CUSTODY AGREEMENT
THIS AGREEMENT is made effective the ___ day of __________, 1998, by
and between INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under
the laws of the state of Missouri, having its trust office located at 000
Xxxxxxxxxxxx Xxx, Xxxxxx Xxxx, Xxxxxxxx 00000 ("IFTC"), and FREMONT MUTUAL
FUNDS, INC., a Maryland corporation, having its principal office and place of
business at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint IFTC as custodian of the assets of the
Fund's investment portfolio or portfolios (each a "Portfolio", and collectively
the "Portfolios"); and
WHEREAS, IFTC is willing to accept such appointment on the terms and
conditions hereinafter set forth;
NOW THEREFORE, for and in consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN AND AGENT. Fund hereby constitutes and
appoints IFTC as custodian of the investment securities, interests in
loans and other non-cash investment property, and monies at any time
owned by each of the Portfolios and delivered to IFTC as custodian
hereunder ("Assets").
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to IFTC:
1. That it is a corporation duly organized and existing
and in good standing under the laws of its state of
organization, and that it is registered under the
1940 Act; and
2. That it has the requisite power and authority under
applicable law, its articles of incorporation and its
bylaws to enter into this Agreement; that it has
taken all requisite action necessary to appoint IFTC
as custodian for the Portfolios; that this Agreement
has been duly executed and delivered by Fund; and
that this Agreement constitutes a legal, valid and
binding obligation of Fund, enforceable in accordance
with its terms.
B. IFTC hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and
existing and in good standing under the
laws of the State of Missouri; and
2. That it has the requisite power and authority under
applicable law, its charter and its bylaws to enter
into and perform this Agreement; that this Agreement
has been duly executed and delivered by IFTC; and
that this Agreement constitutes a legal, valid and
binding obligation of IFTC, enforceable in accordance
with its terms.
3. DUTIES AND RESPONSIBILITIES OF THE PARTIES.
A. DELIVERY OF ASSETS. Except as permitted by the 1940 Act, Fund
will deliver or cause to be delivered to IFTC on the effective
date hereof, or as soon thereafter as practicable, and from
time to time thereafter, all Assets acquired by, owned by or
from time to time coming into the possession of each of the
Portfolios during the term hereof. IFTC has no responsibility
or liability whatsoever for or on account of assets not so
delivered.
B. DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or cause
to be turned over to IFTC all of each Portfolio's relevant
accounts and records needed by IFTC to fully and properly
perform its duties and responsibilities hereunder. IFTC may
rely conclusively on the completeness and correctness of such
accounts and records.
C. DELIVERY OF ASSETS TO THIRD PARTIES. IFTC will receive
delivery of and keep safely the Assets of each Portfolio
segregated in a separate account. IFTC will not deliver,
assign, pledge or hypothecate any such Assets to any person
except as permitted by the provisions hereof or any agreement
executed according to the terms of Section 3.P hereof. Upon
delivery of any such Assets to a subcustodian appointed
pursuant hereto (hereinafter referred to as "Subcustodian"),
IFTC will create and maintain records identifying such Assets
as belonging to the applicable Portfolio. IFTC is responsible
for the safekeeping of the Assets only until they have been
transmitted to and received by other persons as permitted
under the terms hereof, except for Assets transmitted to
Subcustodians, for which IFTC remains responsible to the
extent provided herein. IFTC may participate directly or
indirectly through a subcustodian in the Depository Trust
Company (DTC), Treasury/Federal Reserve Book Entry System (Fed
System), Participant Trust Company (PTC) or other depository
approved by Fund (as such entities are defined at 17 CFR
Section 270.17f-4(b)) (each a "Depository" and collectively
the "Depositories"). IFTC will be responsible to Fund for any
loss, damage or expense suffered or incurred by Fund resulting
from the actions or omissions of any Depository only to the
same extent such Depository is responsible to IFTC.
D. REGISTRATION. IFTC will at all times hold registered Assets in
the name of IFTC as custodian, the applicable Portfolio, or a
nominee of either of them, unless specifically directed by
Instructions, as hereinafter defined, to hold such registered
Assets in so-called "street name;" provided that, in any
event, IFTC will hold all such Assets in an account of IFTC as
custodian containing only Assets of the applicable Portfolio,
or only assets held by IFTC as a fiduciary or custodian for
customers; and provided further, that IFTC's records at all
times will indicate the Portfolio or other customer for which
such Assets are held and the respective interests therein. If,
however, Fund
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directs IFTC to maintain Assets in "street name",
notwithstanding anything contained herein to the contrary,
IFTC will be obligated only to utilize its best efforts to
timely collect income due the Portfolio on such Assets and to
notify the Portfolio of relevant information, such as
maturities and pendency of calls, and corporate actions
including, without limitation, calls for redemption, tender or
exchange offers, declaration, record and payment dates and
amounts of any dividends or income, reorganization,
recapitalization, merger, consolidation, split-up of shares,
change of par value, or conversion ("Corporate Actions"). All
Assets and the ownership thereof by Portfolio will at all
times be identifiable on the records of IFTC. Fund agrees to
hold IFTC and its nominee harmless for any liability as a
shareholder of record of securities held in custody.
E. EXCHANGE. Upon receipt of Instructions, IFTC will exchange, or
cause to be exchanged, Assets held for the account of a
Portfolio for other Assets issued or paid in connection with
any Corporate Action or otherwise, and will deposit any such
Assets in accordance with the terms of any such Corporate
Action. Without Instructions, IFTC is authorized to exchange
Assets in temporary form for Assets in definitive form, to
effect an exchange of shares when the par value of stock is
changed, and, upon receiving payment therefor, to surrender
bonds or other Assets at maturity or when advised of earlier
call for redemption, except that IFTC will receive Instruction
prior to surrendering any convertible security.
F. PURCHASES OF INVESTMENTS -- OTHER THAN OPTIONS AND FUTURES. On
each business day on which a Portfolio makes a purchase of
Assets other than options and futures, Fund will deliver to
IFTC Instructions specifying with respect to each such
purchase:
1. If applicable, the name of the Portfolio making such
purchase;
2. The name of the issuer and description of the Asset;
3. The number of shares and the principal amount purchased,
and accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer
through whom the purchase was made; and
9. Whether the Asset is to be received in certificated form or
via a specified Depository.
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In accordance with such Instructions, IFTC will pay for out of
monies held for the purchasing Portfolio, but only insofar as
such monies are available for such purpose, and receive the
Assets so purchased by or for the account of such Portfolio,
except that IFTC, or a Subcustodian, may in its sole
discretion advance funds to such Portfolio which may result in
an overdraft because the monies held on behalf of such
Portfolio are insufficient to pay the total amount payable
upon such purchase. Except as otherwise instructed by Fund,
IFTC will make such payment only upon receipt of Assets: (a)
by IFTC; (b) by a clearing corporation of a national exchange
of which IFTC is a member; or (c) by a Depository.
Notwithstanding the foregoing, (i) IFTC may release funds to a
Depository prior to the receipt of advice from the Depository
that the Assets underlying a repurchase agreement have been
transferred by book-entry into the account maintained with
such Depository by IFTC on behalf of its customers; provided
that IFTC's instructions to the Depository require that the
Depository make payment of such funds only upon transfer by
book-entry of the Assets underlying the repurchase agreement
in such account; (ii) IFTC may make payment for time deposits,
call account deposits, currency deposits and other deposits,
foreign exchange transactions, futures contracts or options,
before receipt of an advice or confirmation evidencing said
deposit or entry into such transaction; and (iii) IFTC may
make, or cause a Subcustodian to make, payment for the
purchase of Assets the settlement of which occurs outside of
the United States of America in accordance with generally
accepted local custom and market practice.
