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Draft: 1/29/96
CUSTODIAN CONTRACT
Between
THE COUNTRYBASKETSSM INDEX FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
GlobalSeriesCorp
21N
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TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It . . . . . . 1
2. Duties of the Custodian with Respect to Property of the Fund
Held By the Custodian in the United States . . . . . . . . . . . 2
2.1 Holding Securities and Other Assets . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . . . . . . . 5
2.4 Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5 Foreign Exchange Transactions and Futures . . . . . . . . . . . . 5
2.6 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Call or Time Deposits . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Availability of Federal Funds . . . . . . . . . . . . . . . . . . 7
2.9 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . . 8
2.11 Liability for Payment in Advance of Receipt of Securities
Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.12 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . 9
2.13 Deposit of Fund Assets in U.S. Securities Systems . . . . . . . . 10
2.14 Fund Assets Held in the Custodian's Direct Paper System . . . . . 11
2.15 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . 12
2.16 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.17 Communications Relating to Series Securities . . . . . . . . . . 13
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside of the United States . . . . . . . . . . . . . . . . 13
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . . . . . 13
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . 14
3.3 Holding Securities . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Foreign Securities Systems . . . . . . . . . . . . . . . . . . . 14
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . . 15
3.6 Access of Independent Accountants of the Fund . . . . . . . . . . 15
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . . 15
3.8 Transactions in Foreign Custody Account . . . . . . . . . . . . . 16
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . . . 16
3.10 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . 17
3.11 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . . 17
3.12 Collection of Income . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.14 Communications Relating to Portfolio Securities . . . . . . . . . 18
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4. Payments for Purchases or Redemptions of Shares of the Fund . . . 19
4.1 Purchase of Fund Shares . . . . . . . . . . . . . . . . . . . . . 19
4.2 Redemption of Fund Shares . . . . . . . . . . . . . . . . . . . . 19
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . 20
6. Actions Permitted without Express Authority . . . . . . . . . . . 20
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . 21
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income . . . . . . . . . . 21
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. Opinion of Fund's Independent Accountant . . . . . . . . . . . . 22
11. Reports to Fund by Independent Public Accountants . . . . . . . . 22
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . 23
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . 23
14. Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15. Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16. Effective Period, Termination and Amendment . . . . . . . . . . . 25
17. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . 26
18. Interpretive and Additional Provisions . . . . . . . . . . . . . 26
19. Additional Series . . . . . . . . . . . . . . . . . . . . . . . . 27
20. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . 27
21. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 27
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22. Shareholder Communications . . . . . . . . . . . . . . . . . . . 27
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CUSTODIAN CONTRACT
This Contract between The CountryBasketsSM Index Fund, Inc., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of
business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter
called the "Custodian",
WITNESSETH:
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; and
WHEREAS, the Fund intends to initially offer shares of the following
series: Australia Index Series, France Index Series, Germany Index Series,
Hong Kong Index Series, Italy Index Series, Japan Index Series, South
Africa Index Series, UK Index Series and US Index Series (such series,
together with all other series subsequently established by the Fund and
made subject to this Contract in accordance with Article 17, being herein
referred to as the "Series");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
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 Series of the Fund, including securities which the Fund, on behalf
of the applicable Series, desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside
the United States and which constitute "foreign securities," as defined in
paragraph (c)(1) of Rule 17f-5 ("Rule 17f-5") under the Investment Company
Act of 1940, as amended (the "Investment Company Act") ("foreign
securities"). The Fund agrees to deliver to the Custodian all securities
and other investments and cash of each Series, and all payments of income,
payments of principal or capital distributions received by it with respect
to all securities and other instruments owned by the Series from time to
time, and the consideration received by it for such new or treasury shares
of common stock of the Fund representing interests in the Series,
("Shares") as may be issued or sold from time to time. The Custodian shall
not be responsible for any property of a Series held or received by the
Series and not delivered to the Custodian.
