EXHIBIT 4(d)
ADMINISTRATION AND SERVICING AGREEMENT
AGREEMENT made as of the 1st day of May, 2001, between USAA INVESTMENT
MANAGEMENT COMPANY, a corporation organized under the laws of the state of
Delaware and having a place of business in San Antonio, Texas (IMCO), and USAA
MUTUAL FUND, INC., a corporation organized under the laws of the state of
Maryland and having a place of business in San Antonio, Texas (the Company).
WHEREAS, the Company is engaged in business as an open-end management
investment company and is so registered under the Investment Company Act of
1940, as amended (the 1940 Act); and
WHEREAS, the Company is authorized to issue shares of capital stock (the
Shares) in separate classes with each such class representing interests in a
separate portfolio of securities and other assets; and
WHEREAS, the Company offers Shares in each of the classes identified in
Exhibit A hereto (the Existing Funds) (such classes, together with all other
classes subsequently established by the Company with respect to which the
Company desires to retain IMCO to provide administrative and shareholder
services hereunder and with respect to which IMCO is willing so to do, being
herein collectively referred to as the Funds); and
WHEREAS, the Company desires to retain IMCO to render certain
administrative and shareholder services to the Company with respect to the
Funds; and
WHEREAS, IMCO is willing to perform such services:
NOW, THEREFORE, WITNESSETH: That it is hereby agreed between the parties
hereto as follows:
1. APPOINTMENT OF IMCO.
(a) EXISTING FUNDS. The Company hereby appoints IMCO to act as
administrator and shareholder servicing agent for the Existing Funds for the
period and on the terms herein set forth. IMCO accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
(b) ADDITIONAL FUNDS. In the event that the Company desires to retain
IMCO to render administrative and shareholder services hereunder with respect
to any Fund other than an Existing Fund, it shall so notify IMCO in writing. If
IMCO is willing to render such services it shall notify the Company in writing,
whereupon the Company shall appoint IMCO to act as administrator and
shareholder servicing agent for such Fund for the period and on the terms
herein set forth, IMCO shall accept such appointment and agree to render the
services herein set forth for the compensation herein provided.
2. DUTIES OF IMCO.
IMCO shall administer the affairs of the Company and provide
shareholder-related services with respect to the Funds; provided, that IMCO
shall not have any obligation to provide under this Agreement any services
related to the distribution of Fund shares or any other services which are the
subject of a separate agreement or arrangement between the Company and IMCO
with respect to the Funds. Subject to the foregoing, IMCO shall provide the
following services and facilities to the Company:
1
(a) OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to the
Company, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Company's needs with respect to the Funds.
(b) PERSONNEL. Provide, without remuneration from or other cost to the
Company, the services of individuals competent to perform all of the Company's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Company or by IMCO acting in some
other capacity pursuant to a separate agreement or arrangement with the Company
with respect to the Funds.
(c) AGENTS. Assist the Company in selecting and coordinating the
activities of the other agents engaged by the Company with respect to the
Funds, including the Company's transfer agent, custodian, independent auditors
and legal counsel.
(d) DIRECTORS AND OFFICERS. Authorize and permit IMCO's directors,
officers and employees who may be elected or appointed as directors or officers
of the Company to serve in such capacities, without remuneration from or other
cost to the Company.
(e) BOOKS AND RECORDS. Assure that all financial, accounting and other
records required to be maintained and preserved by the Company with respect to
the Funds are maintained and preserved by it or on its behalf in accordance
with applicable laws and regulations.
(f) REGULATORY REPORTS AND FILINGS. Assist in the preparation of (but
not pay for) all periodic reports by the Company with respect to the Funds and
all reports and filings required to maintain the registration and qualification
of the Company and the Shares, or to meet other regulatory or tax requirements
applicable to the Funds under federal and state securities and tax laws.
(g) BOARD REPORTS. Prepare and coordinate materials relating to the
Funds to be presented to the Company's Board of Directors in preparation for
its meetings.
