EXHIBIT 7
FUNDS TRADING AGREEMENT
AGREEMENT made as of the first day of July, 2001, by Fidelity
Investments Institutional Operations Company, mc. ("FIIOC"), a Massachusetts
corporation, Investors Bank & Trust Company ("Transfer Agent"), Xxxxx Brothers
Xxxxxxxx & Company ("Pricing Agent"), Grantham, Mayo, Van Otterloo & Co. LLC
("GMO"), and GMO Trust, on behalf of each fund listed on Exhibit A, severally
and not jointly (individually, the "Fund" and collectively, the "Funds").
WITNESSETH:
WHEREAS: Transfer Agent serves as the transfer agent for the open-end
investment companies registered under the Investment Company Act of 1940, as
amended, and as listed in Exhibit A attached hereto (individually, the "Fund"
and collectively, the "Funds"); and
WHEREAS: Transfer Agent desires that FIIOC serve as limited agent to
accept orders for the purchase, exchange and redemption of securities of the
Fund ("Shares") by certain employee benefit plans for which FIIOC performs
administrative and recordkeeping services (individually, the "Plan" and
collectively, the "Plans");
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto hereby agree as follows:
1. Appointment of FIIOC. Transfer Agent hereby appoints FIIOC as its
agent for the sole and limited purpose of accepting purchase, exchange or
redemption orders for Shares purchased, exchanged or redeemed by the Plans
("Orders"). FIIOC hereby accepts its appointment on the terms and conditions set
forth herein. Notwithstanding anything in this Agreement to the contrary, FIIOC
shall not be acting as agent for Transfer Agent in any manner whatsoever, except
in accepting such Orders.
2. Orders and Acceptance. FIIOC, as agent of Transfer Agent, shall
accept from the Plans, Orders for the purchase, exchange or redemption of Shares
of the Funds. If such Orders are received by FIIOC prior to the close of trading
on the New York Stock Exchange (the "Close of Trading") on a day the New York
Stock Exchange is open for business (a "Business Day"), they shall be treated as
having been received by Transfer Agent on such Business Day ("Trade Date").
Transfer Agent will recognize one omnibus account in FIIOC's name in each of the
Funds, and will not maintain separate accounts for individual Plans or Plan
participants.
3. Pricing Information. By 7:00 p.m. Eastern Time ("ET") each Business
Day, Pricing Agent will input the following information ("Price Information")
into the Fidelity Participant Recordkeeping System ("FPRS") via the remote
access price screen that FIIOC has provided to Pricing Agent: (1) the confirmed
net asset value for each Fund at the Close of Trading, (2) the change in each
Fund's net asset value from the Close of Trading on the prior Business Day, (3)
in the case of Funds which pay a daily dividend, the latest daily accrual for
interest rate factor ("mil rate") and the change in the mil rate from the Close
of Trading on the prior Business Day, and (4) on ex dividend date, if
applicable, dividend and capital gain information. If on any Business Day
Pricing Agent does not provide such Price Information to FIIOC, FIIOC shall hold
all associated transaction activity in the FPRS until the relevant Price
Information is made available by Pricing Agent. The detailed pricing procedures
to be followed by Pricing Agent and FIIOC are outlined in Exhibit B attached
hereto, as such exhibit may be amended from time to time by the parties hereto.
4. Trade Reporting. By 7:30 a.m. ET each Business Day following Trade
Date ("TD + 1), FIIOC will provide, via facsimile, to GMO's Shareholder Services
Group instructions for the net purchase or net redemption of Shares of the Funds
based on Orders accepted by FIIOC prior to Close of Trading on the prior
Business Day. In the event that such instructions represent estimated trade
activity, FIIOC shall provide final instructions to GMO's Shareholder Services
Group by no later than 9:00 a.m. ET. Such purchase or redemption instructions
shall be effected at the public offering price of the Shares of the respective
Fund calculated as of the Close of Trading on the Business Day on which the
Order was accepted by FIIOC. The detailed activity reporting procedures to be
followed by GMO's Shareholder Services Group and FIIOC are outlined in Exhibit C
attached hereto, as such Exhibit may be amended from time to time by the parties
hereto.
5. Settlement. Settlements shall be made for each Business Day, by wire
transfer. Each Business Day FIIOC shall calculate net purchases and redemptions
for all the Plans with respect to all Funds occurring on that Business Day. The
daily wire transfers between FIIOC and Transfer Agent shall operate as follows:
(a) For net redemptions, Transfer Agent shall initiate a wire
transfer to FIIOC by the close of business at the New York Federal Reserve Bank
on TD+ 1.
(b) For net purchases, FIIOC shall initiate a wire transfer to
Transfer Agent by the close of business at the New York Federal Reserve Bank on
TD+ 1.