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Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Series from time to
time employ one or more Sub-custodians, located in the United States to
hold domestic securities and cash, provided that any such Sub-custodian
meets at least the minimum qualifications required by Section 17(f)(1) of
the Investment Company Act to act as a custodian, but only in accordance
with an applicable vote by the Board of Directors of the Fund on behalf of
the applicable Series, and subject to Article 13. The Custodian may from
time to time employ any foreign banking institution or foreign securities
depository designated in Schedule A hereto as Sub-custodian (a "Foreign
Sub-custodian") for the Fund's foreign securities on behalf of the
applicable Series, but only in accordance with the provisions of Article 3
and subject to Article 13.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1 Holding Securities and Other Assets. The Custodian shall hold in a
separate account or accounts and segregated at all times from the
assets of other Series and third parties all non-cash property of
each Series which may now or hereafter be delivered to it for the
account of such Series, including all domestic securities owned by
such Series, other than (a) securities which are maintained pursuant
to Section 2.10 in a "U.S. Securities System" (as therein defined),
and (b) commercial paper of an issuer for which State Street Bank and
Trust Company acts as issuing and paying agent ("Direct Paper") which
is deposited and/or maintained in the Direct Paper System of the
Custodian pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Series held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System
Account") only upon receipt of Proper Instructions from the Fund on
behalf of the applicable Series, 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 Series
against receipt of payment in full therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Series;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10
hereof;
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4) To the agent of the issuer or trustee of such securities in
connection with invitations for tenders or other similar offers
for securities of the Series provided, in any such case, that
the consideration is either to be paid or delivered to the
Custodian or the tendered securities are to be returned to the
Custodian;
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 Series 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 2.9 or into the name or nominee
name of any sub-custodian appointed pursuant to Article 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 Series,
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 Series, but only against receipt of adequate collateral as
agreed upon
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from time to time by the Custodian and the Fund on behalf of
the Series, which may be in the form of cash, obligations
issued or guaranteed by the United States government, its
agencies or instrumentalities or such other securities or
instruments as may be permitted under the Investment Company
Act and which have been approved as acceptable collateral by
the Board of Directors of the Fund, except that in connection
with any loans for which collateral is to be credited to the
Custodian's account in a U.S. Securities System, the Custodian
will not be held liable or responsible for the delivery of
securities owned by the Series prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Series requiring a pledge of assets
by the Fund on behalf of the Series, 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 Series, the Custodian and a
broker-dealer registered under the Securities Exchange Act of
1934, as amended (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 Series of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Series, 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 and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Series
of the Fund;
14) Upon receipt of Proper Instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to the holders of
Shares in connection with redemptions in kind, as may be
described from time to time in the currently effective
prospectus and statement of additional information contained in
the Fund's Registration Statement (together, the "Prospectus"),
in satisfaction of requests by holders of Shares for repurchase
or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the
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applicable Series, a certified copy of a resolution of the
Board of Directors signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
specifying the securities of the Series to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such
securities shall be made.
2.3 Registration of Securities. Domestic securities physically held by
the Custodian (other than bearer securities) shall be registered in
the name of a Series or of the Fund or in the name of any nominee of
the Fund on behalf of such Series or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Series, 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 Series, or in the name or nominee name
of any agent appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to Article 1.
All securities accepted by the Custodian on behalf of a Series under
the terms of this Contract 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.
2.4 Options. The Custodian shall receive and retain confirmations or
other documents evidencing the purchase of or writing of an option on
a security or securities index by a Series; deposit and maintain in a
segregated account, either physically or by book-entry in a
Securities System (as defined herein), securities subject to a
covered put option written by a Series; and release and/or transfer
such securities or other assets only in accordance with a notice or
other communication evidencing the expiration, termination or
exercise of such covered option furnished by the Fund's investment
adviser, The Options Clearing Corporation, the securities or options
exchange on which such covered option is traded or such other
organization as may be responsible for handling such options
transactions.
2.5 Foreign Exchange Transactions and Futures. Pursuant to Proper
Instructions, the Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf and for the account of a Series. Such
transactions may be undertaken by the Custodian with such banking
institutions, including the Custodian or any Sub-custodian(s)
appointed pursuant to Article I as principals, as approved and
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authorized by the Fund. Foreign exchange contracts and options other
than those executed with the Custodian, shall be deemed to be
portfolio securities of the applicable Series [and the responsibi-
lities of the Custodian therefor shall be the same as those for
demand deposit bank accounts placed with other banks or trust
companies as described in Section 2.6 of this Contract?]. Upon
receipt of Proper Instructions, the Custodian shall receive and
retain confirmations evidencing the purchase or sale of a futures
contract or an option on a futures contract by a Series; deposit
and maintain in a segregated account, for the benefit of any futures
commission merchant or to pay to such futures commission merchant,
assets designated by the Fund as initial, maintenance or variation
"margin" deposits intended to secure the Series' performance of its
obligations under any futures contracts purchased or sold or any
options on futures contracts written by the Series, in accordance
with the provisions of any agreement or agreements among any of the
Fund, the Custodian and such futures commission merchant, designed
to comply with the rules of the Commodity Futures Trading Commission
and/or any contract market, or any similar organization or organiza-
tions, regarding such margin deposits; and to release and/or transfer
assets in such margin accounts only in accordance with any such
agreements or rules.
