Automatic Investing Agreement
This Automatic Investing Agreement (this “Agreement”) governs my participation in the Automatic Investing Program (“AIP”) through Morgan Stanley Smith Barney LLC (the “Company”), and by electing to participate in the AIP, I agree to the terms of this Agreement.
1. How Automatic Investing works. Automatic Investing at the Company allows me to set up my own individual automatic investing plan (“My Plan”) by specifying mutual fund or exchange-traded fund (“ETF”) investment instructions according to which My Plan orders will be created and routed for execution on an automatic and recurring basis by the Company. I acknowledge and agree that, subject to adequate funding, buying power, and other potential account or order restrictions, I am instructing the Company to create individual orders for each mutual fund and/or ETF in My Plan in the amounts specified and according to the periodic, recurring, investing schedule I select during the Automatic Investing Program (“AIP”) enrollment experience or as such schedule may be subsequently adjusted by me in accordance with Section 7 of this Agreement. It is my ongoing responsibility to confirm that my instructions to the Company are accurate. My Plan will only become effective after my instructions have been entered via the AIP enrollment experience and accepted by the Company. Automatic Investing does not ensure a profit or protect against loss of my investment due to market conditions.

2. Eligible securities. Only certain mutual funds and ETFs are eligible for Automatic Investing. This includes affiliated products such as some Morgan Stanley, Eaton Vance, Calvert and Parametric mutual funds, meaning that some AIP-eligible mutual funds and ETFs may be issued, sponsored, managed, or sub advised by an affiliate of the Company. Except as described below, money market funds and mutual funds with loads are generally not eligible for Automated Investing. Eligible ETFs are limited to ETFs that have sufficient levels of trading volume and liquidity at the Company or other objective criteria that may established by the Company from time to time. The list of AIP-eligible ETFs will be reviewed periodically and is subject to change at the Company’s discretion, including without notice. Exchange-traded notes, leveraged ETFs, and inverse ETFs are not eligible for Automatic Investing. To the extent that a mutual fund or ETF in My Plan no longer permits new purchases or additional investments, the symbol will no longer be eligible for Automatic Investing. Removal of any mutual fund or ETF from the AIP eligibility list will result in the removal of the mutual fund or ETF from My Plan. I understand that My Plan will be canceled if at any point, for whatever reason, it no longer contains any AIP-eligible symbols. I acknowledge and agree that I will not receive a separate notice from the Company when a mutual fund or ETF becomes AIP-ineligible and that I am responsible for reviewing the list of eligible mutual funds and ETFs before each scheduled day by visiting the ETF screener and Mutual Fund screener and adjusting My Plan if a mutual fund or ETF that I have selected is no longer eligible and I wish to add another eligible mutual fund or ETF to My Plan. I acknowledge and agree that if one or more, but not all, of the securities in My Plan become AIP-ineligible, my order(s) for the respective AIP-ineligible securities will not be created and the amounts allocated for the purchase of the AIP-ineligible securities will not be invested and will remain in my account subject to my further instructions. Orders for the remaining AIP-eligible securities in My Plan will continue to be created in the amounts specified and according to the periodic, recurring investing schedule I have selected through the AIP enrollment experience and any subsequent adjustments.

Former Capital One Investing customers enrolled in a ShareBuilder automatic investing program when their Capital One accounts were transitioned to the Company (“Former Capital One Customers”) are eligible to continue purchasing the same mutual funds selected in their ShareBuilder automated investing program when their Capital One accounts were transitioned to the Company through the AIP, subject to fund availability and purchasing restrictions.

I acknowledge and agree that a mutual fund or ETF’s eligibility for Automatic Investing does not mean the Company has evaluated its suitability for me or made any offer, solicitation, or recommendation to purchase any security that I select for My Plan.