(c) FIIOC and Transfer Agent shall monitor the receipt of wire
transfers on a daily basis. If any wire transfer is not received on the Business
Day such wire was required to be initiated and it is determined that the sending
party was negligent in initiating the wire transfer, causing the delay or
non-receipt of any such wire transfer, then the sending party shall compensate
the receiving party for the amount of reasonable interest plus associated bank
penalties.
6. Confirmation and Reconciliation. Each Business Day Transfer Agent
shall send via regular mail to FIIOC transaction confirmations of the prior
Business Day's net purchase or net redemption, as the case may be, for each
Fund. Transfer Agent shall also send to FIIOC via facsimile by no later than the
third Business Day following calendar month close, a monthly statement for each
Fund. GMO's Shareholder Services Group shall also send to FIIOC via regular
mail, by no later than the tenth Business Day following calendar month close, a
monthly statement for each Fund. FIIOC shall notify GMO's Shareholder Services
Group of any material differences within twenty (20) Business Days of receipt of
the monthly statement. FIIOC and GMO's Shareholder Services Group will jointly
determine the action to be taken to rectify any material differences.
7. Representations of FIIOC. FIIOC represents that:
(a) it has full power and authority to enter into and perform
this Agreement;
(b) it is registered as a transfer agent pursuant to Section
17 A of the Securities Exchange Act of 1934, as amended (the "1934 Act");
(c) the arrangements provided for in this Agreement will be
disclosed to the Plan through its representatives; and
(d) it will promptly notify GMO's Shareholder Services Group
in the event that FIIOC is for any reason unable to perform any of its
obligations under this Agreement.
8. Representations of Transfer Agent. Transfer Agent represents that:
(a) it has full power and authority to enter into and perform
this Agreement and is duly authorized to appoint FIIOC as agent for the Fund;
(b) it is registered as a transfer agent pursuant to Section
17 A of the 1934 Act;
(c) the Funds listed on Exhibit A attached hereto are
qualified under applicable state securities laws in each of the 50 states of the
United States; and
(d) it will promptly notify FIIOC in the event that it is for
any reason unable to perform any of its obligations under this Agreement.
9. Fund Waivers. GMO Trust hereby agrees to waive any and all loads or
fees associated with purchase, exchange and redemption transactions. Any trading
restrictions, including those related to the size and frequency of transactions,
are also waived.
10. Compensation. For its services under this Agreement, FIIOC shall be
entitled to the fees set forth on Exhibit D, attached to this Agreement, as said
Exhibit may be amended from time to time.
11. Prospectus Delivery. FIIOC shall be responsible for mailing Fund
prospectuses to Plan participants who request them and for mailing periodic Fund
reports to Plan participants, and shall retain the services of a third-party
vendor to handle such mailings. GMO shall be responsible for all materials and
production costs, and hereby agrees to provide the prospectuses and periodic
Fund reports to the third-party vendor selected by FIIOC. GMO shall bear the
costs of mailing periodic Fund reports to Plan participants who are prospective
investors in the Fund. GMO Trust shall bear the costs of mailing periodic Fund
reports to Plan participants who are existing investors in the Fund. FIIOC shall
bear the costs of mailing prospectuses to Plan participants who request them.
12. Proxies. GMO Trust shall be responsible for all costs associated
with the production of proxy materials. FIIOC shall retain the services of a
third-party vendor to handle proxy solicitation mailings and vote tabulation.
Expenses associated with such services shall be billed directly to GMO Trust by
the third-party vendor.
13. Participant Communications. GMO agrees to provide
internally-prepared fund descriptive information approved by the Funds' legal
counsel for use by FIIOC in its written Plan participant communication
materials. FIIOC shall utilize historical performance data obtained from
third-party vendors (currently Morningstar, Inc., FACTSET Research Systems and
Lipper Analytical Services) in telephone conversations with Plan participants
and in quarterly participant statements. GMO hereby consents to FIIOC's use of
such materials. FIIOC shall seek the approval of GMO prior to retaining any
other third-party vendor to render such data or materials under this Agreement.
14. Information Regarding the Plans. FIIOC shall transmit to Transfer
Agent or the Fund (or to any agent designated by either of them) such
information concerning the Plans and participants in the Plans as shall
reasonably be necessary for Transfer Agent to fulfill its obligations under this
Agreement and as the Funds shall reasonably conclude is necessary to enable the
Funds to comply with applicable state Blue Sky laws.
15. Indemnification. Transfer Agent shall indemnify and hold harmless
FIIOC, its affiliates, employees, and agents from any and all loss, damage,
penalty, liability, cost, and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon, or
asserted against FIIOC, its affiliates, employees, or agents, by reason of any
claim, regulatory
proceeding, or litigation arising from any act done or omitted to be done by
any individual or person with respect to this Agreement, excepting only any and
all loss, etc., arising from FIIOC's negligence or bad faith.