2.6 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Series
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, 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 Series, other than cash
maintained by the Series in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act or placed
in fixed term and call deposits pursuant to Section 2.7. Funds held
by the Custodian for a Series 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 Investment
Company 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 Series be approved by vote of a majority of the Board
of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by
the Custodian only in that capacity.
2.7 Call or Time Deposits. The Custodian may place interest bearing
fixed time and call deposits with such banks and in such amounts as
the Fund may authorize with respect to a Series pursuant to Proper
Instructions. Such deposits may be placed with the Custodian, or
with any Sub-custodian
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appointed under Article I or such other banks or trust companies
eligible to hold the Fund's demand deposits pursuant to Section 2.6,
as the Fund may determine. Deposits may be denominated in U.S.
Dollars or other currencies and need not be evidenced by the issuance
or delivery of a certificate to the Custodian, provided that the
Custodian shall include in its records with respect to the assets of
such Series, appropriate notation as to the amount and currency of
each such deposit, the accepting banking institution, and other
appropriate details. Such deposits, other than those placed with the
Custodian, shall be deemed portfolio securities of the applicable
Series and the responsibilities of the Custodian therefor shall be
the same as those for demand deposit bank accounts placed with other
banks, as described in Section 2.6 of this Agreement. The respon-
sibility of the Custodian hereunder for such deposits accepted on the
Custodian's books shall be that of a U.S. bank for a similar deposit.
2.8 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of each applicable Series and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Series, make federal funds available to such
Series as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment
for Shares of such Series which are deposited into the Series's
account.
2.9 Collection of Income. 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 Series shall be entitled either by law or
pursuant to custom in the securities business; 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 credit such income
or payments, as collected, to such Series's custodian account.
Without limiting the generality of the foregoing, the Custodian shall
(a) detach and present for payment all coupons and instruments
representing other income items requiring presentation as and when
they become due and shall collect interest when due on securities
held hereunder and (b) promptly execute ownership and other
certificates and affidavits for all federal, state and foreign tax
payments with respect to portfolio securities and other assets of
each applicable Series, or in connection with the purchase, sale or
transfer of such securities and other assets. The Custodian shall
deliver to the Fund periodic written reports providing information as
to amount payable with respect to domestic securities or other assets
of any Series not received by the Custodian when due. Income due
each Series on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund.
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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 monitoring and in
arranging for the timely delivery to the Custodian of the income to
which the Series is properly entitled.
2.10 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Series, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Series 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 Series 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 Investment
Company 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 Series or the Fund or its nominee 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 2.10 hereof; (c) in the
case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d)
in the case of repurchase agreements entered into between the
Fund on behalf of the Series and the Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificated 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 Series of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such securities
from the Series or (e) 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 in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Series as set forth in Section 2.2
hereof;
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3) For the redemption or repurchase of Shares issued by the Series
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Series, including but not limited to the following payments for
the account of the Series: interest, taxes, management,
accounting, administration, distribution, transfer agent and
legal fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or part capitalized or treated
as deferred expenses;
5) For the payment of any dividends on Shares of the Series
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) For repayment of loans made to the Fund or upon redelivery of
cash collateral for loans of securities made by a Series or for
payment in connection with a foreign exchange transaction;
8) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Series, a certified copy of a resolution of the Board of
Directors of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.11 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Series is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Series to so pay in
advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been
received by the Custodian.
2.12 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 Section 17(f)(1) of the
Investment Company Act, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may
from time to time direct;
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provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities here-
under and the Custodian shall be responsible for the acts and
omissions of such agents as if performed by the Custodian hereunder.
2.13 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Series in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, including Rule 17f-4 under the
Investment Company Act, and subject to the following provisions:
1) The Custodian may keep securities of the Series in a U.S.
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the U.S.
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Series which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the
Series;
3) The Custodian shall pay for securities purchased for the
account of the Series upon (i) receipt of advice from the U.S.
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Series. The Custodian shall transfer securities
sold for the account of the Series upon (i) receipt of advice
from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Series.
Copies of all advices from the U.S. Securities System of
transfers of securities for the account of the Series shall
identify the Series, be maintained for the Series by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Series a confirmation of each transfer to or from the account
of the Series in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Series copies of
daily transaction sheets
11
reflecting each day's transactions in the U.S. Securities
System for the account of the Series.
4) The Custodian shall promptly provide the Fund for the Series
with any report obtained by the Custodian on the U.S.