G. SALES AND DELIVERIES OF INVESTMENTS -- OTHER THAN OPTIONS AND
FUTURES. On each business day on which a Portfolio makes a
sale of Assets other than options and futures, Fund will
deliver to IFTC Instructions specifying with respect to each
such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the Asset;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the Assets sold were purchased or other
information identifying the Assets sold and to be
delivered;
5. The trade date; 6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes
or other expenses payable in connection with such sale;
8. The total amount to be received by the Portfolio upon such
sale; and
9. The name and address of the broker or dealer through whom
or person to whom the sale was made.
IFTC will deliver or cause to be delivered the Assets thus
designated as sold for the account of the selling Portfolio as
specified in the Instructions. Except as otherwise instructed
by Fund, IFTC will make such delivery upon receipt of: (a)
payment therefor in such form as is satisfactory to IFTC; (b)
credit to the account of IFTC with a clearing corporation of a
national securities exchange of which IFTC is a member; or (c)
credit to the account maintained by IFTC on behalf of its
customers with a Depository. Notwithstanding the foregoing:
(i) IFTC will deliver Assets held in
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physical form in accordance with "street delivery custom" to a
broker or its clearing agent; or (ii) IFTC may make, or cause
a Subcustodian to make, delivery of Assets the settlement of
which occurs outside of the United States of America upon
payment therefor in accordance with generally accepted local
custom and market practice.
H. PURCHASES OR SALES OF OPTIONS AND FUTURES. On each business
day on which a Portfolio makes a purchase or sale of the
options and/or futures listed below, Fund will deliver to IFTC
Instructions specifying with respect to each such purchase or
sale:
1. If applicable, the name of the Portfolio making such
purchase or sale;
2. In the case of security options:
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through
whom the sale or purchase was made.
3. In the case of options on indices:
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer
through whom the sale or purchase was made, or
other applicable settlement instructions.
4. In the case of security index futures contracts:
a. The last trading date specified in the contract
and, when available, the closing level, thereof;
b. The index level on the date the contract is
entered into;
c. The multiple;
d. Any margin requirements;
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e. The need for a segregated margin account (in
addition to Instructions, and if not already in
the possession of IFTC, Fund will deliver a
substantially complete and executed custodial
safekeeping account and procedural agreement,
incorporated herein by this reference); and
f. The name and address of the futures commission
merchant through whom the sale or purchase was
made, or other applicable settlement instructions.
5. In the case of options on index future contracts:
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening,
exercising, expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. ASSETS PLEDGED OR LOANED. If specifically allowed for in the
prospectus of a Portfolio, and subject to such additional
terms and conditions as IFTC may require:
1. Upon receipt of Instructions, IFTC will release or
cause to be released Assets to the designated pledgee
by way of pledge or hypothecation to secure any loan
incurred by a Portfolio; provided, however, that IFTC
will release Assets only upon payment to IFTC of the
monies borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, further Assets may be
released or caused to be released for that purpose.
Upon receipt of Instructions, IFTC will pay, but only
from funds available for such purpose, any such loan
upon redelivery to it of the Assets pledged or
hypothecated therefor and upon surrender of the note
or notes evidencing such loan.
2. Upon receipt of Instructions, IFTC will release
Assets to the designated borrower; provided, however,
that the Assets will be released only upon deposit
with IFTC of full cash collateral as specified in
such Instructions, and that the lending Portfolio
will retain the right to any dividends, interest or
distribution on such loaned Assets. Upon receipt of
Instructions and the loaned Assets, IFTC will release
the cash collateral to the borrower.
J. ROUTINE MATTERS. IFTC will, in general, attend to all routine
and mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, or other dealings with the
Assets except as may be otherwise provided herein or upon
Instruction from Fund.
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K. DEPOSIT ACCOUNTS. IFTC will open and maintain one or more
special purpose deposit accounts for each Portfolio in the
name of IFTC in such banks or trust companies (including,
without limitation, affiliates of IFTC) as may be designated
by it or Fund in writing ("Accounts"), subject only to draft
or order by IFTC upon receipt of Instructions. IFTC will
deposit all monies received by IFTC from or for the account of
a Portfolio in an Account maintained for such Portfolio.
Subject to Section 5.J hereof, IFTC agrees:
1. To make Fed Funds available to the applicable
Portfolio at 9:00 a.m., Kansas City time, on the
second business day after deposit of any check into
an Account, in the amount of the check;
2. To make funds available immediately upon a deposit
made by Federal Reserve wire; and
3. To make funds available on the next business day
after deposit of ACH wires.
L. INCOME AND OTHER PAYMENTS. IFTC will:
1. Collect, claim and receive and deposit for the
account of the applicable Portfolio all income
(including income from the Accounts) and other
payments which become due and payable on or after the
effective date hereof with respect to the Assets, and
credit the account of such Portfolio in accordance
with the schedule attached hereto as Exhibit A. If,
for any reason, a Portfolio is credited with income
that is not subsequently collected, IFTC may reverse
that credited amount. If monies are collected after
such reversal, IFTC will credit the Portfolio in that
amount;
2. Execute ownership and other certificates and
affidavits for all federal, state and local tax
purposes in connection with the collection of bond
and note coupons; and
3. Take such other action as may be necessary or proper
in connection with (a) the collection, receipt and
deposit of such income and other payments, including
but not limited to the presentation for payment of
all coupons and other income items requiring
presentation; and all other Assets which may mature
or be called, redeemed, retired or otherwise become
payable and regarding which IFTC has actual
knowledge, or should reasonably be expected to have
knowledge; and (b) the endorsement for collection, in
the name of Fund or a Portfolio, of all checks,
drafts or other negotiable instruments.
IFTC, however, will not be required to institute suit or take
other extraordinary action to enforce collection except upon
receipt of Instructions and upon being indemnified to its
satisfaction against the costs and expenses of such suit or
other actions. IFTC will receive, claim and collect all stock
dividends, rights and other similar items and will deal with
the same pursuant to Instructions.
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M. PROXIES AND NOTICES. IFTC will promptly deliver or mail (or
have delivered or mailed) to Fund all proxies properly signed,
all notices of meetings, all proxy statements and other
notices, requests or announcements affecting or relating to
Assets and will, upon receipt of Instructions, execute and
deliver or mail (or cause its nominee to execute and deliver
or mail) such proxies or other authorizations as may be
required. Except as provided herein or pursuant to
Instructions hereafter received by IFTC, neither it nor its
nominee will exercise any power inherent in any such Assets,
including any power to vote the same, or execute any proxy,
power of attorney, or other similar instrument voting any of
such Assets, or give any consent, approval or waiver with
respect thereto, or take any other similar action.
N. DISBURSEMENTS. IFTC will pay or cause to be paid, insofar as
funds are available for the purpose, bills, statements and
other obligations of each Portfolio (including but not limited
to obligations in connection with the conversion, exchange or
surrender of Assets, interest charges, dividend disbursements,
taxes, management fees, custodian fees, legal fees, auditors'
fees, transfer agents' fees, brokerage commissions,
compensation to personnel, and other operating expenses of
such Portfolio) pursuant to Instructions setting forth the
name of the person to whom payment is to be made, and the
amount and purpose of the payment.
O. DAILY STATEMENT OF ACCOUNTS. IFTC will, within a reasonable
time, render to Fund a detailed statement of the amounts
received or paid and of Assets received or delivered for the
account of each Portfolio during each business day. IFTC will
maintain such books and records as are necessary to enable it
to render, from time to time upon request by Fund, a detailed
statement of the Assets. IFTC will permit, and upon
Instruction will cause any Subcustodian to permit, such
persons as are authorized by Fund, including Fund's
independent public accountants, reasonable access to such
records or will provide reasonable confirmation of the
contents of such records, and if demanded, IFTC will permit,
and will cause any Subcustodian to permit, federal and state
regulatory agencies to examine the Assets, books and records
of the Portfolios.
