Attached files
file | filename |
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EX-4.1 - EX-4.1 - Superfund Gold Large Cap Equity Fund | c55724exv4w1.htm |
EX-23.1 - EX-23.1 - Superfund Gold Large Cap Equity Fund | c55724exv23w1.htm |
Table of Contents
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION JANUARY 29, 2010
REGISTRATION NO. 333-[_______]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SUPERFUND GOLD LARGE CAP EQUITY FUND
(Exact name of registrant as specified in its charter)
Delaware | 6221 | 80-6145214 | ||
(State of Organization) | (Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
Paul Wigdor | ||
Superfund Advisors Inc. | ||
489 Fifth Avenue | 489 Fifth Avenue | |
New York, New York 10017 | New York, New York 10017 | |
212.878.4530 | 212.878.4530 | |
(Address, including zip code, and telephone number, including | (Name, address, including zip code, and telephone number, | |
area code, of registrants principal executive offices) | including area code, of agent for service) |
Copy to:
James C. Munsell, Esq.
Sidley Austin llp
787 Seventh Avenue
New York, New York 10019
212.839.5609
James C. Munsell, Esq.
Sidley Austin llp
787 Seventh Avenue
New York, New York 10019
212.839.5609
Approximate Date Of Commencement Of Proposed Sale To The Public: As soon as practicable
after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the Securities Act) check
the following box. þ
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities
Act, check the following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company þ |
CALCULATION OF REGISTRATION FEE
Proposed Maximum | ||||||||||||||
Title of each class of | Aggregate Offering | Proposed Maximum | Amount of | |||||||||||
securities being registered | Amount to be Registered | Price Per Share | Aggregate Offering Price | Registration Fee1 | ||||||||||
Superfund Gold Large Cap Equity
Fund Common Units of Beneficial
Interest |
100,000 | $20.00 | $2,000,000 | $142.60 | ||||||||||
1 | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act, based upon a net asset value per Share of $20.00. |
The Registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may
determine.
EXPLANATORY STATEMENT
The prospectus contained in this Registration Statement relates to the Common Units of
Beneficial Interest for each of the following registrants:
Common Units of Beneficial Interest Being | ||||||
Registrant | Registration Statement | Concurrently Registered | ||||
Superfund Gold Large Cap Equity Fund
|
333-[-] | 100,000 | ||||
Superfund Gold Mid Cap Equity Fund
|
333-[-] | 100,000 | ||||
Superfund Gold Small Cap Equity Fund
|
333-[-] | 100,000 | ||||
Superfund Gold World Equity Fund
|
333-[-] | 100,000 | ||||
Superfund Gold Commodities Fund
|
333-[-] | 100,000 |
TABLE OF CONTENTS
Table of Contents
The information in this Prospectus is not complete and may be changed. We may not sell these
securities until the registration statement filed with the Securities and Exchange Commission is
effective. This Prospectus is not an offer to sell these securities and is not soliciting an offer
to buy these securities in any state where the offer or sale is not permitted.
Subject
to completion, dated January 29, 2010
SUPERFUND GOLD LARGE CAP EQUITY FUND
SUPERFUND GOLD MID CAP EQUITY FUND
SUPERFUND GOLD SMALL CAP EQUITY FUND
SUPERFUND GOLD WORLD EQUITY FUND
SUPERFUND GOLD COMMODITIES FUND
100,000 Common Units of Beneficial Interest
100,000 Common Units of Beneficial Interest
100,000 Common Units of Beneficial Interest
100,000 Common Units of Beneficial Interest
100,000 Common Units of Beneficial Interest
Each of Superfund Gold Large Cap Equity Fund (or the Large Cap Equity Fund), Superfund Gold
Mid Cap Equity Fund (or the Mid Cap Equity Fund), Superfund Gold Small Cap Equity Fund (or the
Small Cap Equity Fund), Superfund Gold World Equity Fund (or the World Equity Fund), and Superfund
Gold Commodities Fund (or the Commodities Fund), has been formed on January 15, 2010 as a separate
Delaware statutory trust, or each a Fund. Each Fund will offer and will issue common units of
beneficial interest, or Shares, which represent units of beneficial interest in and ownership of
each such Fund only. Shares in each Fund are being separately offered. We may refer to each of
the Funds collectively as the Funds.
The primary objective of each Fund is to maintain the approximate equivalent of a dollar for dollar
investment in gold by investing in long positions in exchange-traded futures contracts on gold, or
the Gold Investment, while seeking appreciation of its assets over time by trading and investing in
long positions in exchange-traded futures contracts that reference an appropriate securities,
commodity, or other index, with a view to tracking the applicable index investment over time, or
the Index Investment. Each Fund also earns interest income from United States Treasury and other
high credit quality short-term fixed income securities.
The notional value of each Funds futures contracts with respect to each of its Gold Investment and
Index Investment will be approximately equal to the value of each Funds holdings of United States
Treasury and other high credit quality short-term fixed income securities, or the Funds Equity,
upon establishment of each of these positions. Therefore, the aggregate notional value of each
Funds futures contracts with respect to both its Gold Investment and Index Investment will be
double the value of the Funds Equity, which means each Fund will have a leverage ratio at such
time of 2:1.
Authorized Participants may sell the Shares they purchase from a Fund in blocks of 100,000 Shares,
called Baskets, to other investors at prices that are expected to reflect, among other factors, the
trading price of such Funds Shares on the NYSE Arca, Inc., or the NYSE Arca, and the supply of and
demand for Shares of such Fund at the time of sale and are expected to fall between net asset value
and the trading price of the Shares of such Fund on the NYSE Arca at the time of sale.
Shares of each Fund will be continuously offered at their net asset value, stated in dollars, for
transaction purposes, and ounces of gold, reflecting the U.S. dollar price per ounce of gold
established at the most recent London A.M. fixing, for reference.
The Shares of each Fund are expected to trade on the NYSE Arca under the following symbols:
Superfund Gold Large Cap Equity Fund [___], Superfund Gold Mid Cap Equity Fund [___], Superfund
Gold Small Cap Equity Fund [___], Superfund Gold World Equity Fund [___], and Superfund Gold
Commodities Fund [___].
