INVESTMENT MANAGEMENT AND SERVICES AGREEMENT
This Agreement, made and entered into this 27th day of January, 2000, and
amended and restated effective as of the 1st day of May, 2002, by and between
SECURITY EQUITY FUND, a Kansas corporation (hereinafter referred to as the
"Fund"), and SECURITY MANAGEMENT COMPANY, LLC, a Kansas limited liability
company (hereinafter referred to as "SMC");
WITNESSETH:
WHEREAS, the Fund is engaged in business as an open-end, management investment
company registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, SMC is willing to provide investment research and advice, general
administrative, fund accounting, transfer agency, and dividend disbursing
services to the Fund on the terms and conditions hereinafter set forth and to
arrange for the provision of all other services (except for those services
specifically excluded in this Agreement) required by the Fund, including
custodial, legal, auditing and printing;
NOW, THEREFORE, in consideration of the premises and mutual agreements made
herein, the parties agree as follows:
1. EMPLOYMENT OF SMC. The Fund hereby employs SMC to (a) act as investment
adviser to the Fund with respect to the investment of its assets and to
supervise and arrange for the purchase of securities of the Fund and
the sales of securities held in the portfolio of the Fund, subject
always to the supervision of the Board of Directors of the Fund (or a
duly appointed committee thereof), during the period and upon and
subject to the terms and conditions described herein; (b) provide the
Fund with general administrative, fund accounting, transfer agency, and
dividend disbursing services described and set forth in Schedule A
attached hereto and made a part of this Agreement by reference; and (c)
arrange for, and monitor, the provision to the Fund of all other
services required by the Fund, including but not limited to services of
independent accountants, legal counsel, custodial services and
printing. SMC may, in accordance with all applicable legal
requirements, engage the services of other persons or entities,
regardless of any affiliation with SMC, to provide services to the Fund
under this Agreement. The Fund shall bear the expense of such other
services and all other expenses of the Fund. SMC agrees to maintain
sufficient trained personnel and equipment and supplies to perform its
responsibilities under this Agreement and in conformity with the
current Prospectus of the Fund and such other reasonable standards of
performance as the Fund may from time to time specify and shall use
reasonable care in selecting and monitoring the performance of third
parties, who perform services for the Fund. SMC shall not guarantee the
performance of such persons.
SMC hereby accepts such employment and agrees to perform the services
required by this Agreement for the compensation herein provided.
2. ALLOCATION OF EXPENSES AND CHARGES.
(a) EXPENSES OF SMC. SMC shall pay all expenses in connection with
the performance of its services under this Agreement, except as
provided otherwise herein.
(b) EXPENSES OF THE FUND. Anything in this Agreement to the contrary
notwithstanding, the Fund shall pay or reimburse SMC for the
payment of the following described expenses of the Fund whether
or not billed to the Fund, SMC or any related entity:
(i) brokerage fees and commissions;
(ii) taxes;
(iii) interest expenses;
(iv) any extraordinary expenses approved by the Board of
Directors of the Fund; and
(v) distribution fees paid under the Fund's Class A, Class B,
Class C and Class S Distribution Plans;
and, in addition to those expenses set forth above, the Fund
shall pay all of its expenses whether or not billed to the Fund,
SMC or any related entity, including, but not limited to the
following: Board of Directors' fees; legal, auditing and
accounting expenses; insurance premiums; broker's commissions;
taxes and governmental fees and any membership dues; fees of
custodian; expenses of obtaining quotations on the Fund's
portfolio securities and pricing of the Fund's shares; costs and
expenses in connection with the registration of the Fund's
capital stock under the Securities Act of 1933 and qualification
of the Fund's capital stock under the Blue Sky laws of the
states where such stock is offered; costs and expenses in
connection with the registration of the Fund under the 1940 Act
and all periodic and other reports required thereunder; expenses
of preparing, printing and distributing reports, proxy
statements, prospectuses, statements of additional information,
notices and distributions to stockholders; costs of stockholder
and other meetings; and expenses of maintaining the Fund's
corporate existence.
