RYDEX ETF TRUST
DISTRIBUTION AGREEMENT
Dated as of August 1, 2010
Rydex Distributors, LLC
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Trust") has agreed that you
shall be, for the period of this agreement, the distributor of shares of each
series of the Trust set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Fund"). For purposes of this agreement the
term "Shares" shall mean the authorized shares of the relevant Fund.
1. DISTRIBUTION SERVICES
1.1 You will act as the sole agent of the Trust for the distribution of
Shares in Creation Units (as defined herein) covered by, and in accordance with,
the registration statement and prospectus then in effect under the Securities
Act of 1933, as amended (the "1933 Act") and will transmit promptly any orders
received by you for purchase or redemption of Shares in Creation Units to the
Transfer Agent for the Trust of which the Trust has notified you in writing. You
shall deliver or cause the delivery of a prospectus to persons purchasing Shares
in Creation Units and shall maintain records of both orders placed with you and
confirmations of acceptance furnished by you. You represent and warrant that you
are a broker-dealer registered under the Securities Exchange Act of 1934 (the
"1934 Act") and a member of the National Association of Securities Dealers, Inc.
You agree to comply with all of the applicable terms and provisions of the 1934
Act.
1.2 You agree to use your best efforts to perform the services contemplated
herein on a continuous basis. It is contemplated that you may enter into
"Authorized Participant Agreements" with broker-dealers who agree to solicit
orders for Shares. In addition, you may enter into sales or servicing agreements
with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms. In entering into sales or servicing agreements, you will act only on your
own behalf as principal.
1.3 You shall act as distributor of Shares in Creation Units in compliance
in all material respects with all applicable laws, rules and regulations,
including, without limitations, all rules and regulations made or adopted
pursuant to the Investment Company Act of 1940, as amended, (the "1940 Act") by
the Securities and Exchange Commission ("SEC") or any securities association
registered under the 1934 Act.
1
1.4 Whenever the parties hereto, in their collective judgment, mutually
agree that such action is warranted by unusual market, economic or political
conditions, or by abnormal circumstances of any kind deemed by them to render
sales of a Trust's Shares in Creation Units not in the best interest of the
Trust, the parties hereto may agree to decline to accept any orders for, or make
any sales of, any Shares in Creation Units until such time as the parties deem
it advisable to accept such orders and to make such sales.
1.5 The Trust agrees to pay all appropriate costs and expenses, including
but not limited to, all expenses in connection with the registration of Shares
under the 1933 Act and all expenses in connection with maintaining facilities
for the issue and transfer of Shares in Creation Units and for supplying
information, prices and other data to be furnished by the Trust hereunder, and
all expenses in connection with the preparation and printing of the Trust's
prospectuses and statements of additional information for regulatory purposes
and for distribution to shareholders; provided however, that the Trust shall not
pay any of the costs of advertising or promotion for the sale of Shares, except
as such payments may be made pursuant to Rule 12b-1 of the 0000 Xxx.
1.6 The Trust agrees to execute any and all documents and to furnish any
and all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Trust's officers in connection with the
qualification of Shares for sale in Creation Units in such states as you may
designate to the Trust and the Trust may approve, and the Trust agrees to pay
all expenses which may be incurred in connection with such qualification. You
shall pay all expenses connected with your own qualification as a dealer under
state or Federal laws and, except as otherwise specifically provided in this
agreement, all other expenses incurred by you in connection with the sale of
Shares in Creation Units as contemplated in this agreement.
1.7 The Trust shall furnish you from time to time, for use in connection
with the sale of Shares in Creation Units, such information with respect to the
Trust or any relevant Fund and the Shares as you may reasonably request, all of
which shall be signed by one or more of the Trust's duly authorized officers;
and the Trust warrants that the statements contained in any such information,
when so signed by the Trust's officers, shall be true and correct. The Trust
also shall furnish you upon request with: (a) semi-annual reports and annual
audited reports of the Trust's books and accounts made by independent public
accountants regularly retained by the Trust, (b) quarterly earnings statements
prepared by the Trust, (c) a monthly itemized list of the securities in the
Trust's or, if applicable, each Fund' portfolio, (d) monthly balance sheets as
soon as practicable after the end of each month, and (e) from time to time such
additional information regarding the Trust's financial condition as you may
reasonably request.
