EX-99.B(h)(2)(i)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of September 1, 2002 separately by and between
each of XXXXX FARGO FUNDS TRUST, XXXXX FARGO CORE TRUST and XXXXX FARGO VARIABLE
TRUST, each a Delaware business trust (referred to collectively as the "Funds"
or individually as a "Fund") and PFPC INC., a Massachusetts corporation
("PFPC").
W I T N E S S E T H:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, each Fund wishes to retain PFPC to provide accounting services,
and PFPC wishes to furnish such services to each Fund's investment portfolios
listed on Exhibit A attached hereto and made a part hereof and as such Exhibit A
may be amended from time to time (each, a "Portfolio"); and
NOW, THEREFORE in consideration of the promises and the mutual covenants
herein contained, and intending to be legally bound hereby the parties hereto
agree as follows:
1. Definitions as Used in this Agreement.
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of a Fund and any other person
duly authorized by a Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of a Fund. An
Authorized Person's scope of Authority may be limited by setting
forth such limitation in a written document signed by both parties
hereto.
(d) "CEA" means the Commodities Exchange Act, as amended
(e) "Oral Instructions" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "Securities Laws" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(h) "Shares" mean the shares of beneficial interest of any series of a
Fund or class of a Portfolio.
(i) "Written Instructions" mean (i) written instructions signed by an
Authorized Person and received by PFPC; (ii) instructions sent by an
Authorized Person via electronic mail and received by PFPC; or (iii)
trade instructions transmitted (and received by PFPC) by means of an
electronic transaction reporting system access to which requires use
of a password or other authorized identifier. Written instructions
may be delivered by hand, U.S. mail, express delivery, tested
telegram, cable, telex or facsimile sending device.
2. Appointment. Each Fund hereby appoints PFPC to provide accounting
services to each of its Portfolios in accordance with the terms set
forth in this Agreement. PFPC accepts such appointment and agrees to
furnish such services in accordance with the terms of this Agreement,
including the service standards established in this Agreement or a
mutually agreed addendum to this Agreement.
3. Delivery of Documents. Each Fund has provided or, where applicable,
will provide PFPC with the following:
(a) at PFPC's request, certified or authenticated copies of the
resolutions of the Fund's Board of Trustees, approving the
appointment of PFPC or its affiliates to provide services to each
Portfolio and approving this Agreement;
(b) a copy of the Fund's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreement or agreements;
(d) a copy of the distribution/underwriting agreement with respect to
each class of Shares representing an interest in a Portfolio;
(e) a copy of each additional administration agreement with respect to a
Portfolio;
(f) a copy of each distribution and/or shareholder servicing plan and
agreement made in respect of the Fund or a Portfolio; and
(g) copies (certified or authenticated, where applicable) of any and all
amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PFPC undertakes to
comply with all applicable requirements of the Securities Laws, and any
laws, rules and regulations of governmental authorities having
jurisdiction with respect to the duties to be performed by PFPC
hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by any Fund or any other entity,
except for any entity to which PFPC delegates or assigns duties to be
performed under this Agreement in accordance with Section 19.
5. Instructions.
(a) Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral Instructions or Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instruction or Written
Instruction it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to
this Agreement. PFPC may assume that any Oral Instructions or Written
Instruction received hereunder is not in any way inconsistent with
the provisions of the organizational documents of ea ch Fund or this
Agreement or of any vote, resolution or proceeding of the
relevant Fund's Board of Trustees or of the Portfolio's
shareholders, unless and until PFPC receives Written
Instructions to the contrary.
(c) Each Fund agrees to forward to PFPC Written Instructions
confirming Oral Instructions so that PFPC receives the Written
Instructions by the close of business on the same that such
Oral Instructions are received. The fact that such confirming
Written Instructions are not received by PFPC or differ from
the Oral Instructions shall in no way invalidate the
transactions or enforceability of the transactions authorized
by the Oral Instructions or PFPC's ability to rely upon such
Oral Instructions.
6. Right to Receive Advice.
(a) Advice of a Fund. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or
advice, including Oral Instructions or Written Instructions,
from the relevant Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC may request advice from counsel of its own
choosing (who may be counsel for a Fund, a Fund's investment
adviser or PFPC, at the option of PFPC). Notwithstanding the
foregoing, PFPC may seek advice of Fund counsel only if PFPC
first obtains the Fund's prior approval. The parties agree to
use good faith efforts to properly allocate the expense of any
such counsel fees between the parties.
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral Instructions or Written
Instructions PFPC receives from a Fund and the advice PFPC
receives from counsel, PFPC may rely upon and follow the
advice of counsel provided that PFPC provides reasonable prior
written notice to the Fund. The Fund shall, upon receipt of
such notice, promptly and timely notify PFPC in writing of its
objection, if any, to any
actions or any omissions to act PFPC proposes to take pursuant to
counsel's advice. In the event where a Fund has timely notified
PFPC in writing of its objection, PFPC and the Fund each shall
promptly consult in good faith to reach agreement on the actions
or omissions that are the subject of the Fund's objection. In the
event where, after such consultations, PFPC and the Fund are
unable to agree on the actions or omissions in question, PFPC
shall, at the Fund's expense, consult independent counsel
reasonably acceptable to the Fund, and may follow and rely upon
the advice of such independent counsel.
(d) Protection of PFPC. PFPC shall be indemnified, defended and held
harmless by each Fund for any action PFPC takes or does not take
in reliance upon directions or advice or Oral Instructions or
Written Instructions PFPC receives from or on behalf of a Fund or
from counsel and which PFPC believes, in good faith, to be
consistent with those directions or advice and Oral Instructions
or Written Instructions, provided that in carrying out any such
action PFPC has not acted with willful misfeasance, bad faith,
negligence or reckless disregard of its duties hereunder. Nothing
in this section shall be construed so as to impose an obligation
upon PFPC (i) to seek such directions or advice or Oral
Instructions or Written Instructions, or (ii) to act in accordance
with such directions or advice or Oral Instructions or Written
Instructions.
7. Records; Visits.
(a) Notwithstanding anything herein to the contrary, the books and
records pertaining to the Funds and their Portfolios which are in
the possession or under the control of PFPC shall be the property
of the respective Funds. Such books and records shall be prepared
and maintained as required under the 1940 Act and other applicable
Securities Laws. The Funds and their Authorized Persons, and
employees and agents of the SEC or other governmental authorities
with the approval of the Funds, shall have access
to such books and records at all times during PFPC's normal
business hours. Upon the reasonable request of a Fund, copies of
any such books and records in the form reasonably requested, shall
be provided by PFPC to the Fund or to an Authorized Person or to
employees and agents of the SEC or other governmental authorities
at the Fund's expense. Any such books and records may be
maintained in electronic format if permissible under the
Securities Laws and SEC rules and regulations. No records shall be
destroyed without the consent of the Funds, except that consent to
destroy paper documents may be presumed by PFPC if (i) the
Securities Laws no longer require the retention of such records;
and (ii) PFPC has not received a request from the Funds to retain
all or part of such records (and PFPC expressly agrees to maintain
such documents), or transfer all or part of such records to the
Funds or a third party designated by the Funds. Any direct
out-of-pocket expenses or costs incurred by PFPC to transfer or
maintain, pursuant to the Funds' request, records no longer
required to be maintained by the Securities Laws will be paid or
reimbursed by the applicable Funds.
(b) PFPC shall keep the following records:
(i) all books and records with respect to each Fund's books of
account.
(ii) records of each Portfolio's securities transactions.
(iii) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 under the 1940 Act in connection
with the services provided hereunder.
(c) Upon termination of this Agreement with respect to one or more
Funds or Portfolios, PFPC shall, at the Funds' reasonable request
and in accordance with Written Instructions, deliver the books and
records (or copies thereof) of the terminating Funds or Portfolios
that are in the possession or under
control of PFPC, to the Funds or any other person designated by
the Funds.
8. Confidentiality. Each party shall keep confidential any information
relating to the other party's business ("Confidential Information").
Confidential Information shall include (a) any data or information that
is competitively sensitive material, and not generally known to the
public, including, but not limited to, information about product plans,
marketing strategies, finances, operations, customer relationships,
customer profiles, customer lists, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of a Fund or PFPC, their respective subsidiaries and
affiliated companies and the customers, clients and suppliers of any of
them; (b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or PFPC a
competitive advantage over its competitors; (c) all confidential or
proprietary concepts, documentation, reports, data, specifications,
computer software, source code, object code, flow charts, databases,
inventions, know-how, and trade secrets, whether or not patentable or
copyrightable; and (d) anything designated as confidential.
