RULE 17f-5 DELEGATION AGREEMENT
EX-99.B(g)tgtcadel
RULE 17f-5 DELEGATION AGREEMENT
By its execution of this Delegation Agreement by and between W&R TARGET FUNDS, INC. (the Fund), on behalf of each of its series listed in Appendix A, a management investment company registered with the Securities and Exchange Commission (the Commission) under the Investment Company Act of 1940, as amended (the 1940 Act), and UMB BANK, N. A. (the Custodian), the Fund hereby directs the Custodian to appoint Citibank, N.A. as the Approved Foreign Custody Manager under the terms of the Custodian Agreement between the Fund and the Custodian (the Delegate) to perform certain functions with respect to the custody of the Fund's Assets (as defined in Section 13 of this Delegation Agreement) outside the United States of America. This Delegation Agreement amends and supersedes the Delegation Agreements, dated March 31, 2003, executed individually by W&R Target Funds, Inc. on behalf of each of its Portfolios then in existence.
WHEREAS, Xxxxx Brothers Xxxxxxxx ("BBH") had previously agreed to provide global custody services to the Custodian on behalf of the Fund through a Foreign Custody Manager Delegation Agreement dated July 1, 2001, as amended from time to time; and
WHEREAS, this Delegation Agreement replaces the prior Foreign Custody Manager Delegation Agreement between the Custodian, on behalf of the Fund, and BBH as Delegate dated July 1, 2001;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the Fund and Custodian agree as follows. Capitalized terms shall have the meaning indicated in Section 13 of this Delegation Agreement unless otherwise indicated.
1. Maintenance of Fund's Assets Abroad. The Fund, acting through its Board of Trustees (the Board), or its duly authorized representative, hereby instructs the Custodian to enter into a written agreement with the Delegate to place and maintain the Fund's Assets outside the United States in accordance with instructions received from the Fund's investment adviser. (An investment adviser may include any duly authorized sub-adviser to the Fund.) Such instruction shall represent a Proper Instruction under the terms of the Custodian Agreement between the Fund and the Custodian dated May 13, 1998, as amended from time to time (the Custodian Agreement). The Fund acknowledges that: (a) the Custodian shall direct the Delegate to perform services hereunder only with respect to the countries where the Delegate provides custodial services to the Fund as set forth in Schedule A to this Delegation Agreement; (b) depending on conditions in the particular country, advance notice may be required before the Delegate, upon the Custodian's direction, shall be able to perform its duties in or with respect to such country (such advance notice to be reasonable in light of the specific facts and circumstances attendant to performance of duties in such country); and (c) nothing in this Delegation Agreement shall require the Custodian to direct the Delegate to provide delegated or custodial services in any country, and there may from time to time be countries as to which the Delegate determines it will not provide delegation services.