(h) FIDELITY BOND. Provide and maintain a bond issued by a reputable
insurance company authorized to do business in the place where the bond is
issued, against larceny and embezzlement covering each officer and employee of
the Company who may singly or jointly with others have access to funds or
securities of the Company, with direct or indirect authority to draw upon such
funds or to direct generally the disposition of such funds. The bond shall be
in such reasonable amount as a majority of the Board of Directors of the
Company who are not officers or employees of the Company shall determine, with
due consideration to the aggregate assets of the Company to which any such
officer or employee may have access.
(i) PURCHASES/REDEMPTIONS. Process and coordinate requests by
shareholders of the Funds for the purchase and redemption of Shares of the
Funds.
(j) WIRE TRANSFERS. Coordinate and implement wire transfers in
connection with the purchase and redemption of Fund Shares.
(k) EXCHANGE OFFERS. Execute orders under any offer of exchange offered
by the Company involving concurrent purchases and redemptions of Shares of one
or more Funds or Shares of other mutual funds within the USAA Family of Funds.
(l) SHAREHOLDER INQUIRIES. Respond to shareholder inquiries requesting
information regarding matters such as shareholder account or transaction
status, net asset value of Fund shares, Fund performance,
2
Fund services, plans and options, Fund investment policies, Fund portfolio
holdings and Fund distributions and taxation thereof.
(m) SHAREHOLDER COMMUNICATIONS. Provide services in connection with
processing shareholder proxy statements, annual and semi-annual reports,
prospectuses and other Fund and/or Company communications with shareholders.
(n) ACCOUNT INFORMATION. Furnish (either separately or on an integrated
basis with other reports) monthly, quarterly and/or annual statements and
confirmations of all account activity with respect to each Fund to Fund
shareholders.
(n) SHAREHOLDER COMPLAINTS. Respond to shareholder complaints and other
correspondence directed to or brought to the attention of IMCO.
(o) DELEGATION. Delegate, at its expense, some or all of its duties
hereunder to other persons or entities approved by IMCO upon notice to the
Company.
(p) OTHER SERVICES. Provide such other services as the parties may from
time to time agree in writing.
3. ALLOCATION OF EXPENSES.
Except for the services and facilities to be provided by IMCO set forth
in paragraph 2 above and the services provided by IMCO set forth in any other
Agreement between the Company and IMCO, the Company assumes and shall pay all
expenses for all other Fund operations and activities and shall reimburse IMCO
for any such expenses incurred by IMCO. The expenses to be borne by the Company
shall include, without limitation:
(a) the charges and expenses of any registrar, share transfer or
dividend disbursing agent, custodian, or depository appointed by the Company
for the safekeeping of a Fund's cash, portfolio securities and other property;
(b) the charges and expenses of auditors;
(c) brokerage commissions, if any, for transactions in the portfolio
securities of the Funds;
(d) all taxes, including issuance and transfer taxes, and fees payable
by a Fund to federal, state or other governmental agencies;
(e) the cost of share certificates representing Shares of a Fund;
(f) fees involved in registering and maintaining registrations of the
Company and of its Shares with the Securities and Exchange Commission and
various states and other jurisdictions;
(g) all expenses of shareholders' and Directors' meetings and of
preparing, printing and mailing proxy statements, quarterly reports, semiannual
reports, annual reports and other communications (including prospectuses) to
existing shareholders;
(h) computation of each Fund's net asset value per Share, including the
use of equipment or services to price or value the Fund's investment portfolio;
3
(i) compensation and travel expenses of Directors who are not
"interested persons" of the Company within the meaning of the 1940 Act;
(j) the expense of furnishing or causing to be furnished to each
shareholder of a Fund a statement of the shareholder's account, including the
expense of mailing;
(k) charges and expenses of legal counsel in connection with matters
relating to the Funds, including, without limitation, legal services rendered
in connection with the Funds' legal and financial structure and relations with
its shareholders, issuance of Fund Shares, and registration and qualification
of securities under federal, state and other laws;
(l) membership or association dues for the Investment Company Institute
or similar organizations;
(m) interest payable on Fund borrowings; and
(n) postage.