Securities System's accounting system, internal accounting
control and procedures for safeguarding securities deposited in
the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Series the initial certificate required by Article 14
hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Series for any loss or damage to the Series resulting from use
of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights
as it may have against the U. S. Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage
if and to the extent that the Series has not been made whole
for any such loss or damage.
2.14 Fund Assets Held in the Custodian's Direct Paper System.
Provided the Custodian has received a certified copy of a resolution
of the Board of Directors of the Fund specifically approving
participation in a system maintained by the Custodian for the holding
of commercial paper in book-entry form, upon receipt of Proper
Instructions, the Custodian may deposit and/or maintain securities
owned by a Series in the Direct Paper System of the Custodian subject
to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Series;
2) The Custodian may keep securities of the Series in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
12
3) The records of the Custodian with respect to securities of the
Series which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Series;
4) The Custodian shall pay for securities purchased for the
account of the Series upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Series. The Custodian
shall transfer securities sold for the account of the Series
upon the making of an entry on the records of the Custodian to
reflect such transfer and receipt of payment for the account of
the Series. Upon the maturity of a security, the Custodian
shall make an entry on its records to reflect such maturity and
receipt of payment for the account of the Series.
5) The Custodian shall furnish the Fund on behalf of the Series
confirmation of each transfer to or from the account of the
Series, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and
shall furnish to the Fund on behalf of the Series copies of
daily transaction sheets reflecting each day's transaction in
the Direct Paper System for the account of the Series;
6) The Custodian shall provide the Fund on behalf of the Series
with any report on its system of internal accounting control as
the Fund may reasonably request from time to time.
2.15 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Series
establish and maintain on its books a segregated account or accounts
for and on behalf of each such Series, into which account or accounts
may be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
the Fund on behalf of the Series, 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 Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Series, (ii) for purposes of segregating cash, U.S. government or
other liquid, high-grade debt securities in connection with options
purchased, sold or written by the Series or commodity futures
contracts or options thereon purchased or sold by the
13
Series, (iii) for the purposes of compliance by the Series with the
procedures required by Investment Company Act Release No. 10666, or
any subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Series, a certified copy of a resolution of the Board of
Directors signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.16 Proxies. 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 Series or the Fund or a
nominee of either, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the
Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.17 Communications Relating to Series Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund for each Series 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
Series and the maturity of futures contracts purchased or sold by the
Series) received by the Custodian from issuers of the securities
being held for the Series. With respect to tender, subscription or
exchange offers, the Custodian shall transmit promptly to the Fund
all written information received by the Custodian from issuers of the
securities in respect of which tender, subscription or exchange is
sought and from the party (or his agents) making the tender,
subscription or exchange offer. If the Fund desires to take action
with respect to any tender offer, subscription rights offering,
exchange offer or any other similar transaction, the Fund shall
notify the Custodian at least three business days prior to the date
on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Series's securities and other assets maintained outside the United
States the Foreign Sub-
14
custodians designated on Schedule A hereto. Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together
with a certified resolution of the Fund's Board of Directors, the
Custodian and the Fund may agree to amend Schedule A hereto from
time to time to designate additional Foreign Sub-custodians or
clearing agencies which (i) qualify as Eligible Foreign Custodians
within the meaning of Rule 17f-5 (ii) or are exempted therefrom by
order of the Securities and Exchange Commission to act as sub-
custodians. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more
such Foreign Sub-custodians for maintaining custody of the Series's
assets. In the event of a material breach on the part of a foreign
banking institution, of its agreement with the Custodian provided for
in Section 3.5, which breach is not reasonably amenable of correc-
tion, at the request of the Fund, the Custodian will work with the
Fund to obtain the services of a mutually satisfactory substitute
foreign banking institution.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the Foreign Sub-custodians
to: (a) foreign securities and, (b) subject to the approval of the
Board of Directors of the Fund, cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Series's foreign securities transactions.
3.3 Holding Securities. The Custodian may hold securities and other non-
cash property for all of its customers, including the Fund, with a
Foreign Sub-custodian in a single 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
securities and other non-cash property of each Series which are
maintained in such account shall identify by book-entry those
securities and other non-cash property belonging to each Series and
(ii) the Custodian shall require that securities and other non-cash
property so held by the Foreign Sub-custodian be held separately from
any assets of the Foreign Sub-custodian or of others in an account
that shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers.
