EXHIBIT 99.(h)(xxiii)
State Street Bank and Trust Company
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
Re: American AAdvantage Funds
Custody Agreement
Transfer Agency and Service Agreement
Administrative Services Agreement
Ladies and Gentlemen:
This is to advise you that the American AAdvantage Funds ("the Funds") have
established two new series, the Mid-Cap Value Fund and the Treasury Inflation
Protected Securities Fund. In accordance with the Additional Funds provisions of
Section 20 of the Custodian Contract dated December 1, 1997, Section 15 of the
Transfer Agency and Services Agreement dated January 1, 1998, and Section 7 of
the Administrative Services Agreement between the Funds and State Street Bank
and Trust Company, the Funds hereby request that you act as Custodian and
Transfer Agent for the Mid-Cap Value Fund and Treasury Inflation Protected
Securities Fund and that you invest certain excess cash balances in futures
contracts for the Mid-Cap Value Fund under the terms of the respective
contracts. In addition, the Funds hereby request that you invest certain excess
cash balances in futures contracts for the Emerging Markets Fund.
Pursuant to Section 20 of the above referenced Custodian Contract and Section 15
of the above referenced Transfer Agency and Services Agreement, the Funds hereby
request that Schedules C and D of the Custodian Contract and Schedule A of the
Transfer Agency and Services Agreement be amended and restated as attached.
Pursuant to Section 7 of the above referenced Administrative Services Agreement,
the Funds hereby request that Schedule A of the Administrative Services
Agreement be amended and restated as attached.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Funds and retaining one copy for your
records.
American AAdvantage Funds
By: ______________________________
Name: Xxxxxxx X. Xxxxx
Title: President
Agreed to as of the _____ day of _______________________ ,2004.
State Street Bank and Trust Company
By: _______________________________
Name:
Title:
SCHEDULE A
TO THE
ADMINISTRATIVE SERVICES AGREEMENT
STATEMENT OF INTENT/OPERATING PROCEDURES
State Street Bank and Trust Company ("State Street") shall fulfill its
duties set forth in Section 2 and Section 3 of the Administrative Services
Agreement in accordance with the following:
I. SCOPE OF THE ENGAGEMENT.
AMR is seeking to equitize the cash balances of certain mutual fund
portfolios. AMR will manage the underlying cash balances and will direct State
Street to purchase the futures contract to maintain appropriate equity exposure.
AMR anticipates maintaining a 5% equity (10% for small cap) exposure on a daily
basis.
The mutual funds to be equitized, the equitized amounts and the futures
contracts used are listed below. AMR may in its judgement direct State Street to
implement the equitization using futures contracts other than those listed
below.
II. IMPLEMENTATION.
AMR will direct State Street to equitize the initial portfolio balances,
and State Street will buy and or sell the appropriate number of contracts to
reflect changes in the underlying cash balances using the procedures listed in
Section III. Such procedures may be modified by the mutual consent of AMR and
State Street. With respect to the International Equity Portfolio of the AMR
Investment Services Trust, AMR hereby instructs that contracts to be purchased
from the list set forth in Section VI be purchased substantially in proportion
to the capitalization weights of the nine countries as they comprise the Xxxxxx
Xxxxxxx Capital International Europe, Asia and Far East Index.
III. DAILY OPERATING PROCEDURES
Noon State Street's Mutual Fund Custody Group (MFG) transfers
appropriate cash into AMR's STIF account. MFG e-mails activity
spreadsheet to State Street's investment group (SSgA) and AMR.
12:00pm MFG calls SSgA if spreadsheet will be delayed.
12:00-1:00pm AMR and SSgA Operational Procedures followed:
- Values on spreadsheet are validated.
- Consistency Checks conducted.
- Confirm if special notice re-balancing is requested.
Action steps if validity questioned:
- Assumptions checked.
- Designated MFG team notified - problem logged.
1:00pm SSgA Operations forwards activity spreadsheet to Portfolio
Management Team.
1:00-1:30pm Portfolio Manager loads cash balance data into trading system.
Futures volume is determined by asset pool.
1:30pm Portfolio Manager sends trades to broker
4:45pm Portfolio Manager electronically receives trade confirmation
data. Prices are confirmed. Trades are sent to custody.
8:00am(next day) SSgA Operations sends daily Margin Calculation to custody who
conduct a second reconciliation.
IV. TRUST FUND
----- ----
AMR INVESTMENT SERVICES TRUST International Equity Portfolio
AMERICAN AADVANTAGE FUNDS Balanced Fund
Large Cap Value Fund
International Equity Fund*
Small Cap Value Fund
Mid-Cap Value Fund
Emerging Markets Fund
*Inactive for purposes of this Agreement. To be activated upon prior notice from
Trust.
V. APPROVED FUTURES CONTRACTS
PORTFOLIO FUTURES CONTRACT USED FCM
--------- --------------------- ---
Balanced S&P 500 Xxxxxxx Sachs & Co.
Large Cap Value S&P 500 Xxxxxxx Xxxxx & Co.
International Equity Approved List of CFTC Futures Xxxxxxx Sachs & Co.
Contracts - See Section VI
Small Cap Value Xxxxxxx 2000 Xxxxxxx Sachs & Co.
Mid-Cap Value S&P 400 or a combination of the Xxxxxxx Xxxxx & Co.
following - S&P 400, S&P 600 and
Xxxxxxx 1000 Value
Emerging Markets S&P 500 Xxxxxxx Xxxxx & Co.
VI. LIST OF APPROVED FUTURES CONTRACTS FOR INTERNATIONAL EQUITY PORTFOLIO
COUNTRY CONTRACT NAME
------- -------------
U.K. FTSE
Germany DAX
France CAC 40
Sweden OMX
Italy MIB 30
Spain IBEX 35
Japan TOPIX
Nikkei 300
Hong Kong Hang Seng
Australia All Ords
Canada TSE 35
ACCEPTED AND APPROVED BY:
AMERICAN AADVANTAGE FUNDS
AMERICAN AADVANTAGE MILEAGE FUNDS
AMR INVESTMENT SERVICES TRUST, and
AMR INVESTMENT SERVICES, INC.
By: ___________________________________
Xxxxxxx X. Xxxxx
President
ACCEPTED AND APPROVED BY:
STATE STREET BANK AND TRUST COMPANY
By: ___________________________________
Name:
Title:
DATED: June 30, 2004