Notwithstanding the foregoing, information shall not be subject to such
confidentiality obligations if it: (a) is already known to the receiving
party at the time it is obtained; (b) is or becomes publicly known or
available through no wrongful act of the receiving party; (c) is
rightfully received from a third party who, to the best of the receiving
party's knowledge, is not under a duty of confidentiality; (d) is
released by the protected party to a third party without restriction; (e)
is required to be disclosed by the receiving party pursuant to a
requirement of a court order, subpoena, governmental or regulatory agency
or law (provided the receiving party will provide the other party written
notice of such requirement, to the extent such notice is permitted); (f)
is relevant to the defense of any claim or cause of action asserted
against the receiving party; (g) has been or is independently developed
or obtained by the receiving party; or (h) constitutes reports or data
required to be maintained under the Securities Laws.
9. Liaison with Accountants. PFPC shall act as liaison with each Fund's
independent public accountants and shall provide to them account
analyses, fiscal year summaries, and other audit-related schedules with
respect to each of its Portfolios. PFPC shall take all reasonable action
in the performance of its duties under this Agreement to assure that all
necessary information within its control is made available to such
accountants for the expression of their opinion, as required by the
applicable Fund.
10. PFPC System. PFPC shall retain title to and ownership of any and all data
bases (except for Portfolio information contained in data bases),
computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade
secrets, and other related legal rights utilized by PFPC in connection
with the services provided by PFPC to the Funds.
11. Disaster Recovery and Business Continuity Plans. PFPC represents that it
has in place, and covenants to maintain in place during the term of this
Agreement, a reasonable back-up, business continuity and disaster
recovery plan ("Plans") that, among other things, requires PFPC to
maintain and to be able to readily access back-up files of the Funds'
data and records required to be maintained under the Securities Laws at a
location other than the site at which PFPC maintains their primary copies
of such data and records. At a minimum, PFPC's business continuity plans
shall require PFPC to enter into and maintain in effect with appropriate
parties one or more agreements making reasonable provisions for emergency
use of communication and electronic data processing equipment and
addressing personnel requirements. In the event of equipment failures or
other events, PFPC shall, at no additional expense to the Funds, take
reasonable steps to minimize service interruptions. PFPC shall have no
liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties or obligations under this Agreement,
including this section 11.
12. Compensation. As compensation for service rendered by PFPC during the term
of this Agreement, each Fund, on behalf of each of its Portfolios, will pay
to PFPC a fee or fees as may be agreed to in writing by the Fund and PFPC.
13. Indemnification. Each Fund, on behalf of each of its Portfolios, agrees to
indemnify, defend and hold harmless PFPC and its affiliates, including
their respective officers, directors, agents and employees from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, attorneys' fees and disbursements and liabilities arising under
the Securities Laws and any state and foreign securities and blue sky laws)
arising directly or indirectly from (i) any action or omission to act which
PFPC takes (a) at the request of or in reliance on the advice of the Funds,
or (b) in accordance with Oral Instructions or Written Instructions, (ii)
any action, omission or error by another service provider that amounts to a
violation of another service agreement or duty owed to the Funds,
Portfolios or shareholders; or (iii) any action or omission by the Fund,
its officers or trustees, that amounts to willful misfeasance, bad faith,
negligence or breach of fiduciary duty, provided that neither PFPC, nor any
of its affiliates, shall be indemnified, and PFPC shall indemnify and hold
harmless the Funds, the Portfolios and their affiliates, again any
liability (or any expenses incident to such liability) caused by PFPC's or
its affiliates' own willful misfeasance, bad faith, negligence or reckless
disregard in the performance of PFPC's activities under this Agreement. Any
amounts payable by a Fund hereunder shall be satisfied only against the
relevant Portfolio's assets and not against the assets of any other
Portfolio. The provisions of this Section 13 shall survive termination of
this Agreement.
14. Responsibility of PFPC.
(a) PFPC shall be under no duty hereunder to take any action on behalf of
any Fund or any Portfolio except as specifically set forth herein or
as may be specifically agreed to by PFPC and a Fund in a written
amendment hereto. PFPC shall be obligated to exercise care and
diligence in the performance
of its duties hereunder and to act in good faith in performing
services provided for under this Agreement. PFPC shall be liable only
for any damages arising out of PFPC's failure to perform its duties
under this Agreement to the extent such damages arise out of PFPC's
willful misfeasance, bad faith, negligence or reckless disregard of
such duties, provided, however, that with respect to any activity
outside of normal processing PFPC shall not be liable to the Funds,
Portfolios or any shareholders of the Portfolios for any action or
omission of PFPC in the absence of bad faith, willful misfeasance or
gross negligence in the performance or disregard of PFPC's duties or
obligations under this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary, (i) except
to the extent caused by a failure of PFPC to maintain a reasonable
disaster recovery and business continuity plan as required under
Section 11, PFPC shall not be liable for losses, delays, failure,
errors, interruption or loss of data occurring directly or indirectly
by reason of circumstances beyond its reasonable control, including
without limitation acts of God; action or inaction of civil or
military authority; public enemy; war; terrorism; riot; fire; flood;
sabotage; epidemics; interruption; loss or malfunction of utilities,
transportation, computer or communications capabilities; insurrection;
elements of nature; or non-performance by an unaffiliated third party;
and (ii) PFPC shall not be under any duty or obligation to inquire
into and shall not be liable for the validity or invalidity, authority
or lack thereof, or truthfulness or accuracy or lack thereof, of any
instruction, direction, notice, instrument or other information which
PFPC reasonably believes to be genuine.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC nor its affiliates, nor the Funds or Portfolios shall be liable
for any consequential, special or indirect losses or damages, whether
or not the likelihood of such losses or damages was known by such
party.
Notwithstanding this subsection, any monies required to be paid to a
Portfolio or shareholders of a Portfolio, or any reprocessing costs
required to be expended, pursuant to the Funds' NAV Error Correction
Policy, which is included in the Funds' Procedures for the Valuation
of Portfolio Securities (the "Valuation Procedures"), shall not be
considered consequential, special or indirect losses or damages.
(d) Each party shall have a duty to mitigate damages for which the other
party may become responsible.
(e) The provisions of this Section 14 shall survive termination of this
Agreement.
15. Description of Accounting Services on a Continuous Basis. PFPC will
perform the following accounting services with respect to each Portfolio:
(i) Journalize investment, capital share and income and expense
activities in conformance with generally accepted accounting
practice ("GAAP"), the SEC's Regulation S-X (or any successor
regulation) and the Internal Revenue Code of 1986, as amended
(or any successor laws) (the "Code");
(ii) Verify investment buy/sell trade tickets when received from
the investment adviser for a Portfolio (the "Adviser");
(iii) Provide the Trust or Administrator with unadjusted Fund data
directly from the portfolio accounting system for any business
day and other data reasonably requested for the preparation of
the Funds' periodic financial statements;
(iv) Maintain individual ledgers for investment securities;
(v) Maintain historical tax lots for each security;
(vi) Reconcile cash and investment balances with the Custodian, and
provide the Adviser with the beginning cash balance available
for investment purposes daily;
(vii) Update the cash availability throughout the day as required by
the Adviser;
(viii) Post to and prepare, daily, the general ledger and trial
balance;
(ix) Calculate various contractual expenses (e.g., advisory and
custody fees);
(x) Make such adjustment over such periods as instructed by the
Administrator deems necessary to reflect over-accruals or
under-accruals of estimated expenses or income;
(xi) Notify an officer of the Fund of any proposed adjustment to
the expense accruals (however PFPC is not responsible for the
accuracy of expense budgets prepared by the Fund);
(xii) Control all disbursements and authorize and direct the payment
of such disbursements upon Written Instructions;
(xiii) Obtain security market quotes from independent pricing
services approved by the Adviser, or if such quotes are
unavailable, then obtain such prices from the Adviser, and in
either case calculate the market value of each Portfolio's
Investments in accordance with the Funds' Valuation
Procedures;
(xiv) Perform the duties and functions of the Fund Accountant
specified in the Funds' Valuation Procedures;
(xv) Report to the Fund and Administrator within 15 days after the
end of each calendar month, PFPC's compliance for the prior
month
with the written service level standards agreed upon from time
to time by the Funds and PFPC (the "Service Standards");
(xvi) Transmit or mail a copy of the daily portfolio valuation to
the Adviser;
(xvii) Compute net asset value with the frequency prescribed in each
Fund's then-current Prospectus and communicate such
information to the Funds or other persons as instructed by the
Funds;
(xviii) As appropriate, communicate system-generated SEC and money
market 7-day yields to the Funds or other persons as
instructed by the Funds; and
(xix) PFPC shall provide to the Fund the DataPath internet access
services as set forth on Exhibit B attached hereto and made a
part hereof.
16. Duration and Termination.
(a) Initial Term and Renewal Terms. This Agreement shall expire on
December 31, 2005 unless earlier terminated as provided below. Upon
the expiration of the Initial Term, this Agreement shall automatically
renew for successive one-year terms ("Renewal Terms"). Either party
may terminate the Agreement effective at the end of the Initial Term
or any Renewal Term by providing written notice to the other of its
intent not to renew. Such notice must be received not later than
ninety (90) days prior to the expiration of the Initial Term or the
then current Renewal Term. If this Agreement is terminated with
respect to less than all of the Funds or Portfolios, this Agreement
shall remain in full force and effect with respect to the remaining
Funds or Portfolios.
