EXHIBIT (9)(F)
SUB-ADMINISTRATION AGREEMENT
SUB-ADMINISTRATION AGREEMENT made this 15th day of October, 1996 between
Waterhouse Asset Management, Inc. ("Waterhouse"), a Delaware corporation, and
Funds Distributor, Inc. ("FDI"), a Massachusetts corporation.
WHEREAS, Waterhouse serves as investment adviser to and provides certain
administrative services for certain open-end management investment companies
registered under the Investment Company Act of 1940, as amended (the "1940 Act")
(the "Funds"), and to certain portfolios of the Funds (each a "Portfolio",
collectively, the "Portfolios") as listed on Schedule A, as such Schedule shall
be automatically amended from time to time, subject to Board of Director
approval;
WHEREAS, Waterhouse serves as administrator for the Funds pursuant to an
Administration Agreement dated as of October 15, 1996, as amended from time to
time;
WHEREAS, Waterhouse desires to retain FDI to assist it in performing
administrative services with respect to the shares of the common stock (the
"Shares") of the Fund and FDI is willing to perform such services on the terms
and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein contained, the
parties agree as follows:
1. Services Provided by FDI. FDI will assist Waterhouse by providing
services to the Portfolios of the Fund, as listed in Exhibit A.
2. Services Provided by Waterhouse. In furtherance of the
responsibilities under this Agreement Waterhouse will:
(a) cause the Fund's service providers to furnish any and all
information and assist FDI in taking any other actions that may be
reasonably necessary in connection with FDI providing those services
listed in Exhibit A;
(b) cause the Fund's blue sky administrator to monitor sales of the
Shares to assure compliance with applicable state securities and Blue
Sky laws;
(c) cause the Fund's transfer agent to give necessary information for
the preparation of quarterly reports in a form satisfactory to FDI
regarding Rule 12b-1 fees, front-end sales loads, back-end sales loads,
if applicable, and other data regarding sales and sales loads as
required by the 1940 Act or as requested by the Board of Directors of
the Fund;
(d) cause the Fund's transfer agent to provide FDI with all necessary
historical information so that FDI can calculate the maximum sales
charges payable by the Fund pursuant to the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. ("NASD") and the
actual sales charges paid by the Fund, if applicable; cause the
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Fund's transfer agent to provide FDI with all of the necessary
information so that FDI can calculate the maximum sales charges payable
by the Fund pursuant to the Rules of Fair Practice of the NASD and the
actual sales charges paid by the Fund, if applicable; and cause the
Fund's transfer agent to provide such information in a form
satisfactory to FDI no less often than monthly for every Fund and on a
daily basis for any Fund where FDI determines that the remaining limit
is approaching zero, if applicable; and
(e) provide FDI with copies of, or access to, any documents that FDI
may reasonably request and will notify FDI as soon as possible of any
matter materially affecting FDI's performance of its services under
this Agreement.
3. Compensation; Reimbursement of Expenses. Waterhouse shall pay FDI the
following fee for the services provided under this Agreement:
(a) an annual fee of $250,000 for Routine Administrative Services, as
defined in Exhibit A, payable in equal monthly installments on the
second business day of each month; and
(b) for Extraordinary Administrative Services, as defined in Exhibit A:
(i) a flat fee to be negotiated after the scope of the
project has been accurately and completely defined; or
(ii) a fee for a particular project based on a blended
hourly rate of $75.00 per person. Only personnel with an
Assistant Vice President title or higher with FDI would xxxx
on an hourly basis.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily and the amounts of the daily accruals shall be paid
monthly in arrears. If this Agreement becomes effective subsequent to the first
day of a month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above. In
addition, Waterhouse agrees to reimburse FDI for FDI's reasonable out-of-pocket
expenses as mutually agreed to by the parties from time to time.
4. Effective Date and Term. This Agreement shall become effective with respect
to a Fund as of the date first written above (or, if a particular Fund is not in
existence on that date, on the date Funds Distributor, Inc. becomes
sub-administrator to the Fund; Schedule A to this Agreement shall be deemed
amended to include such Fund from and after such date).