(c) EXPENSE CAP. For each of the Fund's full fiscal years that this
Agreement remains in force, SMC agrees that if total annual
expenses of each Series of the Fund identified below, exclusive
of interest, taxes, extraordinary expenses (such as litigation),
brokerage fees and commissions, and 12b-1 fees paid under a
Fund's Class A, Class B, Class C or Class S Distribution Plans,
but inclusive of SMC's compensation, exceeds the amount set
forth below (the "Expense Cap"), SMC shall contribute to such
Series such funds or waive such portion of its fee, adjusted
monthly, as may be required to insure that the total annual
expenses of the Series shall not exceed the Expense Cap. If this
Agreement shall be effective for only a portion of a Series'
fiscal year, then the maximum annual expenses shall be prorated
for such portion.
EXPENSE CAP
International Series, Class A, B, C and S shares - 2.25% Enhanced Index Series,
Class A, B, C and S shares - 1.75% Select 25 Series, Class A, B, C and S shares
- 1.75%
3. COMPENSATION OF SMC.
(a) As compensation for the investment advisory services to be
rendered by SMC to Global Series, Social Awareness Series, Mid
Cap Value Series, Small Cap Growth Series, Large Cap Growth
Series and Technology Series, for each of the years this
Agreement is in effect, each of the foregoing Series shall pay
SMC an annual fee equal to 1.00% of its respective average daily
net assets. Such fee shall be calculated daily and payable
monthly. As compensation for the investment advisory services to
be rendered by SMC to International Series for each of the years
this Agreement is in effect, the International Series shall pay
SMC an annual fee equal to 1.10% of its average daily net
assets. Such fee shall be calculated daily and payable monthly.
As compensation for the investment advisory services to be
rendered by SMC to Equity Series, Total Return Series, Enhanced
Index Series and Select 25 Series for each of the years this
Agreement is in effect, each of the foregoing Series shall pay
SMC an annual fee equal to 0.75% of its respective average daily
net assets. Such fee shall be calculated daily and payable
monthly. As compensation for the administrative services to be
rendered by SMC to Global, International and Technology Series,
each of the foregoing Series shall pay SMC an annual fee equal
to 0.045% of its average daily net assets, plus the greater of
0.10% of its average daily net assets or $60,000. Such fees
shall be calculated daily and payable monthly. As compensation
for the administrative services to be rendered by SMC to each of
the other Series of the Fund, each such Series shall pay SMC an
annual fee equal to 0.09% of its average daily net assets. Such
fees shall be calculated daily and payable monthly. If this
Agreement shall be effective for only a portion of a year, then
SMC's compensation for said year shall be prorated for such
portion. For purposes of this Section 3, the value of the net
assets of each Series shall be computed in the same manner at
the end of the business day as the value of such net assets is
computed in connection with the determination of the net asset
value of the Fund's shares as described in the Fund's
prospectus.
For transfer agency services provided by SMC to each Series of
the Fund, each Series shall pay a Maintenance Fee of $8.00 per
account, a Transaction Fee of $1.00 per transaction per account
and a Dividend Fee of $1.00 per dividend per account. For the
purpose of calculating the Maintenance, Transaction and Dividend
Fees applicable to each Series, SMC may count as a shareholder
account each person that holds a beneficial interest in an
omnibus account maintained on SMC's transfer agency system by a
third-party administrator, broker/dealer, bank, insurance
company or other entity; provided that SMC is paying such
third-party administrator, broker/dealer, bank, insurance
company or other entity sub-administrative, sub-accounting
and/or sub-transfer agency fees for keeping individual
shareholder records in connection with an investment in the
Fund.