(b) Termination for Cause by the Funds. The Funds may terminate this
Agreement for cause in the event that: (i) PFPC, its employees or
agents
fail or becomes unable to materially perform the services under the
Agreement, including material failure of its operations capability for
any reason other than the actions of the Funds, unaffiliated third
parties or as provided in Section 11 herein; or (ii) during the
Initial Term or any Renewal Term, PFPC fails to meet the service
standards established in this Agreement or an Addendum for (A) a
period of four (4) consecutive months or (B) any six (6) months in a
twelve (12) month period.
(c) Default and Cure. If either of the parties to this Agreement defaults
in the performance of its duties or obligations under this Agreement,
and such default has a material effect on the other party, then the
non-defaulting party may give notice to the defaulting party
specifying the nature of the default in sufficient detail to permit
the defaulting party to identify and cure the default within thirty
(30) days of receipt of such notice, or within such longer periods as
the parties may agree is necessary for such cure. If the defaulting
party fails to cure the default within the 30-day cure period (or such
other time as agreed to by the parties, then the non-defaulting party
may terminate this Agreement immediately upon written notice to the
defaulting party.
(d) Immediate Termination. Either party may terminate this Agreement by
written notice to the other party, effective at any time specified
therein, in the event that bankruptcy, insolvency, dissolution or
liquidation proceedings of any nature are instituted by or against the
other party and such proceedings are not discharged within thirty (30)
days. Either party may immediately terminate this Agreement if the
other party has discontinued all or a significant portion of its
business operations.
(e) Partial Termination.
(i) The parties agree that any termination in accordance with this
Section 16 may be complete, or may only affect specifically
identified Fund(s) or Portfolio(s), at the discretion of the
party giving notice of termination
(ii) The Funds may immediately terminate this Agreement, without
penalty, as to one or more Portfolio(s) that re liquidated,
dissolved, merged or reorganized, into an existing Portfolio
of the Fund ("Terminated Fund"), provided that, in the case of
a merger or reorganization, the Portfolio into which the
Terminated Fund is merged or reorganized is a Portfolio under
this Agreement.
(f) Partial or Complete Termination. Notwithstanding Section 16(a), after
June 30, 2004, this Agreement may be terminated with respect to any or
all Portfolios by the Board(s) if at any time Xxxxx Fargo & Company
directly or indirectly acquires, is acquired by, merges, consolidates
or otherwise reorganizes with (a "Reorganization") any company and
immediately thereafter (i) Xxxxx Fargo & Company or its successor
controls or is under common control with any company that provides in
the normal course of business the services listed in Section 15,
whether generally to the mutual fund industry or only to mutual funds
advised or sponsored by its affiliates, or (ii) Xxxxx Fargo & Company
or an affiliate of it advises a family of mutual funds for which the
services listed in Section 15 are performed by a company not
affiliated with Xxxxx Fargo & Company or PFPC. Such termination may be
made at any time after the occurrence of the event described in the
preceding clauses by the Board on 90 days written notice to PFPC. In
the event that the Funds elect to terminate this Agreement pursuant to
this Section 16(f) with respect to a Portfolio, the applicable Fund
shall pay PFPC a "multiplier" times the greater of (x) the monthly
average fees due to PFPC under this Agreement during the last three
whole months prior to the Reorganization for providing services to the
terminating Portfolio and (y) the monthly average fees paid to PFPC
for providing services to the terminating Portfolio during the last
three whole months prior to delivery of the notice
of termination. For purposes of this clause, the multiplier will equal
the number of months remaining on the Initial Term or Renewal Term of
this Agreement at the time that PFPC is no longer providing services
to the Portfolio under this Agreement divided by three.
(g) Costs When Funds Terminate. Should the Funds exercise their right to
terminate pursuant to subsection (b), (c) or (d) of this Section 16,
PFPC and the Funds agree that all direct out-of-pocket expenses or
costs associated with the movement of records and material will be
borne by PFPC.
(h) Costs When PFPC Terminates or the Term Ends. If this Agreement
terminates at the end of the term specified in Section 16(a) of this
Agreement, or PFPC exercises its right to terminate pursuant to
subsections (c) or (d) of this Section 16, or the Funds exercise their
right to terminate pursuant to subsection (e) or (f) of this Section
16, the Funds agree that all direct out-of-pocket expenses or costs
associated with the movement of records and materials will be borne by
the Funds.
17. Notices. Notices shall be address (a) if to PFPC, at 000 Xxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President; (b) if to the Xxxxx Fargo
Fund Trust, Xxxxx Fargo Core Trust, or Xxxxx Fargo Variable Trust, at 000
Xxxxxx Xxxxxx, 00xx Xxxxx, XXX-X0000-000, Xxx Xxxxxxxxx, XX 00000,
Attention: Xxxxx X. Xxxxxxx; or (c) at such other address as shall have
been given by like notice to the sender of any such notice or other
communication by the other party. If notice is sent by confirming
telegram, cable, telex or facsimile sending device, it shall be deemed to
have been given immediately. If notice is sent by first-class mail, it
shall be deemed to have been given three days after it has been mailed. If
notice is sent by messenger, or express delivery, it shall be deemed to
have been given on the day it is delivered.
18. Amendments. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by the party against whom enforcement of
such change or waiver is sought, except that a Fund, upon the Fund's
creation of a new Portfolio or dissolution of an existing Portfolio,
may add such Portfolio(s) to, or delete such Portfolio(s) from, Exhibit
A by providing at least thirty (30) days' advance written notice to
PFPC. PFPC may reject any proposed additions by written notice within
ten (10) business days after receiving written notice of the proposed
addition, and the parties agree to periodically re-execute Schedule A
to reflect the current list of Portfolios. PFPC may waive the
requirement of the provision of the foregoing thirty and ten business
day notice periods in its sole discretion.
19. Delegation; Assignment. PFPC may not assign or delegate its rights and
duties hereunder to any wholly- or majority-owned direct or indirect
subsidiary of The PNC Financial Services Group, Inc., without prior
written notice to and consent of the Funds, which consent shall not be
unreasonably withheld (and if the Funds do not respond within 30 days
after receipt of the notice provided by PFPC, the Funds' consent may be
deemed to be provided) and provided further that: (i) the delegate or
(assignee) agrees with PFPC and the Funds to comply with all relevant
provisions of this Agreement and the 1940 Act and Securities Laws; and
(ii) PFPC and such delegate (or assignee) promptly provide such
information as the Fund may reasonably request, and respond to such
reasonable questions as the Funds may ask, relative to the delegation
(or assignment), including (without limitation) the capabilities of the
delegate (or assignee). Any other assignment or delegation by PFPC is
prohibited without the express written consent of the Funds prior to
the assignment or delegation. Any Fund may assign its rights under this
Agreement to any successor Fund, provided that PFPC is given notice of
the assignment.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
22. SAS-70 Report. PFPC shall have an audit of its operations performed in
accordance with the AICPA's Statement of Auditing Standards No. 70
(SAS-70). PFPC shall send a copy of its SAS-70 report directly to the
Funds upon its completion.
23. Miscellaneous.
(a) Notwithstanding anything in this Agreement to the contrary,
each Fund agreement to make any modifications to its
registration statement or adopt or modify any policies which
would affect materially the obligations or responsibilities of
PFPC hereunder without the prior written approval of PFPC,
which approval shall not be unreasonably withheld or delayed.
The parties agree that a modification to a registration
statement simply to add or delete a Portfolio or Class of a
Portfolio shall not be construed as materially affecting the
obligations or responsibilities of PFPC hereunder.
(b) Except as expressly provided in this Agreement, PFPC hereby
disclaims all representations and warranties, express or
implied, made to the Funds or any other person, including,
without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose
or otherwise (irrespective of any course of dealing, custom or
usage of trade), of any services or any goods provided
incidental to services provided under this Agreement. PFPC
disclaims any warranty of title or non-infringement except as
otherwise set forth in this Agreement.
(c) This Agreement embodies the entire agreement and understanding
between the respective parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to
delegated duties. The captions in this Agreement are
included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. Notwithstanding any
provision hereof, the services of PFPC are not, nor shall they
be, construed as constituting legal advice or the provision of
legal services for or on behalf of the Funds or any other
person.
(f) This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to
principles of conflicts of law.
(g) If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors
and permitted assigns.
(h) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such
party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
XXXXX FARGO FUNDS TRUST
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
XXXXX FARGO CORE TRUST
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
XXXXX FARGO VARIABLE TRUST
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
EXHIBIT A
Portfolios
THIS EXHIBIT A, dated as of October 1, 2002, is Exhibit A to that
certain Accounting Services Agreement dated as of September 1, 2002 between PFPC
INC. and each of XXXXX FARGO FUNDS TRUST, XXXXX FARGO CORE TRUST and XXXXX FARGO
VARIABLE TRUST.
