As filed with the Securities and Exchange Commission on February 13, 2018

File No. 333-31247

811-09170

 

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

POST EFFECTIVE AMENDMENT NO. 24

TO

Form S-6

 

 

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF

SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED

ON FORM N-8B-2

 

 

 

A.    Exact name of Trust:
           SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST
           (formerly known as DIAMONDS TRUST SERIES 1 prior to February 26, 2010)
   (I.R.S. Employer Identification Number: 04-3403937)
B.    Name of Depositor:
           PDR SERVICES LLC
C.    Complete address of Depositor’s principal executive office:
           PDR SERVICES LLC
           c/o NYSE Holdings LLC
           11 Wall Street
           New York, New York 10005
D.    Name and complete address of agent for service:
           Sherry J. Sandler, Esq
           PDR SERVICES LLC
           c/o NYSE Holdings LLC
           11 Wall Street
           New York, New York 10005
   Copy to:
           Nora M. Jordan, Esq.
           Davis Polk & Wardwell LLP
           450 Lexington Avenue
           New York, New York 10017
   It is proposed that this filing will become effective:
  

☒   immediately upon filing pursuant to paragraph (b) of Rule 485.

E.    Title of securities being registered:
           An indefinite number of Units pursuant to Rule 24f-2 under the Investment Company Act of 1940.
F.    Approximate date of proposed public offering:
           AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
  

☐   Check box if it is proposed that this filing will become effective on [date] at [time] pursuant to Rule 487.

 

 

 


SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST

Cross Reference Sheet

Pursuant to Regulation C

Under the Securities Act of 1933, as amended

(Form N-8B-2 Items required by Instruction 1

as to Prospectus in Form S-6)

 

Form N-8B-2

Item Number

  

Form S-6

Heading in Prospectus

I. Organization and General Information   
1.    (a)    Name of Trust    Registration Statement Front Cover
   (b)    Title of securities issued    Registration Statement Front Cover
2.    Name, address and Internal Revenue Service Employer Identification Number of depositor    Sponsor
3.    Name, address and Internal Revenue Service Employer Identification Number of trustee    Trustee
4.    Name, address and Internal Revenue Service Employer Identification Number of principal underwriter    *
5.    State of organization of Trust    Organization of the Trust
6.    (a)    Dates of execution and termination of Trust Agreement    Organization of the Trust
   (b)    Dates of execution and termination of Trust Agreement    Same as set forth in 6(a)
7.    Changes of name    *
8.    Fiscal Year    *
9.    Material Litigation    *
II. General Description of the Trust and Securities of the Trust
10.    (a)    Registered or bearer securities    Summary—Voting Rights; Book-Entry-Only System; Book-Entry-Only System
   (b)    Cumulative or distributive    Summary—Dividends; Dividends and Distributions; Additional Information Regarding Dividends and Distributions
   (c)    Rights of holders as to withdrawal or redemption    Summary—Redemption of Units; Purchases and Redemptions of Creation Units—Redemption
   (d)    Rights of holders as to conversion, transfer, etc.    Summary—Redemption of Units; Purchases and Redemptions of Creation Units—Redemption; Trust Agreement
   (e)    Lapses or defaults in principal payments with respect to periodic payment plan certificates    *
   (f)    Voting rights    Summary—Voting Rights; Book-Entry-Only System; Trust Agreement
   (g)    Notice to holders as to change in:   
     

(1)   Composition of Trust assets

   *
     

(2)   Terms and conditions of Trust’s securities

   Summary—Amendments to the Trust Agreement; Trust Agreement—Amendments to the Trust Agreement
     

(3)   Provisions of Trust Agreement

   Same as set forth in 10(g)(2)
     

(4)   Identity of depositor and trustee

   Sponsor; Trustee
   (h)    Consent of holders required to change:   
     

(1)   Composition of Trust assets

   *
     

(2)   Terms and conditions of Trust’s securities

   Summary—Amendments to the Trust Agreement; Trust Agreement—Amendments to the Trust Agreement
     

(3)   Provisions of Trust Agreement

   Same as set forth in 10(h)(2)
     

(4)   Identity of depositor and trustee

   Sponsor; Trustee

 

* Not applicable, answer negative or not required.

 

i


Form N-8B-2

Item Number

  

Form S-6

Heading in Prospectus

  

(i) Other principal features of the securities

   Summary—The Trust’s Investments and Portfolio Turnover; Summary—Redemption of Units; Summary—Amendments to the Trust Agreement; Purchases and Redemptions of Creation Units; Trust Agreement
11.    Type of securities comprising units    Summary—The Trust’s Investments and Portfolio Turnover; Portfolio Adjustments
12.    Certain information regarding securities comprising periodic payment certificates    *
13.   

(a)   Certain information regarding loads, fees, expenses and charges

   Summary—Fees and Expenses of the Trust; Summary—The Trust’s Investments and Portfolio Turnover; Expenses of the Trust; Purchases and Redemptions of Creation Units—Redemption
  

(b)   Certain information regarding periodic payment plan certificates

   *
  

(c)   Certain percentages

   Same as set forth in 13(a)
  

(d)   Reasons for certain differences in prices

   *
  

(e)   Certain other loads, fees, or charges payable by holders

   *
  

(f)   Certain profits receivable by depositor, principal underwriters, custodian, trustee or affiliated persons

   Summary—The Trust’s Investments and Portfolio Turnover; Portfolio Adjustments—Adjustments to the Portfolio Deposit
  

(g)   Ratio of annual charges and deductions to income

   *
14.    Issuance of Trust’s securities    Purchases and Redemptions of Creation Units—Purchase (Creation)
15.    Receipt and handling of payments from purchasers    Purchases and Redemptions of Creation Units
16.    Acquisition and disposition of underlying securities    Purchases and Redemptions of Creation Units;
      Portfolio Adjustments; Trust Agreement
17.   

(a)   Withdrawal or redemption by holders

   Trust Agreement; Purchases and Redemptions of Creation Units—Redemption
  

(b)   Persons entitled or required to redeem or repurchase securities

   Same as set forth in 17(a)
  

(c)   Cancellation or resale of repurchased or redeemed securities

   Same as set forth in 17(a)
18.   

(a)   Receipt, custody and disposition of income

   Additional Information Regarding Dividends and Distributions—General Policies
  

(b)   Reinvestment of distributions

   Dividends and Distributions—No Dividend Reinvestment Service
  

(c)   Reserves or special funds

   Same as set forth in 18(a)
  

(d)   Schedule of distributions

   *
19.    Records, accounts and reports    The DJIA; Additional Information Regarding Dividends and Distributions—General Policies;
      Investments by Investment Companies; Expenses of the Trust
20.    Certain miscellaneous provisions of Trust Agreement   
  

(a)   Amendments

   Trust Agreement—Amendments to the Trust Agreement
  

(b)   Extension or termination

   Trust Agreement—Amendments to the Trust Agreement; Trust Agreement—Termination of the Trust Agreement; Organization of the Trust
  

(c)   Removal or resignation of trustee

   Trustee
  

(d)   Successor trustee

   Same as set forth in 20(c)
  

(e)   Removal or resignation of depositor

   Sponsor
  

(f)   Successor depositor

   Same as set forth in 20(e)
21.    Loans to security holders    *
22.    Limitations on liabilities    Trustee; Sponsor
23.    Bonding arrangements    *
24.    Other material provisions of Trust Agreement    *
III. Organization, Personnel and Affiliated Persons of Depositor   

 

* Not applicable, answer negative or not required.

 

ii


Form N-8B-2

Item Number

  

Form S-6

Heading in Prospectus

25.    Organization of depositor    Sponsor
26.    Fees received by depositor    *
27.    Business of depositor    Sponsor
28.    Certain information as to officials and affiliated persons of depositor    Sponsor
29.    Ownership of voting securities of depositor    Sponsor
30.    Persons controlling depositor    Sponsor
31.    Payments by depositor for certain services rendered to Trust    *
32.    Payments by depositor for certain other services rendered to Trust    *
33.    Remuneration of employees of depositor for certain services rendered to Trust    *
34.    Compensation of other persons for certain services rendered to Trust    *
IV. Distribution and Redemption of Securities   
35.    Distribution of Trust’s securities in states    *
36.    Suspension of sales of Trust’s securities    *
37.    Denial or revocation of authority to distribute    *
38.   

(a)   Method of distribution

   Purchases and Redemptions of Creation Units—Purchase (Creation)
  

(b)   Underwriting agreements

   Purchases and Redemptions of Creation Units
  

(c)   Selling agreements

   Same as set forth in 38(b)
39.   

(a)   Organization of principal underwriter

   Distributor
  

(b)   NASD membership of principal underwriter

   Distributor
40.    Certain fees received by principal underwriters    *
41.   

(a)   Business of principal underwriters

   Purchases and Redemptions of Creation Units; Distributor
  

(b)   Branch offices of principal underwriters

   *
  

(c)   Salesmen of principal underwriters

   *
42.    Ownership of Trust’s securities by certain persons    *
43.    Certain brokerage commissions received by principal underwriters    *
44.   

(a)   Method of valuation for determining offering price

   Portfolio Adjustments; Determination of Net Asset Value
  

(b)   Schedule as to components of offering price

   *
  

(c)   Variation in offering price to certain persons

   *
45.    Suspension of redemption rights    *
46.   

(a)   Certain information regarding redemption or withdrawal valuation

   Determination of Net Asset Value; Purchases and Redemptions of Creation Units—Redemption
  

(b)   Schedule as to components of redemption price

   *
47.    Maintenance of position in underlying securities    Purchases and Redemptions of Creation Units; Portfolio Adjustments; Determination of Net Asset Value; Additional Information Regarding Dividends and Distributions—General Policies
V. Information Concerning the Trustee or Custodian   
48.    Organization and regulation of trustee    Trustee
49.    Fees and expenses of trustee    Summary—Fees and Expenses of the Trust; Expenses of the Trust; Purchases and Redemptions of Creation Units—Redemption
50.    Trustee’s lien    Expenses of the Trust; Purchases and Redemptions of Creation Units—Redemption
VI. Information Concerning Insurance of Holders of Securities   
51.   

(a)   Name and address of insurance company

   *
  

(b)   Types of policies

   *
  

(c)   Types of risks insured and excluded

   *
  

(d)   Coverage

   *
  

(e)   Beneficiaries

   *

 

* Not applicable, answer negative or not required.

 

iii


Form N-8B-2

Item Number

  

Form S-6

Heading in Prospectus

   (f)    Terms and manner of cancellation    *
   (g)    Method of determining premiums    *
   (h)    Aggregate premiums paid    *
   (i)    Recipients of premiums    *
   (j)    Other material provisions of Trust Agreement relating to insurance    *
VII. Policy of Registrant   
52.    (a)    Method of selecting and eliminating securities from the Trust    Purchases and Redemptions of Creation Units; Portfolio Adjustments; Trust Agreement
   (b)    Elimination of securities from the Trust    Portfolio Adjustments
   (c)    Policy of Trust regarding substitution and elimination of securities    Portfolio Adjustments; Trust Agreement
   (d)    Description of any other fundamental policy of the Trust    *
   (e)    Code of Ethics pursuant to Rule 17j-1 of the 1940 Act    Code of Ethics
53.    (a)    Taxable status of the Trust    Federal Income Taxes
   (b)    Qualification of the Trust as a regulated investment company    Same as set forth in 53(a)
        
VIII.    Financial and Statistical Information   
54.    Information regarding the Trust’s last ten fiscal years    *
55.    Certain information regarding periodic payment plan certificates    *
56.    Certain information regarding periodic payment plan certificates    *
57.    Certain information regarding periodic payment plan certificates    *
58.    Certain information regarding periodic payment plan certificates    *
59.    Financial statements (Instruction 1(c) to Form S-6)    *

 

* Not applicable, answer negative or not required.

 

iv


Undertaking to File Reports

Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulations of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section.


LOGO

SPDR ® DOW JONES INDUSTRIAL AVERAGE SM ETF Trust (“DIA” or the “Trust”)

(A Unit Investment Trust)

Principal U.S. Listing Exchange for SPDR ® DOW JONES INDUSTRIAL AVERAGE SM ETF Trust:

NYSE Arca, Inc. under the symbol “DIA”

Prospectus Dated February 13, 2018

The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Securities of the Trust (“Units”) are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. Government, nor are such Units deposits or obligations of any bank. Such Units of the Trust involve investment risks, including the loss of principal.

COPYRIGHT 2018 PDR Services LLC


TABLE OF CONTENTS      
    Page  

Summary

    1  

Investment Objective

    1  

Fees and Expenses of the Trust

    1  

The Trust’s Investments and Portfolio Turnover

    2  

Dividends

    3  

Redemption of Units

    3  

Voting Rights; Book-Entry-Only-System

    3  

Amendments to the Trust Agreement

    3  

Principal Risks of Investing in the Trust

    4  

Trust Performance

    5  

Purchase and Sale Information

    6  

Tax Information

    7  

The DJIA

    7  

Dividends and Distributions

    11  

Dividends and Capital Gains

    11  

No Dividend Reinvestment Service

    12  

Federal Income Taxes

    12  

Taxation of the Trust

    13  

Tax Consequences to U.S. Holders

    15  

Tax Consequences to Non-U.S. Holders

    18  

Report of Independent Registered Public Accounting Firm

    21  

Statement of Assets and Liabilities October 31, 2017

    22  

Statements of Operations

    23  

Statements of Changes in Net Assets

    24  

Financial Highlights Selected data for a Unit outstanding throughout each year

    25  

Notes to Financial Statements

    26  

Schedule of Investments October 31, 2017

    37  

Organization of the Trust

    39  

Purchases and Redemptions of Creation Units

    39  

Purchase (Creation)

    39  

Redemption

    44  
TABLE OF CONTENTS      
    Page  

Book-Entry-Only System

    48  

Portfolio Adjustments

    50  

Adjustments to the Portfolio Deposit

    53  

Exchange Listing and Trading

    54  

Secondary Trading on Exchanges

    54  

Trading Prices of Units

    55  

Continuous Offering of Units

    55  

Expenses of the Trust

    56  

Trustee Fee Scale

    58  

Determination of Net Asset Value

    59  

Additional Risk Information

    60  

Additional Information Regarding Dividends and Distributions

    62  

General Policies

    62  

Investment Restrictions

    64  

Investments by Investment Companies

    64  

Annual Reports

    65  

Benefit Plan Investor Considerations

    65  

Index License

    66  

Sponsor

    68  

Trustee

    73  

Depository

    75  

Distributor

    75  

Trust Agreement

    75  

Amendments to the Trust Agreement

    76  

Termination of the Trust Agreement

    76  

Legal Opinion

    78  

Independent Registered Public Accounting Firm and Financial Statements

    78  

Code of Ethics

    78  

Information and Comparisons Relating to Secondary Market Trading and Performance

    78  
 

 

“Dow Jones Industrial Average SM ”, “DJIA ® ”, “Dow Jones ® ”, “The Dow ® ” and “DIAMONDS ® ” are registered trademarks and service marks of Standard & Poor’s Financial Services LLC, a division of S&P Global, and have been licensed for use by S&P Dow Jones Indices LLC (“S&P”) and sublicensed for use by State Street Global Advisors Funds Distributors, LLC (formerly known as State Street Global Markets, LLC). The Trust, PDR Services LLC and NYSE Arca, Inc. are permitted to use these trademarks and service marks pursuant to separate “Sublicenses.” The Trust is not sponsored, endorsed, sold or marketed by S&P, its affiliates or its third party licensors.

“SPDR ® ” is a trademark of Standard & Poor’s Financial Services LLC and has been licensed for use by S&P and sublicensed for use by State Street Global Advisors Funds Distributors, LLC. No financial product offered by State Street Global Advisors Funds Distributors, LLC or its affiliates is sponsored, endorsed, sold or marketed by S&P, its affiliates or its third party licensors.

 

i


SUMMARY

Investment Objective

The Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Dow Jones Industrial Average (the “DJIA”).

Fees and Expenses of the Trust

This table estimates the fees and expenses that the Trust pays on an annual basis, which you therefore pay indirectly when you buy and hold Units. It does not reflect brokerage commissions that you may pay for purchases and sales of Units on the secondary markets.

 

Unitholder Fees:    None
(fees paid directly from your investment)   

 

Estimated Annual Trust Ordinary Operating Expenses :
(expenses that you pay each year as a percentage of the value of your investment)

 

Current Estimated Annual Trust Ordinary Operating Expenses

   As a % of
Trust Average
Net Assets
 

Trustee’s Fee

     0.06

DJIA License Fee

     0.04

Marketing*

     0.06

Other Operating Expenses

     0.01

Expenses

     0.17

Future expense accruals will depend primarily on the level of the Trust’s net assets and the level of expenses.

 

* Expenses have been restated to reflect current fees.

 

1


Growth of $10,000 Investment Since Inception (1)

 

LOGO

 

(1) Past performance is not necessarily an indication of how the Trust will perform in the future.

The Trust’s Investments and Portfolio Turnover

The Trust seeks to achieve its investment objective by holding a portfolio of the common stocks that are included in the DJIA (the “Portfolio”), with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the DJIA.

In this prospectus, the term “Portfolio Securities” refers to the common stocks that are actually held by the Trust and make up the Trust’s Portfolio, while the term “Index Securities” refers to the common stocks that are included in the DJIA, as determined by S&P Dow Jones Indices LLC (“S&P”). At any time, the Portfolio will consist of as many of the Index Securities as is practicable. To maintain the correspondence between the composition and weightings of Portfolio Securities and Index Securities, State Street Global Advisors Trust Company, the trustee of the Trust (the “Trustee”) or its parent company, State Street Bank and Trust Company (“SSBT”), adjusts the Portfolio from time to time to conform to periodic changes made by S&P to the identity and/or relative weightings of Index Securities in the DJIA. The Trustee or SSBT generally makes these adjustments to the Portfolio within three (3) Business Days (as defined below in “Purchases and Redemptions of Creation Units — Purchase (Creation)) before or after the day on which changes in the DJIA are scheduled to take effect.

The Trust may pay transaction costs, such as brokerage commissions, when it buys and sells securities (or “turns over” its Portfolio). Such transaction costs may be higher if there are significant rebalancings of Index Securities in the Index, which may also result in higher taxes when Units are held in a taxable account. These costs, which are not reflected in estimated annual Trust ordinary operating expenses, affect the Trust’s performance. During the most recent fiscal year, the Trust’s portfolio turnover rate was 1% of the average value of its portfolio. The Trust’s portfolio turnover rate does not include securities received or delivered from processing creations or redemptions of Units. Portfolio turnover will be a function of changes to

 

2


the DJIA as well as requirements of the Trust Agreement (as defined below in “Organization of the Trust”).

Although the Trust may fail to own certain Index Securities at any particular time, the Trust generally will be substantially invested in Index Securities, which should result in a close correspondence between the performance of the DJIA and the performance of the Trust. See “The DJIA” below for more information regarding the DJIA. The Trust does not hold or trade futures or swaps and is not a commodity pool.

Dividends

Payments of dividends are made monthly, on the Monday preceding the third (3 rd ) Friday of the next calendar month. See “Dividends and Distributions” and “Additional Information Regarding Dividends and Distributions.”

Redemption of Units

Only certain institutional investors (typically market makers or other broker-dealers) are permitted to purchase or redeem Units directly with the Trust, and they may do so only in large blocks of 50,000 Units known as “Creation Units.” See “Purchases and Redemptions of Creation Units — Redemption” and “Trust Agreement” for more information regarding the rights of Beneficial Owners (as defined in “Book-Entry-Only System”).

Voting Rights; Book-Entry-Only-System

Beneficial Owners shall not have the right to vote concerning the Trust, except with respect to termination and as otherwise expressly set forth in the Trust Agreement. See “Trust Agreement.” Units are represented by one or more global securities registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”) and deposited with, or on behalf of, DTC. See “Book-Entry-Only System.”

Amendments to the Trust Agreement

The Trust Agreement (as defined below in “Organization of the Trust”) may be amended from time to time by the Trustee and PDR Services, LLC (the “Sponsor”) without the consent of any Beneficial Owners under certain circumstances described herein. The Trust Agreement may also be amended by the Sponsor and the Trustee with the consent of the Beneficial Owners to modify the rights of Beneficial Owners under certain circumstances. Promptly after the execution of an amendment to the Trust Agreement, the Trustee arranges for written notice to be provided to Beneficial Owners. See “Trust Agreement — Amendments to the Trust Agreement.”

 

3


Principal Risks of Investing in the Trust

As with all investments, there are certain risks of investing in the Trust, and you could lose money on an investment in the Trust. Prospective investors should carefully consider the risk factors described below, as well as the additional risk factors under “Additional Risk Information” and the other information included in this prospectus, before deciding to invest in Units.

Passive Strategy/Index Risk.     The Trust is not actively managed. Rather, the Trust attempts to track the performance of an unmanaged index of securities. This differs from an actively managed fund, which typically seeks to outperform a benchmark index. As a result, the Trust will hold constituent securities of the DJIA regardless of the current or projected performance of a specific security or a particular industry or market sector. Maintaining investments in securities regardless of market conditions or the performance of individual securities could cause the Trust’s return to be lower than if the Trust employed an active strategy.

Index Tracking Risk.     While the Trust is intended to track the performance of the DJIA as closely as possible ( i.e., to achieve a high degree of correlation with the DJIA), the Trust’s return may not match or achieve a high degree of correlation with the return of the DJIA due to expenses and transaction costs incurred in adjusting the Portfolio. In addition, it is possible that the Trust may not always fully replicate the performance of the DJIA due to the unavailability of certain Index Securities in the secondary market or due to other extraordinary circumstances ( e.g. , if trading in a security has been halted). In addition, the Trust’s portfolio may deviate from the DJIA to the extent required to ensure continued qualification as a “regulated investment company” under Subchapter M of the Code.

Equity Investing Risk.     An investment in the Trust involves risks similar to those of investing in any fund of equity securities, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in securities prices.

An investment in the Trust is subject to the risks of any investment in a portfolio of large-capitalization common stocks, including the risk that the general level of stock prices may decline, thereby adversely affecting the value of such investment. The value of Portfolio Securities may fluctuate in accordance with changes in the financial condition of the issuers of Portfolio Securities, the value of common stocks generally and other factors. The identity and weighting of Index Securities and the Portfolio Securities change from time to time.

The financial condition of issuers of Portfolio Securities may become impaired or the general condition of the stock market may deteriorate, either of which may cause a decrease in the value of the Portfolio and thus in the value of Units. Since the Trust is not actively managed, the adverse financial condition of an issuer will not result in its elimination from the Portfolio unless such issuer is removed from the DJIA. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their

 

4


issuers change. These investor perceptions are based on various and unpredictable factors including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises.

Holders of common stocks of any given issuer incur more risk than holders of preferred stocks and debt obligations of the issuer because the rights of common stockholders, as owners of the issuer, generally are subordinate to the rights of creditors of, or holders of debt obligations or preferred stocks issued by, such issuer. Further, unlike debt securities that typically have a stated principal amount payable at maturity, or preferred stocks that typically have a liquidation preference and may have stated optional or mandatory redemption provisions, common stocks have neither a fixed principal amount nor a maturity. Common stock values are subject to market fluctuations as long as the common stock remains outstanding. The value of the Portfolio will fluctuate over the entire life of the Trust.

The Trust may have significant investments in one or more specific industries or sectors, subjecting it to risks greater than general market risk.

The Trust may invest a larger percentage of its assets in the securities of a few issuers. As a result, the Trust’s performance may be disproportionately impacted by the performance of relatively few securities.

There can be no assurance that the issuers of Portfolio Securities will pay dividends. Distributions generally depend upon the declaration of dividends by the issuers of Portfolio Securities and the declaration of such dividends generally depends upon various factors, including the financial condition of the issuers and general economic conditions.

Trust Performance

The following bar chart and table provide an indication of the risks of investing in the Trust by showing changes in the Trust’s performance based on net assets from year to year and by showing how the Trust’s average annual return for certain time periods compares with the average annual return of the DJIA. The Trust’s past performance (before and after taxes) is not necessarily an indication of how the Trust will perform in the future. Updated performance information is available online at http://www.spdrs.com.

The total returns in the bar chart, as well as the total and after-tax returns presented in the table, have been calculated assuming dividends and capital gain distributions have been reinvested in the Trust at the net asset value per Unit (“NAV”) on the Dividend Payment Date (see “Additional Information Regarding Dividends and Distributions”). No dividend reinvestment services are provided by the Trust (see “Dividends and Distributions”), so investors’ performance may be different from that shown below in the bar chart and table.

 

5


Annual Total Return (years ended 12/31)

LOGO

Highest Quarterly Return: 15.71% for the quarter ended September 30, 2009

Lowest Quarterly Return: -18.39% for the quarter ended December 31, 2008

Average Annual Total Returns (for periods ending December 31, 2017)

The after-tax returns presented in the table are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown below. After-tax returns are not relevant to investors who hold Units through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. The returns after taxes can exceed the return before taxes due to an assumed tax benefit for a holder of Units from realizing a capital loss on a sale of the Units.

 

       Past
One Year
    Past
Five Years
    Past
Ten Years
 

Trust

      

Return Before Taxes

     27.93     16.18     9.10

Return After Taxes on Distributions

     27.26     15.54     8.58

Return After Taxes on Distributions and Sale or Redemption of Creation Units

     16.25     12.92     7.34

Index (reflects no deduction for fees, expenses or taxes)

     28.11     16.37     9.28

PURCHASE AND SALE INFORMATION

Individual Units of the Trust may be purchased and sold on NYSE Arca, Inc. (the “Exchange”), under the market symbol “DIA”, through your broker-dealer at market prices. Units trade at market prices that may be greater than the net asset value per Unit (“NAV”) (premium) or less than NAV (discount). Units are also listed and traded on the Singapore Exchange Securities Trading Limited (stock code D07) and Euronext Amsterdam (ticker symbol DIA). In the future, Units may be listed and

 

6


traded on other non-U.S. exchanges. Units may be purchased on other trading markets or venues in addition to the Exchange, the Singapore Exchange Securities Trading Limited and Euronext Amsterdam. Euronext Amsterdam is an indirect wholly owned subsidiary of NYSE Holdings LLC.

Only certain institutional investors (typically market makers or other broker-dealers) are permitted to purchase or redeem Units directly with the Trust, and they may do so only in large blocks of 50,000 Units known as “Creation Units.” Creation Unit transactions are conducted in exchange for the deposit or delivery of in-kind securities and/or cash constituting a substantial replication of the securities included in the DJIA.

TAX INFORMATION

The Trust will make distributions that are expected to be taxable currently to you as ordinary income and/or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or individual retirement account. See “Federal Income Taxes,” below, for more information.

THE DJIA

The DJIA was first published in 1896. Initially composed of 12 companies, the DJIA has evolved into the most recognizable stock indicator in the world, and the only index composed of companies that have sustained earnings performance over a significant period of time. In its second century, the DJIA is the oldest continuous barometer of the U.S. stock market, and the most widely quoted indicator of U.S. stock market activity.

The companies represented by the 30 stocks now composing the DJIA are all leaders in their respective industries, and their stocks are widely held by individuals and institutional investors.

S&P is not responsible for and shall not participate in the creation or sale of Units or in the determination of the timing, pricing, or quantities and proportions of purchases or sales of Index Securities or Portfolio Securities by the Trust. The information in this prospectus concerning S&P and the DJIA has been obtained from sources that the Sponsor believes to be reliable, but the Sponsor takes no responsibility for the accuracy of such information.

 

7


The following table shows the actual performance of the DJIA for the years 1896 through 2017. The results shown should not be considered representative of the income yield or capital gain or loss that may be generated by the DJIA in the future. THE RESULTS SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE PERFORMANCE OF THE TRUST.

 

Year
Ended

  DJIA
Close
    Point
Change
    Year %
Change
    Divs     %
Yield
 

2017

    24719.22       4956.62       25.08       518.30       2.10  

2016

    19762.60       2337.57       13.42       477.49       2.42  

2015

    17425.03       -398.04       -2.23       436.18       2.5  

2014

    17823.07       1246.41       7.52       388.77       2.18  

2013

    16576.66       3472.52       26.50       360.10       2.23  

2012

    13104.14       886.58       7.26       349.98       2.72  

2011

    12217.56       640.05       5.53       318.70       2.71  

2010

    11577.51       1149.46       11.02       286.88       2.54  

2009

    10428.05       1651.66       18.82       277.38       2.63  

2008

    8776.39       -4488.42       -33.84       316.40       3.61  

2007

    13264.82       801.67       6.43       298.97       2.35  

2006

    12463.15       1745.65       16.29       267.75       2.24  

2005

    10717.50       -65.51       -.61       246.85       2.30  

2004

    10783.01       329.09       3.15       239.27       2.22  

2003

    10453.92       2112.29       25.32       209.42       2.00  

2002

    8341.63       -1679.87       -16.76       189.68       2.27  

2001

    10021.50       -765.35       -7.10       181.07       1.81  

2000

    10786.85       -710.27       -6.18       172.08       1.60  

1999

    11497.12       2315.69       25.20       168.52       1.47  

1998

    9181.43       1273.18       16.10       151.13       1.65  

1997

    7908.25       1459.98       22.60       136.10       1.72  

1996

    6448.27       1331.20       26.00       131.14       2.03  

1995

    5117.12       1282.70       33.50       116.56       2.28  

1994

    3834.44       80.30       2.10       105.66       2.76  

1993

    3754.09       453.00       13.70       99.66       2.65  

1992

    3301.11       132.30       4.20       100.72       3.05  

1991

    3168.83       535.20       20.30       95.18       3.00  

1990

    2633.66       -119.50       -4.30       103.70       3.94  

1989

    2753.20       584.60       27.00       103.00       3.74  

1988

    2168.57       229.70       11.80       79.53       3.67  

1987

    1938.83       42.90       2.30       71.20       3.67  

1986

    1895.95       349.30       22.60       67.04       3.54  

1985

    1546.67       335.10       27.70       62.03       4.01  

1984

    1211.57       -47.10       -3.70       60.63       5.00  

1983

    1258.64       212.10       20.30       56.33       4.48  

1982

    1046.54       171.50       19.60       54.14       5.17  

 

8


Year
Ended

  DJIA
Close
    Point
Change
    Year %
Change
    Divs     %
Yield
 

1981

    875.00       -89.00       -9.20       56.22       6.43  

1980

    963.99       125.30       14.90       54.36       5.64  

1979

    838.74       33.70       4.20       50.98       6.08  

1978

    805.01       -26.20       -3.10       48.52       6.03  

1977

    831.17       -173.50       -17.30       45.84       5.52  

1976

    1004.65       152.20       17.90       41.40       4.12  

1975

    852.41       236.20       38.30       37.46       4.39  

1974

    616.24       -234.60       -27.60       37.72       6.12  

1973

    850.86       -169.20       -16.60       35.33       4.15  

1972

    1020.02       129.80       14.60       32.27       3.16  

1971

    890.20       51.30       6.10       30.86       3.47  

1970

    838.92       38.60       4.80       31.53       3.76  

1969

    800.36       -143.40       -15.20       33.90       4.24  

1968

    943.75       38.60       4.30       31.34       3.32  

1967

    905.11       119.40       15.20       30.19       3.34  

1966

    785.69       -183.60       -18.90       31.89       4.06  

1965

    969.26       95.10       10.90       28.61       2.95  

1964

    874.13       111.20       14.60       31.24       3.57  

1963

    762.95       110.90       17.00       23.41       3.07  

1962

    652.10       -79.00       -10.80       23.30       3.57  

1961

    731.14       115.30       18.70       22.71       3.11  

1960

    615.89       -63.50       -9.30       21.36       3.47  

1959

    679.36       95.70       16.40       20.74       3.05  

1958

    583.65       148.00       34.00       20.00       3.43  

1957

    435.69       -63.80       -12.80       21.61       4.96  

1956

    499.47       11.10       2.30       22.99       4.60  

1955

    488.40       84.00       20.80       21.58       4.42  

1954

    404.39       123.50       44.00       17.47       4.32  

1953

    280.90       -11.00       -3.80       16.11       5.74  

1952

    291.90       22.70       8.40       15.43       5.29  

1951

    269.23       33.80       14.40       16.34       6.07  

1950

    235.41       35.30       17.60       16.13       6.85  

1949

    200.13       22.80       12.90       12.79       6.39  

1948

    177.30       -3.90       -2.10       11.50       6.49  

1947

    181.16       4.00       2.20       9.21       5.08  

1946

    177.20       -15.70       -8.10       7.50       4.23  

1945

    192.91       40.60       26.60       6.69       3.47  

1944

    152.32       16.40       12.10       6.57       4.31  

1943

    135.89       16.50       13.80       6.30       4.64  

1942

    119.40       8.40       7.60       6.40       5.36  

1941

    110.96       -20.20       -15.40       7.59       6.84  

1940

    131.13       -19.10       -12.70       7.06       5.38  

1939

    150.24       -4.50       -2.90       6.11       4.07  

1938

    154.76       33.90       28.10       4.98       3.22  

 

9


Year
Ended

  DJIA
Close
    Point
Change
    Year %
Change
    Divs     %
Yield
 

1937

    120.85       -59.10       -32.80       8.78       7.27  

1936

    179.90       35.80       24.80       7.05       3.92  

1935

    144.13       40.10       38.50       4.55       3.16  

1934

    104.04       4.10       4.10       3.66       3.52  

1933

    99.90       40.00       66.70       3.40       3.40  

1932

    59.93       -18.00       -23.10       4.62       7.71  

1931

    77.90       -86.70       -52.70       8.40       10.78  

1930

    164.58       -83.90       -33.80       11.13       6.76  

1929

    248.48       -51.50       -17.20       12.75       5.13  

1928

    300.00       97.60       48.20       NA       NA  

1927

    202.40       45.20       28.80       NA       NA  

1926

    157.20       0.50       0.30       NA       NA  

1925

    156.66       36.20       30.00       NA       NA  

1924

    120.51       25.00       26.20       NA       NA  

1923

    95.52       -3.20       -3.30       NA       NA  

1922

    98.73       17.60       21.70       NA       NA  

1921

    81.10       9.10       12.70       NA       NA  

1920

    71.95       -35.30       -32.90       NA       NA  

1919

    107.23       25.00       30.50       NA       NA  

1918

    82.20       7.80       10.50       NA       NA  

1917

    74.38       -20.60       -21.70       NA       NA  

1916

    95.00       -4.20       -4.20       NA       NA  

1915

    99.15       44.60       81.70       NA       NA  

1914

    54.58       -24.20       -30.70       NA       NA  

1913

    78.78       -9.10       -10.30       NA       NA  

1912

    87.87       6.20       7.60       NA       NA  

1911

    81.68       0.30       0.40       NA       NA  

1910

    81.36       -17.70       -17.90       NA       NA  

1909

    99.05       12.90       15.00       NA       NA  

1908

    86.15       27.40       46.60       NA       NA  

1907

    58.75       -35.60       -37.70       NA       NA  

1906

    94.35       -1.90       -1.90       NA       NA  

1905

    96.20       26.60       38.20       NA       NA  

1904

    69.61       20.50       41.70       NA       NA  

1903

    49.11       -15.20       -23.60       NA       NA  

1902

    64.29       -0.30       -0.40       NA       NA  

1901

    64.56       -6.10       -8.70       NA       NA  

1900

    70.71       4.60       7.00       NA       NA  

1899

    66.08       5.60       9.20       NA       NA  

1898

    60.52       11.10       22.50       NA       NA  

1897

    49.41       9.00       22.20       NA       NA  

1896

    40.45       NA       NA       NA       NA  

 

Source: S&P. Reflects no deduction for fees, expenses or taxes.

 

10


The DJIA is a price-weighted stock index, meaning that the component stocks of the DJIA are accorded relative importance based on their prices. In this regard, the DJIA is unlike many other stock indexes which weight their component stocks by market capitalization (price times shares outstanding). The DJIA is called an “average” because originally it was calculated by adding up the component stock prices and then dividing by the number of stocks. The method remains the same today, but the number of significant digits in the divisor (the number that is divided into the total of the stock prices) has been increased to eight significant digits to minimize distortions due to rounding and has been adjusted over time to ensure continuity of the DJIA after component stock changes and corporate actions, as discussed below.

The DJIA divisor is adjusted due to corporate actions that change the price of any of its component shares. The most frequent reason for such an adjustment is a stock split. For example, suppose a company in the DJIA issues one new share for each share outstanding. After this two-for-one “split,” each share of stock is worth half what it was immediately before, other things being equal. But without an adjustment in the divisor, this split would produce a distortion in the DJIA. An adjustment must be made to compensate so that the “average” will remain unchanged. At S&P, this adjustment is handled by changing the divisor.* The formula used to calculate divisor adjustments is:

 

New Divisor    =   Current Divisor x Adjusted Sum of Prices
     Unadjusted Sum of Prices

The DJIA is maintained by the Averages Committee, which is composed of the managing editor of The Wall Street Journal , the head of Dow Jones Indexes research and the head of CME Group research. Additions or deletions of components may be made to achieve better representation of the broad market and of American industry.

In selecting components for the DJIA, the following criteria are used: (a) the company is not a utility or in the transportation business; (b) the company has a premier reputation in its field; (c) the company has a history of successful growth; and (d) there is wide interest among individual and institutional investors. Whenever one component is changed, the others are reviewed. For the sake of historical continuity, composition changes are made rarely.

DIVIDENDS AND DISTRIBUTIONS

Dividends and Capital Gains

Holders of Units receive each calendar month an amount corresponding to the amount of any cash dividends declared on the Portfolio Securities during the applicable period, net of fees and expenses associated with operation of the Trust, and taxes, if applicable. Because of such fees and expenses, the dividend yield for Units is ordinarily less than that of the DJIA. Investors should consult their tax

 

* Currently, the divisor is adjusted after the close of business on the day prior to the occurrence of the split; the divisor is not adjusted for regular cash dividends.

 

11


advisors regarding tax consequences associated with Trust dividends, as well as those associated with Unit sales or redemptions.

Any capital gain income recognized by the Trust in any taxable year that is not distributed during the year ordinarily is distributed at least annually in January of the following taxable year. The Trust may make additional distributions shortly after the end of the year in order to satisfy certain distribution requirements imposed by the Internal Revenue Code of 1986, as amended (the “Code”). Although all income distributions are currently made monthly, under certain limited circumstances the Trustee may vary the times at which distributions are made. Under limited certain circumstances, special dividend payments also may be made to holders of Units. See “Additional Information Regarding Dividends and Distributions.”

No Dividend Reinvestment Service

No dividend reinvestment service is provided by the Trust. Broker-dealers, at their own discretion, may offer a dividend reinvestment service under which additional Units are purchased in the secondary market at current market prices. Investors should consult their broker-dealer for further information regarding any dividend reinvestment program offered by such broker-dealer.

Distributions in cash that are reinvested in additional Units through a dividend reinvestment service, if offered by an investor’s broker-dealer, will be taxable dividends to the same extent as if such dividends had been received in cash.

FEDERAL INCOME TAXES

The following is a description of the material U.S. federal income tax consequences of owning and disposing of Units. The discussion below provides general tax information relating to an investment in Units, but it does not purport to be a comprehensive description of all the U.S. federal income tax considerations that may be relevant to a particular person’s decision to invest in Units. This discussion does not describe all of the tax consequences that may be relevant in light of the particular circumstances of a beneficial owner of Units, including alternative minimum tax consequences, Medicare contribution tax consequences and tax consequences applicable to beneficial owners subject to special rules, such as:

 

   

certain financial institutions;

 

   

regulated investment companies;

 

   

real estate investment trusts;

 

   

dealers or traders in securities that use a mark-to-market method of tax accounting;

 

12


   

persons holding Units as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the Units;

 

   

U.S. Holders (as defined below) whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;

 

   

entities classified as partnerships or otherwise treated as pass-through entities for U.S. federal income tax purposes;

 

   

certain former U.S. citizens and residents and expatriated entities;

 

   

tax-exempt entities, including an “individual retirement account” or “Roth IRA”; or

 

   

insurance companies.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds Units, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding Units and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of holding and disposing of the Units.

The following discussion applies only to an owner of Units that (i) is treated as the beneficial owner of such Units for U.S. federal income tax purposes, (ii) holds such Units as capital assets and (iii) unless otherwise noted, is a U.S. Holder. A “U.S. Holder” is (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

This discussion is based on the Code, administrative pronouncements, judicial decisions, and final, temporary and proposed Treasury regulations all as of the date hereof, any of which is subject to change, possibly with retroactive effect.

Prospective purchasers of Units are urged to consult their tax advisors with regard to the application of the U.S. federal income and estate tax laws to their particular situations, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Taxation of the Trust

The Trust believes that it qualified as a regulated investment company under Subchapter M of the Code (a “RIC”) for its taxable year ended October 31, 2017 and intends to qualify as a RIC in the current and future taxable years. Assuming that the Trust so qualifies and that it satisfies the distribution requirements described below, the Trust generally will not be subject to U.S. federal income tax on income distributed in a timely manner to the holders of its Units (“Unitholders”).

 

13


To qualify as a RIC for any taxable year, the Trust must, among other things, satisfy both an income test and an asset diversification test for such taxable year. Specifically, (i) at least 90% of the Trust’s gross income for such taxable year must consist of dividends; interest; payments with respect to certain securities loans; gains from the sale or other disposition of stock, securities or foreign currencies; other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies; and net income derived from interests in “qualified publicly traded partnerships” (such income, “Qualifying RIC Income”) and (ii) the Trust’s holdings must be diversified so that, at the end of each quarter of such taxable year, (a) at least 50% of the value of the Trust’s total assets is represented by cash and cash items, securities of other RICs, U.S. government securities and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the value of the Trust’s total assets and not greater than 10% of the outstanding voting securities of such issuer and (b) not more than 25% of the value of the Trust’s total assets is invested (x) in the securities (other than U.S. government securities or securities of other RICs) of any one issuer or of two or more issuers that the Trust controls and that are engaged in the same, similar or related trades or businesses or (y) in the securities of one or more “qualified publicly traded partnerships.” A “qualified publicly traded partnership” is generally defined as an entity that is treated as a partnership for U.S. federal income tax purposes if (i) interests in such entity are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof and (ii) less than 90% of such entity’s gross income for the relevant taxable year consists of Qualifying RIC Income. The Trust’s share of income derived from a partnership other than a “qualified publicly traded partnership” will be treated as Qualifying RIC Income only to the extent that such income would have constituted Qualifying RIC Income if derived directly by the Trust.

In order to be exempt from U.S. federal income tax on its distributed income, the Trust must distribute to its Unitholders on a timely basis at least 90% of its “investment company taxable income” (determined prior to the deduction for dividends paid by the Trust) and its net tax-exempt interest income for each taxable year. In general, a RIC’s “investment company taxable income” for any taxable year is its taxable income, determined without regard to net capital gain (that is, the excess of net long-term capital gains over net short-term capital losses) and with certain other adjustments. Any taxable income, including any net capital gain, that the Trust does not distribute to its Unitholders in a timely manner will be subject to U.S. federal income tax at regular corporate rates.

A RIC will be subject to a nondeductible 4% excise tax on certain amounts that it fails to distribute during each calendar year. In order to avoid this excise tax, a RIC must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary taxable income for the calendar year, (ii) 98.2% of its capital gain net income for the one-year period ended on October 31 of the calendar year and (iii) any ordinary income and capital gains for previous years that were not

 

14


distributed during those years. For purposes of determining whether the Trust has met this distribution requirement, (i) certain ordinary gains and losses that would otherwise be taken into account for the portion of the calendar year after October 31 will be treated as arising on January 1 of the following calendar year and (ii) the Trust will be deemed to have distributed any income or gains on which it has paid U.S. federal income tax.

If the Trust failed to qualify as a RIC or failed to satisfy the 90% distribution requirement in any taxable year, the Trust would be subject to U.S. federal income tax at regular corporate rates on its taxable income, including its net capital gain, even if such income were distributed to its Unitholders, and all distributions out of earnings and profits would be taxable as dividend income. Such distributions generally would be eligible for the dividends-received deduction in the case of corporate U.S. Holders and would constitute “qualified dividend income” for individual U.S. Holders. See “Federal Income Taxes — Tax Consequences to U.S. Holders — Distributions.” In addition, the Trust could be required to recognize unrealized gains, pay taxes and make distributions (which could be subject to interest charges) before requalifying for taxation as a RIC. If the Trust fails to satisfy the income test or diversification test described above, however, it may be able to avoid losing its status as a RIC by timely curing such failure, paying a tax and/or providing notice of such failure to the U.S. Internal Revenue Service (the “IRS”).

In order to meet the distribution requirements necessary to be exempt from U.S. federal income and excise tax, the Trust may be required to make distributions in excess of the yield performance of the Portfolio Securities and may be required to sell securities.

Tax Consequences to U.S. Holders

Distributions.     Distributions of the Trust’s ordinary income and net short-term capital gains will, except as described below with respect to distributions of “qualified dividend income,” generally be taxable to U.S. Holders as ordinary income to the extent such distributions are paid out of the Trust’s current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. Distributions (or deemed distributions, as described below), if any, of net capital gains will be taxable as long-term capital gains, regardless of the length of time the U.S. Holder has owned Units. A distribution of an amount in excess of the Trust’s current and accumulated earnings and profits will be treated as a return of capital that will be applied against and reduce the U.S. Holder’s basis in its Units. If the amount of any such distribution exceeds the U.S. Holder’s basis in its Units, the excess will be treated as gain from a sale or exchange of the Units.

The ultimate tax characterization of the distributions that the Trust makes during any taxable year cannot be determined until after the end of the taxable year. As a result, it is possible that the Trust will make total distributions during a taxable year in an amount that exceeds its current and accumulated earnings and profits.

 

15


Return-of-capital distributions may result, for example, if the Trust makes distributions of cash amounts deposited in connection with Portfolio Deposits (as defined below in “Purchases and Redemptions of Creation Units — Purchase (Creation)”). Return-of-capital distributions may be more likely to occur in periods during which the number of outstanding Units fluctuates significantly.

Distributions of the Trust’s “qualified dividend income” to an individual or other non-corporate U.S. Holder will be treated as “qualified dividend income” and will therefore be taxed at rates applicable to long-term capital gains, provided that the U.S. Holder meets certain holding period and other requirements with respect to its Units and that the Trust meets certain holding period and other requirements with respect to the underlying shares of stock. “Qualified dividend income” generally includes dividends from domestic corporations and dividends from foreign corporations that meet certain specified criteria.

Dividends distributed by the Trust to a corporate U.S. Holder will qualify for the dividends-received deduction only to the extent that the dividends consist of distributions of dividends eligible for the dividends-received deduction received by the Trust and the U.S. Holder meets certain holding period and other requirements with respect to the underlying shares of stock. Dividends eligible for the dividends-received deduction generally are dividends from domestic corporations.

The Trust intends to distribute its net capital gains at least annually. If, however, the Trust retains any net capital gains for reinvestment, it may elect to treat such net capital gains as having been distributed to the Unitholders. If the Trust makes such an election, each U.S. Holder will be required to report its share of such undistributed net capital gain as long-term capital gain and will be entitled to claim its share of the U.S. federal income taxes paid by the Trust on such undistributed net capital gain as a credit against its own U.S. federal income tax liability, if any, and to claim a refund on a properly filed U.S. federal income tax return to the extent that the credit exceeds such tax liability. In addition, each U.S. Holder will be entitled to increase the adjusted tax basis of its Units by the difference between its share of such undistributed net capital gain and the related credit and/or refund. There can be no assurance that the Trust will make this election if it retains all or a portion of its net capital gain for a taxable year.

Because the tax treatment of a distribution depends upon the Trust’s current and accumulated earnings and profits, a distribution received shortly after an acquisition of Units may be taxable, even though, as an economic matter, the distribution represents a return of the U.S. Holder’s initial investment. Although dividends generally will be treated as distributed when paid, dividends declared in October, November or December, payable to Unitholders of record on a specified date in one of those months, and paid during the following January, will be treated for U.S. federal income tax purposes as having been distributed by the Trust and received by the Unitholders on December 31 of the year in which declared. Unitholders will be notified annually as to the U.S. federal tax status of distributions.

