Investment Company Services Agreement
This Agreement, dated as of the 16th day of December, 1997, made by
and between Spirit of America Investment Fund, Inc. (the "Fund"), a
corporation operating as an open-end, management investment company
registered under the Investment Company Act of 1940, as amended
(the "Act"),duly organized and existing under the laws of the State of
Maryland and FPS Services, Inc. ("FPS"), a corporation duly organized
and existing under the laws of the State of Delaware (collectively, the
"Parties").
Witnesseth That:
Whereas, the Fund is authorized by its Articles of Incorporation
to issue separate series of shares representing interests in separate
investment portfolios which are identified on Schedule "C" attached
hereto, and which Schedule "C" may be amended from time to time by
mutual agreement of the Fund and FPS; and
Whereas, the Parties desire to enter into an agreement whereby
FPS will provide the services to the Fund as specified herein and set
forth in particular in Schedule "A" which is attached hereto and made
a part hereof.
Now Therefore, in consideration of the premises and mutual
covenants contained herein, and in exchange of good and valuable
consideration, the sufficiency and receipt of which is hereby
acknowledged, the Parties hereto, intending to be legally bound, do
hereby agree as follows:
General Provisions
Section 1. Appointment. The Fund hereby appoints FPS as its
servicing agent and FPS hereby accepts such appointment. In order
that FPS may perform its duties under the terms of this Agreement,
the Board of Directors of the Fund shall direct the officers,
investment adviser, legal counsel, independent accountants and
custodian of the Fund to cooperate fully with FPS and, upon request
of FPS, to provide such information, documents and advice relating to
the Fund which FPS requires to execute its responsibilities
hereunder. In connection with its duties, FPS shall be entitled to
rely, and will be held harmless by the Fund when acting in reasonable
reliance, upon any instruction, advice or document relating to the
Fund as provided to FPS by any of the aforementioned persons on
behalf of the Fund. All fees charged by any such persons acting on
behalf of the Fund will be deemed an expense of the Fund.
Any services performed by FPS under this Agreement will conform
to the requirements of:
(1) the provisions of the Act and the Securities Act of
1933, as amended, and any rules or regulations in
force thereunder;
(2) any other applicable provision of state and federal law;
(3) the provisions of the Fund's Articles of
Incorporation and the By-Laws as amended from time
to time and delivered to FPS;
(4) any policies and determinations of the Board of Directors
of the Fund which are communicated to FPS; and
(5) the policies of the Fund as reflected in the Fund's
registration statement as filed with the U.S.
Securities and Exchange Commission.
Nothing in this Agreement will prevent FPS or any officer
thereof from providing the same or comparable services for or with
any other person, firm or corporation. While the services supplied
to the Fund may be different than those supplied to other persons,
firms or corporations, FPS will provide the Fund equitable treatment
in supplying services. The Fund recognizes that it will not receive
preferential treatment from FPS as compared with the treatment
provided to other FPS clients.
Section 2. Duties and Obligations of FPS.
Subject to the provisions of this Agreement, FPS will
provide to the Fund the specific services as set forth in Schedule
"A" attached hereto.
Section 3. Definitions. For purposes of this Agreement:
"Certificate" will mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement or
the custody agreement executed by the Fund ("Custody Agreement"). To
be effective, such Certificate shall be given to and received by the
custodian and shall be signed on behalf of the Fund by any two of its
designated officers. The term Certificate shall also include
instructions communicated to the custodian by FPS.
"Custodian" will refer to that agent which provides safekeeping
of the assets of the Fund.
"Instructions" will mean communications containing instructions
transmitted by electronic or telecommunications media including, but
not limited to, Industry Standardization for Institutional Trade
Communications ("I.S.I.T.C."), computer-to-computer interface,
dedicated transmission line, facsimile transmission (which may be
signed by an officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted
to FPS in person or by telephone, telegram, telecopy or other
mechanical or documentary means lacking original signature, by a
person or persons reasonably identified to FPS to be a person or
persons so authorized by a resolution of the Board of Directors of
the Fund to give Oral Instructions to FPS on behalf of the Fund.
"Shareholders" will mean the registered owners of the shares of
the Fund in accordance with the share registry records maintained by
FPS for the Fund.
"Shares" will mean the issued and outstanding shares of the
Fund.
"Signature Guarantee" will mean the guarantee of signatures by
an "eligible guarantor institution" as defined in Rule 17Ad-15 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Eligible guarantor institutions include banks, brokers, dealers,
credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. Broker-dealers
guaranteeing signatures must be members of a clearing
corporation or maintain net capital of at least $100,000. Signature
guarantees will be accepted from any eligible guarantor institution
which participates in a signature guarantee program.
"Written Instruction" will mean an authorization, instruction,
approval, item or set of data or information of any kind transmitted
to FPS in an original writing containing an original signature or a
copy of such document transmitted by telecopy including transmission
of such signature reasonably identified to FPS to be the signature of
a person or persons so authorized by a resolution of the Board of
Directors of the Fund, or so identified by the Fund to give Written
Instructions to FPS on behalf of the Fund.
Concerning Oral and Written Instructions For all
purposes under this Agreement, FPS is authorized to act
upon receipt of the first of any Written or Oral
Instruction it receives from the Fund or its agents. In
cases where the first instruction is an Oral Instruction
that is not in the form of a document or written record,
a confirmatory Written Instruction or Oral Instruction in
the form of a document or written record shall be
delivered. In cases where FPS receives an Instruction,
whether Written or Oral, to enter a portfolio transaction
onto the Fund's records, the Fund shall cause the
broker/dealer executing such transaction to send a
written confirmation to the Custodian.
FPS shall be entitled to rely on the first Instruction
received. For any act or omission undertaken by FPS in
compliance therewith, it shall be free of liability and
fully indemnified and held harmless by the Fund, provided
however, that in the event a Written or Oral Instruction
received by FPS is countermanded by a subsequent Written
or Oral Instruction received prior to acting upon such
countermanded Instruction, FPS shall act upon such
subsequent Written or Oral Instruction. The sole
obligation of FPS with respect to any follow-up or
confirmatory Written Instruction, Oral Instruction in
documentary or written form shall be to make reasonable
efforts to detect any such discrepancy between the
original Instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be
responsible and bear the expense of its taking any
action, including any reprocessing, necessary to correct
any discrepancy or error. To the extent such action
requires FPS to act, the Fund shall give FPS specific
Written Instruction as to the action required.
The Fund will file with FPS a certified copy of each resolution
of its Board of Directors authorizing execution of Written
Instructions or the transmittal of Oral Instructions as provided
above.
Section 4. Indemnification.
(a) FPS, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Fund resulting
from the willful misfeasance, bad faith, gross negligence or reckless
disregard on the part of FPS in the performance of its obligations
and duties under this Agreement.
(b) Any director, officer, employee, shareholder or agent of
FPS, who may be or become an officer, director, employee or agent of
the Fund, will be deemed, when rendering services to the Fund, or
acting on any business of the Fund (other than services or business
in connection with FPS' duties hereunder), to be rendering such
services to or acting solely for the Fund and not as a director,
officer, employee, shareholder or agent of, or under the control or
direction of FPS even though such person may be receiving
compensation from FPS.
(c) The Fund agrees to indemnify and hold FPS harmless,
together with its directors, officers, employees, shareholders and
agents from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and
every nature which FPS may sustain or incur or which may be asserted
against FPS by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by FPS except
claims, demands, expenses and liabilities arising from willful
misfeasance, bad faith, gross negligence or reckless disregard on the
part of FPS in the performance of its obligations and duties under
this Agreement; or
(ii) any action taken or omitted to be taken by FPS in
reliance upon any Certificate, instrument, order or stock certificate
or other document reasonably believed by FPS to be genuine and
signed, countersigned or executed by any duly authorized person, upon
the
Oral Instructions or Written Instructions of an authorized person of
the Fund, or upon the written opinion of legal counsel for the Fund
or FPS; or
(iii) the offer or sale of shares of the Fund to any
person, natural or otherwise, which is in violation of any state or
federal law.
If a claim is made against FPS as to which FPS may seek
indemnity under this Section, FPS will notify the Fund promptly after
receipt of any written assertion of such claim threatening to
institute an action or proceeding with respect thereto and will
notify the Fund promptly of any action commenced against FPS within
ten (10) days after FPS has been served with a summons or other legal
process. Failure to notify the Fund will not, however, relieve the
Fund from any liability which it may have on account of the indemnity
under this Section so long as the Fund has not been prejudiced in any
material respect by such failure.
