CO-ADMINISTRATION AGREEMENT
MASTERWORKS FUNDS INC.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
October 21, 1996
Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Barclays Global Investors, N.A.
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
This will confirm the agreement among MasterWorks Funds Inc. (the
"Company") on behalf of its funds listed in the attached Appendix A, as such
Appendix may be amended from time to time (each, a "Fund" and, collectively, the
"Funds"), Barclays Global Investors, N.A. ("BGI") and Xxxxxxxx Inc. ("Xxxxxxxx",
together with BGI, the "Co-administrators") as follows:
1. The Company is a registered open-end, management investment company.
The Company engages in the business of investing and reinvesting the assets of
each Fund in the manner and in accordance with the applicable investment
objective, policies and restrictions specified in the Company's currently
effective prospectuses and statements of additional information incorporated
therein relating to the Funds and the Company (such prospectuses and such
statements of additional information being collectively referred to as the
"Prospectuses") included in the Company's Registration Statement, as amended
from time to time (the "Registration Statement"), filed by the Company under the
Investment Company Act of 1940 (the "Act") and the Securities Act of 1933.
Copies of the documents referred to in the preceding sentence have been
furnished to the Co-administrators. Any amendments to those documents shall be
furnished to the Co-administrators promptly.
2. The Company is engaging the Co-administrators to provide, or cause to
be provided, the administrative services specified elsewhere in this agreement,
subject to the overall supervision of the Company's Board of Directors.
Pursuant to an advisory contract between the Company and Barclays Global Fund
Advisors (the "Adviser") on behalf of the Money Market Fund, the Company has
engaged the Adviser to manage the
1
investing and reinvesting of the assets of the Fund and to provide advisory
services as specified in such advisory contracts. MasterWorks' remaining Funds
are feeder funds that invest all of their assets in corresponding master
portfolios of other registered investment companies and, accordingly, have not
engaged an adviser to manage the investing and reinvesting of the assets of such
Funds.
3. The Co-administrators agree, at their expense, to supervise the
administrative operations and undertake to provide, or cause to be provided, the
services described on Appendix B, as such Appendix may be amended from time to
time by the mutual consent of the parties, the provision of, and liability
thereto, for certain of such services to be allocated on such Appendix, in
connection with the operations of the Company and the Funds, and take all
reasonable action in the performance of their obligations under this agreement
to assure that the necessary information is made available to other service
providers, as such may be required by the Company from time to time; and to
provide all other administrative services reasonably necessary for the operation
of the Funds, other than those services that are to be provided by the Adviser
pursuant to the advisory contracts and by the Company's transfer and dividend
disbursing agent and custodian.
4. Except as provided in the Money Market Fund's advisory contract and
this agreement, the Co-administrators agree to bear all costs of the operations
of each Fund, including a pro rata portion of the compensation of the Company's
directors who are not affiliated with the Co-administrators or any of their
affiliates; governmental fees; interest charges; fees and expenses of its
independent auditors, legal counsel (other than in connection with litigation),
transfer agent and dividend disbursing agent; fees paid to shareholder servicing
and other special purpose agents; expenses of preparing and printing any stock
certificates, prospectuses, statements of additional information, shareholders'
reports, notices, proxy statements and reports to regulatory agencies; travel
expenses of directors of the Company in connection with their attendance at
Board and other meetings relating to the Company; office supplies; premiums for
fidelity bonds and errors and omissions and/or officers and directors liability
insurance; trade association membership dues; pricing services, if any; fees and
expenses of any custodian and fund accountant, including those for keeping books
and accounts and calculating the net asset value per share in the Funds;
expenses of shareholders' meetings; expenses relating to the issuance,
registration, qualification and redemption of shares of the Funds; and
organizational expenses. Notwithstanding anything to the contrary, the Co-
administrators shall not be required to bear any portion of brokerage or other
expenses connected with the execution of portfolio securities transactions, fees
payable to the Adviser under its advisory contract with the Company, litigation
expenses, taxes (including income, excise, transfer and withholding taxes), or
cost or expense that a majority of the disinterested directors of the Company
deems to be an extraordinary expense . Expenses attributable to one or more,
but not all, of the Funds shall be charged against the assets of the relevant
Funds. General expenses of the Company shall be allocated among the Funds in a
2
manner proportionate to the net assets of each Fund, on a transactional basis or
on such other basis as the Board of Directors deems equitable.