 

16


Sales and Redemptions of Units.     In general, upon the sale or other disposition of Units, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference, if any, between the amount realized on the sale or other disposition and the U.S. Holder’s adjusted tax basis in the relevant Units. Such gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the relevant Units was more than one year on the date of the sale or other disposition. Under current law, net capital gain (that is, the excess of net long-term capital gains over net short-term capital losses) recognized by non-corporate U.S. Holders is generally subject to U.S. federal income tax at lower rates than the rates applicable to ordinary income.

Losses recognized by a U.S. Holder on the sale or other disposition of Units held for six months or less will be treated as long-term capital losses to the extent of any distribution of long-term capital gain received (or deemed received, as discussed above) with respect to such Units. In addition, no loss will be allowed on a sale or other disposition of Units if the U.S. Holder acquires Units, or enters into a contract or option to acquire Units, within 30 days before or after such sale or other disposition. In such a case, the basis of the Units acquired will be adjusted to reflect the disallowed loss.

If a U.S. Holder receives an in-kind distribution in redemption of Units (which must constitute a Creation Unit, as discussed in “Purchases and Redemptions of Creation Units — Redemption”), the U.S. Holder will realize gain or loss in an amount equal to the difference between the aggregate fair market value as of the redemption date of the stocks and cash received in the redemption and the U.S. Holder’s adjusted tax basis in the relevant Units. The U.S. Holder will generally have an initial tax basis in the distributed stocks equal to their respective fair market values on the redemption date. The IRS may assert that any resulting loss may not be recognized on the ground that there has been no material change in the U.S. Holder’s economic position. The Trust will not recognize gain or loss for U.S. federal income tax purposes on an in-kind distribution in redemption of Creation Units.

Under U.S. Treasury regulations, if a U.S. Holder recognizes losses with respect to Units of $2 million or more for an individual U.S. Holder or $10 million or more for a corporate U.S. Holder, the U.S. Holder must file with the IRS a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases exempted from this reporting requirement, but under current guidance, shareholders of a RIC are not exempted. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the U.S. Holder’s treatment of the loss is proper. Certain states may have similar disclosure requirements.

Portfolio Deposits.     Upon the transfer of a Portfolio Deposit (as defined below in “Purchases and Redemptions of Creation Units — Purchase (Creation)”) to the Trust, a U.S. Holder will generally realize gain or loss with respect to each stock included in the Portfolio Deposit in an amount equal to the difference, if any, between the amount received with respect to such stock and the U.S. Holder’s basis in the stock.

 

17


The amount received with respect to each stock included in a Portfolio Deposit is determined by allocating among all of the stocks included in the Portfolio Deposit an amount equal to the fair market value of the Creation Units received (determined as of the date of transfer of the Portfolio Deposit) plus the amount of any cash received from the Trust, reduced by the amount of any cash that the U.S. Holder pays to the Trust. This allocation is made among such stocks in accordance with their relative fair market values as of the date of transfer of the Portfolio Deposit. The IRS may assert that any loss resulting from the transfer of a Portfolio Deposit to the Trust may not be recognized on the ground that there has been no material change in the economic position of the U.S. Holder. The Trust will not recognize gain or loss for U.S. federal income tax purposes on the issuance of Creation Units in exchange for Portfolio Deposits.

Backup Withholding and Information Returns.     Payments on the Units and proceeds from a sale or other disposition of Units will be subject to information reporting unless the U.S. Holder is an exempt recipient. A U.S. Holder will be subject to backup withholding on all such amounts unless (i) the U.S. Holder is an exempt recipient or (ii) the U.S. Holder provides its correct taxpayer identification number (generally, on IRS Form W-9) and certifies that it is not subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld pursuant to the backup withholding rules will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is furnished to the IRS on a timely basis.

Tax Consequences to Non-U.S. Holders

A “Non-U.S. Holder” is a person that, for U.S. federal income tax purposes, is a beneficial owner of Units and is a nonresident alien individual, a foreign corporation, a foreign trust or a foreign estate. The discussion below does not apply to a Non-U.S. Holder who is a nonresident alien individual and is present in the United States for 183 days or more during any taxable year. Such Non-U.S. Holders should consult their tax advisors with respect to the particular tax consequences to them of an investment in the Trust. The U.S. federal income taxation of a Non-U.S. Holder depends on whether the income that the Non-U.S. Holder derives from the Trust is “effectively connected” with a trade or business that the Non-U.S. Holder conducts in the United States (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder).

If the income that a Non-U.S. Holder derives from the Trust is not “effectively connected” with a U.S. trade or business conducted by such Non-U.S. Holder (or, if an applicable tax treaty so provides, the Non-U.S. Holder does not maintain a permanent establishment in the United States), distributions of “investment company taxable income” to such Non-U.S. Holder will generally be subject to U.S. federal withholding tax at a rate of 30% (or lower rate under an applicable tax treaty). Provided that certain requirements are satisfied, this withholding tax will not be imposed on dividends paid by the Trust to the extent that the underlying income out

 

18


of which the dividends are paid consists of U.S.-source interest income or short-term capital gains that would not have been subject to U.S. withholding tax if received directly by the Non-U.S. Holder (“interest-related dividends” and “short-term capital gain dividends,” respectively).

A Non-U.S. Holder whose income from the Trust is not “effectively connected” with a U.S. trade or business (or, if an applicable tax treaty so provides, does not maintain a permanent establishment in the United States) will generally be exempt from U.S. federal income tax on capital gain dividends and any amounts retained by the Trust that are designated as undistributed capital gains. In addition, such a Non-U.S. Holder will generally be exempt from U.S. federal income tax on any gains realized upon the sale or exchange of Units.

If the income from the Trust is “effectively connected” with a U.S. trade or business carried on by a Non-U.S. Holder (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder), any distributions of “investment company taxable income,” any capital gain dividends, any amounts retained by the Trust that are designated as undistributed capital gains and any gains realized upon the sale or exchange of Units will be subject to U.S. federal income tax, on a net income basis, at the rates applicable to U.S. Holders. A Non-U.S. Holder that is a corporation may also be subject to the U.S. branch profits tax.

Information returns will be filed with the IRS in connection with certain payments on the Units and may be filed in connection with payments of the proceeds from a sale or other disposition of Units. A Non-U.S. Holder may be subject to backup withholding on distributions or on the proceeds from a redemption or other disposition of Units if such Non-U.S. Holder does not certify its non-U.S. status under penalties of perjury or otherwise establish an exemption. Backup withholding is not an additional tax. Any amounts withheld pursuant to the backup withholding rules will be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability, if any, and may entitle the Non-U.S. Holder to a refund, provided that the required information is furnished to the IRS on a timely basis.

In order to qualify for the exemption from U.S. withholding on interest-related dividends, to qualify for an exemption from U.S. backup withholding and to qualify for a reduced rate of U.S. withholding tax on Trust distributions pursuant to an income tax treaty, a Non-U.S. Holder must generally deliver to the withholding agent a properly executed IRS form (generally, Form W-8BEN or Form W-8BEN-E, as applicable). In order to claim a refund of any Trust-level taxes imposed on undistributed net capital gain, any withholding taxes or any backup withholding, a Non-U.S. Holder must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return, even if the Non-U.S. Holder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. income tax return.

 

19


Under Sections 1471 through 1474 of the Code (“FATCA”), a withholding tax at the rate of 30% will generally be imposed on payments to certain foreign entities (including financial intermediaries) of dividends on Units and, for dispositions after December 31, 2018, on gross proceeds from the sale or other disposition made to a foreign entity unless the foreign entity provides the withholding agent with certifications and other information (which may include information relating to ownership by U.S. persons of interests in, or accounts with, the foreign entity). If FATCA withholding is imposed, a beneficial owner of Units that is not a foreign financial institution generally may obtain a refund of any amounts withheld by filing a U.S. federal income tax return (which may entail significant administrative burden). Non-U.S. Holders should consult their tax advisors regarding the possible implications of FATCA on their investment in Units.

 

20


SPDR Dow Jones Industrial Average ETF Trust

Report of Independent Registered Public Accounting Firm

 

To the Trustee and Unitholders of SPDR Dow Jones Industrial Average ETF Trust:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the SPDR Dow Jones Industrial Average ETF Trust as of October 31, 2017, the results of its operations for each of the three years then ended, the changes in its net assets for each of the three years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trustee. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities as of October 31, 2017 by correspondence with the custodian and the application of alternative auditing procedures where securities purchased had not been received, provide a reasonable basis for our opinion expressed above.

PricewaterhouseCoopers LLP

Boston, Massachusetts

December 14, 2017

 

21


SPDR Dow Jones Industrial Average ETF Trust

Statement of Assets and Liabilities

October 31, 2017

 

 

ASSETS

  

Investments in unaffiliated issuers at value (Note 2)

   $ 19,956,435,864  

Cash

     27,464,118  

Receivable for units of fractional undivided interest (“Units”) issued in-kind

     59,105  

Dividends receivable — unaffiliated issuers (Note 2)

     13,789,218  
  

 

 

 

Total Assets

     19,997,748,305  
  

 

 

 

LIABILITIES

  

Accrued Trustee expense (Note 3)

     973,252  

Accrued Marketing expense (Note 3)

     6,222,399  

Accrued DJIA license fee (Note 3)

     2,157,889  

Distribution payable

     15,397,069  

Accrued expenses and other liabilities

     305,274  
  

 

 

 

Total Liabilities

     25,055,883  
  

 

 

 

NET ASSETS

   $ 19,972,692,422  
  

 

 

 

NET ASSETS CONSIST OF:

  

Paid in capital (Note 4)

   $ 19,010,294,496  

Distribution in excess of net investment income

     (117,397

Accumulated net realized gain (loss) on investments

     (569,666,110

Net unrealized appreciation (depreciation) on:

  

Investments — unaffiliated issuers

     1,532,181,433  
  

 

 

 

NET ASSETS

   $ 19,972,692,422  
  

 

 

 

NET ASSET VALUE PER UNIT

   $ 233.62  
  

 

 

 

UNITS OUTSTANDING (UNLIMITED UNITS AUTHORIZED)

     85,492,867  
  

 

 

 

COST OF INVESTMENTS:

  

Investments at cost — unaffiliated issuers

   $ 18,424,254,431  
  

 

 

 

 

See accompanying notes to financial statements.

 

22


SPDR Dow Jones Industrial Average ETF Trust

Statements of Operations

 

 

       Year Ended
10/31/17
     Year Ended
10/31/16
    Year Ended
10/31/15
 

INVESTMENT INCOME

       

Dividend income — unaffiliated issuers (Note 2)

   $ 390,739,297      $ 322,044,803     $ 286,244,430  
  

 

 

    

 

 

   

 

 

 

EXPENSES

       

Trustee expense (Note 3)

     9,556,331        7,244,584       7,116,821  

Marketing expense (Note 3)

     6,737,474        7,275,647       7,142,531  

DJIA license fee (Note 3)

     6,594,301        4,950,431       4,861,688  

Legal and audit fees

     385,300        414,102       137,384  

Other expenses

     610,215        439,594       456,933  
  

 

 

    

 

 

   

 

 

 

Total Expenses

     23,883,621        20,324,358       19,715,357  
  

 

 

    

 

 

   

 

 

 

NET INVESTMENT INCOME (LOSS)

     366,855,676        301,720,445       266,529,073  
  

 

 

    

 

 

   

 

 

 

REALIZED AND UNREALIZED GAIN (LOSS)

       

Net realized gain (loss) on:

       

Investments — unaffiliated issuers

     5,571,232        10,531,594       39,798,945  

In-kind redemptions — unaffiliated issuers

     1,442,502,396        613,737,684       1,262,330,851  
  

 

 

    

 

 

   

 

 

 

Net realized gain (loss)

     1,448,073,628        624,269,278       1,302,129,796  
  

 

 

    

 

 

   

 

 

 

Net change in unrealized appreciation (depreciation) on:

       

Investments — unaffiliated issuers

     2,537,357,835        (344,478,734     (1,048,745,841
  

 

 

    

 

 

   

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS)

     3,985,431,463        279,790,544       253,383,955  
  

 

 

    

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS

   $ 4,352,287,139      $ 581,510,989     $ 519,913,028  
  

 

 

    

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

23


SPDR Dow Jones Industrial Average ETF Trust

Statements of Changes in Net Assets

 

 

      Year Ended
10/31/17
    Year Ended
10/31/16
    Year Ended
10/31/15
 

INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:

     

Net investment income (loss)

  $ 366,855,676     $ 301,720,445     $ 266,529,073  

Net realized gain (loss)

    1,448,073,628       624,269,278       1,302,129,796  

Net change in unrealized appreciation/ depreciation

    2,537,357,835       (344,478,734     (1,048,745,841
 

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

    4,352,287,139       581,510,989       519,913,028  
 

 

 

   

 

 

   

 

 

 

NET EQUALIZATION CREDITS AND CHARGES (NOTE 2)

    3,686,412       (393,590     1,709,097  
 

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS TO UNITHOLDERS FROM NET INVESTMENT INCOME

    (366,118,401     (307,678,873     (264,665,576
 

 

 

   

 

 

   

 

 

 

INCREASE (DECREASE) IN NET ASSETS FROM UNIT TRANSACTIONS:

     

Proceeds from issuance of Units

    26,520,269,748       18,599,999,396       22,952,852,124  

Cost of Units redeemed

    (22,100,189,512     (19,517,373,956     (23,279,960,064

Net income equalization (Note 2)

    (3,686,412     393,590       (1,709,097
 

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS FROM ISSUANCE AND REDEMPTION OF UNITS

    4,416,393,824       (916,980,970     (328,817,037
 

 

 

   

 

 

   

 

 

 

Contribution by Trustee (Note 3)

                3,345,985  
 

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN NET ASSETS DURING THE PERIOD

    8,406,248,974       (643,542,444     (68,514,503
 

 

 

   

 

 

   

 

 

 

NET ASSETS AT BEGINNING OF PERIOD

    11,566,443,448       12,209,985,892       12,278,500,395  
 

 

 

   

 

 

   

 

 

 

NET ASSETS AT END OF PERIOD

  $ 19,972,692,422     $ 11,566,443,448     $ 12,209,985,892  
 

 

 

   

 

 

   

 

 

 

UNDISTRIBUTED (DISTRIBUTION IN EXCESS OF) NET INVESTMENT INCOME (LOSS)

  $ (117,397   $ (854,672   $ 5,103,756  
 

 

 

   

 

 

   

 

 

 

UNIT TRANSACTIONS:

     

Units sold

    128,250,000       106,300,000       131,850,000  

Units redeemed

    (106,600,000     (111,650,000     (133,400,000
 

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE)

    21,650,000       (5,350,000     (1,550,000
 

 

 

   

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

24


SPDR Dow Jones Industrial Average ETF Trust

Financial Highlights

Selected data for a Unit outstanding throughout each period

 

 

      Year
Ended
10/31/17
    Year
Ended
10/31/16
    Year
Ended
10/31/15
    Year
Ended
10/31/14
    Year
Ended
10/31/13
 

Net asset value, beginning of period

  $ 181.17     $ 176.46     $ 173.57     $ 155.11     $ 130.67  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from investment operations:

         

Net investment income (loss)(a)

    4.73       4.39       3.94       3.47       3.49  

Net realized and unrealized gain (loss)

    52.39       4.81       2.78       18.45       24.48  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total from investment operations

    57.12       9.20       6.72       21.92       27.97  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net equalization credits and charges(a)

    0.05       (0.01     0.03       (0.00 )(b)      (0.05
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contribution by Trustee

                0.05 (c)             
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less Distributions from:

         

Net investment income

    (4.72     (4.48     (3.91     (3.46     (3.48
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value, end of period

  $ 233.62     $ 181.17     $ 176.46     $ 173.57     $ 155.11  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total return(d)

    31.86     5.30     3.97 %(e)      14.26     21.55

Ratios and Supplemental Data:

         

Net assets, end of period (in 000s)

  $ 19,972,692     $ 11,566,443     $ 12,209,986     $ 12,278,500     $ 11,368,630  

Ratios to average net assets:

         

Total expenses (excluding Trustee earnings credit)

    0.15     0.17     0.17     0.17     0.17

Total expenses

    0.15     0.17     0.17     0.17     0.17

Net investment income (loss)

    2.26     2.49     2.24     2.11     2.41

Portfolio turnover rate(f)

    1     3     9     0     18

 

(a) Per Unit numbers have been calculated using the average shares method, which more appropriately presents per Unit data for the year.

 

(b) Amount is less than $0.005 per Unit.

 

(c) Contribution paid by the Trustee in the amount of $ 3,345,985. (See Note 3).

 

(d) Total return is calculated assuming a purchase of Units at net asset value per Unit on the first day and a sale at net asset value per Unit on the last day of each period reported. Distributions are assumed, for the purposes of this calculation, to be reinvested at the net asset value per Unit on the respective payment dates of the Trust. Total return for a period of less than one year is not annualized. Broker commission charges are not included in this calculation.

 

(e) Total return would have been lower by 0.03% if the Trustee had not made a contribution. (See Note 3).

 

(f) Portfolio turnover rate excludes securities received or delivered from in-kind processing of creations or redemptions of Units.

 

See accompanying notes to financial statements.

 

25


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements

October 31, 2017

 

 

Note 1 — Organization

SPDR Dow Jones Industrial Average ETF Trust (the “Trust”) is a unit investment trust created under the laws of the State of New York and registered under the Investment Company Act of 1940, as amended. The Trust was created to provide investors with the opportunity to purchase a security representing a proportionate undivided interest in a portfolio of securities consisting of substantially all of the component common stocks, in substantially the same weighting, which comprise the Dow Jones Industrial Average (the “DJIA”). Each unit of fractional undivided interest in the Trust is referred to as a “Unit.” The Trust commenced operations on January 14, 1998 upon the initial issuance of 500,000 Units (equivalent to ten “Creation Units” — see Note 4) in exchange for a portfolio of securities assembled to reflect the intended portfolio composition of the Trust.

Effective June 16, 2017, State Street Bank and Trust Company (“SSBT”) resigned as trustee of the Trust. PDR Services, LLC, as sponsor of the Trust (the “Sponsor”), appointed State Street Global Advisors Trust Company, a wholly-owned subsidiary of SSBT, as trustee of the Trust (the “Trustee”).

The services received, and the trustee fees paid, by the Trust will not change as a result of the change in the identity of the Trustee. SSBT continues to maintain the Trust’s accounting records, act as custodian and transfer agent to the Trust, and provide administrative services, including the filing of certain regulatory reports.

Under the Amended and Restated Standard Terms and Conditions of the Trust, as amended (the “Trust Agreement”), the Sponsor and the Trustee are indemnified against certain liabilities arising out of the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trustee expects the risk of material loss to be remote.

The Sponsor is an indirect, wholly-owned subsidiary of Intercontinental Exchange, Inc. (“ICE”). ICE is a publicly-traded entity, trading on the New York Stock Exchange under the symbol “ICE.”

Note 2 — Summary of Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements:

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and

 

26


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 2 — Summary of Significant Accounting Policies – (continued)

 

assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. The Trust is an investment company under U.S. GAAP and follows the accounting and reporting guidance applicable to investment companies.

Security Valuation

The Trust’s investments are valued at fair value each day that the New York Stock Exchange (“NYSE”) is open and, for financial reporting purposes, as of the report date should the reporting period end on a day that the NYSE is not open. Fair value is generally defined as the price a fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. By its nature, a fair value price is a good faith estimate of the valuation in a current sale and may not reflect an actual market price. The investments of the Trust are valued pursuant to the policy and procedures developed by the Oversight Committee of the Trustee (the “Committee”). The Committee provides oversight of the valuation of investments for the Trust. Valuation techniques used to value the Trust’s equity investments are as follows:

Equity investments (including preferred stocks) traded on a recognized securities exchange for which market quotations are readily available are valued at the last sale price or official closing price, as applicable, on the primary market or exchange on which they trade. Equity investments traded on a recognized exchange for which there were no sales on that day are valued at the last published sale price or at fair value.

In the event that prices or quotations are not readily available or that the application of these valuation methods results in a price for an investment that is deemed to be not representative of the fair value of such investment, fair value will be determined in good faith by the Committee, in accordance with the valuation policy and procedures approved by the Trustee.

Fair value pricing could result in a difference between the prices used to calculate the Trust’s net asset value and the prices used by the Trust’s underlying index, the DJIA, which in turn could result in a difference between the Trust’s performance and the performance of the DJIA.

The Trust values its assets and liabilities at fair value using a hierarchy that prioritizes the inputs to valuation techniques, giving the highest priority to readily available unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs

 

27


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 2 — Summary of Significant Accounting Policies – (continued)

 

(Level 3 measurements) when market prices are not readily available or reliable. The categorization of a value determined for an investment within the hierarchy is based upon the pricing transparency of the investment and is not necessarily an indication of the risk associated with the investment.

The three levels of the fair value hierarchy are as follows:

 

   

Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities;

 

   

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not considered to be active, inputs other than quoted prices that are observable for the asset or liability (such as exchange rates, financing terms, interest rates, yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market-corroborated inputs; and

 

   

Level 3 — Unobservable inputs for the asset or liability, including the Committee’s assumptions used in determining the fair value of investments.

Changes in valuation techniques may result in transfers in or out of an assigned level within the fair value hierarchy. Transfers between different levels of the fair value hierarchy are recognized at the end of the reporting period. The Trust did not hold any investments valued using Level 2 or Level 3 inputs as of October 31, 2017 and did not have any transfers between levels for the year ended October 31, 2017.

Investment Transactions and Income Recognition

Investment transactions are accounted for on the trade date for financial reporting purposes. Dividend income and capital gain distributions, if any, are recognized daily on the ex-dividend date, net of any foreign taxes withheld at source, if any. Non-cash dividends received in the form of stock, if any, are recorded as dividend income at fair value. Realized gains and losses from the sale or disposition of investments are determined using the identified cost method.

Distributions

The Trust declares and distributes dividends from net investment income to its holders of Units (“Unitholders”), if any, monthly. Capital gain distributions, if any, are generally declared and paid annually. Additional distributions may be paid by the

 

28


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 2 — Summary of Significant Accounting Policies – (continued)

 

Trust to avoid imposition of federal income and excise tax on any remaining undistributed net investment income and capital gains. The amount and character of income and gains to be distributed are determined in accordance with federal tax regulations which may differ from net investment income and realized gains recognized for U.S. GAAP purposes.

Equalization

The Trust follows the accounting practice known as “Equalization” by which a portion of the proceeds from sales and costs of reacquiring the Trust’s Units, equivalent on a per Unit basis to the amount of distributable net investment income on the date of the transaction, is credited or charged to undistributed net investment income. As a result, undistributed net investment income per Unit is unaffected by sales or reacquisitions of the Trust’s Units. Amounts related to Equalization can be found on the Statements of Changes in Net Assets.

Federal Income Taxes

For U.S. federal income tax purposes, the Trust has qualified as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (a “RIC”), and intends to continue to qualify as a RIC. As a RIC, the Trust will generally not be subject to U.S. federal income tax for any taxable year on income, including net capital gains, that it distributes to its Unitholders, provided that it distributes on a timely basis at least 90% of its “investment company taxable income” determined prior to the deduction for dividends paid by the Trust (generally, its taxable income other than net capital gain) for such taxable year. In addition, provided that the Trust distributes substantially all of its ordinary income and capital gains during each calendar year, the Trust will not be subject to U.S. federal excise tax. Income and capital gain distributions are determined in accordance with tax regulations which may differ from U.S. GAAP. These book-tax differences are primarily due to differing treatments for expired carry forward losses, in-kind transactions and losses deferred due to wash sales.

U.S. GAAP requires the evaluation of tax positions taken in the course of preparing the Trust’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. For U.S. GAAP purposes, the Trust recognizes the tax benefits of uncertain tax positions only when the position is more likely than not to be sustained, assuming examination by tax authorities.

 

29


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 2 — Summary of Significant Accounting Policies – (continued)

 

The Trust has reviewed its tax positions for the open tax years as of October 31, 2017 and has determined that no provision for income tax is required in the Trust’s financial statements. Generally, the Trust’s tax returns for the prior three fiscal years remain subject to examinations by the Trust’s major tax jurisdictions, which include the United States of America, the Commonwealth of Massachusetts and the State of New York. The Trust recognizes interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations. There were no such expenses for the year ended October 31, 2017.

No income tax returns are currently under examination. The Trustee has analyzed the relevant tax laws and regulations and their application to the Trust’s facts and circumstances and does not believe there are any uncertain tax positions that require recognition of any tax liabilities. Any potential tax liability is also subject to ongoing interpretation of laws by taxing authorities. The tax treatment of the Trust’s investments may change over time based on factors including, but not limited to, new tax laws, regulations and interpretations thereof.

During the year ended October 31, 2017, the Trust reclassified $1,442,502,396 of non-taxable security gains realized from the in-kind redemption of Creation Units (Note 4) as an increase to paid in capital in the Statement of Assets and Liabilities.

At October 31, 2017, the Trust had the following capital loss carryforwards that may be utilized to offset any net realized capital gains, expiring October 31:

 

2018

   $ 4,715,695  

2019

     3,393,588  

Non-Expiring – Long Term*

     561,549,000  

 

* Must be utilized prior to losses subject to expiration

During the tax year ended October 31, 2017, the Trust utilized capital loss carryforwards of $5,593,400 and $779,537,215 of capital loss carryforwards expired.

At October 31, 2017, gross unrealized appreciation and gross unrealized depreciation of investments based on cost for federal income tax purposes were as follows:

 

     Tax Cost      Gross
Unrealized
Appreciation
     Gross
Unrealized
Depreciation
     Net
Unrealized
Appreciation
(Depreciation)
 

SPDR Dow Jones Industrial Average ETF Trust

   $ 18,424,262,258      $ 2,122,440,402      $ 590,266,796      $ 1,532,173,606  

 

30


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 2 — Summary of Significant Accounting Policies – (continued)

 

The tax character of distributions paid during the years ended October 31, 2017, 2016 and 2015 were as follows:

 

Distributions paid from:

   2017      2016      2015  

Ordinary Income

   $ 366,118,401      $ 307,678,873      $ 264,665,576  

As of October 31, 2017, the components of distributable earnings (excluding unrealized appreciation/(depreciation)) were undistributed ordinary income of $15,279,672 and undistributed capital gain of $0.

Note 3 — Transactions with Affiliates of the Trustee and Sponsor

SSBT maintains the Trust’s accounting records, acts as custodian and transfer agent to the Trust, and provides administrative services, including the filing of certain regulatory reports. The Trustee is responsible for determining the composition of the portfolio of securities which must be delivered and/or received in exchange for the issuance and/or redemption of Creation Units of the Trust, and for adjusting the composition of the Trust’s portfolio from time to time to conform to changes in the composition and/or weighting structure of the DJIA. For these services, the Trustee (SSBT prior to June 16, 2017) received a fee at the following annual rates for the year ended October 31, 2017:

 

Net asset value of the Trust

  

Fee as a percentage of net asset value of the Trust

$0 – $499,999,999

   0.10% per annum plus or minus the Adjustment Amount

$500,000,000 – $2,499,999,999

   0.08% per annum plus or minus the Adjustment Amount

$2,500,000,000 and above

   0.06% per annum plus or minus the Adjustment Amount

The adjustment amount (the “Adjustment Amount”) is the sum of (a) the excess or deficiency of transaction fees received by the Trustee, less the expenses incurred in processing orders for the creation and redemption of Units and (b) the amounts earned by the Trustee with respect to the cash held by the Trustee for the benefit of the Trust.

During the year ended October 31, 2017, the Adjustment Amount reduced the Trustee’s fee by $785,121. The Adjustment Amount included an excess of net transaction fees from processing orders of $606,326 and a Trustee earnings credit of $178,795.

In accordance with the Trust Agreement and under the terms of an exemptive order issued by the U.S. Securities and Exchange Commission, dated December 30, 1997, the Sponsor is reimbursed by the Trust for certain expenses up to a maximum

 

31


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 3 — Transactions with Affiliates of the Trustee and Sponsor – (continued)

 

of 0.20% of the Trust’s net asset value (“NAV”) on an annualized basis. The expenses reimbursed to the Sponsor for the years ended October 31, 2017, 2016 and 2015, did not exceed 0.20% per annum.

S&P Dow Jones Indices LLC (“S&P”), per a license from Standard & Poor’s Financial Services LLC, and State Street Global Advisors Funds Distributors, LLC (“SSGA FD” or the “Marketing Agent”) have entered into a license agreement (the “License Agreement”). Effective May 1, 2017, the Marketing Agent’s name changed from State Street Global Markets, LLC to State Street Global Advisors Funds Distributors, LLC. The License Agreement grants SSGA FD, an affiliate of the Trustee, a license to use the DJIA and to use certain trade names and trademarks of S&P in connection with the Trust. The DJIA also serves as the basis for determining the composition of the Trust’s portfolio. The Trustee (on behalf of the Trust), the Sponsor and NYSE Arca, Inc. (“NYSE Arca”) have each received a sublicense from SSGA FD for the use of the DJIA and certain trade names and trademarks in connection with their rights and duties with respect to the Trust. The License Agreement may be amended without the consent of any of the owners of beneficial interests of Units. Currently, the License Agreement is scheduled to terminate on November 29, 2031, but its term may be extended without the consent of any of the owners of beneficial interests of Units. Pursuant to such arrangements and in accordance with the Trust Agreement, the Trust reimburses the Sponsor for payment of fees under the License Agreement to S&P equal to 0.05% on the first $1 billion of the then rolling average asset balance and 0.04% on any excess rolling average asset balance over and above $1 billion. The minimum annual license fee for the Trust is $1 million.

The Sponsor has entered into an agreement with the Marketing Agent pursuant to which the Marketing Agent has agreed to market and promote the Trust. The Marketing Agent is reimbursed by the Sponsor for the expenses it incurs for providing such services out of amounts that the Trust reimburses the Sponsor. Expenses incurred by the Marketing Agent include, but are not limited to: printing and distribution of marketing materials describing the Trust, associated legal, consulting, advertising and marketing costs and other out-of-pocket expenses.

ALPS Distributors, Inc. (the “Distributor”) serves as the distributor of the Units. The Sponsor pays the Distributor for its services a flat annual fee of $35,000, and the Trust does not reimburse the Sponsor for this fee.

 

32


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 3 — Transactions with Affiliates of the Trustee and Sponsor – (continued)

 

Contribution from SSBT as Trustee

On July 20, 2015, SSBT, as trustee of the Trust at such date, made a cash contribution to the Trust in connection with the correction of a class action processing error.

Note 4 — Unitholder Transactions

Units are issued and redeemed by the Trust only in Creation Unit size aggregations of 50,000 Units. Such transactions are only permitted on an in-kind basis, with a separate cash payment that is equivalent to the undistributed net investment income per Unit (income equalization) and a balancing cash component to equate the transaction to the NAV per Unit of the Trust on the transaction date. There is a transaction fee payable to the Trustee in connection with each creation and redemption of Creation Units made through the clearing process (the “Transaction Fee”). The Transaction Fee is non-refundable, regardless of the NAV of the Trust. The Transaction Fee is the lesser of $1,000 or 0.10% (10 basis points) of the value of one Creation Unit at the time of creation per participating party per day, regardless of the number of Creation Units created or redeemed on such day. The Transaction Fee is currently $1,000. For creations and redemptions outside the clearing process, including orders from a participating party restricted from engaging in transactions in one or more of the common stocks that are included in the DJIA, an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged per Creation Unit per day.

Note 5 — Investment Transactions

For the year ended October 31, 2017, the Trust had in-kind contributions, in-kind redemptions, purchases and sales of investment securities of $17,924,686,499, $13,508,496,292, $94,162,005 and $100,259,866 respectively. Net realized gain (loss) on investment transactions in the Statements of Operations includes net gains resulting from in-kind transactions of $1,442,502,396.

Note 6 — Market Risk

In the normal course of business, the Trust invests in securities and enters into transactions where risks exist due to fluctuations in the market (market risk). Due to the level of risk associated with certain investments, it is at least reasonably possible

 

33


SPDR Dow Jones Industrial Average ETF Trust

Notes to Financial Statements — (continued)

October 31, 2017

 

 

Note 6 — Market Risk – (continued)

 

that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.

An investment in the Trust involves risks similar to those of investing in any fund of equity securities, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock prices. The value of a Unit will decline, more or less, in correlation with any decline in value of the DJIA. The values of equity securities could decline generally or could underperform other investments. The Trust would not sell an equity security because the security’s issuer was in financial trouble unless that security was removed from the DJIA.

Note 7 — Subsequent Events

The Trustee has evaluated the impact of all subsequent events on the Trust through the date on which the financial statements were available to be issued and has determined that there were no subsequent events requiring adjustment or disclosure in the financial statements.

 

34


SPDR Dow Jones Industrial Average ETF Trust

Other Information

October 31, 2017 (Unaudited)

Tax Information

For U.S. federal income tax purposes, the percentage of Trust distributions that qualify for the corporate dividends received deduction for the fiscal year ended October 31, 2017 is 100.0%.

For the fiscal year ended October 31, 2017, certain dividends paid by the Trust may be designated as qualified dividend income for U.S. federal income tax purposes and subject to a maximum U.S. federal income tax rate of 20% in the case of certain non-corporate shareholders that meet applicable holding period requirements with respect to their Units. Complete information will be reported in conjunction with your 2017 Form 1099-DIV.

 

35


SPDR Dow Jones Industrial Average ETF Trust

Other Information (continued)

October 31, 2017 (Unaudited)

 

 

FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS

Bid/Ask Price (1)  vs Net Asset Value

As of October 31, 2017

 

     Bid/Ask Price Above NAV      Bid/Ask Price Below NAV  
       50-99
BASIS
POINTS
     100-199
BASIS
POINTS
     >200
BASIS
POINTS
     50-99
BASIS
POINTS
     100-199
BASIS
POINTS
     >200
BASIS
POINTS
 

2017

     0        0        0        0        0        0  

2016

     0        0        0        0        0        0  

2015

     0        0        0        0        0        0  

2014

     0        0        0        0        0        0  

2013

     0        0        0        0        0        0  

Comparison of Total Returns Based on NAV and Bid/Ask Price (1)

The table below is provided to compare the Trust’s total pre-tax return at NAV with the total pre-tax returns based on bid/ask price and the performance of the DJIA. Past performance is not necessarily an indication of how the Trust will perform in the future.

 

Cumulative Total Return

 
     1 Year      5 Year      10 Year  

SPDR Dow Jones Industrial Average ETF Trust

        

Return Based on NAV

     31.86%        100.50%        115.41%  

Return Based on Bid/Ask Price

     31.83%        100.53%        115.46%  

DJIA

     32.07%        102.17%        118.82%  

Average Annual Total Return

 
     1 Year      5 Year      10 Year  

SPDR Dow Jones Industrial Average ETF Trust

        

Return Based on NAV

     31.86%        14.93%        7.98%  

Return Based on Bid/Ask Price

     31.83%        14.93%        7.98%  

DJIA

     32.07%        15.12%        8.15%  

 

(1) Currently, the bid/ask price is the midpoint of the best bid and best offer prices on NYSE Arca at the time the Trust’s NAV is calculated, ordinarily 4:00 p.m. Through November 28, 2008, the bid/ask price was the midpoint of the best bid and best offer prices on NYSE Alternext US (formerly the American Stock Exchange and now NYSE MKT) at the close of trading, ordinarily 4:00 p.m.

 

36


SPDR Dow Jones Industrial Average ETF Trust

Schedule of Investments

October 31, 2017

 

 

Security Description   Shares     Value  

Common Stocks — 99.9%

 

3M Co.

    5,877,890     $ 1,353,031,499  

American Express Co.

    5,877,890       561,456,053  

Apple, Inc.

    5,877,890       993,598,526  

Boeing Co.

    5,877,890       1,516,378,062  

Caterpillar, Inc.

    5,877,890       798,217,462  

Chevron Corp.

    5,877,890       681,188,672  

Cisco Systems, Inc.

    5,877,890       200,729,944  

Coca-Cola Co.

    5,877,890       270,265,382  

DowDuPont, Inc.

    5,877,891       425,030,298  

Exxon Mobil Corp.

    5,877,890       489,922,132  

General Electric Co.

    5,877,890       118,498,262  

Goldman Sachs Group, Inc.

    5,877,890       1,425,270,767  

Home Depot, Inc.

    5,877,890       974,436,604  

Intel Corp.

    5,877,890       267,385,216  

International Business Machines Corp.

    5,877,890       905,547,734  

Johnson & Johnson

    5,877,890       819,436,645  

JPMorgan Chase & Co.

    5,877,890       591,374,513  

McDonald’s Corp.

    5,877,890       981,078,620  

Merck & Co., Inc.

    5,877,890       323,812,960  

Microsoft Corp.

    5,877,890       488,922,890  

NIKE, Inc. Class B

    5,877,890       323,225,171  

Pfizer, Inc.

    5,877,890       206,078,823  

Procter & Gamble Co.

    5,877,890       507,497,023  

Travelers Cos., Inc.

    5,877,890       778,526,531  

United Technologies Corp.

    5,877,890       703,936,106  

UnitedHealth Group, Inc.

    5,877,890       1,235,650,036  

Verizon Communications, Inc.

    5,877,890       281,374,594  

Visa, Inc. Class A

    5,877,890       646,450,342  

Wal-Mart Stores, Inc.

    5,877,890       513,198,576  

Walt Disney Co.

    5,877,890       574,916,421  
   

 

 

 

Total Common Stocks
(Cost $18,424,254,431)

 

  $ 19,956,435,864  
   

 

 

 
 

The following table summarizes the value of the Trust’s investments according to the fair value hierarchy as of October 31, 2017.

 

Description   Level 1 —
Quoted Prices
    Level 2 —
Other
Significant
Observable
Inputs
    Level 3 —
Significant
Unobservable
Inputs
    Total  

ASSETS:

       

INVESTMENTS:

       

Common Stocks

  $ 19,956,435,864     $     $     $ 19,956,435,864  

 

See accompanying notes to financial statements.

 

37


SPDR Dow Jones Industrial Average ETF Trust

Portfolio Statistics

October 31, 2017

 

 

INDUSTRY BREAKDOWN AS OF OCTOBER 31, 2017*

 

       PERCENT OF
NET ASSETS
 

Aerospace & Defense

     11.1

IT Services

     7.7  

Industrial Conglomerates

     7.4  

Capital Markets

     7.1  

Pharmaceuticals

     6.7  

Health Care Providers & Services

     6.2  

Oil, Gas & Consumable Fuels

     5.9  

Technology Hardware, Storage & Peripherals

     5.0  

Hotels, Restaurants & Leisure

     4.9  

Specialty Retail

     4.9  

Machinery

     4.0  

Insurance

     3.9  

Banks

     3.0  

Media

     2.9  

Consumer Finance

     2.8  

Food & Staples Retailing

     2.6  

Household Products

     2.5  
       PERCENT OF
NET ASSETS
 

Software

     2.5

Chemicals

     2.1  

Textiles, Apparel & Luxury Goods

     1.6  

Beverages

     1.4  

Diversified Telecommunication Services

     1.4  

Semiconductors & Semiconductor Equipment

     1.3  

Communications Equipment

     1.0  

Other Assets in Excess of Liabilities

     0.1  
  

 

 

 

Total

     100.0
  

 

 

 

 

* The Trust’s industry breakdown is expressed as a percentage of net assets and may change over time.
 

See accompanying notes to financial statements.

 

38


ORGANIZATION OF THE TRUST

The Trust is a unit investment trust that issues Units. The Trust is organized under New York law and is governed by a trust agreement between the Trustee and the Sponsor, dated as of January 1, 1998 and effective as of January 13, 1998, as amended (the “Trust Agreement”). The Trust is an investment company registered under the Investment Company Act of 1940, as amended (the “1940 Act”). Units represent an undivided ownership interest in Portfolio Securities of the Trust.

The Trust has a specified lifetime term. The Trust is scheduled to terminate on the first to occur of (a) January 14, 2123 or (b) the date 20 years after the death of the last survivor of fifteen persons named in the Trust Agreement, the oldest of whom was born in 1994 and the youngest of whom was born in 1997. Upon termination, the Trust may be liquidated and pro rata Units of the assets of the Trust, net of certain fees and expenses, distributed to holders of Units.

PURCHASES AND REDEMPTIONS OF CREATION UNITS

The Trust, a registered investment company, is an exchange traded fund or “ETF.” The Trust continuously issues and redeems “in-kind” its Units only in specified large lots of 50,000 Units or multiples thereof, which are referred to as “Creation Units,” at their once-daily NAV. Units are listed individually for trading on the Exchange at prices established throughout the trading day, like any other listed equity security trading on the Exchange in the secondary market.

ALPS Distributors, Inc., the distributor of the Trust (the “Distributor”), acts as underwriter of Units on an agency basis. The Distributor maintains records of the Creation Unit orders placed with it and the confirmations of acceptance and furnishes confirmations of acceptance of the orders to those placing such orders. The Distributor also is responsible for delivering a prospectus to authorized participants creating Units. The Distributor also maintains a record of the delivery instructions in response to Creation Unit orders and may provide certain other administrative services.

For purposes of the disclosure relating to the purchase and redemption of Units below, the “Trustee” may refer to SSBT in its capacity as the Administrator, Custodian and/or Transfer Agent for the Trustee.

Purchase (Creation)

Before trading on the Exchange in the secondary market, Units are created at NAV in Creation Units. All orders for Creation Units must be placed with the Distributor as facilitated through the Trustee. To be eligible to place these orders, an entity or person must be an “Authorized Participant,” which is (a) either a “Participating Party” or a “DTC Participant” and (b) in each case must have executed an agreement with the Distributor and the Trustee (the “Participant Agreement”). The term

 

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“Participating Party” means a broker-dealer or other participant in the Clearing Process (as defined below) through the Continuous Net Settlement (“CNS”) System of the National Securities Clearing Corporation (“NSCC”), a clearing agency registered with the Securities and Exchange Commission (“SEC”), and the term “DTC Participant” means a participant in DTC. Payment for orders is made by deposits with the Trustee of a portfolio of securities, substantially similar in composition and weighting to Index Securities, and a cash payment in an amount equal to the Dividend Equivalent Payment (as defined below), plus or minus the Balancing Amount (as defined below in “Portfolio Adjustments — Adjustments to the Portfolio Deposit”). “Dividend Equivalent Payment” is an amount equal, on a per Creation Unit basis, to the dividends on the Portfolio (with ex-dividend dates within the accumulation period), net of expenses and accrued liabilities for such period (including, without limitation, (i) taxes or other governmental charges against the Trust not previously deducted, if any, (ii) accrued fees of the Trustee and (iii) other expenses of the Trust (including legal and auditing expenses) not previously deducted), calculated as if all of the Portfolio Securities had been held for the entire accumulation period for such distribution. The Dividend Equivalent Payment and the Balancing Amount collectively are referred to as the “Cash Component” and the deposit of a portfolio of securities and the Cash Component collectively are referred to as a “Portfolio Deposit.” Persons placing creation orders must deposit Portfolio Deposits either (i) through the CNS clearing process of NSCC (the “Clearing Process”) or (ii) with the Trustee outside the Clearing Process ( i.e., through the facilities of DTC).

The Distributor will reject any order that is not submitted in proper form. A creation order is deemed received by the Distributor on the date on which it is placed (“Transmittal Date”) if (a) such order is received by the Trustee not later than the Closing Time (as defined below) on such Transmittal Date and (b) all other procedures set forth in the Participant Agreement are properly followed. The Transaction Fee (as defined below) is charged at the time of creation of a Creation Unit, and an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged for creations outside the Clearing Process, in part due to the increased expense associated with settlement.

The Trustee, at the direction of the Sponsor, may increase, reduce or waive the Transaction Fee (and/or the additional amounts charged in connection with creations and/or redemptions outside the Clearing Process) for certain lot-size creations and/or redemptions of Creation Units. The Sponsor has the right to vary the lot-size of Creation Units subject to such an increase, a reduction or waiver. The existence of any such variation shall be disclosed in the then current prospectus.

The DJIA is a price-weighted stock index; that is, the component stocks of the DJIA are represented in exactly equal share amounts and therefore are accorded relative importance in the DJIA based on their prices. The shares of common stock of the stock portion of a Portfolio Deposit on any date of deposit will reflect the composition of the component stocks of the DJIA on such day. The portfolio of Index

 

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Securities that is the basis for a Portfolio Deposit varies as changes are made in the composition of the Index Securities. Further, the Trustee is permitted to take account of changes to the identity or weighting of any Index Security resulting from a change to the DJIA by making a corresponding adjustment to the Portfolio Deposit within one (1) Business Day before or after the day on which the change to the DJIA takes effect.

The Trustee makes available to NSCC before the commencement of trading on each day that the New York Stock Exchange LLC (the “NYSE”) is open for business (“Business Day”) a list of the names and required number of shares of each of the Index Securities in the current Portfolio Deposit as well as the amount of the Dividend Equivalent Payment for the previous Business Day. Under certain extraordinary circumstances which may make it impossible for the Trustee to provide such information to NSCC on a given Business Day, NSCC will use the information regarding the identity of the Index Securities of the Portfolio Deposit on the previous Business Day. The Sponsor makes available every 15 seconds throughout the trading day at the Exchange a number representing, on a per Unit basis, the sum of the Dividend Equivalent Payment effective through and including the previous Business Day, plus the current value of the securities portion of a Portfolio Deposit as in effect on such day (which value occasionally may include a cash-in-lieu amount to compensate for the omission of a particular Index Security from such Portfolio Deposit). Such information is calculated based upon the best information available to the Sponsor and may be calculated by other persons designated to do so by the Sponsor. The inability of the Sponsor to provide such information will not by itself result in a halt in the trading of Units on the Exchange.

If the Trustee determines that one or more Index Securities are likely to be unavailable, or available in insufficient quantity, for delivery upon creation of Creation Units, the Trustee may permit, in lieu thereof, the cash equivalent value of one or more of these Index Securities to be included in the Portfolio Deposit as a part of the Cash Component. If a creator is restricted by regulation or otherwise from investing or engaging in a transaction in one or more Index Securities, the Trustee may permit, in lieu of the inclusion of such Index Securities in the stock portion of the Portfolio Deposit, the cash equivalent value of such Index Securities to be included in the Portfolio Deposit based on the market value of such Index Securities as of the closing time of the regular trading session on the NYSE (the “Closing Time”) (ordinarily 4:00 p.m. New York time) (the “Evaluation Time”) on the date such creation order is deemed received by the Distributor as part of the Cash Component.

Procedures for Purchase of Creation Units.     All creation orders must be placed in Creation Units and must be received by the Trustee by no later than the Closing Time (ordinarily 4:00 p.m. New York time) in each case on the date such order is placed, in order for creation to be effected based on the NAV of the Trust as determined on such date. Orders must be transmitted by telephone, through the Internet or by other transmission method(s) acceptable to the Distributor and the Trustee, pursuant to

 

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procedures set forth in the Participant Agreement and/or described in this prospectus. In addition, orders submitted through the Internet must also comply with the terms and provisions of the State Street Fund Connect Buy-Side User Agreement and other applicable agreements and documents, including but not limited to the applicable Fund Connect User Guide or successor documents. An affiliate of State Street Global Advisors Funds Distributors, LLC (“SSGA FD”) may assist Authorized Participants in assembling shares to purchase Creation Units (or upon redemption), for which it may receive commissions or other fees from such Authorized Participants. Severe economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the Distributor, the Trustee, a Participating Party or a DTC Participant.

