[FOR DOMESTIC CUSTODY AGREEMENTS
HAVING REVISED UCC ARTICLE 8 DEFINITIONS]
GLOBAL CUSTODY RIDER
TO
DOMESTIC CUSTODY AGREEMENT
This Rider is entered into by and between The Chase Manhattan Bank
("Custodian") and State Farm Balanced Fund, Inc. ("Company") to provide Global
Custody Services subject to the terms of the Custody Agreement dated as
of _________________, and the terms herein. If there is any conflict between
the terms in the Custody Agreement and the terms in this Rider with regard to
the provision by Custodian of Global Custody Services to Company, the terms of
this Rider shall govern. The terms of this Rider shall be effective as of the
date Custodian commences to provide Global Custody Services to Company.
Capitalized terms used herein and not defined herein shall have the meaning as
set forth in the Custody Agreement.
1. MAINTENANCE OF FINANCIAL ASSETS AND CASH OUTSIDE THE UNITED STATES.
Global Custody Services shall be provided for those Financial Assets that
are to be held outside the United States and unless Company's instructions
specifically require another location acceptable to Custodian:
(a) Financial Assets shall be held in the country or other
jurisdiction in which the principal trading market for such Financial Assets are
located, where such Financial Assets are to be presented for payment or where
such Financial Assets are acquired; and
(b) cash shall be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Custodian can comply with Company's instructions to it, Custodian
is authorized to maintain cash balances on deposit for Company with Custodian or
one of its Affiliates at such reasonable rates of interest as may from time to
time be paid on such accounts, or in non-interest bearing accounts as Company
may direct, if acceptable to Custodian. For purposes hereof, the term
"Affiliate" shall mean an entity controlling, controlled by, or under common
control with, Custodian.
If Company wishes to have any of the Financial Assets held in the custody
of a Securities Intermediary other than the established Subcustodians as defined
in Section 2 hereof (or their securities depositories), such arrangement must be
authorized by a written agreement, signed by Custodian and Company.
2. SUBCUSTODIANS AND DEPOSITORIES.
Custodian may act under this Rider through the subcustodians listed in
Schedule A hereto with which Chase entered into subcustodial agreements
("Subcustodians"). At Company's request, Custodian may, but need not, add to
Schedule A an Eligible Foreign Custodian (hereinafter defined) that is either a
bank or a non-Compulsory Depository where Custodian has not acted as Foreign
Country Manager (hereinafter defined) with respect to the selection thereof.
Custodian shall notify Company in writing in the event that Custodian agrees to
add any such entity. Company authorizes Custodian to hold Financial Assets
recorded to the Custody Account in accounts which Custodian has established
with one or more of its branches or Subcustodians. Custodian and Subcustodians
are authorized to hold any of the Financial Assets in their accounts with any
securities depository in which Custodian or Subcustodians' participant,
subject in the case of a Compulsory Depository to the provisions set forth in
section 9(e) hereof.
Custodian may add new, replace or remove Subcustodians. Company shall be
given reasonable notice by Custodian of any amendment to Schedule A. Upon
Company's request, Custodian shall identify the name, address and principal
place of business of any Subcustodian of Company's Financial Assets and the name
and address of the governmental agency or other regulatory authority that
supervises or regulates such Subcustodian.
To be a Subcustodian of Financial Assets maintained outside the United
States the Subcustodian chosen must be either a branch of a U.S. Bank or an
Eligible Foreign Custodian, which are further defined as follows:
(i) "U.S. Bank" shall mean a qualified U.S. bank as defined in Rule
17f-5(a)(7) under the Investment Company Act of 1940, as amended (the "1940
Act");
(ii) "Eligible Foreign Custodian" shall mean (1) a banking institution
or trust company, incorporated or organized under the laws of a country other
than the United States, that is regulated as such by that country's government
or an agency thereof, (2) a majority owned direct or indirect subsidiary of a
U.S. Bank or bank holding company that is incorporated or organized under the
laws of a country other than the United States, (3) a foreign securities
depository or clearing agency, incorporated or organized under the laws of a
country other than the United States that acts as a system for handling of
securities or equivalent book-entries in that country and that is regulated by a
foreign financial regulatory authority as defined under Section 2(a)(5) of the
1940 Act, (4) a securities depository or clearing agency organized under the
laws of a country other than the United States, when acting as a transnational
system for the central handling of Financial Assets or equivalent book-entries,
and (5) any other entity that shall have been so qualified by exemptive order,
rule or other appropriate action of the Securities and Exchange Commission (the
USEC").
3. USE OF SUBCUSTODIAN.
(a) Custodian shall identify the Financial Assets on its books as
belonging to Company.
