EXHIBIT (h)(5)
FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
AGREEMENT made as of this 24th day of August 1998, between Xxxxxx Xxxxxxxx
Investment Trust (the "Trust"), a Delaware business trust and a management
investment company registered with the Securities and Exchange Commission (the
"Commission") under the Investment Company Act of 1940, as amended, (the "Act"),
acting through its Board of Trustees or its duly appointed representative on
behalf of each series of the Trust listed on Appendix A or later added to
Appendix A and made a party to this agreement, (each a "Fund"), and XXXXX
BROTHERS XXXXXXXX & CO., a New York limited partnership with an office in
Boston, Massachusetts (the "Delegate").
WITNESSETH
WHEREAS each Fund has appointed the Delegate as custodian (the "Custodian")
of the Fund's Assets pursuant to a Custodian Agreement dated August 24, 1998
(the "Custodian Agreement");
WHEREAS each Fund may, from time to time, determine to invest and maintain
some or all of each Fund's Assets outside the United States;
WHEREAS the Board of Trustees of the Trust (the "Board") wishes to delegate
to the Delegate certain responsibilities with respect to the custody of each
Fund's Assets outside the United States;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Trust and the Delegate agree as follows. Capitalized
terms shall have the meaning indicated in Section 12 unless otherwise indicated.
1. MAINTENANCE OF FUND'S ASSETS ABROAD. The Trust, acting through its
Board or its duly authorized representative, hereby instructs the Delegate
pursuant to the terms of the Custodian Agreement to place and maintain each
Fund's Assets within
the countries listed in Schedule 1 attached hereto (as such Schedule may be
amended from time to time in accordance herewith). Such instruction shall be
deemed to include an instruction to use any Compulsory Securities Depository in
any such country and shall represent an Instruction under the terms of the
Custodian Agreement. Countries may be added to Schedule 1 by written
instruction of a Fund that is accepted in writing by the Delegate as an
amendment to Schedule 1. With respect to amendments adding countries to
Schedule 1, each Fund acknowledges that - (a) the Delegate shall perform
services hereunder only with respect to the countries where it provides
custodial services to the Fund under the Custodian Agreement; (b) depending on
conditions in the particular country, advance notice may be required before the
Delegate shall be able to perform its duties hereunder 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 Agreement shall require the Delegate to provide delegated or
custodial services in any country not listed in Schedule 1 until such amended
Schedule 1 has been accepted by the Delegate in accordance herewith. Unless
directed by an Instruction from an Authorized Person, the Delegate shall not
maintain a Fund's Assets in any jurisdiction not listed in Schedule 1.
2. DELEGATION. Pursuant to the provisions of Rule 17f-5 under the Act,
the Board hereby delegates to the Delegate, and the Delegate hereby accepts such
delegation and agrees to perform, only those duties set forth in this Agreement
concerning the safekeeping of each Fund's Assets in each of the countries set
forth in Schedule 1 hereto as amended from time to time. The Delegate is hereby
authorized to take such actions as are reasonably required to discharge its
duties under this Agreement, including, without limitation, to cause a Fund's
Assets to be placed with a particular Eligible Foreign Custodian in accordance
herewith.
3. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS AND CONTRACT ADMINISTRATION.
The Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
each Fund's foreign custodial arrangements:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. The Delegate shall place and
maintain each Fund's Assets with an Eligible Foreign Custodian in each
jurisdiction to which this Agreement applies and as to which it has received an
Instruction to hold Fund's Assets. Before placing the Fund's Assets with an
Eligible Foreign Custodian that is not a Compulsory Securities Depository, the
Delegate shall have determined that each 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;
(ii) Whether the Eligible Foreign Custodian has the
requisite financial strength to provide reasonable care for each Fund's
Assets;
(iii) The Eligible Foreign Custodian's general reputation and standing
and, in the case of a Securities Depository, the depository's operating
history and number of participants; and
(iv) Whether each 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.
Although the Delegate shall place and maintain the Fund's Assets with Compulsory
Securities Depositories upon receipt of Instructions from the Fund's
representatives, the Delegate shall not be responsible for, or liable for any
loss in connection with, the selection of any such Depository.