Superfund Advisors Inc., a member of the Superfund group of affiliated companies, serves as the
managing owner, or the Managing Owner, commodity pool operator and trading advisor of each Fund.
Each of the following Funds intends to reflect the below sectors:
Superfund Gold Large Cap Equity Fund is designed to maintain the approximate equivalent
of a dollar for dollar investment in gold while investing in futures contracts that track a large
cap U.S. equity securities index.
Superfund Gold Mid Cap Equity Fund is designed to maintain the approximate equivalent of
a dollar for dollar investment in gold while investing in futures contracts that track a mid cap
U.S. equity securities index.
Superfund Gold Small Cap Equity Fund is designed to maintain the approximate equivalent
of a dollar for dollar investment in gold while investing in futures contracts that track a small
cap U.S. equity securities index.
Superfund Gold World Equity Fund is designed to maintain the approximate equivalent of a
dollar for dollar investment in gold while investing in futures contracts that track a world equity
securities index.
Superfund Gold Commodities Fund is designed to maintain the approximate equivalent of a
dollar for dollar investment in gold while investing in futures contracts that track a commodities
index.
Except when aggregated in Baskets, the Shares are not redeemable securities.
INVESTING IN THE SHARES INVOLVES SIGNIFICANT RISKS. PLEASE REFER TO THE RISKS YOU FACE BEGINNING ON PAGE 19.
| The Funds have not yet commenced operations and thus have no performance history. |
| Futures trading is volatile and even a small movement in market prices could cause large losses. |
| The success of each Funds trading program depends upon the skill of the Managing Owner and its trading principals. |
| Because the Funds are leveraged, a relatively small movement in the price of a futures contract owned by a Fund may cause greater losses. You could lose all or
substantially all of your investment. |
| You will sustain losses if the substantial expenses of a Fund are not offset by profits from a Funds Gold Investments, Index Investments and/or interest income. |
| A Funds trading operations may be successful and yet a Fund may still sustain losses if the value of a Funds Gold Investments declines by more than the amount
of profits generated by the Funds Index Investments. Likewise, a Funds gains, if any, from its Gold Investments may be offset by losses incurred in its Index
Investments. |
| A Fund may fail to achieve its objective of maintaining a dollar for dollar investment in gold if gold futures margins increase substantially, in which case the
Fund may reduce its Gold Investments and continue its Index Investments. |
| Investors in each Fund pay fees in connection with their investment in Shares including asset-based fees of [0.85]% per annum. Additional charges include
brokerage fees of approximately [0.15]% per annum in the aggregate. |
On [], 2010, [ ], as the Initial Purchaser, subject to certain
conditions, agreed to purchase and took delivery of 100,000 Shares of each Fund, which comprise
the initial Basket of each Fund, at a purchase price of $20.00 per Share ($2,000,000 per
Basket), as described in Plan of Distribution. Shares offered by the Initial Purchaser at
different times may have different offering prices. The Initial Purchaser will not receive
from any Fund, the Managing Owner or any of their affiliates, any fee or other compensation in
connection with their sale of these Shares to the public. The Initial Purchaser may charge a
customary brokerage commission.
Authorized Participants may offer to the public, from time-to-time, Shares from any
Baskets they create. Shares offered to the public by Authorized Participants will be offered at
a per-Share offering price that will vary depending on, among other factors, the trading price
of the Shares of each Fund on the NYSE Arca, the net asset value per Share and the supply of
and demand for the Shares at the time of the offer. Shares initially comprising the same
Basket but offered by Authorized Participants to the public at different times may have
different offering prices. Authorized Participants will not receive from any Fund, the
Managing Owner or any of their affiliates, any fee or other compensation in connection with
their sale of Shares to the public.
An Authorized Participant may receive commissions or fees from investors who purchase Shares through their commission or fee-based brokerage accounts.
These securities have not been approved or disapproved by the Securities and Exchange
Commission or any state securities commission nor has the Securities and Exchange Commission or any
state securities commission passed upon the accuracy or adequacy of this Prospectus. Any
representation to the contrary is a criminal offense. None of the Funds are a mutual fund or any
other type of investment company within the meaning of the Investment Company Act of 1940, as
amended, and none of them are subject to regulation thereunder.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN
THESE POOLS NOR HAS THE COMMISSION PASSED UPON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE
DOCUMENT. The Shares are neither interests in nor obligations of any of the Managing Owner, the
Trustee, the Initial Purchaser or any of their affiliates.
[ ], 2010
Table of Contents
COMMODITY FUTURES TRADING COMMISSION
RISK DISCLOSURE STATEMENT
RISK DISCLOSURE STATEMENT
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE
IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT FUTURES TRADING CAN QUICKLY LEAD TO
LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON
REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY AND
BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE
SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE
DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED TO THESE POOLS AT PAGE 46
AND A STATEMENT OF THE PERCENTAGE RETURNS NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT
OF YOUR INITIAL INVESTMENT, AT PAGE 12.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE
YOUR PARTICIPATION IN ANY OF THESE COMMODITY POOLS. THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN
ANY OF THESE COMMODITY POOLS, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A
DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGES 19 THROUGH 37.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES CONTRACTS.
TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A
UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION
TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO
COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES
JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED.
THESE POOLS HAVE NOT COMMENCED TRADING AND DO NOT HAVE ANY PERFORMANCE HISTORY.
NEITHER THIS POOL OPERATOR NOR ANY OF ITS TRADING PRINCIPALS HAS PREVIOUSLY OPERATED ANY OTHER
POOLS OR TRADED ANY OTHER ACCOUNTS.