(b) A Subcustodian shall hold Company's Financial Assets together with
Financial Assets belonging to other of Custodian's customers in accounts
identified on such Subcustodian's books as for the exclusive benefit of
Custodian's customers.
(c) Any Financial Assets in the accounts held by a Subcustodian shall
be subject only to the instruction of Custodian. Any Financial Assets held in a
securities depository for the account of a Subcustodian shall be subject only to
the directions of such Subcustodian.
(d) Any agreement Custodian enters into with a Subcustodian for
holding its customers' assets shall provide that such assets shall not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of such Subcustodian except for safe custody or administration, and that
the beneficial ownership of such assets shall be freely transferable without the
payment of money or value other than for safe custody or administration or, in
the case of cash deposit, liens or rights in favor of creditors of the
Subcustodian arising under bankruptcy, insolvency or similar laws. Where
Financial Assets are deposited by a Subcustodian with a securities depository,
Custodian shall cause the Subcustodian to identify on its books as belonging to
Custodian, as agent, the Financial Assets shown on the Subcustodian's account on
the books of such securities depository. The foregoing shall not apply to the
extent of any special agreement or arrangement made by Company with any
particular Subcustodian.
4. GLOBAL FINANCIAL ASSETS ACCOUNT TRANSACTIONS.
(a) Financial Assets shall be transferred, exchanged or delivered by
Custodian or Subcustodian upon receipt by Custodian of instructions from Company
which include all information required by Custodian. Settlement and payment for
Financial Assets received for, and delivery of Financial Assets out of, the
Custody Account may be made in accordance with the customary or established
Securities trading or Securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivery of Securities to a purchaser, dealer or their agents
against a receipt with the expectation of receiving later payment and free
delivery. Delivery of Financial Assets out of the Custody Account may be made
in any manner specifically required by Company's instructions acceptable to
Custodian.
All collections of funds or other property paid or distributed in respect
of Financial Assets in the Custody Account shall be made at Company's risk.
Custodian shall have no liability for any loss occasioned by delay in the actual
receipt of notice by Custodian or by Subcustodians of any payment, redemption or
other transaction regarding Financial Assets in the Custody Account in respect
of which Custodian has agreed to take any action under the Agreement.
5. CORPORATE ACTIONS; PROXIES; TAX RECLAIMS.
(a) CORPORATE ACTIONS. Whenever Custodian receives information
concerning the Financial Assets which requires discretionary action by the
beneficial owner of the Financial Assets (other than a proxy), such as
subscription rights, bonus issues, stock repurchase plans and rights offerings,
or legal notices or other material intended to be transmitted to Securities
holders
("Corporate Actions"), Custodian shall give Company notice of such Corporate
Actions to the extent that its central corporate actions department has actual
knowledge of a Corporate Action in time to notify its customers. Custodian
shall notify Company of any Corporate Action regarding Financial Assets held for
the Company, that Custodian shall have received after its intended expiration.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, Custodian shall endeavor to obtain
instructions from Company or an Authorized Officer, but if instructions are not
received in time for Custodian to take timely action, or actual notice of such
Corporate Action was received too late to seek instructions, Custodian is
authorized to sell such rights entitlement or fractional interest and to credit
the Cash Account with the proceeds or take any other action Custodian deems, in
good faith, to be appropriate.
(b) PROXY VOTING. Custodian shall provide proxy voting services, if
elected by Company, in accordance with the terms of the Proxy Voting Services
Rider hereto. Proxy voting services may be provided by Custodian or, in whole
or in part, by one or more third parties appointed by Custodian (which may be
its Affiliates); provided that Custodian shall be liable for the performance of
any such third party to the same extent as Custodian would have been if it
performed such services itself.
(c) TAX RECLAIMS.
(i) Subject to the provisions hereof, Custodian shall apply for a
reduction of withholding tax and any refund of any tax paid or tax credits which
apply in each applicable market in respect of income payments on Financial
Assets for Company's benefit which Custodian believes may be available to
Company.
(ii) The provision of tax reclaim services by Custodian is conditional
upon it receiving from Company or, to the extent the Financial Assets are
beneficially owned by others, from each beneficial owner, A) a declaration of
the beneficial owner's identity and place of residence and (B) certain other
documentation (PRO FORMA copies of which are available from Custodian). Company
acknowledges that, if Custodian does not receive such declarations,
documentation and information Custodian will be unable to provide tax reclaim
services.
(iii) Custodian and its agents shall not be liable to Company or any
third party for any taxes, fines or penalties payable by Custodian or its agents
or by Company, and shall be indemnified accordingly, whether these result from
the inaccurate completion of documents by Company or any third party, or as a
result of the provision to Custodian or any third party of inaccurate or
misleading information or the withholding of material information by Company or
any other third party, or as a result of any delay of any revenue authority or
any other matter beyond Custodian's or its agents' control.