1.8 The Trust represents to you that all registration statements and
prospectuses filed by the Trust with the SEC under the 1933 Act, and under the
1940 Act, with respect to the Shares have been prepared in conformity with the
requirements of said Acts and rules and regulations of the SEC thereunder. As
used in this agreement the terms "registration statement" and "prospectus" shall
mean any registration statement and prospectus, including the statement of
additional information incorporated by reference therein, filed with the SEC and
any amendments and supplements thereto which at any time shall have been filed
with said Commission. The Trust represents and warrants to you that any
registration statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Trust
may, but shall not be obligated to,
2
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as it may deem
necessary or advisable. If the Trust shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days after receipt by
the Trust of a written request from you to do so, you may, at your option,
terminate this agreement or decline to make offers of the Trust's securities
until such amendments are made. The Trust will give you reasonable notice in
advance of its filing of any amendment to any registration statement or
supplement to any prospectus; provided, however, that nothing contained in this
agreement shall in any way limit the Trust's right to file at any time such
amendments to any registration statement and/or supplements to any prospectus,
of whatever character, as the Trust may deem advisable, such right being in all
respects absolute and unconditional.
1.9 No Shares shall be offered by either you or the Trust under any of the
provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 10 of said
Act is not on file with the SEC; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have any application to or
bearing upon the Trust's obligation to redeem or repurchase any Shares from any
shareholder in accordance with the provisions of the Trust's prospectus or
charter documents.
1.10 The Trust authorizes you and any dealers with whom you have entered
into dealer agreements to use any prospectus in the form most recently furnished
by the Trust in connection with the sale of Shares in Creation Units.
1.11. The Trust agrees to advise you immediately in writing of the
occurrence of any of the following events, as soon as any such event comes to
the attention of the Trust:
(a) any request by the SEC for amendments to the registration
statement or prospectus then in effect or for additional information;
(b) the event of the issuance by the SEC of any stop order suspending
the effectiveness of the registration statement or prospectus then in
effect or the initiation of any proceeding for that purpose;
(c) the happening of any event which makes untrue any statement of a
material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) all actions of the SEC with respect to any amendments to any
registration statement or prospectus which may from time to time be filed
with the SEC.
2. ANTI-MONEY LAUNDERING SERVICES
The Trust hereby delegates to you, and you agree to accept the delegation
of, the performance, on behalf of the Trust, of those anti-money laundering
services (the "AML Services") set forth in Exhibit B concerning those retailing
broker-dealers that open accounts with the Trust in order to purchase creation
units of the Trust's Funds into inventory and then sell them to the public. You
agree to the foregoing delegation and agree that you will perform the delegated
AML Services in accordance with the Trust's AML Program. In connection
therewith, you agree to maintain policies and procedures, and related internal
controls, that are consistent with the Trust's AML Program and the requirement
that the
3
Trust employ procedures reasonably designed to achieve compliance with
applicable anti-money laundering laws, regulations and rules, including the
requirement to have policies and procedures that can be reasonably expected to
detect and cause the reporting of transactions under the Bank Secrecy Act, as
amended by the USA PATRIOT Act of 2001. You also agree to keep and maintain on
behalf of the Trust all books and records which the Trust and you are, or may
be, required to keep and maintain pursuant to any applicable laws, regulations,
and rules, including without limitation Rules 31a-1 and 31a-2 under the 1940
Act, relating to the maintenance of books and records in connection with the AML
services to be provided hereunder. You further agree that all such books and
records shall be the property of the Trust and to make such books and records
available for inspection by the Trust or by the Trust's regulators, including
the SEC, at reasonable times and otherwise to keep confidential all books and
records and other information relative to the Trust and its shareholders
consistent with the requirements of Regulation S-P.
2.1 In providing the services and assuming the obligations set forth
herein, you may, contract with one or more third party service providers
("Servicers") as you deem appropriate in connection with the performance of your
duties and obligations hereunder. Reference herein to your duties and
responsibilities shall include the duties and responsibilities of any Servicer
contracted with by you to the extent that you shall delegate such duties and
responsibilities to such Servicer.
3. COMPENSATION
You will accept as compensation for the performance of your obligations
hereunder such compensation, if any, as may be provided for in any plan of
distribution adopted by the Trust with respect to the Trust or any Fund pursuant
to Rule 12b-1 under the 1940 Act.