The Fund and FPS will cooperate in the control of the defense
of any action, suit or proceeding in which FPS is involved and for
which indemnity is being provided by the Fund to FPS. The Fund may
negotiate the settlement of any action, suit or proceeding subject to
FPS' approval, which will not be unreasonably withheld. FPS reserves
the right, but not the obligation, to participate in the defense or
settlement of a claim, action or proceeding with its own counsel.
Costs or expenses incurred by FPS in connection with, or as a result
of, such participation will be borne solely by the Fund if:
(i) FPS has received an opinion of counsel from counsel
to the Fund stating that the use of counsel to the Fund by FPS would
present an impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or
proceeding include both FPS and the Fund, and legal counsel to FPS
has reasonably concluded that there are legal defenses available to
it which are different from or additional to those available to the
Fund or which may be adverse to or inconsistent with defenses
available to the Fund (in which case the Fund will not have the right
to direct the defense of such action on behalf of FPS); or
(iii) the Fund authorizes FPS to employ separate counsel
at the expense of the Fund.
(d) The terms of this Section will survive the termination of
this Agreement.
Section 5. Representations and Warranties.
(a) FPS represents and warrants that:
(i) it is a corporation duly organized and existing and
in good standing under the laws of Delaware;
(ii) it is empowered under applicable laws and by its
Certificate of Incorporation and By-Laws to enter into and perform
this Agreement;
(iii) all requisite corporate proceedings have been taken
to authorize FPS to enter into and perform this Agreement;
(iv) it has and will continue to have, access to the
facilities, personnel and equipment required to fully perform its
duties and obligations hereunder;
(v) no legal or administrative proceeding have been
instituted or threatened which would impair FPS's ability to perform
its duties and obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement
or obligation of FPS or any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section
17A(c)(2) of the Exchange Act;
(viii) this Agreement has been duly authorized by FPS,
and when executed and delivered, will constitute valid, legal and
binding obligation of FPS, enforceable in accordance with its terms.
(b) The Fund represent and warrant that:
(i) it is a corporation duly organized and existing and
in good standing under the laws of the State of Maryland;
(ii) it is empowered under applicable laws and by its
Certificate of Incorporation and By-Laws to enter into and perform
this Agreement;
(iii) all requisite proceedings have been taken to
authorize the Fund to enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been
instituted or threatened which would impair the Fund's ability to
perform its duties and obligations under this Agreement;
(v) the Fund's entrance into this Agreement shall not
cause a material breach or be in material conflict with any other
agreement or obligations of the Fund, or any law or regulation
applicable to either;
(vi) the Shares are properly registered or otherwise
authorized for issuance and sale;
(vii) this Agreement has been duly authorized by the Fund
and, when executed and delivered, will constitute valid, legal and
binding obligation of the Fund, enforceable in accordance with its
terms.
(c) Delivery of Documents
The Fund will furnish or cause to be furnished to FPS the
following documents;
(i) current Prospectus and Statement of Additional
Information;
(ii) most recent Annual Report;
(iii) most recent Semi-Annual Report for registered
investment companies on Form N-SAR;
(iv) certified copies of resolutions of the Fund's Board
of Directors authorizing the execution of Written Instructions or the
transmittal of Oral Instructions and those persons authorized to give
those Instructions.
(d) Record Keeping and Other Information
FPS will create and maintain all records required of it
pursuant to its duties hereunder and as set forth in Schedule "A" in
accordance with all applicable laws, rules and regulations, including
records required by Section 31(a) of the Act. All such records will
be the property of the Fund and will be available during regular
business hours for inspection, copying and use by the Fund. Where
applicable, such records will be maintained by FPS for the periods
and in the places required by Rule 31a-2 under the Act. Upon
termination of this Agreement, FPS will deliver all such records to
the Fund or such person as the Fund may designate.
In case of any request or demand for the inspection of
the Share records of the Fund, FPS shall notify the Fund and secure
instructions as to permitting or refusing such inspection. FPS may,
however, exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do
so.
Section 6. Compensation. The Fund agrees to pay FPS
compensation for its services, and to reimburse it for expenses, at
the rates, times, manner and amounts as set forth in Schedule "B"
attached hereto and incorporated herein by reference, and as will be
set forth in any amendments to such Schedule "B" agreed upon in
writing by the Parties. Upon receipt of an invoice therefor, FPS is
authorized to collect such fees by debiting the Fund's custody
account. In addition, the Fund agrees to reimburse FPS for any out-of-pocket
expenses paid by FPS on behalf of the Fund within ten (10)
calendar days of the Fund's receipt of an invoice therefor.
For the purpose of determining fees payable to FPS, the value
of the Fund's net assets will be computed at the times and in the
manner specified in the Fund's Prospectus and Statement of Additional
Information then in effect.
During the term of this Agreement, should the Fund seek
services or functions in addition to those outlined below or in
Schedule "A" attached hereto, a written amendment to this Agreement
specifying the additional services and corresponding compensation
will be executed by the Parties.
Section 7. Days of Operation. Nothing contained in this
Agreement is intended to or will require FPS, in any capacity
hereunder, to perform any functions or duties on any holiday, day of
special observance or any other day on which the New York Stock
Exchange ("NYSE") is closed. Functions or duties normally scheduled
to be performed on such days will be performed on, and as of, the
next succeeding business day on which the NYSE is open.
Notwithstanding the foregoing, FPS will compute the net asset value
of the Fund on each day required pursuant to Rule 22c-1 promulgated
under the Act.
Section 8. Acts of God, etc. FPS will not be liable or
responsible for delays or errors caused by acts of God or by reason
of circumstances beyond its control, including acts of civil or
military authority, national emergencies, labor difficulties,
mechanical breakdown, insurrection, war, riots, or failure or
unavailability of transportation, communication or power supply,
fire, flood or other catastrophe.
In the event of equipment failures beyond FPS' control, FPS
will, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions but will have no liability with
respect thereto. The foregoing obligation will not extend to computer
terminals located outside of premises maintained by FPS. FPS has
entered into and maintains in effect agreements making reasonable
provision for emergency use of electronic data processing equipment
to the extent appropriate equipment is available.
Section 9. Inspection and Ownership of Records. In the event
that any request or demand for the inspection of the records of the
Fund, FPS will use its best efforts to notify the Fund and to secure
instructions as to permitting or refusing such inspection. FPS may,
however, make such records available for inspection to any person in
any case where it is advised in writing by its counsel that it may be
held liable for failure to do so after notice to the Fund.
FPS recognizes that the records it maintains for the Fund are
the property of the Fund and will be surrendered to the Fund upon
written notice to FPS as outlined under Section 10(c) below and the
payment in advance of any fees owed to FPS. FPS agrees to maintain
the records and all other information of the Fund in a confidential
manner and will not use such information for any purpose other than
the performance of FPS' duties under this Agreement.
Section 10. Duration and Termination.
(a) The initial term of this Agreement will be for the period
of three (3) years, commencing on the date hereinabove first written
(the "Effective Date") and will continue thereafter subject to
termination by either Party as set forth in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached
hereto will be fixed for two (2) years commencing on the Effective
Date of this Agreement and will continue thereafter subject to their
review and any adjustment.
(c) After the initial term of this Agreement, a Party may give
written notice to the other (the day on which the notice is received
by the Party against which the notice is made shall be the "Notice
Date") of a date on which this Agreement shall be terminated
("Termination Date"). The Termination Date shall be set on a day not
less than one hundred eighty (180) days after the Notice Date. The
period of time between the Notice Date and the Termination Date is
hereby identified as the "Notice Period". Any time up to, but not
later than ninety (90) days prior to the Termination Date, the Fund
will pay to FPS such compensation as may be due as of the Termination
Date and will likewise reimburse FPS for any out-of-pocket expenses
and disbursements reasonably incurred or expected to by incurred by
FPS up to and including the Termination Date.
(d) In connection with the termination of this Agreement, if a
successor to any of FPS' duties or responsibilities under this
Agreement is designated by the Fund by written notice to FPS, FPS
will promptly, on the Termination Date and upon receipt by FPS of any
payments owed to it as set forth in Section 10(c) above, shall
transfer to the successor, at the Fund's expense, all records which
belong to the Fund and will provide appropriate, reasonable and
professional cooperation in transferring such records to the named
successor.
