FORM OF
AMENDMENT AGREEMENT
Amendment AGREEMENT, effective as of December 26, 2000, by and among
E*TRADE FUNDS, a business trust organized under the laws of the State of
Delaware (the "Fund"), E*TRADE ASSET MANAGEMENT, INC. (the "Adviser") and
Investors Bank & Trust Company, a Massachusetts trust company ("Investors
Bank").
WHEREAS the Fund and Investors Bank entered into a Custodian Agreement
dated February 15, 1999 (the "Custodian Agreement"); as amended from time to
time, and
WHEREAS, the Fund and Investors Bank desire to amend the Custodian
Agreement as set forth below.
WHEREAS, the Fund, the Adviser and Investors Bank agree that the Adviser
shall become a party to the Custodian Agreement hereby and shall be responsible
for the duties set forth in the Custodian Agreement as amended hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Amendments.
(a) The Custodian Agreement is hereby amended by deleting the lead-in
paragraph thereof in its entirety and inserting in lieu thereof the following:
"Agreement made as of this 15th day of February, 1999, by and among
E*TRADE FUNDS, a business trust organized under the laws of the
State of Delaware (the "Fund"), E*TRADE ASSET MANAGEMENT, INC. (the
"Adviser") and Investors Bank & Trust Company, a Massachusetts trust
company ("Investors Bank")."
(b) Paragraph 1 of the Custodian Agreement is hereby amended by deleting
such Paragraph 1 in its entirety and inserting in lieu thereof the following:
"Bank Appointed as Custodian. The Fund and the Adviser hereby
appoint the Bank as custodian of the Fund's portfolio securities and
cash delivered to the Bank as hereinafter described and the Bank
agrees to act as such upon the terms and conditions hereinafter set
forth. For the services rendered pursuant to this Agreement the
Adviser agrees to pay to the Bank the fees set forth on Appendix B
hereto.
(c) Paragraph 16.4 of the Custodian Agreement is hereby amended by
deleting the word "Fund" therein and inserting the lieu thereof the word
"Adviser."
(d) Appendix A to the Custodian Agreement -- "Portfolios" -- is hereby
amended by deleting such Appendix A in its entirety and replacing it with
Appendix A attached hereto as Exhibit I.
(e) (i) Appendix B to the Custodian Agreement -- "Fees" -- is hereby
amended by renaming such Appendix B as Appendix B-1 and applying such Appendix
B-1 only to the Funds listed under the heading "Feeders" on Appendix A to the
Custody Agreement; and
(ii) The Custodian Agreement is further amended by adding thereto
Appendix B-2 in the form attached hereto as Exhibit II, and applying such
Appendix B-2 only to the Funds listed under the heading "Stand-alone" on
Appendix A to the Custody Agreement.
(f) Section 16.1 of the Custodian Agreement is hereby amended by deleting
the first paragraph of such Section 16.1 in its entirety and inserting in lieu
thereof the following:
"This Agreement shall remain in effect until March 1, 2004 (the "Initial
Term"), unless earlier terminated as provided herein. After the expiration
of the Initial Term, the term of this Agreement shall automatically renew
for successive three-year terms (each a "Renewal Term") unless notice of
non-renewal is delivered by the non-renewing party to the other party no
later than ninety days prior to the expiration of the Initial Term or any
Renewal Term, as the case may be.
(g) Section 18(a) of the Custodian Agreement is hereby amended by deleting
the first paragraph of such Section 18(a) in its entirety and inserting in lieu
thereof the following:
"In the case of notices sent to the Fund to:
E*Trade Funds
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer, as the case may be, as of the date and
year first above written.