(b) For each of the Fund's fiscal years this Agreement remains in
force, SMC agrees that if total annual expenses of any Series of
the Fund, exclusive of interest and taxes, extraordinary
expenses (such as litigation) and distribution fees paid under
the Fund's Class A, Class B, Class C and Class S Distribution
Plans, but inclusive of SMC's compensation, exceed any expense
limitation imposed by state securities law or regulation in any
state in which shares of such Series of the Fund are then
qualified for sale, as such regulations may be amended from time
to time, SMC will contribute to such Series such funds or waive
such portion of its fee, adjusted monthly, as may be requisite
to insure that such annual expenses will not exceed any such
limitation. If this Agreement shall be effective for only a
portion of any Series' fiscal year, then the maximum annual
expenses shall be prorated for such portion. Brokerage fees and
commissions incurred in connection with the purchase or sale of
any securities by a Series shall not be deemed to be expenses
within the meaning of this paragraph (b).
4. INVESTMENT ADVISORY DUTIES.
(a) INVESTMENT ADVICE. SMC shall regularly provide the Fund with
investment research, advice and supervision, continuously
furnish an investment program, recommend which securities shall
be purchased and sold and what portion of the assets of the Fund
shall be held uninvested and arrange for the purchase of
securities and other investments for the Fund and the sale of
securities and other investments held in the portfolio of the
Fund. All investment advice furnished by SMC to the Fund under
this Section 4 shall at all times conform to any requirements
imposed by the provisions of the Fund's Articles of
Incorporation and Bylaws, the 1940 Act, the Investment Advisors
Act of 1940 and the rules and regulations promulgated
thereunder, and other applicable provisions of law, and the
terms of the registration statements of the Fund under the
Securities Act of 1933 ("1933 Act") and/or the 1940 Act, as may
be applicable at the time, all as from time to time amended. SMC
shall advise and assist the officers or other agents of the Fund
in taking such steps as are necessary or appropriate to carry
out the decisions of the Board of Directors of the Fund (and any
duly appointed committee thereof) with regard to the foregoing
matters and the general account of the Fund's business.
(b) SUBADVISERS. Subject to the provisions of the 1940 Act and any
applicable exemptions thereto, SMC is authorized, but is under
no obligation, to enter into sub-advisory agreements (the
"Sub-Advisory Agreements") with one or more subadvisers (each a
"Subadviser") to provide investment advisory services to any
series of the Fund. Each Subadviser shall have investment
discretion with respect to the assets of the series assigned to
that Subadviser by SMC. Consistent with the provisions of the
1940 Act and any applicable exemption thereto, SMC may enter
into Sub-Advisory Agreements or amend Sub-Advisory Agreements
without the approval of the shareholders of the affected series.
(c) PORTFOLIO TRANSACTIONS AND BROKERAGE.
(i) Transactions in portfolio securities shall be effected by
SMC, through brokers or otherwise (including affiliated
brokers), in the manner permitted in this Section 4 and in
such manner as SMC shall deem to be in the best interests
of the Fund after consideration is given to all relevant
factors.
(ii) In reaching a judgment relative to the qualification of a
broker to obtain the best execution of a particular
transaction, SMC may take into account all relevant
factors and circumstances, including the size of any
contemporaneous market in such securities; the importance
to the Fund of speed and efficiency of execution; whether
the particular transaction is part of a larger intended
change of portfolio position in the same securities; the
execution capabilities required by the circumstances of
the particular transaction; the capital required by the
transaction; the overall capital strength of the broker;
the broker's apparent knowledge of or familiarity with
sources from or to whom such securities may be purchased
or sold; as well as the efficiency, reliability and
confidentiality with which the broker has handled the
execution of prior similar transactions.
(iii) Subject to any statements concerning the allocation of
brokerage contained in the Fund's Prospectus or Statement
of Additional Information, SMC is authorized to direct the
execution of portfolio transactions for the Fund to
brokers who furnish investment information or research
service to the SMC. Such allocations shall be in such
amounts and proportions as SMC may determine. If the
transaction is directed to a broker providing brokerage
and research services to SMC, the commission paid for such
transaction may be in excess of the commission another
broker would have charged for effecting that transaction,
if SMC shall have determined in good faith that the
commission is reasonable in relation to the value of the
brokerage and research services provided, viewed in terms
of either that particular transaction or the overall
responsibilities of SMC with respect to all accounts as to
which it now or hereafter exercises investment discretion.