THE BOOKS AND RECORDS OF EACH FUND ARE MAINTAINED AS FOLLOWS: BASKET CREATION AND REDEMPTION
BOOKS AND RECORDS, ACCOUNTING AND CERTAIN OTHER FINANCIAL BOOKS AND RECORDS (INCLUDING EACH FUNDS
ACCOUNTING RECORDS, LEDGERS WITH RESPECT TO ASSETS, LIABILITIES, CAPITAL, INCOME AND EXPENSES, THE
REGISTRAR, TRANSFER JOURNALS AND RELATED DETAILS) AND TRADING AND RELATED DOCUMENTS RECEIVED FROM
FUTURES COMMISSION MERCHANTS ARE MAINTAINED BY THE BANK OF NEW YORK MELLON, 2 HANSON PLACE,
12TH FLOOR, BROOKLYN, NEW YORK 11217, TELEPHONE NUMBER (718) 315-4850. ALL MARKETING
MATERIALS AND ALL OTHER BOOKS AND RECORDS OF EACH FUND (INCLUDING MINUTE BOOKS AND OTHER GENERAL
CORPORATE RECORDS, TRADING RECORDS AND RELATED REPORTS AND OTHER ITEMS RECEIVED FROM EACH FUNDS
COMMODITY BROKERS) ARE MAINTAINED AT EACH FUNDS PRINCIPAL OFFICE, C/O SUPERFUND ADVISORS INC., 489
FIFTH AVENUE, NEW YORK, NEW YORK 10017, (212) 878-4530. SHAREHOLDERS WILL HAVE THE RIGHT, DURING
NORMAL BUSINESS HOURS, TO HAVE ACCESS TO AND COPY (UPON PAYMENT OF REASONABLE REPRODUCTION COSTS)
SUCH BOOKS AND RECORDS IN PERSON OR BY THEIR AUTHORIZED ATTORNEY OR AGENT. MONTHLY ACCOUNT
STATEMENTS FOR EACH FUND CONFORMING
Table of Contents
TO COMMODITY FUTURES TRADING COMMISSION (THE CFTC) AND THE NATIONAL FUTURES ASSOCIATION (THE
NFA) REQUIREMENTS ARE POSTED ON THE MANAGING OWNERS WEBSITE AT [HTTP://WWW.SUPERFUND.COM].
ADDITIONAL REPORTS ARE POSTED ON THE MANAGING OWNERS WEBSITE IN THE DISCRETION OF THE MANAGING
OWNER OR AS REQUIRED BY REGULATORY AUTHORITIES. THERE WILL SIMILARLY BE DISTRIBUTED TO
SHAREHOLDERS OF EACH FUND, NOT MORE THAN 90 DAYS AFTER THE CLOSE OF EACH FUNDS FISCAL YEAR,
CERTIFIED AUDITED FINANCIAL STATEMENTS AND (IN NO EVENT LATER THAN MARCH 15 OF THE IMMEDIATELY
FOLLOWING YEAR) THE TAX INFORMATION RELATING TO SHARES OF EACH FUND NECESSARY FOR THE PREPARATION
OF SHAREHOLDERS ANNUAL FEDERAL INCOME TAX RETURNS.
THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE REGISTRATION
STATEMENT OF THE FUNDS. YOU CAN READ AND COPY THE ENTIRE REGISTRATION STATEMENT AT THE PUBLIC
REFERENCE FACILITIES MAINTAINED BY THE SEC IN WASHINGTON, D.C.
EACH FUND WILL FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ AND COPY THESE
REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN WASHINGTON, D.C. PLEASE CALL THE SEC AT
1-800-SEC-0330 FOR FURTHER INFORMATION.
THE FILINGS OF EACH FUND ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV.
REGULATORY NOTICES
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS, THE MANAGING
OWNER, THE AUTHORIZED PARTICIPANTS OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO SELL OR A SOLICITATION OF AN
OFFER TO BUY, NOR SHALL THERE BE ANY OFFER, SOLICITATION, OR SALE OF THE SHARES IN ANY JURISDICTION
IN WHICH SUCH OFFER, SOLICITATION, OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE ANY SUCH OFFER, SOLICITATION, OR SALE.
THE DIVISION OF INVESTMENT MANAGEMENT OF THE SECURITIES AND EXCHANGE COMMISSION REQUIRES THAT
THE FOLLOWING STATEMENT BE PROMINENTLY SET FORTH HEREIN: NONE OF THE FUNDS HEREOF ARE MUTUAL
FUNDS OR ANY OTHER TYPE OF INVESTMENT COMPANY WITHIN THE MEANING OF THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED, AND ARE NOT SUBJECT TO REGULATION THEREUNDER.
AUTHORIZED PARTICIPANTS MAY BE REQUIRED TO DELIVER A PROSPECTUS WHEN TRANSACTING IN SHARES.
SEE PLAN OF DISTRIBUTION.