P. APPOINTMENT OF SUBCUSTODIANS. Notwithstanding any other
provisions hereof:
1. All or any of the Assets may be held in IFTC's own
custody or in the custody of one or more other banks
or trust companies (including, without limitation,
affiliates of IFTC) acting as Subcustodians as may be
selected by IFTC. Any such Subcustodian selected by
IFTC must have the qualifications required for a
custodian under the 1940 Act. IFTC will be
responsible to the applicable Portfolio for any loss,
damage or expense suffered or incurred by such
Portfolio resulting from the actions or omissions of
any Subcustodians selected and appointed by IFTC
(except Subcustodians appointed at the request of
Fund and as provided in Subsection 2 below) to the
same extent IFTC would be responsible to Fund
hereunder if it committed the act or omission itself.
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2. Upon request of Fund, IFTC will contract with other
Subcustodians reasonably acceptable to IFTC for
purposes of (a) effecting third-party repurchase
transactions with banks, brokers, dealers, or other
entities through the use of a common custodian or
subcustodian, or (b) providing depository and
clearing agency services with respect to certain
variable rate demand note securities, or (c) for
other reasonable purposes specified by Fund;
provided, however, that IFTC will be responsible to
Fund for any loss, damage or expense suffered or
incurred by Fund resulting from the actions or
omissions of any such Subcustodian only to the same
extent such Subcustodian is responsible to IFTC. Fund
may review IFTC's contracts with such Subcustodians.
Q. FOREIGN CUSTODY MANAGER.
1. DELEGATION TO IFTC AS FCM.The Fund, pursuant to
resolution adopted by its Board of Trustees or
Directors (the "Board"), hereby delegates to IFTC,
subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Section Q with
respect to Foreign Assets held outside the United
States, and IFTC hereby accepts such delegation, as
Foreign Custody Manager ("FCM") of each Portfolio. It
is understood and agreed that IFTC will sub-contract
the performance of its responsibilities hereunder
with State Street Bank & Trust Company. IFTC will be
responsible to the applicable Portfolio for any loss,
damage or expense suffered or incurred by such
Portfolio resulting from the actions or omissions of
State Street Bank & Trust Company to the same extent
IFTC would be responsible to Fund hereunder if it
committed the act or omission itself. References
herein to "FCM" shall include IFTC and State Street
Bank & Trust Company.
2. DEFINITIONS. Capitalized terms in this Section Q have
the following meanings:
"Country Risk" means all factors reasonably related
to the systemic risk of holding Foreign Assets in a
particular country including, but not limited to,
such country's political environment; economic and
financial infrastructure (including financial
institutions such as any Mandatory Securities
Depositories operating in the country); prevailing or
developing custody and settlement practices; and laws
and regulations applicable to the safekeeping and
recovery of Foreign Assets held in custody in that
country.
"Eligible Foreign Custodian" has the meaning set
forth in section (a)(1) of Rule 17f-5, except that
the term does not include Mandatory Securities
Depositories.
"Foreign Assets" means any of the Portfolios'
investments (including foreign currencies) for which
the primary market is outside the United States and
such cash and cash equivalents in amounts deemed by
Fund to be reasonably necessary to effect the
Portfolios' transactions in such investments.
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"Foreign Custody Manager" or "FCM" has the meaning
set forth in section (a)(2) of Rule 17f-5.
"Mandatory Securities Depository" means a foreign
securities depository or clearing agency that, either
as a legal or practical matter, must be used if the
Fund determines to place Foreign Assets in a country
outside the United States (I) because required by law
or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or
clearing agency; or (iii) because maintaining or
effecting trades in securities outside the foreign
securities depository or clearing agency is not
consistent with prevailing or developing custodial or
market practices.
3. COUNTRIES COVERED. The FCM is responsible for
performing the delegated responsibilities defined
below only with respect to the countries and custody
arrangements for each such country listed on Exhibit
C hereto , which may be amended from time to time by
the FCM. The FCM will list on Exhibit C the Eligible
Foreign Custodians selected by the FCM to maintain
the assets of each Portfolio. Mandatory Securities
Depositories are listed on Exhibit D hereto, which
Exhibit D may be amended from time to time by the
FCM. The FCM will provide amended versions of
Exhibits C and D in accordance with subsection 7 of
this Section Q.
Upon the receipt by the FCM of Instructions to open
an account, or to place or maintain Foreign Assets,
in a country listed on Exhibit C, and the fulfillment
by the Fund of the applicable account opening
requirements for such country, the FCM is deemed to
have been delegated by the Board responsibility as
FCM with respect to that country and to have accepted
such delegation. Following the receipt of
Instructions directing the FCM to close the account
of a Portfolio with the Eligible Foreign Custodian
selected by the FCM in a designated country, the
delegation by the Board to IFTC as FCM for that
country is deemed to have been withdrawn and IFTC
will immediately cease to be the FCM of the Portfolio
with respect to that country.
The FCM may withdraw its acceptance of delegated
responsibilities with respect to a designated country
upon written notice to the Fund. Thirty days (or such
longer period as to which the parties agree in
writing) after receipt of any such notice by the
Fund, IFTC will have no further responsibility as FCM
to a Portfolio with respect to the country as to
which IFTC's acceptance of delegation is withdrawn.
4. SCOPE OF DELEGATED RESPONSIBILITIES.
a. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS.
Subject to the provisions of this Section Q,
the FCM may place and maintain the Foreign
Assets in the care of the Eligible Foreign
Custodian selected by the
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FCM in each country listed on Exhibit C, as
amended from time to time.
In performing its delegated responsibilities
as FCM to place or maintain Foreign Assets
with an Eligible Foreign Custodian, the FCM
will determine that the Foreign Assets will
be subject to reasonable care, based on the
standards applicable to custodians in the
country in which the Foreign Assets will be
held by that Eligible Foreign Custodian,
after considering all factors relevant to
the safekeeping of such assets, including,
without limitation, those set forth in Rule
17f-5(c)(1)(I) through (iv).
b. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
The FCM will determine that the contract (or
the rules or established practices or
procedures in the case of an Eligible
Foreign Custodian that is a foreign
securities depository or clearing agency)
governing the foreign custody arrangements
with each Eligible Foreign Custodian
selected by the FCM will provide reasonable
care for the Foreign Assets held by that
Eligible Foreign Custodian based on the
standards applicable to custodians in the
particular country. Each such contract will
include the provisions set forth in Rule
17f-5(c)(2)(I)(A) through (F), or, in lieu
of any or all of the provisions set forth in
said (A) through (F), such other provisions
that the FCM determines will provide, in
their entirety, the same or greater level of
care and protection for the Foreign Assets
as the provisions set forth in said (A)
through (F) in their entirety.
c. MONITORING. In each case in which the FCM
maintains Foreign Assets with an Eligible
Foreign Custodian selected by the FCM, the
FCM will establish a system to monitor (a)
the appropriateness of maintaining the
Foreign Assets with such Eligible Foreign
Custodian and (b) the contract governing the
custody arrangements established by the FCM
with the Eligible Foreign Custodian. In the
event the FCM determines that the custody
arrangements with an Eligible Foreign
Custodian it has selected are no longer
appropriate, the FCM will notify the Board
in accordance with subsection 7 of this
Section Q.
5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
For purposes of this Section Q, the Board will be
solely responsible for considering and determining to
accept such Country Risk, or for delegating that
responsibility to the investment advisor for the
Portfolio, as is incurred by placing and maintaining
the Foreign Assets in each country for which IFTC is
serving as FCM of a Portfolio, and the Board will be
solely responsible for monitoring on a continuing
basis such Country Risk not otherwise delegated to
the advisor and to the extent that the Board
considers necessary or appropriate. The Fund, on
behalf of the Portfolios, and IFTC each expressly
acknowledge
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that the FCM will not be delegated any
responsibilities under this Section Q with respect to
Mandatory Securities Depositories.