INVESTORS BANK & TRUST COMPANY
By: _______________________________
Name: _______________________________
Title: ______________________________
E*TRADE FUNDS
By: _______________________________
Name: _______________________________
Title:_______________________________
EXHIBIT I
Appendix A
Portfolios
Feeders
E*TRADE S&P 500 Index Fund
E*TRADE Extended Market Index Fund
E*TRADE Bond Index Fund
E*TRADE International Index Fund
E*TRADE Premier Money Market Fund
E*TRADE Xxxxxxx 2000 Index Fund
Stand-Alone
E*TRADE Financial Sector Index Fund
E*TRADE Global Titans Index Fund
E*TRADE E-Commerce Index Fund
E*TRADE Technology Index Fund
E*TRADE Asset Allocation Fund
EXHIBIT II
Appendix B-2
E*TRADE Funds
Proposed Fee Schedule*
For 4 Funds
January 19, 2001
CUSTODY, FUND ACCOUNTING, CALCULATION OF N.A.V. and
PARTIAL ADMINISTRATION
Assumptions in developing the fee schedule:
- Assumes that Investors Bank will provide services to the funds listed below as
well as any new feeders and standalone funds sponsored by E*TRADE
- Financial Sector Index Fund
- Global Titans Index Fund
- Technology Index Fund
- E-Commerce Index Fund
- Custody, fund accounting and partial administration services
- Assumes the trade ticket for the fund of funds will be provided by E*TRADE
- Assumes Investors Bank will not be tracking re-balances into the fund of funds
- E*TRADE will perform legal administration
- Fee is predicated on Investors Bank performing cash management, foreign
exchange and securities lending
A. Domestic Custody and Fund Accounting
The following basis point fee is based on each fund's assets for which we
are providing services. This amount does not include transactions or
global custody.
Annual Fee
First $150 million in assets 2.5 Basis Points
Next $350 million in assets 1.5 Basis Points
Assets in excess of $500 million 1.0 Basis Point
There will be a yearly per fund minimum as described below.
Domestic Funds $34,000 per fund
Global Funds $45,000 per fund
Each class beyond one $8,000 per fund/class
Fund of Funds (E*TRADE Funds only) $22,000 per fund (no basis
points)
B. Transactions*
o DTCC/Fed Book Entry $ 6.25
o Physical Securities 35
o Options and Futures 18
o GNMA Securities 30
o Principal Paydown 5
o Foreign Currency 18**
o Outgoing Wires 7
o Incoming Wires 5
o Internal Mutual Funds 5
* These fees assume that trade information is sent to Investors Bank
electronically. The DTCC fee will increase to $8 per trade when assets reach
$500 million. There are no transaction charges for the use of Investors Bank
Repo product or for securities lending transactions when Investors Bank acts as
agent **There are no transaction charges for F/X contracts executed by Investors
Bank
C. Foreign Subcustodian Fees
o Incremental basis point and transaction fees will be charged for all
foreign assets for which we are custodian. The asset based fees and
transaction fees vary by country, based upon the attached global
custody fee schedule. Local duties, script fees, reclaims,
registration, exchange fees, and other market charges are
out-of-pocket.
o Investors Bank will require the fund to hold all international assets
at the subcustodian of our choice.
D. Partial Administration
The following basis point fee is based on each fund's assets for which we
are providing services.
Annual Fee
First $150 million in assets 3.0 Basis Points
Next $350 million in assets 2.5 Basis Points
Assets in excess of $500 million 2.0 Basis Points
There will be a yearly per fund minimum of $45,000.
Each class beyond one $10,000 per fund/class
Fund of Funds $40,000 per fund (no basis points)
MISCELLANEOUS
A. Out-of-Pocket
o The charges next to each section are for proforma purposes only.
Actual charges may vary.
o These charges consist of:
-Third Party Review ($250/fd/yr) -InvestView
-Legal Expenses -Customized Reporting
-Printing, Delivery & Postage -Customized Development/Extracts
-International Verification -Blue Sky ($125 per permit)
-Forms and Supplies -Initial Blue Sky Set-up
-Xxxxx Filings -Support Equipment
-Extraordinary Travel Expenses -Copy fitting
-State Registration Fees -Data Transmissions
-Pricing (per security/fund/day $.6 equities, .36 bonds, .40 int'l)
-Telecommunications (Per month/fund dom 61.25, Int'l 77.06)
-Printing of shareholder reports
-Financial statement report modification (after initial agreed upon
parameters) as to style, layout or format.
