DELAWARE GROUP OF FUNDS
FUND ACCOUNTING AGREEMENT
THIS AGREEMENT, made as of this 19th day of August, 1996 by and between the
registered investment companies in the Delaware Group listed on Schedule A,
which Schedule may be amended from time to time as provided in Section 8 hereof
(each corporation or common law or business trust, hereinafter referred to as a
"Company," and all such entities collectively hereinafter referred to as, the
"Companies"), on behalf of the portfolio(s) of securities of such Companies
listed on Schedule A, which Schedule may be amended from time to time (when used
in this Agreement in the context of a Company that offers only a single
portfolio/series of shares, the term "Portfolio" shall be a reference to such
Company, and when used in the context of a Company that offers multiple
portfolios/series of shares, shall be a reference to each portfolio/ series of
such Company) and DELAWARE SERVICE COMPANY, INC. ("DSC"), a Delaware
corporation, having its principal office and place of business at 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Investment Management Agreements between the Companies with
respect to each Portfolio and either Delaware Management Company, Inc. or its
U.K. affiliate, Delaware International Advisers Ltd., provide, in part, that
each Portfolio shall conduct its business and affairs and shall bear the
expenses necessary and incidental thereto including, but not in limitation of
the foregoing, the costs incurred with respect to accounting services; and
WHEREAS, the services to be provided under this agreement previously were
provided by employees of the Companies; and
WHEREAS, the Companies and DSC desire to have a written agreement concerning
the performance of accounting services for each Portfolio and providing
compensation therefor;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and intending legally to be bound, it is agreed:
I. APPOINTMENT AS AGENT
Section 1.1 The Companies hereby appoint DSC the accounting agent
("Accounting Agent") for all of the classes of each Portfolio, to provide such
accounting services as are set forth herein and DSC hereby accepts such
appointment and agrees to provide the Companies, as their agent, the services
described herein.
Section 1.2 The Companies shall pay DSC and DSC shall accept, for the
services provided hereunder, the compensation provided for in Section VI hereof.
The Companies also shall reimburse DSC for expenses incurred or advanced by it
for the Companies in connection with its services hereunder.
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II. DOCUMENTATION
Section 2.1 Each Company represents that it has provided or made available
to DSC (or has given DSC an opportunity to examine) copies of, and, DSC
represents that it has received from the Companies (or is otherwise familiar
with), the following documents:
A. The Articles of Incorporation or Agreement and Declaration of
Trust or other document, as relevant, evidencing each Company's form of
organization and any current amendments thereto;
B. The By-Laws or Procedural Guidelines of each Company;
C. Any resolution or other action of each Company or the Board of
Directors or Trustees of each Company establishing or affecting the rights,
privileges or other status of any class of shares of a Portfolio, or altering or
abolishing any such class;
D. A certified copy of a resolution of the Board of Directors or
Trustees of each Company appointing DSC as Accounting Agent for each Portfolio
and authorizing the execution of this Agreement or an amendment to Schedule A of
this Agreement;
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E. A copy of each Company's currently effective prospectus[es] and
Statement[s] of Additional Information under the Securities Act of 1933, if
effective;
F. A certified copy of any resolution of the Board of Directors or
Trustees of each Company authorizing any person to give instructions to DSC
under this Agreement (with a specimen signature of such person if not already
provided), setting forth the scope of such authority; and
G. Any amendment, revocation or other document altering, adding,
qualifying or repealing any document or authority called for under this Section
2.1.
Section 2.2 Each Company and DSC may consult as to forms or documents that
may be required in performing services hereunder.
Section 2.3 Each Company warrants the following:
A. The Company is, or will be, a properly registered investment
company under the Investment Company Act of 1940 (the "1940 Act") and any and
all shares of a Portfolio which it issues will be properly registered and
lawfully issued under applicable federal and state laws.
B. The provisions of this contract do not violate the terms of any
instrument by which the Company or the Company on behalf of a Portfolio is
bound; nor do they violate any law or regulation of any body having jurisdiction
over the Company or its property.