(iv) Custodian shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to Company
from time to time and Custodian may, by notification in writing, supplement or
amend the markets in which the tax reclaim
services are offered. Other than as expressly provided in this sub-clause,
Custodian shall have no responsibility with regard to Company's tax position or
status in any jurisdiction.
(v) Company confirms that Custodian is authorized to disclose any
information requested by any revenue authority or any governmental body in
relation to Company or the Financial Assets and/or cash held for Company.
(vi) Tax reclaim services may be provided by Custodian or, in whole or
in part, by one or more third parties appointed by Custodian (which may be
Affiliates); provided that Custodian shall be liable for the performance of any
such third party to the same extent as Custodian would have been if it performed
such services.
(d) TAX OBLIGATIONS AND INDEMNIFICATION.
(i) Company confirms that Custodian is authorized to deduct from any
cash received or credited to the Cash Account any taxes or levies required by
any revenue or governmental authority for whatever reason in respect of the
Custody Account.
(ii) Company agrees that if Custodian does not receive appropriate
declarations, documentation and information that additional United Kingdom
taxation shall be deducted from all income received in respect of the Financial
Assets issued outside the United Kingdom and that any applicable United States
withholding tax shall be deducted from income received from the Financial
Assets. Company shall provide to Custodian such documentation and information
as Custodian may require in connection with taxation, and warrant that, when
given, this information shall be true and correct in every respect, not
misleading in any way, and contain all material information. Company undertakes
to notify Custodian immediately if any such information requires updating or
amendment.
(iii) Company shall be responsible for the payment of all taxes relating
to the Financial Assets in the Custody Account, and Company agrees to pay,
indemnify and hold Custodian and its agents harmless from and against any and
all liabilities, penalties, interest or additions to tax with respect to or
resulting from, any delay in, or failure by, Custodian or its agents (1) to pay,
withhold or report any U.S. federal, state or local taxes or foreign taxes
imposed on, or (2) to report interest, dividend or other income paid or credited
to the Cash Account, whether such failure or delay by Custodian or its agents to
pay, withhold or report tax or income is the result of (x) Company's failure to
comply with the terms of this paragraph, or (y) Custodian or its agents own acts
or omissions; provided however, Company shall not be liable to Custodian and its
agents for any penalty or additions to tax due as a result of the failure of
Custodian or its agents to pay or withhold tax or to report interest, dividend
or other income paid or credited to the Cash Account solely as a result of
negligent acts or omissions of Custodian or its agents.
6. NOMINEES.
Financial Assets which are ordinarily held in registered form may be
registered in a nominee name of Custodian, Subcustodians or securities
depositories, as the case may be. Custodian may without notice to Company cause
any such Financial Assets to cease to be
registered in the name of any such nominee and to be registered in Company's
name. Company agrees to hold Custodian, Subcustodians, securities depositories
and its and their respective nominees harmless from any liability arising
directly or indirectly from its or their status as a mere record holder of
Financial Assets in the Custody Account.
7. STANDARD OF CARE.
Custodian shall use reasonable care with respect to its obligations and
the safekeeping of Company's Financial Assets hereunder. Custodian shall be
liable to Company for any loss which shall occur as the result of the failure of
a Subcustodian (except that Custodian shall have no liability for the
performance of a Compulsory Depository as defined in section 9(e) hereof) to
exercise reasonable care with respect to the safekeeping of Financial Assets
where such loss results directly from the failure of a Subcustodian to use
reasonable care in the provision of custodial services by it in accordance with
the standards prevailing in its local market or from the willful default of such
Subcustodian in the provision of custodial services by it. Any liability of the
Custodian hereunder shall be limited to the extent set forth in section 7.16 of
the Custody Agreement. Custodian shall not be responsible for the insolvency of
any Subcustodian which is not a branch or its Affiliate.
Custodian shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for Company) on all matters and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
Without limiting anything else contained in this section, Custodian shall
not be liable for any loss which results from: 1) the general risk of investing,
or 2) investing or holding Financial Assets in a particular country including,
but not limited to, nationalization, expropriation or other governmental
actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions which prevent
the orderly execution of securities transactions or affect the value of
Financial Assets.
8. FEES AND EXPENSES.
Company agrees to pay Custodian for Global Custody Services hereunder the
fees set forth in Schedule B hereto or such other amounts as may be agreed upon
in writing, together with its reasonable out-of-pocket or incidental expenses,
including, but not limited to, legal fees.
