EXHIBIT (h) (1)
AMENDED AND RESTATED
FUND ACCOUNTING SERVICE AGREEMENT
BETWEEN
XXXXXX XXXXXX & COMPANY, INC.
AND
XXXXXX XXXXXX SELECT FUND, INC.
This Amended and Restated Fund Accounting Service Agreement is made this
21st day of August, 2000 (the "Agreement"), between Xxxxxx Xxxxxx Select Fund,
Inc., a Maryland corporation (the "Fund"), and Xxxxxx Xxxxxx & Company, Inc.
("Xxxxxx Xxxxxx"), a brokerage firm.
WHEREAS, the Fund is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") with distinct series of shares of common stock (each a "Portfolio"
and collectively the "Portfolios"); and
WHEREAS, Xxxxxx Xxxxxx is a brokerage firm, and is capable of providing,
among other things, record keeping and fund accounting services in accordance
with the 1940 Act, and the Securities Exchange Act of 1934 (the "1934 Act"), and
the current prospectus of the Fund as filed with the Securities and Exchange
Commission under the Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Fund wishes to retain Xxxxxx Xxxxxx to provide fund
accounting services for its investment portfolios listed on Exhibit A attached
hereto and made a part hereof, as such Exhibit A may be amended from time to
time, and Xxxxxx Xxxxxx wishes to furnish such services;
NOW, THEREFORE, Xxxxxx Xxxxxx and the Fund in consideration of the mutual
agreements contained herein agree as follows:
1. SERVICES. Xxxxxx Xxxxxx agrees to provide all mutual fund accounting services
to the Fund on behalf of each Portfolio required to conduct the business of the
Fund or otherwise required under the 1940 Act, except such services as are
normally performed by the investment adviser, the Fund's independent accountant,
and the officers of the Fund. Such services shall include, without limitation,
the following:
A. PORTFOLIO ACCOUNTING SERVICES:
(1) Maintain each Portfolio's records on a trade date basis using
security trade information communicated on a timely basis from
the Fund's investment adviser.
(2) Update each Portfolio's records, including share or face
positions, with the effect of capital changes and corporate
5
action announcements as known. Obtain information as to these
announcements by performing the following:
(a) Subscribe to announcement information services that
Xxxxxx Xxxxxx deems sufficient to remain current with
industry standards. Xxxxxx Xxxxxx will regularly review
and update such subscriptions and notify its fund
customers of the changes in the information services it
is using. Xxxxxx Xxxxxx will subscribe to additional
information services that are requested in writing by
the Fund, with information from that service used
specifically and solely for the Fund's portfolio
accounting and with the expense of that service charged
directly to the Fund.
(b) Receive information regarding such announcements from
the Fund's investment adviser.
(3) For each security identified by the Fund on behalf of each
Portfolio for pricing, obtain a price for each valuation date
from a pricing source approved by the Fund's Board of
Directors. Apply the price to the security's portfolio
position to determine its market value as of valuation day. In
the event that a price for a given security identified for
pricing is not available from the normal pricing sources for a
given valuation date, obtain a price from alternative source
or sources identified by the Fund's investment adviser.
(4) For each security not identified for pricing, determine its
market value as of each valuation date using a method
identified by the Fund from among the following:
(a) Market value equals book value;
(b) Market value equals face value;
(c) Market value equals book value less any amortization
balance or plus any accretion balance (amortized cost
method);
(d) Another method approved by the Fund's Board of Directors
or its Valuation Committee.
(5) Identify interest and dividend accrual balances as of each
valuation date and identify gross earnings on investments for
each accounting period. Determine these amounts using:
(a) The security characteristics communicated from the
Fund's investment adviser at the time of purchase;
(b) Corrections to security characteristics subsequently
provided in writing by the Fund's investment adviser or
subsequently identified by the Fund's custodian as a
result of collection activity and approved in writing by
the Fund's investment adviser;
(c) Published corporate action announcements available to
the public;
(d) For variable and floating rate notes, rate information
from sources identified and approved by the Fund's
investment adviser.
(6) Determine accretion and amortization balances on each
valuation date for securities which are purchased at a premium
or discount (original issue and secondary market) and which
are identified in the Fund's accounting policy established by
the Fund as requiring that accounting treatment. Determine
these amounts using purchase price and security
characteristics communicated from the Fund's investment
adviser at the time of purchase or using corrections to the
information subsequently provided in writing by the Fund's
investment adviser. For those securities identified for this
accounting treatment, include the daily amortization or
accretion amount as a component of gross earnings on
investments.
(7) For original issue discount (OID) debt instruments to which
the Internal Revenue Service OID rules apply, calculate
adjusted issue price as of each valuation date. For OID bonds
also calculate the ratable position of the original issue
discount for the accounting period and include that amount as
part of gross income on investments for that period.