Table of Contents
PART ONE
DISCLOSURE DOCUMENT
DISCLOSURE DOCUMENT
SUMMARY |
1 | |||
The Funds |
1 | |||
Shares Listed on the NYSE Arca |
1 | |||
Purchases and Sales in the Secondary Market on the NYSE Arca |
2 | |||
Pricing Information Available on the NYSE Arca and Other Sources |
2 | |||
CUSIP Numbers |
3 | |||
Risk Factors |
3 | |||
The Trustee |
4 | |||
Investment Objective of the Funds |
4 | |||
If Gold Prices are Flat, Shares of Each Fund Should Track Closely the Value of its
Index Investment; Market Price per Share Should Track Closely the Net Asset Value
per Share |
6 | |||
The Managing Owner |
7 | |||
The Introducing Broker |
7 | |||
The Commodity Brokers |
7 | |||
The Administrator |
7 | |||
The Distributor |
8 | |||
888 Number for Investors |
8 | |||
The Marketer |
9 | |||
Limitation of Liabilities |
9 | |||
Creation and Redemption of Shares |
9 | |||
The Offering |
9 | |||
Authorized Participants |
9 | |||
Net Asset Value |
9 | |||
Clearance and Settlement |
10 | |||
Segregated Accounts/Interest Income |
10 | |||
Fees and Expenses |
11 | |||
Breakeven Amounts |
12 | |||
Distributions |
12 | |||
Fiscal Year |
12 | |||
Financial Information |
12 | |||
U.S. Federal Income Tax Considerations |
12 | |||
Breakeven Table |
13 | |||
Reports to Shareholders |
17 | |||
Cautionary Note Regarding Forward-Looking Statements |
17 | |||
ORGANIZATION CHART |
18 | |||
THE RISKS YOU FACE |
19 | |||
(1) The Value of the Shares of each Fund Relates Directly to the Value of the
Futures Contracts and Other Assets Held by It and Fluctuations |
in the Price of
These Assets Could Materially Adversely Affect an Investment in a Funds Shares |
19 | |||
(2) Net Asset Value May Not Always Correspond to Market Price and, as a Result,
Baskets may be Created or Redeemed at a Value that Differs from the Market Price of the Shares |
19 | |||
(3) Regulatory and Exchange Position Limits and Other Rules May Restrict the
Creation of Baskets of One or More of the Funds |
20 | |||
(4) A Funds Performance, which Reflects the Results of its Gold Investments, Index
Investments and Treasuries, May Not Always Replicate Exactly the Changes in the
Level of the Index Underlying its Index Investments |
21 | |||
(5) None of the Funds Are Actively or Traditionally Managed and Each Tracks its
Index Investments During Periods in which the Index Investments Are Flat or
Declining as well as when the Index Investments Are Rising |
22 | |||
(6) A Change in the Ownership of the Index Underlying the Index Investment of a
Fund May Change the Determination or Valuation Methodology of the Underlying Index
in a Manner that May be Adverse to the Index Investments, and in turn, the Value of
Your Shares |
22 | |||
(7) Cessation of Publication of the Index Underlying the Corresponding Index
Investments May Materially and Adversely Affect the Activities of the Index
Investments, and in turn, the Managing Owner May Terminate the Affected Fund |
22 | |||
(8) You Have No Recourse to the Index Sponsors or Their Successors of Each Index
Underlying the Corresponding Index Investments |
22 | |||
(9) The Asset Class Underlying the Index Investments May Either Underperform or
Outperform the Sector of the Applicable Fund |
23 | |||
(10) The NYSE Arca May Halt Trading in the Shares of a Fund Which |
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Would Adversely Impact Your Ability to Sell Shares |
23 | |||
(11) The Lack of Active Trading Markets for the Shares of a Fund May Result in
Losses on Your Investment in such Fund at the Time of Disposition of Your Shares |
23 | |||
(12) The Shares of each Fund Are New Securities Products and Their Value Could
Decrease if Unanticipated Operational or Trading Problems Arise |
23 | |||
(13) As the Managing Owner and its Principals have No History of Operating
Investment Vehicles like the Funds, their Experience may be Inadequate or
Unsuitable to Manage the Funds |
23 | |||
(14) You Will Be Relying on the Managing Owner and its Principals Alone to Direct
the Funds Investment and Daily Activities |
23 | |||
(15) Each Fund Is a Newly Formed Entity and Each Fund Has No Performance History for
You to Evaluate; You May Not Rely on Index Investment Results in Deciding Whether
or Not to Invest in a Fund |
24 | |||
(16) Price Variability May Possibly Cause the Total Loss of Your Investment |
25 | |||
(17) Because each Funds Trading will be Leveraged, a Relatively Small Movement in
the Price of a Contract May Cause Greater Losses |
25 | |||
(18) Leverage Will Fluctuate and May be Greater or Less than the Established
Leverage Ratio of 2:1 |
26 | |||
(19) Forward and Swap Transactions Are Not Regulated and Are Subject to the Risk of
Counterparty Non-Performance Resulting in a Fund Not Realizing a Trading Gain |
26 | |||
(20) Forwards, Swaps and Other Derivatives Are Not Subject to CFTC Regulation; the
Funds Could Incur Losses due to Counterparty Default and Regulatory Risk of
Proposed New Laws |
26 | |||
(21) A Computer Systems Failure Could Result in Losses for the Funds |
27 | |||
(22) Unusually Long Peak-to-Valley Drawdown Periods With Respect |
To an Index
Investment of a Fund May Be Reflected in Equally Long Peak-to-Valley Drawdown
Periods with Respect to the Performance of the Shares of the Corresponding Fund |
27 | |||
(23) Fees and Commissions are Charged Regardless of Profitability and May Result in
Depletion of Assets |
27 | |||
(24) A Fund Will Experience a Loss if it is Required to Sell Treasuries at a Price
Lower than the Price at which They were Acquired |
27 | |||
(25) You Cannot Be Assured of the Managing Owners Continued Services, Which
Discontinuance May Be Detrimental to the Funds |
27 | |||
(26) Lack of Liquidity in the Markets in Which a Fund Trades Could Make It
Impossible to Realize Profits or Limit Losses |
27 | |||
(27) You May Be Adversely Affected by Redemption Orders that Are Subject To
Postponement, Suspension or Rejection Under Certain Circumstances |
28 | |||
(28) Because Futures Contracts Have No Intrinsic Value, the Positive Performance of
Your Investment Is Wholly Dependent Upon an Equal and Offsetting Loss |
28 | |||
(29) Various Actual and Potential Conflicts of Interest May Be Detrimental to