XXXXX FARGO FUNDS TRUST
Names of Portfolios Existing Classes
Effective 10/1/2002
SIFE Specialized Financial Services Fund A, B, C
To be Converted from Forum on a Date to be Determined
Asset Allocation Fund A, B, C, Institutional
California Limited Term Tax-Free Fund A, [C], Institutional
California Tax-Free Fund A, B, C, Institutional
California Tax-Free Money Market Fund A, Service
California Tax-Free Money Market Trust Single Class
Cash Investment Money Market Fund Service, Institutional
Colorado Tax-Free Fund A, B, Institutional
Diversified Bond Fund Institutional
Diversified Equity Fund A, B, C, Institutional
Diversified Small Cap Fund Institutional
Equity Income Fund A, B, C, Institutional
Equity Index Fund A, B, [O]
Equity Value Fund A, B, C, Institutional
Government Institutional Money Market Fund Institutional
Government Money Market Fund A, Service
Growth Balanced Fund A, B, C, Institutional
Growth Equity Fund A, B, C, Institutional
Growth Fund A, B, Institutional
Income Fund A, B, Institutional
Income Plus Fund A, B, C
Index Allocation Fund A, B, C
Index Fund Institutional
Intermediate Government Income Fund A, B, C, Institutional
International Equity Fund A, B, C, Institutional
Large Cap Appreciation Fund A, B, C, Institutional
[Large Cap Value Fund A, B, C, Institutional]
Names of Portfolios Existing Classes
Large Company Growth Fund A, B, C, Institutional
Limited Term Government Income Fund A, B, Institutional
Liquidity Reserve Money Market Fund Investor
Mid Cap Growth Fund A, B, C
Minnesota Money Market Fund A
Minnesota Tax-Free Fund A, B, Institutional
Moderate Balanced Fund Institutional
Money Market Fund A, B
Money Market Trust Single Class
National Limited Term Tax-Free Fund Institutional
National Tax-Free Fund A, B, C, Institutional
National Tax-Free Institutional Money Market Fund Service, Institutional
National Tax-Free Money Market Fund A
National Tax-Free Money Market Trust Single Class
Nebraska Tax-Free Fund Institutional
[OTC Growth Fund O]
Outlook Today Fund A, B, C, Institutional
Outlook 2010 Fund A, B, C, Institutional
Outlook 2020 Fund A, B, C, Institutional
Outlook 2030 Fund A, B, C, Institutional
Outlook 2040 Fund A, B, C, Institutional
Overland Express Sweep Fund Single Class
Prime Investment Institutional Money Market Fund Institutional
Prime Investment Money Market Fund Service
Small Cap Growth Fund A, B, C, Institutional
Small Cap Opportunities Fund Institutional
Small Company Growth Fund Institutional
Small Company Value Fund A, B, [C], Institutional
Specialized Health Sciences Fund A, B, C
Specialized Technology Fund A, B, C
Stable Income Fund A, B; Institutional
Strategic Growth Allocation Fund Institutional
Strategic Income Fund Institutional
Tactical Maturity Bond Fund Institutional
Treasury Plus Institutional Money Market Fund Service, Institutional
Treasury Plus Money Market Fund A
WealthBuilder Growth Balanced Portfolio Single Class
WealthBuilder Growth and Income Portfolio Single Class
WealthBuilder Growth Portfolio Single Class
100% Treasury Money Market Fund A, Service
To be effective upon Fund Launch:
Names of Portfolios Existing Classes
High Yield Bond Fund A, B, C
To be effective upon Fund Launch:
[Inflation-Protected Bond Fund] A, B, C, Institutional]
XXXXX FARGO CORE TRUST
Names of Portfolios Existing Classes
To Be Converted from Forum on a Date to be Determined:
Disciplined Growth Portfolio Single Class
Equity Income Portfolio Single Class
Index Portfolio Single Class
International Equity Portfolio Single Class
Large Cap Appreciation Portfolio Single Class
[Large Cap Value Portfolio Single Class]
Large Company Growth Portfolio Single Class
Managed Fixed Income Portfolio Single Class
Small Cap Basic Value Portfolio Single Class
Small Cap Index Portfolio Single Class
[Small Cap Value Portfolio Single Class]
Small Company Growth Portfolio Single Class
Small Company Value Portfolio Single Class
Stable Income Portfolio Single Class
Strategic Value Bond Portfolio Single Class
Tactical Maturity Bond Portfolio Single Class
XXXXX FARGO VARIABLE TRUST
Names of Portfolios Existing Classes
To be Converted from Forum on a Date to be Determined:
Asset Allocation Fund Single Class
Corporate Bond Fund Single Class
Equity Income Fund Single Class
Equity Value Fund Single Class
Growth Fund Single Class
International Equity Fund Single Class
Large Company Growth Fund Single Class
Money Market Fund Single Class
Small Cap Growth Fund Single Class
EXHIBIT B
PFPC DataPath Access Services
1. PFPC Services
PFPC shall:
(a) Provide internet access to PFPC DataPath ("DataPath") at
xxx.xxxxxxxxxxxx.xxx or other site operated by PFPC (the
"Site") for Fund portfolio data otherwise supplied by PFPC to
Fund service providers via other electronic and manual
methods. Types of information to be provided on the Site
include: (i) data relating to portfolio securities,.(ii)
general ledger balances and (iii) net asset value-related
data, including NAV and net asset, distribution and yield
detail (collectively, the "Accounting Services");
(b) Supply each of the Authorized Persons ("Users") with a logon
ID and Password;
(c) Provide to Users access to the information listed in
subsection (a) above using standard inquiry tools and reports.
With respect to the Accounting Services, Authorized Users will
be able to modify standard inquiries to develop user-defined
inquiry tools; however, PFPC will review computer costs for
running user-defined inquiries and may assess surcharges for
those requiring excessive hardware resources. In addition,
costs for developing custom reports or enhancements are not
included in the fees set forth in Section 12 of the Agreement
and will be billed separately;
(d) Utilize a form of encryption that is generally available to
the public in the U.S. for standard internet browsers and
establish, monitor and verify firewalls and other security
features (commercially reasonable for this type of information
and these types of users) and exercise commercially reasonable
efforts to attempt to maintain the security and integrity of
the Site; and
(e) Monitor the telephone lines involved in providing the
Accounting Services and inform the Fund promptly of any
malfunctions or service interruptions.
2. Duties of the Fund and the Users
The Fund and/or the Users, as appropriate, shall:
(a) Provide and maintain a web browser supporting Secure Sockets Layer
128-bit encryption; and
(b) Keep logon IDs and passwords confidential and notify PFPC
immediately in the event that a logon ID or password is lost,
stolen or if you have reason to believe that the logon ID and
password are being used by an unauthorized person.
3. Standard of Care; Limitations of Liability
(a) The Fund acknowledges that the Internet is an "open," publicly
accessible network and not under the control of any party. PFPC's
provision of Accounting Services is dependent upon the proper
functioning of the Internet and services provided by
telecommunications carriers, firewall providers, encryption system
developers and others. The Fund agrees that PFPC shall not be
liable in any respect for the actions or omissions of any third
party wrongdoers (i.e., hackers not employed by such party or its
affiliates) or of any third parties involved in the Accounting
Services and shall not be liable in any respect for the selection
of any such third party, unless that selection constitutes a
breach of PFPC's standard of care set forth in Section 14 of the
Agreement.
(b) Without limiting the generality of the foregoing or limiting the
applicability of any other provision of this Exhibit B or the
Agreement, including Sections 11, 14(a) and 14(b), PFPC shall not
be liable for delays or failures to perform any of the Accounting
Services or errors or loss of data occurring by reason of
circumstances beyond such party's control, which may include:
functions or malfunctions of the internet or telecommunications
services, firewalls, encryption systems or security devices.
XXXXX FARGO FUNDS
FUND ACCOUNTING SERVICE STANDARDS
Criteria 1: Net Asset Value per Share (NAV) Accuracy-Reporting to Transfer Agent
Number of Accurate NAV's Reported to the Transfer Agent divided by the Total
Number of NAV's Required to Report to the Transfer Agent (excluding Money Market
Funds).....................................................................99.7%
.. "NAV" for this purpose is class net assets divided by total class shares
outstanding and includes dividend factors. An NAV is not accurate if,
upon recalculation, the change in the reported extended class NAV is
greater than a full xxxxx and, with respect to dividend factors, any
revision to previously reported data requires the Transfer Agent to
reprocess shareholder account data.
.. Numerator and denominator include (i) NAV's affected by non-controllable
information and (ii) Feeder funds delayed due to Master Portfolio
accounting issues related to non-controllable information.
.. Each NAV error is treated as and NAV error only once (i.e., if an error
lasts more than one business day before it is discovered, it is treated
as one error and excluded from both the numerator and denominator in the
calculation after the first day).