5. Each Co-administrator shall exercise reasonable care and shall give the
Company the benefit of the Co-administrator's best judgment and efforts in
rendering services under this agreement. As an inducement to the Co-
administrators' undertaking to render services hereunder, the Company agrees
that a Co-administrator shall not be liable under this agreement for any mistake
in judgment or in any other event whatsoever, provided that nothing in this
agreement shall be deemed to protect or purport to protect the Co-administrators
against any liability to the Company or its shareholders to which the Co-
administrator would otherwise be subject by reason of willful misfeasance, bad
faith or negligence in the performance of the Co-administrators' duties under
this agreement or by reason of reckless disregard of its obligations and duties
hereunder.
6. In consideration of the services to be provided by the Co-
administrators under this agreement, the Company shall pay the Co-
administrators' a monthly fee on behalf of each Fund on the first business day
of each month at the applicable annual rates specified on Appendix C attached to
this agreement. If the fees payable to the Co-administrators under this
paragraph begin to accrue after the beginning of any month or if this agreement
terminates before the end of any month, the fee for the period from the
effective date to the end of the month or from the beginning of the month to the
termination date, respectively, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. For purposes of calculating each such monthly fee, the value
of each Fund's net assets shall be computed in the manner specified in the
Prospectus and the Company's Articles of Incorporation as amended and
supplemented from time to time (the "Articles") for the computation of the value
of the Fund's net assets in connection with the determination of the net asset
value of a Fund's shares. For purposes of this agreement, a "business day" is
any day the Company is open for business.
7. If in any fiscal year the total expenses incurred by, or allocated to,
a Fund, excluding extraordinary expenses of the Fund but including the fees
provided for in paragraph 6 and those fees payable under the Advisory Contract
for the Money Market Fund or the corresponding master portfolio in which a Fund
invests, as applicable, exceed the most restrictive expense limitation
applicable to a Fund imposed by state securities laws or regulations thereunder,
as these limitations may be raised or lowered from time to time, the Co-
administrators agree to waive or reimburse a pro rata portion of such fees, but
only to the extent of the fee hereunder for the fiscal year. For purposes of
computing the excess, if any, over the most restrictive applicable expense
limitation, the value of each Fund's net assets shall be computed in the manner
specified in the last sentence of paragraph 6, and any reimbursements required
to be made by the Co-administrators shall be made once a year promptly after the
end of the Company's fiscal year.
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8. This agreement shall become effective on its execution date.
Thereafter, this agreement shall continue with respect to a Fund for successive
annual periods only so long as the continuance is specifically approved at least
annually (a) by the vote of a majority of the Fund's outstanding voting
securities (as defined in the Act) or by the Company's Board of Directors and
(b) by the vote, cast in person at a meeting called for the purpose, of a
majority of the Company's Directors who are not parties to this contract or
"interested persons" (as defined in the Act) of any such party. This contract
may be terminated at any time, without the payment of any penalty, by the
Company by a vote of a majority of the Company's outstanding voting securities
(as defined in the Act) or by a vote of a majority of the Company's Board of
Directors on 60 days' written notice to the Co-administrators, or by the Co-
administrators on 60 days' written notice to the Company. This contract shall
terminate automatically in the event of its assignment (as defined in the Act).
9. Except to the extent necessary to perform the Co-administrators'
obligations under this agreement, nothing herein shall be deemed to limit or
restrict the right of the Co-administrators, or any affiliate of the Co-
administrators, or any employee of the Co-administrators, to engage in any other
business or to devote time and attention to the management or other aspects of
any other business, whether of a similar or dissimilar nature, or to render
services of any kind to any other corporation, firm, individual or association.
10. This agreement shall be governed by and construed in accordance with
the laws of the State of Arkansas.
11. The Company hereby agrees and acknowledges that each Co-administrator
may allocate or further delegate responsibility for any or all of the services
to be provided hereunder between each Co-administrator; provided that the Co-
administrators shall have joint and several liability for the provision of the
services under this agreement, except that: BGI or Xxxxxxxx each agree to
assumes sole responsibility, and related liability thereto, for providing the
duties and services identified as the sole responsibility of BGI or Xxxxxxxx on
such Appendix B; and further provided that each Co-administrator agrees to
remain fully liable to the Company for the provision of any service that such
Co-administrator delegates to another entity.
12. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterpart shall, together,
constitute only one instrument.
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If the foregoing correctly sets forth the agreement between the Company and
the Co-administrators, please so indicate by signing and returning to the
Company the enclosed copy hereof.