Shareholders |
28 | |||
(30) Failure of Futures Commission Merchants or Commodity Brokers to Segregate
Assets May Increase Losses; Despite Segregation of Assets, a Fund Remains at Risk
of Significant Losses Because a Fund May Only Receive a Pro-Rata Share of the
Assets, or No Assets at All |
28 | |||
(31) Lack of Independent Advisers Representing Investors |
29 | |||
(32) Possibility of Termination of a Fund May Adversely Affect Your Portfolio |
29 | |||
(33) Shareholders Do Not Have the Rights Enjoyed by Investors in Certain Other Vehicles |
29 | |||
(34) An Investment in Shares of a Fund May Be Adversely Affected by Competition From
Other Methods |
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of Investing in the Index Investments |
29 | |||
(35) Competing Claims Over Ownership of Intellectual Property Rights Related to the
Funds Could Adversely Affect the Funds and an Investment in Shares |
29 | |||
(36) The Value of the Shares Will be Adversely Affected if a Fund is Required to
Indemnify the Trustee or the Managing Owner |
30 | |||
(37) The Net Asset Value Calculation of the Funds May Be Overstated or Understated
Due to the Valuation Method Employed When a Settlement Price is not Available on
the Date of the Net Asset Value Calculation |
30 | |||
(38) Shareholders Will Not Have the Protections Associated With Ownership of Shares
in an Investment Company Registered Under the Investment Company Act of 1940 |
30 | |||
(39) Each Fund May Trade in Foreign Markets Which May Not Be Subject to the Same
Level of Regulatory Oversight as Trading in Domestic Markets |
30 | |||
(40) Regulatory Changes or Actions May Alter the Nature of an Investment in a Fund |
31 | |||
(41) Shareholders of a Fund Will Be Subject to Taxation on Their Share of the Funds
Taxable Income, Whether or Not They Receive Cash Distributions |
31 | |||
(42) Items of Income, Gain, Loss and Deduction With Respect to Shares of a Fund
could be Reallocated if the IRS does not Accept the Assumptions or Conventions Used
by a Fund in Allocating Such Tax Items |
31 | |||
(43) The Current Treatment of Long-Term Capital Gains Under Current U.S. Federal
Income Tax Law May Be Adversely Affected, Changed or Repealed in the Future |
31 | |||
(44) Gains, If Any, From a Funds Futures Trading With Respect to the Corresponding
Index Investment May Be Offset by Losses on Its Gold Investment, and Gains, If Any,
on Its Gold Investment May be Offset by Losses |
From Its Futures Trading With
Respect to the Corresponding Index Investment, Resulting in No Gains or Aggregate
Losses for the Fund |
31 | |||
(45) A Fund May Reduce Its Gold Investment or Its Futures Trading Activity With
Respect to the Corresponding Index Investment If Gold Margin Requirements Increase
Substantially, Thereby Changing the Nature of Your Investment in the Fund |
32 | |||
(46) The U.S. Dollar Price of Gold Has Fluctuated Widely over the Past Several
Years. A Decline in the Price of Gold May Result in a Decline in the Value of the
Shares, Possibly Resulting in an Overall Loss on Your Investment |
32 | |||
(47) Large-Scale Sales of Gold May Lead to a Decline in the Price of Gold and a
Decline in the Value of the Shares, Possibly Resulting in an Overall Loss on Your
Investment |
32 | |||
(48) Widening Interest Rate Differentials Between the Cost of Money and the Cost of
Borrowing Gold Could Result in Increased Sales and a Decline in the Price of Gold,
Possibly Resulting in a Decline in the Value of the Shares and a Loss on Your
Investment in a Fund |
33 | |||
(49) To the Extent that the Index Underlying an Index Investment is Concentrated in
Certain Securities, Such Concentration May Amplify Certain Potentially Adverse
Effects Upon the Corresponding Equity Fund |
33 | |||
(50) The Equity Funds are Subject to Issuer Risk |
33 | |||
(51) The Equity Funds are Subject to Market Risk |
33 | |||
(52) A Liquid Trading Market for Shares of the Issuers Underlying the Index
Investments May Not Develop or Exist, which in turn, May Adversely Affect the Value
of the Shares of your Equity Funds |
34 | |||
(53) Investment in the Large Cap Equity Fund or the Mid Cap Equity Fund Involves the
Risks Inherent in an Investment in any Equity Security |
34 |
Table of Contents
(54) The Small Cap Equity Fund is Subject to Additional Risks Specific to Smaller
Companies |
35 | |||
(55) To the Extent that the Performance of the Index Investments of the World Equity
Fund Is Based Upon Foreign Securities, the World Equity Fund Will be Subject to the
Risks Associated With Investing in Foreign Securities |
35 | |||
(56) The World Equity Fund May be Subject to Geographic Risks |
35 | |||
(57) Adverse Economic Events in Any One Asian Country May Have a Significant
Economic Effect on the Entire Asian Region, and in turn, the Value of Your Shares
in the World Equity Fund |
36 | |||
(58) Adverse Economic Events Affecting Certain Sectors or Key Trading Partners May
Have a Significant Economic Effect on the Australasia Region, and in turn, the
Value of Your Shares in the World Equity Fund |
36 | |||
(59) Adverse Economic Events Affecting the European Union May Have a Significant
Economic Effect on the European Union and Other Major Trading Partners, and in
turn, the Value of Your Shares in the World Equity Fund |
36 | |||
(60) The World Equity Fund is Subject to Currency Risk |
36 | |||
(61) The World Equity Fund May Invest in Less Developed Markets and Will Become
Subject to Additional Custody Risk |
36 | |||
(62) The World Equity Fund is Subject to Privatization Risk |
36 | |||
(63) The World Equity Fund is Subject to International and Internal Security Risks |
36 | |||
(64) Backwardation or Contango in the Market Prices of the Commodities that
Comprise the Index Underlying the Index Investment Will Affect the Value of Your
Shares |
37 | |||
(65) If the Commodities Fund Does Not Perform in a Manner Non-Correlated with the
General Financial Markets or Does Not Perform Successfully, You Will Not Obtain Any
Diversification Benefits by Investing in the Shares of the |
Commodities Fund and You
May Have No Gains to Offset Your Losses from Other Investments |
37 | |||
