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CLIENT SERVICING

Service Standards Specified:
Standards for the delivery of service are documented, usually in a Service Level Agreement.

Service Standards Specified

Standards Contractually Binding:
The Service Level Agreement is incorporated into the main contract for services.

Standards Contractually Binding

Reporting Against Standards:
The service provider provides regular reports on its service against each of the agreed service standards.

Reporting Against Standards

Flexible Service Team Arrangements:
The arrangements for a particular client ensure a strong, positive relationship is built and directly match each client's structure.

Flexible Service Team Arrangements

Measure Own Service Delivery:
The service provider reports on its own performance against meaningful standards and drives a process of regular review and implementation of agreed action.

Measure Own Service Delivery

Measure Sub-custody Service:
The service provider drives a process of regular performance reviews, identification of elements for improvement and implementation of agreed action.

Measure Sub-custody Service

Proactive New Business Transition:
The service provider takes a proactive stance to the inward transition of new business, involving a team of specialists to identify and deliver on all required steps in a timely manner.

Proactive New Business Transition

MASTER CUSTODY

Proactive Reconciliation across Multiple Managers:
This refers to circumstances where a client has multiple investment managers and a single global custodian. The custodian takes responsibility for reconciling its records with those of each investment manager, relieving the client of this administrative burden.

Proactive Reconciliation across Multiple Managers

Consolidated Reporting: Multiple Providers:
This refers to circumstances where a client has multiple global custodians (appointed by itself and/or its investment managers). While the client deals with each custodian individually, reliance is placed on just one custodian for reporting purposes. This custodian takes responsibility for aggregating the records of all custodians and producing composite reports.

Consolidated Reporting: Multiple Providers

Prime Custodian:
This refers to circumstances where a client has multiple global custodians across a range of portfolios. One custodian contracts with the client to take responsibility for managing the other custody relationships.

Prime Custodian

Master Trust:
For a large group of corporations, a multinational or a big fund management group, the management of individual portfolios for each fund can be unwieldy and expensive. Master Trust entails running a small number of portfolios which invest for the benefit of all of the funds. Each plan owns part of each of the common portfolios. The administration of a Master Trust arrangement is complex - allowing managers to benefit from scale economies and to manage the composite position, but collecting certain economic benefits (notably, in an international context, tax entitlements) and reporting for each distinct legal entity.

Master Trust

Pension Pooling:
The service provider helps establish, and administers, pension pooling arrangements. These typically involve a multinational group having its varous country pension plans hold units in a series of investment pools (each having distinct investment objectives) as a means of achieving economies of scale over the traditional arrangement of each country's pension plan investing independently. The service provider will provide reporting at the level of the investment pools and the pension plans. It will be desirable for the structure to be transparent for tax purposes, in order to avoid losing the tax advantages of each pension plan. This could be achieved by virtual pooling (if wider legal and regulatory issues permit) or by using a legal vehicle (for example, a Luxembourg Fond Commun de Placement which provides a low-cost environment and, subject to gaining requisite tax opinions/rulings, is generally considered a "look-through" vehicle for tax purposes).

Pension Pooling

COMMUNICATION

Electronic Securities Instruction:
Instruction of securities trades by means of an electronic communication mechanism - from the client's systems (and/or those of the client's investment managers) to the custodian.

Electronic Securities Instruction

Electronic Cash Instruction:
Instruction of cash movements by means of an electronic communication mechanism - from the client's systems (and/or those of the client's investment managers) to the custodian.

Electronic Cash Instruction

via Dedicated Line:
Electronic communication is supported by means of a direct telecommunications link to the service provider.

via Dedicated Line

via SWIFT:
Electronic communication is supported via the SWIFT network.

via SWIFT

via Internet:
Electronic communication is supported via the Internet.

via Internet

via Workstation:
Communication is supported by means of entry of information via a Workstation supplied by the custodian.

via Workstation

All Messaging Standards Adopted:
All messages must adopt recognized industry standards to avoid causing delays, errors and costs. The format should follow a proprietary standard (such as those specified by SWIFT, ISITC and FIX) and use recognized asset numbering conventions (eg. SEDOL, ISIN, CUSIP) and industry-standard reference codes.