3. Sufficient funds in account. I acknowledge and agree that my instruction to create an order pursuant to My Plan is conditioned on there being sufficient unencumbered, settled funds (in accordance with the Company’s funds-availability policy) or available margin (if applicable) in my account to purchase the full amount that I have instructed the Company to invest in the selected security or securities at the time of order creation on the scheduled day of order placement under My Plan(s), and that my instructions will be (i) canceled if the amount of unencumbered, settled funds or available margin in my account at the time of order creation on the scheduled day of order placement under My Plan(s) is zero or (ii) modified, as set forth below, if the amount of unencumbered, settled funds or available margin in my account at the time of order creation on the scheduled day of order placement under My Plan(s) is greater than zero but less than the total amount necessary to fulfill the scheduled orders under My Plan. With respect to the circumstances described in clause (ii) of the foregoing sentence, I instruct the Company to create orders according to the following methodology:

  • If I have multiple AIP plans, the Company shall implement such plans in the order of the oldest plan to the newest plan (based on the date of creation of the plan). The Company will implement such plans until the amount of unencumbered, settled funds or available margin in my account is no longer sufficient to fulfill the remaining orders instructed in My Plan(s).
  • When creating orders instructed under each AIP plan, the Company shall create orders for each security in the plan in the order of the smallest order (i.e., the order for the security with the smallest notional investment amount) to the largest order until the amount of unencumbered, settled funds or available margin in my account is no longer sufficient to fulfill the remaining orders that I have instructed in My Plan(s). If there are one or more orders under an AIP plan with the same instructed investment amount, the Company shall create orders in alphabetical order based on the name of the security.

I acknowledge and agree that my Automatic Investing instructions may be canceled at any time prior to execution in the sole discretion of the Company. Automatic Investing may provide the ability to fund My Plan using cash transfers that precede the corresponding automatic investment for each period. That means it is my responsibility to determine whether there is sufficient time for the cash transfer to be deposited into my account and be available and unencumbered (in accordance with the Company’s funds-availability policy) for recurring purchases as specified in My Plan. The Company reserves the right, in its sole discretion and without advance notice, to refuse to recognize or accept any deposits or proceeds in my account for Automatic Investing, including settled funds that are pledged, encumbered, owing, or otherwise deemed to be unavailable for Automatic Investing by the Company. Repeated instances of insufficient funding will result in the cancellation of My Plan.

4. Order Instructions.

  • At enrollment.

By enrolling in AIP, I am submitting to the Company conditional order instructions for My Plan with respect to the purchase of one or more AIP-eligible securities that I selected for My Plan in the applicable account, for the dollar amounts, and at the frequency that I specified during the AIP enrollment experience and pursuant to any subsequent changes to My Plan that I make in accordance with Section 7 of this Agreement. Each instruction that I am providing to the Company pursuant to My Plan is a conditional instruction and will not be deemed to have been provided unless and until each of the conditions precedent for such instruction set forth in this Agreement is satisfied (e.g., sufficient funds in my account, the selected securities being AIP eligible). The Company shall endeavor to execute, in accordance with applicable law, each valid order that is created pursuant to My Plan, provided that any order is subject to cancellation or partial execution due to inadequate buying power, market conditions, prevailing pricing, available liquidity, or other factors determined by the Company, in its sole discretion.

  • Schedule.

I am instructing the Company to follow one of the available investment frequencies below for My Plan:

i. Weekly. If I have selected this option, I am instructing the Company to create order(s) for each security that is a part of My Plan on Tuesday of every week, unless the applicable Tuesday is not a business day, in which case such order(s) will be created on the following business day.

ii. Twice a month. If I have selected this option, I am instructing the Company to create order(s) for each security that is a part of My Plan on either the first and third Tuesday of each month or the second and fourth Tuesday of each month, unless the applicable Tuesday is not a business day, in which case such order(s) will be created on the following business day.

iii. Monthly. If I have selected this option, I am instructing the Company to create order(s) for each security that is a part of My Plan on one Tuesday of each month that I select, unless the applicable Tuesday is not a business day, in which case such order(s) will be created on the following business day.

iv. Quarterly. If I have selected this option, I am instructing the Company to create order(s) for each security that is a part of My Plan once every three months on the Tuesday I select, unless the applicable Tuesday is not a business day, in which case such order(s) will be created on the following business day.

v. Semi-annually. If I have selected this option, I am instructing the Company to create order(s) for each security that is a part of My Plan every six months on the Tuesday of the month I select, unless the applicable Tuesday is not a business day, in which case such order(s) will be created on the following business day.

vi. Annually. If I have selected this option, I am instructing the Company to create order(s) for each security that is a part of My Plan on an annual basis on a Tuesday I select, unless the applicable Tuesday is not a business day, in which case such order(s) will be created on the following business day.

vii. “When Funds are Available” (only available to Former Capital One Customers who used this investment frequency for mutual funds at Capital One; account balance will be verified weekly).