(66) Because Investors in the Commodities Fund Gain an Exposure to Gold Through Both
the Gold Investments and the Index Investments, Any Negative Movement in the Price
of Gold will Decrease the Value of Both the Gold Investments and the Index
Investments, and Ultimately the Value of Your Shares |
37 | |||
THE MANAGING OWNER |
37 | |||
INVESTMENT OBJECTIVES OF THE FUNDS |
39 | |||
Role of Managing Owner |
42 | |||
Market Diversification |
43 | |||
MANAGEMENTS DISCUSSION AND ANALYSIS OF PROSPECTIVE OPERATIONS |
43 | |||
USE OF PROCEEDS |
45 | |||
CHARGES |
46 | |||
Management Fee |
46 | |||
Organization and Offering Expenses |
46 | |||
Brokerage Commissions and Fees |
46 | |||
Routine Operational, Administrative and Other Ordinary Expenses |
47 | |||
Non-Recurring and Unusual Fees and Expenses |
47 | |||
Management Fee and Expenses to be Paid First out of Interest Income |
47 | |||
Selling Commission |
47 | |||
WHO MAY SUBSCRIBE |
47 | |||
CREATION AND REDEMPTION OF SHARES |
47 | |||
THE INTRODUCING BROKER |
50 | |||
THE COMMODITY BROKERS |
51 | |||
CONFLICTS OF INTEREST |
51 | |||
General |
51 | |||
The Managing Owner |
51 | |||
Superfund USA, Inc. |
52 | |||
Superfund Asset Management, Inc. |
52 | |||
The Commodity Brokers |
52 |
Table of Contents
DESCRIPTION OF THE SHARES AND THE FUNDS; SUMMARY DESCRIPTION OF CERTAIN MATERIAL TERMS OF
THE AMENDED AND RESTATED TRUST AGREEMENTS |
53 | |||
Description of the Shares and Limitation of Liability |
53 | |||
Principal Office; Location of Records |
54 | |||
Ownership or Beneficial Interest in the Funds |
55 | |||
Shares Freely Transferable |
55 | |||
Book-Entry Form |
55 | |||
Reports to Shareholders |
57 | |||
DISTRIBUTIONS |
57 | |||
THE ADMINISTRATOR |
58 | |||
THE DISTRIBUTOR |
58 | |||
888 Number for Investors |
59 | |||
THE MARKETER |
59 | |||
THE SECURITIES DEPOSITORY; BOOK-ENTRY-ONLY SYSTEM; GLOBAL SECURITY |
59 | |||
SHARE SPLITS |
60 | |||
MATERIAL CONTRACTS |
60 | |||
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS |
60 | |||
PURCHASES BY EMPLOYEE BENEFIT PLANS |
70 | |||
General |
70 | |||
Plan Assets |
70 | |||
Ineligible Purchasers |
71 | |||
PLAN OF DISTRIBUTION |
71 | |||
Initial Purchaser |
71 | |||
Authorized Participants |
72 | |||
Likelihood of Becoming a Statutory Underwriter |
72 | |||
General |
72 | |||
LEGAL MATTERS |
73 | |||
EXPERTS |
73 | |||
ADDITIONAL INFORMATION |
73 | |||
RECENT FINANCIAL INFORMATION AND ANNUAL REPORTS |
74 |
PRIVACY POLICY OF THE MANAGING OWNER |
74 | |||
INDEX TO FINANCIAL STATEMENTS |
75 | |||
Report of Independent Registered Public
Accounting Firm dated [_____], 2010* |
||||
Superfund Gold Large Cap Equity Fund Statement of Financial Condition dated
[_____], 2010* |
||||
Superfund Gold Large Cap Equity Fund Statement of Cash Flows dated [_____], 2010* |
||||
Superfund Gold Large Cap Equity Fund Notes to Statement of Financial Condition dated
[_____], 2010* |
||||
Report of Independent Registered Public Accounting Firm dated [_____], 2010* |
||||
Superfund Gold Mid Cap Equity Fund Statement of Financial Condition dated [_____], 2010* |
||||
Superfund Gold Mid Cap Equity Fund Statement of Cash Flows dated [_____], 2010* |
||||
Superfund Gold Mid Cap Equity Fund Notes to Statement of Financial Condition dated
[_____], 2010* |
||||
Report of Independent Registered Public Accounting Firm dated [_____], 2010* |
||||
Superfund Gold Small Cap Equity Fund Statement of Financial Condition dated [_____],
2010* |
||||
Superfund Gold Small Cap Equity Fund Statement of Cash Flows dated [_____], 2010* |
||||
Superfund Gold Small Cap Equity Fund Notes to Statement of Financial Condition dated
[_____], 2010* |
||||
Report of Independent Registered Public Accounting Firm dated [_____], 2010* |
||||
Superfund Gold World Equity Fund Statement of Financial Condition dated [_____], 2010* |
||||
Superfund Gold World Equity Fund Statement of Cash Flows dated [_____], 2010* |
||||
Superfund Gold World Equity Fund Notes to Statement of Financial Condition dated
[_____], 2010* |
||||
Report of Independent Registered Public Accounting Firm dated [_____], 2010* |
Table of Contents
Superfund Gold Commodities Fund Statement of Financial Condition dated [_____], 2010* |
||||
Superfund Gold Commodities Fund Statement of Cash Flows dated [_____], 2010* |
||||
Superfund Gold Commodities Fund Notes to Statement of Financial Condition dated [_____],
2010* |
||||
Report of Independent Registered Public Accounting Firm dated [_____], 2010* |
||||
Superfund Advisors Inc. Statement of Financial Condition* |
||||
Superfund Advisors Inc. Statement of Changes in Shareholder Capital* |
||||
Superfund Advisors Inc. Statement of Cash Flows* |
||||
Superfund Advisors Inc. Notes to Statement of Financial Condition* |
*To be filed by amendment. |
PART TWO STATEMENT OF ADDITIONAL INFORMATION |
||||
STRATEGY |
103 | |||
General |
103 | |||
WHY SUPERFUND? |
103 | |||
Why A Futures Fund? |
103 | |||
Why Now? |
103 | |||
Why Gold? |
103 | |||
Historical Non-Correlated Performance and Potential Market Diversification |
103 | |||
THE FUTURES AND FORWARD
MARKETS |
103 | |||
Futures Contracts |
103 | |||
Forward Contracts |
104 | |||
Swap Transactions |
104 | |||
REGULATION |
104 | |||
INVESTMENT CONSIDERATIONS |
105 | |||
A Gold Denominated Investment |
105 | |||
Potential Advantages of Futures |
105 | |||
Enhanced Profit Potential |
105 | |||
Potentially Low Correlation to Traditional Asset Classes and Other Alternative Asset Classes |
105 | |||
Interest Credit |
106 |
Potential Global Diversification through an Investment in One or More Funds |
106 | |||
Convenience |
106 | |||
Liquidity |
106 | |||
Limited Liability |
106 | |||
Exhibit APrivacy Notice |
P1 |
Table of Contents
SUMMARY
This summary of all material information provided in this Prospectus is intended for quick
reference only. The remainder of this Prospectus contains more detailed information. You should
read the entire Prospectus, including the Amended and Restated Trust Agreements, or the Trust
Agreements of the Funds, and all exhibits to the registration statement, of which this Prospectus
is a part, before deciding to invest in Shares of any Fund. This Prospectus is intended to be used
beginning [ ], 2010.