Criteria 2: NAV Accuracy-Reported to NASDAQ
Number of accurate NAV's Reported to NASDAQ divided by Number of Total NAV's
Required to be Reported to NASDAQ (excluding Money Market Funds)...........99.7%
.. NAV for this purpose is class net assets divided by total class shares
outstanding and includes dividend factors. An NAV is not accurate if,
upon recalculation, the NAV difference is greater than a full xxxxx and,
with respect to dividend factors, any revision to previously reported
data required the Transfer Agent to reprocess shareholder account data
.. Numerator and denominator include (i) NAV's affected by non-controllable
information and (ii) Feeder funds delayed due to Master Portfolio
accounting issues related to non-controllable information.
.. Each NAV error is treated as an NAV error only once (i.e., if an error
lasts more than one business day before it is discovered, it is treated
as one error and excluded from both the numerator and denominator in the
calculation after the first day).
Criteria 3: NAV and Dividend Factor Timeliness to Transfer Agent
Number of NAV and Dividend Factor transmissions to Transfer Agent by designated
time divided by Required Number of NAV and Dividend Factor transmissions...99.7%
.. NAV for this purpose is class net assets divided by class total shares
outstanding.
.. Designated time is 7:00 p.m. ET.
.. Numerator and denominator include (i) NAV's affected by non-controllable
information and (ii) Feeder funds delayed due to accounting issues
related to Master Portfolio non-controllable information.
Criteria 4: Cash Availability Reporting
Timely Cash Availability Reports ("CAR") to Investment Advisers
Divided by Number of Funds Requiring Cash Availability Reporting...........99.7%
Accurate Cash Availability Reports to Investment Advisers
Divided by Number of Funds Requiring Cash Availability Reporting.............95%
.. Timely CAR means (i) notwithstanding any other clause to the contrary,
with respect to any Fund or Master portfolio participating in a
"consolidated repurchase agreement," within two hours and fifteen minutes
after receipt of final transfer agency capital transaction reporting,
(ii) with respect to a stand-alone fund with a single investment adviser,
within one half hour of receipt of final transfer agency capital
transaction reporting, (iii) with respect to a stand-alone fund with more
than one investment adviser, within two hours of receipt of final
transfer agency capital transaction reporting, (iv) with respect to a
non-money market Master Portfolio within one hour after receipt of final
transfer agency capital transaction reporting and (v) with respect to a
money market Feeder fund, or Master Portfolio with no more than three
relationships, within one half hour after receipt of final transfer
agency capital transactions reporting.
.. Accurate CAR means errors controllable by PFPC that resulted in an
overdraft to a Fund
.. Numerator and denominator include (i) funds affected by non-controllable
information and (ii) Master Portfolios delayed due to Feeder fund
accounting issues related to non-controllable information.
Criteria 5: Monthly Reporting Proof Package Timeliness
Funds for Which Monthly Proofs are Completed by the 15th Calendar Day
Of the Month divided by Number of Funds......................................95%
.. Monthly proof means balance sheet review and monthly reconciliation of
portfolio with the Custodian.
.. Numerator and denominator include (i) funds affected by non-controllable
information and (ii) Feeder funds affected by Master Portfolio
non-controllable information.
General Definitions
"Transfer Agent" means Boston Financial Data Services, Inc. and does not include
other persons to which PFPC communicates fund information.
The numerator and denominator are calculated daily and the quotient is reported
on a cumulative monthly and rolling twelve month basis.
Denominator includes those NAV's for classes of shares that have direct
shareholder investment for criteria 1, 2, and 3.
XXXXX FARGO FUNDS TRUST
XXXXX FARGO CORE TRUST
XXXXX FARGO VARIABLE TRUST
PROCEDURES FOR THE VALUATION OF PORTFOLIO SECURITIES
1. Scope of Procedures. These Procedures apply to the valuation of the
shares of all series of Xxxxx Fargo Funds Trust, Xxxxx Fargo Core Trust and
Xxxxx Fargo Variable Trust (the "Trusts") except for those series that operate
as money market funds in accordance with Rule 2a-7 under the Investment Company
Act of 1940 (the "1940 Act") (hereafter, all such non-money market series are
referred to as the "Funds").
2. Responsibilities
(a) Board of Trustees. The Board of Trustees of each Trust (the
"Board") has established a valuation committee of the Trust (the
"Valuation Committee") comprised exclusively of Trustees, and has
delegated to it the authority to take any action regarding the
valuation of portfolio securities that the Committee deems
necessary or appropriate, including, but not limited to,
determining the fair value of portfolio securities. The Board
retains the authority to make or ratify any valuation decisions or
approve any changes to these Procedures as the Board deems
appropriate. The Board shall consider for ratification at each
quarterly meeting any valuation actions taken by the Valuation
Committee or the valuation team ("Management Valuation Team" of
Xxxxx Fargo Funds Management, LLC ("Funds. Management') during the
previous quarter that require such ratification. The Board shall
review these Procedures as often as they deem appropriate to
consider whether any revisions are warranted.
(b) Valuation Committee.
(i) Responsibilities. The Valuation Committee shall be
responsible for determining the fair value of securities
between Board meetings in instances where that
determination has not been delegated to the Management
Valuation Team. The Valuation Committee also may address
any other valuation issues that arise unless or until the
Board chooses to address such issues directly.
(ii) Meetings. A quorum for meetings of the Valuation Committee
shall consist of one member. The Valuation Committee shall
make and retain minutes of its meetings. Such minutes shall
describe the action taken, and include a description of the
reasoning of the Valuation Committee's actions.
(c) Management Valuation Team.
(i) Responsibilities. The Management Valuation Team shall be
responsible to oversee the calculation of the net asset
value per
share ("NAV") of each class of each Fund on each day that
the Fund is open for business. The Management Valuation
Team shall monitor the fund accounting agent for the Funds
(the "Fund Accountant") at such intervals as it deems
appropriate to determine that the Fund Accountant is
applying the valuation methodologies, including fair
valuation, set forth herein. The Management Valuation Team
shall review the continuing appropriateness of the
methodologies set forth herein and shall recommend
revisions to the Board as necessary. As part of this
review, the Management Valuation Team shall compare fair
valuations to the next actual sales price or other
appropriate market values to assess the continued
appropriateness of the fair valuation methodologies used.
The Management Valuation Team also shall oversee the Fund
portfolio managers ("Portfolio Managers") in exercising the
Portfolio Managers' responsibility to monitor for
significant events affecting Fund portfolio securities and
reporting such significant events to the Management
Valuation Team.
(ii) Fair Valuations. The Management Valuation Team shall have
the authority and responsibility to make fair value
determinations if it concludes in the exercise of its
reasonable judgment that any fair valuation determination
that could reasonably be arrived at would not impact the
NAV of any class of any Fund by $0.005 or more. For any
fair value determinations that could impact the NAV of any
class of any Fund by $0.005 or more, the Management
Valuation Team will develop a valuation recommendation and
seek approval of that recommendation from the Valuation
Committee. The Management Valuation Team also is
responsible for reviewing pricing errors and determining
whether the NAV of a class of a Fund must be corrected in
accordance with the NAV Error Correction Policy detailed in
Exhibit A to these Procedures. The Management Valuation
Team shall also have the authority to stale price any
security for which trading has been halted due to a pending
approval from the Federal Drug Administration (the "FDA")
until trading on the security has resumed regardless of the
impact on the net asset value.
(iii) Meetings. The Management Valuation Team shall meet at least
quarterly to review valuation methodologies and the
performance of the Fund Accountant and Portfolio Managers
in exercising their respective valuation responsibilities.
The Management Valuation Team also shall meet on any days
that fair value determinations need to be considered.
Meetings may be in-person or telephonic. Two or more
members of the Management Valuation Team may make fair
value determinations on behalf of the Team. The Management
Valuation Team shall make and retain minutes of its
meetings. Such minutes shall describe the actions
considered and
taken, and include a description of the reasoning for
Management Valuation Team actions, and shall be made
available to the Board upon request.
(iv) Records. The Trust's Administrator, on behalf of the Trust,
shall maintain and preserve for a period of not less than
six years from the end of the fiscal year during which any
meeting occurs (the first two years in an easily accessible
place), a written record of each meeting, including records
detailing the action taken, the reasoning underlying a
decision, the valuation methodologies considered and the
method used.
(v) Membership. The initial members of the Management Valuation
Team shall be Xxxxxx Xxxxx, Xxxxx Xxxxxxx, Xxxxxx Xxxx and
Xxxxx Xxxxxxx. Changes to the membership of the Management
Valuation Team will be made only with Board approval.
(d) Fund Accountant.
(i) Responsibilities. The Fund Accountant shall be responsible
for the calculation of the NAV of each class of each Fund
on every day that the Fund is open for business. The Fund
Accountant shall be responsible for engaging and overseeing
the work of all pricing services selected by Funds
Management for use by the Fund Accountant. The Fund
Accountant reviews daily pricing information that it
receives and will examine and, if necessary, challenge a
valuation that appears to be unreliable or otherwise
questionable by inquiry to the source.