6. STANDARD OF CARE AS FCM OF A PORTFOLIO. In performing
the responsibilities delegated to it, the FCM agrees
to exercise reasonable care, prudence and diligence
such as a person having responsibility for the
safekeeping of assets of management investment
companies registered under the 1940 Act would
exercise.
7. REPORTING REQUIREMENTS. The FCM will report the
withdrawal of the Foreign Assets from an Eligible
Foreign Custodian and the placement of such Foreign
Assets with another Eligible Foreign Custodian by
providing to the Board amended Exhibits C and D at
the end of the calendar quarter in which an amendment
to either Schedule has occurred. The FCM will make
written reports notifying the Board of any other
material change in the foreign custody arrangements
of a Portfolio described in this Section Q after the
occurrence of the material change.
8. REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The FCM
represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to IFTC that the Board has
determined that it is reasonable for the Board to
rely on IFTC and State Street Bank & Trust Company to
perform the responsibilities delegated pursuant to
this Contract to IFTC and State Street Bank & Trust
Company as the FCM of each Portfolio and that IFTC
has been granted the authority by Fund to delegate to
State Street Bank & Trust Company the FCM functions
to which IFTC has been appointed by Fund.
9. EFFECTIVE DATE AND TERMINATION OF IFTC AS FCM. The
Board's delegation to IFTC as FCM of a Portfolio will
be effective as of the date hereof and will remain in
effect until terminated at any time, without penalty,
by written notice from the terminating party to the
non-terminating party. Termination will become
effective thirty days after receipt by the
non-terminating party of such notice. The provisions
of subsection 3 of this Section Q govern the
delegation to and termination of IFTC as FCM of the
Fund with respect to designated countries.
R. ACCOUNTS AND RECORDS PROPERTY OF FUND. IFTC acknowledges that
all of the accounts and records maintained by IFTC pursuant
hereto are the property of Fund, and will be made available to
Fund for inspection or reproduction within a reasonable period
of time, upon demand. IFTC will assist Fund's independent
auditors, or upon approval of Fund, or upon demand, any
regulatory body, in any requested review of Fund's accounts
and records but Fund will reimburse IFTC for all expenses and
employee time invested in any such review outside of routine
and normal periodic reviews. Upon receipt from Fund of the
necessary information or instructions, IFTC will supply
information from the books and records it maintains for Fund
that Fund
12
needs for tax returns, questionnaires, periodic reports to
shareholders and such other reports and information requests
as Fund and IFTC agree upon from time to time.
S. ADOPTION OF PROCEDURES. IFTC and Fund hereby adopt the Funds
Transfer Operating Guidelines attached hereto as Exhibit B.
IFTC and Fund may from time to time adopt such additional
procedures as they agree upon, and IFTC may conclusively
assume that no procedure approved or directed by Fund, Fund's
or Portfolio's accountants or other advisors conflicts with or
violates any requirements of the prospectus, articles of
incorporation, bylaws, any applicable law, rule or regulation,
or any order, decree or agreement by which Fund may be bound.
Fund will be responsible for notifying IFTC of any changes in
statutes, regulations, rules, requirements or policies which
might necessitate changes in IFTC's responsibilities or
procedures.
T. ADVANCES. Fund will pay on demand any advance of cash or
securities made by IFTC or any Subcustodian, in its sole
discretion, for any purpose (including but not limited to
securities settlements, purchase or sale of foreign exchange
or foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio. Any such cash advance will be
subject to an overdraft charge at the rate set forth in the
then-current fee schedule from the date advanced until the
date repaid. As security for each such advance, Fund hereby
grants IFTC and such Subcustodian a lien on and security
interest in all Assets at any time held for the account of the
applicable Portfolio, including without limitation all Assets
acquired with the amount advanced. Should Fund fail to
promptly repay the advance, IFTC and such Subcustodian may
utilize available cash and to dispose of such Portfolio's
Assets pursuant to applicable law to the extent necessary to
obtain reimbursement of the amount advanced and any related
overdraft charges.
U. EXERCISE OF RIGHTS; TENDER OFFERS. Upon receipt of
Instructions, IFTC will: (1) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof,
or to the agent of such issuer or trustee, for the purpose of
exercise or sale, provided that the new Assets, if any, are to
be delivered to IFTC; and (2) deposit securities upon
invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered
to IFTC or the tendered securities are to be returned to IFTC.
V. FUND SHARES.
1. Fund will deliver to IFTC Instructions with respect
to the declaration and payment of any dividend or
other distribution on the shares of capital stock of
a Portfolio ("Fund Shares") by a Portfolio. On the
date specified in such Instruction, IFTC will pay out
of the monies held for the account of the Portfolio,
insofar as it is available for such purposes, and
credit to the account of the Dividend Disbursing
Agent for the Portfolio, the amount specified in such
Instructions.
13
2. Whenever Fund Shares are repurchased or redeemed by a
Portfolio, Portfolio or its agent will give IFTC
Instructions regarding the aggregate dollar amount to
be paid for such shares. Upon receipt of such
Instruction, IFTC will charge such aggregate dollar
amount to the account of the Portfolio and either
deposit the same in the account maintained for the
purpose of paying for the repurchase or redemption of
Fund Shares or deliver the same in accordance with
such Instruction. IFTC has no duty or responsibility
to determine that Fund Shares have been removed from
the proper shareholder accounts or that the proper
number of Fund Shares have been canceled and removed
from the shareholder records.
3. Whenever Fund Shares are purchased from Fund, Fund
will deposit or cause to be deposited with IFTC the
amount received for such shares. IFTC has no duty or
responsibility to determine that Fund Shares
purchased from Fund have been added to the proper
shareholder account or that the proper number of such
shares have been added to the shareholder records.
4. INSTRUCTIONS.
Q. The term "Instructions", as used herein, means written
(including telecopied, telexed, or electronically transmitted)
or oral instructions which IFTC reasonably believes were given
by a designated representative of Fund. Fund will deliver to
IFTC, prior to delivery of any Assets to IFTC and thereafter
from time to time as changes therein are necessary, written
Instructions naming one or more designated representatives to
give Instructions in the name and on behalf of Fund, which
Instructions may be received and accepted by IFTC as
conclusive evidence of the authority of any designated
representative to act for Fund and may be considered to be in
full force and effect until receipt by IFTC of notice to the
contrary. Unless such written Instructions delegating
authority to any person to give Instructions specifically
limit such authority to specific matters or require that the
approval of anyone else will first have been obtained, IFTC
will be under no obligation to inquire into the right of such
person, acting alone, to give any Instructions whatsoever. If
Fund fails to provide IFTC any such Instructions naming
designated representatives, any Instructions received by IFTC
from a person reasonably believed to be an appropriate
representative of Fund will constitute valid and proper
Instructions hereunder. "Designated representatives" may
include Fund's or a Portfolio's employees and agents,
including investment managers and their employees.
R. No later than the next business day immediately following each
oral Instruction, Fund will send IFTC written confirmation of
such oral Instruction. At IFTC's sole discretion, IFTC may
record on tape, or otherwise, any oral Instruction whether
given in person or via telephone, each such recording
identifying the date and the time of the beginning and ending
of such oral Instruction.
14
S. Fund will provide, upon IFTC's request a certificate signed by
an officer or designated representative of Fund, as conclusive
proof of any fact or matter required to be ascertained from
Fund hereunder. Fund will also provide IFTC Instructions with
respect to any matter concerning this Agreement requested by
IFTC. If IFTC reasonably believes that it could not prudently
act according to the Instructions, or the instruction or
advice of Fund's or a Portfolio's accountants or counsel, it
may in its discretion, with notice to Fund, not act according
to such Instructions.
5. LIMITATION OF LIABILITY OF IFTC. IFTC is not responsible or liable for,
and Fund will indemnify and hold IFTC harmless from and against, any
and all costs, expenses, losses, damages, charges, counsel fees,
payments and liabilities which may be asserted against or incurred by
IFTC or for which IFTC may be held to be liable, arising out of or
attributable to:
T. IFTC's action or omission to act pursuant hereto; provided
that IFTC has acted in good faith and with due diligence and
reasonable care; and provided further, that IFTC is not liable
for consequential, special, or punitive damages in any event.
