Exhibit (d)3.1
YIELD CALCULATION SERVICES AGREEMENT
AGREEMENT made between Xxxxx Xxxxxxx Investment Company, a
Massachusetts business trust, organized and existing under the laws of
Massachusetts having its principal place of business at 0000 Xxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxx 00000 (the "Fund") and State Street Bank and Trust Company
("State Street") having its principal place of business at 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000, hereinafter called "State Street."
WHEREAS, the Fund and State Street have heretofore entered into a
Custodian Agreement dated January 2, 1985, as amended;
WHEREAS, the Fund desires to disclose in its prospectus, statements of
additional information and advertising, certain performance results;
WHEREAS, the Fund is a "series" type investment company registered
under the Investment Company Act of 1940 and currently has 18 separate series
("Series");
WHEREAS, the Fund desires State Street to compute the performance
results of the Fund's Series in accordance with the provisions of Release No.
33-6753 and Release No. 1C-16245 (February 2, 1988) (the "Releases") promulgated
by the Securities and Exchange Commission, and any subsequent amendments to,
published interpretations of or general conventions accepted by the staff of the
Securities and Exchange Commission with respect to such Releases;
WHEREAS, State Street is willing to perform such calculations.
NOW THEREFORE, the parties hereto agree as follows:
(1) State Street shall compute the yield, or tax equivalent yield, for
each of the Fund's Series, except its Money Market and International Series, for
stated periods of time, all as specified in Schedule 1 to Exhibit A hereto, and
promptly communicate the result of such computation, and all supporting
documentation relating to the computation, to the Fund;
(2) State Street will derive from the records it generates and
maintains for the Fund or obtain from Fund designated third party providers of
price or statistical data the items of data set forth in Schedule 2 to Exhibit A
hereto necessary for such computation, which Exhibit may be separately amended
or supplemented by the parties hereto from time to time as may be appropriate;
(3) The Fund or its designee shall provide State Street with the items
of data set forth on Exhibit B hereto required for such computation, which
Exhibit may be separately amended or supplemented by the parties hereto from
time to time as may be appropriate;
(4) State Street shall have no responsibility to review, confirm or
otherwise assume any duty with respect to the accuracy or correctness of any
data supplied to it by the Fund, any of the Fund's designated agents or by
designated third party providers which the Fund or its designee may have
selected pursuant to Section 2 hereof;
(5) The Fund shall provide, from time to time as may be appropriate,
and State Street shall be entitled to rely on, the written standards and
guidelines to be followed by State Street in interpreting and applying the
computation methods set forth in the Releases as they specifically apply to the
Fund. In the event that the computation methods in the Releases or the
application to the Fund of a standard or guideline is not
free from doubt or in the event there is any question of interpretation as to
the characterization of a particular security or any aspect of a security or a
payment with respect thereto (e.g., original issue discount, participating debt
security, income or return of capital, etc.) or otherwise or as to any other
element of the computation which is pertinent to the Fund, the Fund or its
designated agent shall have the full responsibility for making the determination
of how the security, or payment is to be treated for purposes of the computation
and how the computation is to be made and shall inform State Street thereof on a
timely basis. All standards, guidelines and other information described herein
shall initially be set forth on Exhibit C hereto. State Street shall have no
responsibility to made independent determinations with respect to any item which
is covered by this Section, and shall not be responsible for the failure of its
computations to reflect such determinations which have not been communicated to
State Street by the Fund;
(6) The Fund shall keep State Street informed of all publicly available
information and of any non-public advice or information obtained by the Fund
subsequent to the date of this Agreement from its accountants or by its
personnel or the personnel of its investment adviser related to the computations
to be undertaken by State Street pursuant to this Agreement and State Street
shall not be charged with knowledge of such information unless it has been
furnished to State Street in writing;
(7) So long as and to the extent that State Street acts with reasonable
care, State Street shall be kept indemnified by and shall be without liability
to the Fund for its performance of its duties under this Agreement. The Fund
shall indemnify State Street for any expenses, assessments, claims or
liabilities which it may incur in connection with
this Agreement, except as may arise from its own negligent action, negligent
failure to act or willful misconduct. Any liability of State Street hereunder to
each Fund shall be limited to an amount not to exceed fees paid under this
Agreement by each Fund for the immediately preceding 12 month period. In no
event shall State Street be liable for claims of consequential damage arising
out of an incorrect yield or tax equivalent yield performed by it under this
Agreement;
(8) This Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated, may be amended at any time
by mutual agreement of the parties hereto and may be terminated by either party
by an instrument in writing delivered or mailed postage prepaid to the other
party such termination to take effect no sooner than thirty (30) days after the
day of such delivery or mailing;
(9) For performance of its services, State Street shall receive such
compensation, if any, as agreed upon and shown in Exhibit D; which Exhibit may
be separately amended or supplemented by the parties hereto from time to time as
may be appropriate;
(10) If the Fund forms additional Series for which it desires State
Street to perform the services covered by this Agreement, this Agreement or the
applicable exhibits or both, as necessary, shall be amended by the parties.
(11) In connection with the operation of this Agreement, State Street
and the Fund may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provision shall be in writing signed by each party and shall be
annexed hereto;
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and on behalf by a duly authorized representative as of 2nd
day of August, 1988.
XXXXX XXXXXXX INVESTMENT COMPANY
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
Vice President, Head of Operations
STATE STREET BANK AND TRUST COMPANY
By: /s/ XX Xxxxxxx, Jr.
------------------------------------
XX Xxxxxxx, Jr.
Vice President
EXHIBIT A
Computations to be made and data to be generated or obtained from
sources other than the Fund by State Street Bank and Trust Company in connection
with computations for each of the Fun's Series, except its Money Market and
International Series, under Securities and Exchange Commission Releases 33-6753
and 1C-16245.
SCHEDULE 1
Computations to be made: Check one or more
Eff. Tax Equiv.
Yield Yield Yield
----- ----- ----------
Time Periods [ X ] [ ] [ ]
30 day: Daily
Interim Period: N/A
SCHEDULE 2
Data Generated by Obtained From
Items State Street (identify source)
----- ------------ -----------------
1. N/A
2.
3.
4.
5.
EXHIBIT B
Data to be supplied to State Street Bank and Trust Company in
connection with computations for each of the Fund's Series, except its Money
Market and International Series, under Securities and Exchange Commission
Releases 33-6753 and 1C-16245.
Data How Supplied and When
Items By Whom Supplied
----- ---------------- --------
1. Call/Put Date Money Manager on On each trade date
notification of trade plus one
EXHIBIT C
Standards and guidelines to be followed by State Street Bank and Trust
Company in interpreting and applying computation methods indicated on Exhibit B.
PHASE I - JULY 1, 1988 - JULY 31, 1988 (APPLIES ONLY TO FIXED INCOME I FUND,
FIXED INCOME II FUND, DIVERSIFIED BOND FUND, VOLATILITY CONSTRAINED BOND FUND,
AND LIMITED VOLATILITY TAX FREE FUND).
GENERAL
On a daily trade date basis State Street will provide a Daily Income Report
which will include the following:
- Yield-to-maturity for each individual security from which a
daily income amount will be calculated based upon month-end
market values.
- Adjustments for buys will be made on contractual settlement
date.
- Adjustments for sells will be made on contractual settlement
date. For partial sells, the last market price of security will
be used for YTM calculations from T + 1 until settlement date.
For sells in which the entire position is sold, we will use sale
price for YTM calculation. SEC Q&A of 5/13/88 question #7
indicates last sale price should be used.
- Short-term securities will be those securities designated as
short-term by the advisor. Daily income amounts will be
calculated for these short-term securities using coupon rate x
outstanding principal amount. Note: The SEC has defined
short-term securities to be those with a maturity of less than
60 days.
- With respect to mortgage backed securities, daily income amounts
will be calculated using book income based upon coupon rate and
outstanding principal amount.
- No Fund yields will be calculated and no other information will
be provided from July 1 through August 1, 1988.
PHASE II - AUGUST 1, 1988 UNTIL IMPLEMENTATION OF PHASE III
(APPLIES TO THE SAME SERIES AS DID PHASE I).
GENERAL
- Yield will be calculated based upon a rolling 30-day average. A
yield will be determine based upon each day's market value. The
yield will consist of the sum of the last 30 days' income
including adjustments per the trial balance for zero coupon
bonds and short-term bonds net of 30 days expenses for the
period. A factor will be generated each day and a new 30-day
yield calculated. This is Option C of the SEC Q&A question #1 of
their 5/13/88 release.
- Adjustments for buys will be made on contractual settlement
date.
- Adjustments for sells will be made on contractual settlement
date. For sells, the last market price of security will be used
for YTM calculations from T + 1 until settlement date. SEC Q&A
of 5/13/88 question #7 indicates last sale price should be used.
- Short-term securities will be those securities designated as
short-term by the money manager. Note: The SEC has defined
short-term securities to be those with a maturity of less than
60 days.
Put/call date, in conjunction with put/call price, will be
substituted for maturity date upon instructions from the money
manager. Unless instructed otherwise, State Street will use
maturity date.
- In determining average daily shares outstanding and the corresponding
30 days rolling income amounts, shares and income amounts for weekends
will be based on the values as of the following Monday. The following
business day will also be used for holidays.
MUNICIPALS
A comparison will be made daily of market value to current OID basis.
1. If OID basis is higher than market value, OID basis will be used in
YTM calculation.
2. If OID basis is less than market value, market value will be used in
YTM calculation.
3. If security is currently priced at a discount and did not have
any original discount (OID), use par value as basis for YTM
calculation.
ASSET BACKED SECURITIES WHICH ARE RECEIVING PREPAYMENTS
- Yields will be calculated using book income based upon coupon
rate and outstanding principal amount.
- Adjustments for one period's gains or losses from principal
paydowns are included in the interest income.
- Adjustments for one period's principal paydowns will be
estimated and adjusted for actual when received.
The parties agree that this Exhibit C shall be amended as soon as
practicable after the implementation of Phase III to reflect revised standards
and guidelines. THE PHASE III STANDARDS AND GUIDELINES WILL APPLY TO ALL OF THE
FUND'S SERIES THEN EXISTING EXCEPT THE FUND'S MONEY MARKET AND INTERNATIONAL
SERIES.
EXHIBIT D
No fee shall be currently payable to State Street for its services
under this Agreement. It is anticipated that a fee will begin to be paid to
State Street beginning on or about September 1, 1988. This fee is to be
negotiated between the parties and will become effective upon the amendment of
this Exhibit D.