(a) Selection of Eligible Foreign Custodian. The Delegate shall place and maintain the Fund's Assets with an Eligible Foreign Custodian; provided that, the Delegate shall be required to determine that the Fund's Assets will be subject to reasonable care based on the standards applicable to custodians in the relevant market, after considering all factors relevant to the safekeeping of such assets, including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and internal controls, including, but not limited to, the physical protections available for certificated securities (if applicable), the controls and procedures for dealing with any Securities Depository, the method of keeping custodial records, and the security and data protection practices; |
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(ii) Whether the Eligible Foreign Custodian has the requisite financial strength to provide reasonable care for the Fund's Assets; |
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(iii) The Eligible Foreign Custodian's general reputation and standing; and |
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(iv) Whether the Fund will have jurisdiction over and be able to enforce judgments against the Eligible Foreign Custodian, such as by virtue of the existence of any offices of such Eligible Foreign Custodian in the United States or such Eligible Foreign Custodian's appointment of an agent for service of process in the United States or consent to jurisdiction in the United States. |
(b) Contract Administration. The Custodian shall require that the Delegate cause that the foreign custody arrangements with an Eligible Foreign Custodian be governed by a written contract that the Delegate has determined will provide reasonable care for the Fund's Assets based on the standards applicable to custodians in the relevant market after considering all factors relevant to the safekeeping of the Fund's Assets as specified in Rule 17f-5(c)(1). Each such contract shall, except as set forth in the last paragraph of this subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any combination of the foregoing) such that the Fund will be adequately protected against the risk of loss of assets held in accordance with such contract; |
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(ii) That the Fund's Assets will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the Eligible Foreign Custodian or its creditors, except a claim of payment for their safe custody or administration or, in the case of cash deposits, liens or rights in favor of creditors of such Custodian arising under bankruptcy, insolvency or similar laws; |
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(iii) That beneficial ownership of the Fund's Assets will be freely transferable without the payment of money or value other than for safe custody or administration; |
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(iv) That adequate records will be maintained identifying the Fund's Assets as belonging to the Fund or as being held by a third party for the benefit of the Fund; |
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(v) That the Fund's independent public accountants will be given access to those records described in (iv) above or confirmation of the contents of such records; and |
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(vi) That the Delegate will receive sufficient and timely periodic reports with respect to the safekeeping of the Fund's Assets, including, but not limited to, notification of any transfer to or from the Fund's account or a third party account containing foreign assets held for the benefit of the Fund. |
10. Representations. The Custodian hereby represents and warrants that it is a U.S. Bank and that this Delegation Agreement has been duly authorized, executed and delivered by the Custodian and is a legal, valid and binding agreement of the Custodian enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy laws and any other similar laws affecting the rights and remedies of creditors generally and by equitable principles. The Custodian will enter into an agreement with the Delegate in which the Delegate will represent and warrant that it is a U.S. Bank and that the agreement between the Custodian and the Delegate has been duly authorized, executed and delivered by the Delegate and is a legal, valid and binding agreement of the Delegate enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy laws and any other similar laws affecting the rights and remedies of creditors generally and by equitable principles.
13. Definitions. Capitalized terms in this Delegation Agreement have the following meanings:
a. Country Risk - shall mean, with respect to the acquisition, ownership, settlement or custody of investments in a jurisdiction, all risks relating to, or arising in consequence of, systemic and markets factors affecting the acquisition, payment for or ownership of investments including (a) the prevalence of crime and corruption except for crime or corruption by the Eligible Foreign Custodian or its employees, directors or officers, (b) the inaccuracy or unreliability of business and financial information (unrelated to the Custodian's duties imposed by Rule 17f-5(c) under the 1940 Act or to the duties imposed upon it by Rule 17f-7 under the 1940 Act), (c) the instability or volatility of banking and financial systems, or the absence or inadequacy of an infrastructure to support such systems, (d) custody and settlement infrastructure of the market in which such investments are transacted and held, (e) the acts, omissions and operation of any Securities Depository, it being understood that this provision shall not affect any liability that the Custodian otherwise would have under this Delegation Agreement or with respect to foreign subcustodians and securities depositories under the Custodian Agreement, (f) the risk of the bankruptcy or insolvency of banking agents, counterparties to cash and securities transactions, registrars or transfer agents, (g) the existence of market conditions which prevent the orderly execution or settlement of transactions or which affect the value of assets, and (h) the laws relating to the safekeeping and recovery of the Fund's Assets held in custody pursuant to the terms of the Custodian Agreement; provided, however, that, in compliance with Rule 17f-5, neither Sovereign Risk nor Country Risk shall include the custody risk of a particular Eligible Foreign Custodian of the Fund's Assets. |
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b. Eligible Foreign Custodian - shall have the meaning set forth in Rule 17f-5(a)(1) and shall also include a bank that qualifies to serve as a custodian of assets of investment companies under Section 17(f) of the 1940 Act. |
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c. Fund's Assets - shall mean any of the Fund's investments (including foreign currencies) for which the primary market is outside the United States, and such cash and cash equivalents as are reasonably necessary to effect the Fund's transactions in such investments. |
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d. Proper Instructions - shall have the meaning set forth in the Custodian Agreement. |
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e. Securities Depository - shall have the meaning for an "Eligible Securities Depository" as set forth in Rule 17f-7. |
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f. Sovereign Risk - shall mean, in respect of any jurisdiction, including the United States of America, where investments are acquired or held hereunder or under the Custodian Agreement, (a) any act of war, terrorism, riot, insurrection or civil commotion, (b) the imposition of any investment, repatriation or exchange control restrictions by any governmental authority, (c) the confiscation, expropriation or nationalization of any investments by any governmental authority, whether de facto or de jure, (d) any devaluation or revaluation of the currency, (e) the imposition of taxes, levies or other charges affecting investments, (f) any change in the applicable law, or (g) any other economic or political risk incurred or experienced that is not directly related to the economic or financial conditions of the Eligible Foreign Custodian, except as otherwise provided in this Delegation Agreement or the Custodian Agreement. |
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g. U. S. Bank - shall have the meaning set forth in Rule 17f-5(a)(7) under the 1940 Act. |
14. Governing Law and Jurisdiction. This Delegation Agreement shall be construed in accordance with the laws of the State of New York. The parties hereby submit to the exclusive jurisdiction of the Federal courts sitting in the State of New York or the Commonwealth of Massachusetts or of the state courts of either such State or such Commonwealth.
IN WITNESS WHEREOF, each of the parties hereto has caused this Delegation Agreement to be duly executed and effective as provided in Section 11 hereof.
W&R TARGET FUNDS, INC., | |
on behalf of each of the | UMB BANK, N.A. |
Portfolios listed in Appendix A | |
By: /s/Xxxxxxx X. Xxxxxxxx |
By: /s/Xxxxx X. Xxxxxxx |
Name: Xxxxxxx X. Xxxxxxxx |
Name: Xxxxx X. Xxxxxxx |
Title: Vice President |
Title: Senior Vice President |
Dated as of: August 20, 2003 |
Dated as of: August 20, 2003 |
APPENDIX A
Portfolios of W&R Target Funds, Inc.
This Agreement |
Custodian Agreement |
|
Portfolio |
Originally Effective: |
Originally Effective: |
Asset Strategy Portfolio |
March 31, 2003 |
May 13, 1998* |
Balanced Portfolio |
March 31, 2003 |
May 13, 1998* |
Bond Portfolio |
March 31, 2003 |
May 13, 1998* |
Core Equity Portfolio |
March 31, 2003 |
May 13, 1998* |
Dividend Income Portfolio |
November 19, 2003 |
November 19, 2003 |
Global Natural Resources Portfolio |
November 10, 2004 |
November 10, 2004 |
Growth Portfolio |
March 31, 2003 |
May 13, 1998* |
High Income Portfolio |
March 31, 2003 |
May 13, 1998* |
International Portfolio |
March 31, 2003 |
May 13, 1998* |
International II Portfolio |
August 20, 2003 |
August 20, 2003 |
Limited-Term Bond Portfolio |
March 31, 2003 |
May 13, 1998* |
Micro Cap Growth Portfolio |
August 20, 2003 |
August 20, 2003 |
Mid Cap Growth Portfolio |
November 10, 2004 |
November 10, 2004 |
Money Market Portfolio |
March 31, 2003 |
May 13, 1998* |
Mortgage Securities Portfolio |
February 18, 2004 |
February 18, 2004 |
Real Estate Securities Portfolio |
February 18, 2004 |
February 18, 2004 |
Science and Technology Portfolio |
March 31, 2003 |
May 13, 1998* |
Small Cap Growth Portfolio |
March 31, 2003 |
May 13, 1998* |
Small Cap Value Portfolio |
August 20, 2003 |
August 20, 2003 |
Value Portfolio |
March 31, 2003 |
February 14, 2001 |
*As amended and restated. |
As last amended November 10, 2004.