4. TERM
This Agreement shall become effective with respect to each Fund of the
Trust as of the date hereof and will continue for an initial two-year term and
is renewable annually thereafter so long as such continuance is specifically
approved (i) by the Trust's Board on behalf of each Fund or (ii) by a vote of a
majority (as defined in the 0000 Xxx) of the Shares of the Trust or the relevant
Fund, as the case may be, provided that in either event its continuance also is
approved by a majority of the Board members who are not "interested persons" (as
defined in the 0000 Xxx) of any party to this Agreement, by vote cast in person
at a meeting called for the purpose of voting on such approval. This agreement
may be terminated in respect of a Fund at any time, without the payment of any
penalty, (i) by vote of a majority of the Directors who are not interested
persons of the Trust (as defined under the 0000 Xxx) or (ii) by vote of a
majority (as defined under the 0000 Xxx) of the outstanding voting securities of
the relevant Fund, on at least 60 days' written notice to you. This agreement
may also be terminated at any time by you, without the payment of any penalty,
upon 60 days' notice by you and will terminate automatically in the event of its
assignment (as defined under the 1940 Act).
5. INDEMNIFICATION
5.1 The Trust agrees to indemnify, defend and hold you, your several
officers and directors, and any person who controls you within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any reasonable counsel fees
incurred in connection therewith) which you, your officers and directors, or any
such controlling persons, may incur under the 1933 Act, the 1940 Act or common
law or otherwise, (a) arising out of or on the basis of any untrue statement, or
alleged untrue statement, of a material fact required to be stated in either any
registration statement or any prospectus or any statement of additional
information, or (b) arising out of or based
4
upon any omission, or alleged omission, to state a material fact required to be
stated in any registration statement, any prospectus or any statement of
additional information or necessary to make the statements in any of them not
misleading, (c) arising out of breach of any obligation, representation or
warranty pursuant to this Agreement by the Trust, or (d) the Trust's failure to
comply with applicable securities laws, except that the Trust's agreement to
indemnify you, your officers or directors, and any such controlling person will
not be deemed to cover any such claim, demand, liability or expense to the
extent that it arises out of or is based upon any such untrue statement, alleged
untrue statement, omission or alleged omission made in any registration
statement, any prospectus or any statement of additional information in reliance
upon information furnished by you, your officers, directors or any such
controlling person to the Trust or its representatives for use in the
preparation thereof, and except that the Trust's agreement to indemnify you and
the Trust's representations and warranties set out in paragraph 1.8 of this
Agreement will not be deemed to cover any liability to the Funds or their
shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties under this
Agreement ("Disqualifying Conduct"). The Trust's agreement to indemnify you,
your officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Trust's being notified of any action brought
against you, your officers or directors, or any such controlling person, such
notification to be given by letter, by facsimile or by telegram addressed to the
Trust at its address set forth above within a reasonable period of time after
the summons or other first legal process shall have been served. The failure so
to notify the Trust of any such action shall not relieve the Trust from any
liability which the Trust may have to the person against whom such action is
brought by reason of any such untrue, or alleged untrue, statement or omission,
or alleged omission, otherwise than on account of the Trust's indemnity
agreement contained in this paragraph 1.9. The Trust will be entitled to assume
the defense of any suit brought to enforce any such claim, demand or liability,
but, in such case, such defense shall be conducted by counsel of good standing
chosen by the Trust and approved by you. In the event the Trust elects to assume
the defense of any such suit and retain counsel of good standing approved by
you, the defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them; but in case the Trust does
not elect to assume the defense of any such suit, the Trust will reimburse you,
your officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the reasonable fees and expenses of
any counsel retained by you or them. The Trust's indemnification agreement
contained in this paragraph 1.9 and the Trust's representations and warranties
in this Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of you, your officers and directors,
or any controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to your benefit, to the benefit of
your several officers and directors, and their respective estates, and to the
benefit of any controlling persons or other affiliates, and their successors.
The Trust agrees promptly to notify you of the commencement of any litigation or
proceedings against the Trust or any of its officers or Board members in
connection with the issue and sale of Shares.