9. MISCELLANEOUS.
(a) FOREIGN EXCHANGE TRANSACTIONS. To facilitate the administration
of Company's trading and investment activity, when instructed by specific or
standing instruction, Custodian is authorized to enter into spot or forward
foreign exchange contracts for Company's account with itself (or any of its
Affiliates). Custodian may establish rules or limitations concerning any
foreign exchange facility made available. In all cases where Custodian or its
Affiliates have entered into a separate master foreign exchange contract with
Company that covers a foreign exchange transaction for the Custody Account, the
terms and conditions of that foreign exchange contract and, to the extent not
inconsistent, the Agreement shall apply to such transaction.
(b) CERTIFICATION OF RESIDENCY, ETC. Company certifies that it is a
resident of the United States and agrees to notify Custodian of any changes in
residency. Custodian may rely upon this certification or the certification of
such other facts as may be required to administer Custodian's obligations under
this Rider and the Agreement. Company shall indemnify Custodian and its agents
against all losses, liability, damages, claims or demands arising directly or
indirectly from any such certifications.
(c) ACCESS TO RECORDS. Custodian shall allow Company's independent
public accountant reasonable access to records relating to the Custody Account
as is required in connection with their examination of books and records
pertaining to Company's affairs. Subject to restrictions under applicable law,
Custodian shall also obtain an undertaking to permit Company's independent
public accountants reasonable access to the records of any Subcustodian which
has physical possession of any Financial Assets as may be required in connection
with the examination of Company's books and records.
(d) COMPANY'S REPRESENTATION. Company represents that the Financial
Assets being placed in Custodian's custody are subject to the 1940 Act, as the
same may be amended from time to time.
(e) COMPLIANCE WITH SEC RULE 17f-5.
(1) Company's board of directors (or equivalent body) (hereinafter
"Board") hereby delegates to Custodian, and Custodian hereby accepts the
delegation to Custodian, of the obligation to perform as its "Foreign Custody
Manager" (as that term is defined in SEC Rule 1 7f-5(a)(2)), both for the
purpose of selecting Eligible Foreign Custodians (as that term is defined in SEC
Rule 17f-5(a)(1), and as the same may be amended from time to time, or that have
otherwise been made exempt pursuant to an SEC exemptive order) to hold Financial
Assets and of evaluating the contractual arrangements with such Eligible Foreign
Custodians (as set forth in SEC Rule 17f-5(c)(2)); provided that, the term
Eligible Foreign Custodian shall not include any "Compulsory Depository". A
Compulsory Depository shall mean a securities depository or clearing agency the
use of which is compulsory because: (i) its use is required by law or
regulation, (ii) securities cannot be withdrawn from the depository, or (iii)
maintaining securities outside the depository is not consistent with prevailing
custodial practices in the country which the depository serves. Compulsory
Depositories used by Custodian as of the date hereof are set forth in Appendix
1-A hereto, and as the same may be amended on notice to Company from time to
time.
(2) In connection with the foregoing, Custodian shall:
(i) provide written reports notifying our Board of the placement of
Financial Assets with particular Eligible Foreign Custodians and of any material
change in the arrangements with such Eligible Foreign Custodians, with such
reports to be provided to our Board at such times as the Board deems reasonable
and appropriate based on the circumstances of our foreign custody arrangements
(and until further notice from us such reports shall be provided not less than
quarterly with respect to the placement of Financial Assets with particular
Eligible Foreign
Custodians and with reasonable promptness upon the occurrence of any material
change in the arrangements with such Eligible Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in
performing as Company's Foreign Custody Manager as a person having
responsibility for the safekeeping of Financial Assets would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have determined
that Financial Assets placed and maintained in the safekeeping of such Eligible
Foreign Custodian shall be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, after having considered all
factors relevant to the safekeeping of such Financial Assets, including, without
limitation, those factors set forth in SEC Rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign
Custodian (or, in the case of an Eligible Foreign Custodian that is a securities
depository or clearing agency, such contract, the rules or established practices
or procedures of the depository, or any combination of the foregoing) requires
that the Eligible Foreign Custodian will provide reasonable care for Financial
Assets based on the standards applicable to custodians in the relevant market;
and
(v) have established a system to monitor the continued appropriateness
of maintaining Financial Assets with particular Eligible Foreign Custodians and
of the governing contractual arrangements; it being understood, however, that in
the event that Custodian shall have determined that the existing Eligible
Foreign Custodian in a given country would no longer afford Financial Assets
reasonable care and that no other Eligible Foreign Custodian in that country
would afford reasonable care, Custodian shall promptly so advise Company and
shall then act in accordance with Company's instructions with respect to the
disposition of the affected Financial Assets.
Subject to paragraphs (e)(2)(i)-(v) above, Custodian is hereby authorized to
place and maintain Financial Assets on Company's behalf with Eligible Foreign
Custodians pursuant to a written contract deemed appropriate by Custodian.
