Exhibit (h.1)
ADMINISTRATION AGREEMENT
AGREEMENT made as of April 25, 2000 by and between iShares TRUST, a
business trust established under the laws of the state of Delaware (the "Fund"),
and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust company (the "Bank").
WHEREAS, the Fund is a registered investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") consisting of the separate
series listed on Appendix A hereto (as such Appendix A may be amended from time
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to time) (each an "Index Series" and collectively, the "Index Series");
WHEREAS, common shares of each Index Series will be listed on a registered
securities exchange; and
WHEREAS, the Fund desires to retain the Bank to render certain
administrative services to the Fund and the Bank is willing to render such
services.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth,
it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Bank to act as
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Administrator of the Fund on the terms set forth in this Agreement. The Bank
accepts such appointment and agrees to render the services herein set forth for
the compensation herein provided.
2. Delivery of Documents. The Fund has furnished the Bank with copies
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properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Directors authorizing the
appointment of the Bank to provide certain administrative services to the Fund
and approving this Agreement;
(b) The Fund's incorporating documents filed with the state of
Delaware on [date] and all amendments thereto (the "Articles");
(c) The Fund's by-laws and all amendments thereto (the "By-Laws");
(d) The Fund's agreements with all service providers which include
any investment advisory agreements, sub-investment advisory agreements, custody
agreements, distribution agreements and transfer agency agreements
(collectively, the "Agreements");
(e) The Fund's most recent Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933 and under the 1940
Act and all amendments thereto; and
(f) The Fund's most recent prospectus and statement of additional
information (the "Prospectus"); and
(g) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for the Bank in the proper performance of its
duties hereunder.
The Fund will promptly furnish the Bank with copies of all amendments
of or supplements to the foregoing. Furthermore, the Fund will promptly notify
the Bank of any matter which would materially affect the performance by the Bank
of its services under this Agreement.
3. Duties of Administrator.
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(a) Subject to the supervision and direction of the Board of
Directors of the Fund, the Bank, as Administrator, will conduct various aspects
of the Fund's administrative operations and undertakes to perform the services
described in Appendix B hereto. The Fund hereby represents that the sale of
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Fund shares are not subject to Blue Sky laws and the Bank shall not be
responsible for any registration, tracking or other functions related to the
Blue Sky laws of any state. The Bank may, from time to time, perform additional
duties and functions which shall be set forth in an amendment to such Appendix B
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executed by both parties. At such time, the fee schedule included in Appendix C
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hereto shall be appropriately amended.
(b) In performing all services under this Agreement, the Bank shall
act in conformity with the Fund's Articles and By-Laws and the 1940 Act, as the
same may be amended from time to time, and the investment objectives, investment
policies and other practices and policies set forth in the Fund's Registration
Statement, as the same may be amended from time to time. Notwithstanding any
item discussed herein, the Bank has no discretion over the Fund's assets or
choice of investments and cannot be held liable for any losses resulting from
the exercise of such discretion or investment choices.
(c) (i) The Bank shall, during the period that this Agreement
remains in effect, (x) maintain an Errors & Omissions policy of at least $
million, which policy will insure against all claims sustained by any party
(including the Fund) as a result of any actual or alleged wrongful act, error or
omission in the Bank's rendering of or failure to render services in accordance
with the terms set forth in the Bank's agreements with its clients, and (y)
maintain a separate Errors & Omissions policy of at least $ million, which
policy will insure against claims sustained solely by the Fund as a result of
any actual or alleged wrongful act, error or omission in the Bank's rendering of
or failure to render services in accordance with the terms set forth in this
Agreement.
(ii) Upon the Fund's written request, the policy referred to in
clause (c)(i)(y) above will be expanded to $ million when the Fund's total
assets reach $ billion. The Fund will reimburse (or cause its agent to
reimburse) the Bank in advance for the cost of the policy referred to in clause
(c)(i)(y) above. When the policy is expanded to $ million, the Fund will
reimburse (or cause its agent to reimburse) the Bank in advance for the total
cost of such expanded policy.