3.4 Foreign Securities Systems. Assets of the Series may be maintained
in a clearing agency named in Schedule A which acts as a securities
depository or which operates a book-entry system for the central
handling of securities located outside of the United States and which
qualifies as an Eligible Foreign Custodian within the meaning of Rule
17f-5 (each a "Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving as Foreign
Sub-custodians pursuant to the terms
15
hereof (Foreign Securities Systems and U.S. Securities Systems are
collectively referred to herein as the "Securities Systems"). Where
possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5 hereof.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets
belonging to each Series will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the foreign
banking institution or its creditors or agent, except a claim of
payment for their safe custody or administration; (b) beneficial
ownership for the assets belonging to each Series will be freely
transferable without the payment of money or value other than for
safe custody or administration; (c) adequate records will be
maintained by the Custodian to identify the assets as belonging to
the applicable Series; (d) officers of or auditors employed by, or
other representatives of the Custodian, and, to the extent permitted
under applicable law, the independent public accountants for the
Fund, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with
the Custodian; (e) assets of the Series held by the Foreign
Sub-custodian will be subject only to the instructions of the
Custodian or its agents; (f) the Fund will receive periodic reports
with respect to the safekeeping of the assets of the applicable
Series, including, but not limited to, notification of any transfer
to or from the Series' account; and (g) such foreign banking
institution will exercise reasonable care and indemnify the Custodian
and the Fund or the Custodian and each account of the Custodian in
accordance with Section 3.9.
Except with the prior approval of the Fund's Board of Directors, the
Custodian shall not put into effect with a foreign banking
institution designated on Schedule A either an amendment to an
existing agreement or a new agreement if any provision thereof (i)
would violate Rule 17f-5 or (ii) provide for a lesser standard of
care on the part of such foreign banking institution to the Custodian
than the Custodian's standard of care provided for in this Custodian
Contract.
Upon the request of the Fund, the Custodian shall make all reasonable
efforts to enforce the Custodian's rights and the foreign banking
institution's duties and obligations under each agreement provided
for in this Section 3.5.
3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
16
3.7 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Series held by Foreign
Sub-custodians, including but not limited to an identification of
entities having possession of the Series securities and other assets
and advices or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking institu-
tion for the Custodian on behalf of its customers indicating, as to
securities acquired for such Series, the identity of the entity
having physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2, 2.3, 2.4, 2.5, and 2.10 of this Contract shall apply,
mutatis mutandis to the foreign securities of the Fund held outside
the United States by Foreign Sub-custodians. (b) Notwithstanding the
foregoing, subject to any limitations or conditions contained in a
certified copy of resolutions of the Board of Directors of the Fund
delivered to the Custodian, (i) in the case of the purchase for the
account of any Series of securities, the settlement of which occurs
outside of the United States of America, the Custodian or any Foreign
Sub-custodian may, upon Proper Instructions (which may be standing
instructions), make payment therefor and receive delivery of such
securities in accordance with local custom and practice generally
accepted by Institutional Clients (as hereinafter defined) in the
country in which the settlement occurs, but in all events subject to
the standard of care set forth in Section 13; and (ii) in the case
of the sale for the account of any Series of securities, the
settlement of which occurs outside of the United States of America,
the Custodian or any Foreign Sub-custodian may, upon Proper
Instructions (which may be standing instructions), deliver such
securities in expectation of payment therefor in accordance with
local custom and practice generally accepted by Institutional Clients
in the country in which the settlement occurs, but in all events
subject to the standard of care set forth in Section 13. For
purposes of this Article 3, "Institutional Clients" means U.S.
registered investment companies, or major, U.S.-based commercial
banks, insurance companies, pension funds or substantially similar
financial institutions which as a substantial part of their business
operations, purchase or sell securities and make use of non-U.S.
custodial services. (c) Securities maintained in the custody of a
Foreign Sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless from
any liability in its capacity as a holder of record of such
securities.
17
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
Foreign Sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and the Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or
in connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund information concerning the Foreign Sub-custodians employed
by the Custodian to facilitate the review and approval by the Fund's
Board of Directors of the arrangements for the custody of foreign
securities of each Series as provided for in Rule 17f-5. Such
information shall be similar in kind and scope to that furnished to
the Fund in connection with the initial approval of this Contract.
In addition, the Custodian will promptly inform the Fund in the event
that the Custodian learns of a material adverse change in the
financial condition of a Foreign Sub-custodian or any material loss
of the assets of the Fund or, in the case of any Foreign
Sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission, is notified by such Foreign
Sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S.
dollars or the equivalent thereof) or that its shareholders' equity
has declined below $200 million (in each case computed in accordance
with generally accepted U.S. accounting principles).