U. IFTC's payment of money as requested by Fund, or the taking of
any action which might make it or its nominee liable for
payment of monies or in any other way; provided, however, that
nothing herein obligates IFTC to take any such action or
expend its own monies except in its sole discretion.
V. IFTC's action or omission to act hereunder upon any
Instructions, advice, notice, request, consent, certificate or
other instrument or paper appearing to it to be genuine and to
have been properly executed, including any Instructions,
communications, data or other information received by IFTC by
means of the Systems, as hereinafter defined, or any
electronic system of communication.
W. IFTC's action or omission to act in good faith reliance on the
advice or opinion of counsel for Fund or of its own counsel
with respect to questions or matters of law, which advice or
opinion may be obtained by IFTC at the expense of Fund, or on
the Instructions, advice or statements of any officer or
employee of Fund, or Fund's accountants or other authorized
individuals, and other persons believed by it in good faith to
be expert in matters upon which they are consulted.
X. The purchase or sale of any securities or foreign currency
positions. Without limiting the generality of the foregoing,
IFTC is under no duty or obligation to inquire into:
1. The validity of the issue of any securities purchased
by or for any Portfolio, or the legality of the
purchase thereof or of foreign currency positions, or
evidence of ownership required by Fund to be received
by IFTC, or the propriety of the decision to purchase
or the amount paid therefor;
2. The legality of the sale of any securities or foreign
currency positions by or for any Portfolio, or the
propriety of the amount for which the same are sold;
or
15
3. The legality of the issue or sale of any Fund Shares,
or the sufficiency of the amount to be received
therefor, the legality of the repurchase or
redemption of any Fund Shares, or the propriety of
the amount to be paid therefor, or the legality of
the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment
of any stock dividend.
Y. Any error, omission, inaccuracy or other deficiency in any
Portfolio's accounts and records or other information provided
by or on behalf of a Portfolio to IFTC, or the failure of Fund
to provide, or provide in a timely manner, any accounts,
records, or information needed by IFTC to perform hereunder.
Z. Fund's refusal or failure to comply with the terms hereof
(including without limitation Fund's failure to pay or
reimburse IFTC under Section 5 hereof), Fund's negligence or
willful misconduct, or the failure of any representation or
warranty of Fund hereunder to be and remain true and correct
in all respects at all times.
AA. The use or misuse, whether authorized or unauthorized, of the
Systems or any electronic system of communication used
hereunder, by Fund or by any person who acquires access to the
Systems or such other systems through the terminal device,
passwords, access instructions or other means of access to
such Systems or such other system which are utilized by,
assigned to or otherwise made available to Fund, except to the
extent attributable to any negligence or willful misconduct by
IFTC.
BB. Any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the
payment of money to be received by IFTC on behalf of a
Portfolio until actually received; provided, however, that
IFTC will advise Fund promptly if it fails to receive any such
money in the ordinary course of business and will cooperate
with Fund toward the end that such money is received.
CC. Except as provided in Section 3.P hereof, loss occasioned by
the acts, neglects, defaults or insolvency of any broker,
bank, trust company, or any other person with whom IFTC may
deal.
DD. The failure or delay in performance of its obligations
hereunder, or those of any entity for which it is responsible
hereunder, arising out of or caused, directly or indirectly,
by circumstances beyond the affected entity's reasonable
control, including, without limitation: any interruption, loss
or malfunction of any utility, transportation, computer
(hardware or software) or communication service; inability to
obtain labor, material, equipment or transportation, or a
delay in mails; governmental or exchange action, statute,
ordinance, rulings, regulations or direction; war, strike,
riot, emergency, civil disturbance, terrorism, vandalism,
explosions, labor disputes, freezes, floods, fires, tornadoes,
acts of God or public enemy, revolutions, or insurrection.
16
6. COMPENSATION. In consideration for its services hereunder, Fund will
pay to IFTC the compensation set forth in a separate fee schedule,
incorporated herein by this reference, to be agreed to by Fund and IFTC
from time to time, and reimbursement for IFTC's cash disbursements and
reasonable out-of-pocket costs and expenses, including attorney's fees,
incurred by IFTC in connection with the performance of services
hereunder, on demand. IFTC may charge such compensation against monies
held by it for the account of the Portfolios. IFTC will also be
entitled to charge against any monies held by it for the account of the
Portfolios the amount of any loss, damage, liability, advance,
overdraft or expense for which it is entitled to reimbursement from
Fund, including but not limited to fees and expenses due to IFTC for
other services provided to Fund by IFTC. IFTC will be entitled to
reimbursement by Fund for the losses, damages, liabilities, advances,
overdrafts and expenses of Subcustodians only to the extent that (a)
IFTC would have been entitled to reimbursement hereunder if it had
incurred the same itself directly, and (b) IFTC is obligated to
reimburse the Subcustodian therefor.
7. TERM AND TERMINATION. The initial term of this Agreement is for a
period of two (2) years. Thereafter, Fund or IFTC may terminate the
same by notice in writing, delivered or mailed, postage prepaid, to the
other party and received not less than ninety (90) days prior to the
date upon which such termination will take effect. Upon termination
hereof:
A. Fund will pay IFTC its fees and compensation due hereunder and
its reimbursable disbursements, costs and expenses paid or
incurred to such date;
B. Fund will designate a successor custodian by Instruction to
IFTC by the termination date. In the event no such Instruction
has been delivered to IFTC on or before the date when such
termination becomes effective, then IFTC may, at its option,
(i) choose as successor custodian a bank or trust company
meeting the qualifications for custodian set forth in the 1940
Act and having not less than Two Million Dollars ($2,000,000)
aggregate capital, surplus and undivided profits, as shown by
its last published report, or (ii) apply to a court of
competent jurisdiction for the appointment of a successor or
other proper relief, or take any other lawful action under the
circumstances; provided, however, that Fund will reimburse
IFTC for its costs and expenses, including reasonable
attorney's fees, incurred in connection therewith; and
C. IFTC will, upon payment of all sums due to IFTC from Fund
hereunder or otherwise, deliver all Assets, duly endorsed and
in form for transfer, to the successor custodian, or as
specified by the court, at IFTC's office. IFTC will co-operate
in effecting changes in book-entries at all Depositories. Upon
delivery to a successor or as specified by the court, IFTC
will have no further obligations or liabilities hereunder.
Thereafter such successor will be the successor hereunder and
will be entitled to reasonable compensation for its services.
In the event that Assets remain in the possession of IFTC after the
date of termination hereof for any reason other than IFTC's failure to
deliver the same, IFTC is entitled to compensation as provided in the
then-current fee schedule for its services during such period, and the
provisions hereof relating to the duties and obligations of IFTC will
remain in full force and effect.
17
7. NOTICES. Notices, requests, instructions and other writings addressed
to Fund at the address set forth above, or at such other address as
Fund may have designated to IFTC in writing, will be deemed to have
been properly given to Fund hereunder. Notices, requests, Instructions
and other writings addressed to IFTC at the address set forth above,
Attention: Custody Department, or to such other address as it may have
designated to Fund in writing, will be deemed to have been properly
given to IFTC hereunder.
8. THE SYSTEMS; CONFIDENTIALITY.
EE. If IFTC provides Fund direct access to the computerized
investment portfolio custody systems used by IFTC ("Systems")
or if IFTC and Fund agree to utilize any electronic system of
communication, Fund agrees to implement and enforce
appropriate security policies and procedures to prevent
unauthorized or improper access to or use of the Systems or
such other system.
