EXHIBIT - g(5)
Meridian Fund, Inc.
Sixty Xxxx Xxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
PFPC Trust Company
Xxxxxxxx Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Re: Rule 17f-5 ("Rule 17f-5") and Rule 17f-7 ("Rule 17f-7") Under
the Investment Company Act of 1940 (the "1940 Act")
Dear Sirs:
Reference is made to the Subcustodial Services Agreement dated as of January
10,1996 (the "Foreign Custody Agreement"), as amended, by and between Citibank,
N.A. ("Custodian"), Citicorp and PFPC Trust Company ("PFPC") with respect to the
custody of assets by Custodian for the account of PFPC on behalf of certain
customers of PFPC, including Meridian Fund, Inc. (the "Fund") Reference is also
made to the custodian services agreement dated as of 12/30/2002 (the "Fund
Custody Agreement") by and between PFPC and the Fund.
1. Rule 17f-5
1.1. With respect to the "Foreign Assets" (as defined in Rule 17f-5(a)(2))
in such jurisdictions as Custodian provides custody services under the Foreign
Custody Agreement for the Fund, the Fund hereby delegates to Custodian and
Custodian hereby accepts the delegation to it, of the obligation to serve as the
Fund's "Foreign Custody Manager" (as defined in Rule 17f-5(a)(3)). As Foreign
Custody Manager, Custodian shall:
a. select "Eligible Foreign Custodians" (as defined in Rule
17f-5(a)(1)) to serve as foreign custodians and place and
maintain the Fund's Foreign Assets with such Eligible Foreign
Custodians;
b. in selecting an Eligible Foreign Custodian, first determine
that Foreign Assets placed and maintained in the care of the
Eligible Foreign Custodian shall be subject to reasonable
care, based on the standards applicable to custodians in the
relevant market, after having considered all factors relevant
to the safekeeping of such Foreign Assets including, without
limitation, those factors set forth in Rule
17f-5(c)(1)(i)-(iv);
c. enter into a written contract with each Eligible Foreign
Custodian selected by Custodian hereunder;
d. determine that the written contract with each Eligible Foreign
Custodian will provide reasonable care for the Foreign Assets,
based on the standards applicable to custodians in the
relevant market and after having considered all factors
relevant to the safekeeping of such Foreign Assets (including,
without limitation, those factors set forth in Rule
17f-5(c)(1)(i)-(iv)), and that each such contract satisfies
the requirements of Rule 17f-5(c)(2);
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e. provide written reports (i) notifying the Board or similar
governing body (the, a "Board") of the Fund of the placement
of the Fund's Foreign Assets with a particular Eligible
Foreign Custodian, such reports to be provided at such time as
the Board deems reasonable and appropriate, but not less often
than quarterly, and (ii) promptly notifying the Board of any
material change in the arrangements with an Eligible Foreign
Custodian; and
f. have established a system to monitor (i) the appropriateness
of maintaining the Fund's Foreign Assets with a particular
Eligible Foreign Custodian selected hereunder and (ii) the
performance of the governing contractual arrangements; it
being understood, however, that in the event Custodian shall
determine that the arrangement with any Eligible Foreign
Custodian would no longer afford the Fund's Foreign Assets
reasonable care (as defined in Section 1.1 (b) above) or would
no longer be governed by a written contract providing for such
care, Custodian shall promptly so advise the Fund.
Without limiting any duties set forth in the Foreign Custody Agreement,
Custodian shall not be responsible for the duties described in this
Section 1.1 with respect to any foreign securities depository or foreign
clearing agency.
