EXHIBIT (h)(2)
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
2004, by and between THE KENSINGTON FUNDS, a Delaware statutory trust (the
"Trust") and U.S. BANCORP FUND SERVICES, LLC, a Wisconsin limited liability
company ("USBFS").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and is authorized to issue shares of beneficial interest in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, USBFS is, among other things, in the business of providing
mutual fund accounting services to investment companies; and
WHEREAS, the Trust desires to retain USBFS to provide accounting
services to each series of the Trust listed on Exhibit A hereto (as amended from
time to time) (each a "Fund", collectively the "Funds").
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
1. APPOINTMENT OF USBFS AS FUND ACCOUNTANT
The Trust hereby appoints USBFS as fund accountant of the Trust on the
terms and conditions set forth in this Agreement, and USBFS hereby
accepts such appointment and agrees to perform the services and duties
set forth in this Agreement.
2. SERVICES AND DUTIES OF USBFS
USBFS shall provide the following fund accounting services for the
Funds, including but not limited to:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated from
the investment adviser.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Trustees of the Trust
(the "Board of Trustees" or the "Trustees") and apply
those prices to the portfolio positions. For those
securities where market quotations are not readily
available, the Board of Trustees shall approve, in
good faith, procedures for determining the fair value
for such securities.
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(3) Identify interest and dividend accrual balances as of
each valuation date and calculate gross earnings on
investments for the accounting period.
(4) Determine gain/loss on security sales and identify
them as short-term or long-term; account for periodic
distributions of gains or losses to shareholders and
maintain undistributed gain or loss balances as of
each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense
accrual amounts as directed by the Trust as to
methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from the Trust.
(3) Account for Fund expenditures and maintain expense
accrual balances at the level of accounting detail,
as agreed upon by USBFS and the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund
share activity as reported by the Fund's transfer
agent on a timely basis.
(2) Apply equalization accounting as directed by the
Trust.
(3) Determine net investment income (earnings) for the
Fund as of each valuation date. Account for periodic
distributions of earnings to shareholders and
maintain undistributed net investment income balances
as of each valuation date.
(4) Maintain a general ledger and other accounts, books,
and financial records for the Fund in the form as
agreed upon.
(5) Determine the net asset value of the Fund according
to the accounting policies and procedures set forth
in the Fund's Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of
Fund operations at such time as required by the
nature and characteristics of the Fund.
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(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed
upon from time to time.
(8) Prepare monthly reports that document the adequacy of
accounting detail to support month-end ledger
balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of the Fund to support the tax reporting
required for IRS-defined regulated investment
companies.
(2) Maintain tax lot detail for the Fund's investment
portfolio.
(3) Calculate taxable gain/loss on security sales using
the tax lot relief method designated by the Trust.
(4) Provide the necessary financial information to
support the taxable components of income and capital
gains distributions to the Fund's transfer agent to
support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the Fund's
accounting records available to the Trust, the
Securities and Exchange Commission (the "SEC"), and
the outside auditors.
(2) Maintain accounting records according to the 1940 Act
and regulations provided thereunder.
F. USBFS will perform the following accounting functions on a
daily basis:
(1) Reconcile cash and investment balances of each Fund
with the Fund's custodian, and provide the Fund's
investment adviser with the beginning cash balance
available for investment purposes.
(2) Transmit or mail a copy of the portfolio valuation to
the Fund's investment adviser.
(3) Review the impact of current day's activity on a per
share basis, and review changes in market value.
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G. In addition, USBFS will:
(1) Prepare monthly security transactions listings.
(2) Supply various Trust, Fund and class statistical data
as requested by the Trust on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, USBFS shall obtain prices from a pricing
source recommended by USBFS and approved by the Board of Trustees and
apply those prices to the portfolio positions of the Fund. For those
securities where market quotations are not readily available, the Board
of Trustees shall approve, in good faith, procedures for determining
the fair value for such securities.
If the Trust desires to provide a price that varies from the pricing
source, the Trust shall promptly notify and supply USBFS with the
valuation of any such security on each valuation date. All pricing
changes made by the Trust will be in writing and must specifically
identify the securities to be changed by CUSIP, name of security, new
price or rate to be applied, and, if applicable, the time period for
which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Trustees that affects accounting
practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by USBFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
USBFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules,
operating schedules and equipment, so long as such changes do not
adversely affect the service provided to the Trust under this
Agreement.
6. COMPENSATION
USBFS shall be compensated for providing the services set forth in this
Agreement in accordance with the fee schedule set forth on Exhibit B
hereto (as amended from time to time). The Trust shall pay all fees and
reimbursable expenses within thirty (30) calendar days following
receipt of the billing notice, except for any fee or expense subject to
a good faith dispute. The Trust shall notify USBFS in writing within
thirty (30) calendar days following receipt of each invoice if the
Trust is disputing any amounts in good faith. The Trust shall settle
such disputed amounts within ten (10) calendar days of the day on which
the parties agree to the amount to be paid. With the exception of any
fee or
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expense the Trust is disputing in good faith as set forth above, unpaid
invoices shall accrue a finance charge of one and one-half percent (1
1/2%) per month, after the due date. Notwithstanding anything to the
contrary, amounts owed by the Trust to USBFS shall only be paid out of
the assets and property of the particular Fund involved.
