I recently received a letter from a bank asking me to vote for something. Stated from the letter for two things I need to vote on:

  1. To approve amendments to the trust indenture that change the manner in which the ordinary fees and expenses of the trust are paid such that, in return for a payment to the sponsors of x% per year of the daily nav of the trust, the sponsor will be responsible for all other ordinary fees and expenses of the trust, as described in the consent solicitation statement.

  2. to approve the amendment to section x of the trust indenture to permit the sponsor to compensate affilates for providing marketing and other services to the trust

I have no idea what to make of this jargon, any help?

  • Below is a reasonable interpretation
    – Ironluca
    Commented Sep 22, 2014 at 8:22

1 Answer 1

  1. They want to change the way fees and expenses of the trust are paid from how it is now, to become a flat percentage of daily NAV (Net asset value) that is paid to a third party (the sponsor) in exchange for the sponsor paying all fees and expenses. Essentially this will lower the risk of the trust, but might cost more since the third party won't be willing to do it if it loses them money. (On the other hand, if the sponsor benefits from economies of scale, it might save the trust money, it all depends on how reasonable the percentage is)
  2. They want to permit the sponsor to be able to hire other companies to provide marketing and other services for the trust. (The previous amendment would allow the sponsor to pay for expenses and fees, this one expands the range of what the sponsor can spend money on).

Note: While I think the above is a reasonable interpretation, I'm not about to take legal responsibility for it since I'm not a lawyer, if you need serious advice get a professional opinion through appropriate channels.

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