4. Proper Instructions. Proper Instructions shall mean (i) instructions
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given by an Authorized Person (which shall include the Fund's Distributor), such
instructions to be given in such form and manner as the Bank and the Fund shall
agree upon from time to time, and (ii) instructions (which may be continuing
instructions) signed or initialed by an Authorized Person. Oral instructions
will be considered Proper Instructions if the Bank reasonably believes them to
have been given by an Authorized Person. The Fund shall cause all oral
instructions to be promptly confirmed in writing. The Bank shall act upon and
comply with any subsequent Proper Instruction which modifies a prior instruction
and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such
discrepancy to the Fund. The Fund shall be responsible, at the Fund's expense,
for taking any action, including any reprocessing, necessary to correct any such
discrepancy or error, and to the extent such action requires the Bank to act,
the Fund shall give the Bank specific Proper Instructions as to the action
required. Proper Instructions shall include communication effected directly
between electro-mechanical or electronic devices, including information
transmitted by the Fund's Distributor. The Fund hereby authorizes such use of
electro-mechanical or electronic communication and the Fund and the Bank will
agree as to procedures which shall afford adequate safeguards for the Fund's
assets.
5. Fees and Expenses.
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(a) For the services to be rendered and the facilities to be
furnished by the Bank, as provided for in this Agreement, the Fund will
compensate the Bank in accordance with the fee schedule attached as Appendix C
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hereto. Such fees do not include out-of-pocket expenses incurred by the Bank in
connection with the performance of its obligations hereunder (as delineated on
Appendix C hereto) for which the Bank shall be entitled to xxxx the Fund
separately and for which the Fund shall reimburse the Bank.
(b) The Bank shall not be required to pay any expenses incurred by
the Fund.
6. Limitation of Liability.
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6.1 Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank or any of its officers, directors, employees or agents
(collectively, the "Indemnified Parties") be liable to the Fund or any third
party, and the Fund shall indemnify and hold the Bank and the Indemnified
Parties harmless from and against any and all loss, damage, liability, actions,
suits, claims, costs and expenses, including reasonable legal fees, (a "Claim")
arising as a result of any act or omission of the Bank or any Indemnified Party
under this Agreement, except for any Claim to the extent such Claim results from
the material breach of this Agreement by or negligence, willful misfeasance or
bad faith of the Bank or any Indemnified Party.
6.2 The Bank shall indemnify and hold the Fund, its Board of Trustees,
officers and employees and its agents harmless from and against any and all
Claims to the extent any such Claim arises out of the negligent acts or
omissions, bad faith, willful misconduct or material breach of this Agreement by
the Bank, its officers, directors or employees or any of its agents or
subcustodians in connection with the activities undertaken pursuant to this
Agreement, provided that the Bank's indemnification obligation with respect to
the acts or omissions of its subcustodians shall not exceed the indemnification
provided by the applicable subcustodian to the Bank.
6.3 Notwithstanding anything to the contrary in this Agreement, in no
event shall a party to this Agreement be liable to the other party or any third
party for lost profits or lost revenues or any special, consequential, punitive
or incidental damages of any kind whatsoever in connection with this Agreement
or any activities hereunder.
6.4 Notwithstanding anything to the contrary in this Agreement, in no
event shall a party to this Agreement be liable to the other party or any third
party for losses resulting from (i) any acts of God, fires, floods, or other
disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, or insurrection, and (ii) other happenings
or
events beyond the reasonable control or anticipation of the party effected,
provided that (A) the effected party has in place appropriate business
resumption procedures, systems and facilities and (B) the effected party uses
its best efforts to avoid or remove the cause of such losses.
6.5 In performing its duties hereunder, the Bank will be entitled to
receive and act upon the advice of independent counsel of its own selection,
which may be counsel for the Fund.
6.6 The Bank may rely upon any Proper Instruction which it reasonably
believes to be genuine and to be signed or presented by any Authorized Person.
The Bank shall not be held to have notice of any change of authority of any
Authorized Person until receipt of appropriate written notice thereof has been
received by the Bank from the Fund.
6.7 in order that the indemnification provisions contained in this Article
14 shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking the indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
seeking indemnification shall give the indemnifying party full and complete
authority, information and assistance to defend such claim or proceeding, and
the indemnifying party shall have, at its option, sole control of the defense of
such claim or proceeding and all negotiations for its compromise or settlement.
The party seeking indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to indemnify it
except with the other party's prior written consent, which consent shall not be
unreasonably withheld.
7. Termination of Agreement.
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7.1 The term of this Agreement shall be three years commencing upon
the date hereof (the "Initial Term"), unless earlier terminated as provided
herein.
