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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
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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
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also shall reimburse DSC for expenses incurred or advanced by it for the
Companies in connection with its services hereunder.
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:
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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.
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.
D. Valuing a Portfolio's securities
portfolio which includes determining the NAVs for all classes of the Portfolio;
E. 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
F. 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;
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2. preparing footnotes to
financial statements for the Portfolio;
3. preparing workpapers for each
Company's annual audit by its independent public accountants; and
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:
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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));
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;
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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;
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.
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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.
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.
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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.
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
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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.
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.
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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.
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
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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.
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.
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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.
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.
__________________________________
* 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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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)
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)
Delaware Group Government Fund, Inc.
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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.
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
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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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