(ii) Procedures to Monitor Pricing Information. The Fund
Accountant monitors valuations against specified variation
criteria in order to identify potential valuation or
pricing errors or problems. Automated flagging systems are
used to check security prices against indices or other data
to identify abnormal price movements or other relevant
information. The Fund Accountant reviews reports generated
by these systems and researches and independently analyzes
the issues raised by the flags.
The Fund Account will compare the security prices to a
secondary source for accuracy and reasonableness if the
price is stale, or if the reported price falls outside of
established variation criteria. The Fund Accountant also
will scrutinize prices of certain securities of a Fund if
the difference in a Fund's calculated NAV differs
materially from the change in a Fund's comparable index.
Those security prices that do not match the secondary
source within the specified variation criteria are
independently reviewed and researched by the Fund
Accountant to verify the accuracy of
the price being used or determine whether a different value
should be considered.
The Fund Accountant shall alert the Management Valuation
Team whenever market quotations are not readily available
for a security or special considerations need to be
addressed to determine the current value of a security.
(e) Portfolio Managers.
(i) Monitoring. Responsibilities. Portfolio Managers are
responsible for monitoring for significant events affecting
any issuers of securities held in the Fund's portfolio and
relevant markets and market segments ("Significant
Events"). A Significant Event is defined as an event that
may reasonably be expected to materially affect the value
of any Fund portfolio security. The Portfolio Managers'
responsibility to monitor for Significant Events shall
include the responsibility to monitor events occurring
between the close of trading of the portfolio securities
involved and the Fund's valuation time, as well as ongoing
monitoring of events that potentially could materially
affect the price of fair valued securities. Portfolio
Managers will regularly review appropriate information
sources, such as current news stories, financial wires,
market contacts, market indices, reference securities or
baskets of securities, in discharging their responsibility
to monitor for Significant Events.
The following events, among others, may constitute
Significant Events affecting individual issuers:
unscheduled market closings; corporate actions such as
reorganizations, mergers, spin-offs, liquidations,
acquisitions, and buyouts; corporate announcements of
earnings; corporate announcements relating to products such
as new product offerings, product recalls or other product
related news; regulatory news such as new patents or drug
approvals; news relating to natural disasters or acts of
terrorism affecting the issuer's operations; events
relating to significant litigation involving the issuer,
low trading volume; and trading limitations.
The following events, among others, may constitute
Significant Events affecting multiple issuers: government
actions; natural disasters, armed conflicts, acts of
terrorism, and similar situations; and significant market
fluctuations.
The Management Valuation Team will periodically review the
practices of the sub-advisory firms to confirm that
Portfolio Managers are monitoring for Significant Events
and reporting such Significant Events to the Management
Valuation Team. The
Management Valuation Team shall develop such reporting
forms, flow charts and other materials as it deems
appropriate or advisable to assist Portfolio Managers in
performing their responsibilities under these Procedures
and to assist the Management Valuation Team in confirming
compliance.
(ii) Responsibility if a Significant Event Occurs. If a
Portfolio Manager believes that, because of a Significant
Event, the last market quotation for a security does not
accurately reflect the current market value of the
security, he/she shall promptly recommend a fair value of
the security to his/her supervisor and obtain concurrence.
Upon confirmation by the supervisor, the Portfolio Manager
will promptly notify the Management Valuation Team of the
recommendation, the reasons underlying the recommendation
and the methodology used to determine the recommended fair
value price of a security. The Management Valuation Team
will decide, using the standards detailed in Section
2(c)(ii), whether it has the authority to determines the
fair value of a security or whether the decision must be
referred to the Valuation Committee.
3. General Valuation Standards.
(a) As provided in Section 2(a)(41) of the 1940 Act, the "value" of
assets of the Funds shall mean, with respect to securities for
which market quotations are readily available, the market value of
such securities, and with respect to other securities and assets,
fair value as determined in good faith by the board of directors.
(b) The NAV of each class of each Funds will be determined as of the
close of regular trading on the New York Stock Exchange (generally
1:00 p.m. Pacific time) on each day the Fund is open for business,
unless the Board determines otherwise. The Valuation Committee
shall have the authority to approve deviations from the normal NAV
calculation time to address unusual or unexpected circumstances on
any given day.
(c) The value of an investment by any Fund in the shares of another
registered investment company ("Master Portfolio") is the `value
of the holding as determined by the pricing procedures or policies
of the Master Portfolio as disclosed in its registration statement
filed under the 1940 Act.
(d) To the extent indicated below, prices used for the valuation of
securities shall be obtained from a reputable independent pricing
service selected by the Management Valuation Team and engaged and
overseen by the Fund Accountant. In determining a price, an
independent pricing service does not have to rely exclusively on
quoted prices, but also can take into account appropriate factors
such as institutional-sized trading in similar
groups of securities, yield, quality, coupon rate, maturity, type
of issue, trading characteristics and other market data.
4. Valuation Methodologies Based on Market Quotations
(a) Equity securities that are listed on a foreign or domestic
exchange or market, including The Nasdaq National Market, will be
valued at the last sale price on the primary exchange or market on
which they are listed prior to the calculation of the NAV o f the
Fund. If no sale is shown on the primary exchange or market for
the security, the bid price will be used. If no sale is shown and
no bid price is available, the price will be deemed "stale" and
the value will be determined in accordance with Section 5(e) of
these procedures.
(b) Equity securities that are not listed on a foreign or domestic
exchange or market, but that do have a public trading market, will
be valued at the quoted bid price from a market maker in the
security or a dealer that the portfolio Manager reasonably
determines to be an appropriate source for such a quoted bid
price. If reasonably available multiple quotes should be obtained
for verification.
(c) Except as provided in paragraph (e), debt securities with
maturities exceeding 60 days will be valued at the market price
provided by the pre-approved independent pricing service. If a
price is not available from the pre-approved independent pricing
service, a bid quote should be obtained from a dealer that the
Portfolio Manager reasonably determines to be an appropriate
source for such a bid quote. If no reliable market price or bid
quote is available, such debt securities will generally be fair
valued in accordance with the Procedures for Fair Value
Determinations - Special Circumstances detailed in Exhibit B to
these Procedures.
(d) Debt securities with maturities of 60 days or less will be valued
at amortized cost unless an impairment to the credit worthiness of
the issuer or other factors vitiate the accuracy of such amortized
cost valuations.
(e) Convertible bonds that are listed on a foreign or domestic
exchange or market will be valued at the last sale price on the
primary exchange or market on which they are listed prior to the
calculation of the NAV of the Fund. If no sale is shown on the
primary exchange or market for the security, the bid price will be
used. If no sale price and no bid price is available, the price
will be deemed "stale" and the value will be determined in
accordance with Section 5(c) of these procedures.
(f) Options on equity securities and stock indices traded on domestic
option and/or security exchanges will be valued at the closing
price on the primary exchange on which they are traded.
(g) Stock index futures and related options and futures on debt
securities traded on domestic commodities exchanges, will be
valued at the closing price on the primary commodities exchange on
which they are traded. If no sale is shown on the primary exchange
for the security, the bid price will be used. If no sale price and
no bid price is available, the price will be deemed "stale" and
the value will be determined in accordance with Section 5(c) of
these procedures.
(h) Non-listed OTC options, swaps and exotics (i.e., caps, floors,
etc.) will be valued at the evaluated price provided by a broker
that the Portfolio Manager reasonably determines to be qualified
to provide such an evaluated price.
(i) Options and futures traded on foreign exchanges will be valued at
the most recent exchange closing price available prior to the
calculation of the NAV of the Fund.
(j) Asset values initially expressed in foreign currencies will be
converted to U.S. dollars at rates provided by an independent
foreign currency pricing source chosen by Funds Management for use
by the Fund Accountant at a time each business day that has been
specified by the Management Valuation Team.
5. Fair Valuation. Securities and other assets for which current market
quotations are not readily available will be valued at "fair value" as
determined in good faith by the Board or the Valuation Committee, or by the
Management Valuation Team to the extent delegated to it by these Procedures. The
fair value of a security is the price that a Fund might reasonably expect to
receive upon a current sale of the security. No single standard for determining
fair value exists, as it depends on the circumstances of each individual case.
In addition to stale prices, which are addressed below, and matrix pricing of
certain debt securities, which is addressed in Exhibit B, circumstances where
fair valuation may be necessary include: overrides of unreliable prices from
traditional sources, unusual events such as unexpected market closures, and
certain illiquid or restricted securities.
