FUND ADMINISTRATION AND ACCOUNTING AGREEMENT
Exhibit (h)(1)
FUND ADMINISTRATION AND ACCOUNTING AGREEMENT
AGREEMENT made as of April 24, 2003, amended June 21, 2005 and as amended September 27, 2005 by and between PowerShares Exchange-Traded Fund Trust (the “Fund”), and The Bank of New York, a New York banking organization (“BNY”).
W I T N E S S E T H :
WHEREAS, the Fund is an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Fund desires to retain BNY to provide for the portfolios identified on Exhibit A hereto (each, a “Series”) the services described herein, and BNY is willing to provide such services, all as more fully set forth below;
NOW, THEREFORE, in consideration of the mutual promises and agreements contained herein, the parties hereby agree as follows:
1. Appointment.
The Fund hereby appoints BNY as its agent for the term of this Agreement to perform the services described herein. BNY hereby accepts such appointment and agrees to perform the duties hereinafter set forth.
2. Representations and Warranties.
The Fund hereby represents and warrants to BNY, which representations and warranties shall be deemed to be continuing, that:
(a) It is duly organized and existing under the laws of the jurisdiction of its organization, with full power to carry on its business as now conducted, to enter into this Agreement and to perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered by the Fund in accordance with all requisite action and constitutes a valid and legally binding obligation of the Fund, enforceable in accordance with its terms;
(c) It is conducting its business in compliance with all applicable laws and regulations, both state and federal, and has obtained all regulatory licenses, approvals and consents necessary to carry on its business as now conducted; there is no statute, regulation, rule, order or judgment binding on it and no provision of its Fund Agreement or by-laws, nor of any mortgage, indenture, credit agreement or other contract binding on it or affecting its property which would prohibit its execution or performance of this Agreement; and
(d) To the extent the performance of any services described in Schedule II attached hereto by BNY in accordance with the then effective Prospectus (as hereinafter defined) for the Fund would violate any applicable laws or regulations, the Fund shall immediately so notify BNY in writing and thereafter shall either furnish BNY with the appropriate values of securities, net asset value or other computation, as the case may be, or, subject to the prior approval of BNY, instruct BNY in writing to value securities and/or compute net asset value or other computations in a manner the Fund specifies in writing, and either the furnishing of such values or the giving of such instructions shall constitute a representation by the Fund that the same is consistent with all applicable laws and regulations and with its Prospectus.
3. Delivery of Documents.
(a) The Fund will promptly deliver to BNY true and correct copies of each of the following documents as currently in effect and will promptly deliver to it all future amendments and supplements thereto, if any:
(i) The Fund’s Fund Agreement or other organizational document and all amendments thereto (the “Fund Agreement”);
(ii) The Fund’s bylaws (the “Bylaws”);
(iii) Resolutions of the Fund’s Trustees authorizing the execution, delivery and performance of this Agreement by the Fund;
(iv) The Fund’s registration statement most recently filed with the Securities and Exchange Commission (the “SEC”) relating to the shares of the Fund (the “Registration Statement”);
(v) The Fund’s Notification of Registration under the 1940 Act on Form N-8A filed with the SEC; and
(vi) The Fund’s Prospectus and Statement of Additional Information pertaining to the Series (collectively, the “Prospectus”).
(b) The copy of the Fund Agreement shall be certified by the Secretary of State (or other appropriate official) of the state of organization, and if the Fund Agreement is required by law also to be filed with a county or other officer or official body, a certificate of such filing shall be filed with a certified copy submitted to BNY. Each copy of the Bylaws, Registration Statement and Prospectus, and all amendments thereto, and copies of Fund resolutions, shall be certified by the Secretary or an Assistant Secretary of the Fund.
(c) It shall be the sole responsibility of the Fund to deliver to BNY its currently effective Prospectus and BNY shall not be deemed to have notice of any information contained in such Prospectus until it is actually received by BNY.
4. Duties and Obligations of BNY.
(a) Subject to the direction and control of the Fund’s Trustees and the provisions of this Agreement, BNY shall provide to the Fund (i) the administrative services set forth on Schedule I attached hereto and (ii) the valuation and computation services listed on Schedule II attached hereto.
(b) In performing hereunder, BNY shall provide, at its expense, office space, facilities, equipment and personnel.
