EXHIBIT (H)(1)
MUTUAL FUNDS SERVICE AGREEMENT
O FUND ADMINISTRATION SERVICES
O FUND ACCOUNTING SERVICES
THE EXCHANGE TRADED TRUST
AUGUST __, 2006
MUTUAL FUNDS SERVICE AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
1. Appointment.............................................................. 1
2. Representations and Warranties.......................................... 1
3. Delivery of Documents................................................... 3
4. Services Provided....................................................... 3
5. Fees and Expenses....................................................... 4
6. Limitation of Liability and Indemnification............................. 6
7. Term.................................................................... 9
8. Notices................................................................. 9
9. Waiver.................................................................. 9
10. Force Majeure........................................................... 9
11. Amendments.............................................................. 10
12. Assignment............................................................... 10
13. Severability............................................................ 10
14. Governing Law........................................................... 11
15. Confidentiality......................................................... 11
Signatures.................................................................. 12
MUTUAL FUNDS SERVICE AGREEMENT
TABLE OF CONTENTS (CONTINUED)
PAGE
Schedule A -- Fees and Expenses.......................................... A-1
Schedule B -- Fund Administration Services Description................... B-1
Schedule C -- Fund Accounting Services Description....................... C-1
MUTUAL FUNDS SERVICE AGREEMENT
AGREEMENT made as of August __, 2006 by and between THE EXCHANGE TRADED
TRUST (the "Trust"), a Delaware statutory trust, and X.X. XXXXXX INVESTOR
SERVICES CO. ("X.X. Xxxxxx"), a Delaware corporation.
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to contract with X.X. Xxxxxx to provide certain
services with respect to the Trust and the designated series of the Trust
(individually referred to as a "Fund") and X.X. Xxxxxx has agreed to render such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints X.X. Xxxxxx to provide services
for the Trust, as described hereinafter, subject to the supervision of the Board
of Trustees of the Trust (the "Board"), for the period and on the terms set
forth in this Agreement for the Trust and each Fund. X.X. Xxxxxx accepts such
appointment and agrees to furnish the services herein set forth in return for
the compensation as provided in Section 5 of and Schedule A to this Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) X.X. Xxxxxx represents and warrants to the Trust that:
(i) X.X. Xxxxxx is a corporation, duly organized and existing
under the laws of the State of Delaware;
(ii) X.X. Xxxxxx is duly qualified to carry on its business in
the Commonwealth of Massachusetts;
(iii) X.X. Xxxxxx is empowered under applicable laws and by
its Articles of Incorporation and By-Laws to enter into and perform this
Agreement;
(iv) all requisite corporate proceedings have been taken to
authorize X.X. Xxxxxx to enter into and perform this Agreement;
1
(v) X.X. Xxxxxx has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
(vi) no legal or administrative proceedings have been
instituted or threatened, which would impair X.X. Xxxxxx'x ability to perform
its duties and obligations under this Agreement; and
(vii) X.X. Xxxxxx'x entrance into this Agreement shall not
cause a material breach or be in material conflict with any other agreement or
obligation of X.X. Xxxxxx or any law or regulation applicable to X.X. Xxxxxx;
(b) The Trust represents and warrants to X.X. Xxxxxx that:
(i) the Trust is a statutory trust, duly organized and
existing and in good standing under the laws of the State of Delaware;
(ii) the Trust is empowered under applicable laws and by its
Charter Document and By-Laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize
the Trust to enter into and perform this Agreement;
(iv) the Trust is an investment company properly registered
under the 1940 Act;
(v) a registration statement under the Securities Act of 1933,
as amended ("1933 Act") and the 1940 Act on Form N-1A has been filed and will be
effective and will remain effective during the term of this Agreement, and all
necessary filings under the laws of the states will have been made and will be
current during the term of this Agreement;
(vi) no legal or administrative proceedings have been
instituted or threatened, which would impair the Trust's ability to perform its
duties and obligations under this Agreement;
(vii) the Trust's registration statement complies in all
material respects with the 1933 Act and the 1940 Act (including the rules and
regulations thereunder) and none of the Trust's prospectuses and/or statements
of additional information contain any untrue statement of material fact or omit
to state a material fact necessary to make the statements therein not
misleading; and
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(viii) the Trust's entrance into this Agreement shall not
cause a material breach or be in material conflict with any other agreement or
obligation of the Trust or any law or regulation applicable to it.