FF. Fund will preserve the confidentiality of the Systems and the
tapes, books, reference manuals, instructions, records,
programs, documentation and information of, and other
materials relevant to, the Systems and the business of IFTC
("Confidential Information"). Fund agrees that it will not
voluntarily disclose any such Confidential Information to any
other person other than its own employees who reasonably have
a need to know such information pursuant hereto. Fund will
return all such Confidential Information to IFTC upon
termination or expiration hereof.
GG. Fund has been informed that the Systems are licensed for use
by IFTC from one or more third parties ("Licensors"), and Fund
acknowledges that IFTC and Licensors have proprietary rights
in and to the Systems and all other IFTC or Licensor programs,
code, techniques, know-how, data bases, supporting
documentation, data formats, and procedures, including without
limitation any changes or modifications made at the request or
expense or both of Fund (collectively, the "Protected
Information"). Fund acknowledges that the Protected
Information constitutes confidential material and trade
secrets of IFTC and Licensors. Fund will preserve the
confidentiality of the Protected Information, and Fund hereby
acknowledges that any unauthorized use, misuse, disclosure or
taking of Protected Information, residing or existing internal
or external to a computer, computer system, or computer
network, or the knowing and unauthorized accessing or causing
to be accessed of any computer, computer system, or computer
network, may be subject to civil liabilities and criminal
penalties under applicable law. Fund will so inform employees
and agents who have access to the Protected Information or to
any computer equipment capable of accessing the same.
Licensors are intended to be and are third party beneficiaries
of Fund's obligations and undertakings contained in this
Section.
18
HH. Fund hereby represents and warrants to IFTC that it has
determined to its satisfaction that the Systems are
appropriate and suitable for its use. THE SYSTEMS ARE PROVIDED
ON AN AS IS, AS AVAILABLE BASIS. IFTC EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT
NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
9. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:
II. Each Portfolio will be regarded for all purposes hereunder as
a separate party apart from each other Portfolio. Unless the
context otherwise requires, with respect to every transaction
covered hereby, every reference herein to Fund is deemed to
relate solely to the particular Portfolio to which such
transaction relates. Under no circumstances will the rights,
obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any
other Portfolio. The use of this single document to
memorialize the separate agreement of each Portfolio is
understood to be for clerical convenience only and will not
constitute any basis for joining the Portfolios for any
reason.
JJ. Fund may appoint IFTC as its custodian for additional
Portfolios from time to time by written notice, provided that
IFTC consents to such addition. Rates or charges for each
additional Portfolio will be as agreed upon by IFTC and Fund
in writing.
10. MISCELLANEOUS.
KK. This Agreement will be construed according to, and the rights
and liabilities of the parties hereto will be governed by, the
laws of the State of Missouri, without reference to the choice
of laws principles thereof.
LL. All terms and provisions hereof will be binding upon, inure to
the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
MM. The representations and warranties, the indemnifications
extended hereunder, and the provisions of Section 9 hereof are
intended to and will continue after and survive the
expiration, termination or cancellation hereof.
NN. No provisions hereof may be amended or modified in any manner
except by a written agreement properly authorized and executed
by each party hereto.
OO. The failure of either party to insist upon the performance of
any terms or conditions hereof or to enforce any rights
resulting from any breach of any of the terms or conditions
hereof, including the payment of damages, will not be
construed as a continuing or permanent waiver of any such
terms, conditions, rights or privileges, but the same will
continue and remain in full force and effect as if no such
forbearance or waiver had occurred. No waiver, release or
discharge of any party's
19
rights hereunder will be effective unless contained in a
written instrument signed by the party sought to be charged.
PP. The captions herein are included for convenience of reference
only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
QQ. This Agreement may be executed in two or more counterparts,
each of which is deemed an original but all of which together
constitute one and the same instrument.
RR. If any provision hereof is determined to be invalid, illegal,
in conflict with any law or otherwise unenforceable, the
remaining provisions hereof will be considered severable and
will not be affected thereby, and every remaining provision
hereof will remain in full force and effect and will remain
enforceable to the fullest extent permitted by applicable law.
SS. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party.
TT. Neither the execution nor performance hereof will be deemed to
create a partnership or joint venture by and between IFTC and
Fund or any Portfolio.
UU. Except as specifically provided herein, this Agreement does
not in any way affect any other agreements entered into among
the parties hereto and any actions taken or omitted by either
party hereunder will not affect any rights or obligations of
the other party hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST FREMONT MUTUAL FUNDS, INC.
COMPANY
By:___________________________ By:___________________________
Title:________________________ Title:________________________
20
EXHIBIT A -- INCOME AVAILABILITY SCHEDULE
FOREIGN--Income will be credited contractually on pay day in the markets noted
with Contractual Income Policy. The markets noted with Actual income policy will
be credited income when it is received.
MARKET INCOME POLICY MARKET INCOME POLICY MARKET INCOME POLICY
------ ------------- ------ ------------- ------ -------------
Argentina Actual Hong Kong Contractual Poland Actual
Australia Contractual Hungary Actual Portugal Contractual
Austria Contractual India Actual Russia Actual
Bahrain Actual Indonesia Actual Singapore Contractual
Bangladesh Actual Ireland Actual Slovak Republic Actual
Belgium Contractual Israel Actual South Africa Actual
Bermuda Actual Italy Contractual South Korea Actual
* Bolivia Actual Ivory Coast Actual Spain Contractual
Botswana Actual * Jamaica Actual Sri Lanka Actual
Brazil Actual Japan Contractual Swaziland Actual
Canada Contractual Jordan Actual Sweden Contractual
Chile Actual Kenya Actual Switzerland Contractual
China Actual Lebanon Actual Taiwan Actual
Colombia Actual Luxembourg Actual Thailand Actual
Cyprus Actual Malaysia Actual * Trinidad & Actual
Tobago
Czech Republic Actual Mauritius Actual * Tunisia Actual
Denmark Contractual Mexico Actual Turkey Actual
Ecuador Actual Morocco Actual United Kingdom Contractual
Egypt Actual Namibia Actual United States See Attached
**Euroclear Contractual/ Netherlands Contractual Uruguay Actual
Actual
Euro CDs Actual New Zealand Contractual Venezuela Actual
Finland Contractual Norway Contractual Zambia Actual
France Contractual Oman Actual Zimbabwe Actual
Germany Contractual Pakistan Actual
Ghana Actual Peru Actual
Greece Actual Philippines Actual
* Market is not 17F-5 eligible
** For Euroclear, contractual income paid only in markets listed with Income
Policy of Xxxxxxxxxxx.
00
XXXXXX XXXXXX--
INCOME TYPE DTC FED PTC PHYSICAL
----------- --- --- --- --------
Dividends Contractual N/A N/A Actual
Fixed Rate Interest Contractual Contractual N/A Actual
Variable Rate Interest Contractual Contractual N/A Actual
GNMA I N/A N/A Contractual PD +1 N/A
GNMA II N/A N/A Contractual PD *** N/A
Mortgages Actual Contractual Contractual Actual
Maturities Actual Contractual N/A Actual
Exceptions to the above Contractual Income Policy include securities that are:
o Involved in a trade whose settlement either failed, or is pending over the
record date, (excluding the United States);
o On loan under a self directed securities lending program other than IFTC's
own vendor lending program;
o Known to be in a condition of default, or suspected to present a risk of
default or payment delay;
o In the asset categories, without limitation, of Private Placements,
Derivatives, Options, Futures, CMOs, and Zero Coupon Bonds.
o Securities whose amount of income and redemption cannot be calculated in
advance of payable date, or determined in advance of actual collection,
examples include ADRs;
o Payments received as the result of a corporate action, not limited to, bond
calls, mandatory or optional puts, and tender offers.
*** For GNMA II securities, if the 19th day of the month is a business day,
Payable/Distribution Date is the next business day. If the 19th is not a
business day, but the 20th is a business day, Payable/Distribution date is the
first business day after the 20th. If both the 19th and 20th are not business
days, Payable/Distribution will be the next business day thereafter.