5.2 You agree to indemnify, defend and hold the Trust, its several officers
and Board members, and any person who controls the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which the Trust, its officers or Board members, or any
such controlling person, may incur under the 1933 Act, the 1940 Act, or under
common law or otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or Board members, or such controlling person
resulting from such claims or demands, (a) shall arise out of or be based upon
any information, statements or representations made or provided by you in any
sales literature or advertisements, or any Disqualifying Conduct by you in
connection with the offering and sale of any Shares, (b) shall arise out of or
be based upon any untrue, or alleged untrue, statement of a material fact
contained in information
5
furnished in writing by you to the Trust specifically for use in the Trust's
registration statement and used in the answers to any of the items of the
registration statement or in the corresponding statements made in the prospectus
or statement of additional information, or shall arise out of or be based upon
any omission, or alleged omission, to state a material fact in connection with
such information furnished in writing by you to the Trust and required to be
stated in such answers or necessary to make such information not misleading, (c)
arising out of your breach of any obligation, representation or warranty
pursuant to this Agreement, or (d) your failure to comply with applicable
securities laws. Your agreement to indemnify the Trust, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Trust, its officers
or Board members, or any such controlling person, such notification to be given
by letter, by facsimile or by telegram addressed to you at your address set
forth above within a reasonable period of time after the summons or other first
legal process shall have been served. The failure so to notify you of any such
action shall not relieve you from any liability which you may have to the Trust,
its officers or Board members, or to such controlling person by reason of any
such untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of your indemnity agreement contained in this
paragraph. You will be entitled to assume the defense of such action, but, in
such case, such defense shall be conducted by counsel of good standing chosen by
you and approved by an executive officer of the Trust, if such action is based
solely upon such alleged misstatement or omission on your part, and in any other
event Trust, its officers or Board members, or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of any such action. This agreement of indemnity will inure exclusively to the
Trust's benefit, to the benefit of the Trust's officers and Board members, and
their respective estates, and to the benefit of any controlling persons and
their successors. You agree promptly to notify the Trust of the commencement of
any litigation or proceedings against you or any of your officers or directors
in connection with the issue and sale of Shares.
6. MISCELLANEOUS
6.1 The Trust recognizes that your directors, officers and employees may
from time to time serve as directors, trustees, officers and employees of
corporations and business trusts (including other investment companies), and
that you or your affiliates may enter into distribution or other agreements with
such other corporations and trusts.
6.2 No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
6.3 This Agreement shall be governed by the laws of the State of Delaware,
without regard to principles of conflicts of laws.
6.4 The Declaration of Trust dated November 22, 2002, establishing the
Trust, which is hereby referred to and a Certification of Formation for which is
on file with the Secretary of State of the state of Delaware, provides that the
name Rydex ETF Trust means the Trustees from time to time serving (as Trustees
but not personally) under such Declaration of Trust. It is expressly
acknowledged and agreed that the obligations of the Trust hereunder shall not be
binding upon any of the shareholders, Trustees, officers, employees or agents of
the Trust, personally, but shall bind only the trust property of the Trust, as
provided in its Declaration of Trust. The execution and delivery of this
Agreement have been authorized by the Trustees of the Trust and signed by an
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
its Declaration of Trust. You understand
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and agree that the rights and obligations of each series of shares of the Trust
under the Declaration of Trust are separate and distinct from those of any and
all other series.
6.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
Please confirm that the foregoing is in accordance with your understanding
and indicate your acceptance hereof by signing below, whereupon it shall become
a binding agreement between us.