3. DELIVERY OF DOCUMENTS. The Trust will promptly furnish to X.X. Xxxxxx
such copies, properly certified or authenticated, of contracts, documents and
other related information that X.X. Xxxxxx may request or requires to properly
discharge its duties. Such documents may include but are not limited to the
following:
(a) Resolutions of the Board authorizing the appointment of X.X.
Xxxxxx to provide certain services to the Trust and approving this Agreement;
(b) The Trust's Charter Document;
(c) The Trust's By-Laws;
(d) The Trust's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission ("SEC");
(e) The Trust's registration statement including exhibits, as
amended, on Form N-1A (the "Registration Statement") under the 1933 Act and the
1940 Act, as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Trust
and its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors' reports relating to the
Registration Statement;
(h) The Trust's prospectus(es) and statement(s) of additional
information relating to each Fund, as applicable, and all amendments and
supplements thereto (such Prospectus(es) and Statement(s) of Additional
Information and supplements thereto, as presently in effect and as from time to
time hereafter amended and supplemented, herein called the "Prospectuses"); and
(i) Such other agreements as the Trust may enter into from time to
time, which relate to X.X. Xxxxxx'x duties and responsibilities hereunder,
including securities lending agreements, futures and commodities account
agreements, brokerage agreements and options agreements.
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4. SERVICES PROVIDED.
(a) X.X. Xxxxxx will provide the following services subject to the
control, direction and supervision of the Board and in compliance with the
objectives, policies and limitations set forth in the Trust's Registration
Statement, Charter Document and By-Laws; applicable U.S. laws and regulations;
and all resolutions, codes, procedures and policies implemented by the Board, of
which X.X. Xxxxxx has been notified by the Trust:
(i) Trust Administration and
(ii) Trust Accounting.
A detailed description of each of the above services is contained in Schedules B
and C respectively, to this Agreement.
(b) X.X. Xxxxxx will also:
(i) provide office facilities with respect to the provision of
the services contemplated herein (which may be in the offices of X.X. Xxxxxx or
a corporate affiliate of X.X. Xxxxxx);
(ii) provide or otherwise obtain personnel sufficient for
provision of the services contemplated herein;
(iii) furnish equipment and other materials, which are
necessary or desirable for provision of the services contemplated herein; and
(iv) keep records relating to the services provided hereunder
in such form and manner as X.X. Xxxxxx may xxxx appropriate or advisable, but in
all circumstances in accordance with Section 31 of the 1940 Act and the rules
thereunder. To the extent required by Section 31 of the 1940 Act and the rules
thereunder, X.X. Xxxxxx agrees that all such records prepared or maintained by
X.X. Xxxxxx relating to the services provided hereunder are the property of the
Trust and will be preserved for the periods prescribed under Rule 31a-2 under
the 1940 Act, maintained at the Trust's expense, and made available in
accordance with such Section and rules.
5. FEES AND EXPENSES.
(a) As compensation for the services rendered to the Trust pursuant
to this Agreement the Trust shall pay X.X. Xxxxxx monthly fees determined as set
forth in Schedule A to this Agreement. Such fees are to be billed monthly and
shall be due and payable upon receipt of the invoice. Upon any termination of
the provision of services under this Agreement before the end of any month, the
fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of such termination.
4
(b) For the purpose of determining fees calculated as a function of
the Trust's assets, the value of the Trust's assets and net assets shall be
computed as required by its currently effective Prospectus and/or Statement of
Additional Information, generally accepted accounting principles, and
resolutions of the Board.
(c) The Trust may request additional services, additional
processing, or special reports, with such specifications and requirements
documentation as may be reasonably required by X.X. Xxxxxx. In addition,
significant regulatory and legal changes and changes in the Trust's status may
necessitate additional services, processing or reports. In either instance, if
X.X. Xxxxxx elects to provide such services or arrange for their provision, it
shall be entitled to such additional fees and expenses as the parties agree to
in writing.