(a) In the event that Pricing Agent fails to provide Price
Information on any Business Day, as detailed in Section 3 of this Agreement,
FIIOC shall be entitled to compensation from GMO Trust for the amount of any
resulting loss to any related Plan investment option. For this purpose, a
related Plan investment option is defined as any Plan investment option
(including, but not limited to, Fidelity mutual funds, non-Fidelity mutual
funds, employer stock, commingled pools, guaranteed investment contracts, and
customized separately managed portfolios) impacted by held transaction activity
due to Pricing Agent's failure to provide timely Price Information to FIIOC.
(b) In the event that Pricing Agent provides an incorrect
price and said error causes a monetary loss to any Plan participant account
maintained by FIIOC, then GMO Trust shall be responsible for compensating the
account(s) so that any Plan participant who has incurred such a loss shall be
made whole in accordance with FIIOC's price error correction policy.
(c) In the event that Plan participant accounts gain from an
incorrect price, FIIOC shall adjust such accounts in accordance with FIIOC's
price error correction policy and upon notification to the Plan Sponsor(s). If
Plan participants received distributions during the time period affected by an
overstated price, FIIOC shall make a reasonable effort to recover overpayments
from such participants in accordance with its price error correction policy,
upon notification to the Plan Sponsor(s) and provided that GMO Trust assumes
responsibility for all reasonable and demonstrable expenses incurred by FIIOC in
attempting to recover the overpayments. If exchange transactions are involved,
FIIOC shall sell the excess shares in the affected Plan participant accounts on
a current basis and remit the resulting proceeds to Transfer Agent.
(d) Transfer Agent shall not net the impact of individual Plan
participant gains and losses in calculating any compensation due Plan
participants and/or FIIOC as the result of an incorrect price.
FIIOC shall indemnify and hold harmless Transfer Agent, GMO and the
Fund from any and all loss, damage, penalty, liability, cost, and expense,
including without limitation, reasonable attorneys' fees and disbursements, that
may be incurred by, imposed upon, or asserted against Transfer Agent, GMO or the
Fund by reason of any claim, regulatory proceeding, or litigation arising from
FIIOC's negligence or bad faith with respect to this Agreement.
In providing services pursuant to this Agreement, each party to this
agreement shall comply with all applicable federal and state laws and
regulations and each party hereto shall indemnify and hold harmless the other
party, its affiliates, employees and agents from any and all loss, damage,
penalty, liability, cost and expense, including without limitation, reasonable
attorneys' fees and disbursements, that may be incurred by, imposed upon or
asserted against such party, its affiliates, employees, or agents, by reason of
any claim, regulatory proceeding or litigation arising from non-compliance by
such party with any such laws or regulations.
In providing the indemnifications set forth in the immediately
preceding paragraph, each party hereto agrees to maintain such insurance
coverage as shall be reasonably necessary under the circumstances.
16. Non-Exclusivity. Transfer Agent acknowledges and agrees that FIIOC
may enter into agreements similar to this Agreement with organizations other
than Transfer Agent which also serve as transfer agents for mutual funds, or
otherwise. FIIOC acknowledges and agrees that nothing contained herein shall
prohibit Transfer Agent or any affiliate of Transfer Agent from providing
administrative,
subaccounting or recordkeeping services to any defined contribution plan or
from soliciting any such plan or sponsor thereof to enter into any arrangement
with Transfer Agent or any affiliate of Transfer Agent for such services.
17. Termination of Agreement. This Agreement may be terminated at any
time by either party upon sixty (60) days written notice to all parties hereto.
Notwithstanding the foregoing, this Agreement may be terminated immediately upon
either (i) a material breach by either party not cured within thirty (30) days
after notice from the other, or (ii) upon termination of services from either
party to the Plan. The provisions of Section 15 and the second paragraph of this
Section 17 shall survive any termination of this Agreement.
Upon termination of this Agreement for any reason, purchases of the
Funds pursuant to this Agreement shall no longer be permitted through FIIOC.
However, shares of the Funds may continue to be redeemed through FIIOC pursuant
to the terms of this Agreement, FIIOC shall continue to serve as an agent of
Transfer Agent for the limited purpose of accepting such redemption orders, and
FIIOC shall continue to receive compensation from Transfer Agent on existing
account balances in accordance with Section 10 of this Agreement.