Very truly yours,
RYDEX ETF TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
Accepted:
RYDEX DISTRIBUTORS, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
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EXHIBIT A
FUND SYMBOL
---- ------
Rydex S&P Equal Weight ETF RSP
Rydex Xxxxxxx Top 50(R) ETF XLG
Rydex S&P 500 Pure Growth ETF RPG
Rydex S&P 500 Pure Value ETF RPV
Rydex S&P MidCap 400 Pure Growth ETF RFG
Rydex S&P MidCap 400 Pure Value ETF RFV
Rydex S&P SmallCap 600 Pure Growth ETF RZG
Rydex S&P SmallCap 600 Pure Value ETF RZV
Rydex S&P Equal Weight Consumer Discretionary ETF RCD
Rydex S&P Equal Weight Consumer Staples ETF RHS
Rydex S&P Equal Weight Energy ETF RYE
Rydex S&P Equal Weight Financials ETF RYF
Rydex S&P Equal Weight Health Care ETF RYH
Rydex S&P Equal Weight Industrials ETF RGI
Rydex S&P Equal Weight Materials ETF RTM
Rydex S&P Equal Weight Technology ETF RYT
Rydex S&P Equal Weight Utilities ETF RYU
Rydex 2x S&P 500 ETF RSU
Rydex Inverse S&P 500 ETF --
Rydex Inverse 2x S&P 500 ETF RSW
Rydex 2x S&P MidCap 400 ETF RMM
Rydex Inverse S&P MidCap 400 ETF --
Rydex Inverse 2x S&P MidCap 400 ETF RMS
Rydex 2x S&P SmallCap 600 ETF --
Rydex Inverse S&P SmallCap 600 ETF --
Rydex Inverse 2x S&P SmallCap 600 ETF --
Rydex 2x NASDAQ 100 ETF --
Rydex Inverse NASDAQ 100 ETF --
Rydex Inverse 2x NASDAQ 100 ETF --
Rydex 2x Xxxxxxx 2000(R) ETF RRY
Rydex Inverse Xxxxxxx 2000(R) ETF --
Rydex Inverse 2x Xxxxxxx 2000(R) ETF RRZ
Rydex 2x NASDAQ Biotech ETF --
Rydex Inverse NASDAQ Biotech ETF --
Rydex Inverse 2x NASDAQ Biotech ETF --
Rydex 2x Xxxxxxx 1000(R) ETF --
Rydex Xxxxxxx Xxxxxxx 0000(X) ETF --
Rydex Inverse 2x Xxxxxxx 1000(R) ETF --
Rydex Inverse 2x MSCI EAFE ETF --
Rydex Inverse 2x MSCI Emerging Markets ETF --
Rydex Inverse 2x MSCI Japan ETF --
Rydex Inverse 2x MSCI Taiwan ETF --
Rydex Inverse 2x MSCI Hong Kong ETF --
Rydex Inverse 2x MSCI Brazil ETF --
A-1
Rydex Inverse 2x S&P Europe 350 ETF --
Rydex Inverse 2x S&P/TOPIX 150 ETF --
Rydex Inverse 2x FTSE/Xinhua China 25 ETF --
Rydex Inverse 2x Xxxxxx 7-10 Year Treasury ETF --
Rydex Inverse 2x Xxxxxx 20+ Year Treasury ETF --
Rydex Inverse 2x Xxxxxx Aggregate Bond ETF --
Rydex Inverse 2x LB U.S. Corporate High-Yield ETF --
Rydex 2x S&P Select Sector Consumer Discretionary ETF
Rydex Inverse 2x S&P Select Sector Consumer Discretionary ETF
Rydex 2x S&P Select Sector Consumer Staples ETF
Rydex Inverse 2x S&P Select Sector Consumer Staples ETF
Rydex 2x S&P Select Sector Energy ETF
Rydex Inverse 2x S&P Select Sector Energy ETF
Rydex 2x S&P Select Sector Financial ETF
Rydex Inverse 2x S&P Select Sector Financial ETF
Rydex 2x S&P Select Sector Health Care ETF
Rydex Inverse 2x S&P Select Sector Health Care ETF
Rydex 2x S&P Select Sector Industrials ETF
Rydex Inverse 2x S&P Select Sector Industrials ETF
Rydex 2x S&P Select Sector Materials ETF
Rydex Inverse 2x S&P Select Sector Materials ETF
Rydex 2x S&P Select Sector Technology ETF
Rydex Inverse 2x S&P Select Sector Technology ETF
Rydex 2x S&P Select Sector Utilities ETF
Rydex Inverse 2x S&P Select Sector Utilities ETF
Rydex MSCI Equal Weight EAFE ETF
Rydex S&P 700 Equal Weight ETF
Rydex Xxxxxxx XxxXxx Equal Weight ETF
Rydex Xxxxxxx 1000(R) Equal Weight ETF
Rydex Xxxxxxx 2000(R) Equal Weight ETF
Rydex Xxxxxxx BRIC Equal Weight ETF
Rydex Xxxxxxx Greater China Large Cap Equal Weight ETF
Rydex MSCI EAFE Equal Weight ETF
Rydex MSCI Emerging Markets Equal Weight ETF
Rydex MSCI ACWI Equal Weight ETF
A-2
EXHIBIT B
AML SERVICES
1. Establish and implement an AML Program, including a Customer Identification
Program ("CIP"), that is consistent with applicable anti-money laundering
laws, regulations and rules ("Applicable AML Laws") and the Trust's AML
Program.