For purposes of the immediately preceding sentence,
"providing brokerage and research services" shall have the
meaning generally given such terms or similar terms under
Section 28(e)(3) of the Securities Exchange Act of 1934,
as amended.
(iv) In the selection of a broker for the execution of any
transaction not subject to fixed commission rates, SMC
shall have no duty or obligation to seek advance
competitive bidding for the most favorable negotiated
commission rate to be applicable to such transaction, or
to select any broker solely on the basis of its purported
or "posted" commission rates.
(v) In connection with transactions on markets other than
national or regional securities exchanges, the Fund will
deal directly with the selling principal or market maker
without incurring charges for the services of a broker on
its behalf unless, in the best judgment of SMC, better
price or execution can be obtained by utilizing the
services of a broker.
(d) LIMITATION OF LIABILITY OF SMC WITH RESPECT TO RENDERING
INVESTMENT ADVISORY SERVICES. So long as SMC shall give the Fund
the benefit of its best judgment and effort in rendering
investment advisory services hereunder, SMC shall not be liable
for any errors of judgment or mistake of law, or for any loss
sustained by reason of the adoption of any investment policy or
the purchase, sale or retention of any security on its
recommendation shall have been based upon its own investigation
and research or upon investigation and research made by any
other individual, firm or corporation, if such recommendation
shall have been made and such other individual, firm or
corporation shall have been selected with due care and in good
faith. Nothing herein contained shall, however, be construed to
protect SMC against any liability to the Fund or its
shareholders by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason
of its reckless disregard of its obligations and duties under
this Section 4. As used in this Section 4, "SMC" shall include
directors, officers and employees of SMC, as well as SMC itself.
5. ADMINISTRATIVE AND TRANSFER AGENCY SERVICES.
(a) RESPONSIBILITIES OF SMC. SMC will provide the Fund with general
administrative, fund accounting, transfer agency, and dividend
disbursing services described and set forth in Schedule A
attached hereto and made a part of this Agreement by reference.
SMC agrees to maintain sufficient trained personnel and
equipment and supplies to perform such services in conformity
with the current Prospectus of the Fund and such other
reasonable standards of performance as the Fund may from time to
time specify, and otherwise perform such services in an
accurate, timely, and efficient manner.
(b) INSURANCE. The Fund and SMC agree to procure and maintain,
separately or as joint insureds with themselves, their
directors, employees, agents and others, and other investment
companies for which SMC acts as investment adviser and transfer
agent, a policy or policies of insurance against loss arising
from breaches of trust, errors and omissions, and a fidelity
bond meeting the requirements of the 1940 Act, in the amounts
and with such deductibles as may be agreed upon from time to
time. SMC shall be solely responsible for the payment of
premiums due for such policies.
(c) REGISTRATION AND COMPLIANCE.
(i) SMC represents that as of the date of this Agreement it is
registered as a transfer agent with the Securities and
Exchange Commission ("SEC") pursuant to Subsection 17A of
the Securities and Exchange Act of 1934 and the rules and
regulations thereunder, and agrees to maintain said
registration and comply with all of the requirements of
said Act, rules and regulations so long as this Agreement
remains in force.
(ii) The Fund represents that it is a management investment
company registered with the SEC in accordance with the
1940 Act and the rules and regulations thereunder, and
authorized to sell its shares pursuant to said Act, the
1933 Act and the rules and regulations thereunder.
(d) LIABILITY AND INDEMNIFICATION WITH RESPECT TO RENDERING
ADMINISTRATIVE AND TRANSFER AGENCY SERVICES. SMC shall be liable
for any actual losses, claims, damages or expenses (including
any reasonable counsel fees and expenses) resulting from SMC's
bad faith, willful misfeasance, reckless disregard of its
obligations and duties, negligence or failure to properly
perform any of its responsibilities or duties under this Section
5. SMC shall not be liable and shall be indemnified and held
harmless by the Fund, for any claim, demand or action brought
against it arising out of or in connection with:
(i) The bad faith, willful misfeasance, reckless disregard of
its duties or negligence by the Board of Directors of the
Fund, or SMC's acting upon any instructions properly
executed or and authorized by the Board of Directors of
the Fund;
(ii) SMC acting in reliance upon advice given by independent
counsel retained by the Board of Directors of the Fund.