Very truly yours,
MASTERWORKS FUNDS INC.,
on behalf of LifePath 2000, LifePath 2010,
LifePath 2020, LifePath 2030, LifePath 2040, Asset
Allocation, Bond Index, Growth Stock, Money
Market, S&P 500 Index, Short-Intermediate Term and
U.S. Treasury Allocation Funds
By: /s/Xxxxxxx X. Xxxxx, Xx.
-------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Chief Operating Officer,
Secretary and Treasurer
ACCEPTED as of the date
set forth above:
BARCLAYS GLOBAL INVESTORS, N.A.
By: /s/Xxxxxx Xxxxxx
----------------
Name: Xxxxxx Xxxxxx
Title: Vice Chairman
BARCLAYS GLOBAL INVESTORS, N.A.
By: /s/Xxxxxxx Xxxxxxx
------------------
Name: Xxxxxxx Xxxxxxx
Title: Principal
XXXXXXXX INC.
By: /s/Xxxxxxx X. Xxxxx, Xx.
------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Vice President
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Appendix A
MasterWorks Funds Inc.
----------------------
LifePath 2000 Fund
LifePath 2010 Fund
LifePath 2020 Fund
LifePath 2030 Fund
LifePath 2040 Fund
Asset Allocation Fund
Bond Index Fund
Institutional Money Market Fund
Money Market Fund
S & P 500 Index Fund
U.S. Treasury Allocation Fund
Dated: October 21, 1996
Amended:February 10, 1999
Amended: April 28, 0000
X-0
Xxxxxxxx X
MasterWorks Funds Inc.
----------------------
LIST OF ADMINISTRATIVE SERVICES
-------------------------------
Xxxxxxxx Inc.
-------------
(1) Review agenda and assemble Board materials for quarterly Board
meetings; prepare supporting information when necessary; prepare
minutes of Board and committee meetings.
(2) Review and approve Board materials.
(3) Provide expense budgets.
(4) Monitor actual expenses and update budgets/expense accruals as
necessary.
(5) Maintain records of sales and file appropriate registrations and
renewals, sales information and other required material for Blue Sky
purposes.
(6) Review and provide advice to the distributor and the Company and
investment adviser regarding sales literature and marketing plans to
assure regulatory compliance.
(7) Prepare Forms N-SAR for filing; obtain any necessary supporting
documents; file with the SEC via XXXXX.
Barclays Global Investors
-------------------------
(8) Continuously monitor portfolio activity and related functions in
conjunction with all applicable regulatory requirements. Take
corrective action as necessary.
(9) Identify the services to which the Funds report performance
information. Provide information as requested on performance
questionnaires.
(10) Prepare appropriate management letter and coordinate production of
Management Discussion and Analysis, with respect to the preparation
and printing of shareholder reports.
B-1
(11) Coordinate review and approval by portfolio managers of portfolio
listings to be included in financial statements, with respect to the
preparation and printing of shareholder reports.
(12) Prepare selected portfolio and financial information for inclusion in
Board material.
(13) Assist in presentations to Board as desired by Fund Officer(s).
(14) Calculate total return information and other statistical information
including undistributed income and capital gains with respect to
condensed financial information for review by management.
(15) Perform tests of specific portfolio activities against compliance
checklists designed from the Fund's current Prospectus and SAI.
(16) Calculate dividend amounts available for distribution.
(17) Coordinate review of dividend amounts by management and auditors.
(18) Notify fund accounting and transfer agent of authorized dividends
rates.
(19) Prepare responses to various performance questionnaires; coordinate as
necessary, and submit responses to the appropriate agency.
(20) Draft semi-annual and annual shareholder reports and coordinate
auditor and management review.
(21) Coordinate printing of semi-annual and annual shareholder reports and
XXXXX conversion with outside printer and filing with the SEC via
XXXXX.
(22) Provide information for Financial Highlights and expense tables.
(23) Continuously monitor portfolio activity regarding diversification in
conjunction with IRS requirements applicable to regulated investment
companies.
(24) Continuously monitor portfolio activity regarding qualifying income in
conjunction with IRS requirements applicable to regulated investment
companies.
(25) Review diversification test results and corrective actions taken, with
respect to qualification as a regulated investment company.
(26) Approve tax positions taken regarding qualification as a regulated
investment company.
B-2
(27) Prepare, or assist in the preparation, and file with the SEC and state
securities regulators, if applicable, registration statements,
notices, reports, and other material required to be filed under
applicable laws.