3.11 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions of Sections 3.1 and 3.5 shall not apply
where the custody of the Series assets are maintained in a foreign
branch of a banking institution which is a "Qualified U.S. Bank" as
defined in Rule 17f-5 and has aggregate capital, surplus and
undivided profits of not less than $100 million. The appointment of
any such branch as a Sub-custodian shall be governed by Article 1 of
this Contract. (b) Cash held for each Series of the Fund in the
United Kingdom shall be maintained in an interest bearing account
established for the Fund with the Custodian's London branch, which
account shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
18
3.12 Collection of Income. The Custodian (or the foreign banking
institution) shall act in accordance with the contractual standard
of care and in accordance with market practice generally accepted by
Institutional Clients to collect all income and other payments in due
course with respect to the securities held hereunder to which the
applicable Series shall be entitled and shall credit such income, as
collected, to the applicable Series. The Custodian shall promptly
execute ownership and other certificates and affidavits for all
federal, state and foreign tax payments with respect to foreign
securities and other assets of each applicable Series, or in connec-
tion with the purchase, sale or transfer of such securities and
other assets; and based upon information, and in reliance upon tax
advice, received from the Fund, take the steps and provide the
administrative and ministerial functions required in the particular
jurisdiction to obtain appropriate withholding exemptions and to
reclaim foreign taxes paid, and in connection therewith, to inform
the Fund of information with respect to foreign taxes of which it
became aware in the ordinary course of providing custody services
in that jurisdiction; provided, however, that with respect to
portfolio securities registered in so-called "street name," the
Custodian shall use reasonable efforts to collect amounts due and
payable to each Series. The Custodian shall deliver the Fund
periodic written reports providing information as to amounts payable
with respect to foreign securities or other assets of any Series not
received by the Custodian when due. 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 compensa-
tion and expenses of the Custodian attendant thereto.
Collection of income due each Series on securities loaned shall 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 in its possession as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Series is properly entitled.
3.13 Proxies. The Custodian will generally, with respect to the securities
held under this Article 3, act in accordance with the contractual
standard of care and in accordance with available practice generally
acceptable to Institutional Clients to facilitate the exercise of
voting and other shareholder proxy rights, subject always to the
laws, regulations and practical constraints that may obtain in the
jurisdiction where such securities are issued. The Fund acknowledges
that local conditions, including lack of regulation, onerous formal
constraints, lack of notice and the like, may have the effect of
severely limiting the ability of the Fund to exercise shareholder
rights.
19
3.14 Communications Relating to Portfolio Securities. The transmit
promptly to the Fund written information (including, without
limitation, pendency of calls and maturities of securities and
expirations of rights in connection therewith) the substance of
which has been received by the Custodian from its foreign sub-
custodian from issuers of the securities being held for the
account of the applicable Series. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the
Fund written information so received by the Custodian from issuers
of the securities whose tender or exchange is sought or from the
party (or his 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 secu-
rities or other property of a Series at any time held by it unless
(i) it or its foreign sub-custodian are in actual possession of such
securities or property and (ii) it 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
such right or power is to be exercised.
4. Payments for Purchases or Redemptions of Shares of the Fund
4.1 Purchase of Fund Shares. The Custodian shall maintain, on its own
books in the case of the US Index Series, or with the applicable
Foreign Sub-custodian in the case of each other Series, an account
into which an Authorized Participant (as defined in the Prospectus)
proposing to purchase Shares of the Series may deliver a Fund Basket
of securities (as defined in the Prospectus). Upon receipt from the
appointed distributor of Fund Shares of a notice of intention for the
purchase of Shares of any Series, the Custodian shall promptly notify
(other than in the case of the US Index Series) the applicable
Foreign Sub-custodian of the intended delivery to it of the
securities included in the designated Fund Basket. Upon delivery to
the Custodian, in the case of the US Index Series, or advice from the
applicable Foreign Sub-custodian of delivery to it, in the case of
each other Series, of the securities in one or more of the designated
Fund Baskets as contemplated in such notice of intention, the
Custodian shall promptly advise the distributor of such fact and any
deviation from delivery of the securities required in respect of such
purchase. The Custodian shall also promptly advise the distributor
of its receipt of the requisite Cash Component and any applicable
Cash Component transaction fee (both as defined in the Prospectus) in
respect of any such purchase.