Units may be created in advance of receipt by the Trustee of all or a portion of the Portfolio Deposit. In these circumstances, the initial deposit will have a value greater than the NAV of the Units on the date the order is placed in proper form, because in addition to available Index Securities, cash collateral must be deposited with the Trustee in an amount equal to the sum of (a) the Cash Component, plus (b) 115% of the market value of the undelivered Index Securities (“Additional Cash Deposit”). The Trustee holds such Additional Cash Deposit as collateral in an account separate and apart from the Trust. An order will be deemed received on the Business Day on which it is placed so long as (a) the order is placed in proper form before the Closing Time on such Business Day and (b) federal funds in the appropriate amount are deposited with the Trustee by 1:00 p.m. New York time or such other time as designated by the Trustee on settlement date.

If the order is not placed in proper form by the Closing Time or federal funds in the appropriate amount are not received by 1:00 p.m. New York time on settlement date, the order may be deemed to be rejected and the Authorized Participant shall be liable to the Trust for any losses resulting therefrom. An additional amount of cash must be deposited with the Trustee, pending delivery of the missing Index Securities, to the extent necessary to maintain the Additional Cash Deposit with the Trustee in an amount at least equal to 115% of the daily mark-to-market value of the missing Index Securities. If the missing Index Securities are not received by 1:00 p.m. New York time on the prescribed settlement date following the day on which the purchase order is deemed received and if a mark-to-market payment is not made within one (1) Business Day following notification by the Distributor that such payment is required, the Trustee may use the Additional Cash Deposit to purchase the missing Index Securities. The Trustee will return any unused portion of the Additional Cash Deposit only once all of the missing Index Securities of the Portfolio Deposit have been properly received or purchased by the Trustee and deposited into the Trust. In addition, a Transaction Fee will be imposed in an amount not to exceed that charged for creations outside the Clearing Process as disclosed below. The delivery of Creation Units created as described above will occur no later than the prescribed settlement date. The Participant Agreement for any Participating Party intending to follow these procedures contains terms and conditions permitting the Trustee to buy the missing portion(s) of a Portfolio Deposit at any time and will subject the

 

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Participating Party to liability for any shortfall between the cost to the Trust of purchasing such stocks and the value of such collateral. The Participating Party is liable to the Trust for the costs incurred by the Trust in connection with any such purchases. The Trust will have no liability for any such shortfall.

Acceptance of Orders of Creation Units.     All questions as to the number of shares of each Index Security, the amount of the Cash Component and the validity, form, eligibility (including time of receipt) and acceptance for deposit of any Index Securities to be delivered are resolved by the Trustee. The Trustee may reject a creation order if (a) the depositor or a group of depositors, upon obtaining the Units ordered, would own 80% or more of the current outstanding Units; (b) the Portfolio Deposit is not in proper form; (c) acceptance of the Portfolio Deposit would have certain adverse tax consequences; (d) the acceptance of the Portfolio Deposit would, in the opinion of counsel, be unlawful; (e) the acceptance of the Portfolio Deposit would otherwise have an adverse effect on the Trust or the rights of Beneficial Owners; or (f) circumstances outside the control of the Trustee make it for all practical purposes impossible to process creations of Units. The Trustee and the Sponsor are under no duty to give notification of any defects or irregularities in the delivery of Portfolio Deposits or any component thereof and neither of them will incur any liability for the failure to give any such notification.

Creation Transaction Fee.     The transaction fee payable to the Trustee in connection with each creation and redemption of Creation Units made through the Clearing Process (the “Transaction Fee”) is non-refundable, regardless of the NAV of the Trust. The Transaction Fee is the lesser of $1,000 or 0.10% (10 basis points) of the value of one Creation Unit at the time of creation (“10 Basis Point Limit”) per Participating Party per day, regardless of the number of Creation Units created or redeemed on such day. The Transaction Fee is currently $1,000.

For creations and redemptions outside the Clearing Process, including orders from a Participating Party restricted from engaging in transactions in one or more Index Securities, an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged per Creation Unit per day.

Placement of Creation Orders Using Clearing Process.     Creation Units created through the Clearing Process must be delivered through a Participating Party that has executed a Participant Agreement. The Participant Agreement authorizes the Trustee to transmit to the Participating Party such trade instructions as are necessary to effect the creation order. Pursuant to the trade instructions from the Trustee to NSCC, the Participating Party agrees to transfer the requisite Index Securities (or contracts to purchase such Index Securities that are expected to be delivered through the Clearing Process in a “regular way” manner by the second day during which NSCC is open for business (each such day, an “NSCC Business Day”)) and the Cash Component to the Trustee, together with such additional information as may be required by the Trustee.

Placement of Creation Orders Outside Clearing Process.     Creation Units created outside the Clearing Process must be delivered through a DTC Participant that has

 

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executed a Participant Agreement and has stated in its order that it is not using the Clearing Process and that creation will instead be effected through a transfer of stocks and cash. The requisite number of Index Securities must be delivered through DTC to the account of the Trustee by no later than 1:00 p.m. New York time on settlement date. The Trustee, through the Federal Reserve Bank wire transfer system, must receive the Cash Component no later than 1:00 p.m. New York time on settlement date. If the Trustee does not receive both the requisite Index Securities and the Cash Component in a timely fashion, the order may be cancelled. Upon written notice to the Distributor, the cancelled order may be resubmitted the following Business Day using a Portfolio Deposit as newly constituted to reflect the current NAV of the Trust. The delivery of Units so created will occur no later than the prescribed settlement date.

Redemption

Units may be redeemed in-kind only in Creation Units at their NAV determined after receipt of a redemption request in proper form by the Trustee through the Depository and relevant DTC Participant and only on a Business Day. Units are not redeemable for cash. EXCEPT UPON LIQUIDATION OF THE TRUST, THE TRUST WILL NOT REDEEM UNITS IN AMOUNTS LESS THAN CREATION UNITS. Investors must accumulate enough Units in the secondary market to constitute a Creation Unit in order to have such Units redeemed by the Trust, and Units may be redeemed only by or through an Authorized Participant. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Units to constitute a redeemable Creation Unit.

With respect to the Trust, the Trustee, through NSCC, makes available immediately prior to the commencement of trading on the NYSE (currently 9:30 a.m., Eastern time) on each Business Day, a list of the names and required number of shares of each of the Index Securities and the amount of the Dividend Equivalent Payment for the previous Business Day that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as discussed below) on that day. Index Securities received on redemption may not be identical to the stock portion of the Portfolio Deposit which is applicable to purchases of Creation Units.

Redemption Transaction Fee.     The Transaction Fee is non-refundable, regardless of the NAV of the Trust. The Transaction Fee is the lesser of $1,000 or the 10 Basis Point Limit per Participating Party per day, regardless of the number of Creation Units created or redeemed on such day. The Transaction Fee is currently $1,000.

For creations and redemptions outside the Clearing Process, including orders from a Participating Party restricted from engaging in transactions in one or more Index Securities, an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged per Creation Unit per day.

 

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Procedures for Redemption of Creation Units .    Redemption orders must be placed with a Participating Party (for redemptions through the Clearing Process) or DTC Participant (for redemptions outside the Clearing Process), as applicable, in the form required by such Participating Party or DTC Participant. A particular broker may not have executed a Participant Agreement, and redemption orders may have to be placed by the broker through a Participating Party or DTC Participant who has executed a Participant Agreement. At any given time, there may be only a limited number of broker-dealers that have executed a Participant Agreement. Redeemers should afford sufficient time to permit (a) proper submission of the order by a Participating Party or DTC Participant to the Trustee and (b) the receipt by the Trustee of the Units to be redeemed and any Excess Cash Amounts (as defined below) in a timely manner. Orders for redemption effected outside the Clearing Process are likely to require transmittal by the relevant DTC Participant(s) earlier on the Transmittal Date than orders effected using the Clearing Process. These deadlines vary by institution. Persons redeeming outside the Clearing Process are required to transfer Units through DTC and Excess Cash Amounts, if any, through the Federal Reserve Bank wire transfer system in a timely manner.

An Authorized Participant submitting a redemption request is deemed to represent to the Trustee that (i) it (or its client) owns outright or has full legal authority and legal beneficial right to tender for redemption the requisite number of shares to be redeemed and can receive the entire proceeds of the redemption, and (ii) the shares to be redeemed have not been loaned or pledged to another party nor are they the subject of a repurchase agreement, securities lending agreement or such other arrangement which would preclude the delivery of such shares to the Trust. The Trustee reserves the right to verify these representations at its discretion, but will typically require verification with respect to a redemption request in connection with higher levels of redemption activity and/or short interest in the Trust. If the Authorized Participant, upon receipt of a verification request, does not provide sufficient verification of its representations as determined by the Trustee, the redemption request will not be considered to have been received in proper form and may be rejected by the Trustee.

Requests for redemption may be made on any Business Day directly to the Trustee (not to the Distributor). In the case of redemptions made through the Clearing Process, the Transaction Fee is deducted from the amount delivered to the redeemer. In the case of redemptions outside the Clearing Process, the Transaction Fee plus an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit per Creation Unit redeemed, and such amount is deducted from the amount delivered to the redeemer.

The Trustee transfers to the redeeming Beneficial Owner via DTC and the relevant DTC Participant(s) a portfolio of Index Securities (based on NAV of the Trust) for each Creation Unit delivered, generally identical in weighting and composition to the stock portion of a Portfolio Deposit as in effect (a) on the date a request for redemption is deemed received by the Trustee or (b) in the case of the termination of

 

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the Trust, on the date that notice of the termination of the Trust is given. The Trustee also transfers via the relevant DTC Participant(s) to the redeeming Beneficial Owner a “Cash Redemption Payment,” which on any given Business Day is an amount identical to the amount of the Cash Component and is equal to a proportional amount of the following: dividends on the Portfolio Securities for the period through the date of redemption, net of expenses and liabilities for such period including, without limitation, (i) taxes or other governmental charges against the Trust not previously deducted, if any, (ii) accrued fees of the Trustee and (iii) other expenses of the Trust (including legal and auditing expenses) not previously deducted, as if the Portfolio Securities had been held for the entire accumulation period for such distribution, plus or minus the Balancing Amount. The redeeming Beneficial Owner must deliver to the Trustee any amount by which the amount payable to the Trust by such Beneficial Owner exceeds the amount of the Cash Redemption Payment (“Excess Cash Amounts”). For redemptions through the Clearing Process, the Trustee effects a transfer of the Cash Redemption Payment and stocks to the redeeming Beneficial Owner by the second (2nd) NSCC Business Day following the date on which request for redemption is deemed received. For redemptions outside the Clearing Process, the Trustee transfers the Cash Redemption Payment and the stocks to the redeeming Beneficial Owner by the second (2nd) Business Day following the date on which the request for redemption is deemed received. The Trustee will cancel all Units delivered upon redemption.

If the Trustee determines that an Index Security is likely to be unavailable or available in insufficient quantity for delivery by the Trust upon the redemption of Creation Units, the Trustee may elect, in lieu thereof, to deliver the cash equivalent value of any such Index Securities, based on its market value as of the Evaluation Time on the date such redemption order is deemed received by the Trustee, as a part of the Cash Redemption Payment.

If a redeemer is restricted by regulation or otherwise from investing or engaging in a transaction in one or more Index Securities, the Trustee may elect to deliver the cash equivalent value based on the market value of any such Index Securities as of the Evaluation Time on the date of the redemption as a part of the Cash Redemption Payment in lieu thereof. In such case, the Authorized Participant will pay the Trustee the standard Transaction Fee, and may pay an additional amount equal to the actual amounts incurred in connection with such transaction(s) but in any case not to exceed three (3) times the Transaction Fee applicable for one Creation Unit.

The Trustee, upon the request of a redeeming Authorized Participant, may elect to redeem Creation Units in whole or in part by providing such redeemer with a portfolio of stocks differing in exact composition from Index Securities but not differing in NAV from the then-current Portfolio Deposit. Such a redemption is likely to be made only if it were determined that it would be appropriate in order to maintain the Trust’s correspondence to the composition and weighting of the DJIA.

The Trustee may sell Portfolio Securities to obtain sufficient cash proceeds to deliver to the redeeming Beneficial Owner. To the extent cash proceeds are received by the

 

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Trustee in excess of the required amount, such cash proceeds shall be held by the Trustee and applied in accordance with the guidelines applicable to residual cash set forth under “Portfolio Adjustments.”

All redemption orders must be transmitted to the Trustee by telephone, through the Internet or by other transmission methods acceptable to the Trustee, pursuant to procedures set forth in the Participant Agreement and/or described in this prospectus, so as to be received by the Trustee not later than the Closing Time on the Transmittal Date. In addition, orders submitted through the Internet must also comply with the terms and provisions of the State Street Fund Connect Buy-Side User Agreement and other applicable agreements and documents, including but not limited to the applicable Fund Connect User Guide or successor documents. Severe economic or market disruption or changes, or telephone or other communication failure, may impede the ability to reach the Trustee, a Participating Party, or a DTC Participant.

The calculation of the value of the stocks and the Cash Redemption Payment to be delivered to the redeeming Beneficial Owner is made by the Trustee according to the procedures set forth under “Purchases and Redemptions of Creation Units — Redemption — Procedures for Redemption of Creation Units,” “Portfolio Adjustments — Adjustments to the Portfolio Deposit” and “Determination of Net Asset Value” and is computed as of the Evaluation Time on the Business Day on which a redemption order is deemed received by the Trustee. Therefore, if a redemption order in proper form is submitted to the Trustee by a DTC Participant not later than the Closing Time on the Transmittal Date, and the requisite Units are delivered to the Trustee prior to DTC Cut-Off Time (as defined below in “Purchases and Redemptions of Creation Units — Redemption — Placement of Redemption Orders Outside Clearing Process”) on such Transmittal Date, then the value of the stocks and the Cash Redemption Payment to be delivered to the Beneficial Owner will be determined by the Trustee as of the Evaluation Time on such Transmittal Date. If, however, a redemption order is submitted not later than the Closing Time on a Transmittal Date but either (a) the requisite Units are not delivered by DTC Cut-Off Time on the next Business Day immediately following such Transmittal Date or (b) the redemption order is not submitted in proper form, then the redemption order is not deemed received as of such Transmittal Date. In such case, the value of the stocks and the Cash Redemption Payment will be delivered to the Beneficial Owner upon receipt of the requisite Units.

The Trustee may suspend the right of redemption, or postpone the date of payment of the NAV for more than five (5) Business Days following the date on which the request for redemption is deemed received by the Trustee, (a) for any period during which the NYSE is closed, (b) for any period during which an emergency exists as a result of which disposal or evaluation of the Portfolio Securities is not reasonably practicable, or (c) for such other period as the SEC may by order permit for the protection of Beneficial Owners. Neither the Sponsor nor the Trustee is liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

 

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Placement of Redemption  Orders Using Clearing Process.     A redemption order made through the Clearing Process will be deemed received on the Transmittal Date so long as (a) the order is received by the Trustee not later than the Closing Time on such Transmittal Date and (b) all other procedures set forth in the Participant Agreement are properly followed. The order is effected based on the NAV of the Trust as determined as of the Evaluation Time on the Transmittal Date. A redemption order made through the Clearing Process and received by the Trustee after the Closing Time will be deemed received on the next Business Day immediately following the Transmittal Date. The Participant Agreement authorizes the Trustee to transmit to NSCC on behalf of a Participating Party such trade instructions as are necessary to effect the Participating Party’s redemption order. Pursuant to such trade instructions from the Trustee to NSCC, the Trustee will transfer (a) the requisite stocks (or contracts to purchase such stocks which are expected to be delivered in a “regular way” manner) on settlement date, and (b) the Cash Redemption Payment.

Placement of Redemption  Orders Outside Clearing Process.     A DTC Participant who wishes to place an order for redemption of Units to be effected outside the Clearing Process need not be a Participating Party, but its order must state that such DTC Participant is not using the Clearing Process and that redemption will instead be effected through transfer of Units directly through DTC. An order will be deemed received by the Trustee on the Transmittal Date if (a) such order is received by the Trustee not later than the Closing Time on such Transmittal Date, (b) such order is preceded or accompanied by the requisite number of Units specified in such order, which delivery must be made through DTC to the Trustee no later than 1:00 p.m. New York time on the next Business Day immediately following such Transmittal Date (“DTC Cut-Off Time”) and (c) all other procedures set forth in the Participant Agreement are properly followed. Any Excess Cash Amounts owed by the Beneficial Owner must be delivered no later than 1:00 p.m. New York time on settlement date.

The Trustee initiates procedures to transfer the requisite stocks (or contracts to purchase such stocks) that are expected to be delivered on settlement date and the Cash Redemption Payment to the redeeming Beneficial Owner on settlement date.

BOOK-ENTRY-ONLY SYSTEM

DTC acts as securities depository for the Units. Units are represented by one or more global securities, registered in the name of Cede & Co., as nominee for DTC and deposited with, or on behalf of, DTC. Beneficial ownership of Units is shown on the records of DTC or the DTC Participants (owners of such beneficial interests are referred to herein as “Beneficial Owners”).

DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC was created to hold securities of the DTC Participants and to facilitate

 

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the clearance and settlement of securities transactions among the DTC Participants through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of securities certificates. DTC Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. Access to the DTC system also is available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant, either directly or indirectly (“Indirect Participants”).

Upon the settlement date of any creation, transfer or redemption of Units, DTC credits or debits, on its book-entry registration and transfer system, the amount of Units so created, transferred or redeemed to the accounts of the appropriate DTC Participants. The accounts to be credited and charged are designated by the Trustee to NSCC, in the case of a creation or redemption through the Clearing Process, or by the Trustee and the DTC Participants, in the case of a creation or redemption outside of the Clearing Process. Beneficial ownership of Units is limited to the DTC Participants, Indirect Participants and persons holding interests through the DTC Participants and Indirect Participants. Ownership of beneficial interests in Units is shown on, and the transfer of ownership is effected only through, records maintained by DTC (with respect to DTC Participants) and on the records of DTC Participants (with respect to Indirect Participants and Beneficial Owners that are not DTC Participants). Beneficial Owners are expected to receive from or through the relevant DTC Participant a written confirmation relating to their purchase of Units. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such laws may impair the ability of certain investors to acquire beneficial interests in Units.

As long as Cede & Co., as nominee of DTC, is the registered owner of Units, references to the registered or record owner of Units shall mean Cede & Co. and shall not mean the Beneficial Owners of Units. Beneficial Owners of Units are not entitled to have Units registered in their names, will not receive or be entitled to receive physical delivery of certificates in definitive form and will not be considered the record or registered holders thereof under the Trust Agreement. Accordingly, each Beneficial Owner must rely on the procedures of DTC, any DTC Participant and Indirect Participant through which such Beneficial Owner holds its interests, to exercise any rights under the Trust Agreement.

The Trustee recognizes DTC or its nominee as the owner of all Units for all purposes except as expressly set forth in the Trust Agreement. Pursuant to the agreement between the Trustee and DTC, DTC is required to make available to the Trustee upon request and for a fee to be charged to the Trust a listing of the Unit holdings of each DTC Participant. The Trustee inquires of each such DTC Participant as to the number of Beneficial Owners holding Units, directly or indirectly, through the relevant DTC Participant. The Trustee provides each such DTC Participant with copies of any notice, statement or other communication, in the form, number and at the place as such DTC Participant may reasonably request, in order that the notice, statement or

 

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communication may be transmitted by such DTC Participant, directly or indirectly, to the Beneficial Owners. In addition, the Trust pays to each such DTC Participant a fair and reasonable amount as reimbursement for the expense attendant to such transmittal, all subject to applicable statutory and regulatory requirements. The foregoing interaction between the Trustee and DTC Participants may be direct or indirect (i.e., through a third party.)

Distributions are made to DTC or its nominee. DTC or its nominee, upon receipt of any payment of distributions in respect of Units, is required immediately to credit DTC Participants’ accounts with payments in amounts proportionate to their respective beneficial interests in Units, as shown on the records of DTC or its nominee. Payments by DTC Participants to Indirect Participants and Beneficial Owners of Units held through such DTC Participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in a “street name,” and will be the responsibility of such DTC Participants. Neither the Trustee nor the Sponsor has or will have any responsibility or liability for any aspects of the records relating to or notices to Beneficial Owners, or payments made on account of beneficial ownership interests in Units, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and the DTC Participants or the relationship between such DTC Participants and the Indirect Participants and Beneficial Owners owning through such DTC Participants.

DTC may discontinue providing its service with respect to Units at any time by giving notice to the Trustee and the Sponsor, provided that it discharges its responsibilities with respect thereto in accordance with applicable law. Under such circumstances, the Trustee and the Sponsor shall take action either to find a replacement for DTC to perform its functions at a comparable cost or, if such a replacement is unavailable, to terminate the Trust.

NSCC is an affiliate of DTC and the Trustee and Sponsor, and/or their affiliates, own shares of DTC.

PORTFOLIO ADJUSTMENTS

The DJIA is a price-weighted index of 30 component common stocks, the components of which are determined by the Averages Committee, which is composed of the managing editor of The Wall Street Journal , the head of Dow Jones Indexes research and the head of CME Group research.

The Trust is not managed and therefore the adverse financial condition of an issuer does not require the sale of stocks from the Portfolio. The Trustee on a non-discretionary basis adjusts the composition of the Portfolio to conform to changes in the composition and/or weighting structure of Index Securities in the Index. To the extent that the method of determining the DJIA is changed by S&P in a manner that would affect the adjustments provided for herein, the Trustee and the

 

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Sponsor have the right to amend the Trust Agreement, without the consent of DTC or Beneficial Owners, to conform the adjustments to such changes and to maintain the objective of tracking the DJIA.

The Trustee directs its stock transactions only to brokers or dealers, which may include affiliates of the Trustee, from whom it expects to obtain the most favorable prices for execution of orders. Adjustments are made more frequently in the case of significant changes to the DJIA. Specifically, the Trustee is required to adjust the composition of the Portfolio whenever there is a change in the identity of any Index Security ( i.e. , a substitution of one security for another) within three (3) Business Days before or after the day on which the change is scheduled to take effect. While other DJIA changes may lead to adjustments in the Portfolio, the most common changes are likely to occur as a result of changes in the Index Securities included in the DJIA and as a result of stock splits. The Trust Agreement sets forth the method of adjustments which may occur thereunder as a result of corporate actions to the DJIA, such as stock splits or changes in the identity of the component stocks.

For example, in the event of an Index Security change (in which the common stock of one issuer held in the DJIA is replaced by the common stock of another), the Trustee may sell all shares of the Portfolio Security corresponding to the old Index Security and use the proceeds of such sale to purchase the replacement Portfolio Security corresponding to the new Index Security. If the share price of the removed Portfolio Security was higher than the price of its replacement, the Trustee will calculate how to allocate the proceeds of the sale of the removed Portfolio Security between the purchase of its replacement and purchases of additional shares of other Portfolio Securities so that the number of shares of each Portfolio Security after the transactions would be as nearly equal as practicable. If the share price of the removed Portfolio Security was lower than the price of its replacement, the Trustee will calculate the number of shares of each of the other Portfolio Securities that must be sold in order to purchase enough shares of the replacement Portfolio Security so that the number of shares of each Portfolio Security after the transactions would be as nearly equal as practicable.

In the event of a stock split, the price weighting of the stock which is split will drop. The Trustee may make the corresponding adjustment by selling the additional shares of the Portfolio Security received from the stock split. The Trustee may then use the proceeds of the sale to buy an equal number of shares of each Portfolio Security-including the Portfolio Security which had just experienced a stock split. In practice, of course, not all the shares received in the split would be sold: enough of those shares would be retained to make an increase in the number of split shares equal to the increase in the number of shares in each of the other Portfolio Securities purchased with the proceeds of the sale of the remaining shares resulting from such split.

As a result of the purchase and sale of stock in accordance with these requirements, or the creation of Creation Units, the Trust may hold some amount of residual cash (other than cash held temporarily due to timing differences between the sale and

 

51


purchase of stock or cash delivered in lieu of Index Securities or undistributed income or undistributed capital gains). This amount may not exceed, for more than two (2) consecutive Business Days, 0.5% of the value of the Portfolio. If the Trustee has made all required adjustments and is left with cash in excess of 0.5% of the value of the Portfolio, the Trustee will use such cash to purchase additional Index Securities.

All portfolio adjustments are made as described herein unless such adjustments would cause the Trust to lose its status as a “regulated investment company” under Subchapter M of the Code. Additionally, the Trustee is required to adjust the composition of the Portfolio at any time to insure the continued qualification of the Trust as a regulated investment company.

The Trustee relies on S&P for information as to the composition and weightings of Index Securities. If the Trustee becomes incapable of obtaining or processing such information or NSCC is unable to receive such information from the Trustee on any Business Day, the Trustee shall use the composition and weightings of Index Securities for the most recently effective Portfolio Deposit for the purposes of all adjustments and determinations (including, without limitation, determination of the stock portion of the Portfolio Deposit) until the earlier of (a) such time as current information with respect to Index Securities is available or (b) three (3) consecutive Business Days have elapsed. If such current information is not available and three (3) consecutive Business Days have elapsed, the composition and weightings of Portfolio Securities (as opposed to Index Securities) shall be used for the purposes of all adjustments and determinations (including, without limitation, determination of the stock portion of the Portfolio Deposit) until current information with respect to Index Securities is available.

If the Trustee provides written notice of the termination of the Trust, from and after the date of such notice, the Trustee shall use the composition and weightings of Portfolio Securities as of such notice date for the determination of all redemptions or other purposes.

From time to time S&P may adjust the composition of the DJIA because of a merger or acquisition involving one or more Index Securities. In such cases, the Trust, as shareholder of an issuer that is the object of such merger or acquisition activity, may receive various offers from would-be acquirors of the issuer. The Trustee is not permitted to accept any such offers until such time as it has been determined that the stocks of the issuer will be removed from the DJIA. As stocks of an issuer are often removed from the DJIA only after the consummation of a merger or acquisition of such issuer, in selling the securities of such issuer the Trust may receive, to the extent that market prices do not provide a more attractive alternative, whatever consideration is being offered to the shareholders of such issuer that have not tendered their shares prior to such time. Any cash received in such transactions is reinvested in Index Securities in accordance with the criteria set forth above. Any stocks received as a part of the consideration that are not Index Securities are sold as

 

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soon as practicable and the cash proceeds of such sale are reinvested in accordance with the criteria set forth above.

Adjustments to the Portfolio Deposit

On each Business Day (each such day, an “Adjustment Day”), the number of shares and identity of each Index Security required for a Portfolio Deposit are adjusted in accordance with the following procedure. At the close of the market the Trustee calculates the net asset value of the Trust. The net asset value of the Trust is divided by the number of outstanding Units multiplied by 50,000 Units in one Creation Unit, resulting in the net asset value per Creation Unit (“NAV Amount”). The Trustee then calculates the number of shares (without rounding) of each of the component stocks of the DJIA in a Portfolio Deposit for the following Business Day (“Request Day”), such that (a) the market value at the close of the market on the Adjustment Day of the stocks to be included in the Portfolio Deposit on Request Day, together with the Dividend Equivalent Payment effective for requests to create or redeem on the Adjustment Day, equals the NAV Amount and (b) the identity and weighting of each of the stocks in a Portfolio Deposit mirrors proportionately the identity and weightings of the stocks in the DJIA, each as in effect on Request Day. For each stock, the number resulting from such calculation is rounded down to the nearest whole share. The identities and weightings of the stocks so calculated constitute the stock portion of the Portfolio Deposit effective on Request Day and thereafter until the next subsequent Adjustment Day, as well as Portfolio Securities to be delivered by the Trustee in the event of request for redemption on the Request Day and thereafter until the following Adjustment Day.

In addition to the foregoing adjustments, if a corporate action such as a stock split, stock dividend or reverse split occurs with respect to any Index Security that results in an adjustment to the DJIA divisor, the Portfolio Deposit shall be adjusted to take into account the corporate action in each case rounded to the nearest whole share. Further, the Trustee is permitted to take account of changes to the identity or weighting of any Index Security resulting from a change to the DJIA by making a corresponding adjustment to the Portfolio Deposit on the day prior to the day on which the change to the DJIA takes effect.

On the Request Day and on each day that a request for the creation or redemption is deemed received, the Trustee calculates the market value of the stock portion of the Portfolio Deposit as in effect on the Request Day as of the close of the market and adds to that amount the Dividend Equivalent Payment effective for requests to create or redeem on Request Day (such market value and Dividend Equivalent Payment are collectively referred to herein as “Portfolio Deposit Amount”). The Trustee then calculates the NAV Amount, based on the close of the market on the Request Day. The difference between the NAV Amount so calculated and the Portfolio Deposit Amount is the “Balancing Amount.” The Balancing Amount serves the function of compensating for any differences between the value of the Portfolio Deposit Amount and the NAV Amount at the close of trading on Request Day due to, for example,

 

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(a) differences in the market value of the securities in the Portfolio Deposit and the market value of the securities on Request Day and (b) any variances from the proper composition of the Portfolio Deposit.

The Dividend Equivalent Payment and the Balancing Amount in effect at the close of business on the Request Date are collectively referred to as the Cash Component or the Cash Redemption Payment. If the Balancing Amount is a positive number ( i.e. , if the NAV Amount exceeds the Portfolio Deposit Amount) then, with respect to creation, the Balancing Amount increases the Cash Component of the then-effective Portfolio Deposit transferred to the Trustee by the creator. With respect to redemptions, the Balancing Amount is added to the cash transferred to the redeemer by the Trustee. If the Balancing Amount is a negative number ( i.e. , if the NAV Amount is less than the Portfolio Deposit Amount) then, with respect to creation, this amount decreases the Cash Component of the then-effective Portfolio Deposit to be transferred to the Trustee by the creator or, if such cash portion is less than the Balancing Amount, the difference must be paid by the Trustee to the creator. With respect to redemptions, the Balancing Amount is deducted from the cash transferred to the redeemer or, if such cash is less than the Balancing Amount, the difference must be paid by the redeemer to the Trustee.

If the Trustee has included the cash equivalent value of one or more Index Securities in the Portfolio Deposit because the Trustee has determined that such Index Securities are likely to be unavailable or available in insufficient quantity for delivery, or if a creator or redeemer is restricted from investing or engaging in transactions in one or more of such Index Securities, the Portfolio Deposit so constituted shall determine the Index Securities to be delivered in connection with the creation of Units in Creation Unit size aggregations and upon the redemption of Units until the time the stock portion of the Portfolio Deposit is subsequently adjusted.

EXCHANGE LISTING AND TRADING

The discussion below supplements the Summary with regard to exchange listing and trading matters associated with an investment in the Trust’s Units.

Secondary Trading on Exchanges

The Units are listed for secondary trading on the Exchange and individual Units may only be purchased and sold in the secondary market through a broker-dealer. The secondary markets are closed on weekends and also are generally closed on the following holidays: New Year’s Day, Dr. Martin Luther King, Jr. Day, Presidents’ Day, Good Friday, Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The Exchange may close early on the Business Day before certain holidays and on the day after Thanksgiving Day. Exchange holiday schedules are subject to change. If you buy or sell Units in the secondary market, you will pay the secondary market price for Units. In addition, you may incur customary brokerage commissions and charges and may pay some or all of

 

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the spread between the bid and the offered price in the secondary market on each leg of a round trip (purchase and sale) transaction.

There can be no assurance that the requirements of the Exchange necessary to maintain the listing of Units of the Trust will continue to be met or that Units will always be listed on the Exchange. The Trust will be terminated if Units are delisted. Trading in Units may be halted under certain circumstances as set forth in the Exchange rules and procedures. The Exchange will consider the suspension of trading in or removal from listing of Units if: (a) the Trust has more than 60 days remaining until termination and there are fewer than 50 record and/or beneficial holders of Units for 30 or more consecutive trading days; (b) the value of the DJIA is no longer calculated or available; or (c) such other event occurs or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. In addition, trading is subject to trading halts caused by extraordinary market volatility pursuant to Exchange “circuit breaker” rules that require trading to be halted for a specified period based on a specified market change. The Exchange also must halt trading if required intraday valuation information is not disseminated for longer than one (1) Business Day.

Units are also listed and traded on the Singapore Exchange Securities Trading Limited and Euronext Amsterdam. In the future, Units may be listed and traded on other non-U.S. exchanges. Euronext Amsterdam is an indirect wholly owned subsidiary of NYSE Holdings.

Trading Prices of Units

The trading prices of the Trust’s Units will fluctuate continuously throughout trading hours based on market supply and demand rather than the Trust’s NAV, which is calculated at the end of each Business Day. The Units will trade on the Exchange at prices that may be above ( i.e., at a premium) or below ( i.e., at a discount), to varying degrees, the daily NAV of the Units. While the creation/redemption feature is designed to make it likely that Units normally will trade close to the Trust’s NAV, disruptions to creations and redemptions and/or market volatility may result in trading prices that differ significantly from the Trust’s NAV. See the table “Frequency Distribution of Discounts and Premiums for the Trust: Bid/Ask Price vs. NAV as of 12/29/17” herein.

The market price of a Unit should reflect its share of the dividends accumulated on Portfolio Securities and may be affected by supply and demand, market volatility, sentiment and other factors.

CONTINUOUS OFFERING OF UNITS

Creation Units are offered continuously to the public by the Trust through the Distributor. Persons making Portfolio Deposits and creating Creation Units will receive no fees, commissions or other form of compensation or inducement of any

 

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kind from the Sponsor or the Distributor, and no such person has any obligation or responsibility to the Sponsor or Distributor to effect any sale or resale of Units.

Because new Units can be created and issued on an ongoing basis, at any point during the life of the Trust, a “distribution,” as such term is used in the Securities Act of 1933, may be occurring. Broker-dealers and other persons are cautioned that some of their activities may result in their being deemed participants in a distribution in a manner which could render them statutory underwriters and subject them to the prospectus-delivery and liability provisions of the Securities Act of 1933. For example, a broker-dealer firm or its client may be deemed a statutory underwriter if it takes Creation Units after placing a creation order with a distributor, breaks them down into the constituent Units and sells the Units directly to its customers; or if it chooses to couple the creation of a supply of new Units with an active selling effort involving solicitation of secondary market demand for Units. A determination of whether one is an underwriter must take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular case, and the examples mentioned above should not be considered a complete description of all the activities that could lead to categorization as an underwriter.

Broker-dealer firms should also note that dealers who are not “underwriters” but are effecting transactions in Units, whether or not participating in the distribution of Units, generally are required to deliver a prospectus. This is because the prospectus delivery exemption in Section 4(3) of the Securities Act of 1933 is not available in respect of such transactions as a result of Section 24(d) of the 1940 Act. As a result, broker-dealer firms should note that dealers who are not “underwriters” but are participating in a distribution (as contrasted with engaging in ordinary secondary market transactions), and thus dealing with the Units that are part of an overallotment within the meaning of Section 4(3)(C) of the Securities Act of 1933 will be unable to take advantage of the prospectus delivery exemption provided by Section 4(3) of the Securities Act of 1933. For delivery of prospectuses to exchange members, the prospectus delivery mechanism of Rule 153 under the Securities Act of 1933 is only available with respect to transactions on a national exchange.

The Sponsor intends to qualify Units in states selected by the Sponsor and through broker-dealers who are members of the Financial Industry Regulatory Authority (“FINRA”). Persons intending to create or redeem Creation Units in transactions not involving a broker-dealer registered in such person’s state of domicile or residence should consult their legal adviser regarding applicable broker-dealer or securities regulatory requirements under the state securities laws prior to such creation or redemption.

EXPENSES OF THE TRUST

Ordinary operating expenses of the Trust are currently being accrued at an annual rate of 0.17%. Future accruals will depend primarily on the level of the Trust’s net assets and the level of Trust expenses. There is no guarantee that the Trust’s ordinary

 

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operating expenses will not exceed 0.17% of the Trust’s daily net asset value and such rate may be changed without notice.

Subject to any applicable cap, the Sponsor may charge the Trust a special fee for certain services the Sponsor may provide to the Trust which would otherwise be provided by the Trustee in an amount not to exceed the actual cost of providing such services. The Sponsor or the Trustee from time to time may voluntarily assume some expenses or reimburse the Trust so that total expenses of the Trust are reduced. Neither the Sponsor nor the Trustee is obligated to do so and either one or both parties may discontinue any voluntary assumption of expenses or reimbursement at any time without notice.

The following charges are or may be accrued and paid by the Trust: (a) the Trustee’s fee; (b) fees payable to transfer agents for the provision of transfer agency services; (c) fees of the Trustee for extraordinary services performed under the Trust Agreement; (d) various governmental charges; (e) any taxes, fees and charges payable by the Trustee with respect to Units (whether in Creation Units or otherwise); (f) expenses and costs of any action taken by the Trustee or the Sponsor to protect the Trust and the rights and interests of Beneficial Owners of Units (whether in Creation Units or otherwise); (g) indemnification of the Trustee or the Sponsor for any losses, liabilities or expenses incurred by it in the administration of the Trust; (h) expenses incurred in contacting Beneficial Owners of Units during the life of the Trust and upon termination of the Trust; and (i) other out-of-pocket expenses of the Trust incurred pursuant to actions permitted or required under the Trust Agreement.

In addition, the following expenses are or may be charged to the Trust: (a) reimbursement to the Sponsor of amounts paid by it to S&P in respect of annual licensing fees pursuant to the License Agreement; (b) federal and state annual registration fees for the issuance of Units; and (c) expenses of the Sponsor relating to the printing and distribution of marketing materials describing Units and the Trust (including, but not limited to, associated legal, consulting, advertising, and marketing costs and other out-of-pocket expenses such as printing). Pursuant to the provisions of an exemptive order, the expenses set forth in this paragraph may be charged to the Trust by the Trustee in an amount equal to the actual costs incurred, but in no case shall such charges exceed 0.20% per annum of the daily net asset value of the Trust.

With respect to the marketing expenses described in item (c) above, the Sponsor has entered into an agreement with SSGA FD, an affiliate of the Trustee, pursuant to which SSGA FD has agreed to market and promote the Trust. SSGA FD is reimbursed by the Sponsor for the expenses it incurs for providing such services out of amounts that the Trust reimburses the Sponsor. An affiliate of SSGA FD separately receives fees from the Trustee for providing on-line creation and redemption functionality to Authorized Participants through its Fund Connect application.

 

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If the income received by the Trust in the form of dividends and other distributions on Portfolio Securities is insufficient to cover Trust expenses, the Trustee may make advances to the Trust to cover such expenses. Otherwise, the Trustee may sell Portfolio Securities in an amount sufficient to pay such expenses. The Trustee may reimburse itself in the amount of any such advance, together with interest thereon at a percentage rate equal to the then current overnight federal funds rate, by deducting such amounts from (a) dividend payments or other income of the Trust when such payments or other income is received, (b) the amounts earned or benefits derived by the Trustee on cash held by the Trustee for the benefit of the Trust, and (c) the sale of Portfolio Securities. Notwithstanding the foregoing, if any advance remains outstanding for more than forty-five (45) Business Days, the Trustee may sell Portfolio Securities to reimburse itself for such advance and any accrued interest thereon. These advances will be secured by a lien on the assets of the Trust in favor of the Trustee. The expenses of the Trust are reflected in the NAV of the Trust.

For services performed under the Trust Agreement, the Trustee is paid a fee at an annual rate of 0.06% to 0.10% of the net asset value of the Trust, as shown below, depending on the net asset value of the Trust, plus or minus the Adjustment Amount (as defined below). The compensation is computed on each Business Day based on the net asset value of the Trust on such day, and the amount thereof is accrued daily and paid quarterly. To the extent that the amount of the Trustee’s compensation, before any adjustment in respect of the Adjustment Amount, is less than specified amounts, the Sponsor has agreed to pay the amount of any such shortfall. Notwithstanding the fee schedule set forth in the table below, in the fourth year of the Trust’s operation and in subsequent years, the Trustee shall be paid a minimum fee of $400,000 per annum as adjusted by the CPI-U to take effect at the beginning of the fourth year and each year thereafter. The Trustee also may waive all or a portion of such fee.

Trustee Fee Scale

 

Net Asset Value of the Trust

  

Fee as a Percentage of

Net Asset Value of the Trust

$0 - $499,999,999

   0.10% per annum plus or minus the Adjustment Amount*

$500,000,000 - $2,499,999,999

   0.08% per annum plus or minus the Adjustment Amount*

$2,500,000,000 and above

   0.06% per annum plus or minus the Adjustment Amount*

 

* The fee indicated applies to that portion of the net asset value of the Trust that falls in the size category indicated.

As of October 31, 2017, and as of December 31, 2017, the net asset value of the Trust was $19,972,692,422 and $22,288,317,317, respectively. No representation is made as to the actual net asset value of the Trust on any future date, as it is subject to change at any time due to fluctuations in the market value of the Portfolio Securities, or to creations or redemptions made in the future. For the fiscal year ended October 31, 2017, the aggregate dollar amount of fees paid to the Trustee was $9,556,331.

 

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The Adjustment Amount is calculated at the end of each quarter and applied against the Trustee’s fee for the following quarter. “Adjustment Amount” is an amount which is intended, depending upon the circumstances, either to (a) reduce the Trustee’s fee by the amount that the Transaction Fees paid on creation and redemption exceed the costs of those activities, and by the amount of excess earnings on cash held for the benefit of the Trust** or (b) increase the Trustee’s fee by the amount that the Transaction Fees (plus additional amounts paid in connection with creations or redemptions outside the Clearing Process), paid on creations or redemptions, falls short of the actual costs of these activities. If in any quarter the Adjustment Amount exceeds the fee payable to the Trustee as set forth above, the Trustee uses such excess amount to reduce other Trust expenses, subject to certain federal tax limitations. To the extent that the amount of such excess exceeds the Trust’s expenses for such quarter, any remaining excess is retained by the Trustee as part of its compensation. If in any quarter the costs of processing creations and redemptions exceed the amounts charged as a Transaction Fee (plus the additional amounts paid in connection with creations or redemptions outside the Clearing Process) net of the excess earnings, if any, on cash held for the benefit of the Trust, the Trustee will augment the Trustee’s fee by the resulting Adjustment Amount. The net Adjustment Amount is usually a credit to the Trust. The amount of the earnings credit will be equal to the then current Federal Funds Rate, as reported in nationally distributed publications, multiplied by each day’s daily cash balance in the Trust’s cash account, reduced by the amount of reserves for that account required by the Federal Reserve Board of Governors.

For example, during the year ended October 31, 2017, the Adjustment Amount included an excess of net transaction fees from processing orders of $606,326 and a Trustee earnings credit of $178,795. Thus, the Adjustment Amount reduced the Trustee’s fee by $785,121.

DETERMINATION OF NET ASSET VALUE

The net asset value of the Trust is computed as of the Evaluation Time, as shown under “Portfolio Adjustments — Adjustments to the Portfolio Deposit” on each Business Day. The net asset value of the Trust on a per Unit basis is determined by subtracting all liabilities (including accrued expenses and dividends payable) from the total value of the Portfolio and other assets and dividing the result by the total number of outstanding Units. For the most recent net asset value information, please go to www.spdrs.com.

The value of the Portfolio is determined by the Trustee in good faith in the following manner. If Portfolio Securities are listed on one or more national securities exchanges, such evaluation is generally based on the closing sale price on that day (unless the Trustee deems such price inappropriate as a basis for evaluation) on the exchange which is deemed to be the principal market therefor or, if there is no such

 

**

The excess earnings on cash amount is currently calculated, and applied, on a monthly basis.

 

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appropriate closing sale price on such exchange, at the last sale price (unless the Trustee deems such price inappropriate as a basis for evaluation). If the securities are not so listed or, if so listed and the principal market therefor is other than on such exchange or there is no such last sale price available, such evaluation shall generally be made by the Trustee in good faith based on the closing price on the over-the-counter market (unless the Trustee deems such price inappropriate as a basis for evaluation) or if there is no such appropriate closing price, (a) on current bid prices, (b) if bid prices are not available, on the basis of current bid prices for comparable securities, (c) by the Trustee’s appraising the value of the securities in good faith on the bid side of the market, or (d) by any combination thereof.

ADDITIONAL RISK INFORMATION

The following section identifies additional risks. Prospective investors should carefully consider the additional information described below together with the information identified under “Summary — Principal Risks of Investing in the Trust.”

A liquid trading market for certain Portfolio Securities may not exist.     Although all of the Portfolio Securities are listed on a national securities exchange, the existence of a liquid trading market for certain Portfolio Securities may depend on whether dealers will make a market in such stocks. There can be no assurance that a market will be made or maintained for any Portfolio Securities, or that any such market will be or remain liquid. The price at which Portfolio Securities may be sold and the value of the Portfolio will be adversely affected if trading markets for Portfolio Securities are limited or absent.

Asset Category Risk.     The Portfolio Securities may underperform the returns of other securities or indexes that track other industries, groups of industries, markets, asset classes or sectors. Various types of securities or indexes tend to experience cycles of outperformance and underperformance in comparison to the general securities markets.

Trading Issues.     Units are listed for trading on the Exchange under the market symbol “DIA” and are listed or traded on certain non-U.S. stock exchanges other than the Exchange. Trading in Units on the Exchange may be halted due to market conditions or for reasons that, in the view of the Exchange, make trading in Units inadvisable. In addition, trading in Units on the Exchange is subject to trading halts caused by extraordinary market volatility pursuant to Exchange “circuit breaker” rules. There can be no assurance that the requirements of the Exchange necessary to maintain the listing of the Trust will continue to be met or will remain unchanged or that the Units will trade with any volume, or at all, on any stock exchange. Investors are subject to the execution and settlement risks and market standards of the market where they or their broker direct their trades for execution. The Trust will be terminated if the Units are delisted from the Exchange.

Fluctuation of NAV; Unit Premiums and Discounts.     The NAV of the Units will generally fluctuate with changes in the market value of the Trust’s securities

 

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holdings. The market prices of Units will generally fluctuate in accordance with changes in the Trust’s NAV and supply and demand of Units on the Exchange or any other exchange on which Units are traded. It cannot be predicted whether Units will trade below, at or above their NAV. Price differences may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Units will be closely related to, but not identical to, the same forces influencing the prices of the securities of the DJIA trading individually or in the aggregate at any point in time. The market prices of Units may deviate significantly from the NAV of the Units during periods of market volatility. While the creation/redemption feature is designed to make it likely that Units normally will trade close to the Trust’s NAV, disruptions to creations and redemptions and/or market volatility may result in trading prices that differ significantly from the Trust’s NAV. If an investor purchases Units at a time when the market price is at a premium to the NAV of the Units or sells at a time when the market price is at a discount to the NAV of the Units, then the investor may sustain losses that are in addition to any losses caused by a decrease in NAV.

Costs of Buying or Selling Units.     Investors buying or selling Units in the secondary market will pay brokerage commissions or other charges imposed by brokers as determined by that broker. Brokerage commissions are often a fixed amount and may be a significant proportional cost for investors seeking to buy or sell relatively small amounts of Units. In addition, secondary market investors will also incur the cost of the difference between the price that an investor is willing to pay for Units (the “bid” price) and the price at which an investor is willing to sell Units (the “ask” price). This difference in bid and ask prices is often referred to as the “spread” or “bid/ask spread.” The bid/ask spread varies over time for Units based on trading volume and market liquidity, and is generally lower if the Trust’s Units have more trading volume and market liquidity and higher if the Trust’s Units have little trading volume and market liquidity. Further, increased market volatility may cause increased bid/ask spreads. Due to the costs of buying or selling Units, including bid/ask spreads, frequent trading of Units may significantly reduce investment results and an investment in Units may not be advisable for investors who anticipate regularly making small investments.

Large Cap Risk .    The Portfolio Securities will generally consist of equity securities of large-capitalization U.S. issuers. Returns on investments in stocks of large U.S. companies could trail the returns on investments in stocks of smaller and mid-sized companies.

Investment in the Trust may have adverse tax consequences .    Investors in the Trust should consider the U.S. federal, state, local and other tax consequences of the ownership and disposition of Units. For a discussion of certain U.S. federal income tax consequences of the ownership and disposition of Units, see “Federal Income Taxes.”

