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Exhibit (h)(1)
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1ST day of February,
2001, by and between The Dow Target Variable Fund LLC, a limited liability
company organized under the laws of the State of Ohio (the "Corporation") and
Firstar Mutual Fund Services, LLC, a limited liability company organized under
the laws of the State of Wisconsin ("FMFS").
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Corporation is authorized to create separate series, each
with its own separate investment portfolio;
WHEREAS, FMFS is a limited liability company and, among other things,
is in the business of providing mutual fund accounting services to investment
companies; and
WHEREAS, the Corporation desires to retain FMFS to provide accounting
services to each series of the Corporation listed on Exhibit A attached hereto,
(each hereinafter referred to as a "Fund"), as it may be amended from time to
time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Corporation and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Corporation hereby appoints FMFS as Fund Accountant of the
Corporation on the terms and conditions set forth in this Agreement,
and FMFS hereby accepts such appointment and agrees to perform the
services and duties set forth in this Agreement in consideration of the
compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
FMFS shall perform the following services for the Corporation:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated from
the investment manager;
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Directors of the
Corporation and apply those prices to the portfolio
positions. For those securities where market
quotations are not readily available, the Board of
Directors of the Corporation shall approve, in good
faith, the method 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; and
(4) Determine gain or 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 Corporation as to
methodology, rate or dollar amount;
(2) Record payments for Fund expenses upon receipt of
written authorization from the Corporation;
(3) Account for Fund expenditures and maintain expense
accrual balances at the level of accounting detail
agreed upon by FMFS and the Corporation; and
(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 transfer agent on a
timely basis;
(2) Apply equalization accounting as directed by the
Corporation;
(3) Determine net investment income (earnings) for the
Fund as of each valuation date;
(4) Account for periodic distributions of earnings to
shareholders and maintain undistributed net
investment income balances as of each valuation date;
(5) Maintain a general ledger and other accounts, books,
and financial records for the Fund in the form as
agreed upon;
(6) Determine the net asset value of the Fund according
to the accounting policies and procedures set forth
in the Fund's prospectus;
(7) 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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(8) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as agreed
upon from time to time; and
(9) 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 investment portfolio
of each Fund;
(3) Calculate taxable gain or loss on security sales
using the tax lot relief method designated by the
Corporation; and
(4) Provide the necessary financial information to
support the taxable components of income and capital
gains distributions to the 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 Corporation, the
Securities and Exchange Commission, and the
independent auditors; and
(2) Maintain accounting records according to the 1940 Act
and regulations provided thereunder.
F. FMFS 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; and
(3) Review the impact of current day's activity on a per
share basis, review changes in market value.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings; and
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(2) Supply various Corporation, Fund and class
statistical data as requested by the Corporation on
an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, FMFS shall obtain prices from a
pricing source selected by FMFS but approved by the Board of Directors
and apply those prices to the portfolio positions of the Fund. For
those securities where market quotations are not readily available, the
Board of Directors of the Corporation shall approve, in good faith, the
method for determining the fair value for such securities.
If the Corporation desires to provide a price that varies from
the designated pricing source, the Corporation shall promptly notify
and supply FMFS with the valuation of any such security on each
valuation date. All pricing changes made by the Corporation 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 Directors of the
Corporation that affects accounting practices and procedures under this
Agreement shall be effective as to FMFS upon written receipt and
acceptance by FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS 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 Corporation under this
Agreement. FMFS shall promptly notify the Corporation, in writing, of
any such change.
6. COMPENSATION
FMFS shall be compensated for providing the services set forth
in this Agreement in accordance with the Fee Schedule attached hereto
as Exhibit A and as mutually agreed upon and amended from time to time.
The Corporation agrees to pay all fees and reimbursable expenses within
ten (10) business days following the receipt of the billing notice.
Notwithstanding anything to the contrary, amounts owed by the
Corporation to FMFS shall only be paid out of the assets and property
of the particular Fund involved.
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7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any
error of judgment or mistake of law or for any loss suffered
by the Corporation in connection with matters to which this
Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies
beyond FMFS's control, except a loss arising out of or
relating to FMFS'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 FMFS has exercised reasonable care in the
performance of its duties under this Agreement, the
Corporation shall indemnify and hold harmless FMFS from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of
any and every nature (including reasonable attorneys' fees)
which FMFS may sustain or incur or which may be asserted
against FMFS 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 FMFS'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 FMFS
by any duly authorized officer of the Corporation, such duly
authorized officer to be included in a list of authorized
officers furnished to FMFS and as amended from time to time
and furnished to FMFS, in writing, by the Secretary or other
appropriate officer of the Corporation.
FMFS shall indemnify and hold the Corporation harmless from
and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of
any and every nature (including reasonable attorneys' fees)
which the Corporation may sustain or incur or which may be
asserted against the Corporation by any person arising out of
any action taken or omitted to be taken by FMFS as a result of
FMFS'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, FMFS shall
take all reasonable steps to minimize service interruptions
for any period that such interruption continues beyond FMFS's
control. FMFS 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 FMFS. FMFS agrees that it
shall, at all times, have reasonable contingency plans with
appropriate parties, making reasonable provision for emergency
use of electrical data processing equipment to the extent
appropriate equipment is available. Representatives of the
Corporation shall be entitled to inspect FMFS's premises and
operating capabilities at any time during regular business
hours of FMFS, upon reasonable notice to FMFS.
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Regardless of the above, FMFS 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 which 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 which 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.