(a) In general, any one or more of the following factors, as relevant,
should be taken into account in determining the fair value of a
security:
. fundamental analytical data relating to the security;
. the value of other financial instruments, including
derivative securities, traded on the same or other markets
or among dealers;
. values of baskets of securities;
. market interest rates;
. market data or other information from financial
institutions;
. government (domestic or foreign) actions or pronouncements;
. other news events;
. information as to any transactions or offers with respect
to the security;
. price and extent of public trading in similar securities of
the issuer or comparable companies;
. nature and expected duration of the Significant Event, if
any, giving rise to the valuation issue;
. the nature and duration of restrictions on disposition and
appropriate discount from comparable freely traded
security;
. pricing history of the security; and
. other relevant information.
(b) With respect to the fair value of securities traded on foreign
markets, the following factors also may be relevant:
. the value of foreign securities traded on other foreign
markets;
. ADR trading;
. closed-end fund trading;
. foreign currency exchange activity; and
. the trading of financial products that are tied to baskets
of foreign securities, such as WEBS.
(c) Securities having market quotations that are determined to be
"stale" as described in Sections 4(a), (e) and (g), above will be
reported to the Management Valuation Team by the Fund Accountant
and will be reviewed by the Management Valuation Team in
consultation with the Portfolio Manager of the Fund. The relevant
market information and available news regarding the security will
be reviewed to determine what the appropriate fair value of the
security should be. These securities will then be reviewed daily
to determine the appropriate fair value in light of relevant
conditions until such time as a market value becomes available
from the proper channels described in Sections 4(a), (e) and (g),
above.
(d) Quarterly, a report will be prepared for the Board that will
identify fair valued securities and other assets and their status
or ultimate resolution/disposition. The Board will be asked to
ratify any fair value determinations made by the Management
Valuation Team or the Valuation Committee pursuant to the
authority delegated in these Procedures at the next regular
meeting of the Board.
Approved by the Boards: May 7, 2002
EXHIBIT A
NAV Error Correction Policy
The following procedures are to be employed in addressing pricing errors,
whether they result from miscalculations, portfolio composition errors,
valuation errors or any other cause.
1. When the NAV of a Fund or class is impacted by an error in an amount less
than a full $.01 per share, the pricing error and, to the extent necessary, the
NAV will be corrected prospectively only. No further action will be taken in
light of the immateriality of the amount.
2. When the NAV of a Fund or class is impacted by an error in an amount equal
to or in excess of a full $.01 per share, corrective action will be initiated as
set forth below. The NAV will be corrected promptly after the identification of
a pricing error.
(a) When the error equals or exceeds a full $.01 per share and the
error is less than 1/2 of 1% of the NAV, individual
shareholder transactions will not be reprocessed, but Funds
Management will seek to have the Fund made whole as follows:
(i) In the case of an overstatement of the NAV by a full $.01
per share or more, where there have been net redemptions
during the period of the error, Funds Management will seek
to have cash deposited into the Fund by the service
provider responsible for the error in order to make the
Fund whole for the overpayment of redemption proceeds.
(ii) In the case of an understatement of the NAV by a full $.01
or more, where there have been net purchases during the
period of the error, Funds Management will seek to have
cash deposited into the Fund by the service provider
responsible for the error in order to make the Fund whole
for the over issuance of shares.
3. When the error equals or exceeds a full $.01 per share and the error equals
or exceeds 1/2 of 1 % of the NAV, Funds Management will seek to have the Fund
made whole as described in 2(a)(i) or (ii), above (including any reprocessing
costs) and individual shareholder transactions will be reprocessed.
(a) In the case of an overstatement of the NAV by 1/2 of 1%,
shareholder purchases during the period of the error will be
reprocessed to the extent the incremental shares due a shareholder
equal or exceed one full share.
(b) In the case of an understatement of the NAV by 1/2 of 1%,
shareholder redemptions during the period of the error will be
reprocessed to the extent the amount due a shareholder equals $10
or more.
4. The correction of an NAV as contemplated in Section 2 or 3 above may
involve the recording of a receivable from a service provider believed
responsible for the error. In the event that such service provider (or any other
person) is unable or unwilling to pay an amount equal to the receivable, the NAV
would have to be adjusted again to reflect the reduction or elimination of the
receivable. Any such adjustment will be made only as of the date on which the
Management Valuation Team concludes, with the Board's concurrence, that there is
no reasonable expectation that the Fund will realize the amount of the
receivable. No retroactive adjustments to the NAV or account reprocessing will
be effected.
5. At least quarterly, the Management Valuation Team will report to the Board
on all pricing errors that require corrective action under these procedures.
EXHIBIT B
Procedures for Fair Value Determination - Special Circumstances
Introduction:
In the normal course of business, most of the debt securities in a portfolio are
priced by the Fund's customarily used pricing agents. A few securities, however,
are not priced by these pricing services. These securities generally have
similar characteristics to the other securities, but because of an unusual
structure, or a thinly traded market, or for some other reason, the pricing
services do not provide prices for them. This section describes procedures for
using the Xxxxx Fargo Pricing Model (the "Model") to obtain a fair market value
in the event that ordinary pricing procedures do not produce a valuation for
securities in instances where credit risk is not a factor.
Valuation:
The Model is a computer-generated model based upon the theory that the price of
a debt security can be determined if the following information is known.
1. A fair market value from a previous day,
2. The U.S. Treasury yield curve from both today and the previous day
used in step #1,
3. The price value of a basis point for the Treasury yield curve,
4. The duration of the security, and
5. The duration of the Treasury market.
By the application of the relative durations of the security and the Treasury
markets to the change in the price of the Treasury market, the change in the
price of the security may be appropriately estimated.
The factors essential to the Model are determined as follows:
Previous day's value. The source of this price may vary depending upon the
circumstances. Normally, either the previous broker valuation or the purchase
price would be used, however, any appropriate method that produced a fair market
value for the security may be used.
Treasury yield curve. May be obtained from any of several market sources such as
Bloomberg. The Treasury market has been chosen because it is the most common
reference point for the fixed income markets. However, any broad market index
that is composed of actively traded securities, has calculated durations, and is
reported daily may be used if its consistent application brings a more accurate
result.
Price value of a basis point. Will be obtained from the same source as the
Treasury curve data
Duration of the security. The duration of the security will be determined by any
of several analytical tools, including Bloomberg, Bond Edge, broker quote or
adviser determination.
Treasury duration. Will be obtained from the same source as the Treasury yield
curve data.
Controls:
The Sub-Advisor will implement the Model, subject to oversight by the Management
Valuation Team and will send any price calculated under this Model in writing to
the Fund Accountant. In the event that the Sub-Advisor is unable or unwilling to
implement the model, Funds Management will implement the model and send any
price calculated in writing to the Fund Accountant. On a weekly basis, Funds
Management will review all security prices derived from the use of the model for
accuracy and prepare a report for the Management Valuation Team monthly. The
Management Valuation Team will review all securities using the model on a
monthly basis. The party that implements the Model will determine each of the
five input factors necessary to operate the Model. If that party desires to make
a change to one or more of the factors, that party will seek the approval of the
Management Valuation Team who will take steps to insure that the changes are
appropriate. The Management Valuation Team must approve any changes to the
Model.
The Model is primarily designed to address relatively small changes in market
interest rates. In order to address broader market circumstances, any time the
market, as measured by a change in the relevant Treasury price, changes more
than one point in price, or in any event at least on a weekly basis, a new value
shall be established for the security. This value shall be established by
obtaining a bid quote valuation from a dealer, or other such method as produces
a current market value for that security. The Portfolio Managers have the
responsibility to affirm that the price thus obtained reflects a current market
value. The price thus obtained will be used as the price for the security that
day, and as the previous day's value for future calculations.
In accordance with the Trusts' Procedures for the Valuation of Portfolio
Securities, appropriate data, including actual security sales prices as compared
to current valuations, will be reported to the Board periodically.
Process Flow for Xxxxx Fargo Pricing Model
Day l
1. Determine fair market value for security.
2. Use as price for valuation on Day 1.
3. Identify Treasury curve yields for Day 1.
Days 2-7
1. Identify Treasury yield curve for current day.
2. Test for movement of Treasury curve of 1 point in price or greater from Day
1. If greater than 1 point, begin again with Day 1.
3. Identify Treasury yield curve's price value of a basis point (Price value
of a basis point is the amount the price of a security moves given a 1
basis point change in its yield.)
4. Identify durations of Treasury yield curve today.
5. Determine duration of security today.
6. Enter data points into model
(a) Model determines relative durations (#5 divided by #4)
(b) Model determines change in Treasury curve yields (#l less Day 1 #3)
(c) Model determines appropriate price value of a basis point based on
duration of security.
(d) Answers from (a) times (b) times (c) gives the change in price of the
security from Day 1.
(e) Answer from (d) is added to (or subtracted from) Day 1 price, giving
price for today.