(3) Except as expressly provided herein, Company shall be solely
responsible to assure that the maintenance of Financial Assets hereunder
complies with the rules, regulations, interpretations and exemptive orders
promulgated by or under the authority of the SEC.
(4) Custodian represents to Company that Custodian is a U.S. Bank as
defined in Rule 17f-5(a)(7). Company represents to Custodian that: (i) the
Financial Assets being placed and maintained in Custodian's custody are subject
to the 1940 Act, as the same may be amended from time to time; (ii) Company's
Board: (A) has determined that it is reasonable to rely on Custodian to perform
as its Foreign Custody Manager (B) or Company's investment adviser shall have
determined that Company may maintain Financial Assets in each country in which
Financial Assets shall be held hereunder and determined to accept the risks
arising therefrom (including, but not limited to, a country's financial
infrastructure (and including any Compulsory Depository operating in such
country), prevailing custody and settlement practices, laws applicable to the
safekeeping and recovery of Financial Assets held in custody, and the
likelihood of nationalization, currency controls and the like) (collectively
("Country Risk")). Nothing contained herein shall require Custodian to make any
selection or to engage in any monitoring on Company's behalf that would entail
consideration of Country Risk.
(5) Custodian shall provide to Company such information relating to
Country Risk as is specified in Appendix 1-B hereto. Company hereby
acknowledges that: (i) such information is solely designed to inform it of
market conditions and procedures, but is not intended to influence Company's
investment decisions; and (ii) Custodian has gathered the information from
sources it considers reliable, but that Custodian shall have no responsibility
for inaccuracies or incomplete information.
STATE FARM BALANCED FUND, INC.
By:
-----------------------------------
Name:
Title:
Date:
-----------------------------------
Accepted and agreed to:
THE CHASE MANHATTAN BANK
By:
--------------------------------
Xxxxx X. Xxxxxx
Title: Vice President
--------------------------------------------------------------------------------
APPENDIX 1-A
COMPULSORY DEPOSITORIES
AS OF JULY 1998
--------------------------------------------------------------------------------
COUNTRY DEPOSITORY INSTRUMENT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ARGENTINA CAJA DE VALORES Equity, Corporate & Government
Debt
--------------------------------------------------------------------------------
AUSTRALIA AUSTRACLEAR LTD. Corporate Debt, Money Market &
Semi-Government Debt
--------------------------------------------------------------------------------
CHESS Equity
(Clearing House Electronic
Sub-register System)
--------------------------------------------------------------------------------
RITS Government Debt
(Reserve Bank Information and
Transfer System)
--------------------------------------------------------------------------------
AUSTRIA OSTERREICHISCHE KONTROLBANK AG Equity, Corporate + Government
Debt
--------------------------------------------------------------------------------
CIK Equity + Corporate Debt
BELGIUM (Caisse Interprofessionnelle
de Depots et de Virements de
Titres)
--------------------------------------------------------------------------------
BANQUE NATIONALE DE BELGIQUE Treasury Bills + Government Debt
--------------------------------------------------------------------------------
BRAZIL BOVESPA Equity
(Bolsa de Valores de Sao
Paolo)
--------------------------------------------------------------------------------
BVRJ Equity
(Bolsa de Valores de Rio de
Janeiro)
--------------------------------------------------------------------------------
BULGARIA BNB Government Debt
(Bulgaria National Bank)
--------------------------------------------------------------------------------
CENTRAL DEPOSITORY A.D. Equity
--------------------------------------------------------------------------------
CANADA CDS Equity, Corporate + Government
(Canadian Depository for Debt
Securities)
--------------------------------------------------------------------------------
CHINA, SSCCRC Equity
SHANGHAI (Shanghai Securities Central
Clearing and Registration
Corp.)
--------------------------------------------------------------------------------
CHINA, SSCC Equity
SHENZHEN (Shenzhen Securities Clearing
Co., Ltd.)
--------------------------------------------------------------------------------
COLOMBIA DCV Government debt issued,
(Deposito Central de Valores) guaranteed or administered by
the central bank.
--------------------------------------------------------------------------------
CDA Equity and listed government
CROATIA (Central Depository Agency) debt. (Created in April 1997,
the CDA is expected to be
operational in 1998)
--------------------------------------------------------------------------------
MINISTRY OF FINANCE REGISTRY & Short-term debt issued by the
NATIONAL BANK OF CROATIA Ministry of Finance and the
REGISTRY National Bank of Croatia,
respectively.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPULSORY DEPOSITORIES
AS OF JULY 1998
--------------------------------------------------------------------------------
COUNTRY DEPOSITORY INSTRUMENT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CZECH SCP Equity + Long-Term Government
REPUBLIC (Securities Center) Debt
--------------------------------------------------------------------------------
DENMARK VP Equity, Corporate + Government
(Vaerdipapircentralen) Debt
--------------------------------------------------------------------------------
EGYPT MISR CLEARING & SEC. DEP. Equity
--------------------------------------------------------------------------------
ESTONIA EVK Equity
(Estonian Central Depository
for Securities Ltd.)