B. Domestic Balance Credit
o We allow use of balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship.
The credit is based on collected balances reduced by balances required
to support the activity charges of the accounts. The monthly earnings
allowance is equal to 75% of the 90-day T-xxxx rate.
C. Cash Management, Securities Lending and Foreign Exchange
o The assumption was made that Investors Bank would perform cash
management, securities lending and foreign exchange for the
portfolios. Securities Lending will be split with the funds on a
60%/40%; 40% going to the funds. After the first 2 years the split
will change to 50%/50%; 50% going to the funds. After the third year
the split will change to 60%/40%; 60% going to the funds.
D. Systems
o The details of any systems work will be determined after a thorough
business analysis. Any systems work will be billed on a time and
material basis. Investors Bank provides an allowance of 10 system
hours for data extract set-up and reporting extract set-up. Additional
systems hours will be billed on a time and material basis.
E. Payment
o The above fees will be charged against the fund's custodian checking
account on the last business day of the month.
* This fee schedule assumes the execution of our standard contractual
agreements for three years with subsequent three year renewals. Also, this
fee schedule is contingent on all 5 funds contracting for custody, fund
accounting, administration, securities lending, foreign exchange and cash
management services. If the contract is terminated within the first 12
months from the date that all the funds are serviced by Investors Bank,
any payments owed would also include an amount equal to one years fees for
fund accounting and fund administration for 2 E*TRADE funds. If the
contract is terminated in year two, any payment owed would include an
amount equal to 50% of one years fees for fund accounting and fund
administration for 2 E*TRADE funds. If the contract is terminated in year
three, any payment owed would include an amount equal to 25% of one years
fees for fund accounting and fund administration for 2 E*TRADE funds.
Appendix B-1
E*Trade Group, Inc.
E*Trade Funds
Annual Fee Schedule
For Feeder Funds
January 19, 2001
Fund Accounting, Custody and Calculation of N.A.V., Fund Administration,
Financial Statement Preparation.
A. Fund Accounting, Custody and Calculation of N.A.V. , Fund Administration,
Financial Statement Preparation.
The Annual Fee for Fund Accounting, Custody and Calculation of N.A.V.,
Fund Administration, Financial Statement Preparation for the each E *
Trade Group, Inc. sponsored Feeder Funds (including up to two classes) off
of Barclays Global Investors' Master Investment Portfolios will be charged
according to the following schedule. The following schedule is exclusive
of transaction costs and out-of-pocket expenses.
Annual Fee
Annual Fee per fund $42,000
For each additional class added beyond the first two classes there will be
an annual fee of $18,000 for the above services.
Miscellaneous
A. Out-of-Pocket
These charges consist of:
- Telephone
- Ad Hoc Reporting
- Third Party Review
- Forms and Supplies
- Printing/Postage/Delivery
- Systems Development/Reports/Transmissions
- Equipment Rental
- Legal costs associated with substantial alterations of IBT's
standard agreements
B. Balance Credits
We allow use of balance credit against fees (excluding out-of-pocket
charges) for collected fund balances arising out of the custody
relationship. The monthly earnings allowance is equal to 75% of the 90-day
T-xxxx rate.
C. Systems
The details of any systems work required to service this fund will be
determined after a thorough business analysis. All systems work, including
creating customized reports and establishing systems/communications
interfaces with E * Trade, other providers, etc., will be billed on a time
and materials basis.
D. Other
Assumptions:
The above fees will be charged against the funds' custodian checking
account five business days after the invoice is mailed to the fund.