This Agreement shall become effective as of the date hereof and will continue
until December 12, 1997 and will continue thereafter so long as such continuance
is specifically approved at least annually (i) by the Fund's Board or (ii) by a
vote of a majority (as defined in the 0000 Xxx) of the Shares of the Fund or the
relevant Portfolio, as the case may be, provided that in either event its
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in said Act) of any party to this Agreement and
who have no direct or indirect financial interest in this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable with respect to any
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Portfolio or any Fund, without penalty, on not less than sixty days' notice, by
the Fund's Board of Directors, by vote of a majority (as defined in the 0000
Xxx) of the outstanding voting securities of such Fund, or by you. This
Agreement shall terminate automatically in the event of its "assignment" (as
defined in the 1940 Act). This Agreement may be terminated by either party, on
not less than 60 days written notice, upon any material breach of this Agreement
by the other party. If FDI ceases to be the Sub-Administrator of any Fund before
the fifth anniversary of the date the Fund began its investment activities,
Waterhouse shall reimburse FDI an amount equal to the number resulting from
multiplying the Fund's total unamortized organizational expenses by a fraction,
the numerator of which is equal to the number of initial shares redeemed by FDI
or its affiliate and the denominator of which is equal to the number of initial
shares still outstanding as of the date of such redemption, as long as the
administrative position of the staff of the Securities and Exchange Commission
requires FDI to reimburse the Fund such amount. (Initial shares shall mean the
shares purchased by FDI or an affiliate to provide the initial seed capital to a
Fund pursuant to Section 14 of the 1940 Act.)
5. Standard of Care and Indemnification.
(a) Waterhouse will indemnify and hold harmless FDI, its officers,
employees and agents and any persons who control FDI (together "FDI and its
employees") and hold each of them harmless from any losses, claims, damages
or liabilities, or actions in respect thereof, to which FDI and its
employees may become subject, including amounts paid in settlement with the
prior written consent of Waterhouse, insofar as such losses, claims,
damages or liabilities, or actions in respect thereof, arise out of or
result from the failure of Waterhouse to comply with the terms of this
Agreement;
(b) FDI will indemnify and hold harmless Waterhouse, its officers,
employees and agents and any persons who control Waterhouse (together
"Waterhouse and its employees") and hold each of them harmless from any
losses, claims, damages or liabilities, or actions in respect thereof, to
which Waterhouse and its employees may become subject, including amounts
paid in settlement with the prior written consent of FDI, insofar as such
losses, claims, damages or liabilities, or actions in respect thereof,
arise out of or result from the failure of FDI to comply with the terms of
this Agreement;
Waterhouse will reimburse FDI and its employees for reasonable legal or
other expenses reasonably incurred by FDI and its employees in connection
with investigating or defending against any such loss, claim, damage,
liability or action. Waterhouse shall not be liable to FDI for any action
taken or omitted by FDI in bad faith, with willful misfeasance or gross
negligence, or with reckless disregard by FDI of its obligations and duties
hereunder. The indemnities in this Section shall, upon the same terms and
conditions, extend to and inure to the benefit of each of the employees of
FDI that serve as officers or directors of the Fund and to each of the
directors and officers of FDI and any person controlling FDI within the
meaning of Section 15 of the Securities Act of 1933 ("1933 Act") or Section
20 of the Securities Exchange Act of 1934 ("1934 Act").
FDI will reimburse Waterhouse for reasonable legal or other expenses
reasonably incurred by Waterhouse in connection with investigating or
defending against any such loss, claim,
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damage, liability or action. FDI shall not be liable to Waterhouse for any
action taken or omitted by Waterhouse in bad faith, with willful
misfeasance or gross negligence, or with reckless disregard by Waterhouse
of its obligations and duties hereunder. The indemnities in this Section
shall, upon the same terms and conditions, extend to and inure to the
benefit of each of the directors and officers of Waterhouse and any person
controlling Waterhouse within the meaning of Section 15 for the 1933 Act or
Section 20 of the 1934 Act.
(c) (i) Promptly after an indemnified party (or, if such indemnified party
is not a natural person, a responsible officer of such indemnified party)
receives notice or otherwise becomes aware of the commencement of any
action or other assertion of any losses, claims, damages or liabilities by
any third party, such indemnified party shall, if a claim in respect
thereof is to be made pursuant to this Section 5, notify the indemnitor of
the same in writing (such notice, a "claim notice"); but the omission so to
notify the indemnitor will not relieve the indemnitor from any liability
that it may have to such indemnified party otherwise than under this
Section 5. In the event that the indemnified party notifies the indemnitor
in writing of its waiver of any right to indemnification pursuant to this
Section 5 in respect of any losses, claims, damages or liabilities or
portion thereof, the provisions of clause (ii) of this Section 5(c) shall
not apply.
