1
Schwab Investments
Exhibit 99.B(g)(xiii)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of this 1st day of April, 1998, by and among
Schwab Capital Trust and Schwab Annuity Portfolios (each a "Trust", or
collectively, the "Trusts"), each of which is a Massachusetts business trust, on
behalf of those Funds (each a "Fund", or collectively, the "Funds"), listed on
Schedule A, as it may be amended from time to time, and SEI Fund Resources
("SEI"), a Delaware business trust.
WHEREAS, each of the Trusts desires SEI to provide, and SEI is willing to
provide, fund accounting services to the Funds and to each class (each a Class,
or collectively, the "Classes") listed on Schedule A upon the terms and
conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, each Trust and SEI hereby agree as follows:
ARTICLE 1. Retention of SEI. Each Trust hereby retains SEI to act as fund
accounting agent for the Funds and to furnish the Funds with the services
described herein. SEI hereby accepts such employment and agrees to perform the
duties set forth herein. SEI shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trusts in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. Delivery of Documents; Authority. Each Trust shall furnish SEI
with copies, properly certified or authenticated, of the governing documents for
each of the Funds and such other documents as may be reasonably necessary to the
performance by SEI of the services set forth in this Agreement. Each Trust
agrees to furnish SEI with any amendments or supplements to such documents.
Each Trust represents and warrants that all appropriate action has been
taken by it and all other necessary persons or entities to authorize the
appointment of SEI to perform the services contemplated by this Agreement with
respect to each of the Funds.
SEI represents and warrants that all appropriate action has been taken by
it and all other necessary persons or entities to authorize the appointment of
SEI to perform the services contemplated by this Agreement with respect to each
of the Funds.
SEI undertakes to comply with all applicable requirements of the
securities and commodities laws, and any laws, rules or regulations of
governmental authorities having jurisdiction with respect to all duties to be
performed by SEI under this Agreement.
ARTICLE 3. Fund Accounting Services. SEI shall perform the services and
compile the records set forth on Schedule B. In providing services under this
Agreement, SEI shall provide the Funds with all necessary office space,
equipment (including back-up facilities in the event of equipment or systems
failure), personnel compensation and facilities for handling the fund accounting
responsibilities for the Funds. SEI shall enter into and maintain in effect with
appropriate parties agreements making adequate provision for emergency use of
electronic data processing equipment. SEI shall take all reasonable steps
necessary to minimize service disruptions. SEI shall have no responsibility for
supervising the performance by any investment adviser or sub-adviser of its
responsibilities.
1
2
ARTICLE 4. Computation of Net Asset Value, Public Offering Price;
Valuation of Securities.
(a) When computing the net asset value per share of a Fund, SEI will
follow the specific provisions of the Fund's Registration Statement. In general,
such computation will be made by dividing the value of each Fund's securities,
cash and any other assets, less its liabilities, by the number of shares of the
Fund outstanding. Such computation will be made on each day required by each
Fund's Registration Statement.
(b) Securities will be valued in accordance with the specific provisions
of each Fund's Registration Statement, as amended from time to time. SEI may use
one or more external pricing services. SEI shall not be liable for any loss,
cost, damage, claim or other matter incurred by or assessed against the Fund,
regardless of how characterized, based on or resulting from the inaccuracy or
other deficiency in any information or data provided to SEI by any such pricing
service and used by SEI in the performance of these services hereunder, provided
that SEI has used reasonable care in the selection of the pricing agent. SEI
will provide daily to Xxxxxxx Xxxxxx Investment Management, Inc. ("CSIM") by
7:00 p.m. Eastern time via fax or other electronic delivery medium, the
securities prices used in calculating the net asset value of each Fund for its
use in preparing exception reports generated for those prices on which CSIM has
a comment. Further, upon receipt of the exception reports generated by CSIM, SEI
will diligently pursue communication regarding exception reports with the
designated pricing agent. SEI shall provide CSIM with notice as soon as possible
upon the occurrence of an event that would cause a reasonable person to conclude
that the pricing agent is acting negligently or with willful misfeasance.