(b) CONTRACT ADMINISTRATION. For each Eligible Foreign Custodian selected
by the Delegate pursuant to Section 3, the Delegate shall (or in the case of a
Securities Depository, may, under the rules or established practices or
procedures of the depository) enter into a written contract governing the Fund's
foreign custody
arrangements. The Delegate shall determine that each such contract (or, in the
case of a Securities Depository that is not a Compulosry Securities Depository,
such a contract, the rules or established practices or procedures of the
depository, or any combination of the foregoing) provides reasonable care for
each Fund's Assets based on the standards applicable to custodians in the
relevant market. 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 each Fund will be adequately
protected against the risk of loss of the Fund's Assets held in accordance
with such contract;
(ii) That each 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 Eligible Foreign Custodian
arising under bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of each Fund's Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
(iv) That adequate records will be maintained identifying each Fund's
Assets as belonging to each Fund or as being held by a third party for the
benefit of each Fund;
(v) That each 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
(vi) That the Delegate will receive sufficient and timely periodic
reports with respect to the safekeeping of each Fund's Assets, including,
but not limited to, notification of any transfer to or from each Fund's
account or a third party account containing each Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3 (b), such other provisions that the Delegate
determines will provide, in their entirety, the same or a greater level of
care and protection for each Fund's Assets as the specified provisions, in
their entirety.
4. MONITORING. The Delegate shall establish a system to monitor at
reasonable intervals (but at least annually) the initial and continuing
appropriateness of maintaining each Fund's Assets with each Eligible Foreign
Custodian that has been selected by the Delegate pursuant to Section 3 of this
Agreement. The Delegate shall monitor the initial and continuing
appropriateness of placement of each Fund's Assets in accordance with the
criteria established under Section 3(a) of this Agreement. The Delegate shall
monitor the initial and continuing appropriateness of the contracts governing
each Fund's foreign custody arrangements in accordance with the criteria
established under Section 3(b) of this Agreement. The Delegate will provide such
information with regard to Compulsory Securities Depositories as may be
reasonably available to assist the Board in making any determination requisite
under the Rule, with particular attention to matters contained in Section (c)(1)
of the Rule. Additionally, the Delegate shall provide such other information as
it may receive in the course of its providing global custody services within a
market as may be relevant to the Board's determination with respect to
Compulsory Securities Depositories.
5. REPORTING. The Delegate shall provide to the Board and/or the Fund's
investment adviser written reports specifying placement of each Fund's Assets
with each Eligible Foreign Custodian selected by the Delegate pursuant to
Section 3 of this Agreement and shall promptly report as to any material changes
to such foreign custody arrangements with the reports to be provided to the
Board at its regular quarterly meeting next following the event being reported,
unless the Delegate determines that the matter should be reported sooner, in
which case the report shall be made promptly following the occurrence of the
event and directed to the Trust's Secretary for forwarding to the Board. The
Delegate will prepare such a report with respect to any Eligible Foreign
Custodian that the Delegate has been instructed to use pursuant to Section 7
only to the extent specifically agreed to with respect to the particular
situation. The Delegate shall certify, at least annually, to the Board that
each
Fund's foreign custody arrangements delegated to the Delegate under this
Agreement continue to meet the requirements of Rule 17f-5 under the Act and
shall provide such information regarding the Delegate to enable the Board to
determine that it is reasonable to rely on the Delegate to perform the
responsibilities delegated in this Agreement.
6. WITHDRAWAL OF FUND'S ASSETS. If the Delegate determines that an
arrangement with a specific Eligible Foreign Custodian selected by the Delegate
under Section 3 of this Agreement no longer meets the requirements of said
Section, the Delegate shall withdraw each Fund's Assets from the non-complying
arrangement as soon as reasonably practicable; PROVIDED, however, that if in the
reasonable judgment of the Delegate, such withdrawal would require liquidation
of any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets, it shall be the duty of
the Delegate to promptly provide information regarding the particular
circumstances to each Fund's Investment Adviser and to act only in accordance
with Instructions of each Fund or its investment adviser with respect to such
liquidation or other withdrawal.
7. DIRECTION AS TO ELIGIBLE FOREIGN CUSTODIAN. Notwithstanding this
Delegation Agreement, each Fund, acting through its Board, its investment
adviser or its other authorized representative, may direct the Delegate to place
and maintain each Fund's Assets with a particular Eligible Foreign Custodian.
In such event, the Delegate shall be entitled to rely on any such instruction as
an Instruction under the terms of the Custodian Agreement and may limit its
duties under this Delegation Agreement with respect to such arrangement by
describing any such limitations in writing with respect to each particular
instance.