(ii) Promptly following receipt of a claim notice, the indemnitor, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
and any others the indemnitor may designate in contesting such losses,
claims, damages or liabilities and shall pay the reasonable fees and
disbursements of such counsel related to such contest. In any such contest,
any indemnified party shall have the right to retain its own counsel, but
the reasonable fees and expenses of such counsel shall be at the expense of
such indemnified party unless (A) the indemnitor and the indemnified party
shall have mutually agreed to the retention of such counsel or (B) the
named parties to any such contest (including any impleaded parties) include
both the indemnitor and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnitor shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one firm for all such indemnified parties. The
indemnitor may, at its option, at any time upon written notice to the
indemnified party, assume the responsibility for contesting any losses,
claims, damages or liabilities and may designate counsel satisfactory to
the indemnitor in connection therewith provided that the counsel so
designated would have no actual or potential conflict of interest in
connection with such representation. Unless it shall assume the
responsibility for contesting any losses, claims, damages or liabilities,
the indemnitor shall not be liable for any settlement or compromise of such
losses, claims, damages or liabilities or portion thereof which settlement
or compromise is effected without its written consent, but if settled or
compromised with such consent or if there be a final judgment for the
plaintiff asserting such losses, claims or liabilities, the indemnitor
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement, compromise or judgment. If the
indemnitor assumes responsibility for contesting any losses, claims,
damages or liabilities, it shall be entitled to settle or compromise such
losses, claims, damages or liabilities or portion thereof with the consent
of the indemnified
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party or, if such settlement or compromise provides for release of the
indemnified party in connection with all matters relating to such losses,
claims, damages or liabilities, or, with respect to the settlement or
compromise of a portion of such losses, claims, damages or liabilities, all
matters relating to such portion of such losses, claims, damages or
liabilities, that have been asserted against the indemnified party by the
other parties to such settlement or compromise, without the consent of the
indemnified party. In the event that any expense paid by the indemnitor
pursuant to this Section 6(c) is subsequently determined to not be required
to be borne by the indemnitor, the indemnified party that received such
payment shall promptly refund the amount so paid to the indemnitor. If the
indemnitor assumes responsibility for contesting any losses, claims,
damages or liabilities, the indemnitor shall keep the indemnified party
apprised, on a current basis, of matters concerning such contest, including
without limitation (i) providing the indemnified party with reasonable
notice of and opportunity to be present in person and/or by counsel at
proceedings or discussions of settlement or compromise; (ii) providing the
indemnified party with copies of and opportunity to comment on filings,
papers or settlement agreements proposed to be filed or served by or on
behalf of the indemnitor; and (iii) providing the indemnified party with
copies of filings, papers and proposed settlement agreements received by
the indemnitor from or on behalf of persons asserting such losses, claims,
damages or liabilities.
(d) The obligation to indemnify and provide contribution pursuant to this
Section 6 shall survive the termination of this Agreement.
7. Record Retention and Confidentiality. FDI shall keep and maintain on behalf
of the Fund all books and records which the Fund and FDI are, or may be,
required to keep and maintain in connection with the services to be provided
hereunder pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a-1 and 31a-2 under the 1940 Act. FDI further agrees
that all such books and records shall be the property of the Fund and to make
such books and records available for inspection by the Fund, by Waterhouse, or
by the Securities and Exchange Commission at reasonable times and otherwise to
keep confidential all books and records and other information relative to the
Fund and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
8. Rights of Ownership. All computer programs and procedures developed to
perform the services to be provided by FDI under this Agreement are the property
of FDI.
9. Return of Records. FDI may at its option at any time, and shall promptly upon
the demand of Waterhouse and/or the Fund, turn over to Waterhouse and/or the
Fund and cease to retain FDI's files, records and documents created and
maintained by FDI pursuant to this Agreement so long as FDI shall be able to
retain photocopies of such documents to the extent needed by FDI in the
performance of its services or for its legal protection. If not so turned over
to Waterhouse and/or the Fund, such documents and records will be retained by
FDI for six years from the end of the fiscal year of the Fund for which they
were created. At the end of such six-year period, such records and documents
will be turned over to Waterhouse and/or the Fund unless the Fund authorizes in
writing the destruction of such records and documents.