Additionally, Units may perform differently from other investments in portfolios containing large capitalization stocks based upon or derived from an index other than

 

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the DJIA. For example, the great majority of component stocks of the DJIA are drawn from among the largest of the large capitalization universe, while other indexes may represent a broader sampling of stocks within capitalization ranges. Large capitalization companies usually cannot respond as quickly as smaller companies have to competitive challenges, and their growth rates tend to lag the growth rates of well-managed smaller companies during strong economic periods. Also, other indexes may use different methods for assigning relative weights to the index components than the price weighted method used by the DJIA. As a result, DJIA accords relatively more weight to stocks with a higher price-to-market capitalization ratio than a similar market capitalization-weighted index.

Clearing and settlement of Creation Units may be delayed or fail .    Even if an order is processed through the continuous net settlement clearing process of NSCC, Portfolio Securities or Units, as applicable, may not be delivered on settlement date, due to liquidity or other constraints in the clearing process. Orders expected to settle outside of the continuous net settlement clearing process of NSCC are not covered by NSCC’s guarantee of completion of delivery.

ADDITIONAL INFORMATION REGARDING DIVIDENDS AND DISTRIBUTIONS

The following information supplements and should be read in conjunction with the section included in this prospectus entitled “Dividends and Distributions.”

General Policies

The regular monthly ex-dividend date for Units is the third (3rd) Friday in each calendar month, unless such day is not a Business Day, in which case the ex-dividend date is the immediately preceding Business Day (“Ex-Dividend Date”). Beneficial Owners reflected on the records of DTC and the DTC Participants on the first (1st) Business Day following the Ex-Dividend Date (“Record Date”) are entitled to receive an amount representing dividends accumulated on Portfolio Securities through the monthly dividend period which ends on the Business Day preceding such Ex-Dividend Date (including stocks with ex-dividend dates falling within such monthly dividend period), net of fees and expenses, accrued daily for such period. For the purposes of all dividend distributions, dividends per Unit are calculated at least to the nearest 1/1000th of $0.01. The payment of dividends is made on the Monday preceding the third (3rd) Friday of the next calendar month or the next subsequent Business Day if such Monday is not a Business Day (“Dividend Payment Date”). Dividend payments are made through DTC and the DTC Participants to Beneficial Owners then of record with funds received from the Trustee.

Dividends payable to the Trust in respect of Portfolio Securities are credited by the Trustee to a non-interest bearing account as of the date on which the Trust receives such dividends. Other moneys received by the Trustee in respect of the Portfolio, including but not limited to the Cash Component, the Cash Redemption Payment, all

 

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moneys realized by the Trustee from the sale of options, warrants or other similar rights received or distributed in respect of Portfolio Securities as dividends or distributions and capital gains resulting from the sale of Portfolio Securities are credited by the Trustee to a non-interest bearing account. All funds collected or received are held by the Trustee without interest until distributed in accordance with the provisions of the Trust Agreement. To the extent the amounts credited to the account generate interest income or an equivalent benefit to the Trustee, such interest income or benefit is used to reduce the Trustee’s annual fee.

Any additional distributions the Trust may need to make so as to qualify for an exemption from tax on its distributed income under the Code and to avoid U.S. federal excise tax would consist of (a) an increase in the distribution scheduled for January to include any amount by which the Trust’s estimated “investment company taxable income” (determined prior to the deduction for dividends paid by the Trust) and net capital gains for the prior taxable and/or calendar year exceeded the amount of Trust taxable income previously distributed with respect to such taxable year and/or calendar year or, if greater, the minimum amount required to avoid imposition of such excise tax and (b) a distribution soon after the computation of the actual annual “investment company taxable income” (determined prior to the deduction for dividends paid by the Trust) and net capital gain of the Trust of the amount, if any, by which such actual income and gain exceeds the distributions already made. The net asset value of the Trust is reduced in direct proportion to the amount of such additional distributions. The magnitude of the additional distributions, if any, depends upon a number of factors, including the level of redemption activity experienced by the Trust. Because substantially all proceeds from the sale of stocks in connection with adjustments to the Portfolio are used to purchase shares of Index Securities, the Trust may have no cash or insufficient cash with which to pay such additional distributions. In that case, the Trustee typically will have to sell an approximately equal number of shares of each of the Portfolio Securities sufficient to produce the cash required to make such additional distributions.

The Trustee may declare special dividends if such action is necessary or advisable to preserve the status of the Trust as a RIC or to avoid imposition of income or excise taxes on undistributed income. In addition, the Trust may vary the frequency with which periodic distributions are made ( e.g. , from monthly to quarterly) if it is determined by the Sponsor and the Trustee that such a variance would be advisable to facilitate compliance with the rules and regulations applicable to RICs or would otherwise be advantageous to the Trust. The Trustee may also change the regular ex-dividend date for Units to another date within the month or the quarter if the Sponsor and the Trustee determine that such a change would be advantageous to the Trust. Notice of any such variance or change will be provided to Beneficial Owners via DTC and the DTC Participants.

All distributions are made by the Trustee through DTC and the DTC Participants to Beneficial Owners as recorded on the book entry system of DTC and the DTC Participants. With each distribution, the Trustee furnishes for distribution to

 

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Beneficial Owners a statement setting forth the amount being distributed, expressed as a dollar amount per Unit.

The settlement date for the creation of Units or the purchase of Units in the secondary market must occur on or before the Record Date in order for such creator or purchaser to receive a distribution on the next Dividend Payment Date. If the settlement date for such creation or a secondary market purchase occurs after the Record Date, the distribution will be made to the prior securityholder or Beneficial Owner as of such Record Date.

As soon as practicable after notice of termination of the Trust, the Trustee will distribute via DTC and the DTC Participants to each Beneficial Owner redeeming Creation Units before the termination date specified in such notice a portion of Portfolio Securities and cash as described above. Otherwise, the Trustee will distribute to each Beneficial Owner (whether in Creation Unit size aggregations or otherwise), as soon as practicable after termination of the Trust, such Beneficial Owner’s pro rata share of the net asset value of the Trust.

INVESTMENT RESTRICTIONS

The Trust is not actively managed and only holds constituent securities of the Index regardless of the current or projected performance of a specific security or a particular industry or market sector. Therefore, the Trust is not authorized to invest in the securities of registered investment companies or any other registered or unregistered funds, lend its portfolio securities or other assets, issue senior securities or borrow money for the purpose of investing in securities, purchase securities on margin, sell securities short or invest in derivative instruments, including, without limitation, futures contracts, options or swaps.

INVESTMENTS BY INVESTMENT COMPANIES

Purchases of Units by investment companies are subject to restrictions pursuant to Section 12(d)(1) of the 1940 Act. The Trust has received an SEC order that permits registered investment companies to invest in Units beyond these limits, subject to certain conditions and terms. One such condition is that registered investment companies relying on the order must enter into a written agreement with the Trust. Registered investment companies wishing to learn more about the order and the agreement should telephone 1-866-787-2257.

The Trust itself is also subject to the restrictions of Section 12(d)(1). This means that, notwithstanding the investment restrictions described above, absent an exemption or SEC relief, (a) the Trust cannot invest in any registered investment company, to the extent that the Trust would own more than 3% of that registered investment company’s outstanding Units, (b) the Trust cannot invest more than 5% of its total assets in the securities of any one registered investment company, and (c) the Trust cannot invest more than 10% of its total assets in the securities of registered investment companies in the aggregate.

 

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ANNUAL REPORTS

Promptly after the end of each fiscal year, the Trustee furnishes to the DTC Participants for distribution to each person who was a Beneficial Owner of Units at the end of such fiscal year, an annual report of the Trust containing financial statements audited by independent accountants of nationally recognized standing and such other information as may be required by applicable laws, rules and regulations.

BENEFIT PLAN INVESTOR CONSIDERATIONS

In considering the advisability of an investment in Units, fiduciaries of pension, profit sharing or other tax-qualified retirement plans and funded welfare plans or entities whose underlying assets include “plan assets” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (collectively, “Plans”) subject to the fiduciary responsibility requirements of ERISA, should consider whether an investment in Units (a) is permitted by the documents and instruments governing the Plan, (b) is made solely in the interest of participants and beneficiaries of the Plans, (c) is consistent with the prudence and diversification requirements of ERISA, and that the acquisition and holding of Units does not result in a non-exempt “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code. Individual retirement account (“IRA”) investors and certain other investors not subject to ERISA, such as Keogh Plans, should consider that such arrangements may make only such investments as are authorized by the governing instruments and that IRAs, Keogh Plans and certain other types of arrangements are subject to the prohibited transaction rules of Section 4975 of the Code. Employee benefit plans that are government plans (as defined in Section 3(32) of ERISA), certain church plans (as defined in Section 3(33) of ERISA) and non-U.S. plans (as described in Section 4(b)(4) of ERISA) are not subject to the requirements of ERISA or Section 4975 of the Code. The fiduciaries of governmental plans should, however, consider the impact of their respective state pension codes or other applicable law, which may include restrictions similar to ERISA and Section 4975 of the Code, on investments in Units and the considerations discussed above, to the extent such considerations apply. Each purchaser and transferee of a Unit who is subject to ERISA or Section 4975 of the Code or any similar laws will be deemed to have represented by its acquisition and holding of each Unit that its acquisition and holding of any Units does not give rise to a non-exempt prohibited transaction under ERISA, the Code or any similar law.

As described in the preceding paragraph, ERISA imposes certain duties on Plan fiduciaries, and ERISA and/or Section 4975 of the Code prohibit certain transactions involving “plan assets” between Plans or IRAs and persons who have certain specified relationships to the Plan or IRA (that is, “parties in interest” as defined in ERISA or “disqualified persons” as defined in the Code). The fiduciary standards and prohibited transaction rules that apply to an investment in Units by a Plan will not apply to transactions involving the Trust’s assets because the Trust is an investment company registered under the 1940 Act. As such, the Trust’s assets are not deemed to

 

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be “plan assets” under ERISA and U.S. Department of Labor regulations by virtue of Plan and/or IRA investments in Units.

Each purchaser or transferee should consult legal counsel before purchasing the Units. Nothing herein shall be construed as a representation that an investment in the Units would meet any or all of the relevant legal requirements with respect to investments by, or is appropriate for, an employee benefit plan subject to ERISA or Section 4975 of the Code or a similar law.

INDEX LICENSE

A license agreement (the “License Agreement”) between SSGA FD, an affiliate of the Trustee, and S&P grants a license to SSGA FD to use the DJIA and to use certain trade names and trademarks of S&P in connection with the Trust. The DJIA also serves as a basis for determining the composition of the Portfolio. The Trustee (on behalf of the Trust), the Sponsor and the Exchange have each received a sublicense from SSGA FD for the use of the DJIA and certain trade names and trademarks in connection with their rights and duties with respect to the Trust. The License Agreement may be amended without the consent of any of the Beneficial Owners of Units. Currently, the License Agreement is scheduled to terminate on November 29, 2031, but its term may be extended without the consent of any of the Beneficial Owners of Units.

None of the Trust, the Trustee, the Exchange, the Sponsor, SSGA FD, the Distributor, DTC, NSCC, any Authorized Participant, any Beneficial Owner of Units or any other person is entitled to any rights whatsoever under the foregoing licensing arrangements or to use the trademarks and service marks “Dow Jones,” “The Dow,” “DJIA” or “Dow Jones Industrial Average” or to use the DJIA except as specifically described in the License Agreement or sublicenses or as may be specified in the Trust Agreement.

THE TRUST IS NOT SPONSORED, ENDORSED, SOLD OR MARKETED BY S&P DOW JONES INDICES LLC, ITS AFFILIATES, AND/OR THIRD PARTY LICENSORS (INCLUDING, WITHOUT LIMITATION, DOW JONES & COMPANY, INC.) (COLLECTIVELY, FOR PURPOSES OF THIS PARAGRAPH AND THE NEXT PARAGRAPH, “S&P”). S&P MAKES NO REPRESENTATION, CONDITION OR WARRANTY, EXPRESS OR IMPLIED, TO THE OWNERS OF THE TRUST OR ANY MEMBER OF THE PUBLIC REGARDING THE ADVISABILITY OF INVESTING IN SECURITIES GENERALLY OR IN THE TRUST PARTICULARLY OR THE ABILITY OF THE INDEX TO TRACK MARKET PERFORMANCE AND/OR TO ACHIEVE ITS STATED OBJECTIVE AND/OR TO FORM THE BASIS OF A SUCCESSFUL INVESTMENT STRATEGY, AS APPLICABLE. S&P LICENSES TO THE TRUST CERTAIN TRADEMARKS AND TRADE NAMES AND THE INDEX WHICH IS DETERMINED, COMPOSED AND CALCULATED BY S&P WITHOUT REGARD TO SSGA FD OR THE TRUST. S&P HAS NO

 

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OBLIGATION TO TAKE THE NEEDS OF THE TRUST OR THE OWNERS OF OR INVESTORS IN THE TRUST INTO CONSIDERATION IN DETERMINING, COMPOSING OR CALCULATING THE INDEX OR ANY DATA INCLUDED THEREIN OR USED TO CALCULATE THE DJIA. S&P DOW JONES INDICES LLC IS NOT AN ADVISOR TO THE TRUST. S&P IS NOT RESPONSIBLE FOR AND HAS NOT PARTICIPATED IN THE DETERMINATION OF THE PRICES AND AMOUNT OF THE TRUST OR THE TIMING OF THE ISSUANCE OR SALE OF THE TRUST OR IN THE DETERMINATION OR CALCULATION OF THE EQUATION BY WHICH THE UNITS ARE ISSUED OR REDEEMED. S&P HAS NO OBLIGATION OR LIABILITY IN CONNECTION WITH THE ADMINISTRATION, MARKETING, OR TRADING OF THE TRUST.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DJIA OR ANY DATA INCLUDED THEREIN OR USED TO CALCULATE THE INDEX AND S&P SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY OR CONDITION, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, THE TRUSTEE, THE TRUST, OWNERS OF OR INVESTORS IN THE TRUST, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DJIA OR ANY DATA INCLUDED THEREIN OR USED TO CALCULATE THE DJIA. S&P MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS, WARRANTIES OR CONDITIONS, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE AND ANY OTHER EXPRESS OR IMPLIED WARRANTY OR CONDITION WITH RESPECT TO THE DJIA OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS) RESULTING FROM THE USE OF THE DJIA OR ANY DATA INCLUDED THEREIN, EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

SPDR TRADEMARK. The “SPDR” trademark is used under license from Standard & Poor’s Financial Services LLC, a division of S&P Global. No financial product offered by the Trust or its affiliates is sponsored, endorsed, sold or marketed by S&P or its affiliates. S&P makes no representation or warranty, express or implied, to the owners of any financial product or any member of the public regarding the advisability of investing in securities generally or in financial products particularly or the ability of the index on which financial products are based to track general stock market performance. S&P is not responsible for and has not participated in any determination or calculation made with respect to issuance or redemption of financial products. S&P has no obligation or liability in connection with the administration, marketing or trading of financial products. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P OR ITS AFFILIATES HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,

 

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INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

SPONSOR

The Sponsor is a Delaware limited liability company incorporated on April 6, 1998 with offices c/o NYSE Holdings LLC, 11 Wall Street, New York, New York 10005. The Sponsor’s Internal Revenue Service Employer Identification Number is 26-4126158. The Sponsor’s sole business activity is to act as the sponsor of the Trust and two other ETFs. On October 1, 2008, the Sponsor became an indirect wholly-owned subsidiary of NYSE Holdings following the acquisition by NYSE Holdings of the American Stock Exchange LLC and all of its subsidiaries. On November 13, 2013, the Sponsor became an indirect, wholly-owned subsidiary of Intercontinental Exchange, Inc. (“ICE”), following the acquisition of NYSE Holdings LLC (the parent company of the Sponsor) by ICE. As the parent company, ICE is the publicly-traded entity, trading on the New York Stock Exchange under the symbol “ICE.” NYSE Holdings is a “control person” of the Sponsor as such term is defined in the Securities Act of 1933.

The Sponsor, at its own expense, may from time to time provide additional promotional incentives to brokers who sell Units to the public. In certain instances, these incentives may be provided only to those brokers who meet certain threshold requirements for participation in a given incentive program, such as selling a significant number of Units within a specified period.

If at any time the Sponsor fails to undertake or perform or becomes incapable of undertaking or performing any of the duties which by the terms of the Trust Agreement are required to be undertaken or performed by it, and such failure is not cured within fifteen (15) Business Days following receipt of notice from the Trustee of such failure, or if the Sponsor resigns, or if the Sponsor is adjudged bankrupt or insolvent, or a receiver of the Sponsor or of its property is appointed, or a trustee or liquidator or any public officer takes charge or control of the Sponsor or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, the Trustee may appoint a successor Sponsor, agree to act as Sponsor itself, or terminate the Trust Agreement and liquidate the Trust. Upon the Trustee’s and a successor Sponsor’s execution of an instrument of appointment and assumption, the successor Sponsor succeeds to all of the rights, powers, duties and obligations of the original Sponsor. The successor Sponsor shall not be under any liability under the Trust Agreement for occurrences or omissions prior to the execution of such instrument. Any successor Sponsor may be compensated at rates deemed by the Trustee to be reasonable, but not exceeding the amounts prescribed by the SEC.

The Sponsor may resign by executing and delivering to the Trustee an instrument of resignation. Such resignation shall become effective upon the appointment of a successor Sponsor and the acceptance of appointment by the successor Sponsor,

 

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unless the Trustee either agrees to act as Sponsor or terminates the Trust Agreement and liquidates the Trust. The Trustee shall terminate the Trust Agreement and liquidate the Trust if, within sixty (60) days following the date on which a notice of resignation was delivered by the Sponsor, a successor Sponsor has not been appointed or the Trustee has not agreed to act as Sponsor.

The Trust Agreement provides that the Sponsor is not liable to the Trustee, the Trust or to the Beneficial Owners of Units for taking or refraining from taking any action in good faith, or for errors in judgment, but is liable only for its own gross negligence, bad faith, willful misconduct or willful malfeasance in the performance of its duties or its reckless disregard of its obligations and duties under the Trust Agreement. The Sponsor is not liable or responsible in any way for depreciation or loss incurred by the Trust because of the purchase or sale of any Portfolio Securities. The Trust Agreement further provides that the Sponsor and its directors, shareholders, officers, employees, subsidiaries and affiliates under common control with the Sponsor shall be indemnified from the assets of the Trust and held harmless against any loss, liability or expense incurred without gross negligence, bad faith, willful misconduct or willful malfeasance on the part of any such party arising out of or in connection with the performance of its duties or reckless disregard of its obligations and duties under the Trust Agreement, including the payment of the costs and expenses (including counsel fees) of defending against any claim or liability.

As of February 13, 2018, each of the following persons served as an officer or member of the Sponsor:

 

Name

  

Nature of Relationship or Affiliation with Sponsor

Thomas Farley

   President

Scott Hill

   Chief Financial Officer

Doug Foley

   Senior Vice President

Martin Hunter

   Senior Vice President, Tax & Treasury

Douglas Yones

   Senior Director

Elizabeth King

   General Counsel & Secretary

Martha Redding

   Assistant Secretary

Andrew Surdykowski

   Assistant Secretary

Sandra Kerr

   Senior Tax Director

David Nevin

   Senior Treasury Director

NYSE American LLC

   Member

The principal business address for each of the officers and members listed above is c/o NYSE Holdings LLC, 11 Wall Street, New York, New York 10005. None of the officers listed above either directly or indirectly owns, controls or holds with power to vote any of the outstanding limited liability company interests of the Sponsor. All of the outstanding limited liability company interests of the Sponsor are owned by NYSE American LLC as the sole member of the Sponsor.

None of the individuals listed above either directly or indirectly owns, controls or holds with power to vote any of the outstanding Units of the Trust.

 

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Other Companies of which Each of the Persons* Named Above
is Presently an Officer, Director or Partner

Person Named Above

   Name and Principal
Business Address of
such Other Company
  Nature of Business of
such Other Company
  Nature of
Affiliation with
such Other
Company

Thomas W. Farley**

   NYSE Holdings LLC,

11 Wall Street,

New York,

New York 10005

  Global operator of
financial markets
and provider of
trading technologies
  President

Scott Hill***

   Intercontinental
Exchange, Inc.,

5660 New Northside
Drive NW, 3rd Floor,

Atlanta,

Georgia 30328

  Global operator of
regulated exchanges
and clearing houses
for financial and
commodity markets
  Chief
Financial
Officer

Doug Foley****

   Intercontinental
Exchange, Inc.,

5660 New Northside
Drive NW, 3rd Floor,

Atlanta,

Georgia 30328

  Global operator of
regulated exchanges
and clearing houses
for financial and
commodity markets
  Senior
Vice
President

Martin Hunter*****

   Intercontinental
Exchange, Inc.,

5660 New Northside
Drive NW, 3rd Floor,

Atlanta,

Georgia 30328

  Global operator of
regulated exchanges
and clearing houses
for financial and
commodity markets
  Senior
Vice
President,
Tax &
Treasury

Elizabeth King******

   NYSE Holdings LLC,
11 Wall Street,
New York,

New York 10005

  Global operator of
financial markets
and provider of
trading technologies
  General
Counsel &
Secretary

Martha Redding*******

   NYSE Holdings LLC,
11 Wall Street,
New York,

New York 10005

  Global operator of
financial markets
and provider of
trading technologies
  Assistant
Secretary

Andrew Surdykowski********

   Intercontinental
Exchange, Inc.,
5660 New Northside
Drive NW, 3rd Floor,
Atlanta,

Georgia 30328

  Global operator of
regulated exchanges
and clearing houses
for financial and
commodity markets
  Assistant
Secretary

 

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Other Companies of which Each of the Persons* Named Above
is Presently an Officer, Director or Partner

Person Named Above

   Name and Principal
Business Address of
such Other Company
  Nature of Business of
such Other Company
  Nature of
Affiliation with
such Other
Company

Sandra Kerr*********

   Intercontinental
Exchange, Inc.,

5660 New Northside
Drive NW,
3rd Floor, Atlanta,

Georgia 30328

  Global operator of
regulated
exchanges and
clearing houses
for financial and
commodity
markets
  Senior
Tax
Director

David Nevin**********

   Intercontinental
Exchange, Inc.,

5660 New Northside
Drive NW,
3rd Floor, Atlanta,

Georgia 30328

  Global operator of
regulated
exchanges and
clearing houses
for financial and
commodity
markets
  Senior
Treasury
Director

 

* Exclude persons whose affiliation with the Sponsor arises solely by virtue of stock ownership (as defined under Section 2(a)(3)(A) of the Investment Company Act of 1940).
**

In addition to his positions with the Sponsor and NYSE Holdings LLC, Mr. Farley is the Chief Executive Officer of NYSE Group, Inc. and a Director and/or an officer (e.g., President, Chief Executive Officer, Senior Vice President) of 18 other subsidiaries of ICE.

*** In addition to his position with the Sponsor, Mr. Hill is a Director and/or an officer (e.g., Chief Financial Officer, Treasurer, Vice President, Manager, President, Managing Director, Secretary) of 143 other subsidiaries of ICE.
**** In addition to his position with the Sponsor, Mr. Foley is a Director and/or an officer (e.g., Chief Financial Officer, Treasurer, Vice President, Manager, President, Managing Director, Secretary) of 34 other subsidiaries of ICE.
***** In addition to his position with the Sponsor, Mr. Hunter is a Director and/or an officer (e.g., Chief Financial Officer, Treasurer, Vice President, Manager, President, Managing Director, Secretary) of 71 other subsidiaries of ICE.
****** In addition to her positions with the Sponsor and NYSE Holdings LLC, Ms. King is a Director and/or an officer (e.g., President, Chief Executive Officer, Senior Vice President) of 19 other subsidiaries of ICE.
******* In addition to her positions with the Sponsor and NYSE Holdings LLC, Ms. Redding is a Director and/or an officer (e.g., President, Chief Executive Officer, Senior Vice President) of 19 other subsidiaries of ICE.

 

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******** In addition to his position with the Sponsor, Mr. Surdykowski is a Director and/or an officer (e.g., Chief Financial Officer, Treasurer, Vice President, Manager, President, Managing Director, Secretary) of 78 other subsidiaries of ICE.
********* In addition to her positions with the Sponsor, Ms. Kerr is a Director and/or an officer (e.g., President, Chief Executive Officer, Senior Vice President) of 19 other subsidiaries of ICE.
********** In addition to his position with the Sponsor, Mr. Nevin is a Director and/or an officer (e.g., Chief Financial Officer, Treasurer, Vice President, Manager, President, Managing Director, Secretary) of 19 other subsidiaries of ICE.

Thomas Farley is President of the NYSE Group, which includes the New York Stock Exchange and a diverse range of equity and equity options exchanges, all wholly owned subsidiaries of ICE. Mr. Farley joined the NYSE in November of 2013 when ICE acquired NYSE Holdings. He served as the Chief Operating Officer before becoming President in May of 2014. Prior to that, he served as SVP of Financial Markets at ICE where he oversaw the development of several businesses and initiatives across ICE’s markets. Mr. Farley joined ICE in 2007 where he served as the President and COO of ICE Futures U.S., formerly the New York Board of Trade.

Scott Hill has served as Chief Financial Officer of ICE since May 2007. He is responsible for all aspects of ICE’s finance and accounting functions, treasury, tax, audit and controls, business development, human resources and investor relations. Mr. Hill also oversees ICE’s global clearing operations.

Doug Foley is Senior Vice President of Human Resources & Administration of Intercontinental Exchange, Inc. since July 2008 to Present, and has overall global responsibility for Human Resources and Corporate Real Estate (and Corporate Insurance through November 2013).

Martin Hunter is Senior Vice President, Tax & Treasurer of Intercontinental Exchange, Inc. since 2013. Previously he was Vice President, Tax & Treasurer from August 2010 to November 2013.

Douglas Yones currently the Head of Exchange Traded Products at the New York Stock Exchange, where he oversees the team responsible for the delivery of customized, full service end-to-end capabilities for ETP and Closed End Fund Issuers. Prior to joining the NYSE, Mr. Yones spent 17 years at The Vanguard Group, most recently as the Head of Domestic Equity Indexing/ETF Product Management. From 2007 through 2015, Mr. Yones worked on the development and launch of numerous ETFs in the U.S., U.K. and Canada. He also spent a number of years in Hong Kong, responsible for the development and launch of the regional ETF business for Vanguard in Asia.

Elizabeth King is General Counsel & Secretary of the New York Stock Exchange. Ms. King was Global Head of Regulatory and Government Affairs, GETCO from July 2010 to June 2013 and KCG from July 2013 to February 2014 following KCG’s

 

72


merger. Ms. King also served as Associate Director, Division of Trading & Markets, Securities and Exchange Commission from 2000 to June 2010.

Martha Redding has been with the Legal Department of the NYSE Group since 2011. She is Senior Counsel and Assistant Secretary. Prior to joining the NYSE Group, she was Chief Compliance Officer & Associate General Counsel at Financial Security Assurance (now Assured Guaranty Municipal Corp) from 2004-2009.

Andrew Surdykowski was Vice President, Associate General Counsel and Assistant Corporate Secretary of Intercontinental Exchange, Inc., from 2009-2013. He currently is Senior Vice President, Associate General Counsel and Assistant Corporate Secretary of Intercontinental Exchange, Inc. since 2013. His primary responsibilities and activities since 2009 have been general legal matters, corporate law, public filings, mergers & acquisitions, corporate governance and corporate secretary functions.

Sandra Kerr is Senior Tax Director, Tax Compliance & Audits of Intercontinental Exchange Holdings, Inc. in charge of Federal tax compliance and audits from February 2014 to present. Previously she was Tax Director/Consultant of Steele Consulting LLC providing tax services (via contracting work) to various corporate tax departments from June 2005 to February 2014, primarily for Intercontinental Exchange Holdings, Inc. from 2010 to February 2014 and various other companies from June 2005 to 2010.

David Nevin is Group Finance Director, Europe & Asia, responsible for all financial management, reporting and regulatory capital of ICE’s non U.S. exchanges, clearing houses and data businesses. Previously, he was Senior Director, Treasury, Assistant Treasurer, responsible for ICE/NYSE corporate treasury, cash and liquidity, debt management, rating agency support, global intercompany liquidity, starting in 2014. Prior to that, he was Director of Treasury, responsible for ICE corporate treasury, cash and liquidity management and debt servicing from 2011 to 2013. Mr. Nevin also served as Accounting Manager responsible for CDS product accounting and finance from 2008 to 2011 at CDS Brokerage and Clearing.

NYSE American LLC, formerly NYSE MKT LLC, NYSE Amex and prior to that, the American Stock Exchange, became a wholly-owned subsidiary of NYSE Holdings in 2008.

TRUSTEE

Effective June 16, 2017, SSBT resigned as trustee of the Trust. The Sponsor appointed the Trustee, a wholly-owned subsidiary of SSBT, as trustee of the Trust. The services received, and the trustee fees paid, by the Trust did not change as a result of the change in the identity of the Trustee. SSBT continues to maintain the Trust’s accounting records, act as custodian and transfer agent to the Trust, and provide administrative services, including the filing of certain regulatory reports.

The Trustee is a limited purpose trust company organized under the laws of the Commonwealth of Massachusetts with its principal place of business at One Lincoln

 

73


Street, Boston, Massachusetts 02111. The Trustee is a direct wholly-owned subsidiary of SSBT and as such is regulated by the Federal Reserve System and is subject to applicable federal and state banking and trust laws and to supervision by the Federal Reserve, as well as by the Massachusetts Commissioner of Banks and the regulatory authorities of those states and countries in which a branch of the Trustee is located.

The Trustee may resign and be discharged of the Trust created by the Trust Agreement by executing a notice of resignation in writing and filing such notice with the Sponsor and mailing a copy of the notice of resignation to all DTC Participants reflected on the records of DTC as owning Units for distribution to Beneficial Owners as provided above not less than sixty (60) days before the date such resignation is to take effect. Such resignation becomes effective upon the acceptance of the appointment as Trustee for the Trust by the successor Trustee. The Sponsor, upon receiving notice of such resignation, is obligated to use its best efforts promptly to appoint a successor Trustee in the manner and meeting the qualifications provided in the Trust Agreement. If no successor is appointed within sixty (60) days after the date such notice of resignation is given, the Trustee shall terminate the Trust Agreement and liquidate the Trust.

If the Trustee becomes incapable of acting as such, or fails to undertake or perform or becomes incapable of undertaking or performing any of the duties which by the terms of the Trust Agreement are required to be undertaken or performed by it, and such failure is not be cured within fifteen (15) Business Days following receipt of notice from the Sponsor of such failure, or the Trustee is adjudged bankrupt or insolvent, or a receiver of the Trustee or its property is appointed, or a trustee or liquidator or any public officer takes charge or control of such Trustee or of its property or affairs for the purposes of rehabilitation, conservation or liquidation, then the Sponsor may remove the Trustee and appoint a successor Trustee as provided in the Trust Agreement. The Sponsor shall mail notice of such appointment of a successor Trustee via the DTC Participants to Beneficial Owners. Upon a successor Trustee’s execution of a written acceptance and acknowledgement of an instrument accepting appointment as Trustee for the Trust, the successor Trustee becomes vested with all the rights, powers, duties and obligations of the original Trustee. A successor Trustee must be (a) a bank, trust company, corporation or national banking association organized and doing business under the laws of the United States or any state thereof; (b) authorized under such laws to exercise corporate trust powers; and (c) at all times have an aggregate capital, surplus and undivided profits of not less than $50,000,000.

Beneficial Owners of 51% of the then outstanding Units may at any time remove the Trustee by written instrument(s) delivered to the Trustee and the Sponsor. The Sponsor shall thereupon use its best efforts to appoint a successor Trustee as described above and in the Trust Agreement.

The Trust Agreement limits the Trustee’s liabilities. It provides, among other things, that the Trustee is not liable for (a) any action taken in reasonable reliance on properly executed documents or for the disposition of monies or securities or for the

 

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evaluations required to be made thereunder, except by reason of its own gross negligence, bad faith, willful malfeasance, willful misconduct, or reckless disregard of its duties and obligations; (b) depreciation or loss incurred by reason of the sale, or the failure to make a sale, by the Trustee of any Portfolio Securities; (c) any action the Trustee takes where the Sponsor fails to act; and (d) any taxes or other governmental charges imposed upon or in respect of Portfolio Securities or upon the interest thereon or upon it as Trustee or upon or in respect of the Trust which the Trustee may be required to pay under any present or future law of the United States of America or of any other taxing authority having jurisdiction.

The Trustee and its directors, subsidiaries, shareholders, officers, employees and affiliates under common control with the Trustee will be indemnified from the assets of the Trust and held harmless against any loss, liability or expense incurred without gross negligence, bad faith, willful misconduct, willful malfeasance on the part of such party or reckless disregard of its duties and obligations arising out of or in connection with its acceptance or administration of the Trust, including the costs and expenses (including counsel fees) of defending against any claim or liability.

The Trustee, directly or through Depository Trust Company, has possession of all securities and other property in which the Trust invests, all funds held for such investment, all equalization, redemption, and other special funds of the Trust, and all income upon, accretions to, and proceeds of such property and funds. The Trustee segregates, by recordation on its books and records, all securities and/or property held for the Trust. All cash is held on deposit for the Trust and, to the extent not required for reinvestment or payment of Trust expenses, is distributed periodically to Unitholders.

DEPOSITORY

DTC is a limited purpose trust company and member of the Federal Reserve System.

DISTRIBUTOR

The Distributor is a corporation organized under the laws of the State of Colorado and is located at 1290 Broadway, Suite 1100, Denver, CO 80203. The Distributor is a registered broker-dealer and a member of FINRA. The Sponsor pays the Distributor for its services a flat annual fee of $35,000. The Sponsor will not seek reimbursement for such payment from the Trust without obtaining prior exemptive relief from the SEC.

TRUST AGREEMENT

Beneficial Owners shall not (a) have the right to vote concerning the Trust, except with respect to termination and as otherwise expressly set forth in the Trust Agreement, (b) in any manner control the operation and management of the Trust, or (c) be liable to any other person by reason of any action taken by the Sponsor or the

 

75


Trustee. The Trustee has the exclusive right to vote all of the voting stocks in the Trust. The Trustee votes the voting stocks of each issuer in the same proportionate relationship that all other shares of each such issuer are voted (known as “mirror voting”) to the extent permissible and, if not permitted, abstains from voting. The Trustee shall not be liable to any person for any action or failure to take any action with respect to such voting matters.

The death or incapacity of any Beneficial Owner does not operate to terminate the Trust nor entitle such Beneficial Owner’s legal representatives or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the Trust.

Amendments to the Trust Agreement

The Trust Agreement may be amended from time to time by the Trustee and the Sponsor without the consent of any Beneficial Owners (a) to cure any ambiguity or to correct or supplement any provision that may be defective or inconsistent or to make such other provisions as will not adversely affect the interests of Beneficial Owners; (b) to change any provision as may be required by the SEC; (c) to add or change any provision as may be necessary or advisable for the continuing qualification of the Trust as a “regulated investment company” under the Code; (d) to add or change any provision as may be necessary or advisable if NSCC or DTC is unable or unwilling to continue to perform its functions; and (e) to add or change any provision to conform the adjustments to the Portfolio and the Portfolio Deposit to changes, if any, made by S&P in its method of determining the Index. The Trust Agreement may also be amended by the Sponsor and the Trustee with the consent of the Beneficial Owners of 51% of the outstanding Units to add provisions to, or change or eliminate any of the provisions of, the Trust Agreement or to modify the rights of Beneficial Owners, although the Trust Agreement may not be amended without the consent of the Beneficial Owners of all outstanding Units if such amendment would (a) permit the acquisition of any securities other than those acquired in accordance with the terms and conditions of the Trust Agreement; (b) reduce the interest of any Beneficial Owner in the Trust; or (c) reduce the percentage of Beneficial Owners required to consent to any such amendment.

Promptly after the execution of an amendment, the Trustee inquires of each DTC Participant, either directly or through a third party, as to the number of Beneficial Owners for whom such DTC Participant holds Units, and provides each such DTC Participant or third party with sufficient copies of a written notice of the substance of such amendment for transmittal by each such DTC Participant to Beneficial Owners.

Termination of the Trust Agreement

The Trust Agreement provides that the Sponsor has the discretionary right to direct the Trustee to terminate the Trust if at any time the net asset value of the Trust is less

 

76


than $350,000,000, as adjusted for inflation in accordance with the CPI-U at the end of each year from (and including) 2002.

The Trust may be terminated (a) by the agreement of the Beneficial Owners of 66  2 / 3 % of outstanding Units; (b) if DTC is unable or unwilling to continue to perform its functions as set forth under the Trust Agreement and a comparable replacement is unavailable; (c) if NSCC no longer provides clearance services with respect to Units, or if the Trustee is no longer a participant in NSCC; (d) if S&P ceases publishing the DJIA; or (e) if the License Agreement is terminated. The Trust will be terminated if Units are delisted from the Exchange. The Trust is scheduled to terminate on the first to occur of (a) January 14, 2123 or (b) the date 20 years after the death of the last survivor of fifteen persons named in the Trust Agreement, the oldest of whom was born in 1994 and the youngest of whom was born in 1997.

The Trust will terminate if either the Sponsor or the Trustee resigns and a successor is not appointed. The Trust will also terminate if the Trustee is removed or the Sponsor fails to undertake or perform or becomes incapable of undertaking or performing any of the duties required under the Trust Agreement and a successor is not appointed. The dissolution of the Sponsor or its ceasing to exist as a legal entity for any cause whatsoever, however, will not cause the termination of the Trust Agreement or the Trust unless the Trust is terminated as described above.

Prior written notice of the termination of the Trust must be given at least twenty (20) days before termination of the Trust to all Beneficial Owners. The notice must set forth the date on which the Trust will be terminated, the period during which the assets of the Trust will be liquidated, the date on which Beneficial Owners of Units (whether in Creation Unit size aggregations or otherwise) will receive in cash the NAV of the Units held, and the date upon which the books of the Trust shall be closed. The notice shall further state that, as of the date thereof and thereafter, neither requests to create additional Creation Units nor Portfolio Deposits will be accepted, and that, as of the date thereof, the portfolio of stocks delivered upon redemption shall be identical in composition and weighting to Portfolio Securities as of such date rather than the stock portion of the Portfolio Deposit as in effect on the date request for redemption is deemed received. Beneficial Owners of Creation Units may, in advance of the Termination Date, redeem in kind directly from the Trust.

Within a reasonable period after the Termination Date, the Trustee shall, subject to any applicable provisions of law, sell all of the Portfolio Securities not already distributed to redeeming Beneficial Owners of Creation Units. The Trustee shall not be liable or responsible in any way for depreciation or loss incurred because of any such sale. The Trustee may suspend such sales upon the occurrence of unusual or unforeseen circumstances, including but not limited to a suspension in trading of a stock, the closing or restriction of trading on a stock exchange, the outbreak of hostilities or the collapse of the economy. The Trustee shall deduct from the proceeds of sale its fees and all other expenses and transmit the remaining amount to DTC for distribution, together with a final statement setting forth the computation of the gross amount distributed. Units not redeemed before termination of the Trust will be

 

77


redeemed in cash at NAV based on the proceeds of the sale of Portfolio Securities, with no minimum aggregation of Units required.

LEGAL OPINION

The legality of the Units offered hereby has been passed upon by Davis Polk & Wardwell LLP, New York, New York.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

AND FINANCIAL STATEMENTS

The financial statements as of October 31, 2017 included in this prospectus have been so included in reliance upon the report of PricewaterhouseCoopers LLP, independent registered public accounting firm, 101 Seaport Boulevard, Suite 500, Boston, Massachusetts, given on the authority of said firm as experts in auditing and accounting.

CODE OF ETHICS

The Trust has adopted a code of ethics in compliance with Rule 17j-1 requirements under the 1940 Act. Subject to pre-clearance, reporting, certification and other conditions and standards, the code permits personnel subject to the code, if any, to invest in Index Securities for their own accounts. The code is designed to prevent fraud, deception and misconduct against the Trust and to provide reasonable standards of conduct. The code is on file with the SEC and you may obtain a copy by visiting the SEC at the address listed on the back cover of this prospectus. The code is also available on the SEC’s Internet site at http://www.sec.gov. A copy may be obtained, after paying a duplicating fee, by electronic request at publicinfo@sec.gov, or by writing the SEC at the address listed on the back cover of this prospectus.

INVESTMENT BY AN UNDERTAKING FOR COLLECTIVE INVESTMENT IN TRANSFERABLE SECURITIES

The Trustee has reviewed the investment characteristics and limitations of the Trust and believes that, as of January 18, 2018, the Trust qualifies as an undertaking for collective investment (“UCI”) for purposes of the Luxembourg law of 17 December 2010. However, an Undertaking for Collective Investment in Transferable Securities should consult its own counsel regarding the qualification of the Trust as a UCI before investing in the Trust.

INFORMATION AND COMPARISONS RELATING TO

SECONDARY MARKET TRADING AND PERFORMANCE

One important difference between Units and conventional mutual fund shares is that Units are available for purchase or sale on an intraday basis on the Exchange at

 

78


market prices. In contrast, shares in a conventional mutual fund may be purchased or redeemed only at a price at, or related to, the closing net asset value per share, as determined by the fund. The table below illustrates the distribution relationship of bid/ask spreads to NAV for 2017. This table should help investors evaluate some of the advantages and disadvantages of Units relative to mutual fund shares purchased and redeemed at prices at, or related to, the closing net asset value per share. Specifically, the table illustrates in an approximate way the risks of purchasing or selling Units at prices less favorable than closing NAV and, correspondingly, the opportunities to purchase or sell at prices more favorable than closing NAV.

 

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Frequency Distribution of Discounts and Premiums for the Trust:

Bid/Ask Price vs. NAV as of 12/29/17 (1)(2)

 

Range         Calendar
Quarter
Ending
3/31/2017
  Calendar
Quarter
Ending
6/30/2017
  Calendar
Quarter
Ending
9/29/2017
  Calendar
Quarter
Ending
12/29/2017
  Calendar
Year
2017

> 200

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

150 — 200

Basis Points

 

Days

%

  1   0   0   0   1
    0.3%   0.0%   0.0%   0.0%   0.2%

100 — 150

Basis Points

 

Days

%

  2   0   0   0   2
    0.6%   0.0%   0.0%   0.0%   0.4%

50 — 100

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

25 — 50

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

0 — 25

Basis Points

 

Days

%

  174   31   37   34   276
    48.1%   49.2%   58.7%   54.0%   50.1%

Total Days

at Premium

 

Days

%

  177   31   37   34   279
    48.9%   49.2%   58.7%   54.0%   50.6%

Closing Price

Equal to NAV

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

Total Days

at Discount

 

Days

%

  185   32   26   29   272
    51.1%   50.8%   41.3%   46.0%   49.4%

0 — –25

Basis Points

 

Days

%

  184   32   26   29   271
    50.8%   50.8%   41.3%   46.0%   49.2%

–25 — –50

Basis Points

 

Days

%

  1   0   0   0   1
    0.3%   0.0%   0.0%   0.0%   0.2%

–50 — –100

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

–100 — –150

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

–150 — –200

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

< –200

Basis Points

 

Days

%

  0   0   0   0   0
    0.0%   0.0%   0.0%   0.0%   0.0%

Close was within 0.25% of NAV 99.3% of the time throughout 2017.

 

(1) Source: NYSE Holdings LLC

 

(2) Currently, the bid/ask price is the midpoint of the best bid and best offer prices on NYSE Arca at the time the Trust’s NAV is calculated, ordinarily 4:00 p.m.

 

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Comparison of Total Returns Based on NAV and Bid/Ask Price (1)

as of 12/31/17*

The table below is provided to compare the Trust’s total pre-tax returns at NAV with the total pre-tax returns based on bid/ask price and the performance of the DJIA. Past performance is not necessarily an indication of how the Trust will perform in the future.

Cumulative Total Return**

 

     1 Year     5 Year     10 Year  

Trust

      

Return Based on NAV (2)(3)(4) (5)

     27.93     111.63     139.00

Return Based on Bid/Ask Price (2)(3)(4) (5)

     28.00     111.80     139.64

DJIA

     28.11     113.38     142.84

Average Annual Total Return**

 

     1 Year     5 Year     10 Year  

Trust

      

Return Based on NAV (2)(3)(4)(5)

     27.93     16.18     9.10

Return Based on Bid/Ask Price (2)(3)(4)(5)

     28.00     16.19     9.13

DJIA

     28.11     16.37     9.28

 

(1) Currently, the bid/ask price is the midpoint of the best bid and best offer prices on NYSE Arca at the time the Trust’s NAV is calculated, ordinarily 4:00 p.m. Through November 28, 2008, the bid/ask price was the midpoint of the best bid and best offer prices on NYSE Alternext US (formerly the American Stock Exchange and NYSE MKT LLC and now NYSE American LLC) at the close of trading, ordinarily 4:00 p.m.

 

(2) Total return figures have been calculated in the manner described above in “Summary — Trust Performance.”

 

(3) Includes all applicable ordinary operating expenses set forth above in “Summary — Fees and Expenses of the Trust.”

 

(4) Does not include the Transaction Fee which is payable to the Trustee only by persons purchasing and redeeming Creation Units as discussed above in “Purchases and Redemptions of Creation Units.” If these amounts were reflected, returns to such persons would be less than those shown.

 

(5) Does not include brokerage commissions and charges incurred only by persons who make purchases and sales of Units in the secondary market as discussed above in “Exchange Listing and Trading — Secondary Trading on Exchanges.” If these amounts were reflected, returns to such persons would be less than those shown.

 

* Source: NYSE Holdings LLC and State Street Global Advisors Trust Company.

 

** Total returns assume that dividends and capital gain distributions have been reinvested in the Trust at NAV on the Dividend Payment Date (see “Additional Information Regarding Dividends and Distributions”).

 

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SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST (“DIA”)

SPONSOR:

PDR SERVICES LLC

 

 

This prospectus does not include all of the information with respect to DIA set forth in its Registration Statement filed with the SEC in Washington, D.C. under the:

 

   

Securities Act of 1933 (File No. 333-31247) and

 

   

Investment Company Act of 1940 (File No. 811-09170).

To obtain copies from the SEC at prescribed rates —

WRITE: Public Reference Section of the SEC

100 F Street, N.E., Washington, D.C. 20549

CALL: 1-800-SEC-0330

VISIT: http://www.sec.gov

 

 

No person is authorized to give any information or make any representation about DIA not contained in this prospectus, and you should not rely on any other information. Read and keep both parts of this prospectus for future reference.

PDR Services LLC has filed a registration statement on Form S-6 and Form N-8B-2 with the SEC covering the Units. While this prospectus is a part of the registration statement on Form S-6, it does not contain all the exhibits filed as part of the registration statement on Form S-6. You should consider reviewing the full text of those exhibits.

 

 

Prospectus dated February 13, 2018


CONTENTS OF REGISTRATION STATEMENT

This amendment to the Registration Statement on Form S-6 comprises the following papers and documents:

The facing sheet.

The cross-reference sheet.

The prospectus.

The undertaking to file reports.

The signatures.