22
EXHIBIT B -- FUNDS TRANSFER OPERATING GUIDELINES
1 OBLIGATION OF THE SENDER: IFTC is authorized to promptly debit Fund's
("Client's") account(s) upon the receipt of a payment order in compliance with
any of the Security Procedures chosen by the Client, from those offered on the
attached selection form (and any updated selection forms hereafter executed by
the Client), for funds transfers and in the amount of money that IFTC has been
instructed to transfer. IFTC is hereby instructed to accept funds transfer
instructions only via the delivery methods and Security Procedures indicated on
the attached selection form (and any updated executed by the Client). The Client
agrees that the Security Procedures are reasonable and adequate for its wire
transfer transactions and agrees to be bound by any payment orders, amendments
and cancellations, whether or not authorized, issued in its name and accepted by
IFTC after being confirmed by any of the selected Security Procedures. The
Client also agrees to be bound by any other valid and authorized payment order
accepted by IFTC. IFTC shall execute payment orders in compliance with the
selected Security Procedures and with the Client's/Investment Manager's
instructions on the execution date provided that such payment order is received
by the customary deadline for processing such a request, unless the payment
order specifies a later time. IFTC will use reasonable efforts to execute on the
execution date payment orders received after the customary deadline, but if it
is unable to execute any such payment order on the execution date, such payment
order will be deemed to have been received on the next business day.
2 SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered by IFTC.
The Client shall restrict access to confidential information relating to the
Security Procedures to authorized persons as communicated in writing to IFTC.
The Client must notify IFTC immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Client's authorized personnel. IFTC shall verify the authenticity of all
instructions according to the selected Security Procedures.
3 ACCOUNT NUMBERS: IFTC shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number, the
account number shall take precedence and govern. Financial institutions that
receive payment orders initiated by IFTC at the instruction of the Client may
also process payment orders on the basis of account numbers, regardless of any
name included in the payment order. IFTC will also rely on any financial
institution identification numbers included in any payment order, regardless of
any financial institution name included in the payment order.
4 REJECTION: IFTC reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of IFTC's receipt of such payment order;
(b) if initiating such payment order would cause IFTC, in IFTC's sole judgment,
to exceed any applicable volume, aggregate dollar, network, time, credit or
similar limits upon wire transfers; or (c) if IFTC, in good faith, is unable to
satisfy itself that the transaction has been properly authorized.
23
5 CANCELLATION OR AMENDMENT: IFTC shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in compliance
with the selected Security Procedures provided that such requests are received
in sufficient time to afford IFTC a reasonable opportunity to act prior to
executing the payment order. However, IFTC assumes no liability if the request
for amendment or cancellation cannot be satisfied by IFTC's reasonable efforts.
6 ERRORS: IFTC shall assume no responsibility for failure to detect any
erroneous payment order provided that IFTC complies with the payment order
instructions as received and IFTC complies with the selected Security
Procedures. The Security Procedures are established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7 INTEREST AND LIABILITY LIMITS: IFTC shall assume no responsibility for lost
interest with respect to the refundable amount of any unauthorized payment
order, unless IFTC is notified of the unauthorized payment order within thirty
(30) days of notification by IFTC of the acceptance of such payment order. In no
event (including but not limited to failure to execute a payment order) shall
IFTC be liable for special, indirect or consequential damages, even if advised
of the possibility of such damages.
8 AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When the
Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the Mid-America Payment Exchange or other similar body, IFTC or its agent
will act as an Originating Depository Financial Institution and/or Receiving
Depository Financial Institution, as the case may be, with respect to such
entries. Credits given with respect to an ACH credit entry are provisional until
final settlement for such entry is received from the Federal Reserve Bank. If
such final settlement is not received, the Client agrees to promptly refund the
amount credited to the Client in connection with such entry, and the party
making payment to the Client via such entry shall not be deemed to have paid the
amount of the entry.
9 CONFIRMATIONS: Confirmation of IFTC's execution of payment orders shall
ordinarily be provided within 24 hours. Notice may be delivered through IFTC's
account statements, advices, information systems, or by facsimile or callback.
The Client must report any objections to the execution of a payment order within
30 days.
10 MISCELLANEOUS: IFTC may use the Federal Reserve System Fedwire to execute
payment orders, and any payment order carried in whole or in part through
Fedwire will be subject to applicable Federal Reserve Board rules and
regulations. IFTC and the Client agree to cooperate to attempt to recover any
funds erroneously paid to wrong parties, regardless of any fault of IFTC or the
Client, but the party responsible for the erroneous payment shall bear all costs
and expenses incurred in trying to effect such recovery. These Guidelines may
not be amended except by a written agreement signed by the parties.
24
SECURITY PROCEDURES SELECTION FORM
Please select one or more of the funds transfer security procedures
indicated below.
[] SWIFT SWIFT (Society for Worldwide Interbank Financial
Telecommunication) is a cooperative society owned and operated by
member financial institutions that provides telecommunication services
for its membership. Participation is limited to securities brokers and
dealers, clearing and depository institutions, recognized exchanges for
securities, and investment management institutions. SWIFT provides a
number of security features through encryption and authentication to
protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent
changes to messages. SELECTION OF THIS SECURITY PROCEDURE WOULD BE MOST
APPROPRIATE FOR EXISTING SWIFT MEMBERS.
[] REMOTE BATCH TRANSMISSION Wire transfer instructions are delivered
via Computer-to-Computer (CPU-CPU) data communications between the
Client and/or its agent and IFTC and/or its agent. Security procedures
include encryption and/or the use of a test key by those individuals
authorized as Automated Batch Verifiers or a callback procedure to
those individuals. CLIENTS SELECTING THIS OPTION SHOULD HAVE AN
EXISTING FACILITY FOR COMPLETING CPU-CPU TRANSMISSIONS. THIS DELIVERY
MECHANISM IS TYPICALLY USED FOR HIGH-VOLUME BUSINESS SUCH AS
SHAREHOLDER REDEMPTIONS AND DIVIDEND PAYMENTS.
[] TELEPHONE CONFIRMATION (CALL BACK) This procedure requires Clients to
designate individuals as authorized initiators and authorized
verifiers. IFTC will verify that the instruction contains the signature
of an authorized person and prior to execution of the payment order,
will contact someone other than the originator at the Client's location
to authenticate the instruction. SELECTION OF THIS ALTERNATIVE IS
APPROPRIATE FOR CLIENTS WHO DO NOT HAVE THE CAPABILITY TO USE OTHER
SECURITY PROCEDURES.
[] TEST KEY Test Key confirmation will be used to verify all
non-repetitive funds transfer instructions received via facsimile or
phone. IFTC will provide test keys if this option is chosen. IFTC will
verify that the instruction contains the signature of an authorized
person and prior to execution of the payment order, will authenticate
the test key provided with the corresponding test key at IFTC.
SELECTION OF THIS ALTERNATIVE IS APPROPRIATE FOR CLIENTS WHO DO NOT
HAVE THE CAPABILITY TO USE OTHER SECURITY PROCEDURES.
[] REPETITIVE WIRES For situations where funds are transferred
periodically from an existing authorized account to the same payee
(destination bank and account number) and only the date and currency
amount are variable, a repetitive wire may be implemented. Repetitive
wires will be subject to a $10 million limit. If the payment order
exceeds the $10 million limit, the instruction will be confirmed by
telephone or test key prior to execution. Repetitive wire instructions
must be reconfirmed annually. Clients may establish Repetitive Wires by
following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key. THIS ALTERNATIVE IS RECOMMENDED
WHENEVER FUNDS ARE FREQUENTLY TRANSFERRED BETWEEN THE SAME TWO
ACCOUNTS.
25
[] STANDING INSTRUCTIONS Funds are transferred by IFTC to a counter
party on the Client's established list of authorized counter parties.