4. ADMINISTRATION AND SHAREHOLDER SERVICING FEE.
(a) For the services and facilities to be provided by IMCO as provided
in paragraph 2 hereof, the Company shall pay to IMCO a monthly fee with respect
to each Fund computed as set forth in Exhibit A hereto.
(b) IMCO may from time to time and for such periods as it deems
appropriate voluntarily waive fees or otherwise reduce its compensation
hereunder.
5. LIABILITY AND INDEMNIFICATION.
IMCO shall exercise reasonable care in performing its services under this
Agreement and shall not be liable to the Company for any action or inaction,
except for any action or inaction constituting willful misfeasance, bad faith
or negligence in the performance of its duties hereunder or the reckless
disregard of such duties.
The Company shall indemnify and hold IMCO and its officers, directors and
employees harmless from and against any and all loss, cost, damage and expense
(a Loss), including reasonable expenses for counsel, incurred by it resulting
from any claim, demand, action or suit relating to the performance of its
duties under this Agreement, or any action or omission by it in the performance
of its duties hereunder; provided, however, that this indemnification shall not
apply to any Loss resulting from any action or inaction of IMCO constituting
willful misconduct, bad faith or negligence in the performance of its duties or
the reckless disregard of its duties under this Agreement. Prior to confessing
any claim against it which may be the subject of this indemnification, IMCO
shall give the Company reasonable opportunity to defend against said claim in
its own name or in the name of IMCO.
6. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) DURATION. This Agreement shall become effective as of the date
first set forth above and unless terminated shall continue in force from year
to year thereafter, but only so long as such continuance is specifically
approved annually (a) by the Company's Board of Directors or by a vote of a
majority of the Fund's outstanding voting securities (as that term is defined
in the ▇▇▇▇ ▇▇▇) and (b) by a majority of the
4
Directors who are not parties to this Agreement or "interested persons" of any
such party (as defined in the 1940 Act.)
(b) TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by vote of the Board of Directors of the Company or by
vote of a majority of the outstanding shares (as defined in the 1940 Act), or
by IMCO on sixty (60) days' written notice to the other party. This Agreement
shall automatically terminate upon its assignment by IMCO; provided, however,
that IMCO may delegate its duties as provided in subparagraph (o) of paragraph
2 hereof.
7. PRIOR AGREEMENT SUPERSEDED.
This Agreement supersedes any prior agreement relating to the subject
matter hereof between the parties.
8. SERVICES NOT EXCLUSIVE.
The services of IMCO to the Company hereunder are not to be deemed
exclusive, and IMCO shall be free to render similar services to others so long
as its services hereunder are not impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
USAA MUTUAL FUND, INC. USAA INVESTMENT MANAGEMENT
COMPANY
By: By: _________________________
-------------------------
Name: Name:
Title: President Title: Senior Vice President
5
EXHIBIT A
---------
LISTING OF FUNDS AND FEES
-------------------------
NAME OF FUND FEE RATE
------------ --------
S&P 500 Index Fund 0.06%*
Extended Markets Index Fund 0.38%**
Global Titans Index Fund 0.35%
Nasdaq-100 Index Fund 0.35%
(a) The Company shall pay IMCO a fee for each Fund, payable monthly in
arrears, computed as a percentage of the average net assets of the Fund for
such month at the rate set forth in this Exhibit.
(b) The "average net assets" of the Fund for any month shall be equal to
the quotient produced by dividing (i) the sum of the net assets of such Fund,
determined in accordance with procedures established from time to time by or
under the direction of the Board of Directors of the Company, for each calendar
day of such month, by (ii) the number of such days.
*The fee is computed daily and paid monthly, at an annual rate equal to the
lesser of .06% of the average daily net assets of the Fund or the amount that
brings the total Fund and Equity 500 Index Portfolio annual operating expenses
as a percentage of the Fund's average net assets up to .18%.
**The fee is computed daily and paid monthly, at an annual rate equal to .38%,
up to .10% of this fee shall be paid to ▇▇▇▇▇▇▇ ▇▇▇▇▇ Quantitative Advisers for
subadministrative services.
371682
6