Section 2.4 DSC warrants the following:
A. The provisions of this contract do not violate the terms of any
instrument by which DSC is bound; nor do they violate any law or regulation of
any body having jurisdiction over DSC or its property.
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III. SERVICES TO BE PROVIDED BY DSC
Section 3.1 Daily Net Asset Value ("NAV") Calculation. As Accounting Agent
for each Portfolio of the Companies, DSC will perform all functions necessary to
provide daily Portfolio NAV calculations, including:
A. Maintaining each Portfolio's securities portfolio history by:
1. recording portfolio purchases and sales;
2. recording corporate actions and capital changes relating to
portfolio securities;
3. accruing interest, dividends and expenses; and
4. maintaining the income history for securities purchased by a
Portfolio.
B. Determining distributions to Portfolio shareholders;
C. Recording and reconciling shareholder activity including:
1. recording subscription, liquidations and dividend
reinvestments;
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2. recording settlements of shareholder activity; and
3. reconciling Portfolio shares outstanding to the records
maintained by DSC, as transfer agent of the Portfolio.
Valuing a Portfolio's securities portfolio which includes
determining the NAVs for all classes of the Portfolio;
D. Disseminating Portfolio NAVs and dividends to interested parties
(including the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), the Investment Company Institute ("ICI"), Morningstar, and
Lipper Analytical Services, Inc. ("Lipper")); and
E. Resolving pricing and/or custody discrepancies.
Section 3.2 Financial Reporting. As Accounting Agent, DSC shall perform
financial reporting services for each Portfolio, which shall include:
A. The preparation of semi-annual and annual reports for
shareholders which involves the performance of the following functions:
1. preparing all statements of net assets, statements of
operations and statements of changes in net assets for the Portfolio;
2. preparing footnotes to financial statements for the
Portfolio;
3. preparing workpapers for each Company's annual audit by its
independent public accountants; and
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4. coordinating the annual audit by each Company's independent
public accountants.
B. Reporting to the ICI in response to requests for monthly and
other periodic information;
C. Performing statistical reporting, which includes daily, monthly,
quarterly and annual reports for Lipper, Xxxxxxxxxxxx and other third party
reporting agencies; and
D. Furnishing financial information for any additional required SEC
reporting, such as the preparation of financial information for each Company's
reporting on Form N-SAR, the furnishing of financial information for each
Company's prospectus[es] and statement[s] of additional information, and the
financial information required for each Company's annual Rule 24f-2 notice
filing;
Section 3.3 Compliance Testing. DSC will monitor, test and prepare and
maintain supporting schedules which evidence compliance with the definitional
and distribution requirements under the Internal Revenue Code of 1986, as
amended ("IRC"), including the following:
A. The requirement to be registered at all times during the taxable
year under the 0000 Xxx (XXX Section 851(a));
B. The annual ninety percent gross income test (IRC Section
851(b)(2));
C. The short/short (thirty percent) gross income test (IRC Section
851(b)(3));
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D. The quarterly IRC industry diversification tests (IRC Sections
851(b)(4) and 817(h)); and
E. The 90% distribution requirements (IRC Section 852(a)).
Section 3.4 Other Services. In addition to the above, DSC, in its capacity
as Accounting Agent for the Company, will perform the following services:
A. The calculation of required Portfolio monthly yields and total
return calculations in accordance with the prescribed rules of the U.S.
Securities and Exchange Commission;
B. Providing the financial information necessary for the
preparation of all federal and state tax returns and ancillary schedules,
including:
1. year-end excise tax distributions; and
2. compliance with Subchapter M and Section 4982 of the IRC;
C. Performing special tax reporting to shareholders, including the
preparation of reports which reflect income earned by each Portfolio by state,
exempt income and distributions that qualify for the corporate dividends
received deduction;
D. The preparation of expense and budget figures for each
Portfolio, including the maintenance of detailed records pertaining to expense
accruals and payments and adjusting reports to reflect accrual adjustments;
E. The preparation of reports for Board of Directors' or Trustees'
meetings;
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F. Coordination of the custody relationships;
G. Facilitating security settlements;
H. Performance of required foreign security accounting functions;
I. Performance of daily cash reconciliations for each Portfolio;
J. Providing identified reports to portfolio managers including:
1. providing portfolio holdings and security valuation reports;
2. preparing cash forecasts and reconciliations as mutually
agreed upon; and
3. preparing income projections.