In the event that SMC requests the Fund to indemnify or hold it
harmless hereunder, SMC shall use its best efforts to inform the
Fund of the relevant facts concerning the matter in question.
SMC shall use reasonable care to identify and promptly notify
the Fund concerning any matter which presents, or appears likely
to present, a claim for indemnification against the Fund.
The Fund shall have the election of defending SMC against any
claim which may be the subject of indemnification hereunder. In
the event the Fund so elects, it will so notify SMC and
thereupon the Fund shall take over defenses of the claim, and if
so requested by the Fund, SMC shall incur no further legal or
other claims related thereto for which it would be entitled to
indemnity hereunder provided, however, that nothing herein
contained shall prevent SMC from retaining, at its own expense,
counsel to defend any claim. Except with the Fund's prior
consent, SMC shall in no event confess any claim or make any
compromise in any matter in which the Fund will be asked to
indemnify or hold SMC harmless hereunder.
PUNITIVE DAMAGES. SMC shall not be liable to the Fund, or any
third party, for punitive, exemplary, indirect, special or
consequential damages (even if SMC has been advised of the
possibility of such damage) arising from its obligations and the
services provided under this Section 5, including but not
limited to loss of profits, loss of use of the shareholder
accounting system, cost of capital and expenses of substitute
facilities, programs or services.
FORCE MAJEURE. Anything in this Section 5 to the contrary
notwithstanding, SMC shall not be liable for delays or errors
occurring by reason of circumstances beyond its control,
including but not limited to acts of civil or military
authority, national emergencies, work stoppages, fire, flood,
catastrophe, earthquake, acts of God, insurrection, war, riot,
failure of communication or interruption.
(e) DELEGATION OF DUTIES. SMC may, at its discretion, delegate,
assign or subcontract any of the duties, responsibilities and
services governed by this agreement, to an affiliated company,
whether or not by formal written agreement, or to any third
party, provided that such arrangement with a third party has
been approved by the Board of Directors of the Fund. SMC shall,
however, retain ultimate responsibility to the Fund and shall
implement such reasonable procedures as may be necessary for
assuring that any duties, responsibilities or services so
assigned, subcontracted or delegated are performed in conformity
with the terms and conditions of this Agreement.
6. OTHER ACTIVITIES NOT RESTRICTED. Nothing in this Agreement shall
prevent SMC or any officer thereof from acting as investment adviser,
administrator or transfer agent for any other person, firm or
corporation, nor shall it in any way limit or restrict SMC or any of
its directors, officers, stockholders or employees from buying,
selling, or trading any securities for their own accounts or for the
accounts of others for whom they may be acting; provided, however, that
SMC expressly represents that it will undertake no activities which, in
its judgment, will conflict with the performance of its obligations to
the Fund under this Agreement. The Fund acknowledges that SMC acts as
investment adviser, administrator and transfer agent to other
investment companies, and it expressly consents to SMC acting as such;
provided, however, that if in the opinion of SMC, particular securities
are consistent with the investment objectives of, and desirable
purchases or sales for the portfolios of one or more of such other
investment companies or series of such companies at approximately the
same time, such purchases or sales will be made on a proportionate
basis if feasible, and if not feasible, then on a rotating or other
equitable basis.