(a) Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term in the event the other party breaches any
material provision of this Agreement, provided that the non-breaching party
gives written notice of such breach to the breaching party and the breaching
party does not cure such violation within 90 days of receipt of such notice.
(b) The Fund may terminate this Agreement prior to the expiration of
the Initial Term upon ninety days' prior written notice in the event that:
(iii) the Bank's parent, Investors Financial Services Corp. ("IFSC"), fails to
maintain a minimum capital level as follows: (i) total stockholders'
equity, as set forth in IFSC's most recent annual or quarterly financial
statements, shall be equal to no less than $ million, and (ii) the sum
of (x) total stockholders' equity and (y) the outstanding amount of
company-obligated, manditorily redeemable, preferred securities, each as
set forth in IFSC's most recent annual or quarterly financial statements,
shall be equal to no less than $ million; or
(iv) the Board of the Fund votes to liquidate the Fund and terminate its
registration with the Securities and Exchange Commission other than in
connection with a merger or acquisition of the Fund or the Fund's
investment adviser.
7.2 At any time after the termination of this Agreement, the Fund
may, upon written request, have reasonable access to the records of the Bank
relating to its performance of its duties as Administrator.
8. Miscellaneous.
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(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or the Bank shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
iShares Trust
c/o Fund Administration
Barclays Global Fund Advisers
00 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Legal Department
To the Bank:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxxxx Xxxxxxx, Director, Client Management
With a copy to: Xxxx X. Xxxxx, General Counsel
(b) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable without the written consent of the
other party.
(c) This Agreement shall be construed in accordance with the laws of
the State of New York, without regard to its conflict of laws provisions.
(d) This Agreement may be executed in any number of counterparts each
of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
9. Confidentiality. All books, records, information and data pertaining
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to the business of the other party which are exchanged or received pursuant to
the negotiation or the carrying out of this Agreement shall remain
confidential, and shall not be voluntarily disclosed to any other person, except
as may be required in the performance of duties hereunder or as otherwise
required by law.
10. Fund Liability. The Bank agrees that the obligations assumed by the
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Fund hereunder shall be limited in all cases to the assets of the Fund and that
the Bank shall not seek satisfaction of any such obligation from the officers,
agents, employees, trustees, or shareholders of the Fund.
11. Several Obligations of the Index Series. This Agreement is an
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agreement entered into between the Bank and the Fund with respect to each Index
Series. With respect to any obligation of the Fund on behalf of any Index
Series arising out of this Agreement, the Bank shall look for payment or
satisfaction of such obligation solely to the assets of the Index Series to
which such obligation relates as though the Bank had separately contracted with
the Fund by separate written instrument with respect to each Index Series.
12. Use of Name. A party shall not use the name of the other party or any
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of its affiliates in any prospectus, sales literature or other material relating
to the Fund in a manner not approved by the other party prior thereto in
writing; provided however, that such approval shall not be required for any use
of its name which merely refers in accurate and factual terms to the Bank's
appointment hereunder or which is required by the Securities and Exchange
Commission or any state securities authority or any other appropriate
regulatory, governmental or judicial authority; provided further, that in no
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event shall such approval be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
iShares TRUST
By: /s/ Xxxxxx Most
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Name: Xxxxxx Most
Title: President
INVESTORS BANK & TRUST COMPANY
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title: President
Appendices
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Appendix A.................................... Portfolios
Appendix B.................................... Services
Appendix C.................................... Fee Schedule
Review and Approval
The attached Summary of Administration Functions has been reviewed and
represents the services currently being provided.
