FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of October,
1998, by and between Star Funds, a Massachusetts business trust (hereinafter
referred to as the "Trust") and Firstar Mutual Fund Services, LLC, a corporation
organized under the laws of the State of Wisconsin (hereinafter referred to as
"FMFS").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust is authorized to create separate series, each with its
own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things, mutual
fund accounting services to investment companies; and
WHEREAS, the Trust desires to retain FMFS to provide accounting services to
each series of the Trust (hereinafter each series is referred to individually as
"Fund") listed on Exhibit A attached hereto, as it may be amended from time to
time.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Trust hereby appoints FMFS as Fund Accountant of the Trust 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
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 Trustees of the Trust and apply those prices
to the portfolio positions. For those securities where market
quotations are not readily available, the Board of Trustees of the
Trust shall approve, in good faith, the method for determining the fair
value for such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them as short-
term or long-term; account for periodic distributions of gains or
losses to shareholders and maintain undistributed gain or loss balances
as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual amounts as
directed by the Trust as to methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon receipt of written
authorization from the Trust.
(3) Account for Fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FMFS and
the Trust.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges, transfers,
dividend reinvestments, and other Fund share activity as reported by
the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Trust.
(3) Determine net investment income (earnings) for the Fund as of
each valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances
as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
financial records for the Fund in the form as agreed upon.
(5) Determine the net asset value of the Fund according to the
accounting policies and procedures set forth in the Fund's Prospectus.
(6) Calculate per share net asset value, per share net earnings, and
other per share amounts reflective of Fund operations at such time as
required by the nature and characteristics of the Fund.
(7) Communicate, at an agreed upon time, the per share price for each
valuation date to parties as agreed upon from time to time.
(8) Prepare monthly reports which 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.
(3) Calculate taxable gain/loss on security sales using the tax lot
relief method designated by the Trust.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making the Fund's accounting records available
to the Trust, the Securities and Exchange Commission, and the outside
auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected by FMFS
but approved by the Company's Board of Trustees and apply those prices to the
portfolio positions of the Fund. For those securities where market quotations
are not readily available, the Company's Board of Trustees shall approve, in
good faith, the method for determining the fair value for such securities.
If the Trust desires to provide a price which varies from the pricing source,
the Trust shall promptly notify and supply FMFS with the valuation of any such
security on each valuation date. All pricing changes made by the Trust will be
in writing and must specifically identify the securities to be changed by CUSIP,
name of security, new price or rate to be applied, and, if applicable, the time
period for which the new price(s) is/are effective.
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Trustees of the Trust that affects
accounting practices and procedures under this Agreement shall be effective upon
written receipt and acceptance by the 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 Trust under this Agreement and are not inconsistent with
the rules and regulations of appropriate governmental authorities, in
particular, the 1940 Act, and the rules thereunder.
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 Trust agrees to pay all fees and
reimbursable expenses within ten (10) business days following the receipt of the
billing notice.
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 loss
suffered by the Trust in connection with matters to which this Agreement
relates, including losses resulting from mechanical breakdowns or the
failure of communication or power supplies beyond FMFS' control, except a
loss resulting from FMFS' refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, willful misconduct, or
failure to exercise reasonable care on its part in the performance of its
duties under this Agreement. Notwithstanding any other provision of this
Agreement, the Trust 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 in
sole reliance upon any written or oral instruction provided to FMFS by any
duly authorized officer of the Trust, except any officer who is an employee
of FMFS or an affiliate of FMFS, such duly authorized officer to be
included in a list of authorized officers furnished to FMFS and as amended
from time to time in writing by resolution of the Board of Trustees of the
Trust.
FMFS shall indemnify and hold the Trust 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 Trust may sustain or incur or which may be
asserted against the Trust by any person arising out of any action taken or
omitted to be taken by FMFS or as a result of FMFS' refusal or failure to
comply with the terms of this Agreement, its bad faith, negligence, willful
misconduct, or failure to exercise reasonable care.
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 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 Trust shall be entitled to inspect FMFS' premises
and operating capabilities at any time during regular business hours of
FMFS, upon reasonable notice to FMFS.
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.
8. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
9. 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 Trust but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the 1940 Act,
and the rules thereunder. 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 Trust 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 Trust on and in accordance with its request.