Written consents of the following persons:

PricewaterhouseCoopers LLP (included in Exhibit 99.C1)

Davis Polk & Wardwell LLP (included in Exhibit 99.2)

The following exhibits:

 

EX-99.2   — Opinion of Counsel as to legality of securities being registered and consent of Counsel (1)
EX-99.A1(1)   — Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, between PDR Services Corporation, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(2)   — Amendment No. 1 dated as of November 1, 2004 and effective November 8, 2004 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(3)   — Amendment No. 2 dated and effective as of October 24, 2008 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(4)   — Amendment No. 4 dated as of December 22, 2009 and effective as of February 26, 2010 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(5)   — Amendment No. 7 dated as of August 4, 2017 and effective as of September 5, 2017 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, between PDR Services LLC, as Sponsor and State Street Global Advisors Trust Company, as Trustee (1)
EX-99.A1(6)   — Amendment dated and effective February 14, 2008 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, and to the Trust Indenture and Agreement dated and effective January 13, 1998 between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(7)   — Amendment No. 6 dated as of April 12, 2017 and effective as of June 16, 2017 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, and to the Trust Indenture and Agreement dated and effective January 13, 1998 between PDR Services LLC, as Sponsor and State Street Global Advisors Trust Company, as Trustee (1)
EX-99.A1(8)   — Trust Indenture and Agreement dated and effective January 13, 1998 between PDR Services Corporation, as Sponsor and State Street Bank and Trust Company, as Trustee (4)
EX-99.A3   — Distribution Agreement dated and effective November 1, 2011 (5)
EX-99.A4(1)   — Form of Global Certificates (6)
EX-99.A4(2)   — Form of Participant Agreement (3)


EX-99.A4(3)   — Sublicense Agreement entered into as of November 1, 2005 by and among PDR Services LLC, as Sublicensee, State Street Global Markets, LLC, as Licensee, and Dow Jones & Company, Inc. (7)
EX-99.A4(4)   — Sublicense Agreement entered into as of November 1, 2005 by and among State Street Bank and Trust Company, as Sublicensee, State Street Global Markets, LLC, as Licensee, and Dow Jones & Company, Inc. (7)
EX-99.A4(5)   — Custodian Agreement, dated as of November 30, 2017, between the Trustee and State Street Bank and Trust Company (1)
EX-99.A6(1)   — Amended and Restated Certificate of Formation of PDR Services LLC (2)
EX-99.A6(2)   — Amended and Restated Limited Liability Company Agreement of PDR Services LLC (2)
EX-99.A9(1)   — Chief Compliance Officer Services Agreement dated and effective October 5, 2004 (5)
EX-99.A9(2)   — Addendum to Chief Compliance Officer Services Agreements dated and effective September 1, 2006 (5)
EX-99.A9(3)   — Amendment to Chief Compliance Officer Services Agreement dated October 1, 2009 (5)
EX-99.A9(4)   — Depository Agreement among State Street Bank and Trust Company, as Trustee, PDR Services Corporation, as Sponsor and The Depository Trust Company as the Depository, dated January 13, 1998 (4)
EX-99.A9(5)   — Administration Agreement, dated as of November 30, 2017, between the Trustee and State Street Bank and Trust Company (1)
EX-99.A9(6)   — Transfer Agency and Service Agreement, dated as of November 30, 2017, between the Trustee and State Street Bank and Trust Company (1)
EX-99.A11(1)   — Code of Ethics dated January 26, 2012, amended as of December 8, 2015 (8)
EX-99.A11(2)   — Code of Ethics of Distributor dated May 1, 2010, amended as of July 1, 2017 (1)
EX-99.C1   — Consent of Independent Registered Public Accounting Firm (1)

 

(1) Filed herewith.
(2) Filed February 21, 2013 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein..
(3) Filed on February 25, 2011 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(4) Filed on January 14, 1998 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(5) Filed on February 22, 2012 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(6) Filed on February 26, 2010 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(7) Filed on February 23, 2007 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(8) Filed on February 12, 2016 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.


FINANCIAL STATEMENTS

1. Statement of Financial Condition of the Trust as shown in the current prospectus for this series herewith.

2. Financial Statements of the Depositor:

PDR Services LLC—Financial Statements, as part of Intercontinental Exchange, Inc.’s current consolidated financial statements incorporated by reference to Form 10-K dated February 7, 2018.


SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant, SPDR Dow Jones Industrial Average ETF Trust, certifies that it meets all of the requirements for effectiveness of this Post Effective Amendment to the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized, in the City of New York, and State of New York, on the 13 th day of February, 2018.

 

SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST (Registrant)
By:   PDR Services LLC
By:  

/s/ Thomas W. Farley

  Name:   Thomas W. Farley
  Title:   President

Pursuant to the requirements of the Securities Act of 1933, this Post Effective Amendment to the Registration Statement has been signed below on behalf of PDR Services LLC, the Depositor, by the following persons in the capacities and on the date indicated.

PDR SERVICES LLC

 

Name

  

Title/Office

 

Date

/s/ Thomas W. Farley

Thomas W. Farley

   President of PDR Services LLC   February 13, 2018

/s/ Scott A. Hill

Scott A. Hill

   Chief Financial Officer of PDR Services LLC   February 13, 2018

/s/ Douglas Yones

Douglas Yones

   Senior Director of PDR Services LLC   February 13, 2018


EXHIBIT INDEX

 

EX-99.2   — Opinion of Counsel as to legality of securities being registered and consent of Counsel (1)
EX-99.A1(1)   — Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, between PDR Services Corporation, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(2)   — Amendment No. 1 dated as of November 1, 2004 and effective November 8, 2004 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(3)   — Amendment No. 2 dated and effective as of October 24, 2008 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(4)   — Amendment No. 4 dated as of December 22, 2009 and effective as of February 26, 2010 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(5)   — Amendment No. 7 dated as of August 4, 2017 and effective as of September 5, 2017 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, between PDR Services LLC, as Sponsor and State Street Global Advisors Trust Company, as Trustee (1)
EX-99.A1(6)   — Amendment dated and effective February 14, 2008 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, and to the Trust Indenture and Agreement dated and effective January 13, 1998 between PDR Services LLC, as Sponsor and State Street Bank and Trust Company, as Trustee (3)
EX-99.A1(7)   — Amendment No. 6 dated as of April 12, 2017 and effective as of June 16, 2017 to the Standard Terms and Conditions of Trust dated as of January 1, 1998 and effective January 13, 1998, as amended, and to the Trust Indenture and Agreement dated and effective January 13, 1998 between PDR Services LLC, as Sponsor and State Street Global Advisors Trust Company, as Trustee (1)
EX-99.A1(8)   — Trust Indenture and Agreement dated and effective January 13, 1998 between PDR Services Corporation, as Sponsor and State Street Bank and Trust Company, as Trustee (4)
EX-99.A3   — Distribution Agreement dated and effective November 1, 2011 (5)
EX-99.A4(1)   — Form of Global Certificates (6)
EX-99.A4(2)   — Form of Participant Agreement (3)
EX-99.A4(3)   — Sublicense Agreement entered into as of November 1, 2005 by and among PDR Services LLC, as Sublicensee, State Street Global Markets, LLC, as Licensee, and Dow Jones & Company, Inc. (7)
EX-99.A4(4)   — Sublicense Agreement entered into as of November 1, 2005 by and among State Street Bank and Trust Company, as Sublicensee, State Street Global Markets, LLC, as Licensee, and Dow Jones & Company, Inc. (7)
EX-99.A4(5)   — Custodian Agreement, dated as of November 30, 2017, between the Trustee and State Street Bank and Trust Company (1)
EX-99.A6(1)   — Amended and Restated Certificate of Formation of PDR Services LLC (2)
EX-99.A6(2)   — Amended and Restated Limited Liability Company Agreement of PDR Services LLC (2)
EX-99.A9(1)   — Chief Compliance Officer Services Agreement dated and effective October 5, 2004 (5)
EX-99.A9(2)   — Addendum to Chief Compliance Officer Services Agreements dated and effective September 1, 2006 (5)
EX-99.A9(3)   — Amendment to Chief Compliance Officer Services Agreement dated October 1, 2009 (5)
EX-99.A9(4)   — Depository Agreement among State Street Bank and Trust Company, as Trustee, PDR Services Corporation, as Sponsor and The Depository Trust Company as the Depository, dated January 13, 1998 (4)


EX-99.A9(5)   — Administration Agreement, dated as of November 30, 2017, between the Trustee and State Street Bank and Trust Company (1)
EX-99.A9(6)   — Transfer Agency and Service Agreement, dated as of November 30, 2017, between the Trustee and State Street Bank and Trust Company (1)
EX-99.A11(1)   — Code of Ethics dated January 26, 2012, amended as of December 8, 2015 (8)
EX-99.A11(2)   — Code of Ethics of Distributor dated May 1, 2010, amended as of July 1, 2017 (1)
EX-99.C1   — Consent of Independent Registered Public Accounting Firm (1)

 

(1) Filed herewith.
(2) Filed February 21, 2013 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(3) Filed on February 25, 2011 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(4) Filed on January 14, 1998 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(5) Filed on February 22, 2012 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(6) Filed on February 26, 2010 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(7) Filed on February 23, 2007 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.
(8) Filed on February 12, 2016 with registrant’s Registration Statement on Form S-6 (File Nos. 333-31247 and 811-09170) and incorporated by reference herein.

Exhibit 99.2

 

 

LOGO

February 13, 2018

PDR Services LLC

c/o NYSE Holdings LLC

11 Wall Street

New York, New York 10005

Ladies and Gentlemen:

SPDR Dow Jones Industrial Average ETF Trust, a unit investment trust organized under the laws of the State of New York (the “ Trust ”), is filing with the Securities and Exchange Commission (the “ Commission ”) Post-Effective Amendment No. 24 to the Trust’s registration statement (“ Post-Effective Amendment No.  24 ”) in connection with the continued issuance by the Trust of an indefinite number of units of fractional undivided interest in the Trust (“ Units ”) pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.

We, as your counsel, have examined such documents and such matters of fact and law that we have deemed necessary for the purpose of rendering the opinion expressed herein. Based on the foregoing, we advise you that, in our opinion, when the Units have been duly issued and delivered against the consideration therefor in accordance with the terms of the Trust Documents (as defined below), the Units will be validly issued, fully paid and non-assessable.

In rendering this opinion, we have assumed the due authorization, execution and delivery by PDR Services LLC, as sponsor of the Trust, and State Street Bank and Trust Company, as trustee of the Trust from January 14, 1998 to June 16, 2017, and State Street Global Advisors Trust Company, as trustee of the Trust from June 16, 2017 through the date of this letter, as applicable, of (i) the Standard Terms and Conditions of Trust of the Trust dated as of January 1, 1998 (the “ Standard Terms ”), (ii) the Trust Indenture and Agreement into which the Standard Terms are incorporated (the “ Indenture ”) and (iii) each amendment to the Standard Terms and the Indenture (collectively, the “ Trust Documents ”), in each case in the form filed with the Commission via the Electronic Data Gathering, Analysis and Retrieval System.

We are members of the Bar of the State of New York, and the foregoing opinion is limited to the laws of the State of New York and the federal laws of the United States of America.

This opinion is rendered solely to you in connection with Post-Effective Amendment No. 24. This opinion may not be relied upon by you for any other purpose or relied upon by any other person without our prior written consent.


PDR Services LLC    2    February 13, 2018

 

We hereby represent that Post-Effective Amendment No. 24 does not contain disclosures that would render it ineligible to become effective immediately upon filing pursuant to paragraph (b) of Rule 485 under the Securities Act of 1933, as amended (the “ Securities Act ”).

We hereby consent to the filing of this opinion as an exhibit to Post-Effective Amendment No. 24 and further consent to the reference to our name under the caption “Legal Opinion” in the Prospectus which is a part of Post-Effective Amendment No. 24. In giving this consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.

Very truly yours,

/s/ Davis Polk & Wardwell LLP

EXECUTION COPY

AMENDMENT NO. 7

TO AMENDED AND RESTATED

STANDARD TERMS AND CONDITIONS OF TRUST

DATED AS OF JANUARY 1, 1998

AND

EFFECTIVE JANUARY 13, 1998

As Amended

FOR

SPDR ® DOW JONES INDUSTRIAL AVERAGE SM ETF TRUST

(“SPDR DJIA Trust”)

AND

ANY SUBSEQUENT AND SIMILAR

SERIES OF THE

SPDR DJIA Trust

BETWEEN

PDR SERVICES LLC

AS SPONSOR

AND

STATE STREET GLOBAL ADVISORS TRUST COMPANY

AS TRUSTEE

DATED AS OF AUGUST 4, 2017

This Amendment No. 7 (the “Amendment Agreement”) dated as of August 4, 2017 between PDR Services LLC, as sponsor (the “Sponsor”), and State Street Global Advisors Trust Company, as trustee (the “Trustee”), amends the document entitled “STANDARD TERMS AND CONDITIONS OF TRUST DATED AS OF JANUARY 1, 1998 AND EFFECTIVE JANUARY 13, 1998 FOR SPDR ® DOW JONES INDUSTRIAL AVERAGE SM ETF TRUST (“SPDR DJIA TRUST”) AND SUBSEQUENT AND SIMILAR SERIES OF SPDR DJIA TRUST BETWEEN PDR SERVICES LLC, AS SPONSOR AND STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE”, as amended (hereinafter referred to as “Standard Terms”) and the document entitled “TRUST INDENTURE AND AGREEMENT DATED JANUARY 13, 1998 AND EFFECTIVE JANUARY 13, 1998,” as amended (hereinafter the “Trust Indenture” and, together with the Standard Terms, the “Trust Documents”).

WITNESSETH THAT :

WHEREAS , the Sponsor and State Street Bank and Trust Company, the former Trustee, entered into the Standard Terms to facilitate the creation of the SPDR DJIA Trust;

 

1


WHEREAS , the U.S. Securities and Exchange Commission adopted amended Rule 15c6-1(a) to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions;

WHEREAS , the parties hereto desire to amend the Standard Terms as more fully set forth below;

NOW THEREFORE , in consideration of the promises and of the mutual agreements contained herein, the Sponsor and the Trustee agree as follows, effective as of September 5, 2017:

 

  1. The following sentence in Section 2.03(d) of the Standard Terms:

A Participating Party, pursuant to the Participant Agreement described below, agrees to transfer the requisite Index Securities (or contracts to purchase such Index Securities which are expected to be delivered in a “regular way” manner in three (3) Business Days) and the Cash Component to the Trustee by means of the Clearing Process, together with such additional information as may be required by the Trustee.

is hereby amended such that the reference to “three (3) Business Days” shall be replaced with “two (2) Business Days”.

 

  2. The following sentence in Section 2.03(e) of the Standard Terms:

In such cases, the DTC Participant shall effectuate the transfer of the requisite Index Securities and the Cash Component to the Trustee directly through DTC on the day on which the order is accepted by the Distributor for Trust Unit delivery to the creating party directly through DTC not later than on the third (3 rd ) Business Day following the day on which the order is accepted by the Distributor.

is hereby amended such that the reference to “third (3 rd ) Business Day” shall be replaced with “second (2 nd ) Business Day”.

 

  3. The following sentence in Section 3.04(i) of the Standard Terms:

Beneficial Owners as reflected on the records of the Depository and the DTC Participants on the second (2nd) Business Day following the Ex-Dividend Date (the “Record Date”) will be entitled to receive an amount representing dividends accumulated on the Securities through such Ex-Dividend Date, net of fees and expenses, accrued daily for such period.

is hereby amended such that the reference to “second (2nd) Business Day” shall be replaced with “first (1st) Business Day”.

 

2


  4. The following sentence in Section 5.02(c) of the Standard Terms:

The Trustee will transfer the cash and securities to the redeeming Beneficial Owner on the third (3 rd ) NSCC Business Day following the date on which request for redemption is made.

is hereby amended such that the reference to “third (3 rd ) NSCC Business Day” shall be replaced with “second (2 nd ) NSCC Business Day”.

 

  5. Pursuant to Section 10.01 of the Standard Terms, both parties to this Amendment Agreement hereby agree that paragraphs (1)-(4) of this Amendment Agreement are in regard to matters which will not adversely affect the interest of Beneficial Owners in compliance with the provisions of Section 10.01(a)(i) thereof.

 

  6. Pursuant to Section 10.01(b) of the Standard Terms, the Trustee agrees that it shall promptly furnish each DTC Participant with sufficient copies of a written notice of the substance of this Amendment Agreement for transmittal by each such DTC Participant to Beneficial Owners of the Trust.

 

  7. Except as amended hereby, the Standard Terms and any and all amendments thereto, including the document entitled “Standard Terms And Conditions Of Trust Dated As Of January 1, 1998 And Effective January 13, 1998, As Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated As Of November 1, 2004 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated February 14, 2008 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated As Of October 24, 2008 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated As of December 22, 2009 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Bank and Trust Company; and the document entitled “Amendment Dated As of April 12, 2017 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Global Advisors Trust Company now in effect are in all respects ratified and confirmed hereby and this Amendment Agreement and all of its provisions shall be deemed to be a part of the Standard Terms.

 

  8. All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Trust Documents.

 

3


  9. This Amendment Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed as of the date hereof.

 

PDR SERVICES LLC, as Sponsor
By:  

/s/ Douglas Yones

  Name:   Douglas Yones
  Title:   Senior Director

 

ATTEST:                    
TITLE:

 

STATE STREET GLOBAL ADVISORS TRUST COMPANY, as Trustee
By:  

             

  Name:
  Title:

 

ATTEST:                    
TITLE:

 

4


Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated As Of October 24, 2008 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated As of December 22, 2009 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Bank and Trust Company; and the document entitled “Amendment Dated As of April 12, 2017 To Standard Terms And Conditions Of Trust, As Amended” between the Sponsor and State Street Global Advisors Trust Company now in effect are in all respects ratified and confirmed hereby and this Amendment Agreement and all of its provisions shall be deemed to be a part of the Standard Terms.

 

  8. All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Trust Documents.

 

  9. This Amendment Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed as of the date hereof.

 

PDR SERVICES LLC, as Sponsor
By:  

                 

  Name:
  Title:

 

ATTEST:                     
TITLE:

 

STATE STREET GLOBAL ADVISORS TRUST COMPANY, as Trustee
By:  

/s/ James Ross

  Name:   James Ross
  Title:   EVP

 

5


ATTEST:  

/s/ Andrew Robert Walsh

TITLE:  

 

[ NOTARY SEAL]
ANDREW ROBERT WALSH
Notary Public
COMMONWEALTH OF MASSACHUSETTS
My Commission Expires
October 29, 2021

 

6


STATE OF NEW YORK        )

: ss.:

COUNTY OF NEW YORK    )

On the 4 th  day of August in the year 2017 before me personally came Douglas Yones  to me known, who, being by me duly sworn, did depose and say that he is the Senior Director  of PDR Services LLC, the limited liability company described in and which executed the above instrument; and that he signed his name thereto by like authority.

 

       

/s/ Amy Mauro

        Notary Public
        [NOTARY SEAL]
        AMY MAURO
        Notary Public, State of New York
        No. 01MA6262613
        Qualified In Westchester County
        Commission Expires May 29, 2020

 

7


COMMONWEALTH OF MASSACHUSETTS     )

            :ss.: Boston

COUNTY OF SUFFOLK                                        )

On this 7 th  day of August  in the year 2017, before me personally appeared James Ross  , to me known, who, being by me duly sworn, did depose and say that [he] is an Executive Vice President  of SSGA Trust Company, the trust company described in and which executed the above instrument; and that [he] signed [his] name thereto by authority of the board of directors of said trust company.

/s/ Andrew Robert Walsh                    

Notary Public

 

[NOTARY SEAL]
ANDREW ROBERT WALSH
Notary Public
COMMONWEALTH OF MASSACHUSETTS
My Commission Expires
October 29, 2021

 

8

EXECUTION COPY

AMENDMENT NO. 6

TO AMENDED AND RESTATED

STANDARD TERMS AND CONDITIONS OF TRUST

DATED AS OF JANUARY 1, 1998

AND

EFFECTIVE JANUARY 13, 1998

As Amended

AND THE

TRUST INDENTURE AND AGREEMENT

DATED AS OF JANUARY 13, 1998

AND

EFFECTIVE JANUARY 13, 1998

As Amended

FOR

SPDR ® DOW JONES INDUSTRIAL AVERAGE SM ETF TRUST

(“SPDR DJIA Trust”)

AND

ANY SUBSEQUENT AND SIMILAR

SERIES OF THE

SPDR DJIA Trust

BETWEEN

PDR SERVICES LLC

AS SPONSOR

AND

STATE STREET BANK AND TRUST COMPANY

AS TRUSTEE

DATED AS OF APRIL 12, 2017

This Amendment No. 6 (the “Amendment Agreement”) dated as of April 12, 2017 between PDR Services LLC, as sponsor (the “Sponsor”), and State Street Global Advisors Trust Company, as trustee (the “Trustee”), amends the document entitled “AMENDED AND RESTATED STANDARD TERMS AND CONDITIONS OF TRUST DATED AS OF JANUARY 1, 1998 AND EFFECTIVE JANUARY 13, 1998 FOR SPDR ® DOW JONES INDUSTRIAL AVERAGE SM ETF TRUST (“SPDR DJIA TRUST”) AND ANY SUBSEQUENT AND SIMILAR SERIES OF THE SPDR DJIA TRUST BETWEEN PDR SERVICES LLC, AS SPONSOR AND STATE STREET BANK AND TRUST COMPANY, AS TRUSTEE”, as amended (hereinafter referred to as “Standard Terms”) and the document entitled “TRUST INDENTURE AND AGREEMENT DATED AS OF JANUARY 13, 1998 AND EFFECTIVE JANUARY 13, 1998,” as amended (hereinafter the “Trust Indenture” and, together with the Standard Terms, the “Trust Documents”).


WITNESSETH THAT:

WHEREAS , the Sponsor and State Street Bank and Trust Company entered into the Standard Terms to facilitate the creation of the SPDR DJIA Trust;

WHEREAS , pursuant to an Agreement and Instrument of Resignation and Appointment dated April 12, 2017, State Street Bank and Trust Company has resigned as trustee of the SPDR DJIA Trust, the Sponsor has appointed the Trustee as trustee of the SPDR DJIA Trust as of June 16, 2017, and the Trustee has accepted such appointment;

WHEREAS , the parties hereto desire to amend the Trust Documents as more fully set forth below;

NOW THEREFORE , in consideration of the promises and of the mutual agreements contained herein, the Sponsor and the Trustee agree as follows, effective as of June 16, 2017:

1.    The definition of “Trustee” in Section 1 of the Standard Terms shall be amended to read as follows:

(a) State Street Global Advisors Trust Company or its successor or (b) any successor Trustee designated by operation of law or appointed herein provided or (c) any other bank, trust company, corporation or national banking association designated as Trustee in the Indenture for the applicable Trust Series which bank, trust company, corporation or national banking association shall be a party to such Indenture and whose execution thereof shall subject such bank, trust company, corporation or national banking association to all rights, duties and liabilities hereunder and thereunder, in each case acting as Trustee and not individually, unless otherwise indicated.

2.    All references to the “Trustee” in the Trust Documents with respect to actions taken prior to June 16, 2017 shall hereby refer to State Street Bank and Trust Company, as Trustee of the SPDR DJIA Trust.

3.    All references to the “Trustee” in the Trust Documents with respect to actions taken on or after June 16, 2017 shall hereby refer to State Street Global Advisors Trust Company, as Trustee of the SPDR DJIA Trust.

4.    Pursuant to Section 10.01 of the Standard Terms, both parties to this Amendment Agreement hereby agree that paragraphs (1) through (3) of this Amendment Agreement are in regard to matters as will not adversely affect the interest of Beneficial Owners in compliance with the provisions of Section 10.01(a)(i) thereof.


5.    Pursuant to Section 10.01(b) of the Standard Terms, the Trustee agrees that it shall promptly furnish each DTC Participant with sufficient copies of a written notice of the substance of this Amendment Agreement for transmittal by each such DTC Participant to Beneficial Owners of the Trust.

6.    Except as amended hereby, the Standard Terms and any and all amendments thereto, including the document entitled “Standard Terms And Conditions Of Trust Dated As Of January 1, 1998 And Effective January 13, 1998, As Amended” between the Sponsor and State Street Bank and Trust Company; the document entitled “Amendment Dated As Of November 1, 2004 To Standard Terms And Conditions Of Trust, As Amended”; the document entitled “Amendment Dated February 14, 2008 To Standard Terms And Conditions Of Trust, As Amended”; the document entitled “Amendment Dated As Of October 24, 2008 To Standard Terms And Conditions Of Trust, As Amended”; and the document entitled “Amendment Dated As of December 22, 2009 To Standard Terms And Conditions Of Trust, As Amended”; between the Sponsor and State Street Bank and Trust Company, now in effect are in all respects ratified and confirmed hereby and this Amendment Agreement and all of its provisions shall be deemed to be a part of the Standard Terms.

7.    Except as amended hereby, the Trust Indenture between the Sponsor and State Street Bank and Trust Company, now in effect is in all respects ratified and confirmed hereby and this Amendment Agreement and all of its provisions shall be deemed to be a part of the Trust Indenture.

8.    All capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them in the Trust Documents.

9.    This Amendment Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.


IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed as of the date hereof.

 

PDR SERVICES LLC, as Sponsor
By:  

/s/ TW Farley

  Name:    Thomas Farley
  Title:    President

ATTEST:                     

TITLE:

 

STATE STREET GLOBAL ADVISORS TRUST COMPANY, as Trustee
By:  

/s/ James Ross

  Name:    James Ross
  Title:    Senior Representative

ATTEST:                     

TITLE:

STATE OF NEW YORK         )

: ss.                                    :

COUNTY OF NEW YORK     )

On the 12 day of [ 4 ] in the year 2017 before me personally came Thomas Farley  to me known, who, being by me duly sworn, did depose and say that [he] is the President of PDR Services LLC, the limited liability company described in and which executed the above instrument; and that [he] signed [his] name thereto by like authority.

 

/s/ Roseann Aellis

Notary Public

 

[NOTARY SEAL]

ROSEANN AELLIS

Notary Public, State of New York

No. 01AE6309137

Qualified in New York County

Commission Expires August 4, 2018


COMMONWEALTH OF MASSACHUSETTS    )

: ss.:

COUNTY OF SUFFOLK                                       )

On this 12 th day of April  in the year 2017, before me personally appeared James Ross  who is to me known, who, being by me duly sworn, did depose and say that [he] is Senior Representative  of State Street Global Advisors Trust Company, the trust company described in and which executed the above instrument; and that [he] signed [his] name thereto by authority of the board of directors of said trust company.

 

/s/ Kerry A. Rouleau

Notary Public
/s/ Kerry A. Rouleau
My commission expires: 1/18/2019

 

      [NOTARY SEAL]
      KERRY A. ROULEAU
      Notary Public
      COMMONWEALTH OF MASSACHUSETTS
      My Commission Expires
      January 18, 2019

Execution Copy

C USTODIAN A GREEMENT

This Agreement is made as of November 30, 2017 (this “ Agreement ”), between S TATE S TREET G LOBAL A DVISORS T RUST C OMPANY , a Massachusetts limited purpose trust company (the “ Trustee ”), and S TATE S TREET B ANK AND T RUST C OMPANY , a Massachusetts trust company (the “ Custodian ”).

W ITNESSETH :

W HEREAS , the SPDR ® Dow Jones Industrial Average SM ETF Trust (the “ Fund ”) is an exchange-traded fund and will issue and redeem shares of the Fund only in aggregations of Fund Interests (as defined in Section 8.1) known as “ Creation Units ,” generally in exchange for a basket of certain equity securities and/or a specified cash payment, as more fully described in the currently effective prospectus of the Fund (the “ Prospectus ”);

W HEREAS , the Trustee furnishes certain services to the Fund;

W HEREAS , the Trustee desires for the Custodian to provide certain custodial services relating to securities and other assets of the Fund; and

W HEREAS , the Custodian is willing to provide the services upon the terms contained in this Agreement.

S ECTION  1.     D EFINITIONS . In addition to terms defined elsewhere in this Agreement, (a) terms defined in the UCC have the same meanings herein as therein and (b) the following other terms have the following meanings for purposes of this Agreement:

1940 Act ” means the Investment Company Act of 1940, as amended from time to time.

Client Publications ” means the general client publications of State Street Bank and Trust Company available from time to time to clients and their investment managers.

Deposit Account Agreement ” means the Deposit Account Agreement and Disclosure, as may be amended from time to time, issued by the Custodian and available on the Custodian’s internet customer portal, “my.statestreet.com”.

Domestic securities ” means securities held within the United States.

Held within the United States ” means (a) in relation to a security or other financial asset, the security or other financial asset (i) is a certificated security registered in the name of the Custodian or its sub-custodian, agent or nominee or is endorsed to the Custodian or its sub-custodian, agent or nominee or in blank and the security certificate is located within the United States, (ii) is an uncertificated security or other financial asset registered in the name of the Custodian or its sub-custodian, agent or nominee at an office located in the United States, or (iii) has given rise to a security entitlement of which the Custodian or its sub-custodian, agent or nominee is the entitlement holder against a U.S. Securities System or another securities intermediary for which the securities intermediary’s jurisdiction is within the United States, and (b) in relation to cash, the cash is maintained in a deposit account denominated in U.S. dollars with the banking department of the Custodian or with another bank or trust company’s office located in the United States.


Losses ” means any direct losses, damages, liabilities, claims, costs or out-of-pocket expenses (including reasonable attorneys’ fees).

On book currency ” means U.S. dollars that, when credited to a deposit account of a customer maintained in the banking department of the Custodian, the Custodian maintains on its books as an amount owing as a liability by the Custodian to the customer.

Proper Instructions ” means instructions in accordance with Section 9 received by the Custodian from the Fund, the Trustee, or an individual or organization duly authorized by the Fund or the Trustee. The term includes standing instructions.

SEC ” means the U.S. Securities and Exchange Commission.

Senior Representatives ” means the Senior Representatives of State Street Global Advisors Trust Company, as Trustee of the Fund.

UCC ” means the Uniform Commercial Code of the Commonwealth of Massachusetts as in effect from time to time.

U.S. Securities System ” means a securities depository or book-entry system authorized by the U.S. Department of the Treasury or a “clearing corporation” as defined in Section 8-102 of the UCC.

S ECTION  2.     E MPLOYMENT OF C USTODIAN .

S ECTION 2.1     G ENERAL . Subject to the control, supervision, authorization and direction of the Trustee, the Trustee hereby employs the Custodian as a custodian of (a) securities and cash of the Fund and (b) other assets of the Fund that the Custodian agrees to treat as financial assets. The Trustee agress to deliver, or cause the Fund to deliver, to the Custodian (i) all securities and cash of the Fund, (ii) all other assets of the Fund that the Trustee desires the Custodian, and the Custodian is willing, to treat as a financial asset and (iii) all cash and other proceeds of the securities and financial assets held in custody under this Agreement. This Agreement does not require the Custodian to accept an asset for custody hereunder or to treat any asset that is not a security as a financial asset.

S ECTION  2.2     S UB - CUSTODIANS . Upon receipt of Proper Instructions, the Custodian shall on behalf of the Fund appoint one or more banks, trust companies or other entities located in the United States and designated in the Proper Instructions to act as a sub-custodian for the purposes of effecting such transactions as may be designated by the Fund in the Proper Instructions.

 

Information Classification: Limited Access

-2-


S ECTION  2.3     R ELATIONSHIP . With respect to securities and other financial assets, the Custodian is a securities intermediary and the Trustee on behalf of the Fund is the entitlement holder. With respect to cash maintained in a deposit account and denominated in an “on book” currency, the Custodian is a bank and the Trustee on behalf of the Fund is the bank’s customer. If cash is maintained in a deposit account with a bank other than the Custodian and the cash is denominated in an “on book” currency, the Custodian is that bank’s customer. In such circumstances, the Custodian agrees to treat the claim to the cash (but not the cash itself) as a financial asset for the benefit of the Trustee on behalf of the Fund . The Custodian does not otherwise agree to treat cash or any claim to cash as financial asset. The duties of the Custodian as securities intermediary and bank set forth in the UCC are varied by the terms of this Agreement to the extent that the duties may be varied by agreement under the UCC.

S ECTION  3.     A CTIVITIES OF THE C USTODIAN WITH R ESPECT TO P ROPERTY H ELD IN THE U NITED S TATES .

S ECTION  3.1     H OLDING S ECURITIES . The Custodian may deposit and maintain securities or other financial assets of the Fund in a U.S. Securities System in compliance with the conditions of Rule 17f-4 under the 1940 Act. Upon receipt of Proper Instructions on behalf of the Fund, the Custodian shall establish and maintain a segregated account or accounts for and on behalf of the Fund and into which account or accounts may be transferred cash or securities and other financial assets, including securities and financial assets maintained in a U.S. Securities System. The Custodian shall hold and physically segregate for the account of the Fund all securities and other financial assets held by the Custodian in the United States, including all domestic securities of the Fund, other than securities or other financial assets maintained in a U.S. Securities System. The Custodian may at any time or times in its discretion appoint any other bank or trust company, qualified under the 1940 Act to act as a custodian, as the Custodian’s agent to carry out such of the provisions of this Section as the Custodian may from time to time direct. The appointment of any agent shall not relieve the Custodian of any of its duties or liabilities hereunder. The Custodian may at any time or times in its discretion remove the bank or trust company as the Custodian’s agent.

S ECTION  3.2     R EGISTRATION OF S ECURITIES . Domestic securities or other financial assets held by the Custodian and that are not bearer securities shall be registered in the name of the Trustee on behalf of the Fund or in the name of any nominee of the Trustee or of any nominee of the Custodian, or in the name or nominee name of any agent or any sub-custodian permitted hereby. All securities accepted by the Custodian on behalf of the Fund under the terms of this Agreement shall be in “street name” or other good delivery form. However, if the Fund directs the Custodian to maintain securities or other financial assets in “street name,” the Custodian shall utilize reasonable efforts only to timely collect income due the Fund on the securities and other financial assets and to notify the Fund of relevant issuer actions including, without limitation, pendency of calls, maturities, tender or exchange offers.

S ECTION  3.3     B ANK A CCOUNTS . The Custodian shall open and maintain upon the terms of the Deposit Account Agreeement a separate deposit account or accounts in the United States in the name of the Fund, subject only to draft or order by the Custodian acting pursuant to the terms of this Agreement. The Custodian shall credit to the deposit account or accounts, subject to the provisions

 

Information Classification: Limited Access

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hereof, all cash received by the Custodian from or for the account of the the Fund. Funds held by the Custodian for the Fund may be deposited by the Custodian to its credit as Custodian in the banking department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that (a) every such bank or trust company shall be qualified to act as a custodian under the 1940 Act and (b) each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of the Fund be approved by Senior Representatives. The funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity.

S ECTION  3.3A     D ETERMINATION OF F UND D EPOSIT , ETC . Subject to and in accordance with the directions of the Trustee, the Custodian shall determine for the Fund after the end of each trading day on the New York Stock Exchange (the “ NYSE ”), in accordance with the Fund’s Standard Terms and Conditions of Trust, as amended from time to time (the “ Standard Terms and Conditions of Trust ”), and in accordance with the procedures set forth in the Prospectus, (i) the identity and weighting of the securities in the Deposit Securities and the Fund Securities (each as defined in the Prospectus), (ii) the cash component, and (iii) the amount of cash redemption proceeds (all as described in the Prospectus) required for the issuance or redemption, as the case may be, of Fund Interests in Creation Unit aggregations of such Fund on such date. The Custodian shall provide or cause to be provided this information to the Fund’s distributor and other persons as instructed according to the policies established by the Trustee or the Fund and shall disseminate such information on each day that the NYSE is open, including through the facilities of the National Securities Clearing Corporation (the “ NSCC ”), prior to the opening of trading on the NYSE.

Section 3.3B.     Allocation of Deposit Security Shortfalls . The Trustee acknowledges that the Custodian maintains only one account on the books of the NSCC for the benefit of all exchange traded funds for which the Custodian serves as custodian, including the Fund (collectively, the “ ETF Custody Clients ”). In the event that (a) two or more ETF Custody Clients require delivery of the same Deposit Security in order to purchase a Creation Unit, and (b) the NSCC, pursuant to its Continuous Net Settlement system, delivers to the Custodian’s NSCC account less than the full amount of such Deposit Security necessary to satisfy in full each affected ETF Custody Client’s required amount (a “ Common Deposit Security Shortfall ”), then, until all Common Deposit Security Shortfalls for a given Deposit Security are satisfied in full, the Custodian will allocate to each affected ETF Custody Client, on a pro rata basis, securities and/or cash received in the Custodian’s NSCC account relating to such shortfall, first to satisfy any prior unsatisfied Common Deposit Security Shortfall, and then to satisfy the current Common Deposit Security Shortfall.

S ECTION  3.4     C OLLECTION OF I NCOME . Subject to the domestic securities or other financial assets held in the United States being registered as provided in Section 3.2, the Custodian shall collect on a timely basis all income and other payments with respect to the securities and other financial assets and to which the Fund shall be entitled either by law or pursuant to custom in the securities business. The Custodian shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, the securities are held by the Custodian or its agent, and shall credit such income, as collected, to the Fund’s custodian

 

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account. The Custodian shall present for payment all income items requiring presentation as and when they become due and shall collect interest when due on securities and other financial assets held hereunder. The Custodian shall have no liability for any Losses resulting from the failure of any issuer to pay income or make other payments with respect to securities and other financial assets to which the Fund may be entitled.

S ECTION  3.5     D ELIVERY O UT . The Custodian shall release and deliver out domestic securities and other financial assets of the Fund held in a U.S. Securities System only upon receipt of Proper Instructions on behalf of the Fund, specifying the domestic securities or financial assets held in the United States to be delivered out and the person or persons to whom delivery is to be made. The Custodian shall pay out cash of the Fund upon receipt of Proper Instructions from the Trustee on behalf of the Fund, specifying the amount of the payment and the person or persons to whom the payment is to be made.

S ECTION  3.6     R ESERVED .

S ECTION  3.7     P ROXIES . The Custodian shall cause to be promptly executed by the registered holder of domestic securities or other financial assets held in the United States of the Fund, if the securities or other financial assets are registered otherwise than in the name of the Trustee or a nominee of the Trustee, all proxies, without indication of the manner in which the proxies are to be voted, and shall promptly deliver to the Trustee such proxies, all proxy soliciting materials and all notices relating to the securities or other financial assets.

S ECTION  3.8     C OMMUNICATIONS . Subject to the domestic securities or other financial assets held in the United States being registered as provided in Section 3.2, the Custodian shall transmit promptly to the Trustee all written information received by the Custodian from issuers of the securities and other financial assets being held for the Fund. The Custodian shall transmit promptly to the Trustee all written information received by the Custodian from issuers of the securities and other financial assets whose tender or exchange is sought and from the party or its agent making the tender or exchange offer. The Custodian shall also transmit promptly to the Trustee all written information received by the Custodian regarding any class action or other collective litigation relating to Fund securities or other financial assets issued in the United States and then held, or previously held, during the relevant class-action period during the term of this Agreement by the Custodian for the account of the Fund, including, but not limited to, opt-out notices and proof-of-claim forms. The Custodian does not support class-action participation by the Fund beyond such forwarding of written information received by the Custodian.

S ECTION  4.     F OREIGN E XCHANGE .

The provisions of Section 4 apply only to th extent that the Fund is permitted to enter into foreign exchange transactions, notwithstanding anything to the contrary in this Section 4.

S ECTION  4.1.     G ENERALLY . Upon receipt of Proper Instructions, which for purposes of this section may also include security trade advices, the Custodian shall facilitate the processing and settlement of foreign exchange transactions. Such foreign exchange transactions do not constitute part of the services provided by the Custodian under this Agreement.

 

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S ECTION  4.2.     T RUSTEE E LECTIONS . The Trustee on behalf of the Fund hereby elects to enter into and execute foreign exchange transactions of the Fund solely with third parties that are not affiliated with the Custodian or the Trustee. Where the Trustee, on behalf of the Fund, gives Proper Instructions for the execution of a foreign exchange transaction using an indirect foreign exchange service described in the Client Publications, the Trustee on behalf of the Fund instructs the Custodian to direct the execution of such foreign exchange transaction to an unaffiliated sub-custodian. The Custodian shall not have any agency (except as contemplated in preceding sentence), trust or fiduciary obligation to the Trustee, the Fund or any other person in connection with the execution of any foreign exchange transaction. The Custodian shall have no responsibility under this Agreement for the selection of the counterparty to, or the method of execution of, any foreign exchange transaction entered into by the Trustee on behalf of the Fund or the reasonableness of the execution rate on any such transaction.

S ECTION  4.3.     T RUSTEE A CKNOWLEDGEMENT . The Trustee acknowledges that in connection with all foreign exchange transactions entered into by the Trustee on behalf of the Fund with a sub-custodian, each such sub-custodian:

 

(i) shall be acting in a principal capacity and not as broker, agent or fiduciary to the Trustee or the Fund;

 

(ii) shall seek to profit from such foreign exchange transactions, and are entitled to retain and not disclose any such profit to the Trustee or the Fund; and

 

(iii) shall enter into such foreign exchange transactions pursuant to the terms and conditions, including pricing or pricing methodology, (a) agreed with the Trustee from time to time or (b) in the case of an indirect foreign exchange service, as established by the sub-custodian from time to time.

S ECTION  4.4.     T RANSACTIONS BY S TATE S TREET . The Custodian or its affiliates, including State Street Global Markets, may trade based upon information that is not available to the Trustee, and may enter into transactions for its own account or the account of clients in the same or opposite direction to the transactions entered into with the Trustee on behalf of the Fund, and shall have no obligation, under this Agreement, to share such information with or consider the interests of their respective counterparties, including, where applicable, the Fund.

S ECTION  5.     T AX S ERVICES .

S ECTION  5.1     F UND I NFORMATION . The Trustee will provide documentary evidence of the Fund’s tax domicile, organizational specifics and other documentation and information as may be required by the Custodian from time to time for tax purposes, including, without limitation, information relating to any special ruling or treatment to which the Fund may be entitled that is not

 

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applicable to the general nationality and category of person to which the Fund belongs under general laws and treaty obligations and documentation and information required in relation to countries where the Fund engages or proposes to engage in investment activity or where Fund assets are or will be held. The provision of such documentation and information shall be deemed to be a Proper Instruction, upon which the Custodian shall be entitled to rely and act. In giving such documentation and information, the Trustee represents and warrants that it is true and correct in all material respects and that it will promptly provide the Custodian with all necessary corrections or updates upon becoming aware of any changes or inaccuracies in the documentation or information supplied.

S ECTION  5.2     T AX R ESPONSIBILITY . The Fund shall be liable for all taxes (including Taxes, as defined below) relating to its investment activity, including with respect to any cash or securities held by the Custodian on behalf of the Fund or any transactions related thereto. Subject to compliance by the Trustee with its obligations under Section 5.1, the Custodian shall withhold (or cause to be withheld) the amount of any Tax which is required to be withheld under applicable law in connection with the collection on behalf of the Fund pursuant to this Agreement of any dividend, interest income or other distribution with respect to any security and the proceeds or income from the sale or other transfer of any security held by the Custodian. If any Taxes become payable with respect to any prior payment made to the Fund by the Custodian or otherwise, the Custodian may apply any credit balance in the Fund’s deposit account to the extent necessary to satisfy such Tax obligation. The Fund shall remain liable for any tax deficiency. The Custodian is not liable for any tax obligations relating to the Fund or the Trustee, other than those Tax services as set out specifically in this Section 5. The Trustee agrees that the Custodian is not, and shall not be deemed to be, providing tax advice or tax counsel. The capitalized terms “Tax” or “Taxes” means any withholding or capital gains tax, stamp duty, levy, impost, charge, assessment, deduction or related liability, including any addition to tax, penalty or interest imposed on or in respect of (i) cash or securities, (ii) the transactions effected under this Agreement, or (iii) the Fund.

S ECTION  5.3     T AX R ELIEF . The Custodian will provide tax relief services in relation to designated markets as may be specified from time to time in the Client Publications. Subject to the preceding sentence and compliance by the Trustee with its obligations under Section 5.1, the Custodian will apply for a reduction of withholding tax and refund of any tax paid or tax credits which apply in each applicable market in respect of income payments on securities for the benefit of the Fund. Unless otherwise informed by the Trustee, the Custodian shall be entitled to apply categorical treatment of the Fund according to its nationality, particulars of its organization and other relevant details supplied by the Trustee.

S ECTION  6.     P AYMENTS FOR S ALES OR R EDEMPTIONS OF F UND I NTERESTS .

S ECTION  6.1     P AYMENT FOR F UND I NTERESTS I SSUED . The Custodian shall receive from the distributor of beneficial interests in the Fund (“ Fund Interests ”) or from the Fund’s transfer agent (the “ Transfer Agent ”) and deposit into the account of the Fund such payments as are received for Fund Interests, in Creation Unit aggregations, issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Trustee and the Transfer Agent of any receipt of the payments by the Custodian.

 

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S ECTION  6.2     P AYMENT FOR F UND I NTERESTS R EDEEMED . Upon receipt of instructions from the Transfer Agent, the Custodian shall set aside funds and securities of the Fund to the extent available for payment to, or in accordance with the instructions of, Authorized Participants (as defined in the Prospectus) who have delivered to the Transfer Agent a request for redemption of their Fund Interests, in Creation Unit aggregations, which shall have been accepted by the Transfer Agent, the applicable Fund Securities (or such securities in lieu thereof as may be designated by the Trustee in accordance with the Prospectus) for the Fund and the Cash Redemption Amount (as defined in the Prospectus), if applicable, less any applicable Redemption Transaction Fee (as defined in the Prospectus). The Custodian will transfer the applicable Fund Securities to or on the order of the Authorized Participant. Any cash redemption payment (less any applicable Redemption Transaction Fee) due to the Authorized Participant on redemption shall be effected through the DTC system or through wire transfer in the case of redemptions effected outside of the DTC system.

S ECTION  7.     P ROPER I NSTRUCTIONS .

S ECTION  7. 1     F ORM AND S ECURITY P ROCEDURES . Proper Instructions may be in writing signed by the authorized individual or individuals or may be in a tested communication or in a communication utilizing access codes effected between electro-mechanical or electronic devices or may be by such other means and utilizing such intermediary systems and utilities as may be agreed to from time to time by the Custodian and the individual or organization giving the instruction, provided that the Trustee has followed any security procedures agreed to from time to time by the Trustee and the Custodian including, but not limited to, the security procedures selected by the Trustee by reference to the form of Funds Transfer Addendum hereto, the terms of which are part of this Agreement. The Custodian may agree to accept oral instructions, and in such case oral instructions will be considered Proper Instructions. The Trustee shall cause all oral instructions to be confirmed in writing, provided that the Trustee’s failure to do so shall not impact the Custodian’s authority to rely on such oral instructions.

Section 7.2     R ELIANCE ON O FFICER S C ERTIFICATE . Concurrently with the execution of this Agreement, and from time to time thereafter, as appropriate, the Trustee shall deliver to the Custodian an officer’s certificate setting forth the names, titles, signatures and scope of authority of all individuals authorized to give Proper Instructions or any other notice, request, direction, instruction, certificate or instrument on behalf of the Trustee. The certificate may be accepted and conclusively relied upon by the Custodian and shall be considered to be in full force and effect until receipt by the Custodian of a similar certificate to the contrary and the Custodian has had a reasonable time to act thereon.

Section 7.3     U NTIMELY P ROPER I NSTRUCTIONS . If the Custodian is not provided with reasonable time to execute a Proper Instruction (including any Proper Instruction not to execute, or any other modification to, a prior Proper Instruction), the Custodian will use commercially reasonable efforts to execute the Proper Instruction but will not be responsible or liable if the Custodian’s efforts are not successful (including any inability to change any actions that the Custodian had taken pursuant to the prior Proper Instruction). The inclusion of a statement of

 

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purpose or intent (or any similar notation) in a Proper Instruction shall not impose any additional obligations on the Custodian or condition or qualify its authority to effect the Proper Instruction. The Custodian will not assume a duty to ensure that the stated purpose or intent is fulfilled and will have no responsibility or liability when it follows the Proper Instruction without regard to such purpose or intent.

S ECTION  8.     A CTIONS P ERMITTED WITHOUT E XPRESS A UTHORITY .

The Custodian may in its discretion, without express authority from the Trustee:

 

  1) Make payments to itself or others for minor expenses of handling securities or other financial assets relating to its duties under this Agreement; provided that all such payments shall be accounted for to the Fund;

 

  2) Surrender securities or other financial assets in temporary form for securities or other financial assets in definitive form;

 

  3) Endorse for collection, in the name of the Fund, checks, drafts and other negotiable instruments; and

 

  4) In general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and other financial assets of the Fund except as otherwise directed by the Trustee.

 

S ECTION  9.