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10. Representations of Waterhouse. Waterhouse represents and warrants to FDI
that this Agreement has been duly authorized by Waterhouse and, when executed
and delivered by Waterhouse, will constitute a legal, valid and binding
obligation of Waterhouse, enforceable against Waterhouse in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
secured parties.
11. Representations of FDI. FDI represents and warrants that this Agreement has
been duly authorized by FDI and, when executed and delivered by FDI, will
constitute a legal, valid and binding obligation of FDI, enforceable against FDI
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
12. Notices. All notices or other communications hereunder to either party shall
be in writing and shall be deemed sufficient if mailed to Waterhouse at the
following address: Waterhouse Asset Management, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: President; and to FDI at the following address: 00
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000, Attention: President with a copy to
General Counsel or at such other address as such party may designate by written
notice to the other, or in either case if sent by telex, telecopier, telegram or
similar means of same day delivery (with a confirming copy by mail as provided
herein).
13. Headings. Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
14. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party.
15. Governing Law. This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
WATERHOUSE ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
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Dated: October 15, 1996
SCHEDULE A
TO THE AGREEMENT
BETWEEN
WATERHOUSE ASSET MANAGEMENT, INC.
AND
FUNDS DISTRIBUTOR, INC.
NAME OF FUND
WATERHOUSE INVESTORS CASH MANAGEMENT FUND, INC.
Money Market Portfolio
U.S. Government Portfolio
Municipal Portfolio
WATERHOUSE ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
FUNDS DISTRIBUTOR, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
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EXHIBIT A
Administrative Services
Funds Distributor will provide the following routine administrative services
("Routine Administrative Services"):
Corporate and Secretarial Services
o Provide Secretary and the necessary complement of Assistant
Secretaries for the fund. These services will be provided
consistent with the procedures listed in Exhibit B.
o Maintain general corporate calendar. Track all legal and
compliance requirements through annual cycles.
o Four quarterly board meetings per year:
o Prepare agenda and background materials for legal approval
o Make presentations
o Monitor annual approval requirements
o Prepare extensive background material for annual review of
advisory fees
o Prepare minutes
o Follow-up on matters raised at meetings
o Maintain Articles of Incorporation and By-Laws of the Corporation
o Prepare organizational board meeting materials
o Draft contracts, assisting in negotiation and planning, as
appropriate. For example negotiate, draft and keep current the
following contracts: (i) investment advisory and sub-advisory
contracts; (ii) Distribution Agreement; (iii) Bank Agreements;
(iv) Broker Dealer Agreements; (v) Transfer Agency Agreement; (vi)
Custody Agreement; (vii) Administration Agreement and
Sub-Administration Agreement; (viii) 12b-1 Plans and related
agreements; (ix) Shareholder Servicing Plans and Related
Agreements; (x) XXX Custodian Agreements; (xi) Bi-Party Repurchase
Agreements; (xii) Tri-Party Repurchase Agreements; (xiii) Futures
Account Agreement and Procedural Safekeeping Agreement; (xiv) loan
agreements; and (xv) various other agreements and amendments.
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SEC and Public Disclosure Assistance
o Prepare and file one annual amendment to the Fund's registration
statement, including updating prospectuses and SAIs.
o Coordinate/monitor, with assistance from the fund administrator
and fund accountant and any other relevant fund service providers,
XXXXX (Electronic Data Gathering Analysis and Retrieval System)
on-line filings related to post-effective amendments, N-SARs,
24f-2, annual and semi-annual shareholders reports.
o Review annual and semi-annual Shareholder Reports.
o Provide legal assistance for shareholder communications.
Legal Consulting and Planning
o Provide general legal advice on matters relating to portfolio
management, fund operations, mutual fund sales, development of
advertising materials, changing or improving prospectus
disclosure, and any potential changes in the fund's investment
policies, operations, or structure.
o Maintain a continuing awareness of significant emerging regulatory
and legislative developments which may affect the fund, update the
advisor on those developments, and provide related planning
assistance.
o Develop or assist in developing guidelines and procedures to
improve overall compliance by the fund and its various agents.
o Provide advice with regard to fund litigation matters, routine
fund examinations and investigations by regulatory agencies.
o Provide advice regarding long term planning for the Waterhouse
Funds including the creation of new funds or portfolios, corporate
structural changes, mergers, acquisitions, and other asset
gathering plans including new distribution methods.
o Maintain effective communications with fund counsel, counsel to
the "non-interested" board members and to the fund's local
counsel.
o Create and implement timing and responsibility system for outside
legal counsel when necessary to implement major projects and the
legal management of such projects.
