Exhibit (h)(2)
FUND ACCOUNTING SERVICING AGREEMENT
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of April,
1999, by and between The Catholic Funds, Inc., a Maryland Corporation
(hereinafter referred to as the "Fund Company") and Firstar Mutual Fund
Services, LLC, a limited liability company organized under the laws of the State
of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Fund Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Fund Company 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 Fund Company desires to retain FMFS to provide accounting
services to each series of the Fund Company listed on EXHIBIT A attached hereto,
as it may be amended from time to time each such series (referred to herein
individually as a "Fund" and collectively as the "Fund").
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Fund Company (on behalf of the Funds) and FMFS agree as follows:
1. Appointment of Fund Accountant
The Fund Company hereby appoints FMFS as fund accountant for
each of the Funds 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 provide the following services for each of the
Funds;
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 Fund Company
and apply those prices to the portfolio
positions. For those securities where
market quotations are not readily
available, the Board of Directors of the
Fund Company 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
Fund Company as to methodology, rate or
dollar amount.
(2) Record payments for expenses of each Fund
upon receipt of written authorization from
the Fund Company.
(3) Account for expenditures of each Fund and
maintain expense accrual balances at the
level of accounting detail, as agreed upon
by FMFS and the Fund Company.
(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 Fund Company.
(3) Determine net investment income (earnings)
for each 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
each Fund in the form as agreed upon.
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(5) Determine the net asset value of each Fund
according to the accounting policies and
procedures set forth in such 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 relevant 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 each 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 Fund Company.
(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 each Fund's accounting records
available to the Fund Company, the
Securities and Exchange Commission, and the
outside auditors.
(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;
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(2) Update the cash availability throughout the
day as required by each Fund's investment
adviser and, if any, the Fund's
sub-adviser(s);
(3) Transmit or mail a copy of the portfolio
valuation to the Fund's investment adviser
and, if any, the Fund's sub-adviser(s);
(4) Review the impact of current day's activity
on a per share basis, review changes in
market value of securities, and review
yields for reasonableness.
G. In addition, FMFS will:
(1) Prepare monthly security transactions
listings;
(2) Supply various Fund Company, Fund and class
(if any) statistical data as requested on an
ongoing basis.
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 Directors and apply
those prices to the portfolio positions of each Fund. For those securities where
market quotations are not readily available, the Company's Board of Directors
shall approve, in good faith, the method for determining the fair value for such
securities.
If the Fund Company desires to provide a price which varies
from the pricing source, the Fund Company shall promptly notify and supply FMFS
with the valuation of any such security on each valuation date. All pricing
changes made by the Fund Company 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 Fund
Company 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 Fund Company under this Agreement.
6. Compensation
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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 Fund Company
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 Fund Company to FMFS shall only be paid out of the
assets and property of the particular Fund involved.
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
Fund Company or any Fund 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 a breach of a representation or
warranty made by FMFS under this Agreement or
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 Fund Company 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 a breach of a representation or
warranty made by FMFS under this Agreement or
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 Fund Company, 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 Directors
of the Fund Company.
FMFS shall indemnify and hold the Fund Company
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 Fund Company may sustain or incur or which
may be asserted against the Fund Company by any
person arising out of a breach of a representation or
warranty made by FMFS under this Agreement or FMFS's
refusal or failure to comply with the terms of this
Agreement or any action taken or omitted to be taken
by FMFS as a result of FMFS's refusal or
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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 Fund
Company 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.
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 agrees that obligations assumed by the Fund
Company pursuant to this Agreement shall be limited
in all cases to the respective assets of the Fund(s)
to which the obligation relates. FMFS further agrees
that it shall not seek satisfaction of any such
obligation from the shareholder or any individual
shareholder of any Fund or any other series of the
Fund Company, nor from the Directors or any
individual Director of the Fund Company.
8. No Agency Relationship
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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 Fund Company 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 Fund Company 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 Fund Company on and in
accordance with its request.
10. Data Necessary to Perform Services
The Fund Company 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 Fund Company, nothing herein shall be deemed to relieve
FMFS of any of its obligations in such capacity.
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11. Notification of Error
The Fund Company will notify FMFS of any balancing or control
error caused by FMFS the later of: within three (3) business days after receipt
of any reports rendered by FMFS to the Fund Company; 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 Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders of the Fund Company (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 Fund Company, 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 Fund Company.
13. Term of Agreement
This Agreement shall become effective as of the date hereof
and, unless sooner terminated as provided herein, shall continue automatically
in effect for successive annual periods. This Agreement may be terminated by
either party (in the case of the Fund Company, either in its entirety or with
respect to any particular Fund(s)) 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, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Relationship Manager
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and notice to the Fund Company shall be sent to:
The Catholic Funds, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: President
15. Year 2000 Compliance
FMFS represents to the Fund Company that the computer
software, computer firmware, computer hardware (whether general or special
purpose) and other similar related items of automated, computerized and/or
software systems that are owned or licensed by FMFS and will be utilized by FMFS
or its agents in connection with the provision of services described in this
Agreement are "Year 2000 Compliant" (as defined below). As used in this Section
15 of this Agreement, the term "Year 2000 Compliant" shall mean the ability of
the relevant system to provide all of the following functions:
A. Process date information before, during and after
January1, 2000, including but not limited to
accepting date specific input data, providing date
specific output data, and performing calculations on
dates or portions of dates;
B. Function accurately and without interruption or
malfunction before, during and after January 1, 2000,
without any change in operations associated with the
advent of the new millennium and assuming no other
defects, bugs, viruses or other problems unrelated to
Year 2000 compliance issues which disrupt
functionality;
C. Respond to two-digit, year-date input in a way that
resolves the ambiguity as to century and in a
disclosed, defined and predetermined manner; and
D. Store and provide output data of date specific
information in ways that are unambiguous as to
century.
16. 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 Fund
Company by written notice to FMFS, FMFS will promptly, upon such termination and
at the expense of the Fund Company 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 Fund Company (if
such form differs from the form in which FMFS has maintained the same, the Fund
Company 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.
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17. 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.
THE CATHOLIC FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
-------------------------- ---------------------------
Title: Title:
----------------------- ------------------------
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EXHIBIT A
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
Separate Series of The Catholic Funds, Inc.
NAME OF SERIES DATE ADDED
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Equity Income Fund ____________, 1999
Large-Cap Growth Fund ____________, 1999
Disciplined Capital Appreciation Fund ____________, 1999
Domestic Equity Funds
$22,000 for the first $40 million
1 basis point on the next $200 million
.5 basis point on average net assets exceeding $240 million
Domestic Balanced Funds
$23,500 for the first $40 million
1.5 basis points on the next $200 million
1 basis points on average net assets exceeding $240 million
Domestic Fixed Income, International Equity Funds
$25,000 for the first $40 million
2 basis points on the next $200 million
1 basis point on average net assets exceeding $240 million
Plus reasonable and customary out-of-pocket expenses, including pricing service:
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
Fees and out-of-pocket expenses are billed to the fund monthly
A-1