   D UTIES OF C USTODIAN WITH R ESPECT TO THE B OOKS OF A CCOUNT AND C ALCULATION OF N ET A SSET V ALUE AND N ET I NCOME .

The Custodian shall cooperate with and supply necessary information to any organization appointed by the Trustee to keep the books of account of the Fund and compute the net asset value per Fund Interest of the outstanding Fund Interests or, if directed in writing to do so by the Trustee, shall itself keep such books of account and compute such net asset value per Fund Interest. The Custodian shall transmit the net asset value per share of the Fund to the Transfer Agent, the Distributor, the NYSE and such other entities as directed in writing by the Trustee. If and as so directed, the Custodian shall also calculate daily the net income of the Fund as described in the Fund’s Prospectus and shall advise the Trustee and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by the Trustee to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The Custodian shall on each day the Fund is open for the purchase or redemption of Fund Interests compute the number of Fund Interests of each Deposit Security to be included in the current Fund Deposit (as defined in the Prospectus) and the Fund Securities and shall transmit such information to the NSCC. If and as so directed, the calculations of the net asset value per Fund Interest and the daily income of each Fund shall be made at the time or times described from time to time in the Prospectus.

 

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S ECTION  10.     R ECORDS .

The Custodian shall with respect to the Fund create and maintain all records relating to its activities and obligations under this Agreement in such manner as will meet the obligations of the Fund under the 1940 Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Trustee on behalf of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund, including the Trustee, and employees and agents of the SEC. The Custodian shall, at the Trustee’s request, supply the Trustee with a tabulation of securities owned by the Fund and held by the Custodian and shall, when requested to do so by the Trustee and for such compensation as shall be agreed upon between the Trustee and the Custodian, include certificate numbers in such tabulations. In the event that the Custodian is requested or authorized by the Trustee, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Trustee or the Fund by state or federal regulatory agencies, to produce the records of the Trustee or the Fund or the Custodian’s personnel as witnesses, the Trustee agrees to pay the Custodian for the Custodian’s time and expenses, as well as the fees and expenses of the Custodian’s counsel, incurred in responding to such request, order or requirement.

S ECTION  11.     F UND S I NDEPENDENT A CCOUNTANTS ; R EPORTS .

S ECTION  11.1     O PINIONS . The Custodian shall take all reasonable action, as the Trustee may from time to time request, to obtain from year to year favorable opinions from the Fund’s independent accountants with respect to its activities hereunder in connection with the preparation of the Fund’s Form S-6, as applicable, and Form N-SAR or other annual reports to the SEC and with respect to any other requirements thereof.

S ECTION  11.2     R EPORTS . Upon reasonable request of the Trustee, the Custodian shall provide the Trustee with a copy of the Custodian’s Service Organizational Control (SOC) 1 reports prepared in accordance with the requirements of AT section 801, Reporting on Controls at a Service Organization (formerly Statement on Standards for Attestation Engagements (SSAE) No. 16). The Custodian shall use commercially reasonable efforts to provide the Fund with such other reports as the Trustee may reasonably request or otherwise reasonably require to fulfill its duties under Rule 38a-1 of the 1940 Act or similar legal and regulatory requirements.

S ECTION  12.     C USTODIAN S S TANDARD OF C ARE ; E XCULPATION .

12.1     S TANDARD OF C ARE ; L IABILITY . The Custodian shall act in good faith and exercise the reasonable level of skill, care and diligence expected of a professional provider of custody services in carrying out its duties and obligations under this Agreement (the “Standard of Care”), provided, however, that the Custodian shall not be in breach of any obligation under this Agreement and shall have no liability to Trustee or the Fund for any Losses except to the extent that such breach or Losses are caused by or result from the Custodian’s (or its employees’ or agents’) breach of the Standard of Care, intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement.

 

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12.2     R ELIANCE ON P ROPER I NSTRUCTIONS . The Custodian shall be entitled conclusively to rely and act upon Proper Instructions until the Custodian has received notice of any change from the Fund and has had a reasonable time to act thereon. The Custodian may act on a Proper Instruction if it reasonably believes that it contains sufficient information and may refrain from acting on any Proper Instructions until such time that it has determined, in its sole discretion, that is has received any required clarification or authentication of Proper Instructions. In the event the Custodian decides to refrain from acting on any Proper Instructions it shall promptly notify the Fund and request any additional clarification or authentication that it reasonably requires. The Custodian may rely upon and shall be protected in acting upon any Proper Instruction or any other instruction, notice, request, consent, certificate or other instrument or paper believed by it in good faith to be genuine and to have been properly executed by or on behalf of the Fund.

12.3     O THER R ELIANCE . The Custodian is authorized and instructed to rely upon the information that the Custodian receives from the Fund or any third party on behalf of the Fund. The Custodian shall have no responsibility to review, confirm or otherwise assume any duty with respect to the accuracy or completeness of any information supplied to it by or on behalf of the Fund. The Custodian shall have no liability in respect of any Losses incurred or sustained by the Fund arising from the performance of the Custodian’s duties hereunder in reliance upon records that were maintained for the Fund by any individual or organization, other than the Custodian, prior to the Custodian’s appointment as custodian hereunder.

12.4     F ORCE M AJEURE AND T HIRD P ARTY A CTIONS . The Custodian shall be without responsibility or liability to the Fund for: (a) events or circumstances beyond the reasonable control of the Custodian, including, without limitation, the interruption, suspension or restriction of trading on or the closure of any currency or securities market or system, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, work stoppages, natural disasters, acts of war, revolution, riots or terrorism or other similar force majeure events or acts; (b) errors by the Fund, the Trustee or any other duly authorized person in their instructions to the Custodian; (c) the insolvency of or acts or omissions by a U.S. Securities System or domestic sub-custodian designated pursuant to Section 2.2; (d) the failure of the Fund, the Trustee or any duly authorized individual or organization to adhere to the Custodian’s operational policies and procedures; (e) any delay or failure of any broker, agent, securities intermediary or other intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodian’s sub-custodian or agent securities or other financial assets purchased or in the remittance or payment made in connection with securities or other financial assets sold; (f) any delay or failure of any organization in charge of registering or transferring securities or other financial assets in the name of the Custodian, the Fund, the Custodian’s sub-custodians, nominees or agents including non-receipt of bonus, dividends and rights and other accretions or benefits; (g) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security, other financial asset or U.S. Securities System; and (h) the effect of any provision of any law or regulation or order of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction.

 

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12.5     I NDIRECT /S PECIAL /C ONSEQUENTIAL D AMAGES . Subject to the last sentence of this paragraph, and notwithstanding any other provision of this Agreement to the contrary, in no event shall the Trustee, the Fund or the Custodian be liable for any special, indirect, incidental, punitive, consequential, exemplary or enhanced damages of any kind or nature whatsoever (including loss of profit, goodwill, reputation, business opportunity or anticipated savings) arising under this Agreement or under law or otherwise in connection with or in any way related to this Agreement or the subject matter hereof (including the provision of the services, the performance, non-performance or breach of any obligation or duty owed by a party), whether or not such party (including each party’s relevant affiliates) has been advised of, or otherwise might or should have anticipated, the possibility or likelihood of such damages. The limitations of liability set forth in this Section 14.7 shall apply regardless of the form or type of action in which a claim is brought or under which it is made, whether in contract, tort (including negligence of any kind), warranty, strict liability, indemnity or any other legal or equitable grounds, and shall survive failure of an exclusive remedy. The foregoing limitations shall not apply with respect to any damages or claims arising out of or relating to the intentional breach, fraud or willful misconduct of any party hereto or where such limitation is otherwise prohibited by applicable law.

Notwithstanding the foregoing, the Trustee and the Custodian acknowledge and agree that the following categories of damages are deemed direct Losses for purposes of this Agreement, to the extent resulting from a breach by the Custodian of the Standard of Care: (i) regulatory fines (excluding any fines related to a failure by the Fund to oversee or supervise); (ii) damages awarded to a third party by a court of competent jurisdiction pursuant to a final judgment (not subject to further appeal); (iii) settlements (subject to the consent of the Custodian, not to be unreasonably conditioned, delayed or withheld); (iv) the cost of notice mailings and credit reports relating to data breaches; and (v) remediation of lost data.

12.6     D ELIVERY OF P ROPERTY . The Custodian shall not be responsible for any securities or other assets of the Fund which are not received by the Custodian or which are delivered out in accordance with Proper Instructions. The Custodian shall not be responsible for the title, validity or genuineness of any securities or other assets or evidence of title thereto received by it or delivered by it pursuant to this Agreement.

12.7     N O I NVESTMENT A DVICE . The Custodian has no responsibility to monitor or oversee the investment activity undertaken by the Fund or the Trustee. The Custodian has no duty to ensure or to inquire whether the Trustee complies with any investment objectives or restrictions of the Fund or whether the Trustee complies with its legal obligations under applicable securities laws or other laws, including laws intended to protect the interests of investors. The Custodian shall neither assess nor take any responsibility or liability for the suitability or appropriateness of the investments made by the Fund or the Trustee on its behalf.

12.8     C OMMUNICATIONS . The Custodian shall not be liable for any untimely exercise of any tender, exchange or other right or power in connection with securities or other financial assets of the Fund at any time held by the Custodian unless (a) the Custodian is in actual possession of such securities or other financial assets, (b) the Custodian receives Proper Instructions with regard to the

 

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exercise of the right or power, and (c) both of the conditions referred to in the foregoing clauses (a) and (b) have been satisfied at least three business days prior to the date on which the Custodian is to take action to exercise the right or power.

12.9     R ESERVED .

12.10     T RADE C OUNTERPARTIES . The Fund’s receipt of securities or other financial assets from a counterparty in connection with any of its purchase transactions and its receipt of cash from a counterparty in connection with any sale or redemption of securities or other financial assets will be at the sole risk of the Fund, and the Custodian shall not be obligated to make demands on the Fund’s behalf if the Fund’s counterparty defaults. If the Fund’s counterparty fails to deliver securities, other financial assets or cash, the Custodian will, as its sole responsibility, notify the Trustee of the failure within a reasonable time after the Custodian became aware of the failure.

S ECTION  13.     C OMPENSATION ; S ECURITY I NTEREST ; I NDEMNIFICATION .

S ECTION . 13.1     C OMPENSATION . The Custodian shall be entitled to reasonable compensation for its services and expenses as agreed upon from time to time between the Trustee and the Custodian.

S ECTION  13.2     S ECURITY I NTEREST . If the Trustee on behalf of the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to security settlements, assumed settlements, and only to the extent that the Fund is permitted to enter into foreign exchange transactions, foreign exchange contracts), or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assesments, claims or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee’s own negligent action, negligent failure to act or willful misconduct, or if the Trustee fails to compensate the Custodian pursuant to Section 13.1 hereof, any property at any time held for the account of the Fund shall be security therefor and should the Trustee fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of the Fund’s assets to the extent necessary to obtain reimbursement.

S ECTION  13.3     I NDEMNIFICATION BY THE T RUSTEE . Subject to Section 12.5 and any other exculpatory provisions or liability limitations set forth in this Agreement, the Trustee agrees to indemnify and hold harmless the Custodian from and against any Losses incurred or sustained by the Custodian in connection with the performance of its duties under this Agreement, except, in each case, to the extent such Losses result from the Custodian’s (or its agents’) breach of the Standard of Care, intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement. If the Trustee instructs the Custodian to take any action with respect to securities or other financial assets, and the action involves the payment of money or may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund being liable therefor, the Trustee, as a prerequisite to the Custodian taking the action, shall provide to the Custodian at the Custodian’s request such further indemnification in an amount to be mutually agreed upon between the Trustee and Custodian if and when necessary. The indemnification obligations of this section shall survive termination of this Agreement.

 

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S ECTION  13.4     I NDEMNIFICATION BY THE C USTODIAN . Subject to Section 12.5 and any other exculpatory provisions or liability limitations set forth in this Agreement, the Custodian agrees to indemnify and hold harmless the Trustee on behalf of the Fund from and against any Losses incurred or sustained by the Fund as a result of a claim brought by a third party (a “Claim”), in each case, to the extent such Losses result from the Custodian’s (or its agents’) breach of the Standard of Care, intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement. The indemnification obligations of this section shall survive termination of this Agreement.

S ECTION  13.5     D UTY TO M ITIGATE . Each of the Trustee and the Custodian shall use reasonable efforts to mitigate any Losses in respect of which it claims or may be entitled to claim indemnification under this Agreement.

S ECTION  14.     E FFECTIVE P ERIOD AND T ERMINATION .

S ECTION  14.1     T ERM AND T ERMINATION . This Agreement shall remain in full force and effect for an initial term ending November 30, 2027 (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive one-year terms unless a written notice of non-renewal is delivered by the non-renewing party no later than ninety (90) days prior to the expiration of the initial term or any renewal term, as the case may be. A written notice of non-renewal may be given as to the Fund.

S ECTION  14.2     T ERMINATION . Either party may terminate this Agreement as to the Fund: (a) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either failed to cure, or failed to establish a remedial plan to cure that is reasonably acceptable to the non-breaching party, within 60 days’ written notice being given by the non-breaching party of the breach, or (b) in the event of the appointment of a conservator or receiver for the other party, the commencement by or against the other party of a bankruptcy or insolvency case or proceeding, or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction. With respect to the Custodian, the references to “other party” in clause (b) of this section is deemed to refer to the Fund.

S ECTION  14.3     P AYMENTS O WING TO THE C USTODIAN . Upon termination of this Agreement pursuant to Section 14.1 or 14.2 with respect to the Fund, the Trustee shall pay to the Custodian any compensation then due and shall reimburse the Custodian for its other fees, expenses and charges. In the event of: (a) the Trustee’s termination of this Agreement with respect to the Fund for any reason other than as set forth in Section 14.1 or 14.2 or (b) a transaction involving the Fund not in the ordinary course of business pursuant to which the Custodian is not retained to continue providing services hereunder to the Fund (or its respective successor), the Trustee shall pay to the Custodian any compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by the Custodian with respect to the Fund) and shall reimburse the Custodian for its other fees, expenses and charges. Upon receipt of such payment and reimbursement, the Custodian will deliver the Fund’s cash and its securities and other financial assets as set forth in Section 15.

 

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S ECTION  14.4     E XCLUSIONS . No payment will be required pursuant to clause (b) of Section 14.3 in the event of any transaction consisting of (a) the liquidation or dissolution of the Fund and distribution of the Fund’s assets as a result of the Trustee’s determination in its reasonable business judgment that the Fund is no longer viable, (b) a merger of the Fund into, or the consolidation of the Fund with, another organization or series, or (c) the sale by the Fund of all or substantially all of its assets to another organization or series and, in the case of a transaction referred to in the foregoing clause (b) or (c) the Custodian is retained to continue providing services to the Fund (or its respective successor) on substantially the same terms as this Agreement.

S ECTION  14.5     E FFECT OF T ERMINATION . Following termination with respect to the Fund, the Custodian shall have no further responsibility to forward information under Section 3.8. The provisions of Sections 5, 12, 13 and 15 of this Agreement shall survive termination of this Agreement.

S ECTION  14.6     T ERMINATION A SSISTANCE . Upon termination of this Agreement, for any reason or for no reason, the Custodian shall, upon request of the Trustee, for a period of not less than ninety (90) days from the effective date of termination, or for such longer period as may be reasonably requested by the Trustee, continue to perform the services and related obligations under the Agreement and/or any ancillary agreement on the then existing terms and conditions thereof, and cooperate with the Trustee in order to facilitate the orderly transition of the services to a successor custodian. Notwithstanding the foregoing, the Custodian and the Trustee may mutually agree to terminate the Transition Assistance with respect to some or all of the services before the expiry of the agreed period. “Transition Assistance” shall include the continued provision of the services, assistance with the development and implementation of a conversion plan, the provision of information in relation to the relevant services (excluding Confidential Information) and/or any other assistance reasonably requested by the the Trustee.

S ECTION  15.     S UCCESSOR C USTODIAN .

S ECTION  15.1     S UCCESSOR A PPOINTED . If a successor custodian shall be appointed for the Fund by the Trustee, the Custodian shall, upon termination of this Agreement and receipt of Proper Instructions, deliver to the successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all cash and all securities and other financial assets of the Fund then held by the Custodian hereunder and shall transfer to an account of the successor custodian all of the securities and other financial assets of the Fund held in a U.S. Securities System.

S ECTION  15.2     N O S UCCESSOR A PPOINTED . If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of Proper Instructions, deliver at the office of the Custodian and transfer the cash and the securities and other financial assets of the Fund in accordance with the Proper Instructions.

S ECTION  15.3     N O S UCCESSOR A PPOINTED AND N O P ROPER I NSTRUCTIONS . If no successor custodian has been appointed and no Proper Instructions have been delivered to the Custodian on or

 

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before the termination of this Agreement, then the Custodian shall have the right to deliver to a bank or trust company, which is a “bank” as defined in the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of its own selection, all cash and all securities and other financial assets of the Fund then held by the Custodian hereunder, and to transfer to an account of the bank or trust company all of the securities and other financial assets of the Fund held in any U.S. Securities System. The transfer will be on such terms as are contained in this Agreement or as the Custodian may otherwise reasonably negotiate with the bank or trust company. Any compensation payable to the bank or trust company, and any cost or expense incurred by the Custodian, in connection with the transfer shall be for the account of the Fund.

S ECTION  15.4     R EMAINING P ROPERTY . If any cash or any securities or other financial assets of the Fund held by the Custodian hereunder remain held by the Custodian after the termination of this Agreement owing to the failure of the Trustee to provide Proper Instructions, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian holds the cash or the securities or other financial assets (the existing agreed-to compensation at the time of termination shall be one indicator of what is considered fair compensation). The provisions of this Agreement relating to the duties, exculpation and indemnification of the Custodian shall apply in favor of the Custodian during such period.

S ECTION  15.5     R ESERVES . Notwithstanding the foregoing provisions of this Section 15, the Custodian may retain cash or securities or other financial assets of the Fund as a reserve reasonably established by the Custodian to secure the payment or performance of any obligations of the Trustee secured by a security interest or right of recoupment or setoff in favor of the Custodian.

S ECTION  16.     R EMOTE A CCESS S ERVICES A DDENDUM . The Custodian and the Trustee agree to be bound by the terms of the Remote Access Services Addendum hereto.

S ECTION  17.     R ESERVED .

S ECTION  18.     G ENERAL .

S ECTION  18.1     G OVERNING L AW . Any and all matters in dispute between the parties hereto, whether arising from or relating to this Agreement, shall be governed by and construed in accordance with laws of the Commonwealth of Massachusetts, without giving effect to any conflict of laws rules. Likewise, the law applicable to all issues in Article 2(1) of the Hague Convention on the Law Applicable to Certain Rights in respect of Securities Held with an Intermediary is the law in force in the Commonwealth of Massachusetts.

S ECTION  18.2    [R ESERVED ]

S ECTION  18.3     P RIOR A GREEMENTS ; A MENDMENTS . This Agreement supersedes all prior agreements between the Trustee or the Fund and the Custodian relating to the custody of the Fund’s assets. This Agreement may be amended at any time in writing by mutual agreement of the parties hereto.

 

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S ECTION  18.4 A SSIGNMENT ; D ELEGATION . This Agreement may not be assigned by (a) the Trustee without the prior written consent of the Custodian or (b) the Custodian without the written consent of the Trustee, except that the Custodian may assign this Agreement to a successor of all or a substantial portion of its business, or to an affiliate of the Custodian without the consent of the Trustee. The Custodian shall retain the right to employ agents, subcontractors, consultants or other third parties, including, without limitation, affiliates (each, a “ Delegate ” and collectively, the “ Delegates ”) to provide or assist it in the provision of any part of the non-custodial services described herein or the discharge of any other non-custodial obligations or duties under this Agreement without the consent or approval of the Fund. Except as otherwise provided below, the Custodian shall be responsible for the acts and omissions of any such Delegate so employed as if the Custodian had committed such acts and omissions itself. The Custodian shall be responsible for the compensation of its Delegates. Notwithstanding the foregoing, in no event shall the term Delegate include sub-custodians and U.S. Securities Systems, and the Custodian shall have no liability for their acts or omissions except as otherwise expressly provided elsewhere in this Agreement. The liability of the Custodian for the acts and omissions of sub-custodians and U.S. Securities Systems shall be as set forth in Section 12 above.

S ECTION 18.5 I NTERPRETIVE AND A DDITIONAL P ROVISIONS . In connection with the operation of this Agreement, the Custodian and the Trustee may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties, provided that no such interpretive or additional provisions shall contravene any applicable laws or regulations or any provision of the Fund’s organic record and Prospectus. No interpretive or additional provisions made as provided in the preceding sentence shall be an amendment of this Agreement.

S ECTION  18.6 [R ESERVED ]

S ECTION  18.7 T HE P ARTIES ; R EPRESENTATIONS AND W ARRANTIES . Except as expressly otherwise stated, any reference in this Agreement to “the parties” shall mean the Custodian and the Trustee.

18.7.1     T RUSTEE R EPRESENTATIONS AND W ARRANTIES . The Trustee hereby represents and warrants that (a) it is duly organized and validly existing in good standing in its jurisdiction of organization; (b) it has the requisite power and authority under applicable law and its organic record to enter into and perform this Agreement; (c) all requisite proceedings have been taken to authorize it to enter into and perform this Agreement; (d) no legal or administrative proceedings have been instituted or threatened which would materially impair the Trustee’s ability to perform its duties and obligations under this Agreement; and (e) its entering into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Trustee or any law or regulation applicable to it.

 

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18.7.2     C USTODIAN R EPRESENTATIONS AND W ARRANTIES . The Custodian hereby represents and warrants that (a) it is a trust company, duly organized and validly existing under the laws of the Commonwealth of Massachusetts; (b) it has the requisite power and authority to carry on its business in the Commonwealth of Massachusetts; (c) all requisite proceedings have been taken to authorize it to enter into and perform this Agreement; (d) no legal or administrative proceedings have been instituted or threatened which would materially impair the Custodian’s ability to perform its duties and obligations under this Agreement; and (e) its entering into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Custodian or any law or regulation applicable to it.

S ECTION  18.8 N OTICES . Any notice, instruction or other communication required to be given hereunder will, unless otherwise provided in this Agreement, be in writing and may be sent by hand, or by facsimile transmission, or overnight delivery by any recognized delivery service, to the parties at the following addresses or such other addresses as may be notified by any party from time to time.

 

To the Fund or the Trustee:    S TATE S TREET B ANK AND T RUST C OMPANY
   One Lincoln Street
   Boston, MA 02111
   Attn: President
   With a copy to:
   S TATE S TREET B ANK AND T RUST C OMPANY
   Legal Department
   One Lincoln Street
   Boston, MA 02111
   Attn: President
To the Custodian:    S TATE S TREET B ANK AND T RUST C OMPANY
   US Investment Services
   One Heritage Drive
   Quincy, MA 02171
   Attention: Nancy M. Stokes, Senior Vice President
   Telephone: 617-664-9526
   E-mail: nmstokes@statestreet.com
   with a copy to:
   S TATE S TREET B ANK AND T RUST C OMPANY
   Legal Division – Global Services Americas
   One Lincoln Street
   Boston, MA 02111
   Attention: Senior Vice President and Senior Managing Counsel

 

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S ECTION  18.9     C OUNTERPARTS . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement . Counterparts may be executed in either original or electronically transmitted form (e.g., faxes or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received in electronically transmitted form.

S ECTION  18.10     S EVERABILITY ; N O W AIVER . If any provision of this Agreement shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired. The failure of a party hereto to insist upon strict adherence to any term of this Agreement on any occasion or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any the term, right or remedy or a waiver of any other rights or remedies, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy.

S ECTION  18.11     C ONFIDENTIALITY . All information provided under this Agreement by a party (the “Disclosing Party”) to the other party (the “Receiving Party”) regarding the Disclosing Party’s business and operations shall be treated as confidential. Subject to Section 18.12 below, all confidential information provided under this Agreement by Disclosing Party shall be used, including disclosure to third parties, by the Receiving Party, or its agents or service providers, solely for the purpose of performing or receiving the services and discharging the Receiving Party’s other obligations under the Agreement or managing the business of the Receiving Party and its affiliates, including financial and operational management and reporting, risk management, legal and regulatory compliance and client service management. The foregoing shall not be applicable to any information (a) that is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, (b) that is independently derived by the Receiving Party without the use of any information provided by the Disclosing Party in connection with this Agreement, (c) that is disclosed to comply with any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, (d) that is disclosed as required by operation of law or regulation or as required to comply with the requirements of any market infrastructure that the Disclosing Party or its agents direct the Custodian or its affiliates to employ (or which is required in connection with the holding or settlement of instruments included in the assets subject to this Agreement, or (e) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld .

S ECTION  18.12     U SE OF D ATA .

(a)    In connection with the provision of the services and the discharge of its other obligations under this Agreement, the Custodian (which term for purposes of this Section 18.12 includes each of its parent company, branches and affiliates (“ Affiliates ”)) may collect and store information regarding the Fund and share such information with its Affiliates, agents and service providers in order and to the extent reasonably necessary (i) to carry out the provision of services contemplated under this Agreement and other agreements between the Trustee and the Custodian or any of its Affiliates and (ii) to carry out management of its businesses, including, but not limited to, financial and operational management and reporting, risk management, legal and regulatory compliance and client service management.

 

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(b)    Subject to paragraph (c) below, the Custodian and/or its Affiliates (except those Affiliates or business divisions principally engaged in the business of asset management) may use any data or other information (“ Data ”) obtained by such entities in the performance of their services under this Agreement or any other agreement between the Trustee and the Custodian or one of its Affiliates, including Data regarding transactions and portfolio holdings relating to the Fund, and publish, sell, distribute or otherwise commercialize the Data; provided that, unless the Trustee otherwise consents, Data is combined or aggregated with information relating to (i) other customers of the Custodian and/or its Affiliates or (ii) information derived from other sources, in each case such that any published information will be displayed in a manner designed to prevent attribution to or identification of such Data with the Fund. The Trustee agrees that Custodian and/or its Affiliates may seek to profit and realize economic benefit from the commercialization and use of the Data, that such benefit will constitute part of the Custodian’s compensation for services under this Agreement or such other agreement, and the Custodian and/or its Affiliates shall be entitled to retain and not be required to disclose the amount of such economic benefit and profit to the Fund.

(c)    Except as expressly contemplated by this Agreement, nothing in this Section 18.12 shall limit the confidentiality and data-protection obligations of the Custodian and its Affiliates under this Agreement and applicable law. The Custodian shall cause any Affiliate, agent or service provider to which it has disclosed Data pursuant to this Section 18.12 to comply at all times with confidentiality and data-protection obligations as if it were a party to this Agreement.

S ECTION  18.13     D ATA P RIVACY . The Custodian will implement and maintain a written information security program that contains appropriate security measures to safeguard the personal information of the Fund’s shareholders, employees, directors and officers that the Custodian receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. The term, “ personal information ”, as used in this Section, means (a) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (i) Social Security number, (ii) driver’s license number, (iii) state identification card number, (iv) debit or credit card number, (v) financial account number or (vi) personal identification number or password that would permit access to a person’s account, or (b) any combination of any of the foregoing that would allow a person to log onto or access an individual’s account. The term does not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

S ECTION  18.14     R EPRODUCTION OF D OCUMENTS . This Agreement and all schedules, addenda, exhibits, appendices, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

 

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S ECTION  18.15     R EGULATION GG . The Trustee represents and warrants that neither it nor the Fund engages in an “Internet gambling business,” as such term is defined in Section 233.2(r) of Federal Reserve Regulation GG (12 CFR 233) and covenants that neither it or the Fund shall engage in an Internet gambling business. In accordance with Regulation GG, the Trustee and the Fund are hereby notified that “restricted transactions,” as such term is defined in Section 233.2(y) of Regulation GG, are prohibited in any dealings with the Custodian pursuant to this Agreement or otherwise between or among any party hereto.

S ECTION  18.16     S HAREHOLDER C OMMUNICATIONS E LECTION . SEC Rule 14b-2 requires banks that hold securities, as that term is used in federal securities laws, for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, as may be applicable, the Custodian needs the Trustee on behalf of the Fund to indicate whether it authorizes the Custodian to provide such Fund’s name, address, and share position to requesting companies whose securities the Fund owns. If the Trustee, on behalf of the Fund, tells the Custodian “no,” the Custodian will not provide this information to requesting companies. If the Trustee, on behalf of the Fund, tells the Custodian “yes” or does not check either “yes” or “no” below, the Custodian is required by the rule, as applicable, to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund’s protection, the Rule, as applicable, prohibits the requesting company from using the Fund’s name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below.

 

YES ☐    The Custodian is authorized to release the Fund’s name, address, and share positions.

 

NO ☒    The Custodian is not authorized to release the Fund’s name, address, and share positions.

 

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S IGNATURE P AGE

I N W ITNESS W HEREOF , each of the parties has caused this Agreement to be executed in its name and behalf by its duly authorized representative under seal as of the date first above-written.

 

STATE STREET GLOBAL ADVISORS TRUST COMPANY
By:  

 

  Name: James E. Ross
  Title:   Senior Representative
STATE STREET BANK AND TRUST COMPANY
By:  

 

Name:   Andrew Erickson
Title:   Executive Vice President

 

Custodian Agreement

Execution Copy

ADMINISTRATION AGREEMENT

This Administration Agreement (“Agreement”) dated and effective as of November 30, 2017, is by and between State Street Bank and Trust Company, a Massachusetts trust company (the “ Administrator ”), and State Street Global Advisors Trust Company, a Massachusetts limited purpose trust company (the “ Trustee ”).

WHEREAS, the SPDR ® Dow Jones Industrial Average SM ETF Trust, a New York trust (the “ Trust ”), is a unit investment trust and is registered with the U.S. Securities and Exchange Commission (“SEC”) by means of a registration statement (“Registration Statement”) under the Securities Act of 1933, as amended (“1933 Act”), and the Investment Company Act of 1940, as amended (the “1940 Act”);

WHEREAS, the Trustee furnishes, among other services, certain services to the Trust; and

WHEREAS, the Trustee desires to retain the Administrator to furnish certain administrative services to the Trust, and the Administrator is willing to furnish such services, on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows:

1.    A PPOINTMENT OF A DMINISTRATOR

The Trustee hereby appoints the Administrator to act as administrator to the Trust for purposes of providing certain administrative services for the period and on the terms set forth in this Agreement. The Administrator accepts such appointment and agrees to render the services stated herein.

2.    D ELIVERY OF D OCUMENTS

The Trustee will promptly deliver to the Administrator copies of each of the following documents and all future amendments and supplements, if any:

a.    The Trust’s Amended and Restated Standard Terms and Conditions of Trust (the “ Trust Agreement ”) and Trust Indenture and Agreement and any amendments thereto (“ Governing Documents ”);

 

  b. The Trust’s currently effective Registration Statement under the 1933 Act and the 1940 Act and each Prospectus and all amendments and supplements thereto as in effect from time to time;

 

  c.

Copies of the resolutions of the Senior Representatives of State Street Global Advisors Trust Company, as Trustee of the Trust (the “ Senior Representatives ”)


  certified by an officer of the Trustee authorizing (1) the Trustee to enter into this Agreement and (2) certain individuals on behalf of the Trust to (a) give instructions to the Administrator pursuant to this Agreement and (b) sign checks and pay expenses; and

 

  d. Such other certificates, documents or opinions which the Administrator may, in its reasonable discretion, deem necessary or appropriate in the proper performance of its duties.

3.    R EPRESENTATIONS AND W ARRANTIES OF THE A DMINISTRATOR

The Administrator represents and warrants to the Trustee that:

 

  a. It is a Massachusetts trust company, duly organized and existing under the laws of The Commonwealth of Massachusetts;

 

  b. It has the requisite power and authority to carry on its business in The Commonwealth of Massachusetts;

 

  c. All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement;

 

  d. No legal or administrative proceedings have been instituted or threatened which would materially impair the Administrator’s ability to perform its duties and obligations under this Agreement;

 

  e. Its entrance into this Agreement shall not cause a material breach or be in material conflict with any other agreement or obligation of the Administrator or any law or regulation applicable to it; and

 

  f. The Administrator has duly adopted written policies and procedures that are reasonably designed to prevent violation of the Federal Securities Laws (as defined in Rule 38a-1 under the 1940 Act) with respect to the services provided hereunder in respect of the Trust.

4.    R EPRESENTATIONS AND W ARRANTIES OF THE T RUSTEE

The Trustee represents and warrants to the Administrator that:

 

  a. It is a common law trust, duly organized, existing and in good standing under the laws of its state of formation;

 

  b. It has the requisite power and authority under applicable laws and by its organizational documents to enter into and perform this Agreement;

 

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  c. All requisite proceedings have been taken to authorize it to enter into and perform this Agreement;

 

  d. No legal or administrative proceedings have been instituted or threatened which would impair the Trustee’s ability to perform its duties and obligations under this Agreement;

 

  e. Its entrance into this Agreement will not cause a material breach or be in material conflict with any other agreement or obligation of the Trustee or any law or regulation applicable to it;

 

  f. Where information provided by the Trustee or the Trust’s Investors includes information about an identifiable individual (“ Personal Information ”), the Trustee represents and warrants that it has obtained all consents and approvals, as required by all applicable laws, regulations, by-laws and ordinances that regulate the collection, processing, use or disclosure of Personal Information, necessary to disclose such Personal Information to the Administrator, and as required for the Administrator to use and disclose such Personal Information in connection with the performance of the services hereunder. The Trustee acknowledges that the Administrator may perform any of the services, and may use and disclose Personal Information outside of the jurisdiction in which it was initially collected by the Trust, including the United States and that information relating to the Trust, including Personal Information may be accessed by national security authorities, law enforcement and courts. The Administrator shall be kept indemnified by the Trustee and be without liability to the Trustee or the Trust for any action taken or omitted by it in reliance upon this representation and warranty, including without limitation, any liability or costs in connection with claims or complaints for failure to comply with any applicable law that regulates the collection, processing, use or disclosure of Personal Information; and

 

  g. With respect to the Trust, the Administrator is not responsible for ensuring that:

 

  (1) The Trust is a unit investment trust duly organized, existing and in good standing under the laws of the state of its formation;

 

  (2) The Trust is a unit investment trust properly registered under the 1940 Act;

 

  (3) The registration statement under the 1933 Act and 1940 Act has been filed by the Trust and is effective and will remain in effect during the term of this Agreement;

 

  (4) As of the effective date of this Agreement, all necessary filings under the securities laws of the states in which the Trust offers or sells its shares have been made; and

 

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  (5) As of the close of business on the date of this Agreement, the Trust is authorized to issue shares of beneficial interest.

 

5. A DMINISTRATION S ERVICES

The Administrator shall provide the services as listed on Schedule B, subject to the control, supervision, authorization and direction of the Trustee and, in each case where appropriate, the review and comment by the Trust’s independent accountants and legal counsel and in accordance with procedures which may be established from time to time between the Trustee and the Administrator.

The Administrator shall perform such other services for the Trustee that are mutually agreed to by the parties from time to time, for which the Trustee will pay such fees as may be mutually agreed upon between the Trustee and the Administrator, including the Administrator’s reasonable out-of-pocket expenses. The provision of such services shall be subject to the terms and conditions of this Agreement.

The Administrator shall provide the office facilities and the personnel determined by it to perform the services contemplated herein.

 

6. C OMPENSATION OF A DMINISTRATOR ; E XPENSE R EIMBURSEMENT ; T RUST E XPENSES

The Administrator shall be entitled to reasonable compensation for its services and expenses, as agreed upon from time to time in writing between the Trustee and the Administrator.

The Trustee agrees promptly to reimburse the Administrator for any equipment and supplies specially ordered by or for the Trustee through the Administrator and for any other expenses not contemplated by this Agreement that the Administrator may incur on the Trust’s behalf at the Trustee’s request or with the Trustee’s consent.

The Trust will bear all expenses that are incurred in its operation and not specifically assumed by the Administrator. For the avoidance of doubt, Trust expenses not assumed by the Administrator include, but are not limited to: organizational expenses; cost of services of independent accountants and outside legal and tax counsel (including such counsel’s review of the Registration Statement, Form N-30D, Form N-SAR-U, proxy materials, federal and state tax qualification as a regulated investment company and other notices, registrations, reports, filings and materials prepared by the Administrator under this Agreement); cost of any services contracted for by the Trust directly from parties other than the Administrator; cost of trading operations and brokerage fees, commissions and transfer taxes in connection with the purchase and sale of securities for the Trust; trustee fees; taxes, insurance premiums and other fees and expenses applicable to its operation; costs incidental to any meetings of shareholders including, but not limited to, legal and accounting fees, proxy filing fees and the costs of preparation (e.g., typesetting, XBRL-tagging, page changes and all other print vendor and EDGAR charges, collectively referred to herein as “Preparation”), printing, distribution and mailing of any proxy

 

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materials; costs incidental to Senior Representatives meetings, including fees and expenses of Senior Representatives , if any; the salary and expenses of any officer, director\trustee or employee of the Trustee; costs of Preparation, printing, distribution and mailing, as applicable, of the Trust’s Registration Statements and any amendments and supplements thereto and shareholder reports; cost of Preparation and filing of the Trust’s tax returns, Form S-6, Form N-30 D and Form N-SAR-U, and all notices, registrations and amendments associated with applicable federal and state tax and securities laws; all applicable registration fees and filing fees required under federal and state securities laws; the cost of fidelity bond and D&O/E&O liability insurance; and the cost of independent pricing services used in computing the Trust’s net asset value.

7.    I NSTRUCTIONS AND A DVICE

At any time, the Administrator may apply to any officer of the Trustee or his or her designee for instructions or the independent accountants and legal counsel for the Trust, with respect to any matter arising in connection with the services to be performed by the Administrator under this Agreement. The Administrator shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Trust) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice.

The Administrator shall not be liable, and shall be indemnified by the Trustee, for any action taken or omitted by it in good faith in reliance upon any such instructions or advice or upon any paper or document believed by it to be genuine and to have been signed by the proper person or persons. The Administrator shall not be held to have notice of any change of authority of any person until receipt of written notice thereof from the Trustee. Nothing in this section shall be construed as imposing upon the Administrator any obligation to seek such instructions or advice, or to act in accordance with such advice when received.

8.    L IMITATION OF L IABILITY AND I NDEMNIFICATION

The Administrator shall be responsible for the performance only of such duties as are set forth in this Agreement and, except as otherwise provided under Section 14, shall have no responsibility for the actions or activities of any other party, including other service providers. The Administrator shall have no liability in respect of any direct losses, damages, liabilities, claims, costs or out-of-pocket expense (including reasonable attorney’s fees) (“Losses”) or expense suffered by the Trust insofar as such Loss arises from the performance of the Administrator’s duties hereunder in reliance upon records that were maintained for the Trust by entities other than the Administrator prior to the Administrator’s appointment as administrator for the Trust. The Administrator shall have no liability for any error of judgment or mistake of law or for any Loss or damage resulting from the performance or nonperformance of its duties hereunder unless solely caused by or resulting from the gross negligence or willful misconduct of the Administrator, its officers or employees. Neither the Trust, the Trustee nor the Administrator shall be liable for any special, indirect, incidental, punitive, consequential, exemplary or enhanced damages of any kind or nature whatsoever (including loss of profits, goodwill, reputation, business opportunity, anticipated savings or attorneys’ fees) arising under any provision of this Agreement or for any such damages arising out of any act or failure to act hereunder, each of which is hereby excluded by agreement of the parties regardless of whether such damages were foreseeable or whether either

 

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party or any entity had been advised of, or otherwise might or should have anticipated, the possibility or likelihood of such damages. In any event, the Administrator’s cumulative liability for each calendar year (a “Liability Period”) with respect to the Trust under this Agreement regardless of the form of action or legal theory shall be limited to its total annual compensation earned and fees payable hereunder during the preceding Compensation Period, as defined herein, for any liability or Loss suffered by the Trust including, but not limited to, any liability relating to qualification of the Trust as a regulated investment company or any liability relating to the Trust’s compliance with any federal or state tax or securities statute, regulation or ruling during such Liability Period. “Compensation Period” shall mean the calendar year ending immediately prior to each Liability Period in which the event(s) giving rise to the Administrator’s liability for that period have occurred. Notwithstanding the foregoing, the Compensation Period for purposes of calculating the annual cumulative liability of the Administrator for the Liability Period commencing on the date of this Agreement and terminating on December 31, 2017 shall be the date of this Agreement through December 31, 2017, calculated on an annualized basis, and the Compensation Period for the Liability Period commencing January 1, 2018 and terminating on December 31, 2018 shall be the date of this Agreement through December 31, 2017, calculated on an annualized basis.

The Administrator shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action or communication disruption.

The limitations of liability set forth in this Section 8 shall apply regardless of the form or type of action in which a claim is brought or under which it is made, whether in contract, tort (including negligence of any kind), warranty, strict liability, indemnity or any other legal or equitable grounds, and shall survive failure of an exclusive remedy. The foregoing limitations shall not apply with respect to any damages or claims arising out of or relating to the intentional breach, fraud or willful misconduct of any party hereto or where such limitation is otherwise prohibited by applicable law.

Notwithstanding the foregoing, the Administrator and the Trustee acknowledge and agree that the following categories of damages are deemed direct Losses for purposes of this Agreement, to the extent resulting from a breach by the Administrator of its duties hereunder: (i) regulatory fines (excluding any fines related to a failure by the Trustee to oversee or supervise); (ii) damages awarded to a third party by a court of competent jurisdiction pursuant to a final judgment (not subject to further appeal); (iii) settlements (subject to the consent of the Administrator, not to be unreasonably conditioned, delayed or withheld); (iv) the cost of notice mailings and credit reports relating to data breaches; and (v) remediation of lost data.

Subject to any exculpatory provisions or liability limitations set forth in this Agreement, the Trustee agrees to indemnify and hold harmless the Administrator from and against any Losses incurred or sustained by the Administrator in connection with the performance of its duties under this Agreement, except, in each case, to the extent such Losses result from the Administrator’s (or its agents’) intentional breach, fraud or willful misconduct in the discharge of its duties under this

 

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Agreement. If the Trustee instructs the Administrator to take any action with respect to securities or other financial assets, and the action involves the payment of money or may, in the good faith opinion of the Administrator, result in the Administrator or its nominee assigned to the Trustee being liable therefor, the Trustee, as a prerequisite to the Administrator taking the action, shall provide to the Administrator at the Administrator’s reasonable request such further indemnification in an amount to be mutually agreed upon between the Trustee and Administrator if and when necessary.

Subject to any exculpatory provisions or liability limitations set forth in this Agreement, the Administrator agrees to indemnify and hold harmless the Trustee from and against any Losses incurred or sustained by the Trustee as a result of a claim brought by a third party (a “Claim”), in each case, to the extent such Losses result from the Administrator’s (or its agents’) intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement.

The limitation of liability and indemnification contained herein shall survive the termination of this Agreement. Each of the Trustee and the Administrator shall use reasonable efforts to mitigate any Losses in respect of which it claims or may be entitled to claim indemnification under this Agreement.

9.    C ONFIDENTIALITY

All information provided under this Agreement by a party (the “Disclosing Party”) to the other party (the “Receiving Party”) regarding the Disclosing Party’s business and operations shall be treated as confidential. Subject to Section 10 below, all confidential information provided under this Agreement by Disclosing Party shall be used, including disclosure to third parties, by the Receiving Party, or its agents or service providers, solely for the purpose of performing or receiving the services and discharging the Receiving Party’s other obligations under the Agreement or managing the business of the Receiving Party and its Affiliates (as defined in Section 10 below), including financial and operational management and reporting, risk management, legal and regulatory compliance and client service management. The foregoing shall not be applicable to any information (a) that is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, (b) that is independently derived by the Receiving Party without the use of any information provided by the Disclosing Party in connection with this Agreement, (c) that is disclosed to comply with any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, (d) that is disclosed as required by operation of law or regulation or as required to comply with the requirements of any market infrastructure that the Disclosing Party or its agents direct the Administrator or its Affiliates to employ (or which is required in connection with the holding or settlement of instruments included in the assets subject to this Agreement), or (e) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld.

 

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10.    U SE OF D ATA

(a)    In connection with the provision of the services and the discharge of its other obligations under this Agreement, the Administrator (which term for purposes of this Section 10 includes each of its parent company, branches and affiliates (“Affiliates”)) may collect and store information regarding the Trust and share such information with its Affiliates, agents and service providers in order and to the extent reasonably necessary (i) to carry out the provision of services contemplated under this Agreement and other agreements between the Trustee and the Administrator or any of its Affiliates and (ii) to carry out management of its businesses, including, but not limited to, financial and operational management and reporting, risk management, legal and regulatory compliance and client service management.

(b)    Subject to paragraph (c) below, the Administrator and/or its Affiliates (except those Affiliates or business divisions principally engaged in the business of asset management) may use any data or other information (“Data”) obtained by such entities in the performance of their services under this Agreement or any other agreement between the Trustee and the Administrator or one of its Affiliates, including Data regarding transactions and portfolio holdings relating to the Trust, and publish, sell, distribute or otherwise commercialize the Data; provided that, unless the Trustee otherwise consents, Data is combined or aggregated with information relating to (i) other customers of the Administrator and/or its Affiliates or (ii) information derived from other sources, in each case such that any published information will be displayed in a manner designed to prevent attribution to or identification of such Data with the Trust. The Trustee agrees that Administrator and/or its Affiliates may seek to profit and realize economic benefit from the commercialization and use of the Data, that such benefit will constitute part of the Administrator’s compensation for services under this Agreement or such other agreement, and the Administrator and/or its Affiliates shall be entitled to retain and not be required to disclose the amount of such economic benefit and profit to the Trust.

(c)    Except as expressly contemplated by this Agreement, nothing in this Section 10 shall limit the confidentiality and data-protection obligations of the Administrator and its Affiliates under this Agreement and applicable law. The Administrator shall cause any Affiliate, agent or service provider to which it has disclosed Data pursuant to this Section 10 to comply at all times with confidentiality and data-protection obligations as if it were a party to this Agreement.

11.    C OMPLIANCE WITH G OVERNMENTAL R ULES AND R EGULATIONS ; R ECORDS

The Trustee on behalf of the Trust assumes full responsibility for the Trust complying with all securities, tax, commodities and other laws, rules and regulations applicable to the Trust.

In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrator agrees that all records which it maintains for the Trust shall at all times remain the property of the Trustee, shall be readily accessible during normal business hours, and shall be promptly surrendered upon the termination of the Agreement or otherwise on written request except as otherwise provided in Section 13. The Administrator further agrees that all records that it maintains for the Trustee on behalf of the Trust pursuant to Rule 31a-1 under the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under the 1940 Act unless any such records are

 

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earlier surrendered as provided above. Records may be surrendered in either written or machine-readable form, at the option of the Administrator. In the event that the Administrator is requested or authorized by the Trustee, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Trustee or the Trust by state or federal regulatory agencies, to produce the records of the Trustee or the Trust or the Administrator’s personnel as witnesses or deponents, the Trustee agrees to pay the Administrator for the Administrator’s time and expenses, as well as the fees and expenses of the Administrator’s counsel incurred in such production.

12.    S ERVICES N OT E XCLUSIVE

The services of the Administrator are not to be deemed exclusive, and the Administrator shall be free to render similar services to others. The Administrator shall be deemed to be an independent contractor and shall, unless otherwise expressly provided herein or authorized by the Trustee or the Trust from time to time, have no authority to act or represent the Trustee or the Trust in any way or otherwise be deemed an agent of the Trustee or the Trust.

13.    E FFECTIVE P ERIOD AND T ERMINATION

This Agreement shall remain in full force and effect for an initial term ending November 30, 2027 (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms (each, a “Renewal Term”) unless a written notice of non-renewal is delivered by the non-renewing party no later than ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be. During the Initial Term and thereafter, either party may terminate this Agreement: (i) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either (a) failed to cure or (b) failed to establish a remedial plan to cure that is reasonably acceptable, within 60 days’ written notice of such breach, or (ii) in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction. Upon termination of this Agreement pursuant to this paragraph with respect to the Trust, the Trustee shall pay Administrator its compensation due and shall reimburse Administrator for its costs, expenses and disbursements.

In the event of: (i) the Trustee’s termination of this Agreement for any reason other than as set forth in the immediately preceding paragraph or (ii) a transaction not in the ordinary course of business pursuant to which the Administrator is not retained to continue providing services hereunder to the Trust (or its respective successor), the Trustee shall pay the Administrator its compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by Administrator with respect to the Trust) and shall reimburse the Administrator for its costs, expenses and disbursements. Upon receipt of such payment and reimbursement, the Administrator will deliver the Trust’s records as set forth herein. For the avoidance of doubt, no payment will be required pursuant to clause (ii) of this paragraph in the event of any transaction such (a) the liquidation or dissolution of the Trust and distribution of the Trust’s assets as a result of the Trustee’s determination in its reasonable business judgment that the Trust is no longer viable, (b) a merger of the Trust into, or the

 

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consolidation of the Trust with, another entity, or (c) the sale by the Trust of all, or substantially all, of the Trust’s assets to another entity, in each of (b) and (c) where the Administrator is retained to continue providing services to the Trust (or its respective successor) on substantially the same terms as this Agreement.

Upon termination of this Agreement, for any reason or for no reason, the Administrator shall, upon request of the Trustee, for a period of not less than ninety (90) days from the effective date of termination, or for such longer period as may be reasonably requested by the Trustee, continue to perform the services and related obligations under the Agreement and/or any ancillary agreement on the then existing terms and conditions thereof, and cooperate with the Trustee in order to facilitate the orderly transition of the services to a successor administrator. Notwithstanding the foregoing, the Administrator and the Trustee may mutually agree to terminate the Transition Assistance with respect to some or all of the services before the expiry of the agreed period. “Transition Assistance” shall include the continued provision of the services, assistance with the development and implementation of a conversion plan, the provision of information in relation to the relevant services (excluding confidential information) and/or any other assistance reasonably requested by the Trustee.

14.    D ELEGATION

The Administrator shall retain the right to employ agents, subcontractors, consultants and other third parties, including, without limitation, affiliates (each, a “Delegate” and collectively, the “Delegates”) to provide or assist it in the provision of any part of the services stated herein or the discharge of any other obligations or duties under this Agreement without the consent or approval of the Trustee. The Administrator shall be responsible for the acts and omissions of any such Delegate so employed as if the Administrator had committed such acts and omissions itself. The Administrator shall be responsible for the compensation of its Delegates.

15.    I NTERPRETIVE AND A DDITIONAL P ROVISIONS

In connection with the operation of this Agreement, the Administrator and the Trustee, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties, provided that no such interpretive or additional provisions shall contravene any applicable laws or regulations or any provision of the Trust’s Governing Documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of the Agreement.

16.    N OTICES

Any notice, instruction or other instrument required to be given hereunder will be in writing and may be sent by hand, or by facsimile transmission, or overnight delivery by any recognized delivery service, to the parties at the following address or such other address as may be notified by any party from time to time:

If to the Trustee:

S TATE S TREET G LOBAL A DVISORS T RUST C OMPANY

One Lincoln Street

Boston, MA 02111

Attn: President

 

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With a copy to:

S TATE S TREET G LOBAL A DVISORS T RUST C OMPANY

Legal Department

One Lincoln Street

Boston, MA 02110

If to the Administrator:

S TATE S TREET B ANK AND T RUST C OMPANY

One Lincoln Street

Boston, MA 02111

Attention: Brenda Lyons

Telephone: 617-664-6407

with a copy to:

S TATE S TREET B ANK AND T RUST C OMPANY

Legal Division – Global Services Americas

One Lincoln Street

Boston, MA 02110

Attention: Senior Vice President and Senior Managing Counsel

17.    A MENDMENT

This Agreement may be amended at any time in writing by mutual agreement of the parties hereto.

18.    A SSIGNMENT

This Agreement may not be assigned by (a) the Trustee without the written consent of the Administrator or (b) the Administrator without the written consent of the Trustee, except that the Administrator may assign this Agreement to a successor of all or a substantial portion of its business, or to an affiliate of the Administrator without the consent of the Trustee.

19.    S UCCESSORS

This Agreement shall be binding on and shall inure to the benefit of the Trustee and the Administrator and their respective successors and permitted assigns.

 

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20.    D ATA P ROTECTION

The Administrator shall implement and maintain a comprehensive written information security program that contains appropriate security measures to safeguard the personal information of the Trust’s shareholders, and employees, directors and/or officers of the Trustee that the Administrator receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) driver’s license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number or (f) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

21.    E NTIRE A GREEMENT

This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes all previous representations, warranties or commitments regarding the services to be performed hereunder whether oral or in writing.

22.    W AIVER

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 or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any such term, right or remedy or a waiver of any other rights or remedies, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise or any other right or remedy. Any waiver must be in writing signed by the waiving party.

23.    S EVERABILITY

If any provision or provisions of this Agreement shall be held to be invalid, unlawful or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

 

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24.    G OVERNING L AW

This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts, without regard to its conflicts of laws rules.

25.    R EPRODUCTION OF D OCUMENTS

This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, xerographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

26.    C OUNTERPARTS

This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement. Counterparts may be executed in either original or electronically transmitted form (e.g., faxes or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received via electronically transmitted form.

[Remainder of page intentionally left blank.]

 

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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.

 

STATE STREET GLOBAL ADVISORS TRUST COMPANY
By:  

                                                              

Name:   James E. Ross
Title:   Senior Representative
STATE STREET BANK AND TRUST COMPANY
By:  

                                                              

Name:   Andrew Erickson
Title:   Executive Vice President

 

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ADMINISTRATION AGREEMENT

SCHEDULE B

LIST OF SERVICES

 

I. Fund Administration Treasury Services as described in Schedule B1 attached hereto;

 

II. Fund Administration Tax Services as described in Schedule B2 attached hereto; and

 

III. Fund Administration Legal Services as described in Schedule B3 attached hereto.

 

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Schedule B1

Fund Administration Treasury Services

 

  a. Prepare for the review by designated officer(s) of the Trustee or its affiliates, on behalf of the Trust, financial information that will be included in the Trust’s semi-annual and annual shareholder reports and other of the Trust’s regulatory filings and quarterly reports (as mutually agreed upon), including tax footnote disclosures where applicable;

 

  b. Coordinate the audit of the Trust’s financial statements by the Trust’s independent accountants, including the preparation of supporting audit workpapers and other schedules;

 

  c. Prepare for the review by designated officer(s) of the Trustee or its affiliates, on behalf of the Trust, the Trust’s periodic financial reports required to be filed with the SEC on Form N-SAR-U and financial information required by Form S-6, proxy statements and such other reports, forms or filings as may be mutually agreed upon;

 

  d. Prepare for the review by designated officer(s) of the Trustee or its affiliates and counsel to the Trust where applicable, on behalf of the Trust, annual fund expense budgets, perform accrual analyses and roll-forward calculations and recommend changes to fund expense accruals on a periodic basis, review calculations, submit for approval by officers of the Trustee and arrange for payment of the Trust’s expenses, review calculations of fees paid to the Trust’s sponsor, Trustee, custodian, fund accountant, distributor and transfer agent, and obtain authorization of accrual changes and expense payments;

 

  e. Provide periodic testing of the Trust with respect to compliance with the Internal Revenue Code’s mandatory qualification requirements, the requirements of the 1940 Act and limitations for the Trust contained in the Registration Statement for the Trust as may be mutually agreed upon, including quarterly compliance reporting to the designated officer(s) of the Trustee or its affiliates, on behalf of the Trust, as well as preparation of Senior Representative compliance materials;

 

  f. Prepare and furnish total return performance information for the Trust, including such information on an after-tax basis, calculated in accordance with applicable U.S. securities laws and regulations, as may be reasonably requested by Trust management;

 

  g. Prepare and disseminate vendor survey information;

 

  h. Prepare and coordinate the filing of Rule 24f-2 notices, including coordination of payment;

 

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B1-1


  i. Provide sub-certificates in connection with the certification requirements of the Sarbanes-Oxley Act of 2002 with respect to the services provided by the Administrator; and

 

  j. Maintain certain books and records of the Trust as required under Rule 31a-1(b) of the 1940 Act, as may be mutually agreed upon.

 

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B1-2


SCHEDULE B2

Fund Administration Tax Services

 

  a. Prepare annual tax basis provisions for both excise and income tax purposes, including wash sales and all tax financial statement disclosure;

 

  b. Prepare the Trust’s annual federal, state, and local income tax returns and extension requests for review and for execution and filing by the Trust’s independent accountants and execution and filing by designated officer(s) of the Trustee or its affiliates, on behalf of the Trust, including Form 1120-RIC, Form 8613 and Form 1099-MISC;

 

  c. Prepare annual shareholder reporting information relating to Form 1099-DIV;

 

  d. Preparation of financial information relating to Form 1099-DIV, including completion of the ICI Primary and Secondary forms, Qualified Dividend Income, Dividends Received Deduction, Alternative Minimum Tax, Foreign Tax Credit, United States Government obligations;

 

  e. Coordinate Form 1099 mailings;

 

  f. Review annual minimum distribution calculations (income and capital gain) for both federal and excise tax purposes prior to their declaration; and

 

  g. Participate in discussions of potential tax issues with the Trust and the Trust’s audit firm.

Tax services, as described in this Schedule, do not include identification of passive foreign investment companies, qualified interest income securities or Internal Revenue Code Section 1272(a)(6) tax calculations for asset backed securities.

 

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B2-1


SCHEDULE B3

Fund Administration Legal Services

 

  a. Prepare and distribute the agenda and related materials for all requested Senior Representatives (the “Senior Representatives”) meetings, make presentations to the Senior Representatives meetings where appropriate or upon reasonable request, prepare minutes for such Senior Representatives meetings, monitor and coordinate the follow-up on matters raised at any Senior Representatives meetings, and, if applicable, attend the Trust’s shareholder meetings and prepare minutes of such meetings;

 

  b. Assist the Trustee in all other required filings of the Trust made with the SEC (such as exemptive applications an no-action letter requests) or any other regulatory entities, including state corporation reports and private letter rulings from the IRS, as may be mutually agreed upon;

 

  c. Assist in the review of all amendments to the Registration Statement, including updates of the Prospectus for the Trust, prepared by the Trust’s Sponsor;

 

  d. Prepare for filing with the SEC all requested supplements to the Prospectus for the Trust;

 

  e. In cooperation with and subject to review by the Trustee, prepare and file with the SEC proxy statements and provide consultation on proxy solicitation matters;

 

  f. Maintain general Senior Representative meeting calendars;

 

  g. Maintain copies of the Trust’s Amended and Restated Standard Terms and Conditions of Trust and Trust Indenture and Agreement and any amendments thereto;

 

  h. Assist the Trustee in the handling of regulatory inspections and examinations of the Trust, including preparing and assisting in the preparation and filing of responses to inspections or examinations and working closely with the Trust’s and Trustee’s legal counsel;

 

  i. Maintain awareness of significant emerging regulatory and legislative developments that may affect the Trust, update the Senior Representatives and the Trustee on those developments and provide related planning assistance where requested or appropriate;

 

  j. Refer to the Trustee or transfer agent of the Trust and, as appropriate, the Senior Representatives, any shareholder inquiries relating to the Trust to the extent that the Administrator is the first party to become aware of such inquiries;

 

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B3-1


  k. Coordinate the printing of the Prospectus;

 

  l. Act as liaison to counsel to the Trust; and

 

  m. In cooperation with and subject to review by the Trust’s Chief Compliance Officer and the Trustee, assist in developing and periodically reviewing the Trust’s 1940 Act Rule 38a-1 Compliance Policies and Procedures Manual.

 

Information Classification: Limited Access

B3-2

Execution Copy

TRANSFER AGENCY AND SERVICE AGREEMENT

THIS AGREEMENT is made as of the 30 th day of November, 2017, by and between STATE STREET BANK AND TRUST COMPANY, Massachusetts trust company having its principal office and place of business at One Lincoln Street, Boston, Massachusetts 02111 (“ State Street ” or the “ Transfer Agent ”), and State Street Global Advisors Trust Company, a Massachusetts limited purpose trust company having its principal office and place of business at One Lincoln Street, Boston, Massachusetts 02111 (the “ Trustee ”).

WHEREAS, the SPDR® Dow Jones Industrial Average SM ETF Trust (the “ Trust ”), a New York business trust company, is authorized to issue shares of beneficial interest (“ Shares ”);

WHEREAS, the Trust will issue and redeem Shares only in aggregations of Shares known as “ Creation Units ” as described in the currently effective prospectus of the Trust (the “ Prospectus ”);

WHEREAS, only those entities (“ Authorized Participants ”) that have entered into an Authorized Participant Agreement with the distributor of the Trust, currently ALPS Distributors, Inc. (the “ Distributor ”), are eligible to place orders for Creation Units with the Distributor;

WHEREAS, the Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York (“ DTC ”) or its nominee will be the record or registered owner of all outstanding Shares;

WHEREAS, the Trustee furnishes certain services to the Trust; and

WHEREAS, the Trustee desires to appoint Transfer Agent to act as the Trust’s transfer agent, dividend disbursing agent and agent in connection with certain other activities; and Transfer Agent is willing to accept such appointment.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto, agree as follows:

 

1. TERMS OF APPOINTMENT

 

  1.1 Subject to the terms and conditions set forth in this Agreement, the Trustee hereby employs and appoints the Transfer Agent to act as, and the Transfer Agent agrees to act as, transfer agent for the Creation Units and dividend disbursing agent of the Trust, subject to the control, supervision, authorization and direction of the Trustee.

 

  1.2 Transfer Agency Services . In accordance with procedures established from time to time by agreement between the Trustee, on behalf of the Trust, and the Transfer Agent, the Transfer Agent shall:

 

  (i) establish each Authorized Participant’s account in the Trust on the Transfer Agent’s recordkeeping system and maintain such account for the benefit of such Authorized Participant;


  (ii) receive and process orders for the purchase of Creation Units from the Distributor or the Trust, and promptly deliver payment and appropriate documentation thereof to the custodian of the Trust as identified by the Trustee (the “ Custodian ”);

 

  (iii) generate or cause to be generated and transmitted confirmation of receipt of such purchase orders to the Authorized Participants and, if applicable, transmit appropriate trade instruction to the National Securities Clearance Corporation (“ NSCC ”);

 

  (iv) receive and process redemption requests and redemption directions from the Distributor or the Trust and deliver the appropriate documentation thereof to the Custodian;

 

  (v) with respect to items (i) through (iv) above, the Transfer Agent may execute transactions directly with Authorized Participants;

 

  (vi) at the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies, if any, to the redeeming Authorized Participant as instructed by the Distributor or the Trust;

 

  (vii) prepare and transmit by means of DTC’s book-entry system payments for any dividends and distributions declared by the Trust;

 

  (viii) record the issuance of Shares and maintain a record of the total number of Shares which are issued and outstanding; and provide the Trust on a regular basis with the total number of Shares which are issued and outstanding but Transfer Agent shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares to determine if there are authorized Shares available for issuance or to take cognizance of any laws relating to, or corporate actions required for, the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust; and, excluding DTC or its nominee as the record or registered owner, the Transfer Agent shall have no obligations or responsibilities to account for, keep records of, or otherwise related to, the beneficial owners of the Shares;

 

  (ix)

maintain and manage, as agent for the Trust, such bank accounts as the Transfer Agent shall deem necessary for the performance of its duties under this Agreement, including but not limited to, the processing of

 

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  Creation Unit purchases and redemptions and the payment of a Portfolio’s dividends and distributions. The Transfer Agent may maintain such accounts at the bank or banks deemed appropriate by the Transfer Agent in accordance with applicable law;

 

  (x) process any request from an Authorized Participant to change its account registration; and

 

  (xi) except as otherwise instructed by the Trustee, the Transfer Agent shall process all transactions in accordance with the procedures mutually agreed upon by the Trustee and the Transfer Agent with respect to the proper net asset value to be applied to purchase orders received in good order by the Transfer Agent or by the Trust or any other person or firm on behalf of the Trust or from an Authorized Participant before cut-offs established by the Trust. The Transfer Agent shall report to the Trustee any known exceptions to the foregoing.

 

  1.3 Additional Services . In addition to, and neither in lieu of nor in contravention of the services set forth in Section 1.2 above, the Transfer Agent shall perform the following services:

 

  (i) The Transfer Agent shall perform such other services for the Trust that are mutually agreed to by the parties from time to time, for which the Trust will pay such fees as may be mutually agreed upon, including the Transfer Agent’s reasonable out-of-pocket expenses. The provision of such services shall be subject to the terms and conditions of this Agreement.

 

  (ii) DTC and NSCC . The Transfer Agent shall: (a) accept and effectuate the registration and maintenance of accounts, and the purchase and redemption of Creation Units in such accounts, in accordance with instructions transmitted to and received by the Transfer Agent by transmission from DTC or NSCC on behalf of Authorized Participants; and (b) issue instructions to the Trust’s banks for the settlement of transactions between the Portfolio and DTC or NSCC (acting on behalf of the applicable Authorized Participant).

 

  1.4 Authorized Persons . The Trustee hereby agrees and acknowledges that the Transfer Agent may rely on the current list of authorized persons, including the Distributor, as provided or agreed to by the Trustee and as may be amended from time to time, in receiving instructions to issue or redeem Creation Units. The Trustee, on behalf of the Trust, agrees and covenants for itself and each such authorized person that any order or sale of or transaction in Creation Units received by it after the order cut-off time as set forth in the Prospectus or such earlier time as designated by the Trust (the “ Order Cut-Off Time ”), shall be effectuated at the net asset value determined on the next business day or as otherwise required pursuant to the Trust’s then-effective Prospectus, and the Trustee or such authorized person shall so instruct the Transfer Agent of the proper effective date of the transaction.

 

Information Classification: Limited Access

 

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  1.5 Anti-Money Laundering and Client Screening . With respect to the Trust’s offering and sale of Creation Units at any time, and for all subsequent transfers of such interests, the Trustee or its delegate shall, to the extent applicable, directly or indirectly and to the extent required by law: (i) conduct know your customer/client identity due diligence with respect to potential investors and transferees in the Shares and Creation Units and shall obtain and retain due diligence records for each investor and transferee; (ii) use its best efforts to ensure that each investor’s and any transferee’s funds used to purchase Creation Units or Shares shall not be derived from, nor the product of, any criminal activity; (iii) if requested, provide periodic written verifications that such investors/transferees have been checked against the United States Department of the Treasury Office of Foreign Assets Control database for any non-compliance or exceptions; and (iv) perform its obligations under this Section in accordance with all applicable anti-money laundering laws and regulations. In the event that the Transfer Agent has received advice from counsel that access to underlying due diligence records pertaining to the investors/transferees is necessary to ensure compliance by the Transfer Agent with relevant anti-money laundering (or other applicable) laws or regulations, the Trustee shall, upon receipt of written request from the Transfer Agent, provide the Transfer Agent copies of such due diligence records.

 

  1.6 State Transaction (“Blue Sky”) Reporting . If applicable, the Trustee shall be solely responsible for the Trust’s “blue sky” compliance and state registration requirements.

 

  1.7 Tax Law . The Transfer Agent shall have no responsibility or liability for any obligations now or hereafter imposed on the Trustee, the Trust, any Creation Units, any Shares, a beneficial owner thereof, an Authorized Participant or the Transfer Agent in connection with the services provided by the Transfer Agent hereunder by the tax laws of any country or of any state or political subdivision thereof. It shall be the responsibility of the Trustee to notify the Transfer Agent of the obligations imposed on the Trustee, the Trust, the Creation Units, the Shares, or the Transfer Agent in connection with the services provided by the Transfer Agent hereunder by the tax law of countries, states and political subdivisions thereof, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting.

 

  1.8 The Transfer Agent shall provide the office facilities and the personnel determined by it to perform the services contemplated herein.

 

Information Classification: Limited Access

 

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2.     FEES AND EXPENSES

 

  2.1 Fee Schedule . For the performance by the Transfer Agent of services provided pursuant to this Agreement, the Transfer Agent shall be entitled to receive the fees and expenses set forth in a written fee schedule.

 

  2.2 REPRESENTATIONS AND WARRANTIES OF THE TRANSFER AGENT

The Transfer Agent represents and warrants to the Trustee that:

 

  3.1 It is a trust company duly organized and existing under the laws of the Commonwealth of Massachusetts.

 

  3.2 It is duly registered as a transfer agent under Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”), it will remain so registered for the duration of this Agreement, and it will promptly notify the Trustee in the event of any material change in its status as a registered transfer agent.

 

  3.3 It is duly qualified to carry on its business in the Commonwealth of Massachusetts.

 

  3.4 It is empowered under applicable laws and by its organizational documents to enter into and perform the services contemplated in this Agreement.

 

  3.5 All requisite organizational proceedings have been taken to authorize it to enter into and perform this Agreement.

 

3. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE

The Trustee represents and warrants to the Transfer Agent that:

 

  4.1 It is a Massachusetts trust company, duly organized, existing and in good standing under the laws of its state of formation.

 

  4.2 It has the requisite power and authority under applicable laws and by its organizational documents to enter into and perform this Agreement.

 

  4.3 All requisite organizational proceedings have been taken to authorize it to enter into and perform this Agreement.

 

  4.4 With respect to the Trust, the Transfer Agent is not responsible for ensuring that:

 

  (i) The Trust is a unit investment trust duly organized, existing and in good standing under the laws of the state of its formation.

 

  (ii) The Trust is registered under the Investment Company Act of 1940, as amended (the “ 1940 Act ”), as a unit investment trust.

 

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  (iii) A registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”), is currently effective and will remain effective, and all appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Trust being offered for sale.

 

  4.5 Where information provided by the Trustee or a Trust’s investors includes information about an identifiable individual (“ Personal Information ”), the Trustee represents and warrants that it has obtained all consents and approvals, as required by all applicable laws, regulations, by-laws and ordinances that regulate the collection, processing, use or disclosure of Personal Information, necessary to disclose such Personal Information to the Transfer Agent, and as required for the Transfer Agent to use and disclose such Personal Information in connection with the performance of the services hereunder. The Trustee acknowledges that the Transfer Agent may perform any of the services, and may use and disclose Personal Information outside of the jurisdiction in which it was initially collected by the Trust, including the United States and that information relating to the Trust, including Personal Information of investors may be accessed by national security authorities, law enforcement and courts. The Transfer Agent shall be kept indemnified by the Trustee and be without liability to the Trust or the Trustee for any action taken or omitted by it in reliance upon this representation and warranty, including without limitation, any liability or costs in connection with claims or complaints for failure to comply with any applicable law that regulates the collection, processing, use or disclosure of Personal Information.

 

4. DATA ACCESS AND PROPRIETARY INFORMATION

 

  5.1 The Trustee acknowledges that the databases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Trustee or Trust by the Transfer Agent as part of the Trustee’s or Trust’s ability to access certain Trust-related data maintained by the Transfer Agent or another third party on databases under the control and ownership of the Transfer Agent (“Data Access Services”) constitute copyrighted, trade secret, or other proprietary information (collectively, “Proprietary Information”) of substantial value to the Transfer Agent or another third party. In no event shall Proprietary Information be deemed Authorized Participant information or the confidential information of the Trustee or the Trust. The Trustee agrees to treat all Proprietary Information as proprietary to the Transfer Agent and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Trustee agrees for itself and its officers and trustees and their agents, to:

 

  (i) use such programs and databases solely on the Trustee’s, or such agents’ computers, or solely from equipment at the location(s) agreed to between the Trustee and the Transfer Agent, and solely in accordance with the Transfer Agent’s applicable user documentation;

 

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  (ii) refrain from copying or duplicating in any way the Proprietary Information;

 

  (iii) refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform the Transfer Agent in a timely manner of such fact and dispose of such information in accordance with the Transfer Agent’s instructions;

 

  (iv) refrain from causing or allowing Proprietary Information transmitted from the Transfer Agent’s computers to the Trustee’s, or such agents’ computer to be retransmitted to any other computer facility or other location, except with the prior written consent of the Transfer Agent;

 

  (v) allow the Trustee or such agents to have access only to those authorized transactions agreed upon by the Trustee and the Transfer Agent;

 

  (vi) honor all reasonable written requests made by the Transfer Agent to protect at the Transfer Agent’s expense the rights of the Transfer Agent in Proprietary Information at common law, under federal copyright law and under other federal or state law.

 

  5.2 Proprietary Information shall not include all or any portion of any of the foregoing items that are or become publicly available without breach of this Agreement; that are released for general disclosure by a written release by the Transfer Agent; or that are already in the possession of the receiving party at the time of receipt without obligation of confidentiality or breach of this Agreement.

 

  5.3 If the Trustee notifies the Transfer Agent that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Transfer Agent shall endeavor in a timely manner to correct such failure. Organizations from which the Transfer Agent may obtain certain data included in the Data Access Services are solely responsible for the contents of such data, and the Trustee agrees to make no claim against the Transfer Agent arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN “AS IS, AS AVAILABLE” BASIS. THE TRANSFER AGENT EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

  5.4

If the transactions available to the Trustee include the ability to originate electronic instructions to the Transfer Agent in order to effect the transfer or movement of cash or Creation Units or transmit Authorized Participant information or other information, then in such event the Transfer Agent shall be

 

Information Classification: Limited Access

 

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  entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Transfer Agent from time to time.

 

  5.5 Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section. The obligations of this Section shall survive any earlier termination of this Agreement.

 

6. RESERVED

 

7. STANDARD OF CARE / LIMITATION OF LIABILITY

 

  7.1 The Transfer Agent shall act in good faith and exercise the reasonable level of skill, care and diligence expected of a professional provider of transfer agency services in carrying out its duties and obligations under this Agreement (the “ Standard of Care ”), provided, however, that the Transfer Agent shall not be in breach of any obligation under this Agreement and shall have no liability to the Trustee or the Trust for any direct losses, damages, liabilities, claims, costs or out-of-pocket expenses (including reasonable attorneys’ fees) (“Losses”) except to the extent that such breach or Losses are caused by or result from the Transfer Agent’s (or its agents’) breach of the Standard of Care, intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement.

 

  7.2 In any event, the Transfer Agent’s cumulative liability for each calendar year (a “Liability Period”) with respect to the services provided pursuant to this Agreement regardless of the form of action or legal theory shall be limited to its total annual compensation earned and fees payable hereunder during the preceding Compensation Period, as defined herein, for any liability or loss suffered by the Trust including, but not limited to, any liability relating to qualification of the Trust as a regulated investment company or any liability relating to the Trust’s compliance with any federal or state tax or securities statute, regulation or ruling during such Liability Period. “Compensation Period” shall mean the calendar year ending immediately prior to each Liability Period in which the event(s) giving rise to the Transfer Agent’s liability for that period have occurred. Notwithstanding the foregoing, the Compensation Period for purposes of calculating the annual cumulative liability of the Transfer Agent for the Liability Period commencing on the date of this Agreement and terminating on December 31, 2017 shall be the date of this Agreement through December 31, 2017, calculated on an annualized basis, and the Compensation Period for the Liability Period commencing January 1, 2018 and terminating on December 31, 2018 shall be the date of this Agreement through December 31, 2017, calculated on an annualized basis.

 

  7.3

Subject to the last sentence of this paragraph, and notwithstanding any other provision of this Agreement to the contrary, in no event shall the Trustee, Trust or

 

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  the Transfer Agent be liable for any special, incidental, indirect, punitive, consequential, exemplary or enhanced damages of any kind or nature whatsoever (including loss of profit, goodwill, reputation, business opportunity or anticipated savings) arising under the Agreement or under law or otherwise in connection with or in any way related to this Agreement or the subject matter hereof (including the provision of the services, the performance, non-performance or breach of any obligation or duty owed by a party) whether or not such party (including each party’s relevant affiliates) has been advised of, or otherwise might or should have anticipated, the possibility or likelihood of such damages. The limitations of liability set forth in this Section 7.3 shall apply regardless of the form or type of action in which a claim is brought or under which it is made, whether in contract, tort (including negligence of any kind), warranty, strict liability, indemnity or any other legal or equitable grounds, or even if the same were foreseeable, and shall survive failure of an exclusive remedy. The foregoing limitations shall not apply with respect to any damages or claims arising out of or relating to the intentional breach, fraud or willful misconduct of any party hereto or where such limitation is otherwise prohibited by applicable law.

 

  7.4 Notwithstanding the foregoing, the Trustee and the Transfer Agent acknowledge and agree that the following categories of damages are deemed direct Losses for purposes of this Agreement, to the extent resulting from a breach by the Transfer Agent of the Standard of Care: (i) regulatory fines (excluding any fines related to a failure by the Trustee to oversee or supervise); (ii) damages awarded to a third party by a court of competent jurisdiction pursuant to a final judgment (not subject to further appeal); (iii) settlements (subject to the consent of the Transfer Agent, not to be unreasonably conditioned, delayed or withheld); (iv) the cost of notice mailings and credit reports relating to data breaches; and (v) remediation of lost data.

 

8. INDEMNIFICATION

 

  8.1 Indemnification by the Trust. Subject to Sections 7.3 and 7.4 and any other exculpatory provisions or liability limitations set forth in this Agreement, the Trustee agrees to indemnify and hold harmless the Transfer Agent from and against any Losses incurred or sustained by the Transfer Agent in connection with the performance of its duties under this Agreement, except, in each case, to the extent such Losses result from the Transfer Agent’s (or its agents’) breach of the Standard of Care, intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement. If the Trustee instructs the Transfer Agent to take any action with respect to securities or other financial assets, and the action involves the payment of money or may, in the good faith opinion of the Transfer Agent, result in the Transfer Agent or its nominee assigned to the Trustee being liable therefor, the Trustee, as a prerequisite to the Transfer Agent taking the action, shall provide to the Transfer Agent at the Transfer Agent’s reasonable request such further indemnification in an amount to be mutually agreed upon between the Trustee and Transfer Agent if and when necessary. The indemnification obligations of this section shall survive termination of this Agreement.

 

Information Classification: Limited Access

 

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At any time the Transfer Agent may apply to any officer of the Trustee for instructions, and may consult with legal counsel (which may be Trust counsel) with respect to any matter arising in connection with the services to be performed by the Transfer Agent under this Agreement, and the Transfer Agent and its agents or subcontractors shall not be liable and shall be indemnified by the Trustee for any action taken or omitted by it in good faith in reliance upon such instructions or upon the opinion of such counsel. The Transfer Agent, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Trust, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Transfer Agent or its agents or subcontractors by machine readable input, electronic data entry or other similar means authorized by the Trustee, on behalf of the Trust, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Trustee.

 

  8.2 Indemnification by the Transfer Agent . Subject to Sections 7.3 and 7.4 and any other exculpatory provisions or liability limitations set forth in this Agreement, the Transfer Agent agrees to indemnify and hold harmless the Trustee from and against any Losses incurred or sustained by the Trustee as a result of a claim brought by a third party (a “ Claim ”), in each case, to the extent such Losses result from the Transfer Agent’s (or its agents’) breach of the Standard of Care, intentional breach, fraud or willful misconduct in the discharge of its duties under this Agreement. The indemnification obligations of this section shall survive termination of this Agreement.

 

  8.3 Duty to Mitigate . Each of the Trustee and the Transfer Agent shall use reasonable efforts to mitigate any Losses in respect of which it claims or may be entitled to claim indemnification under this Agreement.

 

9. ADDITIONAL COVENANTS OF THE TRUST AND THE TRANSFER AGENT

 

  9.1 Delivery of Documents . The Trustee shall promptly furnish to the Transfer Agent the following:

 

  (i) A copy of the resolution of the Senior Representatives of State Street Global Advisors Trust Company, as Trustee of the Trust, authorizing the appointment of the Transfer Agent and the execution and delivery of this Agreement.

 

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  (ii) A copy of the Amended and Restated Standard Terms and Condition of Trust of the Trust and all amendments thereto.

 

  9.2 Certificates, Checks, Facsimile Signature Devices . The Transfer Agent hereby agrees to establish and maintain facilities and procedures for safekeeping of any stock certificates, check forms and facsimile signature imprinting devices; and for the preparation or use, and for keeping account of, such certificates, forms and devices.

 

  9.3 Records . The Transfer Agent shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the 1940 Act and the Rules thereunder, the Transfer Agent agrees that all such records prepared or maintained by the Transfer Agent relating to the services to be performed by the Transfer Agent hereunder are the property of the Trust and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Trustee, on behalf of the Trust, on and in accordance with its request. Records may be surrendered in either written or machine-readable form, at the option of the Transfer Agent. In the event that the Transfer Agent is requested or authorized by the Trustee or Trust, or required by subpoena, administrative order, court order or other legal process, applicable law or regulation, or required in connection with any investigation, examination or inspection of the Trustee or Trust by state or federal regulatory agencies, to produce the records of the Trustee or Trust or the Transfer Agent’s personnel as witnesses or deponents, the Trustee agrees to pay the Transfer Agent for the Transfer Agent’s time and expenses, as well as the fees and expenses of the Transfer Agent’s counsel, incurred in such production.

 

10. CONFIDENTIALITY AND USE OF DATA

 

  10.1

All information provided under this Agreement by a party (the “Disclosing Party”) to the other party (the “Receiving Party”) regarding the Disclosing Party’s business and operations shall be treated as confidential. Subject to Section 10.2 below, all confidential information provided under this Agreement by Disclosing Party shall be used, including disclosure to third parties, by the Receiving Party, or its agents or service providers, solely for the purpose of performing or receiving the services and discharging the Receiving Party’s other obligations under the Agreement or managing the business of the Receiving Party and its Affiliates (as defined in Section 10.2 below), including financial and operational management and reporting, risk management, legal and regulatory compliance and client service management. The foregoing shall not be applicable to any information (a) that is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, (b) that is independently derived by the Receiving Party without the use of any information provided by the Disclosing Party in connection with this Agreement, (c) that is

 

Information Classification: Limited Access

 

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  disclosed to comply with any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, (d) that is disclosed as required by operation of law or regulation or as required to comply with the requirements of any market infrastructure that the Disclosing Party or its agents direct the Transfer Agent or its Affiliates to employ (or which is required in connection with the holding or settlement of instruments included in the assets subject to this Agreement), or (e) where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld .

 

  10.2 (i)    In connection with the provision of the services and the discharge of its other obligations under this Agreement, the Transfer Agent (which term for purposes of this Section 10.2 includes each of its parent company, branches and affiliates (“ Affiliates ”)) may collect and store information regarding the Trust and share such information with its Affiliates, agents and service providers in order and to the extent reasonably necessary (i) to carry out the provision of services contemplated under this Agreement and other agreements between the Trustee and the Transfer Agent or any of its Affiliates and (ii) to carry out management of its businesses, including, but not limited to, financial and operational management and reporting, risk management, legal and regulatory compliance and client service management.

(ii)    Subject to paragraph (iii) below, the Transfer Agent and/or its Affiliates (except those Affiliates or business divisions principally engaged in the business of asset management) may use any data or other information (“ Data ”) obtained by such entities in the performance of their services under this Agreement or any other agreement between the Trustee and the Transfer Agent or one of its Affiliates, including Data regarding transactions and portfolio holdings relating to the Trust, and publish, sell, distribute or otherwise commercialize the Data; provided that, unless the Trustee otherwise consents, Data is combined or aggregated with information relating to (i) other customers of the Transfer Agent and/or its Affiliates or (ii) information derived from other sources, in each case such that any published information will be displayed in a manner designed to prevent attribution to or identification of such Data with the Trust. The Trustee agrees that the Transfer Agent and/or its Affiliates may seek to profit and realize economic benefit from the commercialization and use of the Data, that such benefit will constitute part of the Transfer Agent’s compensation for services under this Agreement or such other agreement, and the Transfer Agent and/or its Affiliates shall be entitled to retain and not be required to disclose the amount of such economic benefit and profit to the Trust.

(iii)    Except as expressly contemplated by this Agreement, nothing in this Section 10.2 shall limit the confidentiality and data-protection obligations of the Transfer Agent and its Affiliates under this Agreement and applicable law. The Transfer Agent shall cause any Affiliate, agent or service provider to which it has disclosed Data pursuant to this section 10.2 to comply at all times with confidentiality and data-protection obligations as if it were a party to this Agreement.

 

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  10.3 The Transfer Agent affirms that it has, and will continue to have throughout the term of this Agreement, procedures in place that are reasonably designed to protect the privacy of non-public personal consumer/customer financial information to the extent required by applicable laws, rules and regulations.

 

11. EFFECTIVE PERIOD AND TERMINATION

This Agreement shall remain in full force and effect for an initial term ending November 30, 2027 (the “Initial Term”). After the expiration of the Initial Term, this Agreement shall automatically renew for successive one (1) year terms (each, a “Renewal Term”) unless a written notice of non-renewal is delivered by the non-renewing party no later than ninety (90) days prior to the expiration of the Initial Term or any Renewal Term, as the case may be. During the Initial Term and thereafter, either party may terminate this Agreement: (i) in the event of the other party’s material breach of a material provision of this Agreement that the other party has either (a) failed to cure or (b) failed to establish a remedial plan to cure that is reasonably acceptable, within 60 days’ written notice of such breach, or (ii) in the event of the appointment of a conservator or receiver for the other party or upon the happening of a like event to the other party at the direction of an appropriate agency or court of competent jurisdiction. Upon termination of this Agreement pursuant to this paragraph with respect to the Trust, the Trustee shall pay Transfer Agent its compensation due and shall reimburse Transfer Agent for its costs, expenses and disbursements.

In the event of: (i) the Trustee’s termination of this Agreement for any reason other than as set forth in the immediately preceding paragraph or (ii) a transaction not in the ordinary course of business pursuant to which the Transfer Agent is not retained to continue providing services hereunder to the Trust (or its respective successor), the Trustee shall pay the Transfer Agent its compensation due through the end of the then-current term (based upon the average monthly compensation previously earned by Transfer Agent with respect to the Trust) and shall reimburse the Transfer Agent for its costs, expenses and disbursements. Upon receipt of such payment and reimbursement, the Transfer Agent will deliver the Trust’s records as set forth herein. For the avoidance of doubt, no payment will be required pursuant to clause (ii) of this paragraph in the event of any transaction such as (a) the liquidation or dissolution of the Trust and distribution of the Trust’s assets as a result of the Trustee’s determination in its reasonable business judgment that the Trust is no longer viable, (b) a merger of the Trust into, or the consolidation of the Trust with, another entity, or (c) the sale by the Trust of all, or substantially all, of its assets to another entity, in each of (b) and (c) where the Transfer Agent is retained to continue providing services to the Trust (or its respective successor) on substantially the same terms as this Agreement.

 

Information Classification: Limited Access

 

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12. RESERVED

 

13. ASSIGNMENT

 

  13.1 Except as provided in Section 14.1 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party, except that the Transfer Agent may assign this Agreement to a successor of all or a substantial portion of its business or to its affiliate, without the consent of the Trustee.

 

  13.2 Except as explicitly stated elsewhere in this Agreement, nothing under this Agreement shall be construed to give any rights or benefits in this Agreement to anyone other than the Transfer Agent, the Trustee and the Trust, and the duties and responsibilities undertaken pursuant to this Agreement shall be for the sole and exclusive benefit of the Transfer Agent, the Trustee and the Trust. This Agreement shall inure to the benefit of, and be binding upon, the parties and their respective permitted successors and assigns.

 

  13.3 This Agreement does not constitute an agreement for a partnership or joint venture between the Transfer Agent and the Trustee. Other than as provided in Section 14, neither party shall make any commitments with third parties that are binding on the other party without the other party’s prior written consent.

 

14. SUBCONTRACTORS

The Transfer Agent may, without further consent on the part of the Trustee, subcontract for the performance hereof with a transfer agent which is duly registered pursuant to Section 17A(c)(2) of the 1934 Act, including, but not limited to another affiliated or unaffiliated third party duly registered as a transfer agent pursuant to Section 17A(c)(2) of the 1934 Act; provided, however, that the Transfer Agent shall remain liable to the Trust for the acts and omissions of any subcontractor under this Section as it is for its own acts and omissions under this Agreement.

 

15. MISCELLANEOUS

 

  15.1 Amendment . This Agreement may be amended by a written agreement executed by both parties.

 

  15.2 Massachusetts Law to Apply . This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of The Commonwealth of Massachusetts without giving effect to any conflicts of law rules thereof.

 

  15.3 Force Majeure . The Transfer Agent shall not be responsible or liable for any failure or delay in performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its control, including without limitation, work stoppage, power or other mechanical failure, computer virus, natural disaster, governmental action or communication disruption.

 

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  15.4 Data Protection . The Transfer Agent will implement and maintain a comprehensive written information security program that contains appropriate security measures to safeguard the personal information of the Trust’s shareholders and employees, directors and/or officers of the Trustee that the Transfer Agent receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder. For these purposes, “personal information” shall mean (i) an individual’s name (first initial and last name or first name and last name), address or telephone number plus (a) social security number, (b) drivers license number, (c) state identification card number, (d) debit or credit card number, (e) financial account number or (f) personal identification number or password that would permit access to a person’s account or (ii) any combination of the foregoing that would allow a person to log onto or access an individual’s account. Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

 

  15.5 Survival . All provisions regarding indemnification, warranty, liability, and limits thereon, and confidentiality and/or protections of proprietary rights and trade secrets shall survive the termination of this Agreement.

 

  15.6 Severability . If any provision or provisions of this Agreement shall be held invalid, unlawful, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired.

 

  15.7 Priorities Clause . In the event of any conflict, discrepancy or ambiguity between the terms and conditions contained in this Agreement and any schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence.

 

  15.8 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 or the failure of a party hereto to exercise or any delay in exercising any right or remedy under this Agreement shall not constitute a waiver of any such term, right or remedy or a waiver of any other rights or remedies, and no single or partial exercise of any right or remedy under this Agreement shall prevent any further exercise of the right or remedy or the exercise of any other right or remedy. Any waiver must be in writing signed by the waiving party.

 

  15.9 Entire Agreement . This Agreement and any schedules, exhibits, attachments or amendments hereto constitute the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written.

 

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  15.10 Counterparts . This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, and all such counterparts taken together shall constitute one and the same Agreement . Counterparts may be executed in either original or electronically transmitted form (e.g., faxes or emailed portable document format (PDF) form), and the parties hereby adopt as original any signatures received via electronically transmitted form.

 

  15.11 Reproduction of Documents . This Agreement and all schedules, exhibits, attachments and amendments hereto may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties hereto all/each agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.

 

  15.12 Notices . Any notice instruction or other instrument required to be given hereunder will be in writing and may be sent by hand, or by facsimile transmission, or overnight delivery by any recognized delivery service, to the parties at the following address or such other address as may be notified by any party from time to time:

 

  (a) If to Transfer Agent, to:

State Street Bank and Trust

Transfer Agency

Attention: Compliance

One Heritage Drive Building

1 Heritage Drive

Mail Stop OHD0100

North Quincy MA 02171

With a copy to:

STATE STREET BANK AND TRUST COMPANY

Legal Division – Global Services Americas

One Lincoln Street

Boston, MA 02111

Attention: Senior Vice President and Senior Managing Counsel

 

  (b) If to the Trustee, to:

STATE STREET GLOBAL ADVISORS TRUST COMPANY

One Lincoln Street

Boston, MA 02111

Attn: President

 

Information Classification: Limited Access

 

16


With a copy to:

STATE STREET GLOBAL ADVISORS TRUST COMPANY

Legal Department

One Lincoln Street

Boston, MA 02111

 

  15.13 Interpretive and Other Provisions . In connection with the operation of this Agreement, the Transfer Agent and the Trustee may from time to time agree on such provisions interpretive of or in addition to the provisions of this Agreement as may in their joint opinion be consistent with the general tenor of this Agreement. Any such interpretive or additional provisions shall be in a writing signed by all parties, provided that no such interpretive or additional provisions shall contravene any applicable laws or regulations or any provision of the Trust’s governing documents. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Agreement.

 

  15.14 Delegation . The Transfer Agent shall retain the right to employ agents, subcontractors, consultants and other third parties, including, without limitation, affiliates (each, a “Delegate” and collectively, the “Delegates”) to provide or assist it in the provision of any part of the services stated herein or the discharge of any other obligations or duties under this Agreement without the consent or approval of the Trustee. The Transfer Agent shall be responsible for the acts and omissions of any such Delegate so employed as if the Transfer Agent had committed such acts and omissions itself. The Transfer Agent shall be responsible for the compensation of its Delegates.

[Remainder of Page Intentionally Left Blank]

 

Information Classification: Limited Access

 

17


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written.

 

STATE STREET BANK AND TRUST COMPANY
By:  

 

  Name:   Andrew Erickson
  Title:   Executive Vice President
STATE STREET GLOBAL ADVISORS TRUST COMPANY
By:  

 

  Name:   James E. Ross
  Title:   Senior Representative

 

Information Classification: Limited Access

 

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ALPS Code of Ethics   LOGO

 

 

 

LOGO

ALPS Code of Ethics

Amended as of: July 1 st , 2017

 

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ALPS Code of Ethics   LOGO

 

 

 

Table of Contents

 

Introduction

    3  

Applicability

    4  

General Standards of Business Conduct

    5  

Conflicts of Interest

    5  

Protecting Confidential Information

    5  

Insider Trading

    5  

Limitation on Trading DST Stock

    6  

Excess Trading

    6  

Gifts and Entertainment

    7  

Improper Payments or Rebates

    8  

Service on a Board of Directors/Outside Business Activities

    9  

Political Contributions

    9  

Personal Securities Transactions – Restrictions & Reporting Requirements

    10  

Access Persons

    10  

Investment Persons

    13  

Sanctions

    17  

Compliance and Supervisory Procedures

    18  

Appendix A – Broker/Dealers with Electronic Feeds (updated June 30, 2016)

    21  

Appendix B – Sub-Advisers to ALPS Advisors, Inc. (Updated March 31, 2017)

    22  

Appendix C – Glossary of Defined Terms*

    23  

 

* Capitalized terms not otherwise defined shall have the meaning attributed in Appendix C attached hereto (i.e. Glossary of defined terms)

 

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Introduction

This Code of Ethics (“Code”) has been adopted by ALPS Holdings, Inc. and applies to its subsidiaries (collectively referred to herein as “ALPS”). The Code is designed to comply with Rule 204A-1 under the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 17j-1 under the Investment Company Act of 1940 (the “1940 Act”). By adopting and adhering to a code that meets the applicable requirements under the Advisers Act and 1940 Act, it is intended that ALPS employees who are deemed to be Access Persons and/or Investment Persons, will not also be subject to duplicative reporting requirements under various other codes for fund companies for which they may serve as an officer or are otherwise deemed to be an Access Person. However, all such persons should check with each company’s Compliance or Legal representatives to confirm their status.

ALPS and its employees are subject to certain laws, rules and regulations governing personal securities trading, conflicts of interest, treatment of client assets and information, generally prohibiting fraudulent, deceptive or manipulative conduct. The Code is designed to ensure compliance with these. The actual requirements of the Code may vary depending on the employee’s business role of respective subsidiary so care should be taken by each employee to understand how the Code applies to them.

Employees who are also registered with the Financial Industry Regulatory Authority (“FINRA”) as a Registered Representative may have additional requirements and/or restrictions in addition to those described herein. Those Registered Representatives should consult their Written Supervisory Procedures for additional requirements.

ALPS and its employees are prohibited from engaging in fraudulent, deceptive or manipulative conduct. The Code is designed to reinforce ALPS’ reputation for integrity by avoiding even the appearance of impropriety in the conduct of our business. This Code was developed to promote the highest standards of behavior and ensure compliance with applicable laws.

Employees are required to promptly report any known violations of the Code to the Chief Compliance Officer of ALPS Fund Services, Inc. (“AFS CCO”). This includes violations that come to your attention that may have been inadvertent and/or violations that other employees may have committed. The AFS CCO (or a designee) will promptly investigate the matter and take action if needed. There will be no retribution against any employee for making such a report, and every effort will be made to protect the identity of the reporting employee. There may be additional provisions for reporting violations that are covered under applicable policies and employees should make themselves familiar with these policies or consult with AFS’ CCO.

Employees should be aware that they may be held personally liable for any improper or illegal acts committed during their course of employment, and that “ignorance of the law” is not a defense. All ALPS employees are expected to read the Code carefully and observe and adhere to its guidance at all times. Failure to comply with the provisions of the Code may result in serious sanctions including, but not limited to: disgorgement of profits, termination, personal criminal or civil liability and referral to law enforcement agencies or other regulatory agencies.

The provisions of the Code are not all-inclusive. Rather, they are intended as a guide for employees of ALPS in their conduct. In those situations where an employee may be uncertain as to the intent or purpose of the Code, they are advised to consult with the AFS CCO. All questions arising in connection with personal securities trading should be resolved in favor of the Client, even at the expense of the interests of employees.

The AFS CCO will periodically report to senior management/board of directors of ALPS and the respective fund boards where ALPS serves in the capacity of investment adviser and/or distributor to document compliance or non-compliance with this Code. Each employee is responsible for knowing their responsibilities under the Code.

 

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Applicability

ALPS Employees

This Code is applicable to all ALPS employees. This includes full-time, part-time, benefited and non-benefited, officers, directors, exempt and non-exempt personnel. Additionally, each new employee’s offer letter will include a copy of the Code of Ethics and a statement advising the individual that he/she will be subject to the Code of Ethics if he/she accepts the offer of employment. Employees with access to certain information (as described herein) may also be deemed to be “Access Persons” or “Investment Persons and be subject to additional restrictions, limitations, reporting requirements and other policies and procedures. All ALPS employees have an obligation to promptly notify the Administrator of the Code of Ethics if there is a change to their duties, responsibilities or title which affects their reporting status under the code. All ALPS employees have an obligation to promptly notify the Administrator of the Code of Ethics if there is a change to their duties, responsibilities, or title which affects their reporting status under the Code.

Family Members and Related Parties

The Code applies to the Accounts of each employee, his/her spouse or domestic partner, his/her minor children, his/her immediate family members residing in the same household as the employee (e.g. adult children or parents living at home), and any relative, person or entity for whom the employee directs the investments or securities trading.

Contractors and Consultants

ALPS contractor/consultant/temporary employee contracts may include the Code as an addendum, and each contractor/consultant/temporary employee may be required to sign an acknowledgement that he/she has read the Code and will abide by it. Certain sections might not be applicable.

 

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General Standards of Business Conduct

All employees are subject to and expected to abide by the Code including, but not limited to, the General Standards of Business Conduct and all reporting requirements outlined herein.

Conflicts of Interest

A conflict of interest is a situation where our personal loyalties or interests may be at odds with those of ALPS, its subsidiaries, or its clients or where our position at ALPS affords us improper personal benefits. When determining whether or not a conflict exists, make sure to consider not only your own activities, but also those of your family members and related parties.

Employees may not act on behalf of ALPS or its clients in any Securities Transaction or other transfer or receipt of property, services or benefits involving other persons or organizations where such employee may have any financial or a other interest without prior approval from the AFS CCO.

Protecting Confidential Information

Employees may receive information about ALPS, its Clients and other parties that, for various reasons, should be treated as confidential. Employees have an obligation to safeguard personal client or fellow employee personal information and material non-public information regarding ALPS and its Clients. Accordingly, employees may not disclose current portfolio holdings, Fund Transactions, or Securities Transactions proxy vote or corporate action made or contemplated, personal client or fellow employee personal information or any other non-public information to anyone outside of ALPS, without approval from the AFS CCO or the Ethics Committee. All employees are expected to strictly comply with measures necessary to preserve the confidentiality of the information. Refer to applicable ALPS and DST policies for additional information.

Insider Trading

The misuse of M aterial Nonpublic Information , or inside information, constitutes fraud under the securities laws of the United States and many other countries. Anyone aware of Material Nonpublic Information (or inside information) may not trade in, recommend, or in some cases refrain from selling those securities whether directly, through a third party, for a personal account, ALPS or the account of any ALPS’ Client.

No employee may cause ALPS or a Client to take action, or to fail to take action, for personal benefit, rather than to benefit ALPS or such Client. For example, a person would violate this Code by causing a Client to purchase securities owned by the Access Person for the purpose of supporting or increasing the price of that security or by causing a Client to refrain from selling securities in an attempt to protect a personal investment, such as an option on that security.

As a general rule, we should consider all information we learn about our clients, proprietary products, DST, or other companies in the course of our employment to be material nonpublic information unless it has been fully disclosed to the public.

In addition, employees must not engage in tipping . Tipping occurs when one individual (the tipper ) passes Material Nonpublic information to another (the tippee ) under circumstances that suggest the tipper was trying to help the tippee make a profit or avoid a loss in exchange for some benefit to the tipper. The benefit does not have to be pecuniary and could result from a family or personal relationship. In this situation, both the tipper and the tippee may be liable, and this liability may extend to everyone to whom the tippee discloses the information.

 

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Employees may not engage in “ front running ,” that is, the purchase or sale of securities for their own accounts on the basis of their knowledge of a Fund’s Transactions or planned Transactions.

Trading activity will be monitored by the Administrator of the Code of Ethics for Access and Investment persons as described.

Limitation on Trading DST Stock

In addition to Insider Trading restrictions, some DST stock transactions are prohibited altogether as described below.

DST Stock Transactions that are prohibited by this Policy

Short sales

Employees may never engage in a short sale of DST’s securities. A short sale is a sale of securities the seller does not own or, if owned, is not delivered against the sale within 20 days (a short sale against the box ). Short sales of DST’s securities show the seller’s expectation that the securities will decline in value. Therefore, these sales signal to the market that the seller has no confidence in DST or its short-term prospects. In addition, short sales may reduce the seller’s incentive to improve DST’s performance. For these reasons, short sales of DST securities are not permitted.

Option trades

Employees may not take part in certain option trades that are more profitable as DST stock declines in value. Employees may not:

 

  Purchase a put option on DST securities

 

  Write a call option on DST securities

Hedging transactions

Employees must not enter into hedging transactions, as these transactions may permit the employee to continue to own DST securities without the full risks and rewards of ownership. When that occurs, the employee may no longer have the same objectives as other DST stockholders. For that reason, employees must not enter into prepaid variable forward contracts, equity swaps, collars and exchange funds or other similar hedging or monetization transactions involving DST stock.

Margin accounts and pledges

Holding or pledging DST securities as collateral in margin accounts are not permitted.

Blackout Period

Certain employees may be restricted from buying or selling shares of DST during specified blackout periods or required to pre-clear transactions of DST shares. If either or both restrictions apply, employees will be contacted directly by DST regarding the restrictions and when blackout periods occur.

Excess Trading

While active personal trading may not in and of itself raise issues under applicable laws and regulations, we believe that a very high volume of personal trading can be time consuming and can increase the possibility of actual or apparent conflicts with portfolio transactions. Accordingly, an unusually high level of personal trading activity (as determined by ALPS based on the facts and circumstances) is strongly discouraged. A pattern of excessive trading may lead to the taking of appropriate corrective or restrictive action under the Code.

 

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Gifts and Entertainment

Gifts or Entertainment may create an actual or apparent conflict of interest, which could affect (or appear to affect) the recipients’ independent business judgment. Therefore, ALPS has established reasonable limits and procedures relating to the giving and receiving of Gifts and Entertainment.

All employees are required to follow the standards below regarding the acceptance or giving of gifts and entertainment with respect to all Business Partners. Every circumstance where gifts or entertainment may be given or received may not be listed below however, ALPS employees are expected to avoid any gifts or entertainment that:

 

    Could create an apparent or actual conflict,

 

    Is excessive or would reflect unfavorably on ALPS or its Clients, or

 

    Would be inappropriate or disreputable nature.

A Gift is anything of value that is given with the intent to foster a legitimate business relationship. Gifts can include merchandise such as wine, gift baskets, or tickets if the giver does not attend.

Entertainment is a meeting, meal or other activity where both you and the business partner are present and have the opportunity to discuss business or any participant’s employer bears the cost. It does not include events that have been organized by ALPS directly, such as receptions following an industry gathering or multi-client entertainment. If the Business Partner will not be present for the event it will be considered a gift.

A Business Partner, for the purpose of this Code, includes all current Clients and vendors with which ALPS Holdings conducts business, any potential clients or vendors with whom ALPS could engage in business with, any registered broker/dealers, and any firms under contract to do business with ALPS Holdings or our subsidiaries.

The Value of any Gifts or Entertainment given or received must be the greater of cost or market value. If the cost or market value is not easily determined an employee can estimate the approximate value or request further guidance from the CCO or designee.

All Disclosures of applicable gifts or entertainment must be disclosed via the Gifts Request Form found on SchwabCT.com. Unless otherwise indicated, this should be done on a quarterly basis along with regular quarterly Code requirements. Some Gifts or Entertainment may require prior approval

All Approvals , unless otherwise indicated, must come from the appropriate CCO or designee. Due to the nature of gift-giving and the impromptu nature of some Entertainment, approval for ALPS employees accepting such items may often be after the fact. However, to the extent feasible, any required approvals should be obtained before accepting Gifts or Entertainment. If a gift request is not approved and returning or rejecting the item would negatively affect the business relationship the gift should be turned over to the appropriate CCO. The gift will then be donated to a charity of the Ethics Committee’s choosing.

 

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Gifts to be Given/Received by ALPS Employees

  

Approval/Disclosure Required

Cash or Cash Equivalent    Prohibited from giving or receiving
Gifts received from the same Business Partner which would aggregate less than $100/twelve months    Quarterly disclosure required, no approval required
Gifts received from the same Business Partner which would aggregate equal/more than $100/twelve months    Approval required, Quarterly disclosure required, strictly prohibited for FINRA registered reps
Promotional gifts such as those that bear a logo valued less than $50    Quarterly disclosure not required, approval not required
Gifts given to or received by a wide group of recipients (e.g. gift basket to a department) that are reasonable in nature    Quarterly disclosure not required, approval not required
Gifts given on behalf of ALPS Holdings or its subsidiaries (from an ALPS budget)    Indication of who received the gift must be included via regular expense reports, gifts must be reasonable in nature
Gifts of any value given or received by Investment Persons (as defined in Glossary) to or from a broker/dealer    Must be pre-cleared with their immediate supervisor and the AAI CCO (or designee)

 

Entertainment provided by and for ALPS employees

  

Approval/Disclosure Required

Entertainment provided on behalf of ALPS or its subsidiaries (from an ALPS budget) valued at $250 or less per person per event    Indication of who was present must be included via expense reports
Entertainment provided to an ALPS employee at $250 or less per person per event    Quarterly disclosure required (excluding entertainment of de minimis value - below approx. $50), no approval required
Entertainment provided on behalf of ALPS or its subsidiaries (from an ALPS budget) valued at equal/more than $250 per person per event    Typically not allowed, Approval required, Indication of who was present must be included via expense reports
Entertainment provided to an ALPS employee at equal/more than $250 per person per event    Typically not allowed, Approval required, Quarterly disclosure required
Attendance and participation at industry sponsored events    No approval required, no disclosure required
Entertainment of any value given or received by Investment Persons (as defined on page 5) to or from a broker/dealer    Must be pre-cleared with their immediate supervisor and the AAI CCO (or designee)

Improper Payments or Rebates

Associates must not offer or receive gratuities, bribes, kickbacks, or improper rebates from public officials, officials of foreign governments, competitors or suppliers.

Pursuant to the Foreign Corruption Practices Act (“FCPA”), employees are prohibited from making or offering to make any payment to or for the benefit of any Foreign Official if the purpose of such payment is to improperly influence or induce that Foreign Official to obtain or retain business for the company (a so-called bribe or kickback). All payments, whether large or small, are prohibited if they are, in essence, bribes or kickbacks, including:

 

    cash payments

 

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ALPS Code of Ethics   LOGO

 

 

 

    gifts

 

    entertainment

 

    services

 

    amenities

If an employee is unsure about whether he/she are being asked to make an improper payment, he/she should not make the payment. Employees must promptly report to the AFS CCO any request made by a Foreign Official for a payment that would be prohibited under the guidelines set above and any other actions taken to induce such a payment. If you have any questions or need any guidance, please contact the AFS CCO.

Service on a Board of Directors/Outside Business Activities

All employees are required to comply with the following provisions:

 

    Employees are to avoid any business activity, outside employment or professional service that competes with ALPS or conflicts with the interests of ALPS or its Clients.

 

    An employee is required to obtain the approval from the AFS CCO, or designee, prior to becoming an employee, director, officer, partner, sole proprietor of a “for profit” organization, or otherwise compensated by an entity outside of ALPS. The request for approval should disclose the name of the organization, the nature of the business, whether any conflicts of interest could reasonably result from the association, whether fees, income or other compensation will be earned and whether there are any relationships between the organization and ALPS.

 

    Employees may not accept any personal fiduciary appointments such as administrator, executor or trustee other than those arising from family or other close personal relationships.

 

    Employees may not use ALPS resources, including computers, software, proprietary information, letterhead and other property in connection with any employment or other activity outside ALPS.

 

    Employees must disclose a conflict of interest or the appearance of a conflict with ALPS or Clients and discuss how to control the risk.

When completing the quarterly Code requirements, employees may be asked to disclose all outside affiliations. Any director/trustee positions with public companies or companies with the potential to become public are prohibited without prior written approval of the AFS CCO or designee.

Political Contributions

All political activities of employees must be kept separate from employment and expenses may not be charged to ALPS. Employees may not use ALPS facilities for political campaign purposes.

All employees who are deemed Covered Associates are required to comply with the provisions under Rule 206(4)-5 of the Advisers Act as well as the Political Contributions Policy within AAI’s Compliance Program. Spouses and household family members of each Covered Associate are also subject to the provisions under Rule 206(4)-5 and this Political Contribution Policy, including pre-approval and reporting requirements.

Covered Associates are prohibited from making political contributions on behalf of AAI or individually in their capacity as a covered associate unless their contribution is within the de minimis exception. The de minimis exception permits contributions according to the following guidelines:

 

    Up to $350 per candidate per election cycle, to incumbents or candidates for whom they are eligible to vote

 

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    Up to $150 per candidate per election cycle, to other incumbents or candidates

Covered Associates will be required to obtain a pre-approval for all political contributions, including but not limited to those noted above.

On a quarterly basis, the AAI CCO, or designee, will request a reporting of political contributions during the previous quarter by all Covered Associates. The reporting should include contributions by spouses, household family members and all contributions by other parties (lawyers, affiliated companies, acquaintances, etc.) directed by the Covered Associate. The report should include the individual or election committee receiving the contribution, the office for which the individual is running, the current elected office held, if any, the dollar amount of the contribution or value of the donated item and whether or not the Covered Associate is eligible to vote for the candidate. The Covered Associate report must be completed within 30 days of each quarter end so that if an inadvertent political contribution (of $350.00 or less) has been made to an official for whom the Covered Associate is not entitled to vote, the contributor may be required to request the return of the contribution in order to avoid the two year compensation ban against AAI.

Personal Securities Transactions – Restrictions & Reporting Requirements

Access Persons

Trading Restrictions

Initial Public Offering (“IPO”) - Access Persons are prohibited from acquiring securities through an allocation by the underwriter of an initial public offering (“IPO”). Exceptions may be made with prior written disclosure to and written approval from the AFS CCO, whereby an Access Person could acquire shares in an IPO of his/her employer.

Limited or Private Offerings - Access Persons are prohibited from purchasing securities in a private offering unless the purchase is approved in writing by the AFS CCO. Private placements include certain co-operative investments in real estate, commingled investment vehicles such as hedge funds, and investments in family owned businesses. Time-shares and cooperative investments in real estate used as a primary or secondary residence are not considered to be private placements.

Investment Clubs - Access Persons are prohibited from participating in investment clubs unless such membership is approved in writing by the AFS CCO. An investment club is any group of people who pool their money to make joint or group investments.

Short-Term Trading - Access Persons are prohibited from the purchase and sale or sale and purchase of the same Proprietary Products within a sixty (60) calendar day holding period (ALPS is the investment Adviser).

Account Restrictions

Managed Accounts – Access Persons are restricted from establishing an external managed account (also referred to as a discretionary account) with any adviser that conducts business with ALPS Advisors, Inc. See Appendix B for a list of advisers that work with AAI.

 

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Reporting Requirements

Access Persons are subject to the following Initial, Quarterly and Annual Reporting requirements unless specifically exempted by Rule 204A-1 or 17j-1. Access persons are required to disclose any account in which securities transactions can be effected and in which the Access person has a beneficial interest (as further defined on page 6).

All Covered Securities are subject to the reporting requirements of the Code. Covered Securities will include all Securities as well as all Proprietary Products, any equivalents in local non-US jurisdictions, single stock futures, and both the U.S. Securities and Exchange Commission (“SEC”), and Commodity Futures Trading Commission (“CFTC”) regulated futures. For purposes of the Code, Securities shall have the meaning set forth in Section 2(a) (36) of the 1940 Act. This definition of Security includes, but is not limited to:

 

    Any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificates of interest or participation in any profit-sharing agreement,

 

    Any put, call, straddle, option or privilege on any Security or on any group or index of Securities,

 

    Any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency,

 

    Any exchange-traded vehicle (including, but not limited to, closed-end mutual funds, exchange-traded notes and exchange-traded funds),

 

    Any commodity contracts as defined in Section 2(a) (1) (A) of the Commodity Exchange Act. Including but not limited to futures contracts on equity indices,

 

    Any derivative of a Security shall also be considered a Security.

The following securities are exempt from the reporting requirements:

 

    Transactions made in an account where the employee, pursuant to a valid legal instrument, has given full investment discretion to an unaffiliated/unrelated third party

 

    Direct Obligations of any government of the United States;

 

    Bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements;

 

    Investments in dividend reinvestment plans;

 

    Variable and fixed insurance products;

 

    Non Proprietary Product open-end mutual funds;

 

    Qualified tuition programs pursuant to Section 529 of the Internal Revenue Code; and

 

    Accounts that are strictly limited to any of the above transactions.

a.     Initial Holdings Reports for Access Persons

Within ten (10) calendar days of being designated as, or determined to be, an Access Person (which may be upon hire), each such person must provide a statement of all Covered Securities holdings and financial accounts. More specifically, each such person must provide the following information:

 

    The title, number of shares and principal amount of each Covered Security in which the employee had any direct or indirect Beneficial Ownership when the person became an employee;

 

    The name of any financial institution with whom the employee maintained an account in which any securities were held for the direct or indirect benefit of the employee as of the date the person became an employee; and

 

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    The date the report is submitted by the employee.

 

  b. Duplicate Statements/Electronic Feeds

All new employees and any new account(s) opened by existing employees after April 1, 2015 shall be limited to the financial institutions listed in Appendix A – Broker/Dealers with Electronic Feeds of the Code.

If an account is held with a financial institution that does not supply electronic feeds to ALPS, new employees who are deemed an Access Person will have 30 calendar days to close or transfer the existing account and are asked to only open an account with a firm listed in Appendix A of the Code.

Existing employees hired prior to April 1, 2015, who are deemed an Access Person, with existing accounts can maintain those accounts and continue satisfying their quarterly reporting requirements in the system as they have in the past. However, existing employees will only be allowed to open any new accounts with financial institutions listed in Appendix A of the Code.

 

  c. Quarterly Transaction Reports

Each Access Person is required to submit quarterly his/her Quarterly Securities Report within thirty (30) calendar days of each calendar quarter end. If no transactions were executed or if transactions were exempt from reporting, this should be noted on the quarterly report.

Specific information to be provided includes:

1. With respect to any Securities Transaction* during the quarter in a Covered Security in which any employee had any direct or indirect beneficial ownership:

 

    The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Security involved;

 

    The nature of the transaction, (i.e., purchase, sale, or other type of acquisition or disposition);

 

    The price of the Security at which the transaction was effected;

 

    The name of the financial institution with or through which transaction was effected; and

 

    The date that the report is submitted by the employee.

 

* Transactions effected pursuant to an Automatic Investment Plan need not be reported in the Quarterly Securities Report but holdings in Covered Securities are subject to the annual holdings reporting requirement discussed below.

2. With respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person:

 

    The name of the financial institution with whom the employee established the account;

 

    The date the account was established; and

 

    The date the report is submitted by the employee.

 

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  d. Annual Holdings Reports

Each Access Person is required to submit annually (i.e., once each and every calendar year) a list of applicable holdings, which is current as of a date no more than forty five (45) calendar days before the report is submitted. In addition, each employee is required to certify annually that he/she has reviewed and understands the provisions of the Code.

Specific information to be provided includes:

 

    The title, number of shares and principal amount of each Covered Security in which the employee had any direct or indirect beneficial ownership;

 

    The name of any financial institution with whom the employee maintains an account in which any securities are held for the direct or indirect benefit of the employee; and

 

    The date that the report is submitted by the employee.

 

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Investment Persons

Trading Restrictions

Initial Public Offering (“IPO”) - Investment Persons are prohibited from acquiring securities through an allocation by the underwriter of an initial public offering (“IPO”). Exceptions may be made with prior written disclosure to and written approval from the AFS CCO, whereby an Investment Person could acquire shares in an IPO of his/her employer.

Limited or Private Offerings - Investment Persons are prohibited from purchasing securities in a private offering unless the purchase is approved in writing by the AFS CCO. Private placements include certain co-operative investments in real estate, commingled investment vehicles such as hedge funds, and investments in family owned businesses. Time-shares and cooperative investments in real estate used as a primary or secondary residence are not considered to be private placements.

Investment Clubs - Investment Persons are prohibited from participating in investment clubs unless such membership is approved in writing by the AFS CCO. An investment club is any group of people who pool their money to make joint or group investments.

Options - Investment Persons are not prohibited from buying or selling options on Covered Securities, however all other trading restrictions such as limitations on short-term and excess trading and pre-clearance apply to Investment Persons buying, selling or exercising options.

Short-Term Trading - Investment Persons are prohibited from the purchase and sale or sale and purchase of the same Covered Securities within thirty (30) calendar days. In addition, all Proprietary Products are subject to a sixty (60) calendar day holding period (ALPS is the investment Adviser).

Blackout Period – Blackout periods may be determined and established by the AFS CCO. Any such periods will be communicated to all affected persons as necessary.

Shorting of Securities - Investment Persons are not prohibited from the practice of short selling securities, however all other trading restrictions such as limitations on short-term and excess trading and pre-clearance apply to Investment Persons shorting of securities.

Restricted List - Investment Persons of Red Rocks Capital, LLC (“Red Rocks”) may not purchase or sell any security that Red Rocks holds or is being considered for purchase or sale by the Red Rocks Research Department for any account in which he/she has any beneficial interest. The list of Restricted Securities (the “Restricted List”) includes the Red Rocks Listed Private Equity SM Universe of securities and their subsidiaries.

Account Restrictions

Managed Accounts – Investment Persons are restricted from establishing an external managed account (also referred to as a discretionary account) with any adviser that conducts business with ALPS Advisors, Inc. See Appendix B for a list of advisers that work with AAI. See Appendix B for a list of advisers that work with AAI.

 

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Pre-Clearance

Unless the investment transaction is exempted from pre-clearance requirements all Investment Persons must request and receive pre-clearance prior to engaging in the purchase or sale of a Covered Security.

Pre-clearance approval is only good until midnight local time of the day after approval is obtained. “Good-till-Cancelled” orders are not permitted. “Limit” orders must receive pre-clearance every day the order is open.

As there could be many reasons for pre-clearance being granted or denied, Investment Persons should not infer from the pre-clearance response anything regarding the security for which pre-clearance was requested.

Exempted Securities/Transactions

Pre-clearance by Investment Persons is not required for the following transactions:

 

    Transactions that meet the de minimis exception (defined below);

 

    Transactions made in an account where the employee, pursuant to a valid legal instrument, has given full investment discretion to an unaffiliated/unrelated third party;

 

    Purchases or sales of direct obligations of the government of the United States or other sovereign government or supra-national agency, high quality short-term debt instruments, bankers acceptances, certificates of deposit (“CDs”), commercial paper, repurchase agreements;

 

    Automatic investments in programs where the investment decisions are non-discretionary after the initial selections by the account owner (although the initial selection requires pre-clearance);

 

    Investments in dividend reinvestment plans;

 

    Exercised rights, warrants or tender offers;

 

    General obligation municipal bonds;

 

    Transactions in Employee Stock Ownership Programs (“ESOPs”);

 

    Securities received via a gift or inheritance; and

 

    Non-Proprietary Product open-end mutual funds.

De Minimis Exception

A De Minimis transaction is a personal trade that meets the following conditions: (a) less than $25,000; and (b) is made with no knowledge that a Client Fund have purchased or sold the Covered Security, or the Client Fund or its investment adviser considered purchasing or selling the Covered Security. Notwithstanding the foregoing, transactions that fall under the de minimis exception should not be so frequent and repetitive in nature that in totality the transactions appear to be improperly avoiding the intent of the de minimis exception. The AAI CCO may require an Investment Person to pre-clear transactions regardless of if the transaction falls under the de minimis exception should the AAI CCO deem reasonable and appropriate. Further, transactions effected pursuant to the de minimis exception remain subject to reporting requirements of the Code.

Serving on a Board of Directors

Investment Personnel may not serve on the board of directors of a publicly traded company without prior written authorization from the Ethics Committee. No such service shall be approved without a finding by the Ethics Committee that the board service would be consistent with the interests of Clients. If board service is authorized by the Ethics Committee, in some instances, it may be required that the Investment Personnel serving as a Director may be isolated from making investment decisions with respect to the company involved through the use of “Chinese Walls” or other procedures.

 

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Reporting Requirements

Investment Persons are subject to the following Initial, Quarterly and Annual Reporting requirements unless specifically exempted by Rule 204A-1 or 17j-1. Investment persons are required to disclose any account in which securities transactions can be effected and in which the Access person has a beneficial interest (as further defined on page 5).

All Covered Securities are subject to the reporting requirements of the Code. Covered Securities will include all Securities as well as all Client Funds, any equivalents in local non-US jurisdictions, single stock futures, and both the U.S. Securities and Exchange Commission (“SEC”), and Commodity Futures Trading Commission (“CFTC”) regulated futures. For purposes of the Code, Securities shall have the meaning set forth in Section 2(a) (36) of the 1940 Act. This definition of Security includes, but is not limited to:

 

    Any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificates of interest or participation in any profit-sharing agreement,

 

    Any put, call, straddle, option or privilege on any Security or on any group or index of Securities,

 

    Any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency,

 

    Any exchange-traded vehicle (including, but not limited to, closed-end mutual funds, exchange-traded notes and exchange-traded funds),

 

    Any commodity contracts as defined in Section 2(a) (1) (A) of the Commodity Exchange Act. Including but not limited to futures contracts on equity indices,

 

    Any derivative of a Security shall also be considered a Security.

The following securities are exempt from the reporting requirements:

 

    Transactions made in an account where the employee, pursuant to a valid legal instrument, has given full investment discretion to an unaffiliated/unrelated third party;

 

    Direct Obligations of any sovereign government or supra-national agency;

 

    Bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements;

 

    Investments in dividend reinvestment plans;

 

    Variable and fixed insurance products;

 

    Non Proprietary Product open-end mutual funds;

 

    Qualified tuition programs pursuant to Section 529 of the Internal Revenue Code; and

 

    Accounts that are strictly limited to any of the above transactions.

 

  a. Initial Holdings Reports for Investment

Within ten (10) calendar days of being designated as, or determined to be, an Investment Person (which may be upon hire), each such person must provide a statement of all Covered Securities holdings and brokerage accounts. More specifically, each such person must provide the following information:

 

    The title, number of shares and principal amount of each Covered Security in which the employee had any direct or indirect Beneficial Ownership when the person became an employee;

 

    The name of any financial institution with whom the employee maintained an account in which any securities were held for the direct or indirect benefit of the employee as of the date the person became an employee; and

 

    The date the report is submitted by the employee.

 

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  b. Duplicate Statements/ Electronic Feeds

All new employees and any new account(s) opened by existing employees after April 1, 2015 shall be limited to the financial institutions listed in Appendix A – Broker/Dealers with Electronic Feeds of the Code.

If an account is held with a financial institution that does not supply electronic feeds to ALPS, new employees who are deemed an Investment Person will have 30 calendar days to close or transfer the existing account and are asked to only open an account with a firm listed in Appendix A of the Code.

Existing employees hired prior to April 1, 2015, who are deemed an Investment Person, with existing accounts can maintain those accounts and continue satisfying their quarterly reporting requirements in the system as they have in the past. However, existing employees will only be allowed to open any new accounts with financial institutions listed in Appendix A of the Code.

 

  c. Quarterly Transaction Reports

Each Investment Person is required to submit quarterly his/her Quarterly Securities Report within thirty (30) calendar days of each calendar quarter end. If no transactions were executed or if transactions were exempt from reporting, this should be noted on the quarterly report.

Specific information to be provided includes:

1. With respect to any Securities Transaction* during the quarter in a Covered Security in which any employee had any direct or indirect beneficial ownership:

 

    The date of the transaction, the title, the interest rate and maturity date (if applicable), the number of shares and the principal amount of each Security involved;

 

    The nature of the transaction, (i.e., purchase, sale, or other type of acquisition or disposition);

 

    The price of the Security at which the transaction was effected;

 

    The name of the financial institution with or through which transaction was effected; and

 

    The date that the report is submitted by the employee.

 

* Transactions effected pursuant to an Automatic Investment Plan need not be reported in the Quarterly Securities Report but holdings in Covered Securities are subject to the annual holdings reporting requirement discussed below.

2. With respect to any account established by the employee in which any securities were held during the quarter for the direct or indirect benefit of the employee:

 

    The name of the financial institution with whom the employee established the account;

 

    The date the account was established; and

 

    The date the report is submitted by the employee.

 

  d. Annual Holdings Reports

Each Investment Person is required to submit annually (i.e., once each and every calendar year) a list of applicable holdings, which is current as of a date no more than forty five (45) calendar days before the report is submitted. In addition, each employee is required to certify annually that he/she has reviewed and understands the provisions of the Code.

 

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Specific information to be provided includes:

 

    The title, number of shares and principal amount of each Covered Security in which the employee had any direct or indirect beneficial ownership;

 

    The name of any financial institution with whom the employee maintains an account in which any securities are held for the direct or indirect benefit of the employee; and

 

    The date that the report is submitted by the employee.

 

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Sanctions

Upon discovering a violation of this Code by an employee, family member, or related party sanctions as deemed appropriate may be imposed. Including, but not limited to, the following:

 

    A written warning with a copy provided to the employee’s direct report;

 

    Monetary fines and/or disgorgement of profits when an employee profits on the trading of a security deemed to be in violation of the Code;

 

    Suspension of the employment;

 

    Termination of the employment; or

 

    Referral to the SEC or other civil regulatory authorities determined by ALPS.

Violations and proposed sanctions will be documented by the Administrator of the Code of Ethics and will be submitted to the appropriate CCO for review and approval. In some cases, the Code of Ethics Committee may assist in determining the materiality of the violation and appropriate sanctions. Records of all reviews are the responsibility of and will be maintained by the Administrator of the Code of Ethics.

In determining the materiality of the violation, among other considerations, the CCO may review:

 

    Indications of fraud, neglect or indifference to Code of Ethics provisions;

 

    Evidence of violation of law, policy or guideline;

 

    Frequency of repeat violations;

 

    Level of influence of the violator; and

 

    Any mitigating circumstances that may exist.

In assessing the appropriate penalties, other factors considered may include:

 

    The extent of harm (actual or potential) to client interests;

 

    The extent of personal benefit or profit;

 

    Prior record of the violator;

 

    The degree to which there is a personal benefit or perceived benefit from unique knowledge obtained through employment with ALPS;

 

    The level of accurate, honest and timely cooperation from the violator; and

 

    Any mitigating circumstances that may exist.

Appeals Process

If an employee decides to appeal a sanction, they should contact the Administrator of the Code of Ethics who will refer the issue to the appropriate CCO for their review and consideration. Any appeals submitted by an employee will be kept along with records of the violation and actions taken.

 

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Compliance and Supervisory Procedures

The AFS CCO, or designee, is responsible for implementing supervisory and compliance review procedures. Supervisory procedures can be divided into two classifications: prevention of violations and detection of violations. Compliance review procedures include preparation of special and annual reports, record maintenance and review, and confidentiality preservation.

Prevention of Violations

To prevent violations of the Rules, the AFS CCO or designee should, in addition to enforcing the procedures outlined in the Rules:

 

  1. Review and update the procedures as necessary, at least once annually, including but not limited to a review of the Code by the AFS CCO, the Ethics Committee and/or counsel;

 

  2. Answer questions regarding the Code;

 

  3. Request from all persons upon commencement of services, and annually thereafter, any applicable forms and reports as required by the procedures;

 

  4. Identify all Access Persons and Investment Persons, and notify them of their responsibilities and reporting requirements;

 

  5. With such assistance from the Human Resources Department as may be appropriate, maintain a continuing education program consisting of the following:

 

    Orienting employees who are new to ALPS and the Rules; and

 

    Continually educating employees by distributing applicable materials and offering training to all employees on at least an annual basis.

Detection of Violations

To detect violations of these procedures, the AFS CCO, or designee, should, in addition to enforcing the policies, implement procedures to review holding and transaction reports, forms and statements relative to applicable restrictions, as provided under the Code.

Compliance Procedures

Reports of Potential Deviations or Violations

Upon learning of a potential deviation from or violation of the policies, the AFS CCO shall either present the information at the next regular meeting of the Ethics Committee or conduct a special meeting. The Ethics Committee shall thereafter take such action as it deems appropriate (see Penalty Guidelines).

Annual Reports

The AFS CCO shall prepare a written report to the Ethics Committee and Senior Management at least annually. The written report shall include any certification required by Rule 17j-1. This report shall set forth the following information:

 

    Copies of the Code, as revised, including a summary of any changes made since the last report;

 

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    Identification of any material issues including material violations requiring significant remedial action since the last report;

 

    Identification of any immaterial violations as deemed appropriate by the AFS CCO;

 

    Identification of any material conflicts arising since the last report; and

 

    Recommendations, if any, regarding changes in existing restrictions or procedures based upon experience under these Rules, evolving industry practices, or developments in applicable laws or regulations.

Records

ALPS shall maintain the following records:

 

    A copy of this Code and any amendment thereof which is or at any time within the past five years has been in effect;

 

    A record of any violation of this Code, or any amendment thereof, and any action taken as a result of such violation;

 

    Files for personal securities account statements, all reports and other forms submitted by employees pursuant to these Rules and any other pertinent information;

 

    A list of all persons who are, or have been, required to submit reports pursuant to this Code;

 

    A list of persons who are, or within the last five years have been responsible for, reviewing transaction and holdings reports; and

 

    A copy of each report produced pursuant to this Code.

Inspection

The records and reports maintained by ALPS pursuant to the Rules shall at all times be available for inspection, without prior notice, by any member of the Ethics Committee.

Confidentiality

All procedures, reports and records monitored, prepared or maintained pursuant to this Code shall be considered confidential and proprietary to ALPS and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than to members of the Ethics Committee or as requested.

The Ethics Committee

The purpose of this section is to describe the Ethics Committee. The Ethics Committee was created to provide an effective mechanism for monitoring compliance with the standards and procedures contained in the Rules and to take appropriate action at such times as violations or potential violations are discovered.

Membership of the Ethics Committee

The Committee consists of the Chief Compliance Officer(s) of ALPS Portfolio Solutions Distributor, Inc., ALPS Distributors, Inc., ALPS Advisors, Inc., and ALPS Fund Services, Inc., the Human Resources Director of ALPS Fund Services, Inc., the President(s) of ALPS Fund Services, Inc., ALPS Advisors, Inc., ALPS Portfolio Solutions Distributor, Inc. and ALPS Distributors, Inc., the Chief Operating Officer of ALPS Fund Services, Inc., and ALPS General Counsel.

 

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The AFS CCO currently serves as the Chairman of the Committee. The composition of the Committee may be changed from time-to-time and the Committee may seek input of other employees concerning matters related to this Code as they deem appropriate.

Committee Meetings

The Committee shall meet approximately every six months, or as often as necessary, to review operation of this Code and to consider technical deviations from operational procedures, inadvertent oversights or any other potential violation of the Rules. Deviations alternatively may be addressed by including them in the employee’s personnel records maintained by ALPS. Committee meetings are primarily intended for consideration of the general operation of the compliance procedures as well as for substantive or serious departures from the standards and procedures in the Rules.

Other persons may attend a Committee meeting, at the discretion of the Committee, as the Committee shall deem appropriate. Any individual whose conduct has given rise to the meeting may also be called upon, but shall not have the right, to appear before the Committee. It is not required that minutes of Committee meetings be maintained; in lieu of minutes the Committee may issue a report describing any action taken. The report shall be included in the confidential file maintained by the AFS CCO with respect to the particular employee whose conduct has been the subject of the meeting.

If a Committee member has committed, or is the subject of, a violation, he or she shall not be considered a voting member of the Committee or be involved in the review or decisions of the Committee with respect to his or her activities, or sanctions.

Special Discretion

The Committee shall have the authority by unanimous action to exempt any person or class of persons or transaction or class of transactions from all or a portion of the Rules provided that:

 

    The Committee determines, on advice of counsel, that the particular application of all or a portion of the Code is not legally required;

 

    The Committee determines that the likelihood of any abuse of the Code by such exempted person(s) or as a result of such exempted transaction is remote;

 

    The terms or conditions upon which any such exemption is granted is evidenced in writing; and

 

    The exempted person(s) agrees to execute and deliver to the AFS CCO, at least annually, a signed Acknowledgment Form, which Acknowledgment shall, by operation of this provision, describe such exemptions and the terms and conditions upon which it was granted.

The Committee shall also have the authority by unanimous action to impose such additional requirements or restrictions as it, in its sole discretion, determines appropriate or necessary, as outlined in the Sanctions Guidelines.

Any exemption, and any additional requirement or restriction, may be withdrawn by the Committee at any time (such withdrawal action is not required to be unanimous).

 

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Appendix A – Broker/Dealers with Electronic Feeds (updated March 31, 2017)

 

    Ameriprise

 

    Charles Schwab

 

    Chase Investment Services

 

    Edward Jones

 

    E-Trade

 

    Fidelity

 

    Interactive Brokers

 

    Merrill Lynch

 

    Morgan Stanley

 

    OptionsHouse

 

    OptionsXpress

 

    Raymond James

 

    RBC Capital Markets

 

    Scottrade

 

    TD Ameritrade

 

    UBS

 

    Vanguard

 

    Wells Fargo

 

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Appendix B – Sub-Advisers to ALPS Advisors, Inc. (Updated March 31, 2017)

 

    Aristotle Capital Management, LLC

 

    Clough Capital Partners, LP

 

    CoreCommodity Management, LLC

 

    Congress Asset Management Company

 

    Delaware Investment Fund Advisers

 

    Kotak Mahindra (UK) Limited

 

    Metis Global Partners, LLC

 

    Morningstar Investment Management LLC

 

    Principal Real Estate Investors, LLC

 

    Pzena Investment Management, LLC

 

    Red Rocks Capital, LLC

 

    RiverFront Investment Group, LLC

 

    RiverNorth Capital Management, LLC

 

    Stadion Money Management, LLC

 

    Sterling Global Strategies, LLC

 

    Sustainable Growth Advisers, LP

 

    TCW Investment Management Company

 

    Weatherbie Capital, LLC

 

    Wellington Management Company, LLP

Revised as of March 31, 2017

 

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Appendix C – Glossary of Defined Terms*

Access Person - Any Director, Trustee, Officer, Partner, Investment Person, or Employee of ALPS Holdings Inc., who:

 

    has access to non-public information regarding any Clients’ Transactions, or non-public information regarding the portfolio holdings of any fund(s) of a Client or any ALPS fund(s) or fund(s) of a subsidiary;

 

    is involved in making Securities Transactions recommendations to Clients, or has access to such recommendations that are non-public;

 

    in connection with his or her regular functions or duties, makes, participates in or obtains information regarding a Fund’s Transactions or whose functions relate to the making of any recommendations with respect to a Fund’s Transactions;

 

    obtains information regarding a Fund’s Transactions or whose functions relate to the making of any recommendations with respect to a Fund’s Transactions; or

 

    any other person designated by the AFS CCO or the Ethics Committee has having access to non-public information.

Account - Any accounts in which Securities (as defined below) transactions can be effected including:

 

    any accounts held by any employee;

 

    accounts of the employee’s immediate family members (any relative by blood or marriage) living in the employee’s household or is financially dependent;

 

    accounts held by any other related individual over whose account the employee has discretionary control;

 

    any other account where the employee has discretionary control and materially contributes; and

 

    any account in which the employee has a direct or indirect beneficial interest, such as trusts and custodial accounts or other accounts in which the employee has a beneficial interest or exercises investment discretion.

Administrator of the Code of Ethics – Designee(s) by the Chief Compliance Officer tasked with assisting in the oversight of ALPS’ Code of Ethics and all applicable restrictions and requirements.

Automatic Investment Plan - A program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined scheduled and allocation. An Automatic Investment Plan includes a dividend reinvestment plan.

Beneficial Ownership - For purposes of the Code, “Beneficial Ownership” shall be interpreted in the same manner as it would be in Rule 16a-1(a)(2) under the Securities Exchange Act of 1934 (“Exchange Act”) in determining whether a person is subject to the provisions of Section 16 under the Exchange Act and the rules and regulations there under. Generally speaking, beneficial ownership encompasses those situations where the beneficial owner has the right to enjoy some economic benefits which are substantially equivalent to ownership regardless of who is the registered owner. This would include, but is not limited to:

 

    securities which a person holds for his or her own benefit either in bearer form, registered in his or her own name or otherwise, regardless of whether the securities are owned individually or jointly;

 

    securities held in the name of a member of his or her immediate family sharing the same household;

 

    securities held by a trustee, executor, administrator, custodian or broker;

 

    securities owned by a general partnership of which the person is a member or a limited partnership of which such person is a general partner;

 

    securities held by a corporation which can be regarded as a personal holding company of a person; and

 

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    securities recently purchased by a person and awaiting transfer into his or her name.

Chief Compliance Officer (“CCO”) - The CCO referred to herein as the AFS CCO is Cory Gossard, so designated by ALPS Fund Services, Inc. The CCO referred to herein as the AAI CCO is Erin Nelson, so designated by ALPS Advisors, Inc.

Covered Associate – Any employee that is required to comply with the provisions under Rule 206(4)-5 of the Advisers Act as well as the Political Contributions Policy within ALPS Advisors, Inc.’s Compliance Program. A person is generally considered to be a covered associate for these purposes:

 

    if he or she is a President, managing director, VP in charge of a business unit and any other employee who performs a policy-making function of ALPS Advisors, Inc. (“AAI”);

 

    if he or she is an employee who solicits a government entity for AAI and such employee’s direct or indirect supervisor;

 

    a political action committee controlled by AAI or by any of AAI’s covered associates; or

 

    any other AAI employee so designated by the CCO of AAI. (“AAI CCO”).

Covered Securities – For purposes of the Code, “Covered Securities” will include all Securities (as defined below) as well as all Proprietary Products (as defined below) or any equivalents in non-US jurisdictions, single stock futures or swap, security based swap and security futures products regulated by both the U.S. Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”).

Employee All employees of ALPS Holdings, Inc. and its subsidiaries, including directors, officers, partners of AAI (or other persons occupying similar status), any temporary worker, contractor, or independent contractor if so designated by the AFS CCO or the Ethics Committee.

Financial Institution – Any broker, dealer, trust company, registered or unregistered pooled investment or trading account, record keeper, bank, transfer agent or other financial firm holding and/or allowing securities transactions in Covered Securities.

Foreign Official – the term “Foreign Official” includes:

 

    government officials;

 

    political party leaders;

 

    candidates for office;

 

    employees of state-owned enterprises (such as state-owned banks or pension plans); and

 

    relatives or agents of a Foreign Official if a payment is made to such relative or agent of a Foreign Official with the knowledge or intent that it ultimately would benefit the Foreign Official.

Fund Transactions – For purposes of the Code, “Fund Transactions” refers to any transactions of a fund itself. It does not include “Securities Transactions” of an employee (Securities Transactions are defined below).

Investment Persons – “Investment Person” shall mean any Access Person (within ALPS) who makes investment decisions for AAI or Clients, who provides investment related information or advice to portfolio managers, or helps to execute and/or implement a portfolio manager’s decisions. This typically includes for example, portfolio managers, portfolio assistants, traders, and securities analysts.

 

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Material Nonpublic Non-public Information – Any information that has not been publicly disseminated, or that was obtained legitimately while acting in a role of trust or confidence of an issuer or that was obtained wrongfully from an issuer or such person acting in a role of trust or confidence that a reasonable investor would consider important in making a decision to buy, hold or sell a company’s securities. Regardless of whether it is positive or negative, historical or forward looking, any information that a reasonable investor could expect to affect a company’s stock price. Material Nonpublic Non-public Information could include -

 

    projections of future earnings or losses;

 

    news of a possible merger, acquisition or tender offer;

 

    significant new products or services or delays in new product or service introduction or development;

 

    plans to raise additional capital through stock sales or otherwise;

 

    the gain or loss of a significant customer, partner or supplier;

 

    discoveries, or grants or allowances or disallowances of patents;

 

    changes in management;

 

    news of a significant sale of assets;

 

    impending bankruptcy or financial liquidity problems; or

 

    changes in dividend policies or the declaration of a stock split

Portfolio Securities – Securities held by accounts (whether registered or private) managed or serviced by ALPS.

Proprietary Products – any funds (open-end, closed-end, Exchange-Traded Funds, Unit Investment Trusts) where ALPS is the investment adviser. A list will be made available to employees on a quarterly basis.

Registered Representative – The term “Registered Representative” as used within this Code, refers to an employee who holds a securities license, and is actively registered, with FINRA.

Restricted Accounts – Employees are restricted from establishing external managed accounts (also referred to as a discretionary account) with any adviser that conducts business with ALPS Advisors, Inc. A managed account is defined as an investment account that is owned by an individual investor but is managed by a hired professional money manager. Investment in a hedge fund is not deemed to be managed account. See Appendix B for a list of advisers that work with AAI.

Securities – For purposes of the Code, “Security” shall have the meaning set forth in Section 2(a) (36) of the 1940 Act. This definition of “Security” includes, but is not limited to: any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificates of interest or participation in any profit-sharing agreement, any put, call, straddle, option or privilege on any Security or on any group or index of Securities, or any put, call, straddle, option or privilege entered into on a national securities exchange relating to foreign currency, any exchange-traded vehicle (including, but not limited to, closed-end mutual funds, exchange-traded notes and exchange-traded funds). Further, for the purpose of the Code, “Security” shall include any commodity contracts as defined in Section 2(a) (1) (A) of the Commodity Exchange Act. This definition includes but is not limited to futures contracts on equity indices. For purposes of the Code, any derivative of a “Security” shall also be considered a Security.

“Security” shall not include direct obligations of the government of the United States or any other sovereign country or supra-national agency, bankers’ acceptances, bank certificates of deposit, commercial paper and high quality short-term debt instruments, including repurchase agreements, variable and fixed insurance products.

 

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Securities Transactions – The term “Securities Transactions” as used within this Code typically refers to the purchase and/or sale of Securities, (as defined herein), by an employee. Securities Transactions shall include any gift of Covered Securities that is given or received by the employee, including any inheritance received that includes Covered Securities.

 

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Exhibit 99.C1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form S-6 of our report dated December 14, 2017, relating to the financial statements and financial highlights of SPDR Dow Jones Industrial Average ETF Trust, which appears in such Registration Statement. We also consent to the reference to us under the heading “Independent Registered Public Accounting Firm and Financial Statements” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February 13, 2018