN THE PRODUCTION OF REGULATORY REPORTS
Assist the Administrator and outside counsel with review of
prospectuses, supplements, and SAIs
Provide plot points and total return data for financial regulatory
reporting (prospectuses, annuals, semi-annuals, proxies)
19. PROJECT MANAGEMENT
Assist Administrator with project planning / project management for new
funds, products, share classes, or load structures
Assist Administrator with project planning / project management for
launch of new fund families
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