(c) BNY shall not provide any services relating to the management, investment advisory or sub-advisory functions of the Fund, distribution of shares of the Fund, maintenance of the Fund’s financial records, except to the extent specifically set forth herein or other services normally performed by the Funds’ respective counsel or independent auditors.
(d) Upon receipt of the Fund’s prior written consent (which shall not be unreasonably withheld), BNY may delegate any of its duties and obligations hereunder to any delegee or agent whenever and on such terms and conditions as it deems necessary or appropriate. Notwithstanding the foregoing, no Fund consent shall be required for any such delegation to any other subsidiary of The Bank of New York Company, Inc., and BNY shall be deemed to have taken or omitted any action taken or omitted by any such subsidiary.
(e) The Fund shall cause its officers, advisors, sponsor, distributor, legal counsel, independent accountants, current administrator (if any) and transfer agent to cooperate with BNY and to provide BNY, upon request, with such information or documents relating to the Fund as is within the possession or knowledge of such persons, in order to enable BNY to perform its duties hereunder. In connection with its duties hereunder, BNY shall be entitled to rely, and shall be held harmless by the Fund when acting in reliance, upon the any such information or documents provided to BNY, or upon any advice received from (i) a person reasonably believed by BNY to have been identified by the Fund as authorized to give advice on behalf of the Fund or its advisors (each an “Authorized Person”) (ii) Fund Counsel, or (iii) the Fund’s Independent Accountants. BNY shall not be liable for any loss, damage or expense resulting from or arising out of the failure of the Fund to cause any information, documents or advice from legal counsel or independent accountants to be provided to BNY as provided herein. All fees or costs charged by such persons shall be borne by the Fund.
(f) Nothing in this Agreement shall limit or restrict BNY, any affiliate of BNY or any officer or employee thereof from acting for or with any third parties, and providing services similar or identical to same or all of the services provided hereunder.
(g) The Fund shall furnish BNY with any and all instructions, explanations, information, specifications and documentation deemed necessary by BNY in the performance of its duties hereunder, including, without limitation, the amounts or written formula for calculating the amounts and times of accrual of Fund liabilities and expenses. BNY shall not be required to include as the Fund liabilities and expenses, nor as a reduction of net asset value, any accrual for
any federal, state, or foreign income taxes unless the Fund shall have specified to BNY the precise amount of the same to be included in liabilities and expenses or used to reduce net asset value. The Fund shall also furnish BNY with bid, offer, or market values of Securities if BNY notifies the Fund that same are not available to BNY from a security pricing or similar service utilized, or subscribed to, by BNY which BNY in its judgment deems reliable at the time such information is required for calculations hereunder. At any time and from time to time, the Fund also may furnish BNY with bid, offer, or market values of Securities and instruct BNY to use such information in its calculations hereunder. BNY shall at no time be required or obligated to commence or maintain any utilization of, or subscriptions to, any securities pricing or similar service.
(h) BNY may apply to an officer of the Fund for written instructions with respect to any matter arising in connection with BNY’s performance hereunder for the Fund, and BNY shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with such instructions. Such application for instructions may, at the option of BNY, set forth in writing any action proposed to be taken or omitted to be taken by BNY with respect to its duties or obligations under this Agreement and the date on and/or after which such action shall be taken, and BNY shall not be liable for any action taken or omitted to be taken in accordance with a proposal included in any such application on or after the date specified therein unless, prior to taking or omitting to take any such action, BNY has received written instructions in response to such application specifying the action to be taken or omitted.
(i) BNY may consult with counsel to the Fund or its own outside counsel, at the Fund’s expense, and shall be fully protected with respect to anything done or omitted by it in good faith in accordance with the advice or opinion of such counsel.
(j) Notwithstanding any other provision contained in this Agreement or Schedule I or II attached hereto, BNY shall have no duty or obligation to with respect to, including, without limitation, any duty or obligation to determine, or advise or notify the Fund of: (i) the taxable nature of any distribution or amount received or deemed received by, or payable to the Fund, (ii) the taxable nature or effect on the Fund or its shareholders of any corporate actions, class actions, tax reclaims, tax refunds or similar events, (iii) the taxable nature or taxable amount of any distribution or dividend paid, payable or deemed paid, by the Fund to its shareholders; or (iv) the effect under any federal, state, or foreign income tax laws of the Fund making or not making any distribution or dividend payment, or any election with respect thereto.