10. DATA NECESSARY TO PERFORM SERVICES
The Trust 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 as the transfer agent for
the Trust, nothing herein shall be deemed to relieve FMFS of any of its
obligations under the Transfer Agent Servicing Agreement.
11. NOTIFICATION OF ERROR
The Trust will notify FMFS of any balancing or control error caused by FMFS
within three (3) business days after discovery of the error, or 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.
12. 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 Trust all records and
other information relative to the Trust and prior, present, or potential
shareholders of the Trust (and clients of said shareholders), and not to use
such records and information for any purpose other than the performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where 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 Trust.
13. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and, unless sooner
terminated as provided herein, shall continue until February 28, 1999, and
thereafter shall continue automatically in effect for successive annual periods.
This Agreement may be terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter period as is mutually
agreed upon by the parties. However, this Agreement may be replaced or modified
by a subsequent agreement between the parties.
14. 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
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to the Trust shall be sent to:
Star Funds
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
with copy to:
Xxxxx Xxxx Xxxxxxx, Esq.
Cors & Xxxxxxx
000 Xxxx Xxxx Xxxx Xxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
15. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any of FMFS'
duties or responsibilities hereunder is designated by the Trust by written
notice to FMFS, FMFS will promptly, upon such termination and at the expense of
the Trust transfer to such successor all relevant books, records, correspondence
and other data established or maintained by FMFS under this Agreement in a form
reasonably acceptable to the Trust (if such form differs from the form in which
FMFS has maintained the same, the Trust shall pay any expenses associated with
transferring the same to such form), and will cooperate in the transfer of such
duties and responsibilities, including provision for assistance from FMFS'
personnel in the establishment of books, records and other data by such
successor.
In the event that FMFS terminates this Agreement, FMFS will promptly, upon such
termination at its own expense, transfer to FMFS' successor all relevant books
records, correspondence, and other data established or maintained by FMFS under
this Agreement in a form reasonably acceptable to the Trust, and will cooperate
in the transfer of such duties and responsibilities, including provision for
assistance from FMFS' personnel in the establishment of books, records, and
other data by such successor.
16. LIMITATION ON LIABILITY
You are hereby expressly put on notice of the limitation of liability as set
forth in Article XI of the Trust's Declaration of Trust and agree that the
obligations assumed by the Trust pursuant to this agreement shall be limited in
any case to the Trust and its assets and you shall not seek satisfaction of any
such obligation from the shareholders of the Trust, the trustees, officers,
employees, or agents of the Trust, or any of them.
17. COUNSEL FEES
FMFS shall bear all legal fees incident to providing fund accounting services
hereunder, other than such fees as are incident to representing the officers,
trustees and shareholders of the Star Funds.
18. 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 SEC thereunder.
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.
STAR FUNDS FIRSTAR MUTUAL FUND SERVICES
By:/s/ Xxxxxxx Xxxxxx III By: /s/ Xxxxxx Xxxxxxxxx
-------------------------------- ------------------------------
Attest: /s/ Xxxxx X. Xxxxxx Attest: /s/ Xxxx Xxxx
---------------------------- ---------------------------
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
EXHIBIT A
Separate Series of the Star Funds
NAME OF SERIES
--------------
Star Tax-Free Money Market Fund
Star Ohio Tax-Free Money Market Fund
Star Treasury Fund
Star Strategic Income Fund
Star U.S. Government Income Fund
Star Relative Value Fund
Star Market Capitalization Fund
Star Growth Equity Fund
Star Capital Appreciation Fund
Star International Equity Fund
The Stellar Fund
Stellar Insured Tax-Free Bond Fund
Annual Fund Accounting Fee
First $100 Million 3.0 Basis Points
$100 Million - $300 Million 2.0 Basis Points
$300 Million - $500 Million 1.0 Basis Point
Over $500 Million 0.5 Basis Point
Fund Minimum $39,000
Additional Class of Shares $12,000
Plus out-of-pocket expenses, including, but not limited to, the following:
0 Postage (including overnight courier service)
0 Statement Stock
0 Envelopes
0 Telephones
0 Telecommunication Charges (including FAX)
0 Travel
0 Duplicating
0 Forms
0 Supplies
0 Microfiche
0 Computer Access Charges
0 Client Specific System Enhancements
0 Access to the Shareholder Recordkeeping System
0 Security Pricing Services
0 Variable Rate Change Notification Services
0 Paydown Factor Notification Services
Fees and out-of-pocket expenses are billed to the fund monthly.