1.2. In acting as a Foreign Custody Manager, Custodian shall exercise
reasonable care, prudence and diligence such as a person having responsibility
for the safekeeping of Foreign Assets would exercise in each jurisdiction where
Custodian acts as subcustodian for assets of the Fund. Custodian shall reimburse
and pay the Fund for any loss or damage suffered by the Fund as a result of the
performance of Custodian's duties under this Section 1 where such loss or damage
results from an act of negligence or willful misconduct on the part of Custodian
hereunder; provided that the liability of Custodian hereunder shall not exceed
the fair market value of any loss of assets resulting from such negligence or
willful misconduct, at the time of such negligence or willful misconduct. Any
payment to the Fund under this Section 1.2 shall limit the Fund's right and
ability to enforce any rights under the Foreign Custody Agreement for loss of
such assets. Notwithstanding anything else in this document, Custodian shall not
be liable to the Fund for any indirect, special, consequential or general
damages or from reasons or causes beyond its control. PFPC shall be indemnified
by the Fund for any damages PFPC may incur in connection with the provision by
Custodian of the services set forth in this Section 1 with respect to the Fund
(provided PFPC will not be indemnified for damages which are the result of
PFPC's failure to comply with its liability standard of care set forth in the
Fund Custody Agreement). In no event shall PFPC have responsibility or liability
for any action or inaction of Custodian under Section 1 hereof.
1.3. In acting as a Foreign Custody Manager, Custodian shall not
supervise, recommend or advise PFPC or the Fund relative to the investment,
purchase, sale, retention or disposition of any assets in any particular
country, including with respect to prevailing country risks.
2. Rule 17f-7
2.1. (a) The Fund and PFPC appoint Custodian to provide the Fund (or its
duly-
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authorized investment manager or investment adviser) with an analysis (in form
and substance as reasonably determined by Custodian) of the custody risks
associated with maintaining assets with each foreign securities depository or
foreign clearing agency listed on Exhibit B hereto (as the same may be changed
by Custodian from time to time) in accordance with Rule 17f-7(a)(1)(i)(A).
Custodian shall monitor such custody risks on a continuing basis and in such
manner as Custodian deems reasonable, and shall promptly notify the Fund (or its
duly-authorized investment manager or investment adviser) of any adverse
material changes in such risks in accordance with Rule 17f-7(a)(1)(i)(B).
(b) Only an entity that Custodian has determined satisfies the
requirements of Rule 17f-7(b)(1) as an "Eligible Securities Depository" (as
defined in Rule 17f-7(b)(1)) will be included by Custodian on Exhibit B hereto
(as the same may be changed by Custodian from time to time). In such manner as
Custodian deems reasonable, Custodian shall give the Fund prompt notice of any
material change known to Custodian that would adversely effect Custodian's
determination that an entity is an Eligible Securities Depository.
2.2. In performing its obligations under this Section 2, Custodian may
obtain information from sources Custodian believes to be reliable, but Custodian
does not warrant its completeness or accuracy and has no duty to verify or
confirm any such information. Custodian is not obligated to make any
determination regarding whether any Eligible Securities Depository provides
reasonable care for Foreign Assets or to provide any information or evaluation
comparing any Eligible Securities Depository to any other securities depository
or any existing or proposed standards for securities depositories.
2.3. The Fund acknowledges that it may maintain assets only at the foreign
securities depositories or foreign clearing agencies listed on Exhibit B hereto
(as the same may be changed by Custodian from time to time). If the Fund
maintains assets at a foreign securities depository or foreign clearing agency
listed on Exhibit B (including assets maintained by the Fund at the time this
document is entered into) or the Fund enters into a transaction with respect to
assets that as a matter of practice are or may be maintained at a foreign
securities depository or foreign clearing agency listed on Exhibit B, such
action will (unless the Fund provides written notice to Custodian and PFPC
specifically stating that a particular foreign securities depository or foreign
clearing agency is not acceptable to it) serve as the Fund's acknowledgement
that such foreign securities depository or foreign clearing agency is acceptable
to it.