(d) X.X. Xxxxxx will bear its own expenses in connection with the
performance of the services under this Agreement except as provided herein or as
agreed to by the parties. The Trust agrees to reimburse, within a reasonable
period of time, X.X. Xxxxxx for any services, equipment or supplies ordered by
or for the Trust through X.X. Xxxxxx and for any other expenses that X.X. Xxxxxx
may incur on the Trust's behalf at the Trust's request or as consented to by the
Trust. Such other expenses to be incurred in the operation of the Trust and to
be borne by the Trust, may include, but are not limited to: taxes; interest;
brokerage fees and commissions; salaries and fees of officers and trustees who
are not officers, directors, shareholders or employees of X.X. Xxxxxx, or the
Fund's investment adviser or distributor; SEC and state Blue Sky registration
and qualification fees, levies, fines and other charges; XXXXX filing fees,
processing services and related fees; postage and mailing costs; costs of share
certificates; advisory and administration fees; charges and expenses of pricing
and data services, independent public accountants and custodians; insurance
premiums including fidelity bond premiums; legal expenses; consulting fees;
customary bank charges and fees; costs of maintenance of corporate or trust
existence; expenses of typesetting and printing of Prospectuses for regulatory
purposes and for distribution to current shareholders of the Trust (the Trust's
distributor to bear the expense of all other printing, production, and
distribution of Prospectuses, and marketing materials); expenses of printing and
production costs of shareholders' reports and proxy statements and materials;
expenses of proxy solicitation, proxy tabulation and annual meetings; costs and
expenses of Trust stationery and forms; costs and expenses of special telephone
and data lines and devices; costs associated with corporate or trust,
shareholder, and Board meetings; trade association dues and expenses;
reprocessing costs to X.X. Xxxxxx caused by third party errors; copying charges;
overtime work when necessitated by unusual client requests; microfilm and
storage, audio response unit costs; corporate action services; service
termination and conversion costs; any expenses necessitated by regulatory or
legal changes; and any extraordinary expenses and other customary Trust
expenses. In addition, X.X. Xxxxxx may utilize one or more independent pricing
services to obtain securities prices and to act as backup to the primary pricing
services designated by the Trust, in connection with determining the net asset
values of each Fund. The Trust will reimburse X.X. Xxxxxx for the Trust's share
of the cost of such services based upon the actual usage, or a pro-rata estimate
of the use, of the services for the benefit of the Trust.
5
(e) All fees, out-of-pocket expenses, or additional charges of X.X.
Xxxxxx shall be billed on a monthly basis and shall be due and payable upon
receipt of the invoice.
(f) X.X. Xxxxxx will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month. Charges remaining unpaid after thirty (30) days shall bear interest in
finance charges equivalent to, in the aggregate, the Prime Rate (as determined
by X.X. Xxxxxx) plus two percent per year and all costs and expenses of
effecting collection of any such sums, including reasonable attorney's fees,
shall be paid by the Trust to X.X. Xxxxxx.
(g) In the event that the Trust is more than sixty (60) days
delinquent in its payments of monthly xxxxxxxx in connection with this Agreement
(with the exception of specific amounts which may be contested in good faith by
the Trust), this Agreement may be terminated upon thirty (30) days' written
notice to the Trust by X.X. Xxxxxx. The Trust must notify X.X. Xxxxxx in writing
of any contested amounts within thirty (30) days of receipt of a billing for
such amounts. Disputed amounts are not due and payable while they are being
investigated.
6. LIMITATION OF LIABILITY AND INDEMNIFICATION.
(a) X.X. Xxxxxx shall not be liable for any error of judgment or
mistake of law or for any loss or expense suffered by the Trust or third
parties, in connection with the matters to which this Agreement relates, except
that X.X. Xxxxxx shall be liable for a loss or expense caused by or resulting
from X.X. Xxxxxx'x bad faith, negligence or willful misconduct.