The Funds
Each of Superfund Gold Large Cap Equity Fund (or the Large Cap Equity Fund), Superfund Gold
Mid Cap Equity Fund (or the Mid Cap Equity Fund), Superfund Gold Small Cap Equity Fund (or the
Small Cap Equity Fund), Superfund Gold World Equity Fund (or the World Equity Fund), and Superfund
Gold Commodities Fund (or the Commodities Fund), has been formed on January 15, 2010 as a separate
Delaware statutory trust, or each a Fund. Each Fund will offer and will issue common units of
beneficial interest, or Shares, which represent units of beneficial interest in and ownership of
each such Fund only. Shares in each Fund are being separately offered. We may refer to each of
the Funds collectively as the Funds.
Each Fund is designed to maintain a long position in gold futures with a notional, or face,
value approximately equal to the net asset value of the Fund while seeking capital appreciation of
its assets through investing in long positions in exchange-traded futures contracts that reference
an appropriate securities, commodity, or other index, with a view to tracking the applicable index
investment over time. Superfund Advisors Inc. serves as the managing owner, or Managing Owner, the
commodity pool operator and trading advisor of each Fund. The long gold position is referred to in
this Prospectus as a Funds gold position or the dollar for dollar gold position. The net asset
value of each Funds Shares will be quoted in ounces of gold, as described below under Summary
The Offering, as well as in dollars. You should note, however, that the Funds are not gold
funds, and a Funds performance will not necessarily track the price of gold. Likewise, the net
asset value of the Funds will not be determined solely by the price of gold.
To obtain their dollar for dollar gold position, the Funds will enter into futures contracts
to purchase gold in a dollar amount approximately equal to the amount of capital invested in each
Fund. The Managing Owner will adjust each Funds gold position daily, to reflect additions to and
redemptions of a Funds capital, as well as to reflect profits and losses from the Funds futures
trading and investing in long positions in exchange-traded futures contracts that reference an
appropriate securities, commodity, or other Index and interest income, so as to maintain a gold
futures position with a notional, or face, value approximately equal to the Funds net asset value
on a daily basis. You should note, however, that because each Funds gold positions are adjusted
daily, profits or losses incurred on a Funds gold position or from a Funds futures trading and
investing in long positions in exchange-traded futures contracts that reference an appropriate
securities, commodity, or other Index and interest income earned by a Fund may cause the notional,
or face, value of a Funds gold position intraday to be greater than or less than a Funds net
asset value at the end of the day. In addition to maintaining an investment in gold, each Fund
will invest in long positions in exchange-traded futures contracts that reference an appropriate
securities, commodity, or other index, with a view to tracking the applicable Index Investment over
time.
Table of Contents
Each Fund will seek to maintain the approximate equivalent of a dollar for dollar investment
in gold by investing in long positions in exchange-traded futures contracts on gold, or the Gold
Investment. Each Funds Gold Investment will be obtained through an investment in the gold futures
contract that trades on the NYMEX under the symbol GC.
Each Fund will seek appreciation of its assets over time by trading and investing in long
positions in exchange-traded futures contracts that reference an appropriate securities, commodity,
or other index, with a view to tracking the applicable index investment over time, or the Index
Investment, as follows:
Fund | Index Investment/Objective | Exchange | Symbol | ||||||||
Large Cap Equity Fund
|
E-mini Standard and Poors 500 Stock Price IndexTM Futures/ Provide exposure to benchmark for large-cap U.S. stocks. |
CME | ES | ||||||||
Mid Cap Equity Fund
|
E-mini Standard and Poors Midcap 400 Stock Price IndexTM Futures/ Provide exposure to benchmark for 400 medium-sized company stocks. |
CME | EMD | ||||||||
Small Cap Equity Fund
|
Russell 2000® Index Mini Futures/ Provide an exposure to benchmark for 2000 small-cap U.S. stocks. |
ICE | TF | ||||||||
World Equity Fund
|
E-Mini MSCI EAFE Index Futures/ Provide an exposure to benchmark for more than 1,100 stocks in Europe, Australasia, and the Far East. |
CME | EFE | ||||||||
Commodities Fund
|
S&P GSCI TM Commodity Index Futures/
Provide an exposure to benchmark for 24 commodity futures contracts in the following commodity sectors: energy, precious and industrial metals, agricultural and livestock products. |
CME | GI | ||||||||
Legend:
CME means Chicago Mercantile Exchange, Inc., or its successor.
ICE means ICE Futures U.S., Inc., or its successor.
NYMEX means the New York Mercantile Exchange Inc., or its successor.
ICE means ICE Futures U.S., Inc., or its successor.
NYMEX means the New York Mercantile Exchange Inc., or its successor.
The Managing Owners offices, and the office of each Fund are located at 489 Fifth
Avenue, New York, New York 10017 and the telephone number is (212) 878-4530.
Shares Listed on the NYSE Arca
The Shares of each Fund are expected to be listed on the NYSE Arca under the following
symbols:
Fund | NYSE Arca Symbol | ||||
Large Cap Equity Fund |
[____] | ||||
Mid Cap Equity Fund |
[____] | ||||
Small Cap Equity Fund |
[____] | ||||
World Equity Fund |
[____] | ||||
Commodities Fund |
[____] | ||||
Table of Contents
Secondary market purchases and sales of Shares will be subject to ordinary brokerage
commissions and charges.
Purchases and Sales in the Secondary Market on the NYSE Arca
The Shares of each Fund will trade on the NYSE Arca like any other equity security.
Baskets of Shares in each Fund may be created or redeemed only by Authorized Participants,
except that the initial Basket(s) in each Fund were created by the Initial Purchaser. It is
expected that Baskets in a Fund will be created when there is sufficient demand for Shares in such
Fund that the market price per Share is at a premium to the net asset value per Share. Authorized
Participants are expected to sell such Shares, which are listed on the NYSE Arca, to the public at
prices that are expected to reflect, among other factors, the trading price of the Shares of such
Fund on the NYSE Arca and the supply of and demand for Shares at the time of sale and are expected
to fall between net asset value and the trading price of the Shares on the NYSE Arca at the time of
sale. Similarly, it is expected that Baskets in a Fund will be redeemed when the market price per
Share of such Fund is at a discount to the net asset value per Share. Retail investors seeking to
purchase or sell Shares on any day are expected to effect such transactions in the secondary
market, on the NYSE Arca, at the market price per Share, rather than in connection with the
creation or redemption of Baskets.