(e) Should the Fund desire to move any of the services
outlined in this Agreement to a successor service provider prior to
the Termination Date, FPS shall make a good faith effort to
facilitate the conversion on such prior date; however, there can be
no guarantee that FPS will be able to facilitate a conversion of
services prior to the end of the Notice Period. Should services be
converted to a successor service provider prior to the end of the
Notice Period, or if the Fund is liquidated or its assets merged or
purchased or the like with another entity, payment of fees to FPS
shall be accelerated to a date prior to the conversion or termination
of services and calculated as if the services had remained at FPS
until the expiration of the Notice Period and calculated at the asset
levels on the Notice Date.
(f) Notwithstanding the foregoing, this Agreement may be
terminated at any time by either Party in the event of a material
breach by the other Party involving gross negligence, willful
misfeasance, bad faith or a reckless disregard of its obligations and
duties under this Agreement provided that such breach shall have
remained unremedied for sixty (60) days or more after receipt of
written specification thereof.
Section 11. Rights of Ownership. All computer programs and
procedures developed to perform services required to be provided by
FPS under this Agreement are the property of FPS. All records and
other data except such computer programs and procedures are the
exclusive property of the Fund and all such other records and data
will be furnished to the Fund in appropriate form as soon as
practicable after termination of this Agreement for any reason.
Section 12. Amendments to Documents. The Fund will furnish
FPS written copies of any amendments to, or changes in, the Fund's
Articles of Incorporation or By-Laws, and each Prospectus or
Statement of Additional Information in a reasonable time prior to
such amendments or changes becoming effective. In addition, the Fund
agrees that no amendments will be made to the Prospectus or Statement
of Additional Information of the Fund which might have the effect of
changing the procedures employed by FPS in providing the services
agreed to hereunder or which amendment might affect the duties of FPS
hereunder unless the Fund first obtains FPS' approval of such
amendments or changes.
Section 13. Confidentiality. Both Parties hereto agree that
any non-public information obtained hereunder concerning the other
Party is confidential and may not be disclosed to any other person
without the consent of the other Party, except as may be required by
applicable law or at the request of the U.S. Securities and Exchange
Commission or other governmental agency. FPS agrees that it will not
use any non-public information for any purpose other than performance
of its duties or obligations hereunder. The obligations of the
Parties under this Section will survive the termination of this
Agreement. The Parties further agree that a breach of this Section
would irreparably damage the other Party and accordingly agree that
each of them is entitled, without bond or other security, to an
injunction or injunctions to prevent breaches of this provision.
Section 14. Notices. Except as otherwise provided in this
Agreement, any notice or other communication required by or permitted
to be given in connection with this Agreement will be in writing, and
will be delivered in person or sent by first class mail, postage
prepaid or by prepaid overnight delivery service to the respective
parties as follows:
If to the Fund: If to FPS:
Spirit of America Investment Fund, Inc. FPS Services, Inc.
000 Xxxxxxx Xxxxxxxx 0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000 King of Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx Attention: Xxxxxxx X. Xxxxx
President President
Section 15. Amendment. No provision of this Agreement may
be amended or modified in any manner except by a written agreement
properly authorized and executed by FPS and the Fund. This Agreement
may be amended from time to time by supplemental agreement executed
by the Fund and FPS and the compensation stated in Schedule "B"
attached hereto may be adjusted accordingly as mutually agreed upon.
Section 16. Authorization. The Parties represent and warrant
to each other that the execution and delivery of this Agreement by
the undersigned officer of each Party has been duly and validly
authorized; and when duly executed, this Agreement will constitute a
valid and legally binding enforceable obligation of each Party.
Section 17. Counterparts. This Agreement may be executed in
two or more counterparts, each of which when so executed will be
deemed to be an original, but such counterparts will together
constitute but one and the same instrument.
Section 18. Assignment. This Agreement will extend to and be
binding upon the Parties hereto and their respective successors and
assigns; provided, however, that this Agreement will not be
assignable by the Fund without the written consent of FPS or by FPS
without the written consent of the Fund which consent will be
authorized or approved by a resolution of its respective Boards of
Directors.
Section 19. Governing Law. This Agreement will be governed by
the laws of the State of Pennsylvania and the exclusive venue of any
action arising under this Agreement will be Xxxxxxxxxx County,
Commonwealth of Pennsylvania.
Section 20. Severability. If any part, term or provision of
this Agreement is held by any court to be illegal, in conflict with
any law or otherwise invalid, the remaining portion or portions will
be considered severable and not be affected and the rights and
obligations of the parties will be construed and enforced as if the
Agreement did not contain the particular part, term or provision held
to be illegal or invalid, provided that the basic Agreement is not
thereby materially impaired.
In Witness Whereof, the Parties hereto have caused this Agreement
consisting of twelve (12) typewritten pages, together with Schedules
"X," "X" and "C" to be signed by their duly authorized officers as of
the day and year first above written.
Spirit of America Investment Fund, Inc.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
FPS Services, Inc.
By: /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, President
Schedule "A"
Services To Be Provided by FPS Services, Inc.
FPS Services, Inc. ("FPS") will (i) provide its own office space,
facilities, equipment and personnel for the performance of its duties
under this Agreement; and (ii) take all actions it deems necessary to
properly execute its responsibilities hereunder.
I. Services Related to Administration (Compliance and Financial Reporting)
Regulatory Compliance
A. Compliance - Investment Company Act of 1940, as
amended
1. Review, report and renew
a. investment advisory contracts
b. fidelity bond
c. underwriting contracts
d. distribution (12b-1) plans
e administration contracts
f. accounting contracts
g. custody administration contracts
h. transfer agent and shareholder services
contracts
2. Filings
a N-SAR (semi-annual report)
b. N-1A (prospectus), post-effective
amendments and supplements ("stickers")
c. 24f-2 indefinite registration of shares
d. filing fidelity bond under 17g-1
e. filing shareholder reports under 30(b)2-1
3. Annual up-dates of biographical and financial
information through questionnaires for Directors
and Officers
B. Compliance - Other
1. applicable stock exchange rules
2. applicable state tax laws
Corporate Business and Shareholder/Public Information
A. Directors/Management
1. Preparation of Directors' meetings
a. agendas - all necessary items of
compliance
b. arrange and conduct meetings
c. prepare minutes of meetings
d. keep attendance records
e. maintain corporate records/minute book
B. Coordinate Proposals
1. Printers
2. Auditors
3. Literature fulfillment
4. Insurance
C. Maintain Corporate Calendars and Files
D. Release Corporate Information (as directed by
management)
1. To shareholders
2. To financial and general press
3. To industry publications
a. distributions (dividends and capital
gains)
b. tax information
c. changes to prospectus
d. letters from management
e. fund performance
4. Respond to:
a. financial press
b. miscellaneous shareholders inquiries
c. industry questionnaires
E. Communications to Shareholders
1. Coordinate printing and distribution of annual,
semi-annual reports,
and prospectus
Financial and Management Reporting
A. Income and Expenses
1. Monitoring of expense accruals, expense payments
and expense caps
2. Approve and coordinate payment of expenses
3. Establish Fund's operating expense checking
account and perform monthly reconciliation of
checking account
4. Calculation of advisory fee, 12b-1 fee and
reimbursements to Fund (if applicable)
6. Authorize the recording and amortization of
organizational costs and pre-paid expenses
(supplied by Adviser) for start-up funds and
reorganizations
7. Calculation of average net assets
8. Calculation of expense ratios
B. Distributions to Shareholders
1. Calculations of dividends and capital gain
distributions (in conjunction with the Fund and
its auditors)
a. compliance with income tax provisions
b. compliance with excise tax provisions
c. compliance with Investment Company Act of
1940, as amended
3. Book/Tax identification and adjustments at
required distribution periods (in conjunction
with the Fund and its auditors)
C. Financial Reporting
1. Liaison between Fund management, independent
auditors and printers for semi-annual and annual
shareholder reports
2. Preparation of semi-annual and annual reports to
shareholders
3. Preparation of semi-annual and annual N-SAR's
(Financial Data)
4. Preparation of Financial Statements for required
SEC Post-Effective
Amendments (if applicable)
5. Preparation of required performance graph
(annually)(based on . . . Adviser supplied indicies)
D. Subchapter M Compliance (monthly)
1. Asset diversification test
2. Short/short test
E. Other Financial Analyses
1. Upon request from Fund management, other
budgeting and analyses can be constructed to
meet the Fund's specific needs (additional fees
may apply)
2. Sales information, portfolio turnover (monthly)
3. Work closely with independent auditors on return
of capital presentation and excise tax
calculation
4. Monthly performance calculation (total return)
5. 1099 Miscellaneous - prepared and filed for
Directors (annual)
6. Annual analysis of interest derived from various
Government obligations and prepare detail
schedule showing same
7. Review and characterize 1099-DIV forms
8. Prepare and coordinate with printer the printing
and mailing of 1099-Dividend insert cards.