(k) BNY shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and Schedules I and II attached hereto, and no covenant or obligation shall be implied against BNY in connection with this Agreement.
(l) BNY, in performing the services required of it under the terms of this Agreement, shall be entitled to rely fully on the accuracy and validity of any and all instructions, explanations, information, specifications and documentation furnished to it by any authorized person on behalf of the Fund and shall have no duty or obligation to review the accuracy, validity or propriety of such instructions, explanations, information, specifications or documentation,
including, without limitation, evaluations of securities; the amounts or formula for calculating the amounts and times of accrual of Series’ liabilities and expenses; the amounts receivable and the amounts payable on the sale or purchase of Securities; and amounts receivable or amounts payable for the sale or redemption of Fund shares effected by or on behalf of the Fund. In the event BNY’s computations hereunder rely, in whole or in part, upon information, including, without limitation, bid, offer or market values of securities or other assets, or accruals of interest or earnings thereon, from a pricing or similar service utilized, or subscribed to, by BNY which BNY in its judgment deems reliable, BNY shall not be responsible for, under any duty to inquire into, or deemed to make any assurances with respect to, the accuracy or completeness of such information. Without limiting the generality of the foregoing, BNY shall not be required to inquire into any valuation of securities or other assets by the Fund or any third party described in this (l) even though BNY in performing services similar to the services provided pursuant to this Agreement for others may receive different valuations of the same or different securities of the same issuers.
(m) BNY, in performing the services required of it under the terms of this Agreement, shall not be responsible for determining whether any interest accruable to the Fund is or will be actually paid, but will accrue such interest until otherwise instructed by the Fund.
(n) BNY shall not be responsible for delays or errors which occur by reason of circumstances beyond its control in the performance of its duties under this Agreement, including, without limitation, labor difficulties within or without BNY, mechanical breakdowns, flood or catastrophe, acts of God, failures of transportation, interruptions, loss, or malfunctions of utilities, communications or computer (hardware or software) services. Nor shall BNY be responsible for delays or failures to supply the information or services specified in this Agreement where such delays or failures are caused by the failure of any person(s) other than BNY to supply any instructions, explanations, information, specifications or documentation deemed necessary by BNY in the performance of its duties under this Agreement.
5. Allocation of Expenses.
Except as otherwise provided herein, all costs and expenses arising or incurred in connection with the performance of this Agreement shall be paid by the Fund, including but not limited to, organizational costs and costs of maintaining corporate existence, taxes, interest, brokerage fees and commissions, insurance premiums, compensation and expenses of the Fund’s Trustees, directors, officers or employees, legal, accounting and audit expenses, management, advisory, sub-advisory, administration and shareholder servicing fees, charges of custodians, transfer and dividend disbursing agents, expenses (including clerical expenses) incident to the issuance, redemption or repurchase of the Fund shares, fees and expenses incident to the registration or qualification under federal or state securities laws of the Fund or its shares, costs (including printing and mailing costs) of preparing and distributing Prospectuses, reports, notices and proxy material to the Fund’s shareholders, all expenses incidental to holding meetings of the Fund’s Trustees, directors and shareholders, and extraordinary expenses as may arise, including litigation affecting the Fund and legal obligations relating thereto for which the Fund may have to indemnify its Trustees, directors and officers.
6. Standard of Care; Indemnification.
(a) Except as otherwise provided herein, BNY shall not be liable for any costs, expenses, damages, liabilities or claims (including attorneys’ and accountants’ fees) incurred by the Fund, except those costs, expenses, damages, liabilities or claims arising out of BNY’s own negligence or willful misconduct. In no event shall BNY be liable to the Fund or any third party for special, indirect or consequential damages, or lost profits or loss of business, arising under or in connection with this Agreement, even if previously informed of the possibility of such damages and regardless of the form of action, but BNY shall indemnify the Fund against direct money damages arising out of BNY’s own negligence or willful misconduct. BNY shall not be liable for any loss, damage or expense, including counsel fees and other costs and expenses of a defense against any claim or liability, resulting from, arising out of, or in connection with its performance hereunder, including its actions or omissions, the incompleteness or inaccuracy of any specifications or other information furnished by the Fund, or for delays caused by circumstances beyond BNY’s control, unless such loss, damage or expense arises out of the negligence or willful misconduct of BNY.