2.4. Custodian shall exercise reasonable care, prudence and diligence in
performing its duties pursuant to Section 2 hereof. Custodian shall reimburse
and pay the Fund for any loss or damaged suffered by the Fund as a result of the
performance of Custodian's duties under this Section 2 where such loss or damage
results from an act of negligence or willful misconduct on the part of Custodian
hereunder; provided that the liability of Custodian hereunder shall not exceed
the fair market value of any loss of assets resulting from such negligence or
willful misconduct, at the time of such negligence or willful misconduct. Any
payment to the Fund under this Section 2.4 shall limit the Fund's right and
ability to enforce any rights under the Foreign Custody Agreement for loss of
such assets. Notwithstanding anything else in this document, Custodian shall not
be liable to the Fund for any indirect, special, consequential or general
damages or from reasons or causes beyond its control. PFPC shall be indemnified
by the Fund for any damages PFPC may incur in connection with the provision by
Custodian of the services set forth in this Section 2 with respect to the Fund
(provided PFPC will not be indemnified for damages which are the result of
PFPC's failure to comply with its liability
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standard of care set forth in the Fund Custody Agreement). The Fund and PFPC
agree that PFPC's obligation to exercise reasonable care, prudence and diligence
in providing for the services set forth in Section 2.1 above is satisfied by the
appointment of Custodian hereunder to provide those services. In no event shall
PFPC have responsibility or liability for any action or inaction of Custodian
under Section 2 hereof.
3. General
3.1. A. As between Custodian and PFPC, Section 7(a) of the Foreign Custody
Agreement is hereby amended and restated in its entirety with respect to the
Fund as follows:
"(a) The Bank may maintain investments (including foreign
currencies) for which the primary market is outside the United
States (and such cash and cash equivalents as are reasonably
necessary to effect transactions in such investments) (collectively,
"Foreign Securities") and which are maintained hereunder in
subcustody accounts which have been established by the Bank with (x)
branches of "U.S. banks" as defined in Rule 17f-5 under the
Investment Company Act (as effective June 12,2000) ("Rule 17f-5")
("Branches"), or (y) foreign custodians that meet the definition of
"eligible foreign custodian" under Rule 17f-5(a)(1) and which the
Bank has determined are eligible to maintain assets pursuant to the
requirements of Rule 17f-5 (such Branches and such foreign
custodians, collectively, "Eligible Foreign Custodians"). The Bank
or an Eligible Foreign Custodian is authorized to hold Foreign
Securities of a particular investment portfolio of a Fund in an
account with any foreign securities depository or foreign clearing
agency (provided the same are "eligible securities depositories" as
defined in Rule 17f-7(b)(1) under the Investment Company Act) which
is listed on Exhibit B hereto (as the same may be amended from time
to time), provided that the particular foreign securities depository
or foreign clearing agency is acceptable for that particular
investment portfolio (each such foreign securities depository or
foreign clearing agency, an "Eligible Foreign Securities
Depository"). Any Property held by an Eligible Foreign Custodian or
Eligible Foreign Securities Depository shall be subject to
applicable laws, regulations, decrees, orders, government acts,
restrictions, customs, procedures and market practices (the "Laws")
(i) to which such Eligible Foreign Custodian or Eligible Foreign
Securities Depository is subject, (ii) as exist in the country in
which such Property is held and (iii) of the country of the currency
in which the Property is denominated. The Customer acknowledges
that, as is normally the case with respect to deposits outside the
United States, deposits with Citibank London and any other entity
authorized to hold Property pursuant to this Agreement are not
insured by the Federal Deposit Insurance Corporation."
B. As between Custodian and PFPC, the final sentence of Section 7(b)
of the Foreign Custody Agreement is hereby amended and restated in its entirety
with respect to the Fund as follows:
"Notwithstanding any of the foregoing provisions of this subsection (b) of
this Section 7, the Bank's undertaking to provide to the Customer, or at
the direction of the Customer to the Fund, the information referred to in
this subsection (b) of this Section 7 shall neither
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increase the Bank's duty of care nor reduce any other entity's
responsibility to determine for itself the prudence of entrusting its
assets to any particular foreign securities depository."
C. As between Custodian and PFPC, Section 9 of the Foreign Custody
Agreement is amended to insert the word "Eligible" before the words "Foreign
Securities Depositories."
D. As between Custodian and PFPC, the fifth paragraph of Section 4
of the Foreign Custody Agreement is hereby deleted.
3.2. The duties of Custodian set forth herein are in addition to the
duties of Custodian under the Foreign Custody Agreement.