8. STANDARD OF CARE. In carrying out its duties under this Agreement,
the Delegate agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for safekeeping each Fund's Assets would
exercise. The Delegate agrees to immediately notify the Board and/or a Fund's
investment adviser if, at any time, the Delegate believes it cannot perform, in
accordance with the foregoing standard of care, its duties hereunder generally
or with respect to any jurisdiction
specified in Schedule 1.
9. REPRESENTATIONS. The Delegate hereby represents and warrants that it
is a U.S. Bank and that this Agreement has been duly authorized, executed and
delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate.
Each Fund hereby represents and warrants that its Board has determined that
it is reasonable to rely on the Delegate to perform the delegated
responsibilities provided for herein and that this Agreement has been duly
authorized, executed and delivered by the Trust on behalf of each Fund and is a
legal, valid and binding agreement of each Fund.
10. EFFECTIVENESS; TERMINATION. This Agreement shall be effective as of
the date on which this Agreement shall have been accepted by the Delegate, as
indicated by the date set forth below the Delegate's signature. This Agreement
may be terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Such termination shall be
effective on the 75th day (or such other period as agreed by the parties)
following the date on which the non-terminating party shall receive the
foregoing notice. The foregoing to the contrary notwithstanding, this Agreement
shall be deemed to have been terminated concurrently with the termination of the
Custodian Agreement.
11. NOTICES. Notices and other communications under this Agreement are to
be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless otherwise indicated in a writing referencing this
Agreement and executed by both parties.
12. DEFINITIONS. Capitalized terms in this agreement have the following
meanings:
a. COMPULSORY SECURITIES DEPOSITORY - shall mean a Securities Depository
the use of which is mandatory (i) under applicable law or regulation; (ii)
because securities cannot be withdrawn from the depository; or, (iii)
because maintaining securities outside the Securities Depository is not
consistent with
local prevailing custodial practices.
b. ELIGIBLE FOREIGN CUSTODIAN - shall have the meaning set forth in Rule
17f-5(a)(1) of the Act and shall also include a U.S. Bank.
c. FUND'S ASSETS - shall mean any of the investments of a Fund (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 each Fund's transactions in such investments.
d. INSTRUCTIONS - shall have the meaning set forth in the Custodian
Agreement.
e. SECURITIES DEPOSITORY - shall have the meaning set forth in Rule
17f-5(a)(6) of the Act.
f. SOVEREIGN RISK - shall have the meaning set forth in Section 9.1 of
the Custodian Agreement.
g. U.S. BANK - shall mean a bank which qualifies to serve as a custodian
of assets of investment companies under Section 17(f) of the Act.
13. GOVERNING LAW AND JURISDICTION. This Agreement shall be construed in
accordance with the federal laws of the United States and, to the extent not
governed thereby, 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 of the state courts of such State.
14. FEES. The Delegate shall perform its functions under this agreement
for the compensation determined under the Custodian Agreement.
15. INTEGRATION. This Agreement sets forth the Delegate's duties with
respect to the selection and monitoring of Eligible Foreign Custodians, the
administration of contracts with Eligible Foreign Custodians, the withdrawal of
assets from Eligible Foreign Custodians and the issuance of reports in
connection with such
duties. The terms of the Custodian Agreement shall apply generally as to
matters not expressly covered in this Agreement, including dealings with the
Eligible Foreign Custodians in the course of discharge of the Delegate's
obligations under the Custodian Agreement. If and to the extent that there is
any inconsistency between this Agreement and the Custodian Agreement relating to
the Delegate's duties with respect to the selection and monitoring of Eligible
Foreign Custodians, this Agreement shall prevail.