7. INDEMNIFICATION; LIMITATION OF LIABILITY
A. USBFS shall exercise reasonable care in the performance of its
duties under this Agreement. USBFS shall not be liable for any
error of judgment or mistake of law or for any loss suffered
by the Trust in connection with matters to which this
Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies
beyond USBFS's control, except a loss arising out of or
relating to USBFS's refusal or failure to comply with the
terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its
duties under this Agreement. Notwithstanding any other
provision of this Agreement, if USBFS has exercised reasonable
care in the performance of its duties under this Agreement,
the Trust shall indemnify and hold harmless USBFS from and
against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable
attorneys' fees) that USBFS may sustain or incur or that may
be asserted against USBFS by any person arising out of any
action taken or omitted to be taken by it in performing the
services hereunder, except for any and all claims, demands,
losses, expenses, and liabilities arising out of or relating
to USBFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence or from willful
misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction provided
to USBFS by any duly authorized officer of the Trust, such
duly authorized officer to be included in a list of authorized
officers furnished to USBFS and as amended from time to time
in writing by resolution of the Board of Trustees.
USBFS shall indemnify and hold the Trust harmless from and
against any and all claims, demands, losses, expenses, and
liabilities of any and every nature (including reasonable
attorneys' fees) that the Trust may sustain or incur or that
may be asserted against the Trust by any person arising out of
any action taken or omitted to be taken by USBFS as a result
of USBFS's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, USBFS
shall take all reasonable steps to minimize service
interruptions for any period that such interruption continues
beyond USBFS's control. USBFS will make every reasonable
effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of
USBFS. USBFS agrees that it shall, at all times, have
reasonable contingency plans with appropriate parties, making
reasonable provision for
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emergency use of electrical data processing equipment to the
extent appropriate equipment is available. Representatives of
the Trust shall be entitled to inspect USBFS's premises and
operating capabilities at any time during regular business
hours of USBFS, upon reasonable notice to USBFS.
Notwithstanding the above, USBFS reserves the right to
reprocess and correct administrative errors at its own
expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and promptly advised
of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning
any situation that presents or appears likely to present the
probability of a claim for indemnification. The indemnitor
shall have the option to defend the indemnitee against any
claim that may be the subject of this indemnification. In the
event that the indemnitor so elects, it will so notify the
indemnitee and thereupon the indemnitor shall take over
complete defense of the claim, and the indemnitee shall in
such situation initiate no further legal or other expenses for
which it shall seek indemnification under this section.
Indemnitee shall in no case confess any claim or make any
compromise in any case in which the indemnitor will be asked
to indemnify the indemnitee except with the indemnitor's prior
written consent.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
USBFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
prior, present, or potential shareholders of the Trust (and clients of
said shareholders), and not to use such records and information for any
purpose other than the performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may
not be withheld where USBFS may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested
by the Trust.
Further, USBFS will adhere to the privacy policies adopted by the Trust
pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified
from time to time (the "Act"). Notwithstanding the foregoing, USBFS
will not share any nonpublic personal information concerning any of the
Trust's shareholders to any third party unless specifically directed by
the Trust or allowed under one of the exceptions noted under the Act.
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9. TERM OF AGREEMENT; AMENDMENT
This Agreement shall become effective as of the date first written
above and will continue in effect for a period of two years, after
which this Agreement may be terminated by either party upon giving 90
days prior written notice to the other party or such shorter period as
is mutually agreed upon by the parties. Subsequent to the initial
two-year term, this Agreement will renew automatically for an annual
period. However, this Agreement may be amended by mutual written
consent of the parties. At any point during the term of this Agreement,
should the Trust determine that as a result of a corporate sale or
merger of USBFS or any regulatory action, sanction or investigation
that is reasonably deemed by the Trust to be harmful or unfavorable to
the Trust, this agreement will terminate and the expense of the
transfer of all relevant books, records, correspondence and other data
to a successor shall be at the expense of USBFS.
10. RECORDS
USBFS shall keep records relating to the services to be performed
hereunder in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Trust, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular, Section 31 of the 1940 Act and the rules thereunder. USBFS
agrees that all such records prepared or maintained by USBFS relating
to the services to be performed by USBFS hereunder are the property of
the Trust and will be preserved, maintained, and made available in
accordance with such applicable sections and rules of the 1940 Act and
will be promptly surrendered to the Trust on and in accordance with its
request.
11. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin, without regard to conflicts of law principles. To
the extent that the applicable laws of the State of Wisconsin, or any
of the provisions herein, conflict with the applicable provisions of
the 1940 Act, the latter shall control, and nothing herein shall be
construed in a manner inconsistent with the 1940 Act or any rule or
order of the SEC thereunder.
12. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of USBFS's duties or responsibilities hereunder is designated by the
Trust by written notice to USBFS, USBFS will promptly, upon such
termination and at the expense of the Trust, transfer to such successor
all relevant books, records, correspondence and other data established
or maintained by USBFS under this Agreement in a form reasonably
acceptable to the Trust (if such form differs from the form in which
USBFS has maintained the same, the Trust shall pay any expenses
associated with transferring the same to such form), and will cooperate
in the transfer of such duties and responsibilities, including
provision for
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assistance from USBFS's personnel in the establishment of books,
records and other data by such successor.
13. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower USBFS
to act as agent for the other party to this Agreement, or to conduct
business in the name, or for the account, of the other party to this
Agreement.
14. DATA NECESSARY TO PERFORM SERVICES
The Trust or its agent shall furnish to USBFS the data necessary to
perform the services described herein at such times and in such form as
mutually agreed upon. If USBFS is also acting in another capacity for
the Trust, nothing herein shall be deemed to relieve USBFS of any of
its obligations in such capacity.
15. NOTIFICATION OF ERROR
The Trust will notify USBFS of any discrepancy between USBFS and the
Trust, including, but not limited to, failing to account for a security
position in the fund's portfolio, by the later of: within three (3)
business days after receipt of any reports rendered by USBFS to the
Trust; within three (3) business days after discovery of any error or
omission not covered in the balancing or control procedure, or within
three (3) business days of receiving notice from any shareholder.
16. ASSIGNMENT; CHANGE IN CONTROL
This Agreement may not be assigned by either party without the prior
written consent of the other party. Accordingly, this Agreement shall
not be assigned upon the transfer, assignment, or corporate sale or
merger of either party without the prior written consent of the other
party.
17. NOTICES
Any notice required or permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given on the
date delivered personally or by courier service, or three (3) days
after sent by registered or certified mail, postage prepaid, return
receipt requested, or on the date sent and confirmed received by
facsimile transmission to the other party's address set forth below:
Notice to USBFS shall be sent to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
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and notice to the Trust shall be sent to:
The Kensington Funds
0 Xxxxxx Xxx, Xxxxx 000X
Xxxxxx, Xxxxxxxxxx 00000
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by a duly authorized officer on one or more counterparts as of the date first
above written.
THE KENSINGTON FUNDS U.S. BANCORP FUND SERVICES, LLC
By: By:
------------------------------ --------------------------------
Xxxx X. Xxxxxx Xxx X. Xxxxxxx
Title: President Title: President
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EXHIBIT A
TO THE
FUND ACCOUNTING SERVICING AGREEMENT
FUND NAMES
SEPARATE SERIES OF THE KENSINGTON FUNDS
Name of Series
Kensington Strategic Realty Fund
Kensington Select Income Fund
Kensington Real Estate Securities Fund
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EXHIBIT B
THE KENSINGTON FUNDS
TRANSFER AGENCY, FUND ACCOUNTING AND FUND ADMINISTRATION SERVICES
ANNUAL FEE SCHEDULE
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The following is a combined fee schedule for all services provided by
U.S. Bancorp Fund Services LLC to The Kensington Funds.
ANNUAL FEE BASED ON TOTAL ASSETS OF THE FUND COMPLEX UP TO 4 FUNDS AND CLASSES
12 BASIS POINTS ON THE FIRST $1.25 BILLION
8 BASIS POINTS TO THE NEXT $1.75 BILLION
6 BASIS POINTS THEREAFTER
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OUT OF POCKET COSTS INCLUDED IN BASIS POINTS OUT OF POCKETS AND FUND COSTS NOT INCLUDED IN BASIS POINTS
SERVICE FEE SERVICE FEE
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- Shareholder Communication Stationery
o Statements, confirms, etc. - Printing of Prospectus, Annual/semi Reports, Advertising
o Postage and Sales Materials
- Shareholder Mailing and Inserting - Independent Legal and Audit
- NSCC - Fund/SERV, Networking Services - Insurance and Registration Fees
- Shareholder Web Access (FanWeb) - Board Member compensation and travel expenses
o set up/maintenance/activity - Proxies and Proxies Services
- Financial Advisor/Broker Web Access (Vision) - Literature Fulfillment Service
o inquiry/transactions activity - Marketing/Sales - internal wholesaling
- Voice Response Services - Licensing of Investment Advisor's Staff
o account inquiry/maintenance/ transactions o $1,500 per year per registered representative.
- Banking Services - Engagement of designers, free-xxxxx writers and public
o Draft Checking, ACH Cost relations firms
- 800 Telephone Service Cost
- Anti-Money Laundering Service
- E-Delivery Statements/Compliance
- Security Pricing
- Corporate Action Services
- Manual Security Pricing
- XXXXX filings, retention of records
- US Bancorp Employee Board Meeting Travel ADDITIONAL FUNDS: Annual Fee Schedule to be
re-negotiated.
- Adhoc reports
- Advertising Compliance Review/NASD Filings
- On-line internet access to U.S. Bancorp systems
(TA 200, COLD, Image, Report Source, Vision, EFFECTIVE PERIOD FOR FEE SCHEDULE: 2 years for all
Fund Accounting) services, with an option to extend the contract for an
- Sales Reporting additional 3 years, provided the average account size is
- Licensing of registered representatives up to 10. greater than $20,000.
- short term trading system and support
SET-UP AND CONVERSION COST: None
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