_________________________________________________________
___________________________
Signature of Account Director/Date
__________________________________________________________
___________________________
Signature of Authorized Client Representative/ Date
APPENDIX A
LIST OF FUNDS
iShares S&P 500 iShares Dow Xxxxx U.S. Total Market iShares Xxxxxxx 3000
Index Fund Index Fund Index Fund
iShares S&P 500/BARRA iShares Dow Xxxxx U.S. Basic Materials iShares Xxxxxxx 3000 Growth
Growth Index Fund Sector Index Fund Index Fund
iShares S&P 500/BARRA iShares Dow Xxxxx U.S. Consumer iShares Xxxxxxx 3000 Value
Value Index Fund Cyclical Sector Index Fund Index Fund
iShares S&P MidCap 400 iShares Dow Xxxxx U.S. Consumer Non-Cyclical iShares Xxxxxxx 2000
Index Fund Sector Index Fund Index Fund
iShares S&P MidCap iShares Dow Xxxxx U.S. Energy iShares Xxxxxxx 2000
400/BARRA Growth Index Fund Sector Index Fund Fund Growth Index
iShares S&P MidCap iShares Dow Xxxxx U.S. Financial iShares Xxxxxxx 2000 Value
400/BARRA Value Index Fund Sector Index Fund Index Fund
iShares S&P SmallCap 600 iShares Dow Xxxxx U.S. Healthcare iShares Xxxxxxx 1000
Index Fund Sector Index Fund Index Fund
iShares S&P SmallCap iShares Dow Xxxxx U.S. Industrial iShares Xxxxxxx 1000 Growth
600/BARRA Growth Index Fund Sector Index Fund Index Fund
iShares S&P SmallCap iShares Dow Xxxxx U.S. Technology iShares Xxxxxxx 1000 Value
600/BARRA Value Index Fund Sector Index Fund Index Fund
iShares S&P Europe 350 iShares Dow Xxxxx U.S. Telecommunications
Index Fund Sector Index Fund
iShares S&P/TSE 60 iShares Dow Xxxxx U.S. Utilities Sector
Index Fund Index Fund
iShares Dow Xxxxx U.S. Chemicals
Index Fund
iShares Dow Xxxxx U.S. Financial Services
Composite Index Fund
iShares Dow Xxxxx U.S. Internet
Index Fund
iShares Dow Xxxxx U.S. Real Estate
Index Fund
Investors Bank & Trust
Summary of Administration Functions
Barclays Global Investors iShares Trust
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
-------------------------------- --------------------------------- ----------------------------- -----------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION
--------------------------------
Monitor portfolio compliance in Perform tests of certain specific Continuously monitor A/C - Provide
accordance with the current portfolio activity designed from portfolio activity and Fund consultation as needed
Prospectus and SAI. provisions of the Fund's operations in conjunction on compliance issues.
Prospectus and SAI. Follow-up on with 1940 Act, Prospectus,
potential violations. SAI and any other applicable
laws and regulations.
Monitor testing results and
Frequency: Daily approve resolution of
compliance issues.
Provide compliance summary package. Provide a report of compliance Review report. A/C - Provide
testing results. consultation as needed.
Frequency: Bi- weekly
Perform asset diversification Perform asset diversification Continuously monitor A - Provide consultation
testing to establish qualification tests at each tax quarter end. portfolio activity in as needed in establishing
as a RIC. Follow-up on issues. conjunction with IRS positions to be taken in
requirements. Review test tax treatment of
results and take any particular issues. Review
necessary action. Approve quarter end tests on a
Frequency: Quarterly tax positions taken. current basis.
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
------------------------------------ --------------------------------- ----------------------------- ------------------------
MANAGEMENT REPORTING
& TREASURY ADMINISTRATION (CONT.)
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Perform qualifying income testing to Perform qualifying income testing Continuously monitor A- Consult as needed on
establish qualification as a RIC. (on book basis income, unless portfolio activity in tax accounting positions
material differences are conjunction with IRS to be taken. Review in
anticipated) on quarterly basis requirements. Review test conjunction with year-end
and as may otherwise be results and take any audit.
Frequency: Quarterly necessary. Follow-up on issues. necessary action. Approve
tax positions taken.
Prepare the Fund's annual expense Prepare preliminary expense Provide asset level
budget. Establish daily accruals. budget. Notify fund accounting projections and vendor fee
of new accrual rates. information. Approve
Frequency: Annually expense budget.
Monitor the Fund's expense budget. Monitor actual expenses updating Provide asset level C/A - Provide
budgets/ expense accruals. projections quarterly. consultation as
Provide vendor information requested.
as necessary. Review
expense analysis and approve
budget revisions.
Frequency: Quarterly
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
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Receive and coordinate payment of Propose allocations of invoice Approve invoices and
fund expenses. among Funds and obtain authorized allocations of payments.
approval to process payment. Send invoices to IBT in a
Frequency: As often as necessary timely manner.
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MANAGEMENT REPORTING
& TREASURY ADMINISTRATION (CONT.)