Coordinate the accounting for original issue discount with the
accounting for market premium or discount (Section 5 above)
for those OID debit instruments purchased on the secondary
market at a price other than OID adjusted issue price. Perform
this calculation using the following information communicated
from the Fund's investment adviser at the time of purchase.
(a) Whether the debt security is one to which the Internal
Revenue Service OID rules apply;
(b) the original issue date;
(c) the original issue price;
(d) the redemption value;
(e) the maturity date;
(f) payment dates, if on irregular intervals or payment
start date and payment cycle, if on regular intervals;
and
(g) the original issue yield to maturity.
(8) Determine gain/loss on security sales and identify them as to
short or long term status under the Internal Revenue Code,
using the tax lot relief policy elected by the Fund or
recognizing sales from lots that may be specifically
identified by the Fund's investment adviser at the time trade
details are communicated. Account for periodic distributions
of gain to shareholders and maintain undistributed gain or
loss balances as of each valuation date.
(9) Provide the portfolio-based reports requested in writing by
the Fund or the Fund's investment adviser in a format as
agreed to from time to time. Issue requested reports to the
recipient and with the frequency identified in the request.
(10) Compare portfolio information in the Fund accounting system
with corresponding information in the Fund's custody records.
Report to the Fund any outstanding receivables of each
Portfolio aged more than 30 days beyond contractual payment
date.
B. EXPENSE ACCRUAL AND PAYMENT SERVICES:
(1) For each valuation date, calculate the expense accrual amounts
as directed by each Portfolio as to methodology, rate, or
dollar amount.
(2) Upon receipt of written authorization from the Fund's
Administrator, initiate payment of each Portfolio's expenses
by the Fund's custodian.
(3) Account for each Portfolio's expenditures and maintain expense
accrual balances at the level of accounting detail specified
by the Fund.
(4) Provide accounting information to the Fund's Administrator or
designated expense control agent from the Fund's accounting
records as to actual expense activity versus expense accrual
amounts for specified time periods.
(5) Maintain accounting control over payment checks issued and
outstanding.
C. FUND VALUATION AND FINANCIAL REPORTING SERVICES:
(1) Account for share purchases, sales, exchanges, transfers,
dividend reinvestment, and other share activity as reported on
a timely basis by the Fund's transfer agent.
(2) Determine net investment income (earnings) 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.
(3) Maintain a general ledger in the form defined by the Fund and
as of each valuation date produce the set of financial
statements in the format agreed to from time to time. Issue
the statements to the recipients identified in writing by the
Fund on behalf of each Portfolio and with the specified
frequency.
(4) For each day the Fund is open as defined in the Fund's
prospectus, determine net asset value according to the
accounting policies and procedures set forth in the Fund's
prospectus.
(5) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of Fund and Portfolio
operation at such time as required by the nature and
characteristics of the Fund and each Portfolio. Perform the
calculations using the number of shares outstanding reported
by the Fund's transfer agent to be applicable at the time of
calculation.
(6) Communicate per share price for each valuation date to
newspapers, the Fund's transfer agent, the Fund's investment
adviser, and other parties as specified by the Fund's
Administrator.
(7) Prepare a monthly proof package of reports in the format
agreed to from time to time which documents the adequacy of
accounting detail to support month-end ledger balances and
reports. Distribute this package to the recipients identified
in writing by the Fund behalf of each Portfolio.
D. TAX ACCOUNTING SERVICES:
(1) Maintain tax accounting records for each Portfolio, for
expense activity and for shareholder distribution activity
sufficient to support federal and state tax reporting required
for IRS-defined regulated investment companies.
(2) Maintain tax lot detail for each Portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method defined by the Fund and recognizing sales
from lots that are specifically identified.
(4) Calculate and report the taxable components of income and
capital gains distributions to the Fund's transfer agent to
support tax reporting to the shareholders.
(5) Prepare all Federal and State tax returns.
E. COMPLIANCE CONTROL SERVICES:
(1) Make the Fund's accounting records and the requested
portfolio-based reporting identified above available to the
investment adviser upon request in a timely fashion so as to
support their compliance-monitoring review. Provide the
compliance reporting in the format requested by the Fund.
Issue the requested reports to the recipients and with the
frequency identified in this request.
(2) Make the Fund's accounting records and the requested
portfolio-based and compliance reporting identified above
available upon request in a timely fashion, to the Fund's
financial accountant, so as to support the Fund's compliance
with all applicable regulatory filings including N-1A filings,
N-SAR filing and any applicable IRS filings, and preparation
of the Fund's financial statements.
(3) Make the Fund's accounting records identified above available
upon request to Securities and Exchange Commission
representatives, to the Fund's auditors and to designated Fund
agents for their review as to the propriety of the Fund's
accounting records and the Fund's operations.
(4) Maintain at Xxxxxx Xxxxxx'x expense, and preserve at the
Fund's expense in accordance with the 1940 Act and the rules
thereunder, all such accounting records, which shall at all
times be the property of the Fund.