3.3. Notwithstanding the provisions of any arrangements between the Fund
and PFPC or otherwise, the Fund hereby agrees that assets may be maintained with
any Eligible Foreign Custodian referred to in Section 1.1 hereof and any foreign
securities depository or foreign clearing agency which is acceptable to it
pursuant to Section 2.3 above (without the need to comply with any notice or
consent or other requirements which may be set forth in any such arrangements).
PFPC will not be deemed to have chosen any such Eligible Foreign Custodians or
any such foreign securities depositories or foreign clearing agencies.
3.4. The Fund shall be entitled to enforce its rights directly against
Custodian with respect to any action or omission of Custodian taken or omitted
hereunder, notwithstanding any other agreement to the contrary. If the Fund is
able to effectively enforce its rights against Custodian hereunder, PFPC will
not also seek to enforce such rights against Custodian under the Foreign Custody
Agreement.
3.5. This document shall apply only to the Fund and shall not apply to any
other customer of PFPC.
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If the foregoing corresponds to your understanding of our agreement, please
indicate your acceptance by signing below.
Very truly yours,
CITIBANK, N.A.
By: /s/ Xxxx Zaabi
------------------------
Name: XXXX ZAABI
Title: Vice President
Agreed and Accepted:
PFPC TRUST COMPANY
By: /s/ Xxxxxxx Xxxxxxxx
------------------------
Name: XXXXXXX XXXXXXXX
Title: V.P. AND DIRECTOR
MERIDIAN FUND, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: XXXXX X. XXXXXXX
Title: Treasurer
Dated: 9-11-03
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Exhibit A
Intentionally left blank
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Global Securities Services Eligible Depositories Exhibit B
Market CyCd Depository Name
---------- ---- --------------------------------------------------
ARGENTINA AR Caja de Valores S.A. (CVSA)
Central de Registracion y Liquidacion de Titulos
Publicos (CRYL)
AUSTRALIA AU Austraclear Limited
Clearing House Electronic Subregister System (CHESS)
AUSTRIA AT Oesterreichische Kontrollbank AG (OeKB)
BANGLADESH BD None
BELGIUM BE Euronext Belgium (ex-CIK)
The Banque Nationale de Belgique/Nationale Bank van
Belgie
BERMUDA BM Bermuda Securities Depository
BOLIVIA BO None
BOTSWANA BW None
BRAZIL BR Companhia Brasileira de Liquidacao e Custodia (CBLC)
Center for the Custody and Financial Settlement of
Securities (CETIP)
Special Settlement and Custody System (SELIC)
BULGARIA BG Tzentralen Depozitar AD (CD AD)
Bulgarian National Bank
CANADA CA The Canadian Depository for Securities Limited
CHILE CL Deposito Central de Valores S.A. (DCV)
CHINA-SHANGAI CN Shanghai Securities Central Clearing & Registering
Corporation (SSCCRC)
CHINA-SHENZHEN Shenzhen Securities Clearing Co. Ltd (SSCC)
CLEARSTREAM XS Clearstream Banking Luxembourg
COLOMBIA CO Deposito Centralizado de Valores (DECEVAL)
Deposito Central de Valores (DCV)
COSTA RICA CR Central de Valores, S.A. (CEVAL)
CROATIA HR Sredisnja Depozitarna Agencija d.d.