All Messaging Standards Adopted

MARKET INFORMATION

Market Intelligence:
The provision of timely reports detailing changes to local law, regulation and practice which impact on investments in each market. For the avoidance of doubt, no legal or tax advice is provided.

Market Intelligence

Market Analysis:
Reports covering macroeconomic and corporate news for each market.

Market Analysis

Market Risk:
Prompt reporting of market risk factors. This includes timely updates on events which may impact market risk plus real-time alerts on changes (such as country risk ratings, government debt defaults and repatriation risk).

Market Risk

Market Tax Information:
Reports summarising local taxes for each market and providing timely updates. The scope of this information includes specifying the standard rates of withholding and other taxes, distinguishing the alternate treatment of certain instrument classes, setting out any exemptions and reductions available under local law and specifying the reduced rates available by virtue of double taxation treaties. For the avoidance of doubt, such services shall not include tax advice.

Market Tax Information

CUSTODY RISK

Sub-custody Service Risk:
The service provider drives a process of regular performance reviews, identification of elements for improvement and implementation of agreed action.

Sub-custody Service Risk

Sub-custody Insolvency:
The service provider will define the risks arising from insolvency or bankruptcy of any of its sub-custodians and specify the steps taken to manage these risks: addressing such matters as ring-fencing of assets and the risk to cash balances.

Sub-custody Insolvency

Depository Risk Management:
The service provider will proactively manage the risks associated with securities held with depositories. This typically entails: reporting the value of assets held with depositories; providing individual risk profiles of depositories; and proactive reporting of current risk analyis as circumstances change.

Depository Risk Management

Own Service Risk:
The service provider reports on its own performance against meaningful standards and drives a process of regular review and implementation of agreed action.

Own Service Risk

Own Credit Risk:
The service provider will assist in defining and managing risks associated with cash balances and foreign exchange.

Own Credit Risk

Indemnity for Own Loss: Capped:
The service provider will contract on terms which include indemnification by the service provider against loss arising from such risks as fraud, theft or negligence associated with the service provider - subject to certain maximum amounts.

Indemnity for Own Loss: Capped

Indemnity for Own Loss: Uncapped:
The service provider will contract on terms which include indemnification by the service provider against loss arising from such risks as fraud, theft or negligence associated with the service provider - without limit.

Indemnity for Own Loss: Uncapped

Indemnity for Sub-custodian Loss: Capped:
The service provider will contract on terms which include indemnification by the service provider against loss arising from such risks as fraud, theft or negligence associated with its network of sub-custodial agents - subject to certain maximum amounts.

Indemnity for Sub-custodian Loss: Capped

Indemnity for Sub-custodian Loss: Uncapped:
The service provider will contract on terms which include indemnification by the service provider against loss arising from such risks as fraud, theft or negligence associated with its network of sub-custodial agents - without limit.

Indemnity for Sub-custodian Loss: Uncapped

CUSTODY FEES

Composite Fee:
Standard practice is for global custodians to charge a composite fee (computed as a basis point charge on market value) to cover safekeeping and the range of asset servicing activities, plus a fee for principal transactions (trade instruction and/or settlement).

Composite Fee

Unbundled Pricing:
Unbundled pricing refers to the option of separate, alternate pricing arrangements - for some or all elements of the service - in place of the composite fee. For more details, refer to the globalcustody.net Buyer's Guide.

Unbundled Pricing

OUTSOURCING

Outsourcing Solutions:
The service provider contracts to take over an existing function from a client. For example, the middle office function of an investment management firm.

Outsourcing Solutions

Managed Account Administration:
Provision of full-service outsourcing for investment managers and sponsors, including account opening and closing, account maintenance, performance reporting and account reconciliation.

Managed Account Administration