4.2 Redemption of Fund Shares. From such funds and securities held by a
Series as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes
of the Board of Directors of the Fund pursuant thereto, the Custodian
shall, upon receipt of instructions from the
20
Transfer Agent, make available for payment to Authorized Participants
of Shares who have delivered to the Transfer Agent a request for
redemption of their Shares which shall have been accepted by the
Transfer Agent, the applicable Fund Basket (or such securities in
lieu thereof as may be designated by the Adviser in accordance with
the Prospectus) for such Series and the applicable cash redemption
payment less any applicable cash redemption transaction fee. The
Custodian will transfer the securities proceeds, in the case of the
US Index Series, to or on the order of the Authorized Participant
through the DTC system (as defined in the Prospectus) or, at the
election of the Authorized Participant, through the CNS System of
NSCC and, in the case of each other Series, will instruct the
applicable Foreign Sub-custodian to transfer the Fund Basket of
securities to the account of the Authorized Participant or beneficial
owner in the applicable foreign jurisdiction, all as specified in
such instructions.
Transfers of the securities and cash redemption proceeds to or on the
order of the Authorized Participant in respect of each redemption
request accepted by the Fund shall be made (a) if the Authorized
Participant is a broker or dealer, within the number of business days
after the date of redemption specified by Rule 15c6-1 under the
Exchange Act, except as may otherwise be agreed in the Authorized
Participant Agreement among the Fund, the Fund's distributor, State
Street, as Transfer Agent and such Authorized Participant and except
for those dates of redemption and Series identified in Annex VII to
such Authorized Participant Agreement, and (b) in any event within
the number of calendar days permitted by Section 22(e) of the 1940
Act and the rules thereunder or as otherwise permitted under an
effective order of the Securities and Exchange Commission. The cash
redemption payment (less any applicable cash redemption transaction
fee) due to the Authorized Participant on redemption shall be
effected through DTC cash transfer facilities.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of
Directors shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved,
including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Directors of the Fund
accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of Directors and the
21
Custodian are satisfied that such procedures afford adequate safeguards for
the Series' assets. For purposes of this Section, Proper Instructions
shall include instructions received by the Custodian (and which are
designated to be authorized instructions of the Fund) pursuant to any
three-party agreement which requires a segregated asset account in accor-
dance with Section 2.12 or from the Transfer Agent as provided in
Section 2.2(14).
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Series:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund on behalf of the Series;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Series, 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 Series except as otherwise directed by the Board of
Directors of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting in good faith reliance
upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably 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 certified copy of a vote of the Board of Directors of
the Fund as conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as
described in such vote, and such vote may be considered as in full force
and effect until receipt by the Custodian of written notice to the
contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
22
The Custodian shall keep the books of account of each Series as set
forth in Schedule attached hereto and compute the net asset value per
share of the outstanding Shares of each Series. The net asset value
calculation for each Series shall be made in accordance with (1) the terms
set forth in the Prospectus, as such terms may, from time to time, be
amended or supplemented, (2) resolutions adopted by the Board of Directors
of the Fund and delivered to the Custodian and at the time in force and
applicable, and delivered to the Custodian, (3) Proper Instructions and
(4) the provisions of the Price Source Authorization Agreement between the
Fund and the Custodian. The Custodian shall transmit the net asset value
of each Series to the Fund's distributor and to the Transfer Agent. If
directed in writing to do so by the Fund, the Custodian shall also transmit
the net asset value of each Series to the National Association of
Securities Dealers Automated Quotations System and to such other entities
as directed by the Fund. If directed in writing to do so by the Fund, the
Custodian shall also calculate daily the net income of each Series as
described in the Fund's Prospectus and shall advise the Fund, its
distributor 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 Series shall be made at the
time or times described from time to time in the Fund's Prospectus related
to such Series. In connection with computing the net asset value of shares
of each Series, the Custodian shall on each day a Series is open for the
purchase of shares of a given Series compute the amount of the Cash
Component and transmit such information to the Fund's Distributor and to
the Transfer Agent.
9. Records
The Custodian shall, with respect to each Series, create and maintain
all records relating to its activities and obligations under this Contract
in such manner as will meet the obligations of the Fund under the
Investment Company Act including without limitation 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 Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund
with a tabulation of securities owned by each Series 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.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Series may from time to time request, to obtain from
year to year favorable
23
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 Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Series
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 relating
to the services provided by the Custodian under this Contract; 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.
12. 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 Series and the Custodian.
