EXHIBIT (h)(1)
Delegation Amendment
October 1, 2003
Xx. Xxxx X. XxXxxxx
The Preferred Group of Mutual Funds
000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000-0000
Dear Xx. XxXxxxx:
The Preferred Group of Mutual Funds (the "Fund") and State Street Bank and Trust
Company (the "Transfer Agent") are parties to an agreement dated as of June 23,
1992 (the "Agreement") under which the Transfer Agent performs certain transfer
agency and/or record-keeping services for the Fund. In connection with the
enactment of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 and the
regulations promulgated thereunder, (collectively, the "USA PATRIOT Act"), the
Fund has requested and the Transfer Agent has agreed to amend the Agreement as
of the date hereof in the manner set forth below:
WHEREAS, the USA PATRIOT Act imposes new anti-money laundering requirements on
financial institutions, including mutual funds;
WHEREAS, the Fund recognizes the importance of complying with the USA PATRIOT
Act and the Fund has developed and implemented a written anti-money laundering
program, which is designed to satisfy the requirements of the USA PATRIOT Act,
(the "Fund's Program");
WHEREAS, the USA PATRIOT Act authorizes a mutual fund to delegate to a service
provider, including its transfer agent, the implementation and operation of
aspects of the fund's anti-money laundering program; and
WHEREAS, the Fund desires to delegate to the Transfer Agent the implementation
and operation of certain aspects of the Fund's Program and the Transfer Agent
desires to accept such delegation.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements hereinafter contained, the parties hereby agree to amend the
Agreement, pursuant to the terms thereof, as follows:
1. Delegation; Services.
1.1 Subject to the terms and conditions set forth in the Agreement, the
Transfer Agent agrees to perform those services that are set forth on
Exhibit A, attached hereto. The services set forth on Exhibit A may be
amended, from time to time, by mutual agreement of the parties upon the
execution by both parties of a revised Exhibit A bearing a later date
than the date hereof.
1.2 The Transfer Agent agrees to perform such services, with respect to the
ownership, or attempted ownership, of shares in the Fund for which the
Transfer Agent maintains the applicable shareholder information,
subject to and in accordance with the terms and conditions of the
Agreement.
2. Consent to Examination/Audits.
2.1 In connection with the performance by the Transfer Agent of the
services hereunder, the Transfer Agent understands and acknowledges
that the Fund remains responsible for assuring compliance with the USA
PATRIOT Act and that the records the Transfer Agent maintains for the
Fund relating to the Fund's Program may be subject, from time to time,
to examination and/or inspection by federal regulators and/or the
Fund's auditors in order that the regulators and/or Fund auditors may
evaluate such compliance. The Transfer Agent hereby consents to such
examination and/or inspection and agrees to cooperate with such federal
examiners and Fund auditors in connection with their reviews. For
purposes of such examination and/or inspection, the Transfer Agent will
use its best efforts to make available, during normal business hours,
all required records and information for review by such examiners or
Fund auditors. With respect to Fund directed audits, the Transfer Agent
shall provide such assistance in accordance with reasonable procedures
and at reasonable frequencies, which shall not exceed once per quarter
unless otherwise agreed to by the parties, and the Fund shall provide
reasonable advance notice to the Transfer Agent of such Fund directed
audits.
3. Limitation on Delegation.
3.1 The Fund acknowledges and agrees that in accepting the delegation
hereunder, the Transfer Agent is agreeing to perform only those
services on Exhibit A, as such exhibit may be amended from time to time
by mutual agreement of the parties, and is not undertaking and shall
not be responsible for any other aspect of the Fund's Program or for
the overall compliance by the Fund with the USA PATRIOT Act.
Additionally, the parties acknowledge and agree that the Transfer Agent
shall only be responsible for performing such services with respect to
the ownership, or attempted ownership, of shares in the Fund for which
the Transfer Agent maintains the applicable shareholder information.
4. Expenses.
4.1 In consideration of the performance of the foregoing duties, the Fund
agrees to pay the Transfer Agent for the reasonable administrative
expense that may be associated with such additional duties. The terms
of the Agreement shall apply with respect to the payment of such
expense in the same manner and to the same extent as any other expenses
incurred under the Agreement.
5. Miscellaneous.
5.1 In all other regards, the terms and provisions of the Agreement shall
continue to apply with full force and effect.
5.2 Each party represents to the other that the execution and delivery of
this Amendment has been duly authorized.
5.3 This Amendment shall supercede the amendment between the Fund and the
Transfer Agent dated July 19, 2002.
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IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of
the date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
___________________________ By:_________________________________
Xxxxxx X. Xxxxxx,
Executive Vice President
Name:______________________
Title:_______________________
WITNESSED BY: The Preferred Group of Mutual Funds
___________________________ By:_________________________________
Name:______________________ Name:_______________________________
Title:________________________ Title:______________________________
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EXHIBIT A
DELEGATED DUTIES
Date: October 1, 2003
With respect to the ownership of shares in the Fund for which the Transfer Agent
maintains the applicable shareholder information, the Transfer Agent shall:
o Submit all new account and registration maintenance transactions through
the Office of Foreign Assets Control ("OFAC") database and such other lists
or databases of trade restricted individuals or entities as may be required
from time to time by applicable regulatory authorities.
o Submit special payee checks through the OFAC database.
o Review redemption transactions that occur within thirty (30) days of
account establishment or maintenance.
o Review wires sent pursuant to banking instructions other than those on file
with the Transfer Agent.
o Review accounts with small balances followed by large purchases.
o Review accounts with frequent activity within a specified date range
followed by a large redemption.
o On a daily basis, review purchase and redemption activity per tax
identification number ("TIN") within the Funds to determine if activity for
that TIN exceeded the $100,000 threshold on any given day.
o Compare all new accounts and registration maintenance through the Known
Offenders database and notify the Fund of any match.
o Monitor and track cash equivalents under $10,000 for a rolling twelve-month
period and file IRS Form 8300 and issue the shareholder notices required by
the IRS.
o Determine when a suspicious activity report ("SAR") should be filed as
required by regulations applicable to mutual funds; prepare and file the
SAR. Provide the Fund with a copy of the SAR within a reasonable time after
filing; notify the Fund if any further communication is received from U.S.
Department of the Treasury or other law enforcement agencies regarding the
SAR.
o Compare account information to any FinCEN request received by the Fund and
provided to the Transfer Agent pursuant to USA PATRIOT Act Sec. 314(a).
Provide the Fund with documents/information necessary to respond to
requests under USA PATRIOT Act Sec. 314(a) within required time frames.
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EXHIBIT A
DELEGATED DUTIES
Date: October 1, 2003
(continued)
o In accordance with procedures agreed upon by the parties (which may be
amended from time to time by mutual agreement of the parties) (i) Verify
the identity of any person seeking to open an account with the Fund, (ii)
Maintain records of the information used to verify the person's identity
and (iii) Determine whether the person appears on any lists of known or
suspected terrorists or terrorists organizations provided to the Fund by
any government agency.
In the event that the Transfer Agent detects suspicious activity as a
result of the foregoing procedures, which necessitates the filing by the
Transfer Agent of a SAR, a Form 8300 or other similar report or notice to OFAC
or other regulatory agency, then the Transfer Agent shall also immediately
notify the Fund unless prohibited by applicable Law.
THE PREFERRED GROUP OF STATE STREET BANK AND TRUST COMPANY
MUTUAL FUNDS
By:_________________________ By:______________________________________
Xxxxxx X. Xxxxxx,
Name:______________________ Executive Vice President
Title:_______________________
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