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(b) X.X. Xxxxxx shall not be responsible for, and the Trust shall
indemnify and hold X.X. Xxxxxx and its directors, officers, agents and employees
(collectively the "Indemnitees") harmless from and against any and all claims,
liabilities, losses, damages, fines, penalties and expenses, including
out-of-pocket and incidental expenses and legal fees ("Losses") that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them in
the performance of its/their duties hereunder, including but not limited to
those arising out of or attributable to:
(i) any and all actions of the Indemnitees required to be
taken pursuant to this Agreement and that are taken without bad faith,
negligence, or willful misconduct;
(ii) the reliance on or use by the Indemnitees of information,
records, or documents which are received by the Indemnitees and furnished to it
or them by or on behalf of the Trust, and which have been prepared or maintained
by the Trust or any third party on behalf of the Trust;
(iii) the Trust's refusal or failure to comply with the terms
of this Agreement or the Trust's lack of good faith, or its actions, or lack
thereof, involving negligence or willful misfeasance;
(iv) following any instructions or other directions reasonably
believed to be requests of the Trust or otherwise duly authorized, and upon
which X.X. Xxxxxx is authorized to rely pursuant to the terms of this Agreement;
(v) the breach of any representation or warranty of the Fund
hereunder;
(vi) any delays, inaccuracies, errors in or omissions from
information or data provided to X.X. Xxxxxx by the Trust, its investment
advisers and/or sub-advisers, and providers of other services such as data
services, corporate action services, pricing services or securities brokerage;
(vii) the offer or sale of shares by the Trust in violation of
any requirement under the Federal securities laws or regulations or the
securities laws or regulations of any state, or in violation of any stop order
or other determination or ruling by any Federal agency or any state agency with
respect to the offer or sale of such shares in such state (1) resulting from
activities, actions, or omissions by the Trust or its other service providers
and agents, or (2) existing or arising out of activities, actions or omissions
by or on behalf of the Trust prior to the effective date of this Agreement;
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(viii) any failure of the Trust's registration statement to
comply with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a material fact necessary to make any statement therein not
misleading in a Trust's prospectus;
(ix) the actions taken by the Trust, its investment adviser
and/or sub-advisers, and its distributor in compliance with applicable
securities, tax, commodities and other laws, rules and regulations, or the
failure to so comply; and
(x) all actions, inactions, omissions, or errors caused by
third parties to whom the Trust has assigned any rights and/or delegated any
duties under this Agreement at the request of or as required by the Trust, its
investment advisers or distributor.
(c) In performing its services hereunder, X.X. Xxxxxx shall be
entitled to rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Trust and its
officers and directors, investment advisers and sub-advisers, agents and other
service providers which X.X. Xxxxxx reasonably believes to be genuine, valid and
authorized. X.X. Xxxxxx shall also be entitled to consult with and rely on the
advice and opinions of outside legal counsel and public accountants retained by
the Trust, as necessary or appropriate.
(d) X.X. Xxxxxx shall use reasonable care in performing its duties
under this Agreement. X.X. Xxxxxx shall not be in violation of this Agreement
with respect to any matter as to which it has satisfied its duty of reasonable
care, except that a loss arising out of or relating to X.X. Xxxxxx'x bad faith,
negligence or willful misconduct on its part in the performance of its duties
under this Agreement.
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(e) Anything in this agreement to the contrary notwithstanding, in
no event shall X.X. Xxxxxx be liable for any special or consequential losses or
damages of any kind whatsoever (including but not limited to lost profits),
whether or not foreseeable and regardless of the form of action in which such
claim may be brought. This provision shall survive the termination of this
Agreement.
7. TERM. This Agreement shall become effective on the date first
hereinabove written and may be modified or amended from time to time by mutual
written agreement between the parties hereto. The Agreement shall continue in
effect unless terminated by either party on 180 days' prior written notice. Upon
termination of this Agreement, the Trust shall pay to X.X. Xxxxxx such
compensation and any out-of-pocket or other reimbursable expenses which may
become due or payable under the terms hereof as of the date of termination or
after the date that the provision of services ceases, whichever is later. In the
event of late payment or non-payment, X.X. Xxxxxx shall have the right to retain
the records of the Trust until all fees and monies due X.X. Xxxxxx are paid.
However, at all times, all such records shall be available for review, at the
Trust's request, by the Trust and/or other authorized individual.
8. NOTICES. Any notice required or permitted hereunder shall be in writing
and shall be deemed effective on the date of personal delivery (by private
messenger, courier service or otherwise) or upon confirmed receipt of telex or
facsimile, whichever occurs first, or upon receipt if by mail to the parties at
the following address (or such other address as a party may specify by notice to
the other):
If to the Trust:
The Exchange Traded Trust
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention:
Fax:
If to X.X. Xxxxxx:
X.X. Xxxxxx Investor Services Co.
00 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention:
Fax:
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9. WAIVER. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
10. FORCE MAJEURE. X.X. Xxxxxx shall maintain and update from time to time
business continuation and disaster recovery procedures with respect to its
administration and accounting business that it determines from time to time meet
reasonable commercial standards. Neither party shall be responsible or liable
for any harm, loss or damage suffered by the Trust, its investors, or other
third parties or for any failure or delay in performance of their obligations
under this Agreement arising out of or caused, directly or indirectly, by
circumstances reasonably beyond their control, such as an act of God, fire,
flood, civil or labor disturbance, war, terrorism, act of any governmental
authority or other act or threat of any authority (de jure or de facto), legal
constraint, fraud or forgery (except to the extent that such fraud or forgery is
attributed to X.X. Xxxxxx or to its employees) and inability to obtain or
interruption of external communications facilities. However, that in the event
of a failure or delay, X.X. Xxxxxx (i) shall not discriminate against the Trust
in favor of any other customer of X.X. Xxxxxx in making computer time and
personnel available to input of process the transactions contemplated by this
Agreement, and (ii) shall use reasonable efforts to ameliorate the effects of
any such failure or delay. X.X. Xxxxxx shall use reasonable efforts to resume
service and mitigate loss to the Trust through implementation of its disaster
recovery and business continuation plan. X.X. Xxxxxx shall promptly notify the
Trust of a force majeure that may affect services provided to the Trust under
this Agreement. In the event of a force majeure, any resulting harm, loss,
damage, failure or delay by X.X. Xxxxxx will not give the Trust the right to
terminate this Agreement.
11. AMENDMENTS. This Agreement may be modified or amended from time to
time by mutual written agreement between the parties. No provision of this
Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
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12. ASSIGNMENT. Neither party may assign this Agreement or any interest
hereunder either voluntarily or involuntarily, by operation of law or otherwise,
without the prior consent of the other party.
13. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK.
15. CONFIDENTIALITY. In accordance with the provisions of the Financial
Service Modernization Act of 1999 (Xxxxx-Xxxxx Xxxxxx Act), the Securities and
Exchange Commission's regulation S-P ("Regulation S-P") and any other applicable
federal and state privacy laws, rules and regulations, nonpublic personal
financial information relating to consumers and customers of the Trust provided
by, or at the direction of the Trust to X.X. Xxxxxx, or collected or retained by
X.X. Xxxxxx in the course of providing services to the Trust shall be considered
confidential information. X.X. Xxxxxx agrees that it shall not use such
confidential information for any purpose other than to carry out its obligations
under this Agreement, and further agrees that it shall not give, sell or in any
way transfer or disclose such confidential information to any person or entity,
other than (i) affiliates of X.X. Xxxxxx or third parties who have entered into
contractual arrangements with the Trust or with X.X. Xxxxxx, and then only to
the extent necessary to carry out the obligations under such contractual
arrangements, (ii) at the direction of the Trust, (iii) as required by law or
(iv) subject to (i) above, as permitted by law. X.X. Xxxxxx represents that it
has in place and shall maintain physical, electronic, and procedural safeguards
reasonably designed to protect the security, confidentiality and integrity of,
and to prevent unauthorized access to or use of records and information related
to consumers or customers of the Trust. X.X. Xxxxxx warrants that it shall not
disclose such confidential information to any person or entity as permitted in
the previous sentence unless such person or entity has agreed to keep such
information confidential. The Trust represents to X.X. Xxxxxx that it has
adopted a Statement of its privacy policies and practices as required by
Regulation S-P and agrees to provide X.X. Xxxxxx with a copy of that statement
annually.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
THE EXCHANGE TRADED TRUST
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
X.X. XXXXXX INVESTOR SERVICES CO.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE A
FEES AND EXPENSES
FUND ADMINISTRATION AND ACCOUNTING FEES
A. For the services rendered under this Agreement, the Trust shall pay
to the Administrator an annual fee based on the following schedule:
Year One:
First 6 months 10.00 bp per annu
Next 6 months 20.00 bp per annum(1)
Year Two:
Minimum Charge per Fund $15,000 per annum
Market Value Fee 20.00 bp per annum(1)
After Year Two:
Minimum Charge per Fund $100,000 per annum
(1) The maximum amount a single fund will pay for Fund Accounting and
Fund Administration services will be $100,000
S
B. The foregoing calculation is based on the average daily net assets
of the Trust. The fees will be computed, billed and payable monthly.