(b) The Fund shall indemnify and hold harmless BNY from and against any and all costs, expenses, damages, liabilities and claims (including claims asserted by the Fund), and reasonable attorneys’ and accountants’ fees relating thereto, which are sustained or incurred or which may be asserted against BNY, by reason of or as a result of any action taken or omitted to be taken by BNY in good faith hereunder or in reliance upon (i) any law, act, regulation or interpretation of the same even though the same may thereafter have been altered, changed, amended or repealed, (ii) the Fund’s Registration Statement or Prospectus, (iii) any instructions of an Authorized Person, or (iv) any opinion of legal counsel for the Fund or BNY, or arising out of transactions or other activities of the Fund which occurred prior to the commencement of this Agreement; provided, that the Fund shall not indemnify BNY for costs, expenses, damages, liabilities or claims for which BNY is liable under preceding 6(a). This indemnity shall be a continuing obligation of the Fund, its successors and assigns, notwithstanding the termination of this Agreement. Without limiting the generality of the foregoing, the Fund shall indemnify BNY against and save BNY harmless from any loss, damage or expense, including counsel fees and other costs and expenses of a defense against any claim or liability, arising from any one or more of the following:
(i) Errors in records or instructions, explanations, information, specifications or documentation of any kind, as the case may be, supplied to BNY by any third party described above in 4(e) or 4(g) above;
(ii) Action or inaction taken or omitted to be taken by BNY pursuant to written or oral instructions of the Fund or otherwise without negligence or willful misconduct;
(iii) Any action taken or omitted to be taken by BNY in good faith in accordance with the advice or opinion of counsel for the Fund or its own outside counsel;
(iv) Any improper use by the Fund or its agents, distributor or investment advisor of any valuations or computations supplied by BNY pursuant to this Agreement;
(v) The method of valuation of the securities and the method of computing each Series’ net asset value; or
(vi) Any valuations of securities or net asset value provided by the Fund.
(c) Actions taken or omitted in reliance on oral or written instructions, or upon any information, order, indenture, stock certificate, power of attorney, assignment, affidavit or other instrument reasonably believed by BNY to be genuine or bearing the signature of a person or persons believed to be authorized to sign, countersign or execute the same, or upon the opinion of legal counsel for the Fund or its own outside counsel, shall be conclusively presumed to have been taken or omitted in good faith.
(d) Notwithstanding any other provision contained in this Agreement, BNY shall have no duty or obligation with respect to, including, without limitation, any duty or obligation to determine, or advise or notify the Fund of: (a) the taxable nature of any distribution or amount received or deemed received by, or payable to the Fund; (b) the taxable nature or effect on the Fund or its shareholders of any corporate actions, class actions, tax reclaims, tax refunds, or similar events; (c) the taxable nature or taxable amount of any distribution or dividend paid, payable or deemed paid, by the Fund to its shareholders; or (d) the effect under any federal, state, or foreign income tax laws of the Fund making or not making any distribution or dividend payment, or any election with respect thereto.
7. Record Retention and Confidentiality.
BNY shall keep and maintain on behalf of the Fund all books and records which the Fund and BNY are, or may be, required to keep and maintain in connection with the services to be provided hereunder pursuant to any applicable statutes, rules and regulations, including, without limitation, Rules 31a-1 and 31a-2 under the 1940 Act. BNY further agrees 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 Fund, by the investment adviser to the Fund, or by the SEC at reasonable times.
8. Regulation S-P.
BNY agrees to make reasonable efforts to adhere to the Fund’s policy regarding the use of Fund Shareholder and potential shareholder information as required by Regulation S-P. BNY shall be free to share information regarding Fund shareholders and potential Fund shareholders, on an as needed basis in order to fulfill its role as administrator, with other authorized agents of the Fund including service providers and brokers. BNY shall also be free to provided such information to its internal and external auditors, counsel and accountants, its
regulators and examiners, and to any other person when advised by its counsel that it could be liable for a failure to provide such information.
9. Compensation.
For the services provided hereunder, the Fund agrees to pay BNY such compensation as is mutually agreed from time to time and such out-of-pocket expenses (e.g., telecommunication charges, postage and delivery charges, record retention costs, reproduction charges and transportation and lodging costs) as are incurred by BNY in performing its duties hereunder. Except as hereinafter set forth, compensation shall be calculated and accrued daily and paid monthly. The Fund authorizes BNY to debit the Fund’s custody account for all amounts due and payable hereunder. BNY shall deliver to the Fund invoices for services rendered after debiting the Fund’s custody account with an indication that payment has been made. Upon termination of this Agreement before the end of any month, the compensation for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the effective date of termination of this Agreement. For the purpose of determining compensation payable to BNY, the Fund’s net asset value shall be computed at the times and in the manner specified in the Fund’s Prospectus.