C. FMFS is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Corporation's
Articles of Incorporation and agrees that obligations assumed
by the Corporation pursuant to this Agreement shall be limited
in all cases to the Corporation and its assets, and if the
liability relates to one or more series, the obligations
hereunder shall be limited to the respective assets of such
series. FMFS further agrees that it shall not seek
satisfaction of any such obligation from the shareholders or
any individual shareholder of a series of the Corporation, nor
from the Directors or any individual Director of the
Corporation.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of
the Corporation all records and other information relative to the
Corporation and prior, present, or potential shareholders of the
Corporation (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 Corporation, which
approval shall not be unreasonably withheld and may not be withheld
where FMFS 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 Corporation.
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9. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof
and will continue in effect unless terminated as hereinafter provided.
This Agreement may be terminated by either party upon the expiration of
any term by the delivery to the other party of ninety (90) days prior
written notice of such termination. However, this Agreement may be
amended by mutual written consent of the parties at any time.
10. RECORDS
FMFS 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 Corporation but not
inconsistent with the rules and regulations of appropriate government
authorities, in particular, Section 31 of the 1940 Act, and the rules
thereunder. FMFS agrees that all such records prepared or maintained by
FMFS relating to the services to be performed by FMFS hereunder are the
property of the Corporation and will be preserved, maintained, and made
available in accordance with such section and rules of the 1940 Act and
will be promptly surrendered to the Corporation 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. However, nothing herein shall be construed
in a manner inconsistent with the 1940 Act or any rule or regulation
promulgated by the Securities and Exchange Commission thereunder.
12. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor
to any of FMFS's duties or responsibilities hereunder is designated by
the Corporation by written notice to FMFS, FMFS will promptly, upon
such termination and at the expense of the Corporation transfer to such
successor all relevant books, records, correspondence and other data
established or maintained by FMFS under this Agreement in a form
reasonably acceptable to the Corporation (if such form differs from the
form in which FMFS has maintained the same, the Corporation 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 assistance from FMFS'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 FMFS to act as agent for the Corporation, or to conduct
business in the name of, or for the account of the Corporation.
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14. DATA NECESSARY TO PERFORM SERVICES
The Corporation or its agent, which may be FMFS, shall furnish
to FMFS the data necessary to perform the services described herein at
such times and in such form as mutually agreed upon. If FMFS is also
acting in another capacity for the Corporation, nothing herein shall be
deemed to relieve FMFS of any of its obligations in such capacity.
15. NOTIFICATION OF ERROR
The Corporation will notify FMFS of any discrepancy between
FMFS and the Corporation, 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 FMFS to the Corporation; 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. NOTICES
Notices of any kind to be given by either party to the other
party shall be in writing and shall be duly given if mailed or
delivered as follows: Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Corporation shall be sent to:
The Dow Target Variable Fund LLC
Attention: Xxxxxx Xxxxx
Xxx Xxxxxxxxx Xxx
Xxxxxxxxxx, XX 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 day and year first written above.
THE DOW TARGET VARIABLE FUND LLC FIRSTAR MUTUAL FUND SERVICES, LLC
By:______________________________ By: ________________________________
Title: ________________________ Title: ____________________________
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FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
EXHIBIT A
Separate Series of Ohio National Fund, Inc.
NAME OF SERIES DATE ADDED
-------------- ----------
JANUARY DOW TARGET 5 3/1/01
FEBRUARY DOW TARGET 5 3/1/01
MARCH DOW TARGET 5 3/1/01
XXXXX XXX TARGET 5 3/1/01
MAY DOW TARGET 5 3/1/01
XXXX XXX TARGET 5 3/1/01
JULY DOW TARGET 5 3/1/01
AUGUST DOW TARGET 5 3/1/01
SEPTEMBER DOW TARGET 5 3/1/01
OCTOBER DOW TARGET 5 3/1/01
NOVEMBER DOW TARGET 5 3/1/01
DECEMBER DOW TARGET 5 3/1/01
DOGS OF THE DOW JANUARY 3/1/01
DOGS OF THE DOW FEBRUARY 3/1/01
DOGS OF THE DOW MARCH 3/1/01
DOGS OF THE DOW APRIL 3/1/01
DOGS OF THE DOW MAY 3/1/01
DOGS OF THE DOW JUNE 3/1/01
DOGS OF THE DOW JULY 3/1/01
DOGS OF THE DOW AUGUST 3/1/01
DOGS OF THE DOW SEPTEMBER 3/1/01
DOGS OF THE DOW OCTOBER 3/1/01
DOGS OF THE DOW NOVEMBER 3/1/01
DOGS OF THE DOW DECEMBER 3/1/01
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DOMESTIC EQUITY FUNDS
--------------------- Multiple Classes - Each class is an additional 25% of the
charge of the initial class.
Extraordinary services - quoted separately
Conversion - one month's fee
Under $5 Million (per fund)
---------------------------
$15,000 per fund NOTE - All schedules subject to change depending upon the
use of derivatives - options, futures, short sales, etc.
Over $5 Million (per fund)
-------------------------- All fees are billed monthly plus out-of-pocket expenses,
$30,000 for the first $100 million including pricing service:
1.25 basis point on the next $200 million
.75 basis point on the balance Domestic and Canadian Equities - $.15
Options - $.15
Corp/Gov/Agency Bonds $.50
CMO's - $.80
International Equities and Bonds - $.50
Municipal Bonds - $.80
Money Market Instruments - $.80
Mutual Funds - $125/fund/mo
Factor Services (BondBuyer)
Per CMO-$1.50/month
Per Mortgage Backed-$0.25/month
Minimum-$300/month
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