2. COMPENSATION. Xxxxxx Xxxxxx shall be compensated for providing the
above-referenced services for each Portfolio of the Fund in accordance with the
Fee Schedule listed on Exhibit B, attached hereto and made a part hereof, as
such Exhibit B may be amended from time to time.
3. RESPONSIBILITY OF XXXXXX XXXXXX & COMPANY, INC. Xxxxxx Xxxxxx shall be held
to the exercise of reasonable care in carrying out the provisions of this
Agreement, but shall be indemnified by and shall be without liability to the
Fund for any action taken or omitted by it in good faith without negligence or
willful misconduct. Xxxxxx Xxxxxx shall be entitled to rely on and may act upon
the reasonable advice of the Fund's auditors or of counsel (who may be counsel
of the Fund) on all matters, and shall not be liable for any action reasonably
taken or omitted pursuant to such advice.
In addition, Xxxxxx Xxxxxx shall not be liable for any loss of data or any
delay in its performance under this Agreement to the extent such loss or delay
is due to causes beyond its control, including but not limited to: acts of God,
interruption in, loss of or malfunction in power, significant computer hardware
or systems software or telephone communication service; acts of civil or
military authority; sabotage; war or civil commotion; fire; explosion; or strike
beyond delivery of minimum critical services. Xxxxxx Xxxxxx shall use its best
efforts to minimize any such loss or delay by all practical means and to replace
any lost data promptly. Xxxxxx Xxxxxx agrees not to discriminate against the
Fund in favor of any other customer of Xxxxxx Xxxxxx in making computer time and
its personnel available to input and process the transactions hereunder when a
loss or delay occurs.
4. AMENDMENTS. Xxxxxx Xxxxxx and the Fund shall regularly consult with each
other regarding Xxxxxx Xxxxxx'x performance of its obligations hereunder. Any
change in the Fund's registration statements under the Securities Act of 1933,
as amended, or the 1940 Act or in the forms relating to any plan, program or
service offered by the current prospectus of the Fund which would require a
change in Xxxxxx Xxxxxx'x obligations hereunder shall be subject to Xxxxxx
Xxxxxx'x approval, which shall not be unreasonably withheld. Neither this
Agreement nor any provisions hereof may be changed, waived, discharged, or
terminated orally, but only by written instrument which shall make specific
reference to this Agreement and which shall be signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
5. TERM OF AGREEMENT. This Agreement shall become effective as of its execution.
Thereafter, the Agreement will be renewed automatically on an annual basis;
provided, however, that this Agreement may be terminated at any time by either
party upon at least sixty days' prior written notice to the other party and
provided further that this Agreement may be terminated immediately at any time
for cause either by the Fund or Xxxxxx Xxxxxx. Any such termination shall not
affect the rights and obligations of the parties under paragraph 3 hereof. In
the event that the Fund designates a successor to any of Xxxxxx Xxxxxx'x
obligations hereunder, Xxxxxx Xxxxxx shall, at the expense and direction of the
Fund, transfer to such successor all relevant books, records and other data of
the Fund established or maintained by Xxxxxx Xxxxxx hereunder and shall
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Xxxxxx Xxxxxx'x cognizant personnel in the
establishment of books, records and other data by such successor. Historical
records will be transferred in accordance with all then current laws and
industry regulations.
6. MISCELLANEOUS. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Maryland. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
XXXXXX XXXXXX & COMPANY, INC.
By: ________________________________
Name:
Title:
XXXXXX XXXXXX SELECT FUND, INC.
By:
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Name:
Title:
EXHIBIT A
THIS EXHIBIT A, dated as of August 21, 2000, is Exhibit A to that certain
Amended and Restated Fund Accounting Service Agreement between Xxxxxx Xxxxxx &
Company, Inc. and Xxxxxx Xxxxxx Select Fund, Inc.
PORTFOLIOS
Xxxxxx Xxxxxx Intermediate Bond Fund
Xxxxxx Xxxxxx High Income Fund
Xxxxxx Xxxxxx Select Financial Fund
Xxxxxx Xxxxxx Select Capital Growth Fund
EXHIBIT B
THIS EXHIBIT B, dated as of August 21, 2000, is Exhibit B to that certain
Amended and Restated Fund Accounting Service Agreement between Xxxxxx Xxxxxx &
Company, Inc. and Xxxxxx Xxxxxx Select Fund, Inc.
Xxxxxx Xxxxxx Intermediate Bond Fund: Fund Accounting - $1,500 per month,
$18,000 per year
Xxxxxx Xxxxxx High Income Fund: Fund Accounting - $1,500 per month, $18,000 per
year
Xxxxxx Xxxxxx Select Financial Fund: Fund Accounting - $2,500 per month, $30,000
per year
Xxxxxx Xxxxxx Select Capital Growth Fund: Fund Accounting - $2,500 per month,
$30,000 per year
Fund Accounting Fees include Daily Valuation and Financial Statement Preparation