10. Term of Agreement.
(a) This Agreement shall continue until terminated by either BNY giving to the Fund, or the Fund giving to BNY, a notice in writing specifying the date of such termination, which date shall be not less than 90 days after the date of the giving of such notice. Upon termination hereof, the Fund shall pay to BNY such compensation as may be due as of the date of such termination, and shall reimburse BNY for any disbursements and expenses made or incurred by BNY and payable or reimbursable hereunder.
(b) Notwithstanding the foregoing, BNY may terminate this Agreement upon 30 days prior written notice to the Fund if the Fund shall terminate its custody agreement with The Bank of New York, or fail to perform its obligations hereunder in a material respect.
11. Authorized Persons.
Attached hereto as Exhibit B is a list of persons duly authorized by the Trustees of the Fund to execute this Agreement and give any written or oral instructions, or written or oral specifications, by or on behalf of the Fund. From time to time the Fund may deliver a new Exhibit B to add or delete any person and BNY shall be entitled to rely on the last Exhibit B actually received by BNY.
12. Amendment.
This Agreement may not be amended or modified in any manner except by a written agreement executed by BNY and the Fund, and authorized or approved by the Fund’s Trustees.
13. Assignment.
This Agreement shall extend to and shall be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the written consent of BNY, or by BNY without the written consent of the Fund accompanied by the authorization or approval of the Fund’s Trustees.
14. Governing Law; Consent to Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State of New York, without regard to conflict of laws principles thereof. The Fund hereby consents to the jurisdiction of a state or federal court situated in New York City, New York in connection with any dispute arising hereunder, and waives to the fullest extent permitted by law its right to a trial by jury. To the extent that in any jurisdiction the Fund may now or hereafter be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (before or after judgment) or other legal process, the Fund irrevocably agrees not to claim, and it hereby waives, such immunity.
15. Severability.
In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations shall not in any way be affected or impaired thereby, and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances.
16. No Waiver.
Each and every right granted to BNY hereunder or under any other document delivered hereunder or in connection herewith, or allowed it by law or equity, shall be cumulative and may be exercised from time to time. No failure on the part of BNY to exercise, and no delay in exercising, any right will operate as a waiver thereof, nor will any single or partial exercise by BNY of any right preclude any other or future exercise thereof or the exercise of any other right.
17. Limitations of Liability of the Trustees and Shareholders.
It is expressly acknowledged and agreed that the obligations of the Fund 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.
18. Notices.
All notices, requests, consents and other communications pursuant to this Agreement in writing shall be sent as follows:
if to the Fund, at
PowerShares Exchange-Traded Fund Trust
Wheaton Oaks Professional Building
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
if to BNY, at
The Bank of Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ETF Services
or at such other place as may from time to time be designated in writing. Notices hereunder shall be effective upon receipt.
19. Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original; but such counterparts together shall constitute only one instrument.
20. Several Obligations.
The parties acknowledge that the obligations of the Funds hereunder are several and not joint, that no Fund shall be liable for any amount owing by another Fund and that the Funds have executed one instrument for convenience only.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their seals to be hereunto affixed, all as of the day and year first above written.
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POWERSHARES EXCHANGE-TRADED | |
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FUND TRUST | |
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By: |
/s/ H. Xxxxx Xxxx |
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Title: |
President |
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THE BANK OF NEW YORK | |
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By: |
/s/ Xxxx Xxxxxxx |
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Title: |
Vice President |
EXHIBIT B
I, Xxxxx xxxx CEO, PowerShares Exchange Traded Fund Trust, a Massachusetts Fund (the “Fund”), do hereby certify that:
The following individuals serve in the following positions with the Fund, and each has been duly elected or appointed by the Fund to each such position and qualified therefor in conformity with the Fund’s Fund Agreement and By-Laws, and the signatures set forth opposite their respective names are their true and correct signatures. Each such person is authorized to give written or oral instructions or written or oral specifications by or on behalf of the Fund to BNY.