18. Notices. Unless otherwise specified, all notices and other
communications hereunder shall be in writing and shall be hand delivered or
mailed by certified mail to the other party at the following address or such
other address as each party may give notice to the other:
If to Transfer Agent:
Investors Bank & Trust Co.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
If to Pricing Agent:
Xxxxx Brother Xxxxxxxx & Company
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn.: Xxxxxx Rock
If to GMO or the Funds:
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxxxxxx
If to FIIOC:
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn.: Xxxxxxx Xxxxxx, XX0X
19. Amendment. Assignment and Other Matters. This Agreement may not be
amended except by a writing signed by each of the parties hereto. This Agreement
shall not be assigned, except to affiliates, by either party without the written
consent of the other party. This Agreement may be executed in several
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument. The headings in this Agreement are for
reference only and shall not affect the interpretation or construction of this
Agreement. This Agreement, including the Exhibits attached hereto, contains the
entire agreement of the parties as to the subject matter hereof and supersedes
any prior agreements, written or oral. This Agreement shall be governed by and
construed in
accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
XXXXX BROTHERS XXXXXXXX FIDELITY INVESTMENTS
& COMPANY INSTITUTIONAL OPERATIONS COMPANY, INC.
By: By:
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Name: Name:
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Title: Title:
------------------------------------- -------------------------------------
Date: Date:
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XXXXXXXX MAYO GMO TRUST, ON BEHALF OF EACH
VAN OTTERLOO & CO. LLC FUND ON EXHIBIT A, SEVERALLY
AND NOT JOINTLY
By: By:
---------------------------------------- ----------------------------------------
Name: Name:
-------------------------------------- --------------------------------------
Title: Title:
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Date: Date:
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INVESTORS BANK & TRUST
COMPANY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Date:
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EXHIBIT A
FUNDS
FUND: GMO Foreign Fund - Class III
TICKER SYMBOL: GMOFX
CUSIP: 000000000
EXHIBIT B
REMOTE PRICING PROCEDURES
The Price information as described in Section 3 shall be provided by Pricing
Agent to FIIOC as follows:
(1) Pricing Agent shall input the Price Information to the FPRS Remote Pricing
Screen by no later than 7:00 p.m. ET.
(2) In the event that the FPRS Remote Pricing Screen is unavailable prior to
7:00 p.m. ET, Pricing Agent will notify FIIOC via telephone, at 000-000-0000,
and shall then send the Price Information via fax, in FIIOC's format, to
000-000-0000 (primary fax machine) or 000-000-0000 (back-up fax machine), or
other numbers as FIIOC may designate in writing from time to time, by no later
than 7:00 p.m. ET.
(3) Upon receipt of the faxed Price Information, FIIOC shall contact Pricing
Agent by telephone in order to verbally confirm each individual Fund price and
the relevant pricing date. If Pricing Agent does not receive such contact from
FIIOC by 7:00 p.m. ET confirming the receipt of the fax, then Pricing Agent must
call FIIOC by 7:00 p.m. ET.
(4) In the event that a fax machine is unavailable to either Pricing Agent or
FIIOC prior to 7:00 p.m. ET, Pricing Agent shall provide FIIOC with the Price
Information via a telephone call, and shall confirm such information via fax as
soon as practicable. FIIOC shall document the Price Information received by
telephone, referencing the Pricing Agent employee name, date and time.
(5) In the event that Pricing Agent does not provide Price Information to FIIOC
in accordance with Steps 1 through 4 above, transactions involving the Fund
(which may include other Plan investment options for purposes of participant
distributions and exchanges, as described in section 15(a) of this Agreement)
shall be held until it is administratively feasible to update these transactions
in a next nightly cycle following receipt of Price Information from Pricing
Agent. Held transactions shall then be processed "as-of" the original Trade
Date.
EXHIBIT C
ACTIVITY REPORTING PROCEDURES
The final net purchase or net redemption activity as described in Section 4
shall be provided by FIIOC to GMO Shareholder Services as follows:
(1) FIIOC shall fax the final net activity information for each Fund to GMO
Shareholder Services by no later than 9:00 a.m. ET each day, regardless of
whether or not activity occurred.
(2) GMO Shareholder Services shall notify FIIOC by 9:15 a.m. ET if the fax has
not yet been received.
(3) In the event that a fax machine is unavailable to either FIIOC or GMO
Shareholder Services, FIIOC shall provide GMO Shareholder Services with the
activity information via a telephone call and shall confirm such information via
fax as soon as practicable. FIIOC shall document the activity information
reported, referencing the GMO Shareholder Service employee name, date and time.
(4) Upon receipt of the fax, GMO Shareholder Services shall notify FIIOC via
telephone in order to confirm receipt of the fax and the legibility of the
information.
EXHIBIT D
COMPENSATION
In consideration of the services provided by FIIOC under this Agreement, no
compensation shall be paid.