For the purposes of this Agreement, “business day” means Monday through Friday excluding stock exchange holidays and closings. The Company may adjust the schedule(s) set forth above at any time.

  • Order terms.

i. Temporary and Limited Discretion to the Company: I acknowledge and agree that all orders to purchase ETF shares through My Plan are being submitted on each scheduled day as “not-held” orders, that is, an order pursuant to which I hereby grant the Company discretion as to the time at which My Plan order(s) will be placed on the scheduled day(s) of My Plan and the price(s) at which My Plan order(s) will be executed. Each not-held order will be considered to be in effect until the end of the business day on which the order was created and routed for execution. I understand that, as a result of this discretion, to work my orders the Company is permitted to, and may, trade in the same security that is the subject of my order at the same price or a better price than the price at which my order is executed, provided that the Company remains responsible for obtaining best execution under this Agreement and the prevailing market conditions at the time. Further, I understand that the discretion I grant the Company as to the time when and price at which My Plan purchases order(s) will be created and routed for execution is temporary and limited. I acknowledge that the discretion I grant to the Company as to the time when and price at which My Plan purchases order(s) will be created and routed for execution neither confers onto the Company nor establishes any “fiduciary” relationship, capacity, or obligations owed to me by the Company, including with respect to the ongoing monitoring of my investments and that the Company’s exercise of such discretion does not constitute “investment advice” of any kind.

ii. Order Types: I acknowledge and agree that all orders to purchase ETF shares through My Plan are being submitted, on the scheduled day, as “not-held” orders and that limit orders, stop orders, and other nonmarketable or conditional order types are not available for Automatic Investing purchase orders.

iii. Separate Orders: A separate order will be created for each security selected in My Plan, which will be aggregated with other AIP customer purchase orders for the AIP-eligible ETF when there are multiple AIP customer orders for the same security. The ETFs I purchase through My Plan will be allocated to me at an average price of all executions for the aggregated ETF orders of Automatic Investing customers that are executed that trading day.

iv. Timing: Any mutual fund purchase orders for My Plan will be placed on the applicable business day set forth in the schedule for My Plan and will receive daily end-of-day net asset value (“NAV”) pricing, subject to the order’s acceptance of the applicable mutual fund company. ETF orders are routed to the market for execution on the applicable business day set forth in the schedule for My Plan subject to the terms of Section 4.c.i. and other applicable provisions of this Agreement. If one or more orders cannot be executed on the day set forth in My Plan because the market is closed at the time that an order is scheduled to be routed or routed for execution or the order is not created and routed on the scheduled date due to any extenuating technical, operational, systemic, or other market disruption or outage, whether caused by the Company, its affiliates, any issuer, or any other third-party vendor or market maker upon which the Company’s AIP processes rely, or for any other reason, such orders will be canceled.

v. Pricing: My Plan mutual fund orders will be priced at the trade date’s end-of-day NAV. The number of mutual fund shares or units purchased for my account will correspond to the amount of dollars that I have instructed the Company to automatically invest in the mutual fund(s) that I selected for My Plan on that day subject to any other applicable terms of this Agreement.

vi. Partial Execution: With respect to orders for ETF shares, the number of ETF shares purchased for my account will correspond as close to the approximate amount of dollars I have instructed the Company to automatically invest for me for the specified period, without going over, based on the ETF price and unit calculations at the time that the order is created and routed to the market for execution. Despite my market order instructions on My Plan order(s) and the potential to receive fractional shares, I acknowledge and agree that due to rounding and decimalization limitations it is likely that orders under My Plan will not be executed in full, down to the nearest one-thousandth of a share, and, thus, the amount invested will likely be less than the amount I instructed, resulting in a partial execution (“Dispersion”). In general, Dispersion will be greater the higher the price of the ETF. Please go to the ETF screener and select the “Eligible for Recurring Investment” filter to view the Automatic Investing eligible ETFs. I acknowledge and agree that (i) any such Dispersion is immaterial to my AIP order instructions and (ii) the Company cannot guarantee a full execution of the ETF purchase orders for My Plan. Any amount not used in the purchase of securities for My Plan will remain in my account. I agree to consult my trade confirmations, account statements, and communications from the Company for information regarding the order status and execution of My Plan orders and acknowledge that allocations of My Plan purchases may not be reflected in my account until the next business day.