--------------------------------------------------------------------------------
EUROMARKET CEDEL & EUROCLEAR Euro-Debt
--------------------------------------------------------------------------------
FINLAND CSR Equity + Government Debt
(Central Share Registry
Finland)
--------------------------------------------------------------------------------
FRANCE SICOVAM Equity + Corporate Debt.
(Banque de France)
--------------------------------------------------------------------------------
SATURNE Government Debt.
(Banque de France)
--------------------------------------------------------------------------------
GERMANY DBC Equity, Corporate + Government
(Deutsche Boerse Clearing Debt
A.G.)
--------------------------------------------------------------------------------
GREECE APOTHETIRIO TITLON A.E. Equity
--------------------------------------------------------------------------------
BANK OF GREECE Government Debt
--------------------------------------------------------------------------------
HONG KONG CCASS Equity
(Central Clearing and
Settlement System)
--------------------------------------------------------------------------------
CMU Corporate + Government Debt
(Central Moneymarkets Unit)
--------------------------------------------------------------------------------
HUNGARY KELER LTD. Equity + Government Debt
--------------------------------------------------------------------------------
INDIA NSDL Equity + Corporate Debt
(National Securities
Depository Limited)
--------------------------------------------------------------------------------
IRELAND CREST Equity
--------------------------------------------------------------------------------
GSO Government Debt
(Gift Settlement Office)
--------------------------------------------------------------------------------
ISRAEL TASE CLEARING HOUSE Equity, Corporate + Government
(Tel Aviv Stock Exchange Debt
Clearing House)
--------------------------------------------------------------------------------
ITALY MONTE TITOLI Equity + Corporate Debt
--------------------------------------------------------------------------------
BANK OF ITALY Government Debt
--------------------------------------------------------------------------------
JAPAN BANK OF JAPAN Registered Government Debt
--------------------------------------------------------------------------------
LATVIA LCD Equity + Government Debt)
(Latvian Central Depository)
--------------------------------------------------------------------------------
LEBANON MIDCLEAR Equity
(Custodian and Clearing Center
of Lebanon and the Middle
East)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
COMPULSORY DEPOSITORIES
AS OF JULY 1998
--------------------------------------------------------------------------------
COUNTRY DEPOSITORY INSTRUMENT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
LITHUANIA CSDL Equity + Government Debt
(Central Securities Depository
of Lithuania)
--------------------------------------------------------------------------------
LUXEMBOURG CEDEL Equity
--------------------------------------------------------------------------------
MALAYSIA MCD Equity
(Malaysian Central Depository
Snd Bhd)
--------------------------------------------------------------------------------
MAURITIUS CDS Equity
(Central Depository System)
--------------------------------------------------------------------------------
MEXICO INDEVAL Equity, Corporate + Government
(Institucion para el Deposito Debt.
de Valores)
--------------------------------------------------------------------------------
MOROCCO MAROCLEAR Equity + Corporate Debt
(expected to be operational in
1998)
--------------------------------------------------------------------------------
NETHERLANDS NECIGEF/KAS ASSOCIATE N.V. Equity, Corp. + Govt. D
--------------------------------------------------------------------------------
NEW ZEALAND AUSTRACLEAR NEW ZEALAND Equity, Corporate + Government
Debt
--------------------------------------------------------------------------------
NORWAY VPS Equity, Corporate + Government
(Verdipapirsentralen) Debt
--------------------------------------------------------------------------------
OMAN MSM Equity
(Muscat Securities Market)
--------------------------------------------------------------------------------
PAKISTAN CDC Equity
(Central Depository Company of
Pakistan Ltd.)
--------------------------------------------------------------------------------
PERU CAVALI Equity
(Caja de Valores)
--------------------------------------------------------------------------------
PHILIPPINES PCD Equity
(Philippine Central
Depository)
--------------------------------------------------------------------------------
POLAND NDS Equity, Long-Term Government
(National Securities Debt + Vouchers
Depository)
--------------------------------------------------------------------------------
CRT Treasury-Bills
(Central Registry of Treasury-
Bills)
--------------------------------------------------------------------------------
PORTUGAL INTERBOLSA Equity, Corporate + Government
Debt
--------------------------------------------------------------------------------
ROMANIA SNCDD - RASDAQ Equity
(National Company for
Clearing, Settlement and
Depository for Securities)
--------------------------------------------------------------------------------
BSE Equity
(Bucharest Stock Exchange
Registry)
--------------------------------------------------------------------------------
NATIONAL BANK OF ROMANIA Treasury-Bills
--------------------------------------------------------------------------------
RUSSIA VNESTORGBANK Ministry of Finance Bonds
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NATIONAL DEPOSITORY CENTER GKOs are Treasury Bills with
three months to one year
maturity; OFZs are Federal Loan
bonds with one to two years'
maturity.