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o Monitor activities and billing practices of outside counsel
performing services for the fund or in connection with related
fund activities.
Compliance
o Review of all testing that is done by fund accountant to assist
the advisor in complying with fund prospectus guidelines and
limitations, 1940 Act requirements, and Internal Revenue Code
requirements.
o Review of monthly testing and compliance report created by fund
accountant including:
o Tax compliance testing for gross income, short three,
diversification, and single issuer,
o 5% diversification testing for tax and 1940 Act compliance
based on current market value and acquisition cost testing,
if required,
o Income available for distribution report, which includes
capital gains and interest income,
o Net investment income calculated on per-share basis each
month, and
o Prospectus and 1940 Act compliance testing-tests are tailored
to each individual fund's prospectus and tests against the
type and amount of securities held.
o Jointly create Compliance Manuals and workshops for advisory
personnel with the fund accountant.
o Consultation and advice for resolution of compliance questions
along with the investment advisor, the fund administrator, the
fund counsel and the fund accountant.
o Be actively involved with the management of SEC and other
regulatory examinations.
o Review with the investment advisor and fund administrator summary
reports created by the fund accountant of all compliance issues to
assure immediate compliance adjustments.
o Assist portfolio managers with compliance matters including
reviewing the Compliance Manual on a regular basis and attending
compliance meetings with the portfolio managers.
o Assist in developing guidelines and procedures to improve overall
compliance by the fund and its various agents.
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o Maintain legal liaison with and provide legal advice and counsel
to fund regarding its relationships, contractual or otherwise,
with the various fund agents, such as the adviser, custodian,
transfer agents, and auditors with respect to their activities on
behalf of the fund.
o Advice regarding all fund distribution arrangements for compliance
with applicable banking and broker-dealer regulations.
o Provide other fund officers as requested (e.g. President and
Vice President).
o Maintaining the fund's code of ethics.
Treasury Services
o Providing the Fund's Treasurer and the appropriate complement of
Assistant Treasurers to assume certain specified responsibilities
(these functions will be based upon the day to day work completed
by knowledgeable staff assembled by Waterhouse including the fund
accountant).
o Determining properly chargeable expenses and authorizing payment
of bills for each fund.
o Monitoring and recommending changes to expense accrual rates.
o Coordinate/monitor, with assistance from the investment adviser,
the fund accountant and any other relevant fund service provider,
all required financial materials for review by the board (for
example, items required by SEC Rule 2a-7, 10f-3, 17a-7, and 17e-1
reports, repurchase agreements, dealer lists, securities
transactions).
o Recommending dividends to be voted by the board
o Reviewing and monitoring xxxx-to-market comparisons for money
market funds that are generated by the fund accountant.
o Reviewing, signing off and filing all fund tax returns after such
returns have been prepared and signed by the fund's independent
auditors.
o Assisting (along with the fund accountant) the fund's advisor in
valuing securities which are not readily salable.
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o Function as a liaison with the fund's custodian, fund accountant,
outside auditors and regulators, including managing the planning
and conducting of audits and examinations.
13
Funds Distributor is willing to provide any extraordinary administration
services ("Extraordinary Administrative Services") to the Waterhouse Fund
Family. All of the extraordinary legal functions set forth below may be
accomplished wholly or partially by Funds Distributor depending upon the
circumstances surrounding each request. Extraordinary Administrative Services
may, depending upon the circumstances, include the following:
o Shareholder Meetings
o Draft Proxies
o Organize, attend and keep minutes
o Work with the Transfer Agent on Solicitations and Vote
Tabulation
o Provide legal presence at meetings
o Draft Proxy/Solicitation Documents on Form N-14 (Fund Mergers).
o An Annual Post-Effective Amendment that involves major prospectus
revisions or the addition of new investment portfolios.
o Board Meeting Materials for significant corporate restructuring or
other major changes as well as more than four board meetings
during a twelve month period.
o More than one Post-Effective Amendment in any twelve month period.
o Advice regarding conversion of pooled funds and certain other bank
specific advice.
o Monitor and participate in the preparation of documents for
Exemptive Orders (e.g., Joint Repurchase Account), Revenue Rulings
(e.g., Multi-Class) and other state specific regulatory orders
(e.g., Florida Request for Technical Assistance).
o Filing advertising and sales literature with the appropriate
regulatory entities and providing all compliance review of such
materials.