16. PROVISION OF INFORMATION RELATING TO COUNTRY RISK. In addition to the
delegated duties set forth herein, and with respect to the jurisdictions
listed in Schedule 1, or added thereto pursuant to Section 1, the Delegate
agrees to provide annually to the Board and each Fund's investment adviser,
such information relating to Sovereign Risk, if available, as set forth
below, and agrees to provide, from time to time, written reports to the
Board and each Fund's investment adviser regarding any material change in
such information relating to Sovereign Risk, of which the Delegate becomes
aware. Information relating to Sovereign Risk includes:
COUNTRY INFORMATION
- Settlement Environment
- Depository
- Settlement Period
- Trading
- Security Registration
- Currency
- Foreign Investment Restrictions
- Entitlements
- Proxy Voting
- Foreign Taxation
DEPOSITORY INFORMATION (IF APPLICABLE TO THE COUNTRY)
- Name
- Information relative to determining compulsory or voluntary status
of the facility
- Information as to the existence and merits of an alternative to a
compulsory facility (including matters relevant to practices with
regard to safekeeping, administration and settlement)
- Operational Capabilities (including rules, practices, procedures or
internal controls)
- Type of Entity
- Ownership Structure
- Operating History and Number of Participants
- Eligible instruments
- Security Form
- Financial Data
- Regulator
- External Auditor
Legal Opinions on the following Legal Questions
- Would the applicable foreign law restrict the access afforded the
independent public accountants of the Fund to books and records
kept by a foreign custodian?
- Would the applicable foreign law restrict the ability of the Fund
to recover it assets in the event of bankruptcy of the foreign
custodian?
- What are the foreseeable difficulties in converting the Fund's cash
into U.S. dollars?
- The likelihood of expropriation, nationalization, friezes or
confiscation of the Fund's assets.
The Delegate may provide information under this subsection by means of its
regularly established mechanisms for the communication of client market
information. In the provision of information under this Section, the Delegate
shall be responsible to use reasonable care in the gathering of such information
and shall not otherwise be responsible for the completeness or specific accuracy
of such information. In the provision of information under this Section, the
Delegate may rely without limitation on reports and information distributed by
the Compulsory Securities Depository, governmental or regulatory reports and
reports of any auditor of a Compulsory Securities Depository. Provision of
information in accordance with this Section is not offered as financial,
investment or other professional advice.
17. LIMITATION OF LIABILITY. The Delegate shall indemnify and hold the
Fund, its officers, directors, employees or agents (collectively, the
"Indemnified Parties") harmless from and against any and all loss, damage,
liability, actions, suits, claims costs and expenses, including reasonable legal
fees (a "Claim") incurred or suffered by any Indemnified Party resulting from
the negligence, willful misfeasance or bad faith of the Delegate in the
performance of its duties under this Agreement. Notwithstanding the foregoing,
the Delegate shall not be liable for any Claim arising as a result of any acts
of God, earthquakes, fires, floods, storms or other disturbances of nature,
strikes, riots, nationalization, expropriation, currency restrictions, acts of
war, civil war or terrorism, insurrection, the interruption, loss or malfunction
of utilities, transportation or computers and computer facilities, the
unavailability of energy sources and other similar happenings or events.
Nothing in this Section 17shall be deemed to preclude the Fund or any
Indemnified Party from pursuing any rights it may have in law or in equity.
18. MOST FAVORED CLIENT. If at any time the Delegate shall be a party to
an agreement, to serve as a "foreign custody manager" (as defined in Rule
17f-5(a)(2) of the Act) to an investment company, that provides for either (a) a
standard of care with respect to the selection of Eligible Foreign Custodians in
any jurisdiction higher than that set forth in Section 3 of this Agreement or
(ii) a standard of care with respect to the exercise of the Delegate's duties
higher than that set forth in Section 8 of this Agreement, the Delegate agrees
to notify the Trust of this fact and to raise the applicable standard of care
hereunder to the standard specified in such other agreement.
19. DECLARATION OF TRUST. A copy of the Trust's Declaration of Trust is
on file with the Secretary
of State of the The State of Delaware and notice is hereby given that this
Agreement has been executed on behalf of the Trust by an officer of the Trust in
such capacity and not individually. It is agreed that obligations of the Trust
hereunder shall not be binding personally upon any of the Trustees,
shareholders, officers, agents or employees of the Trust, but shall bind only
the trust property of the Trust as provided in the Declaration of Trust. No
Fund of the Trust shall be liable for the obligations of any other Fund of the
Trust. NO OBLIGATIONS OF THE TRUST THAT RELATE TO A PARTICULAR FUND SHALL BE
ATTRIBUTABLE TO OR AFFECT ANY OTHER FUND OF THE TRUST BUT SHALL ONLY RELATE TO
THE PARTICULAR FUND.
NOW THEREFORE, each of the parties has caused this Agreement to be executed by
its duly authorized representatives, effective as of the date first above
written.
XXXXX BROTHERS XXXXXXXX & CO. XXXXXX XXXXXXXX
INVESTMENT TRUST on behalf of
each series of the Trust set forth in
Appendix A
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------- -------------------------
Name: Name: Xxxxxx X. Xxxxxxx
------------------- -------------------
Title: Title: Treasurer & CFO
------------------ ------------------
Date: Date: 8/24/98
------------------ ------------------
APPENDIX "A" TO THE ACCOUNTING AGENCY AGREEMENT
BETWEEN
XXXXX BROTHERS XXXXXXXX & CO.
AND
XXXXXX XXXXXXXX INVESTMENT TRUST
The following are Funds for which the Accounting Agent shall act as accounting
agent under the terms and conditions of an Accounting Agency Agreement between
Xxxxx Brothers Xxxxxxxx & Co. and Xxxxxx Xxxxxxxx Investment Trust dated
August 24, 1998.
Xxxxxx Xxxxxxxx International Equity Fund
Xxxxxx Xxxxxxxx Global Equity Fund
Xxxxxx Xxxxxxxx European Equity Growth Fund (formerly
Xxxxxx Xxxxxxxx European Equity Fund)
Xxxxxx Xxxxxxxx New Asia Fund (formerly Xxxxxx Xxxxxxxx
Pacific Basin Equity Fund)
Xxxxxx Xxxxxxxx International Small Cap Equity Fund
Xxxxxx Xxxxxxxx Japanese Small Cap Equity Fund
Xxxxxx Xxxxxxxx European Small Cap Equity Fund
Xxxxxx Xxxxxxxx Emerging Markets Equity Fund
Xxxxxx Xxxxxxxx Core Global Fixed Income Fund
Xxxxxx Xxxxxxxx Global Fixed Income Fund
Xxxxxx Xxxxxxxx International Fixed Income Fund
Xxxxxx Xxxxxxxx Emerging Markets Debt Fund
Xxxxxx Xxxxxxxx Emerging Local Currency Debt Fund
Xxxxxx Xxxxxxxx Fixed Income Fund
Xxxxxx Xxxxxxxx Municipal Bond Fund
Xxxxxx Xxxxxxxx Short-Term Fixed Income Fund
Xxxxxx Xxxxxxxx Short-Term Municipal Bond Fund
Xxxxxx Xxxxxxxx Total Return Bond Fund
Xxxxxx Xxxxxxxx High Yield Bond Fund
Xxxxxx Xxxxxxxx Smaller Companies Fund
Xxxxxx Xxxxxxxx Microcap Fund
Xxxxxx Xxxxxxxx Large Cap Growth Fund
APPENDIX B
THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN EXCHANGE
QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS:
AUTHORIZED SOURCES
BLOOMBERG
EXTEL (LONDON)
FUND MANAGERS
INTERACTIVE DATA CORPORATION
REPUTABLE BROKERS
REUTERS
SUBCUSTODIAN BANKS
TELEKURS
VALORINFORM (GENEVA)
REPUTABLE FINANCIAL PUBLICATIONS
STOCK EXCHANGES
FINANCIAL INFORMATION INC. CARD
XX XXXXX
FRI CORPORATION
XXXXXXX XXXXX PRICING SERVICE
XXXXXX
SCHEDULE 1
TO THE XXXXXX XXXXXXXX INVESTMENT TRUST
FOREIGN CUSTODY MANAGER DELEGATION AGREEMENT
AS OF AUGUST 24, 1998
ARGENTINA
AUSTRALIA
AUSTRIA
BANGLADESH
BELGIUM
BOLIVIA
BOTSWANA
BRAZIL
BULGARIA
CANADA
CHILE
CHINA
COLOMBIA
CROATIA
CZECH REPUBLIC
DENMARK
ECUADOR
EGYPT
FINLAND
FRANCE
GERMANY
GREECE
HONG KONG
HUNGARY
INDIA
INDONESIA
IRELAND
ISRAEL
ITALY
JAPAN
JORDAN
KENYA
MALAYSIA
MAURITIUS
MEXICO
MOROCCO
NAMIBIA
NETHERLANDS
NIGERIA
NORWAY
OMAN
PAKISTAN
PANAMA
PERU
PHILIPPINES
POLAND
PORTUGAL
ROMANIA
RUSSIA
SINGAPORE
SOUTH AFRICA
SOUTH KOREA
SPAIN
SWEDEN
SWITZERLAND
TAIWAN
THAILAND
TURKEY
UNITED KINGDOM
URUGUAY
VENEZUELA
ZAMBIA