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COMPULSORY DEPOSITORIES
AS OF JULY 1998
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COUNTRY DEPOSITORY INSTRUMENT
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SINGAPORE CDP Equity + Corporate Debt and
(Central Depository Pte. Ltd.) Malaysian equities traded on
CLOB
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MONETARY AUTHORITY OF Government Debt
SINGAPORE
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SLOVAK SCP Equity + Government Debt
REPUBLIC (Stredisko Cennych Papiru)
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NATIONAL BANK OF SLOVAKIA Treasury-Bills
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SLOVENIA KDD Equity + Corporate Debt
(The Centralna Klirinsko
Depota Xxxxxx x.x. (KDD)
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SO. AFRICA CD Corporate + Government Debt
(Central Depository)
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SO. KOREA KSD Equity, Corporate + Government
Debt
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SPAIN SCLV Equity + Corporate Debt
(Servicio de Compensacion y
Liquidacion de Valores)
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CBEO Government Debt
(Central Book Entry Office)
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SRI LANKA CDS Equity
(Central Depository System
(Private) Ltd.)
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SWEDEN VPC Equity, Corporate + Government
Vardepapperscentralen AB) Debt
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SWITZERLAND SEGA Equity, Corporate + Government
(Schweizerische Effekten-Giro Debt
AG)
--------------------------------------------------------------------------------
TAIWAN TSCD Equity + Government Debt
(Taiwan Securities Central
Depository Co., Ltd.)
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THAILAND TSDC Equity, Corporate + Government
(Thailand Securities Debt
Depository Company Ltd.)
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TUNISIA STICODEVAM Equity
(Societe Tunisienne
Interprofessionnelle pour la
Compensation et le Depot des
Valeurs Mobilieres
--------------------------------------------------------------------------------
MINISTRY OF FINANCE Government Debt tradable on the
stock exchange (BTNBs)
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CENTRAL BANK OF TUNISIA Government Debt not tradable on
the stock exchange (BTCs)
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TURKEY TAKAS BANK Equity + Corporate Debt
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CENTRAL BANK OF TURKEY Government Debt
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UNITED CREST Equity + Corp. Debt
KINGDOM (Clearing & settlement system)
--------------------------------------------------------------------------------
CMO Sterling CDs & CP
(Central Moneymarket Office)
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COMPULSORY DEPOSITORIES
AS OF JULY 1998
--------------------------------------------------------------------------------
COUNTRY DEPOSITORY INSTRUMENT
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CGO Gilts
(Central Gilts Office)
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UNITED DTC Equity + Corporate Debt
STATES (Depository Trust Company)
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PTC Mortgage Back Debt
(Participants Trust Company)
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FED BOOK-ENTRY Government Debt
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ZAMBIA XxXX Equity + Government Debt
(XxXX Central Shares
Depository Ltd.)
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APPENDIX 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid our Board in its determinations regarding Country Risk, The
Chase Manhattan Bank ("Bank") shall furnish Board annually and upon the initial
placing of Assets into a country the following information (check items
applicable):
A Opinions of local counsel concerning:
i. Whether applicable foreign law would restrict the access afforded
--- our independent public accountants to books and records kept by an
eligible foreign custodian located in that country.
ii. Whether applicable foreign law would restrict the our ability to
--- recover our assets in the event of the bankruptcy of an Eligible
Foreign Custodian located in that country.
iii. Whether applicable foreign law would restrict the our ability to
--- recover assets that are lost while under the control of an
Eligible Foreign Custodian located in the country.
B. Written information concerning:
i. The likelihood of expropriation, nationalization, freezes, or
--- confiscation of our assets.
ii. Whether difficulties in converting our cash and cash equivalents
--- to U.S. dollars are reasonably foreseeable.
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) compulsory depositories (including
depository evaluation).
2. To aid our Board in monitoring Country Risk, Bank shall furnish
Board the following additional information:
Market flashes, including with respect to changes in the information in
market reports
GLOBAL PROXY SERVICE RIDER
l. Company hereby requests The Chase Manhattan Bank ("Chase") to provide to
Company Global Proxy Services (the "Services") for the countries listed
in the procedures and guidelines ("Procedures") furnished to Company, as
the same may be amended by Chase from time to time on prior notice to
Company. The Procedures are incorporated by reference herein and form a
part of this Rider. This Global Proxy Service Rider supplements the terms
of the Global Custody Rider to the Custody Agreement between Chase and
Company. All terms herein unless defined herein shall have the meanings
set forth in the Global Custody Rider or the Custody Agreement. This
Rider shall be effective on the date Chase commences to provide Global
Proxy Service to Company.