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EXHIBIT B
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SIGNATURE/OVERSIGHT PROCEDURES
RULE 24e(2)/24f(2) SHARE REGISTRATION
Documents pertaining to filing of fund share registration statements pursuant to
Rule 24e(2) or 24f(2) will be prepared by the fund accountant. The fund
accountant will provide FDI with certain financial information contained in such
filing. After the filing documents have been prepared and reviewed by
Waterhouse, the following will occur:
o Filing documents, accompanied by a completed signature request form
(see copy attached), will be forwarded to appropriate fund officer for
signature.*
o Financial statements providing the basis for the financial information
contained in the filing documents will be provided in "blueprint" form
to Funds Distributor by the fund accountant.
o Documents will be reviewed by Funds Distributor utilizing the
financial statements.
o Completed signature request form will be reviewed by Funds Distributor
for proper authorization.
o Any questions that may arise during review will be directed to
Waterhouse or the fund accountant as appropriate.
o If not in order, Funds Distributor will contact the appropriate
entities or persons with an explanation and, if necessary, documents
will be returned to Waterhouse and/or the fund accountant, as
appropriate, with explanation.
o If in order, documents will be signed by fund officer and returned to
the Waterhouse Legal Department by the request date specified in the
completed signature request form.
o To the extent that Funds Distributor must provide an opinion letter to
which another Fund service provider is the source of knowledge, that
service provider must provide Funds Distributor with an opinion letter
supporting the data that it provides Funds Distributor.
*Contact Persons:
15
2
SIGNATURE/OVERSIGHT PROCEDURES
FORM N-SAR SEMI-ANNUAL REPORT
Semi-annual report on form N-SAR will be prepared for filing by the fund
accountant. The fund accountant will provide Waterhouse and Funds Distributor
with certain financial information required on Form N-SAR. After form has been
completed, the following will occur:
o Form N-SAR, accompanied by completed signature request form (see copy
attached), will be forwarded to Funds Distributor for fund officer
signature.*
o Form will be reviewed by Funds Distributor and Waterhouse.
o Completed Signature Request form will be reviewed for proper
authorization.
o Any questions that may arise during review will be directed to
Waterhouse or the fund accountant appropriate.
o If not in order, Funds Distributor will contact the appropriate
entities or persons with an explanation and, if necessary, form will be
returned to Waterhouse and/or the fund accountant, as appropriate, with
explanation.
o If in order, form will be signed by fund officer and returned to
Waterhouse by the request date specified in the completed signature
request form.
*Contact Person:
16
3
SIGNATURE/OVERSIGHT PROCEDURES
TAX RETURNS
All tax and information returns will be prepared and reviewed by the fund's
auditor. When returns are completed and reviewed, the following will occur:
o Tax and information returns, signed by independent auditors and
accompanied by a completed signature request form (see copy attached),
will be forwarded to Funds Distributor for fund officer signature.*
o All returns will be reviewed by Funds Distributor and Waterhouse.
o Completed signature request form will be reviewed for proper
authorization.
o Any questions that arise during review will be directed to the funds
auditor.
o In not in order, returns will be returned to the funds auditor with
explanation.
o If in order, returns will be signed by fund officer and returned to
the fund auditor.
*Contact Persons:
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4
SIGNATURE/OVERSIGHT PROCEDURES
SEC EXAMINATION/INQUIRIES
When the Securities and Exchange Commission conducts a periodic examination of
the Funds or makes written inquiries for specific information, the following
will occur:
o Waterhouse* will promptly inform Funds Distributor* of such
examination or written inquiry.
o Waterhouse will inform Funds Distributor of the specific nature of
the information requested for examination or by inquiry.
o Funds Distributor will be actively involved with any SEC
examinations.
o Waterhouse will submit to Funds Distributor the response to
SEC-written inquiries.
o Waterhouse will forward to Funds Distributor and each fund officer a
copy of the comment letter received from the SEC upon completion of
examination.
o Waterhouse will forward to Funds Distributor and each fund officer a
copy of the response to the comment letter.