IV. PERFORMANCE OF DUTIES
Section 4.1 DSC may request or receive instructions from a Company and may,
at a Portfolio's expense, consult with counsel for the Company or its own
counsel, with respect to any matter arising in connection with the performance
of its duties hereunder, and shall not be liable for any action taken or omitted
by it in good faith in accordance with such instructions or opinions of counsel.
Section 4.2 DSC shall maintain reasonable insurance coverage for errors and
omissions and reasonable bond coverage for fraud.
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Section 4.3 Upon notice thereof to a Company, DSC may employ others to
provide services to DSC in its performance of this Agreement.
Section 4.4 Personnel and facilities of DSC used to perform services
hereunder may be used to perform similar services to all Companies of the
Delaware Group and their Portfolios and to others, and may be used to perform
other services for all of the Companies of the Delaware Group and others.
Section 4.5 The Companies and DSC may, from time to time, set forth in
writing at the Companies' expense certain guidelines to be applicable to the
services hereunder.
V. ACCOUNTS AND RECORDS
Section 5.1 The parties hereto agree and acknowledge that the accounts and
records maintained by DSC with respect to a Portfolio shall be the property of
such Portfolio, and shall be made available to the relevant Company promptly
upon request and shall be maintained for the periods prescribed in Rule 31a-2
under the Investment Company Act of 1940 or such longer period as shall be
agreed to by the parties hereto, at such Portfolio's expense.
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VI. COMPENSATION
Section 6.1 The Companies and DSC acknowledge that the compensation to be
paid hereunder to DSC is intended to induce DSC to provide services under this
Agreement of a nature and quality which the Boards of Directors or Trustees of
the Companies, including a majority who are not parties to this Agreement or
interested person of the parties hereto, have determined after due consideration
to be necessary for the conduct of the business of a Portfolio in the best
interests of a Portfolio and its shareholders.
Section 6.2 Compensation by a Portfolio hereunder shall be determined in
accordance with Schedule B hereto as it shall be amended from time to time as
provided for herein and which is incorporated herein as a part hereof.
Section 6.3 Compensation as provided in Schedule B shall be reviewed and
approved for each Portfolio in the manner set forth in Section 8.1 hereof by the
Boards of Directors or Trustees of the Companies at least annually and may be
reviewed and approved more frequently at the request of either party. The Boards
may request and DSC shall provide such information as the Boards may reasonably
require to evaluate the basis of and approve the compensation.
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VII. STANDARD OF CARE
Section 7.1 The Companies on behalf of each Portfolio acknowledge that DSC
shall not be liable for, and in the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of the performance of its duties under
this contract, agree to indemnify DSC against, any claim or deficiency arising
from the performance of DSC's duties hereunder, including DSC's costs, counsel
fees and expenses incurred in investigating or defending any such claim or any
administrative or other proceeding, and acknowledge that any risk of loss or
damage arising from the conduct of a Portfolio's affairs in accordance herewith
or in accordance with guidelines or instructions given hereunder, shall be borne
by the Portfolio. The indemnification provided for in this Section 7.1 shall be
made Portfolio by Portfolio so that DSC is only entitled to indemnification from
a Company on behalf of a Portfolio for actions arising from the performance of
DSC's duties as to that Portfolio.