7. AMENDMENT. This Agreement and the schedules forming a part hereof may
be amended at any time, without shareholder approval to the extent
permitted by applicable law, by a writing signed by each of the parties
hereto. Any change in the Fund's registration statements or other
documents of compliance or in the forms relating to any plan, program
or service offered by its current Prospectus which would require a
change in SMC's obligations hereunder shall be subject to SMC's
approval, which shall not be unreasonably withheld.
8. DURATION AND TERMINATION OF AGREEMENT. This Agreement shall become
effective on May 1, 2002, provided that on or before that date it has
been approved by the holders of a majority of the outstanding voting
securities of each series of the Fund. This Agreement shall continue in
force until May 1, 2004, and for successive 12-month periods
thereafter, unless terminated, provided each such continuance is
specifically approved at least annually by (a) the vote of a majority
of the entire Board of Directors of the Fund, and the vote of a
majority of the directors of the Fund who are not parties to this
Agreement or interested persons (as such terms are defined in the
Investment Company Act of 1940) of any such party cast in person at a
meeting of such directors called for the purpose of voting upon such
approval, or (b) by the vote of the holders of a majority of the
outstanding voting securities of each series of the Fund (as defined in
the 1940 Act). In the event a majority of the outstanding shares of one
series vote for continuance of the Agreement, it will be continued for
that series even though the Agreement is not approved by either a
majority of the outstanding shares of any other series or by a majority
of outstanding shares of the Fund.
Upon this Agreement becoming effective, any previous Agreement between
the Fund and SMC providing for investment advisory, administrative
and/or transfer agency services shall concurrently terminate, except
that such termination shall not affect any fees accrued and guarantees
of expenses with respect to any period prior to termination.
This Agreement may be terminated at any time as to any series of the
Fund without payment of any penalty, by the Fund upon the vote of a
majority of the Fund's Board of Directors or, by a majority of the
outstanding voting securities of the applicable series of the Fund, or
by SMC, in each case on sixty (60) days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment (as such term is defined in the 1940 Act).
9. SEVERABILITY. If any clause or provision of this Agreement is
determined to be illegal, invalid or unenforceable under present or
future laws effective during the term hereof, then such clause or
provision shall be considered severed herefrom and the remainder of
this Agreement shall continue in full force and effect.
10. APPLICABLE LAW. This Agreement shall be subject to and construed in
accordance with the laws of the State of Kansas.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers thereto duly authorized on the day, month
and year first above written.
SECURITY EQUITY FUND
By XXXXX X. XXXXXXX
-------------------------------------
Title: President
ATTEST:
XXX X. XXX
----------------------------------
Secretary
SECURITY MANAGEMENT COMPANY, LLC
By XXXXX X. XXXXXXX
-------------------------------------
Title: President
ATTEST:
XXX X. XXX
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Secretary
SCHEDULE A
INVESTMENT MANAGEMENT AND SERVICES
AGREEMENT
SCHEDULE OF ADMINISTRATIVE AND FUND ACCOUNTING FACILITIES AND SERVICES
Security Management Company, LLC agrees to provide the Fund the following
administrative facilities and services.
1. FUND AND PORTFOLIO ACCOUNTING
a. Maintain Fund General Ledger and Journal.
b. Prepare and record disbursements for direct Fund expenses.
c. Prepare daily money transfers.
d. Reconcile all Fund bank and custodian accounts.
e. Assist Fund independent auditors as appropriate.
f. Prepare daily projection of available cash balances.
g. Record trading activity for purposes of determining net asset
values and daily dividend.
h. Prepare daily portfolio evaluation report to value portfolio
securities and determine daily accrued income.
i. Determine the daily net asset value per share.
j. Determine the daily, monthly, quarterly, semiannual or annual
dividend per share.
k. Prepare monthly, quarterly, semiannual and annual financial
statements.
l. Provide financial information for reports to the Securities and
Exchange Commission in compliance with the provisions of the 1940
Act and the Securities Act of 1933, the Internal Revenue Service
and any other regulatory agencies as required.
m. Provide financial, yield, net asset value, etc. information to
NASD and other survey and statistical agencies as instructed by
the Fund.
n. Report to the Audit Committee of the Board of Directors.