*Contact Person:
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5
SIGNATURE/OVERSIGHT PROCEDURES
AUDIT REPRESENTATION LETTER
The process of examining financial statements of the Funds by independent
auditors includes the receipt of a letter from the Funds in which various
representations are made. This letter will be prepared by the independent
auditors. Upon completion of this letter, the following will occur:
o Letter will be reviewed and signed by Waterhouse authorized signatory.
o Letter will be sent to Funds Distributor for review and fund officer
signature.*
o Letter will be reviewed by Funds Distributor.
o To the extent that Funds Distributor must provide an audit
representation letter to which another Fund service provider is the
source of knowledge (i.e. the fund auditor), that service provider
must provide Funds Distributor with an opinion letter supporting the
audit representation letter or any other data that it provides Funds
Distributor.
o If not in order, letter will be returned to Waterhouse or the fund
auditor with explanation.
o If in order, letter will be signed by fund officer and returned to
independent auditors.
*Contact Persons:
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6
SIGNATURE/OVERSIGHT PROCEDURES
VALUATION OF MUTUAL FUND PORTFOLIO SECURITIES
In connection with the valuation of mutual fund portfolio securities, it is
sometimes necessary to convene a meeting of the Fund's Portfolio Securities
Pricing Committee to place a value on a portfolio security for the purpose of
calculating NAV per share.
o Funds Distributor and a fund officer will be present at meeting,
either in person or by conference call.
o Meeting minutes or memo of Pricing Committee decisions will be sent to
Funds Distributor.
In addition, because of the complexities or large universe of various portfolio
securities (i.e., GNMA and Tax-Exempt Securities), an independent pricing
service is utilized to price such securities.
o Waterhouse will inform Funds Distributor of any change of independent
pricing service.
In connection with money market funds, it is necessary to monitor any deviation
of a fund's net asset value per share calculated using market values from the
fund's net asset value per share calculated using amortized cost prices.
o Waterhouse or the fund accountant will send Funds Distributor,* on a
daily basis, a schedule that indicates each money market fund's net
asset value per share calculated at amortized cost and market value.
o Waterhouse or the fund accountant will send Funds Distributor,* on a
monthly basis, a schedule for each fund, indicating the fund's total
net assets, dividend per share and net asset value per share
calculated at amortized cost and market value.
o Waterhouse will notify Funds Distributor* when Waterhouse intends to
apprise a fund's Board of Directors of information concerning the
fund's net asset value per share.
*Contact Persons:
20
7
SIGNATURE/OVERSIGHT PROCEDURES
CHANGE IN NET ASSET VALUE PER SHARE
If a fund's net asset value per share changes after the day of calculation and
shareholder account processing, the following will occur:
o Waterhouse or the fund accountant will send Funds Distributor* a
schedule that will indicate the fund and change in net asset value per
share.
o Waterhouse or the fund accountant will document the change in net
asset value per share and forward the documentation to Funds
Distributor* accompanied by completed signature request form (see copy
attached).
*Contact Persons:
21
CHANGE IN NET ASSET VALUE PER SHARE
SIGNATURE REQUEST FORM
To:
--------------------------------
From:
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Tel. #: Fax #
----------------- ------------------------
Date:
------------------------------
RIC/Fund Name:
------------------------------------------------
Restated NAV Per Share:
---------------------------------------
Documentation of Change in NAV:
------------------------------------------------
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-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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Waterhouse Approval:
Signature: Date:
--------------------------------------- ----------------
Name:
Title:
Funds Distributor Approval:
Signature: Date:
--------------------------------------- ----------------
Fund Officer
Waterhouse Authorized Signatories Funds Distributor Contact Persons
22
8
SIGNATURE/OVERSIGHT PROCEDURES
RECLAIM OF TAXES WITHHELD FROM
DIVIDENDS ON FOREIGN SECURITIES
Forms necessary to reclaim taxes withheld from dividends paid on foreign
securities are coordinated by the fund's auditor. When these forms require the
signature of a fund officer, the following will occur:
o Completed forms, accompanied by completed signature request form (see
copy attached), will be forwarded to Funds Distributor for fund
officer signature.*
o Funds Distributor will review the form.
o Funds Distributor will review the completed form for proper
authorization.
o Any questions that arise during review will be directed to the fund's
auditor.
o If not in order, form will be returned to the fund's auditor with
explanation.
o If in order, form will be signed by fund officer and returned to the
fund's auditor.
*Contact Persons:
