Exhibit 99.(h)(1)
FOURTH AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
FOURTH AMENDED AND RESTATED ADMINISTRATIVE SERVICES AGREEMENT ("Agreement")
effective as of February 26, 2003, by and between E*TRADE Funds, a Delaware
statutory trust ("Trust") on behalf of each series listed on Exhibit A hereto as
amended from time to time (each a "Fund" and collectively, the "Funds"), and
E*TRADE Asset Management, Inc., a Delaware corporation ("Administrator").
WHEREAS, the Trust and the Administrator entered into the Third Amended and
Restated Administrative Services Agreement on September 10, 2001, as amended
from time to time, and each party wishes to amend and restate that agreement
herein;
WHEREAS, the Trust is a registered open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Administrator is able to act as administrator of the Fund; and
WHEREAS, the Trust wishes to retain the Administrator to render
administrative services with respect to each of the Funds listed on Exhibit A
hereto (as the same may be amended from time to time by the mutual written
consent of the parties), and the Administrator has agreed to act as
administrator for each of the Funds.
NOW, THEREFORE, for good and valuable consideration, the receipt whereof is
hereby acknowledged, and the mutual performance of undertakings herein, it is
agreed by and between the parties hereto as follows:
1. Services to be Provided by the Administrator. (a) Subject to the
control, direction and supervision of the Board of Trustees of the Trust
("Board") and in compliance with the objectives, policies and limitations set
forth in the Trust's Registration Statement, Declaration of Trust and By-Laws;
applicable laws and regulations; and all resolutions and policies implemented by
the Board, the Administrator shall have general responsibility for the oversight
of the Trust's administrative operations and will provide the following
services:
(i) Trust Administration,
(ii) Compliance Services, and
(iii) Trust Accounting.
A detailed description of each of the above services is contained in
Schedules B and C, respectively, to this Agreement.
(b) The Administrator will also:
(i) provide, without additional cost to the Trust except for
out-of-pocket expenses, office facilities in an appropriate location
with respect to the provision of
the services contemplated herein (which may be in the offices of the
Administrator or a corporate affiliate of the Administrator);
(ii) provide, without additional remuneration from, or other cost to,
the Trust except for out-of-pocket expenses, the services of
individuals to serve as officers of the Trust who will be designated
by the Administrator and elected by the Board subject to reasonable
Board approval;
(iii) provide or otherwise obtain, without additional remuneration
from or other cost to the Trust except for out-of-pocket expenses,
personnel sufficient for provision of the services contemplated
herein;
(iv) furnish, at no additional cost to the Trust except for
out-of-pocket expenses, equipment and other materials, which are
necessary or desirable for provision of the services contemplated
herein; and
(v) keep records, at no additional cost to the Trust except for
out-of-pocket expenses, relating to the services provided hereunder in
such form and manner as the Administrator may deem appropriate or
advisable.
2. Compensation. For the services provided by the Administrator, each of
the Funds shall pay to the Administrator a fee, computed daily and to be paid on
the last business day of each month equal on an annual basis to the amount of
the average daily net assets of such Fund or, if applicable, the average daily
net assets of such Fund attributable to a class, as listed opposite that Fund's
or Class' name in Exhibit A, attached hereto.
The term "average daily net assets of the Fund" is defined as the average
of the values placed on the net assets of the Fund as of the close of the New
York Stock Exchange, on each day on which the net asset value of the portfolio
of the Fund is determined consistent with the provisions of Rule 22c-1 under the
1940 Act or, if the Fund lawfully determines the value of the net assets of its
portfolio as of some other time on each business day, as of such time. The value
of the net assets of the Fund shall be determined pursuant to the applicable
provisions of the Fund's then current registration statement under the 1940 Act
and the Securities Act of 1933, as amended, ("Registration Statement"). If,
pursuant to such provisions, the determination of net asset value is suspended
for any particular business day, then for the purposes of this Section 2, the
value of the net assets of the Fund shall be deemed to be the value of such net
assets as last determined in accordance with the Registration Statement. If the
determination of the net asset value of the Fund has been suspended pursuant to
the Registration Statement for a period including a month for which payment
pursuant to this Agreement is due, the Administrator's compensation payable at
the end of such month shall be computed on the basis of the value of the net
assets of the Fund or of such Fund attributable to a class as last determined
(whether during or prior to such month).