F. Review and Monitoring Functions (monthly)
1. Review expense and reclassification entries to
ensure proper update
2. Perform various reviews to ensure accuracy of
Accounting (the monthly expense analysis) and
Custody (review of daily bank statements to
ensure accurate expense money movements for
expense payments)
3. Review accruals and expenditures (where
applicable)
G. Preparation and distribution of monthly operational
reports to management by 10th business day
1. Management Statistics (Recap)
a.portfolio summary
x.xxxx gains/losses/per share
x.xxx income, book income/per share
x.xxxxxxx stock activity
e. .distributions
2. Performance Analysis
x.xxxxx return
b.monthly, quarterly, year to date, average annual returns
3. Expense Analysis
a. . .schedule
b. summary of due to/from Adviser
c. .expenses paid
d. expense cap
e.accrual monitoring
f.advisory fee
4. Short-Short Analysis
a.short-short income
b. . . . . .gross income (components)
5. Portfolio Turnover
x.xxxxxx value
b.cost of purchases
x.xxx proceeds of sales
d. average market value
6. Asset Diversification Test
x.xxxxx assets
b.non-qualifying assets
7. Activity Summary
a.shares sold, redeemed and reinvested
b. change in investment
H. Provide rating agencies statistical data as requested
(monthly/quarterly)
I. Standard schedules for Board Package (Quarterly)
1. Activity Summary (III-G-7 from above)
2. Expense analysis
3. Other schedules can be provided (additional fees
may apply)
Blue Sky Administration
A. Sales Data
1. Receive daily sales figures through SUNGARD
interface with Price Waterhouse Blue 2 System
2. Receive daily sales figures broken down by state
from Xxxxxxx Xxxxxx (if applicable)
3. Produce daily warning report for sales in excess
of pre-determined percentage
4. Analysis of all sales data to determine trends
within certain states
B. Filings
1. Produce and mail the following required filings:
a. Initial filings - produce all required forms and
follow-up on any comments, including
notification of SEC effectiveness
b. Renewals - produce all renewal documents and
mail to states, including follow-up to ensure
all is in order to continue selling in states
c. Sales Reports - produce all relevant sales
reports for the states and complete necessary
documents to properly file sales reports with
states
d. Annual Report Filings - file copies of all
annual reports with states
e. Prospectus filings - file all copies of
definitive Prospectus and Statement of
Additional Information with the states
f. Post-Effective Amendment filing - file all Post-Effective
Amendments with the states as well as
with other required documents
2. On demand additional states - complete filing for any
additional states requested for filing. This
includes all of the items in 1(A).
3. Amendments to current permits - file in a timely
manner any amendment to registered share amounts
4. Update and file hard copy of all data pertaining to
individual permits
C. Consulting and Analysis - We will supply you with the
most current fee structure for each state and ascertain
procedures to minimize Blue Sky State Registration
expenditures
II. Services Related to Portfolio Valuation and Mutual Fund Accounting
All financial data provided to, processed and reported by FPS
under this Agreement shall be stated in U. S. dollars. FPS'
obligation to convert, equate or deal in foreign currencies or
values extends only to the accurate transposition of
information received from the various pricing and information
services.
A. Daily Accounting Services
1. Calculate Net Asset Value ("NAV") and Offering Price Per
Share ("POP"):
Fund Level
Update the daily market value of securities held by
the Fund using FPS' standard agents for pricing U.S.
equity and bond securities. The U.S. equity pricing
services are Reuters, Inc., Xxxxxx Data Corporation,
X.X. Xxxxx Co., Inc. and Interactive Data Corporation
(IDC). Xxxxxx Data, Dow Xxxxx Markets (formerly
Telerate Systems, Inc.), X.X. Xxxxx Co., Inc.,
Municipal Market Data and IDC are also used for bond
and money market prices/yields. Bloomberg is
available and used for price research.
Enter limited number of manual prices supplied by
Spirit of America Management Corp. (the "Adviser")
and/or broker.
Review variance reporting on-line and in hard copy
for price changes in individual securities using
variance levels established by the Adviser. Verify
U.S. dollar security prices exceeding variance levels
by notifying the Adviser and pricing sources of noted
variances.
Review for ex-dividend items indicated by pricing
sources; trace to Fund's general ledger for
agreement.
Fund and Each Class
Allocate daily unrealized Fund
appreciation/depreciation to classes based upon value
of outstanding class shares.
Prepare NAV proof sheets. Review components of
change in NAV for reasonableness. Complete Fund and
class control proofs.
Communicate pricing information (NAV/Offering Price)
to Adviser, the Fund's transfer agent ("Transfer
Agent") and, electronically, to NASDAQ.
2. Determine and Report Cash Availability to Adviser by
approximately 9:30 a.m. Eastern Time:
Fund Level
Receive daily cash and transaction statements from
the agent responsible for the safekeeping of the
Fund's assets (the "Custodian") by 8:30 a.m. Eastern
time.
Receive previous day shareholder activity reports
from the Transfer Agent 8:30 a.m. Eastern time.
Class level shareholder activity will be accumulated
into the Fund's available cash balances.
Fax hard copy of Cash Availability calculations with
all details to Adviser.
Supply Adviser with 3-day cash projection report.
For the Fund, prepare daily bank cash
reconciliations. Notify the Custodian and Adviser of
any reconciling items.
3. Reconcile and Record All Daily Expense Accruals:
Fund Level
Accrue expenses based on budget supplied by the
Adviser either as percentage of net assets or
specific dollar amounts.
If applicable, monitor expense limitations
established by the Adviser.
If applicable, accrue daily amortization of
organizational expense.
If applicable, complete daily accrual of 12b-1
expenses.
Fund and Each Class
Class specific accruals completed such as daily
accrual of 12b-1 expenses.
Allocate Fund expenses to classes based upon value of
outstanding class shares.
4. Verify and Record All Daily Income Accruals for Debt
Issues:
Fund Level
Review and verify all system generated interest and
amortization reports. . . . . . . . . . . .
Establish unique security codes for bond issues to
permit segregated trial balance income reporting.
Fund and Each Class
Allocate Fund income to classes based upon value of
outstanding class shares.
5. Monitor Securities held for cash dividends, corporate
actions and capital changes such as splits, mergers,
spinoffs, etc. and process appropriately.
Fund Level
Monitor electronically received information from
Xxxxxx Data Corporation for all domestic securities.
Review current daily security trades for dividend
activity.
Monitor collection and postings of corporate actions,
dividends and interest.
Fund and Each Class
Allocate Fund dividend income to classes based upon
value of outstanding class shares.
6. Enter All Security Trades on Investment Accounting System
(IAS) based on written instructions from the Adviser.
Fund Level
Review system verification of trade and interest
calculations.
Verify settlement through statements supplied by the
Custodian.
Maintain security ledger transaction reporting.
Maintain tax lot holdings.
Determine realized gains or losses on security
trades.
Provide broker commission reporting.
Fund and Each Class
Allocate all Fund level realized and unrealized
capital gains/losses to classes based upon value of
class outstanding shares.
7. Enter All Fund Share Transactions on IAS:
Each Class
Process activity identified on reports supplied by
the Transfer Agent.
Verify settlement through statements supplied by the
Custodian.
Reconcile report balances to the Transfer Agent.
Roll each classes' capital share values into Fund and
determine allocation percentages based upon the value
of each classes' outstanding shares to the Fund
total.
8. Prepare and Reconcile/Prove Accuracy of the Daily Trial
Balance (listing all asset, liability, equity, income and
expense accounts)
Fund Level
Post manual entries to the general ledger.
