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Other Service Providers

In addition to the principal service providers described above, some funds retain one or more of the following service providers.


Not all funds have an administrator, as many of the responsibilities of an administrator are typically assumed by the fund’s manager (the investment adviser). Still, some funds—for historical, business, or practical reasons—do have one. The responsibilities of an administrator will vary, but often include: keeping books and records; registering the fund and its public offering of shares and keeping the registration statement current; providing corporate administrative services, including logistical support for the board of directors; preparing board reports and minutes of meetings; providing legal and regulatory compliance support, including preparing annual and semiannual reports to shareholders and quarterly schedules of investments; and overseeing other service providers to the fund.

Fund Accounting Agent

Funds are subject to unique accounting and financial reporting requirements. In order to assist funds in fulfilling these requirements, a fund accounting agent can perform a variety of services, including valuing all portfolio securities daily, calculating the fund’s net assets and NAV per share, recording all security trades and corporate actions, calculating daily expenses, calculating dividend and distribution rates, and maintaining the fund’s general ledger. Some or all of these services also may be provided by one of the fund’s other services providers, such as the custodian or administrator.

Pricing Vendor

The integrity of a fund’s NAV and the accurate valuation of portfolio holdings are of central importance under the 1940 Act and, of course, to the fund’s shareholders. As securities have become more complicated and markets more volatile, it has become common for funds to hire an external pricing vendor to help price portfolio holdings. According to the SEC staff, funds should implement appropriate measures to determine whether prices provided by vendors reflect what the funds might reasonably expect to receive upon a “current” sale of the securities.

Proxy Voting Service

A fund’s investment adviser may rely on a third-party proxy voting service to provide administrative efficiencies. A fund complex may engage a proxy voting service when, for example, there are many funds in the complex and perhaps thousands of individual portfolio securities to vote, as well as the obligation to report those votes. There may be cost savings associated with the hiring of a service to vote proxies, as well as to research the individual proposals. Administrative efficiencies also may be achieved for smaller advisers or fund complexes that have limited resources to handle proxy voting functions in-house. A third-party proxy voting service also may provide analysis and recommendations on proxy issues, and may offer protection against potential conflicts between the interests of the adviser and those of fund shareholders.

Securities Lending Agent

Funds may enter into securities lending programs in order to generate extra income, thus increasing the fund’s total return. Funds that engage in securities lending often do so through a securities lending agent, which may be the fund’s custodian, an affiliate, or a third party. In most cases, lending agents are compensated for their services based upon a percentage or “split” of the net revenue generated by the fund’s securities lending activity.