H. Xxxxx Xxxx |
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President & CEO |
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/s/ H. Xxxxx Xxxx |
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Xxxx X. Xxxxxxxx |
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Managing Director |
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/s/ Xxxx X. Xxxxxxxx |
SCHEDULE 1
ADMINISTRAVITE SERVICES
1. Oversee the maintenance by the Fund’s custodian of certain books and records of the fund as required under Rule 31a-1(b) of the 1940 Act.
2. Review calculation, submit for approval by officers of the Fund and arrange for payment of the Fund’s expenses.
3. Prepare for review and approval by an officer and Treasurer for the Fund, its counsel and its independent accountants financial information for the Fund’s semi-annual and annual reports, proxy statements and other communications required or otherwise to be sent to Fund shareholders and arrange for the printing and discrimination of such reports and communications to record and beneficial shareholders through The Depository Fund Company.
4. Prepare for review and approval by an officer and Treasurer of the Fund, its counsel and its independent accountants the Fund’s periodic financial reports required to be filed with the Securities and Exchange commission (“SEC”) on Form N-SAR and financial information required by Form N-1A and such other reports, forms or filing as may be mutually agreed upon;
5. Prepare recommendations as to each Fund’s income and capital gains available for distribution; calculate such distributions for each Fund in accordance with applicable regulations and the distribution for each Fund in accordance with applicable regulations and the distribution policies set forth in the Fund’s registration statement, and assist Fund management in making final determination of distribution amounts;
6. Oversee and review calculation of fees paid to the Fund’s investment adviser, custodian and Transfer Agent;
7. Respond to, or refer to the Fund’s officers or the Distributor or the Transfer Agent shareholder inquiries relating to the Fund;
8. Provide periodic testing of portfolios to assist the Trust’s investment adviser in complying with Internal Revenue Code mandatory qualification requirements, the requirements of the 1940 Act and Fund prospectus limitations as my be mutually agreed upon;
9. Review and provide assistance on shareholder communications;
10. Prepare for review and approval by an officer and Treasurer of the fund, its counsel and its independent accountants and file annual and semi-annual shareholder reports with the appropriate regulatory agencies; review text of “President’s letters” to shareholders and
“Management’s Discussion of Fund Performance” (which shall also be subject to review by the Fund’s legal counsel);
11. Organize, attend and prepare minutes of shareholder meetings.
12. Counsel and assist the fund in the handling of routing regulatory examinations and work closely with the Fund’s legal counsel in response to any non-routine regulatory matters.
13. Prepare for review and approval by an officer and Treasurer for the Fund, its counsel and its independent accountants and file with the SEC amendments to the Fund’s registration statement, including updating the Prospectus and Statement of Additional Information, where applicable;
14. Prepare for review and approval by an officer and Treasurer for the Fund, its counsel and its independent accountants and file with the SEC proxy statements; provide consultation on proxy solicitation matters.
15. Prepared agenda and background materials for Board meetings, make presentation where appropriate, prepare minutes and follow-up on matters raised at Board meetings;
16. Prepare and file with the SEC Rule 24f-2 notices
SCHEDULE II
VALUATION AND COMPUTATION SERVICES
I. BNY shall maintain the following records on a daily basis for each Series.
1. Report of priced portfolio securities
2. Statement of net asset value per share
II. BNY shall prepare and on behalf of the Fund all books and records of the Fund as required by Rule 31a-1 under the 1940 Act, and as such rule or any successor rule, may be amended from time to time, that are applicable to the fulfillment of BNY’s duties hereunder, as well as any other documents necessary or advisable for compliance with applicable regulation as may be mutually agreed to between the Fund and BNY. Without limiting the generality of the foregoing, BNY will prepare and maintain the following records upon receipt of information in proper form from the Fund or its authorized agents:
1. General Ledger
2. General Journal
3. Cash Receipts Journal
4. Cash Disbursements Journal
5. Subscriptions Journal
6. Redemptions Journal
7. Accounts Receivable Reports
8. Accounts Payable Reports
9. Open Subscriptions/Redemption Reports
10. Transaction (Securities) Journal
11. Broker Net Trades Reports
III BNY shall prepare a Holdings Ledger on a quarterly basis, and a Buy-Sell Ledger (Broker’s Ledger) on a semiannual basis for each Series. Schedule D shall be produced on an annual basis for each Series.
The above reports may be printed according to any other required frequency to meet the requirements of the Internal Revenue Service, The Securities and Exchange Commission and the Fund’s Auditors.
IV. For internal control purposes, BNY uses the Account Journals produced by The Bank of New York Custody System to record daily settlements of the following for each Series:
1. Securities bought
2. Securities sold
3. Interest received
4. Dividends received
5. Capital stock sold
6. Capital stock redeemed
7. Other income and expenses
All portfolio purchases for the Fund are recorded to reflect expected maturity value and total cost including any prepaid interest.
Fee Schedule
DOMESTIC CUSTODY, ETF TRANSFER AGENCY,
FUND ACCOUNTING, AND
FUND AMDINISTRATION
FEE PROPOSAL
for
PowerShares Capital Management LLC
ETFs
Safekeeping/Securities Processing/Income Collection/All Reporting
3/4 basis point annually on the first $1 billion in total gross adjusted assets.
1/2 basis point annually on the excess over $1 billion in total gross adjusted assets.
Securities Transaction Charges
$ 5 Automated Book-Entry Settlements/Paydowns-DTC/FRB
$10 Manual Book-Entry Settlements/Paydowns-DTC/FRB
$15 Physical Settlements, Options, Futures, and Other Derivatives
$40 Eurodollar C/D’s
Federal Funds Wires/Official Checks
$ 6 For wires not related to securities transactions and checks requested to pay corporate expenses.
Monthly Minimum Safekeeping Fee
There is a monthly minimum safekeeping fee of $300 per portfolio.
ETF Creation/Redemption Unit Transaction Charges
The minimum Creation/Redemption Unit Transaction fee will be $500. Fees for Creation/Redemption Units to be paid by the Authorized Participants will be calculated as follows to the next highest $500 increment:
$ 5 per Book-Entry eligible security settled via the NSCC’s CNS system
$15 per security for “in-kind” settlements settled outside the NSCC, and all physical settlements, including options, futures, and other derivatives.
Monthly Minimum ETF Transfer Agency Fee
There is a monthly minimum ETF Transfer Agency fee of $200 per portfolio.
Billing Cycle
All fees will be billed on a monthly basis.
Fund Accounting — Daily Pricing, General Ledger Bookkeeping, and Daily Basket Computation
2 basis points annually on the first $1 billion in total gross adjusted assets.
1 ½ basis points annually on the next $1.5 billion in total gross adjusted assets.
1 basis points annually on the next $2.5 billion in total gross adjusted assets.
3/4 basis points annually on the excess over $5 billion in total gross adjusted assets.
Annual Minimum Fund Accounting Fee
There is an annual minimum Fund Accounting fee of $55,000 per portfolio, if BNY is also providing Fund Administration Services. The annual minimum fee for Fund Accounting will be $65,000 without the provision of Fund Administration Services.
Fund Administration Services
3 basis points annually on the first $1 billion in total gross adjusted assets.
2 ½ basis points annually on the next $1.5 billion in total gross adjusted assets.
2 basis points annually on the next $2.5 billion in total gross adjusted assets.
1 ½ basis points annually on the excess over $5 billion in total gross adjusted assets.
Annual Minimum Fund Administration Fee
There is an annual minimum Fund Administration fee of $60,000 per portfolio.
Out-of-Pocket Expenses
Out-of-Pocket expenses traditionally include, but are not limited to, cost of obtaining prices for security valuations (including manual broker quotes), Federal Reserve charges related to securities transactions, postage and insurance on physical transfer items, attendance at closings, telecommunication charges, etc. These expenses will be billed to the client as they are incurred.
Earnings Credit on Balances/Interest on Overdrafts
Earnings credits are provided to the Fund on 100% of the daily available balance in the domestic custodian account after reduction for Federal Reserve requirements, computed at the 90-day T-xxxx rate on the day of the balance. Overdrafts, excluding bank errors, will cause a reduction of earnings credits daily, computed at 2% above the Federal Funds rate on the day of the overdraft.
Fees due the Bank are calculated monthly. If the earnings credits exceed the bank charges, such excess can be carried forward to the next succeeding month. However, no earnings credits will be carried forward after calendar year-end. If a negative amount is computed after considering earnings credits (positive/negative) and bank charges, such negative amounts would be billed monthly.
Fee Waiver
The annual minimum fees for each service provided will be prorated monthly and waived for the first six months of operation for each of the PowerShares Capital Management LLC ETFs.