Post Custodian activity.
Post security transactions.
Post and verify system generated activity, i.e.,
income and expense accruals.
Fund and Each Class
Prepare Fund's general ledger net cash proof used in
NAV calculation.
Post class specific shareholder activity and roll
values into Fund.
Allocate all Fund level net cash accounts on the Fund
trial balance to each specific class based upon value
of class outstanding shares.
Maintain allocated Trial Balance accounts on class
specific Allocation Reports.
Maintain class-specific expense accounts.
Prepare class-specific proof/control reports to
ensure accuracy of allocations.
9. Review and Reconcile with Custodian Statements:
Fund Level
Verify all posted interest, dividends, expenses, and
shareholder and security payments/receipts, etc.
(Discrepancies will be reported to and resolved by
the Custodian.)
Post all cash settlement activity to the trial
balance.
Reconcile to ending cash balance accounts.
Clear IAS subsidiary reports with settled amounts.
Track status of past due items and failed trades as
reported by the Custodian.
10. Submission of Daily Accounting Reports to Adviser:
(Additional reports readily available.)
Fund Level
Portfolio valuation (listing inclusive of holdings,
costs, market values, unrealized
appreciation/depreciation and percentage of portfolio
comprised of each security.)
Cash availability.
3-day Cash Projection Report
Fund and Each Class
Fund Trial Balance and Class Allocation Report
NAV Calculation
B. Monthly Accounting Services
1. For each Fund, full Financial Statement Preparation
(automated Statements of Assets and Liabilities, of
Operations and of Changes in Net Assets) and submission
to Adviser by 10th business day.
Class specific capital share activity and expenses
will be disclosed also.
2. Submission of Monthly Automated IAS Reports to Adviser:
Fund Level
Security Purchase/Sales Journal
Interest and Maturity Report
Brokers Ledger (Commission Report)
Security Ledger Transaction Report with Realized
Gains/Losses
Security Ledger Tax Lot Holdings Report
Additional reports available upon request
3. Reconcile Accounting Asset Listing to Custodian Asset
Listing:
Fund Level
Report any security balance discrepancies to the
Custodian and the Adviser.
4. Provide Monthly Analysis and Reconciliation of Additional
Trial Balance Accounts, such as:
Fund Level
Security cost and realized gains/losses
Interest/dividend receivable and income
Payable/receivable for securities purchased and sold
Fund and Each Class
Payable/receivable for Fund's shares; issued and
redeemed
Expense payments and accruals analysis
C. Annual (and Semi-Annual) Accounting Services
1. Annually assist and supply Fund's auditors with schedules
supporting securities and shareholder transactions,
income and expense accruals, etc. for each Fund and each
Class during the year in accordance with standard audit
assistance requirements.
2. Provide N-SAR Reporting (Accounting Questions) on a Semi-Annual
Basis:
If applicable for Fund and Classes, answer the following items:
2, 12B, 20, 21, 22, 23, 28, 30A, 31, 32, 35, 36, 37, 43,
53, 55, 62, 63, 64B, 71, 72, 73, 74, 75 and 76.
D. Accounts and Records
On each day the NYSE is open for regular trading and subject
to the proper receipt (via Oral or Written Instructions) by
FPS of all information required to fulfill its duties under
this Agreement, FPS will maintain and keep current the
following Accounts and Records and any other records
required to be kept pursuant to Rule 31a-1 of the Act
relating to the business of the Fund in such form as may be
mutually agreed upon between the Fund and FPS:
(1) Net Asset Value Calculation Reports;
(2) Cash Receipts Report;
(3) Cash Disbursements Report;
(4) Dividends Paid and Payable Schedule;
(5) Purchase and Sales Journals - Portfolio Securities;
(6) Subscription and Redemption Reports;
(7) Security Ledgers - Transaction Report and Tax Lot Holdings Report;
(8) Broker Ledger - Commission Report;
(9) Daily Expense Accruals;
(10) Daily Interest Accruals;
(11) Daily Trial Balance;
(12) Portfolio Interest Receivable and Income Reports;
(13) Portfolio Dividend Receivable and Income Reports;
(14) Listing of Portfolio Holdings - showing cost, market
value and percentage of portfolio comprised of each
security; and
(15) Average Daily Net assets provided on monthly basis.
E. Protocol concerning accuracy of Pricing Portfolio
Securities
FPS shall perform the ministerial calculations necessary to
calculate the net asset value each day that the New York
Stock Exchange is open for business, in accordance with; (i)
the current Prospectus and Statement of Additional
Information for the Fund, and (ii) procedures with respect
thereto approved by the Board of Directors of the Fund and
supplied in writing to FPS. Portfolio items for which
market quotations are available by FPS' use of an automated
financial information service (the "Service") shall be based
on the closing prices of such Service except where the Fund
or the Adviser has given or caused to be given specific
Written or Oral Instructions to utilize a different value
subject to the appropriate provisions in the Fund's
Prospectus and Statement of Additional Information then in
effect. All of the portfolio securities shall be given such
values as the Fund or the Adviser provides by Written or
Oral Instructions including all restricted securities and
other securities requiring valuation not readily
ascertainable solely by such Service subject to the
appropriate provisions in the Fund's Prospectus and
Statement of Additional Information then in effect.
FPS will have no responsibility or liability for (i) the
accuracy of prices quoted by such Service; (ii) the accuracy
of the information supplied by the Fund; or (iii) any loss,
liability, damage, or cost arising out of any inaccuracy of
such data. FPS will have no responsibility or duty to
include information or valuations which are to be provided
by the Fund in any computation unless and until it is
supplied to FPS in usable form by 4:45 p.m. on the day which
such calculation is made. FPS will record corporate action
information as received from the Custodians, the Service or
the Fund. FPS will not have any duty to gather or record
corporate action information not supplied by these sources.
FPS will assume no liability for price changes caused by the
Adviser or any subadvisor, Custodian, suppliers of security
prices, corporate action and dividend information, or any
party other than FPS itself.
Assumptions Regarding Portfolio Valuation and Mutual Fund Accounting
The fees as set forth in Schedule "B" are based on the following
assumptions. To the extent these assumptions are inaccurate or
require change, fee revisions may be necessary.
Basic Assumptions:
1. It is assumed that the portfolio asset composition will be
primarily real estate securities such as REITS and
securities of publicly traded real estate companies. Trading
activity is expected to be 20 trades per month with an
annual turnover rate not to exceed 100%.
2. The Fund has a tax year-end which coincides with its fiscal
year-end. No additional accounting requirements are
necessary to identify or maintain book-tax differences. FPS
does not provide security tax accounting which differs from
its book accounting under this fee schedule
3. The Fund agrees to the use of FPS' standard current pricing
services for domestic equity and debt securities.
It is assumed that FPS will work closely with the Fund to
ensure the accuracy of the Fund's NAV and to obtain the most
satisfactory pricing sources and specific methodologies
prior to the actual start-up date. The Fund will establish
security variance procedures to minimize NAV
miscalculations.
4. To the extent the Fund requires a limited number of daily
security prices from specific brokers for domestic
securities (as opposed to pricing information received
electronically), these manual prices will be obtained by the
Fund's Adviser and faxed to FPS by 4:00 p.m. Eastern time
for inclusion in the NAV calculations. The Adviser will
supply FPS with the appropriate pricing contacts for these
manual quotes.
5. Procedural discussions between FPS and the Fund are required
to clarify the appropriate pricing and dividend rate sources
if the Fund invests in open-end regulated investment
companies (RIC's). Depending on the methodologies selected
by the Fund, additional fees may apply.
6. FPS will supply daily Portfolio Valuation Reports to the
Fund's Adviser identifying current security positions,
original/amortized cost, security market values and changes
in unrealized appreciation/depreciation. It will be the
responsibility of the Adviser to review these reports and to
promptly notify FPS of any possible problems, trade
discrepancies, incorrect security prices or corporate
action/capital change information that could result in a
misstated Fund NAV.
7. The Fund does not currently expect to invest in swaps,
futures, xxxxxx, derivatives or foreign (non-U.S. dollar
denominated) securities and currency. To the extent these
investment strategies should change, additional fees may
apply after the appropriate procedural discussions have
taken place between FPS and Fund management. (Two weeks
advance notice is required should the Fund commence trading
in these investments.)
8. The Fund will supply FPS with income information such as
accrual methods, interest payment frequency details, coupon
payment dates, floating rate reset dates, and complete
security descriptions with issue types and CUSIP numbers for
all debt issues. The Fund's Adviser shall supply the yield
to maturity and related cash flow schedules for any
mortgage/asset-backed securities held in the Fund.
Depending on the level of support required for the mortgage-backed
securities and asset-backed securities held in the
Fund, additional fees may apply.
9. With respect to mortgage/asset-backed securities including
GNMA's, FHLMC's, FNMA's, CMO's and ARM's, the Fund shall
direct the Custodian or an Adviser supplied source, to
provide FPS with current principal repayment factors on a
timely basis in accordance with the appropriate securities
schedule. Income accrual adjustments (to the extent
necessary) based upon initial estimates will be completed by
FPS when actual principal/income payments are collected by
the Custodian and reported to FPS.
10. FPS will use the ICI\NAREIT Tracking System along with
Bloomberg to obtain receipt of complete and accurate
information on REITs. The Adviser will supply/support
FPS in timely receipt of dividend information and return
of capital characterization for the REITs held in the
Fund, if not available from the ICI or Bloomberg systems.
To the extent applicable, FPS will maintain on a daily basis
U.S. dollar denominated qualified covered call options and
index options reporting on the daily Trial Balance and value
the respective options and underlying positions. This
Agreement does not provide for tax classifications if they
are required.
11. The Fund is responsible for the establishment and
monitoring of any segregated accounts pertaining to any
line of credit for temporary administrative purposes,
and/or leveraging/hedging the portfolio. FPS will
reflect appropriate trial balance account entries and
interest expense accrual charges on the daily trial
balance adjusting as necessary at month-end.
12. If the Fund commences participation in security lending
or short sales within its portfolio securities,
additional fees may apply. Should the Fund require these
additional services, procedural discussions must take
place between FPS and the Fund's Adviser to clarify
responsibilities. (Two weeks advance notice to FPS is
required should the Fund desire to participate in the
above.)
13. The following specific deadlines will be met and complete
information will be supplied by the Fund in order to
minimize any settlement problems, NAV miscalculations or
income accrual adjustments.
The Fund will direct the Adviser to provide Trade
Authorization Forms to FPS with the appropriate officer's
signature on all security trades placed by the Fund no later
than 12:30 p.m. Eastern time on settlement/value date for
short term money market securities issues (assuming that
trade date equals settlement date); and by 11:00 a.m.
Eastern time on trade date plus one for non-money market
securities. Receipt by FPS of trade information within
these identified deadlines may be made via telex, fax or on-line
system access. The Adviser will supply FPS with the
trade details in accordance with the above stated deadlines.
The Adviser will provide all information required by FPS,
including CUSIP numbers and/or ticker symbols for all U.S.
dollar denominated trades on the Trade Authorization, telex
or on-line support. FPS will supply the Adviser with
recommended trade ticket documents to minimize receipt of
incomplete information. FPS will not be responsible for NAV
changes or distribution rate adjustments that result from
incomplete trade information.
14. To the extent the Fund utilizes purchases in-kind (U.S.
dollar denominated securities only) as a method for
shareholder subscriptions, FPS will provide the Fund with
procedures to properly handle and process such
transactions. Should the Fund prefer procedures other
than those provided by FPS, additional fees may apply.
Discussions shall take place at least two weeks in
advance between FPS and the Fund to clarify the
appropriate in-kind operational procedures to be
followed.
15. The Parties will establish mutually agreed upon
amortization procedures and accretion requirements for
debt issues held by the Fund prior to commencement of
operations. Adjustments for financial statements
regarding any issues with original issue discount (OID)
are not included under this Agreement. The Fund will
direct its independent auditors to complete the necessary
OID adjustments for financial statements and/or tax
reporting.
III. Services Related to Shareholder and Share Transactions
The following services related to Shareholder and Share
Transactions shall be performed under this Agreement.
A. Shareholder File
1. Establish new accounts and enter demographic data into
shareholder base. Includes . . . . . . . . . . . in-house
processing and National Securities Clearing Corporation
(NSCC) - Fund/SERV - Networking transmissions.
2. Create Customer Information File (CIF) to link accounts
within the Fund. Facilitates account maintenance, lead
tracking, quality control, household mailings and combined
statements.
3. 100% quality control of new account information including
verification of initial investment.
4. Maintain account and customer file records based on
shareholder request and routine quality review.
5. Maintain tax ID certification and Non Resident Agent (NRA)
records for each account, including backup withholding.
6. Provide written confirmation of address changes.
7. Produce shareholder statements for daily activity,
dividends, on-request, interested party and periodic
mailings.
8. Establish and maintain dealer file by fund group, including
dealer, branch, representative number and name.
9. Automated processing of dividends and capital gains with
daily, monthly, quarterly or annual distributions. Payment
options include reinvestment, directed payment to another
fund, cash via mail, Fed wire or ACH.
10. Image all applications, account documents, data changes,
correspondence, monetary transactions and other pertinent
shareholder documents.
B. Shareholder Services
1. Provide quality service through a staff of highly trained
NASD licensed customer service personnel, including phone,
research and correspondence representatives.
2. Answer shareholder calls: provide routine account
information, transaction details including direct and wire
purchases, redemptions, exchanges, systematic withdrawals,
pre-authorized drafts, FundSERV and wire order trades,
problem solving and process telephone transactions.
3. Silent monitoring of shareholder calls by the phone
supervisor to ensure exceptional customer service.
4. Record and maintain tape recordings of all shareholder calls
for a six month period.
5. Phone Supervisor produces daily management reports of
shareholder calls which track volumes, length of calls,
average wait time and abandoned call rates to ensure quality
service.
6. Customer inquiries received by letter or telephone are
thoroughly researched by a correspondence team member.
These inquires include such items as account/customer file
information, complete historical account information, stop
payments on checks, transaction details and lost
certificates.
7. Provide written correspondence in response to shareholder
inquiries and request through the XXXXX Letter Writer System.
Whenever possible, unclear shareholder instructional letters are
handled by a phone call to the shareholder from our phone
representatives to avoid delay in processing of the request.
C. Investment Processing
1. Establish and maintain Rights of Accumulation and Letter of
Intent files.
2. Initial investment (checks or Fed wires).
3. Subsequent investments processed through lock box.
4. Pre-authorized investments (PAD) through ACH system.
5. Government allotments through ACH system.
6. NSCC-Fund/SERV trades.
7. Prepare and process daily bank deposit of shareholder
investments.
D. Redemption Processing
1. Process mail redemption requests.
2. Process telephone redemption transactions.
3. Establish Systematic Withdrawal File and process automated
transactions on monthly basis.
4. Distribute redemption proceeds distributed to shareholder by
check, wire or ACH processing.
5. Provide NSCC-Fund/SERV trade processing.
E. Exchange & Transfer Processing
1. Process legal transfers.
2. Issue and cancel certificates.
3. Replace certificates through surety bonds (separate charge
to shareholder).
4. Process exchange transactions (letter and telephone
request).
5. Process Automated Customer Account Transfer Service (ACATS)
transfers.
F. Retirement Plan Services
1. Fund sponsored IRAs offered using Semper Trust Company as
"custodian." Services include:
a. Contribution processing
b. Distribution processing
c. Apply rollover transactions
d. Process Transfer of Assets
e. Letters of Acceptance to prior custodians
f. Notify XXX holders of 70 one-half requirements
g. Calculate Required Minimum Distributions (RMD)
h. Maintain beneficiary information file
i. Solicit birth date information
2. Fund sponsored SEP-XXX plans offered using Semper Trust
Company as "custodian." Services include those listed under
IRA's and:
a. Identification of employer contributions
3. Fund sponsored Qualified plans offered:
a. Plan document available
b. Omnibus/master account processing only
c. Produce annual statements
d. Process contributions
e. Process distributions
f. Process rollover and Transfer of Assets transactions
G. Commission Processing
1. Settlement and payment of dealer commissions on the 10th and
25th of each month for front-end load funds.
2. Settlement and payment of CDSC fees on the 1st of each month
for back-end load funds.
H. Settlement & Control
1. Daily review of processed shareholder transactions to assure
input was processed correctly. Accurate trade activity
figures passed to the Fund's accounting agent by 10:00 a.m.
Eastern Time.