ARTICLE 5. Duration and Termination of this Agreement. This Agreement
shall become effective on the dates set forth in Schedule A and shall remain in
effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth under Schedule
C, unless terminated in accordance with the provisions of this Article 5. This
Agreement may be terminated only: (a) by the mutual written agreement of the
parties; (b) by either party hereto on 60 days' written notice, as of the end of
the Initial Term or at any time during any Renewal Term; (c) except for any
situation under section (g) hereof any party hereto on such date as is specified
in written notice given by the terminating party, in the event of a material
breach of this Agreement by the other party, provided the terminating party has
notified the other party of such breach at least 30 days prior to the specified
date of termination and the breaching party has not remedied such breach by the
specified date; (d) effective upon the filing of a petition for bankruptcy or
seeking protection from creditors of any party; (e) as to any Fund, effective
upon the liquidation of such Fund; (f) effective upon the liquidation of SEI;
and (g) in the event, however, of willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties by SEI at any time during the
term of this Agreement, the Trusts have a right to terminate this Agreement
immediately upon notice to SEI; however, to the extent that the Trusts' rights
under this provision arise solely due to gross negligence then the Trusts may
terminate this Agreement only if SEI fails to eliminate such gross negligence
immediately upon demand from the Trusts. If the Trusts authorize a cure period,
SEI shall take steps promptly following such demand (but in any event within 30
days thereafter) to preclude the recurrence of such gross negligence. If such
gross negligence is not cured within the cure period, this Agreement shall
terminate effective as of the first date following the cure period'. For
purposes of this Article 5, the term "liquidation" shall mean a transaction in
which the assets of a Fund are sold or otherwise disposed of and proceeds
therefrom are distributed in cash to the shareholders in complete liquidation of
the interests of such shareholders in the entity.
2
3
ARTICLE 6. Compensation of SEI. For the services to be rendered by SEI
pursuant to this Agreement, the Trusts shall pay to SEI compensation at the rate
specified in Schedule C. The Trust's shall also reimburse SEI for its reasonable
out of pocket expenses as are agreed upon in advance by the parties from time to
time. SEI shall maintain detailed information about the compensation and
expenses allocated to the Trusts by Fund and by Class and shall provide this
detail to the Trusts in its monthly xxxxxxxx. Any revised Schedule C agreed to
by the parties shall be dated and signed by a duly authorized officer of the
Trusts and by a duly authorized officer of SEI. SEI shall in no way be
responsible for paying any expenses of the Funds not otherwise allocated herein,
including without limitation, the cost of pricing services. If this Agreement
becomes effective subsequent to the first day of a month or terminates before
the last day of a month, SEI's compensation for that part of the month in which
this Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees as set forth above. All rights of compensation under
this Agreement for services performed as of the termination date shall survive
the termination of this Agreement.
ARTICLE 7. Limitation of Liability
(a) The duties of SEI shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against SEI
hereunder. SEI shall not be liable for any error of judgment or mistake of law
or for any loss (collectively, "Losses") arising out of any act or omission in
carrying out its duties hereunder, except for those Losses resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties or
Losses arising out of or related to a breach by SEI of its warranty and
obligations set forth in Article 10. hereto. (As used in this Article,
references to SEI shall include officers, employees and other agents of SEI and
its affiliates.) SEI may apply to the Funds at any time for instructions and may
consult counsel for +.he Funds or its own counsel and with accountants and other
experts with respect to any matter arising in connection with its duties, and
SEI shall not be liable to the Funds for any action taken or omitted by it in
good faith in accordance with the opinion of counsel for the Funds, Schwab or
their accountants or other experts.
(b) So long as SEI acts without willful misfeasance, bad faith, gross
negligence, or reckless disregard for its duties, the Trusts shall indemnify SEI
and hold it harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses,
liabilities, damages, costs and charges (including reasonable counsel fees and
disbursements), arising directly or indirectly out of services rendered
hereunder. The indemnity provisions set forth herein shall indefinitely survive
the termination of this Agreement.
ARTICLE 8. Recordkeeping. SEI shall maintain all records specified in this
Agreement pursuant to Rules 31 a-1 and 31 a-2 under the 1940 Act. All such
records shall be prepared and maintained at the expense of SEI, but shall be the
property of the relevant Fund and will be made available to or surrendered
promptly to such Fund or its designee on the request of either the Fund or CSIM.
SEI shall assist CSIM, the Funds' independent auditors, or upon approval of the
relevant Fund, or upon demand, any regulatory body, in any requested review of
such Fund's accounts and records but shall be reimbursed for all expenses and
employee time invested in any such review of accounts and records outside of the
expenses and employee time routinely and normally expended by SEI as part of a
regulatory review and audit. Upon receipt of the necessary information, SEI
shall supply the necessary data for a Fund's completion of any necessary tax
returns, questionnaires, periodic reports to shareholders and such other reports
and information requests as such Fund and SEI shall agree upon from time to
time.
3
4
ARTICLE 9. Confidentiality. SEI agrees to keep confidential all records of
the Trusts and information relative to each Fund and its shareholders, unless
the release of such information is otherwise consented to in writing by the
Trust. SEI agrees that should the Trusts be required to provide any information
or records to regulatory bodies (who may institute civil or criminal contempt
proceedings for a failure to comply), SEI must notify the Trusts' and obtain
their consent prior to disclosing any information, unless such disclosure is
required by law.
ARTICLE 10. Year 2000 Compliance. SEI warrants that all software code owned
by or under SEI's control, used in the performance of SEI's obligations under
this contract, will be Year 2000 compliant. For purposes of this paragraph,
"Year 2000 Compliant" means that the software will continue to operate beyond
December 31, 1999 and without creating any logical, mathematical or programming
inconsistencies concerning any date after December 31, 1999 and without
decreasing the functionality of the system applicable to dates prior to January
1, 2000 including, but not limited to, making changes to [a] date and data
century recognition; [b] calculations which accommodate same- and multi- century
formulas and date values; and [c] input/output of date values which reflect
century dates.
ARTICLE 11. Activities of SEI. The services of SEI rendered to the Funds
are not exclusive. SEI is free to render such services to others and to have
other businesses and interests so long as its services hereunder are not
hindered thereby.
ARTICLE 12. Amendment; Assignment. This Agreement may only be amended or
modified by all parties hereto. Neither this Agreement nor any of the rights and
obligations under this Agreement may be assigned by any party without the
written consent of all parties hereto. If a successor fund accountant shall be
appointed by the Trusts, upon termination of this Agreement, SEI shall deliver
all records and property of the Trusts held by SEI to the successor fund
accountant.
ARTICLE 13. Trustees' Liability. A copy of the Declaration of Trust for the
Trusts is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trusts as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Trusts individually, but are binding only upon
the assets and property of the Fund in question. The Names "Schwab Annuity
Portfolios, " "Schwab Capital Trust," "Trustees of Schwab Annuity Portfolios"
and "Trustees of Schwab Capital Trust" refer, respectively, to the Trusts
created and the Trustees, as trustees but not individually or personally, acting
from time to time under the applicable Declarations of Trust which are hereby
referred to and copies of which are on file at the office of the Secretary of
the Commonwealth of Massachusetts and at the principal office of the Trusts. The
obligations of "Schwab Annuity Portfolios" and "Schwab Capital Trust," entered
into in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, representatives of the Trusts
personally, but bind only the property of the Funds in question, and all persons
dealing with any class of shares of the Funds must look solely to the Funds
property belonging to such class for the enforcement of any claims against the
Funds.
ARTICLE 14. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Trusts, at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, Attention:
Secretary and if to SEI, at Xxx Xxxxxxx Xxxxxx Xxxxx, Xxxx, XX 00000.