VIII. CONTRACTUAL STATUS
Section 8.1 This Agreement shall be executed and become effective as to a
Company with regard to a Portfolio listed on Schedule A as of the date first
written above if approved by a vote of such Company's Board of Directors or
Trustees, including an affirmative vote of a majority of the non-interested
members of the Board of such Company, cast in person at a meeting called for the
purpose of voting on such approval. It shall continue in effect for an
indeterminate period, and is subject to termination as to a Company on behalf of
a Portfolio or DSC, as the case may be, on sixty (60) days notice by either that
Company or DSC, unless earlier terminated or amended by agreement among the
parties. A Company shall be permitted to terminate this Agreement as to a
Portfolio on sixty (60) days notice to DSC. Compensation under this Agreement by
a Portfolio shall require approval by a majority vote of the Board of Directors
or Trustees of such Portfolio's Company, including an affirmative vote of the
majority of the non-interested members of such Board cast in person at a meeting
called for the purpose of voting such approval.
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Section 8.2 This Agreement shall become effective as to any Company or
Portfolio not included on Schedule A as of the date first written above, but
desiring to participate in this Agreement, on such date as an amended Schedule A
adding such new Company or Portfolio to such Schedule is executed by DSC and
such new Company or a Company on behalf of a new Portfolio following approval by
the Company or by the Company on behalf of a new Portfolio desiring to be
included in this Agreement in accordance with the method specified in Section
8.1. Any such amended Schedule A shall not affect the validity of this Agreement
as between DSC and the other Companies which have executed this Agreement or any
subsequent amendment to Schedule A of this Agreement.
Section 8.3 This Agreement may not be assigned by DSC without the approval
of all of the Companies.
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Section 8.4 This Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.
DELAWARE SERVICE COMPANY, INC.
/s/ Xxxxx X. Xxxxxx
By:__________________________________________
Xxxxx X. Xxxxxx
Senior Vice President/Chief
Administrative Officer/Chief
Financial Officer
DELAWARE GROUP CASH RESERVE, INC.
DELAWARE GROUP DECATUR FUND, INC.
DELAWARE GROUP DELAWARE FUND, INC.
DELAWARE GROUP TAX-FREE FUND, INC.
DELAWARE GROUP TAX-FREE MONEY FUND, INC.
DELAWARE GROUP LIMITED-TERM GOVERNMENT FUNDS,
INC.
DELAWARE GROUP TREND FUND, INC.
DELAWARE GROUP DELCHESTER HIGH-YIELD BOND
FUND, INC.
DMC TAX-FREE INCOME TRUST - PENNSYLVANIA
DELAWARE GROUP VALUE FUND, INC.
DELAWARE GROUP GLOBAL & INTERNATIONAL FUNDS,
INC.
DELAWARE GROUP DELCAP FUND, INC.
DELAWARE GROUP PREMIUM FUND, INC.
DELAWARE GROUP GOVERNMENT FUND, INC.
DELAWARE GROUP ADVISER FUNDS, INC.
/s/Xxxxx X. Xxxxx
By:__________________________________________
Xxxxx X. Xxxxx
Chairman, President and
Chief Executive Officer
DELAWARE POOLED TRUST, INC.
/s/Xxxxx X. Xxxxx
By:__________________________________________
Xxxxx X. Xxxxx, Chairman,
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SCHEDULE A
COMPANIES AND PORTFOLIOS COMPRISING THE DELAWARE GROUP*
Delaware Group Cash Reserve, Inc.
Delaware Group Decatur Fund, Inc.
Decatur Income Fund
Decatur Total Return Fund
Delaware Group Delaware Fund, Inc.
Delaware Fund
Devon Fund
Delaware Group Tax-Free Fund, Inc.
Tax-Free USA Fund
Tax-Free Insured Fund
Tax-Free USA Intermediate Fund
Delaware Group Tax-Free Money Fund, Inc.
---------------
* Except as otherwise noted, all Portfolios included on this Schedule A are
Existing Portfolios for purposes of the compensation described on Schedule B to
that Fund Accounting Agreement between Delaware Service Company, Inc. and the
Delaware Group of Funds dated as of August 19, 1996 ("Agreement"). All
Portfolios added to this Schedule A by amendment executed by a Company on behalf
of such Portfolio hereof shall be a New Portfolio for purposes of Schedule B to
the Agreement.