C. Out-of-pocket expenses will be computed, billed and payable monthly.
A-1
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE B
GENERAL DESCRIPTION OF FUND ADMINISTRATION
AND COMPLIANCE SERVICES
X.X. Xxxxxx'x Fund Administration and Compliance Services are designed and
intended to address the Trust's routine financial and tax reporting, portfolio
compliance and general administration needs. X.X. Xxxxxx will work closely with
the Trust's experts, such as its public accountants and legal counsel, with
respect to these services.
I. ROUTINE FINANCIAL REPORTING SERVICES
A. Semi-annual and annual reports. Prepare for review and approval by
the Trust's officers, the Trust's semi-annual reports, annual
reports and financial statements for routine prospectus updates,
including, but not limited to, the Trust's Schedule of Investments,
Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes, Financial Highlights, Statement of Cash Flows,
Notes to Financial Statements, Review of Financial Data in MD&A and
other line graph and performance information. Assist with financial
statement process by preparing and reviewing ROC SOP disclosure and
tax footnote disclosures.
B. Regular N-SAR filings. Prepare for review and approval by the
Trust's officers, Form N-SAR. Upon approval of the N-SAR by the
Trust's adviser and officers, X.X. Xxxxxx will file Form N-SAR with
the SEC.
C. 24f-2 Notices. Prepare and file with the SEC the annual Rule 24f-2
Notice, upon approval by the Trust officers.
D. Form N-Q. Prepare for review and approval by the Trust's officers,
Form N-Q. Upon approval of the N-Q by the Trust's adviser and
officers, X.X. Xxxxxx will file Form N-Q with the SEC.
E. Form N-CSR. Prepare for review and approval by the Trust's officers,
Form N-CSR. Upon approval of the N-CSR by the Trust's adviser and
officers, X.X. Xxxxxx will file Form N-CSR with the SEC.
F. Other. Review Form N-1A and proxies and provide certain financial
information.
II. Routine Tax Services
A. Financial Statement Support Provide financial reporting group with
year end tax footnote disclosure, ROCSOP and 60 day notification
information
B-1
B. Tax Filings X.X. Xxxxxx will prepare and review the Trust's fiscal
and excise taxable income calculations. In addition, X.X. Xxxxxx
will prepare and review the Trust's Federal tax returns and
supporting schedules ( i.e. Form 1120RIC and Form 8613).Taxable
income calculations and tax returns will be provided to the Trust's
auditors for review and sign off as paid preparer. X.X. Xxxxxx will
work closely with the Trust's auditors to determine state and local
income tax filing requirements for the Trust.
C. Form 1099-DIV Support Prepare and review data such as foreign tax
credit, qualified dividend income, tax exempt percentages, return of
capital and any distribution re-characterizations and provide to the
Trust's transfer agent at calendar year end.
D. Supplementary Form 1099-DIV Support Prepare and review supplementary
year end reporting data such as state by state, foreign source
income, AMT percentages, treasury income and asset and state
intangible tax information and provide to Trust's transfer agent at
calendar year end.
E. Other Prepare and review periodic distributions; review IRS
diversification and qualifying income tests; prepare and review
qualified interest income percentages; provide tax consultation and
research; review complex corporate actions.
III. ROUTINE COMPLIANCE
X.X. Xxxxxx will provide assistance to the Trust and its investment adviser with
respect to compliance with federal tax and securities laws. Responsibility for
such compliance services are subject to the development of a more precise
allocation of duties and responsibilities between X.X. Xxxxxx, the adviser and
other relevant service providers. In addition, X.X. Xxxxxx'x provision of
compliance services is designed to assist the Trust and its adviser but is not
intended as an assumption by X.X. Xxxxxx of the adviser's fiduciary duties and
legal responsibilities to the Trust.