CZECH REPUBLIC CZ Stredisko Cennych Papiru (Securities Center)
Czech National Bank (TKD System)
DENMARK DK VP A/S - the Danish Securities Centre
ECUADOR EC Deposito Centralizado de Valores Decevale SA
(DECEVALE)
EGYPT EG Misr for Clearing, Settlement and Depository
ESTONIA EE Estonian Central Depository for Securities (ECDSL)
EUROCLEAR XS Euroclear Bank
FINLAND FI Finnish Central Securities Depository Ltd (APK)
FRANCE FR Euroclear France (Ex Sicovam)
GERMANY DE Clearstream Banking Frankfurt
GREECE GR Central Securities Depository S.A. (CSD)
National Bank of Greece
HONG KONG HK Hongkong Securities Clearing Company Limited (Hongkong
Clearing)
Central Moneymarkets Unit (CMU) Hong Kong Monetary
Authority
HUNGARY HU Kozponti Elszamolohaz es Ertektar Rt (KELER)
INDIA IN National Securities Depository Ltd. (NSDL)
The Reserve Bank of India (RBI)
Central Depository Services Limited (CDS)
INDONESIA ID PT Kustodian Sentral Efek Indonesia (KSEI)
Bank Indonesia
IRELAND IE CRESTCo Limited
Through Euroclear Bank
ISRAEL IL TASE Clearing house
ITALY IT Monte Titoli spa
JAPAN JP Japan Securities Depository Centre (Jasdec)
The Bank of Japan
XXXXXX XX Central Bank of Jordan
LATVIA LV Latvijas Centralais Depozitarijs
Bank of Latvia
LITHUANIA LT Lietuvos Centrinio Vertybiniu Popieriu Depozitoriumo
LUXEMBOURG LU Clearstream Banking - LuxClear Services (LuxClear)
MALAYSIA MY Bank Negara Malaysia
Eligible Securities Depositories Global Securities Services
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Global Securities Services Eligible Depositories Exhibit B
Malaysian Central Depository Sdn Bhd
MAURITIUS MU Central Depository & Settlement Co. Ltd
Bank of Mauritius
MEXICO MX S.D. INDEVAL, S.A. DE C.V. (INDEVAL)
MOROCCO MA Maroclear
THE NETHERLANDS NL Euroclear Netherlands (Ex NECIGEF)
NEW ZEALAND NZ New Zealand Central Securities Depository (NZDCSD)
(Reserve Bank of New Zealand
NORWAY NO Verdipapirsentralen (VPS)
PAKISTAN PK Central Depository Company of Pakistan Ltd.
The State Bank of Pakistan
PERU PE Caja de Valores y Liquidaciones (CAVALI ICLV S.A.)
PHILIPPINES PH Philippine Central Depository, Inc. (PCD)
Registry of Scripless Securities
POLAND PL Krajowy Depozyt Paplerow Wartosclowych
Centralny Rejestr Bonow Skarbowych (National Bank
of Poland)
PORTUGAL PT Banco de Portugal Credit Operations and Markets
Department Interbolsa
ROMANIA RO Bucharest Stock Exchange (Clearing and Settlement
Division)
National Bank of Romania
Societatea Nationala de Compensare, Decontare si
Depozitare Valori Mobillare
RUSSIA RU National Depository Center
Depositary Clearing Company
SINGAPORE SG The Central Depository (Pte) Limited (CDP)
The Monetary Authority of Singapore
SLOVAK REPUBLIC SK National Bank of Slovakia (NBS)
Stredisko Cennych Papierov (SCP)
SLOVENIA SI Centralna Klirinsko Depotna Xxxxxx x.x. (KDD)
SOUTH AFRICA ZA STRATE Ltd
The Central Depository Limited
SOUTH KOREA KR Korea Securities Depository
SPAIN ES Servicio de Compensacion y Liquidacion de Valores
(SCLV)
Bank of Spain
SRI LANKA LK Central Depository Systems (Pvt) Ltd (CDS)
SWEDEN SE Vardepapperscentralen VPC AB
XXXXXXXXXXX XX XXX - XXXXXXXXXXXXXXX XX
XXXXXX XX Xxxxxx Securities Central Depository Co., Ltd
Central Bank of China
THAILAND TH Thailand Securities Depository Co., Ltd.
Bank of Thailand, Bangkok
TURKEY TR IMKB Takas ve Saklama Bankasi A. S.
Central Bank of Turkey
UKRAINE UA National Depository System
U.K. GB CRESTCo Limited
Central Money Markets Office (Bank of England) CMO
U.S. US The Depository Trust Company (DTCC)
Federal Reserve Bank of NY (FED)
VENEZUELA VE Caja Venezolana de Valores (CVV)
ZIMBABWE ZW None
Eligible Securities Depositories Global Securities Services
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