5. Prebuilt Mutual Fund Portfolios and Automatic Investing. Prebuilt Mutual Fund Portfolios is an educational tool that shows what sample mutual fund portfolios could look like based on different investment objectives. If I decided to purchase a Prebuilt Mutual Fund Portfolio and elected to make ongoing purchases of these mutual funds through Automatic Investing, My Plan will consist of recurring purchases of those mutual funds based on the allocation percentages in place when I used the Prebuilt Mutual Fund Portfolios tool to create My Plan. If the Company later makes changes to the mutual funds or allocations in Prebuilt Mutual Fund Portfolios, those updates will not be applied to My Plan going forward. Instead, I instruct the Company to continue making recurring investments in the mutual funds at the allocations previously selected.

My instructions with respect to mutual funds in a Prebuilt Mutual Fund Portfolio are conditioned on all of the mutual funds in such Prebuilt Mutual Fund Portfolio being available for Automatic Investing. If any mutual fund in My (Prebuilt) Plan is no longer eligible for Automatic Investing on a scheduled purchase day, the order for that mutual fund and the order(s) for every other mutual fund in My (Prebuilt) Plan will not be created or executed. If one or more mutual funds in My (Prebuilt) Plan are not eligible for Automatic Investing on a few consecutive scheduled purchase days, My (Prebuilt) Plan will be canceled after a number of unsuccessful attempts at placing the order for the ineligible fund, as determined by the Company. I acknowledge and agree that if I liquidate my Prebuilt Mutual Fund Portfolio, I must also cancel My Plan if I do not want to continue making recurring investments in those mutual funds. This feature is not available for Prebuilt ETF Portfolios.
6. Use of Margin. I acknowledge and agree that mutual funds purchased through My Plan in a margin account cannot be purchased on margin and may be subject to further margin restrictions. My Plan ETFs are margin-eligible in accordance with my account’s margin privileges. All My Plan ETF orders are subject to the Company’s margin policies and requirements as defined in the E*TRADE from Morgan Stanley Client Agreement for Self-Directed Accounts (the “Client Agreement”), the Margin Supplement thereto, and other applicable documents, communications, and disclosures.
7. Modification of My Plan. I acknowledge and agree that the Company reserves the right to deactivate, terminate, or decline My Plan at any time and for any reason. I may modify My Plan at any time, but I acknowledge that the effective date of such modification will depend on whether the Company has accepted the modification and has had sufficient time to act on it.
8. Transaction costs. I acknowledge and agree that although there are no transaction fees or commissions for the mutual funds or ETFs purchased within My Plan, other account-related costs, exchange and regulatory fees, and/or commissions may apply, including but not limited to investment advisory fees, Rule 12b-1 distribution fees, shareholder servicing fees, revenue-sharing payments and other costs and fees. Additionally, I acknowledge and agree that the Company and its affiliates may receive compensation from mutual funds and ETFs and their sponsors and advisers, including, without limitation, Rule 12b-1 fees, revenue-sharing, shareholder servicing fees, and other payments for marketing, support, and educational services, in connection with my investments in such mutual funds and ETFs. Additional information can be found on the Fees and Expenses tab on the fund’s information page and also in the Morgan Stanley Smith Barney LLC Relationship Summary and the Important Account Information for Self-Directed Accounts. Former Capital One Customers who are eligible to purchase mutual funds through the AIP will continue to be charged the same transaction fees as in the former Capital One ShareBuilder program. The Company will also receive payments from third parties based on customer trading activity. For more information, see us.etrade.com/l/quarterly-order-routing-report.
9. Fractional ETF shares. I acknowledge and agree that, due to rounding and decimalization limitations, AIP ETF purchases made pursuant to My Plan will likely result in partial execution and my receiving residual fractional share positions in the ETFs in My Plan. I acknowledge and agree that fractional shares may not be transferred via an automated clearinghouse and cannot be freely traded on any exchange or alternative trading system. De minimis fractional ETF interests in my account will be liquidated if I decide to transfer the relevant ETF holdings to another investment firm. I also acknowledge and agree that only whole shares, not fractional shares, are eligible to participate in voluntary corporate actions, including tender offers and certain rights offerings, and that I will not be able to exercise voting rights on any fractional share remainders in my account.