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Calculate periodic dividend rates to Calculate amounts available for Establish and maintain C - Review dividend
be declared in accordance with distribution. Coordinate review dividend and distribution resolutions in
management guidelines. by management and/or auditors. policies. Approve conjunction with Board
Notify custody and transfer agent distribution rates per share approval.
of authorized dividend rates in and aggregate amounts.
accordance with Board approved Obtain Board approval when A - Review and concur
policy. Report dividends to required. with proposed
Frequency: Quarterly Board as required. distributions
Calculate total return information Provide SEC total return Review total return
on Funds as defined in the current calculations. information.
Prospectus and SAI.
Frequency: Monthly
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
------------------------------------ --------------------------------- ----------------------------- ----------------------
Prepare responses to major industry Prepare, coordinate as necessary, Identify the services to
questionnaires. and submit responses to the which the Funds report.
appropriate agency. Provide information as
Frequency: As often as necessary requested.
Prepare disinterested trustee Form Summarize amounts paid to Provide social security
1099-Misc. directors/trustees during the numbers and current mailing
calendar year. Prepare and mail address for trustees.
Form 1099-Misc. Review and approve
Frequency: Annually information provided for
Form 1099-Misc.
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FINANCIAL REPORTING
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Prepare financial information for Prepare selected portfolio and Review financial information.
presentation to Fund Management and financial information for
Board of Directors. inclusion in board material.
Frequency: Quarterly
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
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Coordinate the annual audit and Coordinate the creation of Provide past financial A - Perform audit and
semi-annual preparation and templates reflecting statements and other issue opinion on annual
printing of financial statements client-selected standardized information required to financial statements.
and notes with management, fund appearance and text of financial create templates, including
accounting and the fund auditors. statements and footnotes. Draft report style and graphics. A/C - Review reports.
and manage production cycle. Approve format and text as
Coordinate with IBT fund standard. Approve
accounting the electronic receipt production cycle and assist
of portfolio and general ledger in managing to the cycle.
information. Assist in Coordinate review and
resolution of accounting issues. approval by portfolio
Using templates, draft financial managers of portfolio
statements, coordinate auditor listings to be included in
and management review, and clear financial statements.
comments. Coordinate printing of Prepare appropriate
reports and XXXXX conversion with management letter and
outside printer and filing with coordinate production of
the SEC via XXXXX. Management Discussion and
Frequency: Annually/semi-annually Analysis. Review and
approve entire report. Make
appropriate representations
in conjunction with audit.
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LEGAL
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Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
------------------------------------ --------------------------------- ----------------------------- ----------------------
Prepare agenda and board materials Maintain annual calendar of Review and approve board C - Review agenda,
for quarterly board meetings. required quarterly and annual materials and board and resolutions, board
approvals. Prepare agenda, committee meeting minutes. material and board and
resolutions and other board committee meeting
materials for quarterly board minutes. Ensure BOD
meetings. Prepare supporting material contains all
information and materials when required information
necessary. Assemble, check and that the BOD must review
distribute books in advance of and/or approve to
meeting. Attend board and perform their duties as
committee meetings and prepare directors.
Frequency: Quarterly minutes.
Prepare and file Form N-SAR. Prepare form for filing. Obtain Provide appropriate C - Review initial filing.
any necessary supporting responses. Review and A - Provide annual audit
documents. File with SEC via authorize filing. internal control letter
XXXXX. to accompany the annual
filing.
Frequency: Semi-annually
Prepare amendments to Registration Prepare and coordinate the filing Review and approve. C - Review and approve
Statement. of post-effective amendments. filings.
Coordinate with outside printers A/C - Provide consents as
Frequency: Annual update (includes the Xxxxx conversion, filing with appropriate.
updating financial highlights, the SEC and printing of
expense tables, ratios) plus one prospectus.
additional filing per fiscal year
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
------------------------------------ --------------------------------- ----------------------------- ----------------------
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LEGAL (CONT.)
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Prepare Prospectus/SAI supplements. Prepare Prospectus and SAI Review and approve. C - Review and approve
supplements. File with the SEC filings.
via Xxxxx. Coordinate printing A/C - Provide consents
of supplements. as appropriate.
Frequency: As often as required
Preparation and filing of 24f-2 Accumulate capital stock Review and approve filing. C - Approve 24f-2 Notice.
Notice. information and draft Form 24f-2.
Notice. File approved Form with A - Review informally
SEC via Xxxxx. when requested
Frequency: Annually
Proxy Material/Shareholder Meetings Prepare drafts of proxy material Review and approve proxy. C - Review and approve
for review, file materials or proxy.
coordinate filing with SEC and
coordinate printing. Assist
proxy solicitation firm and
prepare scripts. Attend meeting
and prepare minutes.
Frequency: As needed
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
------------------------------------ --------------------------------- ----------------------------- ----------------------
Assist in updating of fidelity bond Make annual filing of fidelity Obtain required fidelity
insurance coverage. bond insurance material with the bond insurance coverage.
SEC. Monitor level of fidelity
bond insurance maintained
Frequency: Annually in accordance with required
coverage.
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LEGAL (CONT.)
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Respond to regulatory audits. Compile and provide documentation Coordinate with regulatory C - Provide consultation
pursuant to audit requests. auditors to provide as needed.
Frequency: As needed (at least Assist client in resolution of requested documentation and
annually) audit inquiries. resolutions to inquiries.
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
------------------------------------ --------------------------------- ----------------------------- ----------------------
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TAX
------------------------------------
Prepare income tax provisions. Calculate investment company Provide transaction A - Provide consultation
taxable income, net tax exempt information as requested. as needed in establishing
interest, net capital gain and Identify Passive Foreign positions to be taken in
spillback dividend requirements. Investment Companies tax treatment of
Identify book-tax accounting (PFICs). Approve tax particular issues.
differences. Track required accounting positions to be Perform review in
information relating to taken. Approve provisions. conjunction with the
Frequency: Annually accounting differences. year-end audit.
Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
---------------------------------- --------------------------------- --------------------------- -------------------------
Calculate excise tax distributions Calculate required distributions Provide transaction A - Provide consultation
to avoid imposition of excise tax. information as requested. as needed in establishing
- Calculate capital gain net Identify Passive Foreign positions to be taken in
income and foreign currency Investment Companies tax treatment of
gain/loss through October 31. (PFICs). Approve tax particular issues.
- Calculate ordinary income and accounting positions to be Review and concur with
distributions through a taken. Review and approve proposed distributions
specified cut off date. all income and distribution per share.
- Project ordinary income from calculations, including
cut off date to December 31. projected income and
- Ascertain dividend shares. dividend shares. Approve
Identify book-tax accounting distribution rates per share
differences. Track required and aggregate amounts.
information relating to Obtain Board approval when
accounting differences. required.
Coordinate review by management
and fund auditors. Notify
custody and transfer agent of
authorized dividend rates in
accordance with Board approved
Frequency: Annually policy. Report dividends to
Board as required.
TAX (CONT.)
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Suggested Fund Auditor
Function Investors Bank & Trust Barclays Global Investors or Counsel
---------------------------------- --------------------------------- --------------------------- ------------------------
Prepare tax returns Prepare excise and RIC tax Review and sign tax return. A - Review and sign tax
returns. return as preparer.
Frequency: Annually
Prepare Form 1099 Obtain yearly distribution Review and approve
information. Calculate 1099 information provided for
reclasses and coordinate with Form 1099.
Frequency: Annually transfer agent.
Prepare other year-end tax-related Obtain yearly income distribution Review and approve
disclosures information. Calculate information provided.
disclosures
(i.e., dividend received
deductions, foreign tax credits,
Frequency: Annually tax-exempt income, income by
jurisdiction) and coordinate with
transfer agent.
Schedule C
Fee Schedule*
Exchange Traded Funds
March 8, 2000
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CUSTODY, FUND ACCOUNTING, ADMINISTRATION, and
INSTITUTIONAL TRANSFER AGENCY
================================================================================
Assumptions used in developing the fee schedule:
-The launch of the 36 new funds will begin around May 1, 2000.
-BGI will use IBT for securities lending for a minimum of 2.5 years from
the date that at least 14 funds are serviced by Investors Bank.
-BGI will use IBT for foreign exchange.
-BGI will use IBT for custody, fund accounting, administration and
transfer agency services.
-IBT will provide accounting information to BGI for the PCF file.
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CUSTODY
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A. Transactions**
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. DTC/Fed Book Entry $ ***
. Physical Securities
. Options and Futures
. GNMA Securities
. Principal Paydown
. Foreign Currency ****
. Outgoing Wires
. Incoming Wires
** These fees assume that trade information is sent to Investors Bank
electronically utilizing the same format as we are using today or electronically
from NSCC. For non-automated DTC/Fed Book trades the per trade fee will be.
***There are no transaction charges for the use of Investors Bank Repo product.
****There are no transaction charges for F/X contracts executed by Investors
Bank.
B. Foreign Subcustodian Fees
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. 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 global custody fees
below. Local duties, script fees, reclaims, registration, exchange
fees, and other market charges are out-of-pocket.
. Investors Bank will require the fund to hold all international assets
at the subcustodian of our choice.
Per
Basis Point Trade
Country Charge Charge
------- ------ ------
Australia $
Austria $
Belgium $
Canada $
Euroclear $
France $
Germany $
Hong Kong $
Italy $
Japan $
Malaysia $
Mexico $
Netherlands $
Singapore $
Spain $
Sweden $
Switzerland $
UK $
Brazil $
Korea $
South Africa $
Taiwan $
Thailand $
Denmark $
Finland $
Ireland $
Norway $
Portugal $
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FUND ACCOUNTING, ADMINISTRATION and TRANSFER AGENCY
================================================================================
B. Fund Accounting, Calculation of N.A.V., Administration and Transfer
-------------------------------------------------------------------
Agency
------
. The following basis point fee is based on all assets for which we are
fund accountant, administrator and transfer agent. This amount does
not include transactions.
Annual Fee
-----------------
First $ billion in assets ___ Basis Points
Next $ billion in assets ___ Basis Points
Next $ billion in assets ___ Basis Points
Assets in excess of $ billion ___ Basis Points
. There will be an incremental __ basis point fee on each global
portfolio.
. There will be a yearly complex minimum of $ which includes
36 funds. For each new fund beyond 36 the complex minimum will
increase by $ (This fee does not include transactions or
global custody). The $ million complex minimum will be billed
monthly beginning on May 1, 2000. Any additional basis point fees
owed to Investors Bank will be calculated at the end of the first 12
month period (April 31, 2001) based on the above fee schedule and the
end of month assets for each of the previous 12 months (May 1, 2000
to April 31, 2001). After the initial 12 months, the complex minimum
or basis points, whichever is larger, will be billed on a monthly
basis.
. The monthly minimum fee of $ will be billed starting on May 1,
2000. Also, Barclays Global Investors agrees to pay Investors Bank
$ million in calendar year 2000.
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MISCELLANEOUS
================================================================================
A. Out-of-Pocket
-------------
. The charges next to each section are for proforma purposes only. Actual
charges may vary.
. These charges consist of:
-Third Party Review ($ /fd/yr) -InvestView
-Legal Expenses -Customized Reporting
-Printing, Delivery & Postage -Non-Standard Transmissions/Extracts
-Extraordinary Travel Expenses -Blue Sky ($ /permit)
-Forms and Supplies -Microfiche
-Pricing (per security/fund/day $ equities, $ bonds, $
int'l)
-Telecommunications (Per month/fund dom $ , int'l $ )
-International Verification ($ /security/fund/month)
-Printing of shareholder reports -Copy fitting
-Financial statement report modification (after initially agreed upon
parameters) as to style, layout or format.
-Board meeting attendance -Data Transmissions
-Ad Hoc Reporting -Customized Statements
B. Domestic Balance Credit
-----------------------
. We allow use of balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship. The
monthly earnings allowance is equal to % of the 90-day T-xxxx rate.
C. Securities Lending, Cash Management and Foreign Exchange
--------------------------------------------------------
. The fee schedule is predicated on Investors Bank performing cash
management, foreign exchange and securities lending for the portfolios.
Securities lending revenue is split with the funds and Investors Bank as
follows:
$ -$ billion in assets %/ %. % going to the funds
Assets in excess of $ billion %/ %. % going to the funds
D. Systems
-------
. 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.
E. Payment
-------
. The above fees will be charged against the fund's custodian checking
account on the last business day of the month. All fees will be billed
monthly.
* This fee schedule assumes the execution of our standard contractual
agreements for a term of 3 years and utilizing Investors Bank for
custody, fund accounting, transfer agent, administration and ancillary
services mentioned above.