Only the date and the dollar amount are variable. Clients may establish
Standby Instructions by following the agreed upon security procedures
as described by Telephone Confirmation (Call Back) or Test Key. THIS
OPTION IS USED FOR TRANSACTIONS THAT INCLUDE BUT ARE NOT LIMITED TO
FOREIGN EXCHANGE CONTRACTS, TIME DEPOSITS AND TRI-PARTY REPURCHASE
AGREEMENTS.
[] AUTOMATED CLEARING HOUSE (ACH) IFTC or its agent receives an automated
transmission from a Client for the initiation of payment (credit) or
collection (debit) transactions through the ACH network. The
transactions contained on each transmission or tape must be
authenticated by the Client. The transmission is sent from the Client's
or its agent's system to IFTC's or its agent's system with encryption.
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
_______________________________ _______________________________
Name Name
_______________________________ _______________________________
Address Address
_______________________________ _______________________________
City/State/Zip Code City/State/Zip Code
_______________________________ _______________________________
Telephone Number Telephone Number
_______________________________
Facsimile Number
_______________________________
SWIFT Number
FREMONT MUTUAL FUNDS, INC.
By:_____________________________
Title:__________________________
Date:___________________________
00
XXXXXXX X
XXXXX XXXXXX GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria GiroCredit Bank Aktiengesellschaft der Sparkassen --
Bahrain The British Bank of the Middle East (as delegate --
of the Hongkong and Shanghai Banking Corporation
Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale Bank --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's The Hongkong and Shanghai Banking Corporation --
Republic of Limited Shanghai and Shenzhen branches
China
Colombia Cititrust Colombia S.A.Sociedad Fiduciaria --
Croatia Privredana banka Zagreb d.d --
Cyprus Barclays Bank PLC Cyprus Offshore Banking Unit --
Czech Ceskoslovenska Obchodni Banka A.S. --
Republic
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
00
XXXXXXX X
XXXXX XXXXXX GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Xxxxxx Bank Limited --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A Bank of Greece
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
India Deutsche Bank AG;The Hongkong and Shanghai --
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques en Cote d'Ivoire --
Jamaica Scotiabank Trust and Merchant Bank --
Japan The Daiwa Bank, Limited; The Fuji Bank Limited Japan
The Sumitomo Trust & Banking Co., Ltd. Securities
Depository
Jordan The British Bank of the Middle East (as delegate --
of the Hongkong and Shanghai Banking Corporation
Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Citibank, N.A. --
Korea
00
XXXXXXX X
XXXXX XXXXXX GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
Lebanon The British Bank of the Middle Custodian and Clearing
East (as delegate of the Center of Financial
Hongkong and Shanghai Banking Instruments for
Corporation Limited) Lebanon (MIDCLEAR)
X.X.X.;
Malaysia Standard Chartered Bank Malaysia Berhad --
Mauritius The Hongkong and Shanghai Banking --
Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group (New Zealand) Limited --
Norway Christiania Bank og Kreditkasse --
Oman The British Bank of the Middle East(as --
delegate of the Hongkong and Shanghai
Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank Poland S.A. --
Portugal Banco Comercial Portugues --
Romania ING Bank, N.V. --
Russia Credit Suisse First Boston, Zurich via Credit --
Suisse First Boston Limited, Moscow
Singapore The Development Bank of Singapore Ltd. --
Slovak Ceskoslovenska ObchodnaBanka A.S. --
Republic
29
EXHIBIT C
STATE STREET GLOBAL CUSTODY NETWORK SUBCUSTODIANS AND OPTIONAL DEPOSITORIES
COUNTRY SUBCUSTODIAN OPTIONAL DEPOSITORIES
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai Banking Corporation
Limited --
Swaziland Barclays Bank of Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland Union Bank of Switzerland --
Taiwan - Central Trust of China --
R.O.C.
Thailand Standard Chartered Bank --
Trinidad Republic Bank Ltd. --
& Tobago
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
United State Street Bank and Trust --
Kingdom
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
30
EXHIBIT D
STATE STREET GLOBAL CUSTODY NETWORK MANDATORY DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS
MANDATORY AS A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A
MATTER OF MARKET PRACTICE)
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information andTransfer System
Austria -Oesterreichische Kontrollbank AG (Wertpapiersammelbank
Division)
Belgium -Caisse Interprofessionnelle de Depots et de Virements de
Titres S.A.;
-Banque Nationale de Belgique
Brazil -Bolsa de Valores de Sao Paulo;
-Bolsa de Valores de Rio de Janeiro
-All SSB CLIENTS PRESENTLY USE CALISPA
-Central de Custodia e de Liquidacao Financeira de Titulos
-Banco Central do Brasil, Systema Especial de Liquidacao e
Custodia
Canada -The Canadian Depository for Securities Limited; West
Canada Depository Trust Company [DEPOSITORIES LINKED]
People's Republic -Shanghai Securities Central Clearing and Registration
of China Corporation;
-Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance
Czech Republic --Stredisko cennych papiru(Degree);
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish Securities Center
Egypt -Misr Company for Clearing, Settlement, and Central
Depository
Estonia -Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities Depository
France -Societe Interprofessionnelle pour la Compensation des
Valeurs Mobilieres;
-Banque de France, Saturne System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository (Apothetirion Titlon
A.E.);
Hong Kong -The Central Clearing and Settlement System;
-The Central Money Markets Unit
31
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS
MANDATORY AS A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A
MATTER OF MARKET PRACTICE)
Hungary -The Central Depository and Clearing House (Budapest) Ltd.
[MANDATORY FOR GOV'T BONDS ONLY; SSB DOES NOT USE FOR
OTHER SECURITIES]
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland, The Gilt Settlement Office
Israel -The Clearing House of the Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository
Lebanon -The Central Bank of Lebanon
Malaysia -Malaysian Central Depository Sdn. Bhd.;
-Bank Negara Malaysia, Scripless Securities Trading and
Safekeeping Systems
Mauritius -The Central Depository & Settlement System
Mexico -S.D. INDEVAL, S.A. de C.V.(Instituto para el Deposito de
Valores);
Netherlands -Nederlands Centraal Instituut voor Giraal Effectenverkeer
B.V. ("NECIGEF") [** IT IS PLANNED THAT AS OF 1/1/98
NBNV WILL NO LONGER HOLD GOVERNMENT SECURITIES, ALL
SECURITIES WILL BE TRANSFERRED TO NECIGEF];
-De Nederlandsche Bank N.V. ("NBNV")**
New Zealand -New Zealand Central Securities Depository Limited
Norway -Verdipapirsentralen -The Norwegian Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones (CAVALI, S.A.)
Philippines -The Philippines Central Depository Inc.
-The Book-Entry-System of Bangko Sentral ng Pilipinas;
32
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS
MANDATORY AS A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A
MATTER OF MARKET PRACTICE)
-The Registry of Scripless Securities of the Bureau of the
Treasury
Poland -The National Depository of Securities (Krajowy Depozyt
Papierow Wartos'ciowych);
-National Bank of Poland
Portugal -Central de Valores Mobiliarios
Romania -National Securities Clearing, Settlement and Depository
Co.;
-Bucharest Stock Exchange;
-National Bank of Romania
Singapore -The Central Depository (Pte)Limited;
-Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y Liquidacion de Valores, S.A.;
-Banco de Espana, Anotaciones en Cuenta
Sri Lanka -Central Depository System (Pvt) Limited
Sweden -Vardepapperscentralen VPC AB - The Swedish Central
Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central Depository Company, Ltd.
Thailand -Thailand Securities Depository Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Tunisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
United Kingdom -The Bank of England, The Central Gilts Office; The
Central Moneymarkets Office; The European Settlements
Office;
-First Chicago Clearing Centre
33
COUNTRY MANDATORY DEPOSITORIES (INCLUDES ENTITIES FOR WHICH USE IS
MANDATORY AS A MATTER OF LAW OR EFFECTIVELY MANDATORY AS A
MATTER OF MARKET PRACTICE)
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
34