2. LEGAL
a. Provide registration and other administrative services necessary
to qualify the shares of the Fund for sale in those jurisdictions
determined from time to time by the Fund's Board of Directors
(commonly known as "Blue Sky Registration").
b. Provide registration with and reports to the Securities and
Exchange Commission in compliance with the provisions of the 1940
Act and the Securities Act of 1933.
c. Prepare and review Fund Prospectus and Statement of Additional
Information.
d. Prepare proxy statements and oversee proxy tabulation for annual
meetings.
e. Prepare Board materials and maintain minutes of the Board
meetings.
f. Draft, review and maintain contractual agreements between Fund and
Investment Adviser, Custodian, Distributor and Transfer Agent.
g. Oversee printing of proxy statements, financial reports to
shareholders, prospectuses and Statements of Additional
Information.
h. Provide legal advice and oversight regarding shareholder
transactions, administrative services, compliance with contractual
agreements and the provisions of the 1940 Act and the Securities
Act of 1933.
SCHEDULE OF SHARE TRANSFER AND DIVIDEND DISBURSING SERVICES
Security Management Company, LLC agrees to provide the Fund the following
transfer agency and dividend disbursing services.
1. Maintain shareholder accounts, including processing of new accounts.
2. Post address changes and perform other file maintenance for shareholder
accounts.
3. Post all transactions to the shareholder file, including:
a. Direct purchases;
b. Wire order purchases;
c. Direct redemptions;
d. Wire order redemptions;
e. Draft redemptions;
f. Direct exchanges;
g. Transfers;
h. Certificate issuances; and
i. Certificate deposits.
4. Monitor fiduciary processing, insuring accuracy and deduction of fees.
5. Prepare daily reconciliations of shareholder processing to money movement
instructions.
6. Handle bounced check collections. Immediately liquidate shares purchased
and return to the shareholder the check and confirmation of the
transaction.
7. Issue all checks and stop and replace lost checks.
8. Draft clearing services.
a. Maintain signature cards and appropriate corporate resolutions.
b. Compare the signature on the check to the signatures on the
signature card for the purpose of paying the face amount of the
check only.
c. Receive checks presented for payment and liquidate shares after
verifying account balance.
d. Order checks in quantity specified by the Fund for the
shareholder.
9. Mail confirmations, checks and/or certificates resulting from transaction
requests to shareholders.
10. Perform all of the Fund's other mailings, including:
a. Dividend and capital gain distributions;
b. Semiannual and annual reports;
c. 1099/year-end shareholder reporting;
d. Systematic withdrawal plan payments; and
e. Daily confirmations.
11. Answer all service-related telephone inquiries from shareholders and
others, including:
a. General and policy inquiries (research and resolve problems);
b. Fund yield inquiries;
c. Shareholder processing requests and account maintenance changes by
telephone as described above;
d. Pending requests to correspondence;
e. On-line statistical performance of unit; and
f. Reports on telephone activity.
12. Respond to written inquiries (research and resolve problems), including:
a. Initiate shareholder account reconciliation proceeding when
appropriate;
b. Notify shareholder of bounced investment checks;
c. Respond to financial institutions regarding verification of
deposit;
d. Initiate proceedings regarding lost certificates;
e. Respond to complaints and log activities; and
f. Correspondence control.
13. Maintain and retrieve all required past history for shareholders and
provide research capabilities as follows:
a. Monitor daily all processing activity to verify back-up
documentation;
b. Provide exception reports;
c. Provide microfilming services; and
d. Provide storage, retrieval and archive services.
14. Prepare materials for annual meetings.
a. Address and mail annual proxy and related material.
b. Prepare and submit to Fund an affidavit of mailing.
c. Furnish certified list of shareholders (hard copy or microfilm)
and inspectors of elections.
15. Report and remit as necessary for state escheatment requirements.
Approved: Fund XXXXX X. XXXXXXX SMC XXXXX X. XXXXXXX
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