Day 8
1. Determine new fair market value, generally by broker quote.
September 1, 2002
XXXXX FARGO FUNDS TRUST
XXXXX FARGO CORE TRUST
XXXXX FARGO VARIABLE TRUST
Re: Accounting Service Fees
Dear Sir/Madam:
This letter constitutes our agreement with respect to compensation to be
paid to PFPC Inc. ("PFPC") under the terms of an Accounting Services Agreement
dated September 1, 2002 between each of Xxxxx Fargo Funds Trust, Xxxxx Fargo
Core Trust and Xxxxx Fargo Variable Trust (collectively, the "Funds" and
individually a "Fund") and PFPC (the "Agreement") as amended from time to time
for services provided on behalf of each of the Fund's investment portfolios
("Portfolios"). Pursuant to Paragraph 12 of the Agreement, and in consideration
of the services to be provided to each Portfolio, the Funds will pay PFPC an
annual accounting services fee to be calculated daily and paid monthly as set
forth below, subject .to the following assumptions being in place within one
year of the date of this letter:
. Xxxxx Fargo Funds Management will utilize the PFPC data warehouse. to
access portfolio information including security positions,
transactions, lots and NAV'S.
. PFPC receives automated trade information from investment advisors.
. PFPC receives automated fund share activity from the transfer agent
(BFDS).
. PFPC can secure files from the custodian (Xxxxx Fargo Bank
Minnesota N.A.) necessary to complete an automated
reconciliation of cash and security positions.
If the above processes are not operational within one year, PFPC reserves the
right to increase stated fees up to 10%.
Annual Complex Asset Based Fees:
The following annual fee will be calculated based upon the Portfolios'
aggregate average net assets (excluding the Portfolios of the Xxxxx Fargo Core
Trust (the "Core Trust") and paid monthly:
.0057% (.57 basis points) for the first $85 billion of aggregate average
net assets of the Portfolios; and,
.0025% (.25 basis points) on the aggregate average net assets of the
Portfolios in excess of $85 billion.
Annual Base Fee:
The annual base fee will be $20,000 per feeder, stand-alone and variable
trust fund, per year, except that Portfolios of the Core Trust and the
Wealthbuilder Funds will not be charged a base fee.
Monthly Multiple Class Fee*:
The monthly multiple class fee per Portfolio will be $500 for each
additional class beyond the first class of shares.
*This fee will be waived for the existing classes of shares of the existing
Portfolios (as set forth in Exhibit A of this letter).
Monthly Multiple Manager Fee:
The monthly multiple Sub-Advisor fee will not include the first manager but
will be calculated and paid monthly for each subsequent manager as follows:
$2,000 for the second Sub-Advisor in each Portfolio;
$1,500 for the third Sub-Advisor in each Portfolio, and
$500 per Sub-Advisor, for each manager beyond the third manager in each
Portfolio.
Out-of-Pocket Expenses:
The Funds will reimburse PFPC for out-of-pocket expenses incurred on a
Portfolio's behalf, including, but not limited to, postage, telephone, telex,
overnight express charges, deconversion costs, custom development costs,
transmission expenses, travel expenses incurred for Board meeting attendance or
other travel at the request of the Funds. In addition, out-of-pocket costs will
include the costs to obtain independent security market quotes*, which currently
are as follows:
Domestic Bonds $0.40
Foreign Bonds $0.55
Money Market Inst. $0.40
CMO/Asset-backed $0.80
Municipal Bonds $0.45
Domestic Equities $0.05
Foreign Equities $0.40
Broker obtained quotes $1.00
*These prices will be charged at the CUSIP level daily, and will not be charged
for each holding.
Miscellaneous:
Any fee or out-of-pocket expenses not paid within 30 days of the date of
the original invoice will be charged a late payment fee of 1% per month until
payment of the fees a received by PFPC.
The fee for the period from the date hereof until the end of that year
shall be prorated according to the proportion which such period bears to the
full annual period.
If the foregoing accurately sets forth our agreement and you intend to be
legally bound thereby, please execute a copy of this letter and return it to us.
Very truly yours,
PFPC INC.
By: /s/ Xxxx X. Xxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
Agreed and Accepted:
XXXXX FARGO FUNDS TRUST
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
XXXXX FARGO CORE TRUST
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
XXXXX FARGO VARIABLE TRUST
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Treasurer
EXHIBIT A
Portfolios
THIS EXHIBIT A, dated as of October 1, 2002, is Exhibit A to the Fee Letter
dated as of September 1, 2002 between PFPC INC. and each of XXXXX FARGO FUNDS
TRUST, XXXXX FARGO CORE TRUST and XXXXX FARGO VARIABLE TRUST.
XXXXX FARGO FUNDS TRUST
Names of Portfolios Existing Classes
Effective 10/1/2002
SIFE Speciailzed Financial Services Fund A, B, C
To be Converted from Forum on a Date to be Determined
Asset Allocation Fund A, B, C, Institutional
California Limited Term Tax-Free Fund A, C, Institutional
California Tax-Free Fund A, B, C, Institutional
California Tax-Free Money Market Fund A, Service
California Tax-Free Money Market Trust Single Class
Cash Investment Money Market Fund Service, Institutional
Colorado Tax-Free Fund A, B, Institutional
Diversified Bond Fund Institutional
Diversified Equity Fund A, B, C, Institutional
Diversified Small Cap Fund Institutional
Equity Income Fund A, B, C, Institutional
Equity Index Fund A, B, O
Equity Value Fund A, B, C, Institutional
Government Institutional Money Market Fund Institutional
Government Money Market Fund A, Service
Growth Balanced Fund A, B, C, Institutional
Growth Equity Fund A, B, C, Institutional
Growth Fund A, B, Institutional
Income Fund A, B, Institutional
Income Plus Fund A, B, C
Index Allocation Fund A, B, C
Index Fund Institutional
Intermediate Government Income Fund A, B, C, Institutional
International Equity Fund A, B, C, Institutional
Large Cap Appreciation Fund A, B, C, Institutional
Large Company Growth Fund A, B, C, Institutional
Limited Term Government Income Fund A, B, Institutional
Liquidity Reserve Money Market Fund Investor
Names of Portfolios Existing Classes
Mid Cap Growth Fund A, B, C
Minnesota Money Market Fund A
Minnesota Tax-Free Fund A, B, Institutional
Moderate Balanced Fund Institutional
Money Market Fund A, B
Money Market Trust Single Class
National Limited Term Tax-Free Fund Institutional
National Tax-Free Fund A, B, C, Institutional
National Tax-Free Institutional Money Market Fund Service, Institutional
National Tax-Free Money Market Fund A
National Tax-Free Money Market Trust Single Class
Nebraska Tax-Free Fund Institutional
OTC Growth Fund O
Outlook Today Fund A, B, C, Institutional
Outlook 2010 Fund A, B, C, Institutional
Outlook 2020 Fund A, B, C, Institutional
Outlook 2030 Fund A, B, C, Institutional
Outlook 2040 Fund A, B, C, Institutional
Overland Express Sweep Fund Single Class
Prime Investment Institutional Money Market Fund Institutional
Money Market Fund Institutional
Prime Investment Money Market Fund Service
Small Cap Growth Fund A, B, C, Institutional
Small Cap Opportunities Fund Institutional
Small Company Growth Fund Institutional
Small Company Value Fund A, B, C, Institutional
Specialized Health Sciences Fund A, B, C
Specialized Technology Fund A, B, C
Stable Income Fund A, B, Institutional
Strategic Growth Allocation Fund Institutional
Strategic Income Fund Institutional
Tactical Maturity Bond Fund Institutional
Treasury Plus Institutional Money Market Fund Service, Institutional
Treasury Plus Money Market Fund A
WealthBuilder Growth Balanced Portfolio Single Class
WealthBuilder Growth and Income Portfolio Single Class
WealthBuilder Growth Portfolio Single Class
100% Treasury Money Market Fund A, Service
XXXXX FARGO CORE TRUST
Names of Portfolios Existing Classes
To be Converted from Forum on a Date to be Determined
Disciplined Growth Portfolio Single Class
Equity Income Portfolio Single Class
Index Portfolio Single Class
International Equity Portfolio Single Class
Large Cap Appreciation Portfolio Single Class
Large Cap Value Portfolio Single Class
Large Company Growth Portfolio Single Class
Managed Fixed Income Portfolio Single Class
Small Cap Basic Value Portfolio Single Class
Small Cap Index Portfolio Single Class
Small Cap Value Portfolio Single Class
Small Company Growth Portfolio Single Class
Small Company Value Portfolio Single Class
Stable Income Portfolio Single Class
Strategic Value Bond Portfolio Single Class
Tactical Maturity Bond Portfolio Single Class
XXXXX FARGO VARIABLE TRUST
Names of Portfolios Existing Classes
To be Converted from Forum on a Date to be Determined
Asset Allocation Fund Single Class
Corporate Bond Fund Single Class
Equity Income Fund Single Class
Equity Value Fund Single Class
Growth Fund Single Class
International Equity Fund Single Class
Large Company Growth Fund Single Class
Money Market Fund Single Class
Small Cap Growth Fund Single Class