2. The Services shall consist of those elements as set forth in the
Procedures, and shall include (a) notifications ("Notifications") by
Chase to Company of the dates of pending shareholder meetings,
resolutions to be voted upon and the return dates as may be received by
Chase or provided to Chase by the Subcustodians (as defined in the Global
Custody Rider) or third parties, and (b) voting by Chase of proxies based
on our instructions. Original proxy materials or copies thereof shall not
be provided. Notifications shall generally be in English and, where
necessary, shall be summarized and translated from such non-English
materials as have been made available to Chase or the Subcustodian. In
this respect Chase's only obligation is to provide information from
sources Chase believes to be reliable and/or to provide materials
summarized and/or translated in good faith. Chase shall have the right,
in its discretion, to provide Notifications, or parts thereof, in the
language received. Upon reasonable advance request
by Company, backup information relative to Notifications, such as annual
reports, explanatory material concerning resolutions, management
recommendations or other material relevant to the exercise of proxy
voting rights shall be provided as available, but without translation.
3. While Chase shall attempt to provide accurate and complete Notifications,
whether or not translated, Company acknowledges and agrees Chase shall
not be liable for any losses or other consequences that may result from
reliance by Company upon Notifications where Chase prepared the same in
good faith.
4. Notwithstanding the fact that Chase may be acting in a fiduciary capacity
with respect to Company under other agreements or otherwise under the
Custody Agreement, in performing Services Chase shall be acting solely as
Company's agent, and shall not exercise any discretion with regard to
such Services.
5. Proxy voting may be precluded or restricted in a variety of
circumstances, including, without limitation, where the relevant
securities are: (i) on loan; (ii) at the registrar for registration or
reregistration; (iii) the subject of a conversion or other corporate
action; (iv) not held in a name subject to the control of Chase or the
Subcustodian or are otherwise held in a manner which precludes voting;
(v) not capable of being voted on account of local market regulations or
practices or restrictions by the issuer; or (vi) held in a margin or
collateral account.
6. Company acknowledges that in certain countries Chase may be unable to
vote individual proxies but shall only be able to vote proxies on a net
basis (E.G., a net yes or no vote given the voting instructions received
from all its customers).
7. Company shall not make any use of the information provided hereunder,
except in connection with the funds or plans covered by this Rider, and
shall in no event sell, license, give or otherwise make the information
provided hereunder available, to any third party, and Company shall not
directly or indirectly compete with Chase or diminish the market for the
Services by provision of such information, in whole or in part, for
compensation or otherwise, to any third party.
STATE FARM BALANCED FUND, INC.
By:
-----------------------------------
Name
Title
DATE:
-----------------------------------
State Farm Insurance Companies
Global Custody Fee Proposal
25 September 1998
I. Safekeeping and Settlement
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COUNTRY SAFEKEEPING FEES TRANSACTION FEES
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tier One Canada 3.0 b.p. $35.00
CEDEL
Japan
United Kingdom
--------------------------------------------------------------------------------
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Tier Two Australia 5.0 b.p. $35.00
France
Germany
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--------------------------------------------------------------------------------
Tier Three Italy 6.0 b.p. $35.00
Netherlands
Switzerland
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tier Four Denmark 6.0 b.p. $50.00
Finland
Hong Kong
Ireland
Sweden
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tier Five Malaysia 8.0 b.p. $55.00
New Zealand
Norway
Singapore
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tier Six Mexico 12.0 b.p. $100.00
Portugal
Spain
Thailand
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tier Seven Brazil 25.0 b.p. $100.00
--------------------------------------------------------------------------------
State Farm Insurance Companies
Global Custody Fee Proposal
25 September 1998
I. Safekeeping and Settlement (CONT.)
--------------------------------------------------------------------------------
COUNTRY SAFEKEEPING FEES TRANSACTION
FEES
--------------------------------------------------------------------------------
Tier Eight Argentina 40.0 b.p. $100.00
Bangladesh
Botswana
Chile
China (Shanghai)
China (Shenzhen)
Czech Republic
Greece
Hungary
India
Indonesia
Xxxxxx
Xxxxxx
Morocco
Pakistan
Peru
Philippines
Poland
Portugal
Sri Lanka
Taiwan
Tunisia
Turkey
Uruguay
Venezuela
Zimbabwe
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Tier Nine Costa Rica 50.0 b.p. $150.00
Cyprus
Ecuador
Egypt
Ghana
Jamaica / T&T
Kenya
Mauritius
Nepal
Slovakia
Slovena
Vietnam
Zambia
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