A. Portfolio compliance. Monitor and periodically test the Trust's
compliance with such investment restrictions and other regulatory
requirements, as may be agreed to between the adviser, X.X. Xxxxxx
and the Trust (e.g., issuer or industry diversification, etc.),
including 1940 Act Compliance monitoring.
B. Tax compliance. Monitor and periodically test, including on required
quarterly testing dates, the Trust's compliance with the
requirements of Section 851 of the Internal Revenue Code and all
other applicable Treasury Regulations, including, but not limited
to, testing for qualification as a regulated investment company,
performance of IRS asset diversification and good income tests,
quarterly tax exempt asset test and annual foreign security asset
test.
C. Policies and procedures compliance. Assist the investment adviser
with monitoring its compliance with Trust Board directives, such as
"Approved Issuers Listings for Repurchase Agreements", Rule 17a-7,
Rule 17e-1 and Rule 12d3-1 procedures.
B-2
D. Other. Provide assistance with calculation of portfolio turnover,
and perform annual gross income test.
IV. GENERAL ADMINISTRATION
A. Board materials. Prepare or compile performance and expense
information, financial reports, and compliance data and information
for inclusion in the Trust's regular quarterly Board meeting
materials.
B. Dividend distributions. Calculate dividend distributions in
accordance with distribution policies detailed in the Trust's
prospectuses or Board resolutions. Assist Trust management in making
final determinations of distribution amounts.
C. Expense accruals. Prepare Fund expense projections and budgets,
establish accruals and review on a periodic basis, at least monthly,
including expenses based on a percentage of average daily net assets
(e.g., management, advisory and administrative fees) and expenses
based on actual charges annualized and accrued daily (audit fees,
registration fees, directors' fees, etc.). Provide expense budgeting
consulting to review expense ratios/fee waivers.
D. Expense payments. Arrange, if directed by the appropriate Trust
officers, for the payment of the Trust's and each Fund's expenses.
E. Reports to statistical service providers. Report Trust performance
to outside statistical service providers as directed by Trust
management. Provide all survey reporting services request by the
Trust.
F. SEC examinations. Provide support and coordinate communications and
data collection, of records and documents held by X.X. Xxxxxx on the
Trust's behalf, with respect to routine SEC regulatory examinations
of the Trust.
G. Bills. Allocate Fund bills based on client-directly methodology.
B-3
MUTUAL FUNDS SERVICE AGREEMENT
SCHEDULE C
DESCRIPTION OF FUND ACCOUNTING SERVICES
X.X. Xxxxxx shall provide the following accounting services to the Trust:
A. Maintenance of the books and records for the Trust 's assets,
including records of all securities transactions.
B. Maintenance of general and auxiliary ledgers reflecting all asset,
liability, capital income and expense accounts. Verify and reconcile
with the Trust's custodian and adviser all daily trade activity.
C. Calculation of each Fund's Net Asset Value in accordance with the
Prospectus and Statement of Additional Information, as presently in
effect, and as amended, supplement and/or superseded from time to
time. X.X. Xxxxxx shall prepare and maintain all documentation and
records as are necessary to reflect the determination of the Net
Asset Value per share for each Fund. After the Fund meets
eligibility requirements, transmission to NASDAQ and to such other
entities as directed by the Trust.
D. Accounting for dividends and interest received and distributions
made by the Trust.
E. Coordinate with the Trust 's independent auditors with respect to
the annual audit, and as otherwise requested by the Trust.
E. As mutually agreed upon, X.X. Xxxxxx will provide domestic and/or
international reports.
F. Provide all other related accounting services, including, but not
limited to, standard/automated inputs, trade processing, capital
stock processing, expense processing, portfolio income recognition,
corporate actions processing, market value calculations utilizing
automated price vendors, standard/automated reporting and deadlines,
rate calculation for daily distributing Funds, cash component
information and NAV calculation of PCF, Fund information reporting
to client and third party agencies, risk reporting (e.g.,
statistics, past due income, etc.), daily cash reconciliation,
weekly asset reconciliation, monthly SEC yield calculations,
external audit, SAS 70 and client due diligence coordination and
generally accepted accounting principles and materiality thresholds
to support a daily valuation environment.
C-1