4
5
ARTICLE 15. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of California and the applicable provisions of the
1940 Act. To the extent that the applicable laws of the State of California, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 17. Binding Agreement. This Agreement, and the rights and
obligations of the parties and the Funds hereunder, shall be binding on, and
inure to the benefit of the parties and the Funds and the respective successors
and assigns of each of them.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
SCHWAB CAPITAL TRUST
SCHWAB ANNUITY PORTFOLIOS
By /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Operating Officer
SEI FUND RESOURCES
By /s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President and Assistant Secretary
5
6
SCHEDULE A
LIST OF FUNDS
NAME OF FUND DATE
------------ ----
Schwab MarketTrack Growth Portfolio 4/30/98
Schwab MarketTrack Balanced Portfolio 4/30/98
Schwab MarketTrack Conservative Portfolio 4/30/98
Schwab MarketTrack All Equity Portfolio 4/15/98
Schwab International Index Fund: Investor Shares, Select Shares 4/30/98
Schwab Small-Cap Index Fund: Investor Shares, Select Shares 4/30/98
Schwab MarketManager International Portfolio 4/30/98
Schwab MarketManager Balanced Portfolio 4/30/98
Schwab MarketManager Growth Portfolio 4/30/98
Schwab MarketManager Small Cap Portfolio 4/30/98
Schwab MarketManager Growth Portfolio II 4/30/98
Schwab S&P 500 Fund: Select Shares, Investor Shares, e.Shares 11/1/98
Schwab S&O 500 Portfolio 11/1/98
Schwab 1000 Fund: Select Shares, Investor Shares 11/1/98
Schwab Analytics Fund 11/1/98
SCHWAB INVESTMENTS
SCHWAB CAPITAL TRUST
SCHWAB ANNUITY PORTFOLIOS
By /s/ Tai-Xxxx Xxxx
------------------------------------
Name: Tai-Xxxx Xxxx
Title: Treasurer, Principal Financial Officer
SEI FUND RESOURCES
By
------------------------------------
Name:
Title:
6
7
SCHEDULE B
Fund Accounting:
1. Maintain general ledger accounts
2. Calculate NAV (with a primary backup at all times) by the NASDAQ deadline
(by 6:30 PST in the case of the OneSource portfolios)
3. Perform securities valuation; notify pricing committee on Fair Valued
Securities
4. Verify daily the underlying funds' NAVS with the underlying funds' transfer
agent or fund accountant
5. Maintain tax lots for portfolio holdings
6. Bifurcate currency vs. security gains/losses
7. Record investment purchases and sells
8. Record and verify daily income accruals
9. Record, verify expense accruals and monitor CSIM reimbursements and CSIM
waivers both by fund and class
10. Monitor daily collateral asset segregation for Repos, securities lending,
futures and etc.
11. Reconcile cash and positions daily with custodians
12. Compute investable cash; monitor O/D and line of credit outstanding
13. Oversee custodian's activities (settlements, tax reclaims, corporate
actions, etc.)
14. Complete the daily information sheet and investment management report
15. Record fund purchases, redemptions and reconcile outstanding shares daily
with transfer agent
16. Provide month end proof
17. Perform tax compliance quarterly, including the short-short calculation
(until states conform to Federal Code) seven business days before fiscal
quarter end
18. Complete weekly 3% portfolio compliance check for OneSource Portfolios
(until the Exempt Order is granted)
19. Calculate total returns and yields including external distribution of
information
20. Prepare statistics for Board meeting and external agents (reporting
services)
21. Prepare and coordinate the calendar quarter financial summaries for the
Board
22. Maintain book/tax differences and conform to SOPs
23. Calculate fund distribution for both excise and income taxes
24. Coordinate annual audit
25. Prepare and file N-SAR, 24F-2 and N30D through XXXXX
26. Monitor financial D&O and E&O coverage quarterly
27. Consult on general legal and tax issues
28. Prepare monthly service report card
29. Attend quarterly in-person service review meetings
30. Prepare and update accounting policies and operational procedures manual
31. Assist in the SEC examination
32. Comply with Article 10. Year 2000 compliance provisions
7
8
SCHEDULE C
TO THE ACCOUNTING SERVICES AGREEMENT
BETWEEN
SCHWAB CAPITAL TRUST AND SCHWAB ANNUITY PORTFOLIOS
AND
SEI FUND RESOURCES
APRIL 1, 1998
FEES:
The Trusts shall pay SEI annual compensation for the services performed
and the facilities and personnel provided by SEI pursuant to this Agreement, the
following fee:
(a) with respect to the combined value of the average daily net assets (the
"Combined Assets") of the Funds:
(i) 0.04% (4 basis points) of the Combined Assets with respect to those
assets that are less than or equal to $1 Billion (One Billion U.S.
Dollars); plus
(ii) 0.03% (3 basis points) of the Combined Assets with respect to those
assets that are greater than $1 Billion (One Billion Dollars) but less
than or equal to $2 Billion Dollars); plus
(iii) 0.02% (2 basis points) of the Combined Assets with respect to those
assets that are greater than $2 Billion (Two Billion Dollars) but less
than or equal to $3 Billion (Three Billion Dollars); plus
(iv) 0.015% (1.5 basis points) of the Combined Assets with respect to
those assets that are greater than $3
8