10. Termination and suspension of My Plan. I acknowledge and agree that to terminate My Plan I must submit appropriate instructions to, and which then must be accepted by, the Company. I will remain liable for all transactions that have not been settled prior to the effective time of termination of My Plan. Any closure of my account will result in the termination of My Plan and any suspension of my account will result in the suspension of My Plan. My Plan will be terminated if there are insufficient funds in my account (as further set forth in Section 3 of this Agreement) on three consecutive scheduled purchase days. However, if I am a Former Capital One Customer who continues using a “When Funds are Available” frequency, My Plan will be automatically canceled if sufficient funds are not available for 52 consecutive weeks.
11. Other risks. I acknowledge and agree not to hold the Company responsible for any loss or damage caused by anything that is beyond the reasonable control of the Company, including, but not limited to, market conditions and system outages or downtime. The Company shall have no liability resulting from inaccuracy of information that I provide to the Company or my failure to update any information that I have previously provided. I acknowledge and agree that the Company will not be liable for partial executions of ETF purchases for My Plan as noted in Section 4, the receipt of fractional shares as noted in Section 9, price fluctuations that an ETF or mutual fund may experience due to a delay in the execution of My Plan orders, any loss incurred by me in connection with transfers from or to my the Company account, actions I undertake that impact my buying power between execution of orders under My Plan and their settlement, or other administration of My Plan unless the Company is grossly negligent in fulfilling its obligations regarding My Plan. Under no circumstances will the Company be liable for consequential, special, or indirect damages or losses. I acknowledge and agree to indemnify the Company, its affiliates and their officers, employees, agents, successors, and assigns against any and all claims or liabilities by virtue of the Company acting on my instructions under My Plan.
12. Modification of this Agreement. The Company reserves the right to change this Agreement at any time without prior notice. Modifications to this Agreement will be posted on the Automatic Investing landing page available through etrade.com. I acknowledge and agree that my continued use of Automatic Investing after such change constitutes my consent to the modified Agreement. To the extent that this Agreement is silent on any subject, the terms of the Client Agreement govern. This Agreement supplements the Client Agreement and sets forth additional terms and conditions that govern any account with respect to My Plan. Except as specifically supplemented herein, all terms and conditions of the Client Agreement remain unchanged and in full force and effect. In the event of a conflict between the terms of this Agreement and the terms of the Client Agreement with respect to the subject matter hereof, the terms of this Agreement shall control.
13. Electronic acceptance of this Agreement. A version of this Agreement was presented to me at the time that My Plan was created. I acknowledge and agree that I can also find the current version of this Agreement on the Automatic Investing landing page available through etrade.com. I acknowledge and agree that my continued enrollment in the AIP is valid evidence of my ongoing consent to be legally bound by this Agreement. My continued enrollment, as well as my electronic acknowledgement of this Agreement when creating or changing My Plan, is also evidence of my consent for the Company to act upon the written order instructions I provided when enrolling in the AIP. An electronically stored copy of this Agreement is considered to be the true, complete, valid, authentic, and enforceable record of this Agreement, admissible in judicial or administrative proceedings to the same extent as if the documents and records were originally generated and maintained in printed form.
I accept the Agreement. My acceptance of the Agreement will enable the Company to enroll my account into the Automatic Investing Program. The Automatic Investing Agreement available on this page details my relationship with Morgan Stanley Smith Barney LLC with regard to my individual automatic investing plan and supplements the E*TRADE from Morgan Stanley Client Agreement for Self-Directed Accounts as each applies to my individual automatic investing plan.
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