2. Preparation of daily cash movement information to be passed
to the Fund's accounting agent and Custodian by 10:00 a.m.
Eastern Time for use in determining the Fund's daily cash
availability.
3. Prepare a daily share reconcilement which balances the
shares on the Transfer Agent system to those on the books of
the Fund.
4. Resolve any outstanding share or cash issues that are not
cleared by trade date + 2.
5. Process shareholder adjustments to also include the proper
notification of any booking entries needed, as well as any
necessary cash movement.
6. Settlement and review of the Fund's declared dividends and
capital gains to include the following:
a. Review record date report for accuracy of shares.
b. Preparation of dividend settlement report after dividend
is posted. Verify the posting date shares, the rate used
and the NAV price of reinvest date to ensure dividend was
posted properly.
c. Distribute copies to the Fund's accounting agent.
d. Preparation of the checks prior to being mailed.
e. Sending of any dividends via wires if requested.
f. Preparation of cash movement information for the cash
portion of the dividend payout on payable date.
7. Placement of stop payments on dividend and liquidation
checks as well as the issuance of their replacements.
8. Maintain inventory control for stock certificates and
dividend check form.
9. Aggregate tax filings for all FPS clients. All types of
monthly deposits to the IRS of all taxes withheld from
shareholder disbursements, distributions and foreign account
distributions. Correspond with the IRS concerning any of
the above issues.
10. Timely settlement and cash movement for all NSCC -
Fund/SERV activity.
I. Year-End Processing
1. Maintain shareholder records in accordance with IRS notices
for under-reporting and invalid Tax IDs. This includes
initiating 31% backup withholding and notifying shareholders
of their tax status and the corrective action which is
needed.
2. Conduct annual W-9 solicitation of all uncertified accounts.
Update account tax status to reflect backup withholding or
certified status depending upon responses.
3. Conduct periodic W-8 solicitation of all non-resident alien
shareholder accounts. Update account tax status with
updated shareholder information and treaty rates for NRA
tax.
4. Review IRS Revenue Procedures for changes in transaction and
distribution reporting and specifications for the production
of forms to ensure compliance.
5. Coordinate year-end activity with client. Activities
include producing year-end statements, scheduling record
dates for year-end dividends and capital gains, production
of combined statements and printing of inserts to be mailed
with tax forms.
6. Distribute Dividend Letter to Fund for sign off on all
distributions paid year-to-date. Dates and rates must be
authorized so that they can be used for reporting to the
IRS.
7. Coordinate the ordering of forms and envelopes from vendor
in preparation of tax reporting. Review against IRS
requirements to ensure accuracy.
8. Prepare form flashes for the microfiche vendor. Test and
oversee the production of fiche for year end statements and
tax forms.
9. Match and settle tax reporting totals to fund records and
on-line data from INVESTAR.
10. Produce forms 1099R, 1099B, 1099Div, 5498, 1042S and year
end valuations. Quality assure forms before mailing to
shareholders.
11. Monitor IRS deadlines and special events such as cross
over dividends and prior year XXX contributions.
12. Prepare magnetic tapes and appropriate forms for the
filing of all reportable activity to the IRS.
J. Client Services
1. An Account Manager shall be assigned to the Fund. The
Account Manager is the liaison between the Fund and FPS.
Responsibilities include scheduling of events, system
enhancement implementation, special promotion/event
implementation and follow-up, and constant interaction with
the Fund on daily operational issues.
Specifically:
a. Scheduling of dividends, proxies, report mailing and
special mailings.
b. Coordinate with the Fund the shipment of materials for
scheduled mailings.
c. Liaison between the Fund and support services for
preparation of proofs and eventual printing of statement
forms, certificates, proxy cards, envelopes, etc.
d. Handle all notification to the client regarding proxy
tabulation through the meeting. Coordinate scheduling of
materials, including voted cards, tabulation letters, and
shareholder list, to be available for the meeting.
e. Order special reports, tapes, discs for special systems
requests received.
f. Implement any new operational procedures, i.e., check
writing feature, load discounts, minimum waivers, sweeps,
telephone options, PAD promotions, etc.
g. Coordinate with other operating departments any special
events, i.e., mergers, new fund start ups, small account
liquidations, combined statements, household mailings,
additional mail files, etc.
h. Prepare standard operating procedures and review
prospectuses. Coordinate implementation of suggested
changes with the Fund.
i. Liaison between the Fund and FPS staff regarding all
service and operational issues.
2. Blue Sky Processing
a. Maintain file with additions, deletions, changes and
updates at the Fund's direction.
K. Other Related Services
Although not included under the terms hereunder, the following
services are available by amendment to this Agreement.
1. Systematic linkage of shareholder accounts with exact
matches of social security numbers (SSN) and address for the
purpose of consolidated account history reporting. Periodic
production of laser printed combined statements.
2. Production of household mailing labels which enable the Fund
to do special mailings to each address as opposed to each
account.
3. Produce shareholder lists, labels and ad hoc reports as
requested.
Daily Reports
Report Number Report Description
-- Daily Activity
Register
024 Tax Reporting Proof
051 Cash Receipts and
Disbursement Proof
053 Daily Share Proof
091 Daily Gain/Loss Report
104 Maintenance Register
044 Transfer/Certificate
Register
056 Blue Sky Warning Report
Monthly Reports
Report Description:
Blue Sky
Certificate Listing
State Sales and Redemption
Monthly Statistical Report
Account Demographic Analysis
MTD Sales - Demographics by Account Group
Account Analysis by Type
iv. Services Related to Custody Administration
The following services related to Administration of the custody
of the assets of the Fund shall be performed under this
Agreement.
Assign a Custody Administrator to accept, control and
process daily portfolio transactions through direct
computer link with the Custodian.
Match and review DTC eligible ID's and trade information
with the Fund's instructions for accuracy and
coordinating with the Custodian and the Fund's accounting
agent for recording and affirmation processing with the
depository.
Systematically settle all depository eligible issues.
Transactions requiring physical delivery will be settled
through the Custodian's New York Office.
Assist the Fund in placing cash management trades through
the Custodian, such as commercial paper, CD's and
repurchase agreement.
Provide the Fund's accounting agent and investment
adviser with daily custodian statements reflecting all
prior cash activity on behalf of each portfolio by 8:30
a.m. Eastern time. Complete description of any posting,
inclusive of Sedol/CUSIP numbers, interest/dividend
payment date, capital stock details, expense
authorizations, beginning/ending cash balances, etc.,
will be provided by the Custodian's reports or system.
Provide monthly activity statements combining both cash
changes and security trades and a full portfolio listing.
Communicate to the Fund and the Fund's accounting agent
on any corporate actions, capital changes and interest
rate changes supported by appropriate supplemental
reports received from the Custodian. Follow-up will be
made with the Custodian to ensure all necessary actions
and/or paperwork is completed.
Work with fund accounting and the Custodian on monthly
asset reconciliations.
Coordinate and resolve unsettled dividends, interest,
paydowns and capital changes. Assist in resolution of
failed transactions and any settlement problems.
Arrange for securities lending, lines of credit, and/or
letters of credit through the Custodian.
Provide automated mortgage-backed processing through the
Custodian.
Provide broker interface ensuring trade settlement with
fail trade follow-up.
Provide the Fund's auditors with trade documentation to
help expedite the Fund's audit.
Schedule "B"
FEE SCHEDULE
FOR
SPIRIT OF AMERICA INVESTMENT FUND, INC.
INVESTMENT COMPANY SERVICES FEE SCHEDULE
This Fee Schedule is fixed for a period of two (2) years from the
Effective Date as that term is
defined in the Agreement. A third year term will be offered at fees
that shall be increased at a rate that is less than or equal to 10%.
I. Fees related to Administration (Compliance and Financial Reporting)
A. Subject to a minimum annual fee of $55,000 for the initial
Series' first class of shares and $12,000 for each additional
domestic portfolio or class thereof, the Fund agrees to pay FPS
each month an asset-based fee calculated at the annual rate of:
.0015 On the First $ 50 Million of Average Net
Assets
.0010 On the Next $ 50 Million of Average Net
Assets
.0005 Over $100 Million of Average Net
Assets
II. Fees related to Portfolio Valuation and Mutual Fund Accounting
A. Annual Fee Schedule Per Domestic Portfolio U.S. Dollar
Denominated Securities only (1/12th payable monthly )
$24,000 Minimum to $ 00 Xxxxxxx xx Xxxxxxx Xxx Xxxxxx*
.0000 Xx the Next $ 00 Xxxxxxx xx Xxxxxxx Xxx Xxxxxx*
.0000 Xx the Next $ 50 Million of Average Net Assets*
.0001 Over $100 Million of Average Net Assets*
Each additional class is $12,000 minimum per year.