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3. Allocation of Charges and Expenses.
(a) Except as otherwise specifically provided in this Section 3, the
Administrator shall pay the compensation and expenses of all of its directors,
officers and employees who serve as trustees, officers and executive employees
of the Trust (including the Trust's share of payroll taxes), and the
Administrator shall make available, without expense to each Fund or Class, the
service of its directors, officers and employees who may be duly elected
officers of the Trust, subject to their individual consent to serve and to any
limitations imposed by law.
(b) The Administrator shall not be required to pay pursuant to this
Agreement any expenses of each Fund or Class other than those specifically
allocated to the Administrator in this section 3.
4. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Administrator hereby agrees that all records which it
maintains or causes to be maintained for the Funds are the property of the Funds
and further agrees to surrender promptly to the Funds any of such records upon
the Trust's request. The Administrator further agrees to preserve or cause to be
preserved for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
5. Sub-Contracts. The Administrator may, from time to time, at its own
expense, employ or associate with itself such person or persons as it believes
necessary to assist it in carrying out its obligations under this Agreement.
6. Compliance. The Administrator shall observe and comply with the
Certificate of Trust and organizing documents of the Trust, the applicable
provisions of the Registration Statement, federal securities laws, all lawful
resolutions of the Board and other lawful orders and directions given to it from
time to time by the Board. All activities engaged in by the Administrator
hereunder shall be at all times subject to the control of and review by the
Board.
7. Limitations of Liability.
(a) Except as may otherwise be required by the 1940 Act or the rules
thereunder or other applicable law, neither the Administrator nor its
shareholders, officers, directors, employees or agents shall be subject to any
liability for, or any damages, expenses or losses incurred in connection with,
any act or omission connected with or arising out of any services rendered under
this Agreement, except by reason of willful misfeasance, bad faith or negligence
in the performance of the Administrator's duties or by reason of reckless
disregard of the Administrator's obligations and duties under this Agreement.
Notwithstanding the foregoing, the Administrator shall not be liable to the
Trust or the Funds for the acts and omissions of any party engaged by the
Administrator to assist it in carrying out its obligations under this Agreement
except to the extent that such party is liable to the Administrator for such
acts and omissions pursuant to the contract under which the Administrator shall
have retained such party. Any person, even though also employed by the
Administrator, who may be or become an employee of and paid by the Trust shall
be deemed, when acting within the scope of his employment by the
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Trust, to be acting in such employment solely for the Trust and not as the
employee or agent of the Administrator.
(b) The Administrator shall look only to the assets of a particular
Fund or to the assets attributable to a particular Class of a Fund, as
applicable, for the performance of the Agreement by the Trust with respect to
such Fund, and neither the Trustees nor any of the Trust's shareholders,
officers, employees or agents, whether past, present or future, shall be
personally liable therefor.
8. Non-Exclusivity. Nothing in this Agreement will in any way limit or
restrict the Administrator or any of its officers, directors, employees, agents
or affiliates from providing administrative services or other services to any
other person or entity pursuant to any contract or otherwise; and no such
performance of administrative or other services or taking of any such action or
doing of any such thing, shall be in any manner restricted or otherwise affected
by any aspect of any relationship of the Administrator to the Trust or the Funds
or be deemed to violate or give rise to any duty or obligation of the
Administrator to the Trust, except as otherwise imposed by law.
9. Duration and Termination. This Agreement shall continue in effect with
respect to those Funds with multiple classes, as set forth in Exhibit A, until
October 7, 2004, if not sooner terminated. This Agreement shall continue in
effect with respect to all other Funds until August 31, 2003, if not sooner
terminated. This Agreement shall continue in effect thereafter with respect to
each Fund for successive 12-month periods, unless terminated, provided that each
such continuance is specifically approved at least annually by (a) the vote of a
majority of the entire Board, or by the vote of a majority of the outstanding
voting securities (as defined in the 1940 Act), of the Funds and (b) the vote of
a majority of those Trustees who are not parties to this Agreement or interested
persons (as such term is defined in the 1940 Act). This Agreement may be
terminated at any time without payment of any penalty, by the Trust upon the
vote of a majority of the Board or by a majority of the outstanding voting
securities of the Fund or class, as applicable, or by the Administrator, in each
case, on sixty (60) days' written notice to the other party.