2. Respond promptly to requests from Financial Crimes Enforcement Network
("FinCEN"), a department of the U.S. Treasury, about accounts or
transactions by reporting to FinCEN the identity of the specified
individual or organization, the account number, all identifying information
provided by the account holder when the account was established, and the
date and type of transaction, after providing notice to the Trust to the
extent reasonably practical and allowed by Applicable AML Laws.
3. Share information with the Trust, and other financial institutions as
requested by the Trust, regarding those suspected of terrorism and money
laundering for the purposes of identifying and reporting activities that
may involve terrorist acts or money laundering activities in compliance
with Applicable AML Laws.
4. File with FinCEN an initial notice before sharing any information with any
other financial institutions, including affiliates, and file annual notices
afterwards using forms made available at XXX.XXXXXX.XXX and take reasonable
steps to verify that the other financial institution has submitted the
requisite notice to FinCEN, either by obtaining confirmation from the
financial institution or by consulting a list of such financial
institutions that FinCEN will make available.
5. Identify and verify the identity of all shareholders upon the opening of
new accounts in compliance with Applicable AML Laws.
6. Perform additional due diligence to verify the identity of shareholders
with accounts that may pose a greater risk of terrorism or money laundering
activity, such as foreign accounts, domestic or foreign corporate or
business entity accounts, domestic or foreign trust accounts, offshore
accounts, intermediary accounts, account in high risk and non-cooperative
jurisdictions, and senior foreign government or public official accounts in
compliance with Applicable AML Laws.
7. Check shareholders against Treasury's Office of Foreign Assets Control
("OFAC") list of "Specifically Designated Nationals and Blocked Persons
List" and similar lists of terrorists received from governmental agencies,
and place holds on transactions in shareholder accounts or freeze assets in
shareholder accounts, as required by Applicable AML Laws.
8. Provide notices to shareholders, prior to the opening of an account or
trading authority is granted, that the Trust will request information, from
either the shareholder or a third party, to verify the identity of the
shareholder in compliance with Applicable AML Laws.
9. Monitor, identify and report shareholder transactions and identify and
report suspicious activities that are required to be so identified and
reported, and provide other required reports to the SEC, the U.S. Treasury
Department, the Internal Revenue Service or each
B-1
agent's designated agent, in each case consistent with the Trust's AML
Program.
10. Maintain the confidentiality of any reports provided to the SEC, the U.S.
Treasury Department, the Internal Revenue Service or each agency's
designated agent in compliance with Applicable AML Laws.
11. Create documentation to provide a basis for law enforcement authorities to
trace illicit funds.
12. Maintain all records or other documentation related to shareholder accounts
and transactions therein that are required to be prepared and maintained
pursuant to the Trust's AML Program, and make the same available for
inspection by (i) the Trust's AML Compliance Officer, the Board, or the
independent auditor of the Board, (ii) any auditor of the Trust's AML
Program or related procedures, policies or controls that has been
designated by the Trust in writing, or (iii) regulatory or law enforcement
authorities, and otherwise make said records or other documents available
at the reasonable direction of the Trust's AML Compliance Officer.
13. Arrange for periodic reviews of the AML Services of the Distributor at
least annually, which reviews are performed by qualified outside parties
knowledgeable about Applicable AML Laws, but not involved in the day-to-day
operation of the AML Services.
14. Develop and implement an ongoing employee training program providing
training, at least annually, with regard to how to identify red flags and
signs of terrorism or money laundering activities, what to do if such a red
flag is identified, AML record retention policies, and the consequences of
not complying with the Applicable AML Laws.
15. Perform such other related services as are required by the Trust's AML
Program as it relates to shareholder accounts that are maintained pursuant
to omnibus account relationships between the Distributor and
Sub-Distributors pursuant to certain Dealer Agreements that the Distributor
may elect to enter into from time to time.
16. Provide a copy of the Distributor's AML Program, and promptly provide any
subsequent amendments thereto, and an annual written certification to the
Trust that the Distributor has implemented an AML Program that is
consistent with the AML Program of the Trust and will perform the specified
requirements of the CIP.
B-2