*For multiple class portfolios, fees are based on combined
classes' average net assets.
B. Pricing Services Quotation Fee
Specific costs will be identified based upon options
selected by the Adviser and will be billed monthly.
FPS does not currently pass along charges for U.S. equity
prices supplied by Xxxxxx Data. Should the Fund invest in
security types other than domestic equities supplied by
Xxxxxx Data, the following fees would apply.
Security Types: Xxxxxx Data Corp.* Interactive Data Corp.*
X.X. Xxxxxx Co., Inc.
Government Bonds
Xxxxxx Data Corp.* $.50
Interactive Data Corp.* $.50
X.X. Xxxxxx Co., Inc. $.25 (a)
Mortgage-Backed (evaluated, seasoned, closing)
Xxxxxx Data Corp.* $.50
Interactive Data Corp.* $.50
X.X. Xxxxxx Co., Inc. $.25 (a)
Corporate Bonds (short and long term)
Xxxxxx Data Corp.* $.50
Interactive Data Corp.* $.50
X.X. Xxxxxx Co., Inc. $.25 (a)
U.S. Municipal Bonds (short and long term)
Xxxxxx Data Corp.* .55
Interactive Data Corp.* .80
X.X. Xxxxxx Co., Inc. .50 (b)
CMO's/ARM's/ABS
Xxxxxx Data Corp. 1.00
Interactive Data Corp.* .80
X.X. Xxxxxx Co., Inc. 1.00 (a)
Convertible Bonds
Xxxxxx Data Corp. .50
Interactive Data Corp.* .50
X.X. Xxxxxx Co., Inc. 1.00 (a)
High Yield Bonds
Xxxxxx Data Corp. .50
Interactive Data Corp.* .50
X.X. Xxxxxx Co., Inc. 1.00 (a)
Mortgage-Backed Factors (per Issue per Month)
Xxxxxx Data Corp. 1.00
Interactive Data Corp.* n/a
X.X. Xxxxxx Co., Inc. n/a
U.S. Equities
Xxxxxx Data Corp. (d)
Interactive Data Corp.* .15
X.X. Xxxxxx Co., Inc. n/a
Domestic Options
Xxxxxx Data Corp. n/a
Interactive Data Corp.* .15
X.X. Xxxxxx Co., Inc. n/a
Domestic Dividends & Capital Changes(per Issue per month)
Xxxxxx Data Corp. (d)
Interactive Data Corp.* 3.50
X.X. Xxxxxx Co., Inc. n/a
Foreign Securities
Xxxxxx Data Corp. .50
Interactive Data Corp.* .50
X.X. Xxxxxx Co., Inc. n/a
Foreign Securities Dividends & Capital Changes(per Issue per Month)
Xxxxxx Data Corp. 2.00
Interactive Data Corp.* 4.00
X.X. Xxxxxx Co., Inc. n/a
Set-up Fees
Xxxxxx Data Corp. n/a
Interactive Data Corp.* n/a(e)
X.X. Xxxxxx Co., Inc. .25 (c)
All Added Items
Xxxxxx Data Corp. n/a
Interactive Data Corp.* n/a
X.X. Xxxxxx Co., Inc. .25 (c)
* Based on current Vendor costs, subject to change.
Costs are quoted based on individual security CUSIP/identifiers
and are per issue per day.
(a) $35.00 per day minimum
(b) $25.00 per day minimum
(c) $ 1.00, if no cusip
(d) At no additional cost to FPS clients(e) Interactive Data also
charges monthly transmission costs and disk storage charges.
1) Futures and Currency Forward Contracts -
$ 2. 00 per Issue per Day
2) Dow Xxxxx Markets (formerly Telerate
Systems, Inc.)* (if applicable)
*Based on current vendor costs, subject
to change.
Specific costs will be identified based
upon options selected by the Adviser and
will be billed monthly.
3) Reuters, Inc.*
*Based on current vendor costs, subject
to change.
FPS does not currently pass along the
charges for the domestic security prices
supplied by Reuters, Inc.
4) Municipal Market Data* (if applicable)
*Based on current vendor costs, subject
to change.
Specific costs will be identified based
upon options selected by the Adviser and
will be billed monthly.
C. SEC Yield Calculation: (if applicable)
Provide up to 12 reports per year to reflect the
yield calculations for non-money market funds
required by the SEC, $1,000 per year per Fund. For
multiple class Funds, $1,000 per year per class.
(U.S. dollar denominated securities only).
III. Fees related to Transfer Agency and Shareholder Servicing
A. Transfer Agent and Shareholder Services:
$20.00 per account per year per portfolio
Minimum monthly fee - $2,250 per portfolio. This
fee is reduced to $24,000/year for the first two
years of a 3-year contract.
Each additional class has a $1,250 minimum monthly
fee.
B. IRA's, 403(b) Plans, Defined Contribution/Benefit
Plans:
Annual Maintenance Fee - $12.00 per account per year
(normally charged to participants)
C. FUND/SERV Processing (if applicable)
$1,000 One time start-up fee
$50.00 Per month/per Fund monthly maintenance fee
D. Networking Processing (if applicable)
$1,000 One time start-up fee
$75.00 Per month/per Fund monthly maintenance fee
IV. Fees related to Custody Administration
A. Domestic Securities and ADRs: (1/12th payable
monthly)
.0002 On the First $ 50 Million of Combined Average Net Assets
.00015 On the Next $150 Million of Combined Average Net Assets
.000125 Over $200 Million of Combined Average Net Assets
Minimum is $6,000 per portfolio per year ($500 monthly).
B. Custody Domestic Securities Transactions Charge:
(billed monthly)
Book Entry DTC, Federal Book Entry, PTC. . . . . . . . . $12.00
Physical Securities, Options/Futures . . . . . . . $20.00
RIC's. . . . . . . . . . . . . . . . . . . . . . . $24.50
P & I Paydowns . . . . . . . . . . . . . . . . . . $7.00
Wires. . . . . . . . . . . . . . . . . . . . . . . $7.00
Check Request. . . . . . . . . . . . . . . . . . . $6.00
Euro CD's. . . . . . . . . . . . . . . . . . . . . $45.00
Eurotime Deposit . . . . . . . . . . . . . . . . . $15.00
A transaction includes buys, sells, maturities or free security
movements.
Cedel/Euroclear
4 BPS safekeeping charge, $20 transaction charge.
Fee expressed in basis points per annum based upon
month end market value.
Global Network Fee
$500 per portfolio per month
C. When Issued, Securities Lending, Index Futures, etc.
Should any investment vehicle require a separate
segregated custody account, a fee of $250 per account
per month will apply.
D. Custody Miscellaneous Fees
Administrative fees incurred in certain local markets
will be passed onto the customer with a detailed
description of the fees. Fees include income
collection, corporate action handling, overdraft
charges, funds transfer, special local taxes, stamp
duties, registration fees, messenger and courier
services and other out-of-pocket expenses.
V. Out-of-Pocket Expenses
The Fund will reimburse FPS monthly for all reasonable
out-of-pocket expenses which including telephone,
postage, XXXXX filings, Fund/SERV and Networking
expenses, telecommunications, special reports, record
retention, special transportation costs, copying and
sending materials to auditors and/or regulatory agencies
as incurred and approved.
VI. Additional Services
To the extent the Fund commences investment techniques
such as futures, security lending, swaps, leveraging,
short sales, derivatives, precious metals, or foreign
(non-U.S.) securities and currency, additional fees will
apply. Activities of a non-recurring nature such as
shareholder in-kinds, fund consolidations, mergers or
reorganizations will be subject to negotiation. To the
extent that the Fund should decide to issue
multiple/separate classes of shares in excess of those
listed on Schedule "C", additional fees will apply. Any
additional/enhanced services, programming requests or
reports will be quoted upon request.
Schedule "C"
Identification of Separate Series of Shares to which this Agreement
applies:
1. Spirit of America Investment Fund, Inc.