10. Reliance on Information. In discharging the functions specified in this
Agreement, the Administrator may, without inquiry, rely and act upon all
notices, information or other communications reasonably believed to have been
supplied to it by any one or more of the Trustees or agents of the Trust.
11. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought.
12. Miscellaneous.
a. This Agreement shall be construed in accordance with the laws of the
State of Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, as amended, or rules or orders of the SEC
thereunder.
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b. The captions of this Agreement are included for convenience only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect.
c. If any provisions of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
d. The Administrator shall for all purposes herein be deemed to be an
independent contractor and shall have, unless otherwise expressly provided or
authorized, no authority to act for or represent the Trust or the Funds in any
way or otherwise be deemed an agent of the Trust or the Funds.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
E*TRADE FUNDS (on behalf of the
series or classes listed on Exhibit A)
By:
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Name:
Title:
E*TRADE ASSET MANAGEMENT, INC.
By:
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Name:
Title:
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AMENDED EXHIBIT A
to the
FOURTH AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
Exhibit A to the Fourth Amended and Restated Administrative Services
Agreement dated as of February 26, 2003, between E*TRADE Funds and E*TRADE Asset
Management, Inc. is hereby amended as of November 7, 2003, 2003 to reflect (i)
the deletion of the E*TRADE Premier Money Market Fund; (ii) the addition of the
Premier Class of the E*TRADE Money Market Fund; and (iii) revised fees for the
E*TRADE International Index Fund, E*TRADE Xxxxxxx 2000 Index Fund, and E*TRADE
S&P 500 Index Fund, as set forth below:
Name of Fund Fee
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E*TRADE Asset Allocation Fund 0.15%
E*TRADE Bond Fund 0.15%
E*TRADE International Index Fund 0.15%
E*TRADE Money Market Fund
Sweep Class 0.15%
Institutional Class 0.10%
Premier Class 0.15%
E*TRADE Government Money Market Fund
Sweep Class 0.15%
E*TRADE Municipal Money Market Fund
Premier Class 0.15%
Sweep Class 0.15%
E*TRADE California Municipal Money Market Fund
Sweep Class 0.15%
E*TRADE New York Municipal Money Market Fund
Sweep Class 0.15%
E*TRADE Xxxxxxx 2000 Index Fund 0.15%
E*TRADE S&P 500 Index Fund 0.15%
E*TRADE Technology Index Fund 0.15%
E*TRADE Funds E*TRADE Asset Management, Inc.
By: By:
--------------------------------- ------------------------------------
Name: Name:
Title: Title:
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EXHIBIT B
to the
THIRD AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
GENERAL DESCRIPTION OF TRUST ADMINISTRATIVE AND COMPLIANCE SERVICES
I. GENERAL
A. Coordinate and manage the work relationships among all service providers to
the Trust.
B. Perform trust operational management, including development of control
procedures and monitor the performance of all service vendors to the Trust.
C. Propose and carry out policies, particularly in the area of operational
problem inquiry and resolution, such as, among others, potential/actual
compliance violations, valuation of complex securities or those trading in
problematic markets, and Trust share valuation errors, as applicable.
II. FINANCIAL AND TAX REPORTING OBLIGATIONS
A. Prepare management reports and Board of Trustees materials, such as, for
example, unaudited financial statements and summaries of dividends and
distributions.
B. Supervise the reporting by any sub-administrator of the Trust's performance
to outside service providers as directed by Trust management.
C. Assist Trust management in making final determinations of distribution
amounts.
D. The Trust will advise the Administrator of the declaration of any dividend or
distribution and the record and payable date thereof at least five (5) days
prior to the record date, and the Administrator will make appropriate credits to
each shareholder's account.
E. Supervise the preparation and filing by the sub-administrator of the Trust's
Form N-SAR with the SEC.