Xxxxxxxx Inc. and Barclays Global Investors
-------------------------------------------
(28) Review qualifying income test results and corrective actions taken,
with respect to qualification as a regulated investment company.
(29) Review financial information and take any necessary action.
(30) Develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with each Fund's investment
objective, policies and restrictions as established by the Company's
Board, perform compliance testing and approve resolution of compliance
issues.
(31) Approve dividend rates; obtain Board approval when required.
(32) Determine allocation of invoices among funds. Authorize and send to
fund accountants for payment of expenses.
(33) Coordinate activities of other vendors as necessary.
(34) Review and approve entire shareholder report.
(35) Review drafts and coordinate review process of Forms N-1A updates and
prospectus supplements.
(36) Coordinate printing, XXXXX conversion, and filing with the SEC with
outside printers of Forms N-1A.
(37) Maintain and preserve the corporate records of the Company, including
each Master Portfolio.
(38) Make appropriate representations in conjunction with audit.
(39) Approve tax positions taken regarding qualifying income with respect
to qualification as a regulated investment company.
(40) Approve tax accounting positions to be taken.
B-3
(41) Approve distributions.
(42) Review tax returns and coordinate signature thereof with a Fund
Officer. Approved: October 21, 1996
Signed: /s/ Xxxxxx Xxxxxx Signed: /s/ Xxxxxxx X. Xxxxx, Xx.
----------------- -------------------------
By: Xxxxxx Xxxxxx By: Xxxxxxx X. Xxxxx, Xx.
Vice Chairman Vice President
Barclays Global Investors, X.X. Xxxxxxxx Inc.
Signed: /s/ Xxxxxxx Xxxxxxx
-------------------
By: Xxxxxxx Xxxxxxx
Principal
Barclays Global Investors, N.A.
Signed: /s/ Xxxxxxx X. Xxxxx, Xx.
-------------------------
By: Xxxxxxx X. Xxxxx, Xx.
Chief Operating Officer,
Secretary and Treasurer
Masterworks Funds Inc.
B-4
Appendix C
MasterWorks Funds Inc.
----------------------
FEE SCHEDULE
------------
Fund Fee
---- ---
(as a % age of daily net assets)
LifePath 2000 Fund 0.40%
LifePath 2010 Fund 0.40%
LifePath 2020 Fund 0.40%
LifePath 2030 Fund 0.40%
LifePath 2040 Fund 0.40%
Asset Allocation Fund 0.40%
Bond Index Fund 0.15%
Institutional Money Market Fund 0.02%
Money Market Fund 0.35%
S & P 500 Index Fund 0.15%
U.S. Treasury Allocation Fund 0.40%
Dated: October 21, 1996
Approved as amended: June 11, 1998
Approved as amended: April 28, 1999
C-1
Addendum
--------
ALLOCATION
----------
Current Allocation of Joint Responsibilities Between Xxxxxxxx
------------------------------------------------------------
Inc. and Barclays Global Investors Under MasterWorks Fund
---------------------------------------------------------
Inc. Co-Administration Agreement dated October 21, 1996
-------------------------------------------------------
(28) Review qualifying income test results and corrective actions taken,
with respect to qualification as a regulated investment company.
(BOTH)
(29) Review financial information and take any necessary action. (BOTH)
(30) Develop and implement procedures for monitoring compliance with
regulatory requirements and compliance with each Fund's investment
objective, policies and restrictions as established by the Company's
Board, perform compliance testing and approve resolution of compliance
issues. (BGI)
(31) Approve dividend rates; obtain Board approval when required. (BOTH)
(32) Determine allocation of invoices among funds. Authorize and send to
fund accountants for payment of expenses. (BOTH)
(33) Coordinate activities of other vendors as necessary. (BGI)
(34) Review and approve entire shareholder report. (BOTH)
(35) Review drafts and coordinate review process of Forms N-1A updates and
prospectus supplements. (BGI)
(36) Coordinate printing, XXXXX conversion, and filing with the SEC with
outside printers of Forms N-1A. (BGI)
(37) Maintain and preserve the corporate records of the Company, including
each Master Portfolio. (BOTH)
(38) Make appropriate representations in conjunction with audit. (BOTH)
(39) Approve tax positions taken regarding qualifying income, with respect
to qualification as a regulated investment company. (BGI)
(40) Approve tax accounting positions to be taken. (BOTH)
(41) Approve distributions. (BOTH)
(42) Review tax returns and coordinate signature thereof with a Fund
Officer. (BOTH)
Dated: December 1998
Amended: February 10, 1999