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Delaware Group Limited-Term Government Funds, Inc.
Limited-Term Government Fund
U.S. Government Money Fund
Delaware Group Trend Fund, Inc.
Delaware Group Delchester High-Yield Bond Fund, Inc.
DMC Tax-Free Income Trust - Pennsylvania
Delaware Group Value Fund, Inc.
Delaware Group Global & International Funds, Inc.
International Equity Fund
Global Bond Fund
Global Assets Fund
Emerging Markets Fund (New)
Delaware Group DelCap Fund, Inc.
Delaware Pooled Trust, Inc.
The Defensive Equity Portfolio
The Aggressive Growth Portfolio
The International Equity Portfolio
The Defensive Equity Small/Mid-Cap Portfolio (New) The Defensive
Equity Utility Portfolio (New) The Labor Select International Equity
Portfolio The Real Estate Investment Trust Portfolio The Fixed Income
Portfolio The Limited-Term Maturity Portfolio (New) The Global Fixed
Income Portfolio The International Fixed Income Portfolio (New) The
High-Yield Bond Portfolio (New)
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Delaware Group Premium Fund, Inc.
Equity/Income Series
High Yield Series
Capital Reserves Series
Money Market Series
Growth Series
Multiple Strategy Series
International Equity Series
Value Series
Emerging Growth Series
Global Bond Series (New)
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Delaware Group Government Fund, Inc.
Delaware Group Adviser Funds, Inc.
Enterprise Fund
U.S. Growth Fund
World Growth Fund
New Pacific Fund
Federal Bond Fund
Corporate Income Fund
Dated as of: August 19, 1996
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SCHEDULE B
COMPENSATION
Fee Schedule for The Delaware Group of Funds
--------------------------------------------
Part 1 - Fees for Existing Portfolios
------
Existing Portfolios are those so designated on Schedule A to the Fund Accounting
Agreement between Delaware Service Company, Inc. and the Delaware Group of Funds
dated as of August 19, 1996 ("Agreement").
Annual Asset Based Fees
-----------------------
First $10 Billion of Aggregate
Complex Net Assets 2.5 Basis Points
Aggregate Complex Net Assets
over $10 Billion 2.0 Basis Points
Annual asset based fees will be charged at a rate of 2.5 basis points for the
first $10 Billion of Aggregate Complex Net Assets. Aggregate Complex Net Assets
over $10 Billion will be charged at a rate of 2.0 basis points. These fees will
be charged to a Portfolio on an aggregated pro rated basis.
Annual Minimum Fees
-------------------
Domestic Equity Portfolio $35,000
Domestic Fixed Income Portfolio $45,000
International Series Portfolio $70,000
Per Class of Share Fee $ 4,000
There is an annual minimum fee that will be charged only if the annual asset
based fee is less than the calculation for the minimum fee. This fee is based on
the type and the number of classes per Portfolio. For an equity Portfolio
$35,000 will be charged; for a fixed income Portfolio $45,000 will be charged,
and for an international Portfolio $70,000 will be charged. For each class of
shares, $4,000 will be charged, such amount to be prorated over a period of less
than a year for any classes added after April 30, 1996. A total of all minimum
fees will be compared to the total asset based fee to determine which fee is
higher and, subsequently, will be used to xxxx the Companies.
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Part 2 - Fees for New Portfolios
------
For each Portfolio designated as a New Portfolio on Schedule A to the Agreement,
there will be a fee of 2.0 basis points, providing that the Delaware complex net
assets are above $10 Billion (the rate would be 2.5 basis points if under $10
Billion and then 2.0 basis points once the net assets cross $10 Billion), or an
annual minimum fee calculated in the manner described above, whichever is
higher. This new fee would be added to the total of Existing Portfolio fees and
then pro rated. Fees shall not be charged for New Portfolios included on
Schedule A until such Portfolios shall have commenced operations.
Dated as of: August 19, 1996
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