F. Supervise the preparation, coordination and filing with the appropriate
regulatory agencies of the Trust's semi-annual and annual reports to
shareholders The Administrator shall be responsible for preparing the
"President's Letters" or the "Management's discussion of each Fund's
performance" for inclusion in the Trust's annual reports to shareholders.
G. Supervise the preparation by the Trust's officers of financial information
for the Trust's semi-annual and annual reports, proxy statements and other
communications required or otherwise sent to the Trust's shareholders and
arrange for the dissemination of such reports and communications.
H. Provide financial information for Trust proxies and prospectuses including
expense table.
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I. Supervise the filing of copies of financial reports to shareholders with the
SEC under Rule 30b2-1.
III. PORTFOLIO COMPLIANCE
The Administrator shall provide the following compliance services in conjunction
with the investment adviser's obligations pursuant to its Investment Advisory
Agreement with the Trust and all applicable laws.
A. Mail quarterly requests for "Securities Transaction Reports" to the Trust's
Trustees and officers and "access persons" under the terms of the Trust's Code
of Ethics and regulations promulgated by the U.S. Securities and Exchange
Commission.
B. Prepare, distribute, and utilize in compliance training sessions,
comprehensive compliance materials, including compliance manuals and checklists,
and develop or assist in developing guidelines and procedures to improve overall
compliance by the Trust and its various agents.
IV. REGULATORY AFFAIRS AND CORPORATE GOVERNANCE
A. Prepare, review and file post-effective amendments to the Trust's
registration statement and supplements as needed with respect to the currently
existing Funds only.
B. Prepare and file proxy materials and administer shareholder meetings.
C. Prepare minutes, and follow up on matters related to the Administrator's
responsibilities under this Agreement that are raised at all Board meetings.
D. In coordination with the investment adviser, make reports and recommendations
to the Board concerning the performance of the investment adviser and other
service providers for the Trust, as the Board may reasonably request.
E. Supervise the preparation and filing with the SEC of Rule 24f-2 Notices (and
all similar state filings, if required by the states). The Administrator shall
not be responsible for preparing any legal opinions required in connection with
Rule 24f-2 Notices.
F. Review and monitor the fidelity bond and errors and omissions insurance
coverage and the submission of any related regulatory filings.
G. Prepare and update documents, such as charter document, by-laws, and foreign
qualification filings.
H. Provide support and counsel with respect to routine regulatory examinations
or investigations of the Trust and work closely with the Trust's legal counsel
in response to any non-routine regulatory matters. Also, coordinate all
communications and data collection with regard to any regulatory examinations
and yearly audits by independent accountants.
I. Maintain general corporate calendar.
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J. Assist with preparations for, attend and prepare minutes of shareholder
meetings.
K. When requested, provide consultation on regulatory matters relating to
portfolio management, Trust operations and any potential changes in each Fund's
investment policies, operations or structure.
L. Maintain continuing awareness of significant emerging regulatory and
legislative developments which may affect each Fund, update the Board and the
investment adviser on those developments and provide related planning assistance
where reasonably requested or appropriate.
V. ADMINISTRATION
A. Furnish appropriate officers for the Trust, subject to Board approval.
B. For new Funds, obtain Employer or Taxpayer Identification Number and CUSIP
numbers, as necessary. Estimate organizational costs and expenses and monitor
against actual disbursements.
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EXHIBIT C
to the
THIRD AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
DESCRIPTION OF TRUST ACCOUNTING SERVICES
The Administrator shall provide the following accounting services to the Trust:
A. Supervise the maintenance of the books and records for the Trust's assets,
including records of all securities transactions.
B. Supervise the calculation of each Fund's net asset value in accordance with
each Fund's prospectus and, after the Fund meets eligibility requirements,
supervise the transmission to NASDAQ and to such other entities as directed by
the Trust.
C. Supervise the accounting for dividends and interest received and
distributions made by the Trust.
D. Coordination with the Trust's independent auditors with respect to the annual
audit, and as otherwise requested by the Trust.
E. Consult with the Trust's officers, independent public accountants and other
appropriate persons in establishing the accounting policies of the Trust.
F. As mutually agreed upon, the Administrator will provide domestic and/or
international reports.
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