13. 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 Contract 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 Contract, 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. 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 have no more or less responsibility or liability
to the Fund on account of the acts or omissions of a foreign banking
institution appointed pursuant to the provisions of Article 3 or a Sub-
custodian located in the United States and appointed pursuant to the
provisions of Article 1, than any such Sub-custodian has to the Custodian;
provided that this provision shall not protect the Custodian from
24
responsibility or liability in the event of the Custodian's own negligence
or bad faith. Regardless of whether assets are maintained in the custody
of a foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by Section 3.11 hereof, 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, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of
trading on or the closure of any securities markets, power or other
mechanical or technological failures or interruptions, computer viruses or
communications disruptions which, in any such case, the Custodian could not
have prevented by using commercially reasonable methods, acts of war or
terrorism, riots, revolutions, work stoppages, natural disasters or other
similar events or acts; (ii) errors by the Fund or its investment adviser
in their instructions to the Custodian provided such instructions have been
given in accordance with this Contract; (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 of 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 laws or regulations or orders 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;
provided that this provision shall not protect the Custodian from
responsibility or liability in the event of the Custodian's own negligence
or bad faith. Notwithstanding the foregoing provisions of this Article 13,
in delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss due to
such delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil strife or
armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due to
Acts of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable care.
If the Fund on behalf of a Series 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 Series being liable
for the payment of money or incurring liability of some
25
other form, the Fund on behalf of the Series, 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) for the benefit of a Series including the purchase or sale of
foreign exchange or of contracts for foreign exchange, any property at any
time held for the account of the applicable Series shall be security for
such advance and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of
such Series's assets to the extent necessary to obtain reimbursement.
14. Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting.
15. Advances
From time to time and in accordance with the Custodian's internal
policies and guidelines it may make funds available for the settlement of
the Fund's securities transactions.
16. Effective Period, Termination and Amendment
This Contract 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 written 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, that at the Fund's request such termination
may be postponed for an additional thirty (30) days if necessary to permit
the Fund to obtain the services of a successor custodian, and provided
further, however that the Custodian shall not with respect to a Series act
under Section 2.13 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors of the Fund has approved the initial use of a particular U.S.
Securities System by such Series, as required by Rule 17f-4 under the
Investment Company Act that the Custodian shall
26
not with respect to a Series act under Section 2.14 hereof in the absence
of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors has approved the initial use of the
Direct Paper System by such Series and that the Custodian shall not, with
respect to a Series, act under Article 3 to appoint a Foreign Sub-
custodian or make any deposit of securities of a Series in any Foreign
Securities System in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Directors has
approved the initial use of such Foreign Sub-custodian or Foreign
Securities System by such Series; provided further, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles
of Incorporation, and further provided, that the Fund on behalf of one or
more of the Series may at any time by action of its Board of Directors
(i) substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) immediately terminate
this Contract 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 Contract, the Fund on behalf of each
applicable Series 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.
17. Successor Custodian
If a successor custodian for the Fund, of one or more of the Series
shall be appointed by the Board of Directors of the Fund, 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 Series and all cash and other instruments
then held by it or an agent hereunder and shall transfer to an account of
the successor custodian all of the securities of each such Series held in a
U.S. Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of Directors of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Directors 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 Investment
Company Act, doing business in Boston, Massachusetts, of its own
27
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 held by the Custodian on behalf of
each applicable Series and all instruments held by the Custodian relative
thereto and all other property held by it under this Contract on behalf of
each applicable Series and to transfer to an account of such successor
custodian all of the securities of each such Series held in any U.S.
Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
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 copy of the vote referred
to or of the Board of Directors 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 Contract relating to the
duties and obligations of the Custodian shall remain in full force and
effect.
18. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Series, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor
of this Contract. 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 Articles of
Incorporation of the Fund. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
19. Additional Series
In the event that the Fund establishes one or more series of Shares
in addition to the Australia Index Series, France Index Series, Germany
Index Series, Hong Kong Index Series, Italy Index Series, Japan Index
Series, South Africa Index Series, UK Index Series and US Index Series 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 Series hereunder.
20. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with the internal laws of The
Commonwealth of Massachusetts.
28
21. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Series and the
Custodian relating to the custody of the Fund's assets.
22. Shareholder Communications
Rule 14b-2 under the Exchange Act 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. Unless and
until the Custodian receives Proper Instructions to the contrary, the
Custodian will (check applicable provision) ( ) disclose ( ) not disclose
the Fund's name, address and securities position to issuers whose
securities are held by the Fund upon request of such issuers.
29
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative
and its seal to be hereunder affixed as of the day of
, 1995.
ATTEST THE COUNTRYBASKETSSM INDEX FUND, INC.
By
ATTEST STATE STREET BANK AND TRUST
COMPANY
By
Executive Vice President
30
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of The
CountryBasketsSM Index Fund, Inc. for use as Sub-custodians for the Fund's
securities and other assets:
(Insert banks and securities depositories)
Certified:
Fund's Authorized Officer
Date:
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