The market price of the Shares of a Fund may not be identical to the net asset value per
Share, but these valuations are expected to be very close. Investors are able to use the
indicative intra-day value per Share to determine if they want to purchase in the secondary market
via the NYSE Arca. The intra-day indicative value per Share of each Fund is based on the prior
days final net asset value, adjusted four times per minute throughout the day to reflect the
continuous price changes of the Funds futures positions to provide a continuously updated
estimated net asset value per Share.
Retail investors may purchase and sell Shares through traditional brokerage accounts.
Purchases or sales of Shares may be subject to customary brokerage commissions. Investors are
encouraged to review the terms of their brokerage accounts for applicable charges.
Pricing Information Available on the NYSE Arca and Other Sources
The current trading price per Share of each Fund (quoted in U.S. dollars) will be published
continuously under its ticker symbol as trades occur throughout each trading day on the
consolidated tape, Reuters and/or Bloomberg and on the Managing Owners website at
[http://www.superfund.com], or any successor thereto.
The most recent end-of-day net asset value of each Fund will be published under its own symbol
as of the close of business on Reuters and/or Bloomberg and on the Managing Owners website at
[http://www.superfund.com], or any successor thereto. In addition, the most recent end-of-day net
asset value of each Fund will be published the following morning on the consolidated tape.
End-of-Day Net Asset Value Symbols
The end-of-day net asset value of each Fund will be published under the following symbols:
Fund | Symbol | ||||
Large Cap Equity Fund |
[____] | ||||
Mid Cap Equity Fund |
[____] | ||||
Small Cap Equity Fund |
[____] | ||||
World Equity Fund |
[____] | ||||
Commodities Fund |
[____] | ||||
The Managing Owner will publish the net asset value of each Fund and the net asset value per
Share of each Fund daily. Additionally, the Managing Owner will publish the indicative value per
Share of each Fund (quoted in U.S. dollars) once every fifteen seconds throughout each trading day
on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owners website at
[http://www.superfund.com], or any successor thereto. All of the foregoing information will be
published under the following symbols:
Intra-Day Indicative Values Per Share Symbols
The intra-day indicative value per Share of each Fund will be published under the following
symbols:
Fund | Symbol | ||||
Large Cap Equity Fund |
[____] | ||||
Mid Cap Equity Fund |
[____] | ||||
Small Cap Equity Fund |
[____] | ||||
World Equity Fund |
[____] | ||||
Commodities Fund |
[____] | ||||
2
Table of Contents
CUSIP Numbers
The CUSIP number of each Fund is as follows:
Fund | CUSIP | ||||
Large Cap Equity Fund |
[____] | ||||
Mid Cap Equity Fund |
[____] | ||||
Small Cap Equity Fund |
[____] | ||||
World Equity Fund |
[____] | ||||
Commodities Fund |
[____] | ||||
Risk Factors
An investment in Shares of any Fund is speculative and involves a high degree of risk. The
summary risk factors set forth below are intended merely to highlight certain risks that are common
to all the Funds. Each Fund has particular risks that are set forth elsewhere in this Prospectus.
| The Funds have not yet commenced operations and thus have no performance history. |
|
| Futures trading is volatile and even a small movement in market prices could cause large
losses. |
|
| The success of each Funds trading program depends upon the skill of the Managing Owner and
its trading principals. |
|
| Past performance is not necessarily indicative of future results. The past performance of
gold or of the Managing Owner, if any, is not necessarily indicative of the future results of
the Funds. |
|
| Because the Funds are leveraged, a relatively small movement in the price of a futures
contract owned by a Fund may cause greater losses. You could lose all or substantially all of
your investment. |
|
| You will sustain losses if the substantial expenses of a Fund are not offset by profits
from a Funds Gold Investments, Index Investments and/or interest income. |
|
| Each Fund is subject to the fees and expenses set forth below (prior to the amount of any
commissions charged by the investors broker in connection with an investors purchase of
Shares) and will be successful only if significant losses are avoided. |
Yield on | Required | |||||||||||||||||||||
3-month | Income to | |||||||||||||||||||||
U.S. | Break Even | |||||||||||||||||||||
Fees and | Treasury | |||||||||||||||||||||
Fund | Expenses | bills | % | $1 | ||||||||||||||||||
Large Cap Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
Mid Cap Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
Small Cap Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
World Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
Commodities Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
1 The dollar amount as specified in the above table reflects that amount
of required income to break even per annum per Share assuming that the net asset value of each
Share is $20.00.
Each Fund will be subject to the approximate fees and expenses in the aggregate amounts
per annum set forth in the above table and elsewhere in this Prospectus. The Funds will be
successful only if their annual returns from futures trading, plus their annual interest income
from their holdings of United States Treasury securities and other high credit quality short-term
fixed income securities, exceed these fees and expenses. Each Fund is expected to earn interest
income equal to 0.05% per annum, based upon the yield of 3-month U.S. Treasury bills as of
January 20, 2010, or a dollar amount as specified in the above table per annum per Share
at $20.00 as the net asset value per Share. Therefore, based upon the difference between the
current yield of 3-month U.S. Treasury bills and the annual fees and expenses, each Fund will be
required to earn a net income equal to or greater than the approximate amount per annum set forth
in the above table, assuming that each Fund does not experience gains or losses from its futures
trading, in order for an investor to break-even on an investment during the first twelve months of
an investment. Actual interest income could be higher or lower than the current yield of 3-month
U.S. Treasury bills.
| A Funds trading operations may be successful and yet a Fund may still sustain losses if
the value of a Funds Gold Investments declines by more than the amount of profits generated
by the Funds Index Investments. Likewise, a Funds gains, if any, from its Gold Investments
may be offset by losses incurred in its Index Investments. |
|
| A Fund may fail to achieve its objective of maintaining a dollar for dollar investment in
gold if gold futures margins increase substantially, in |
3
Table of Contents
which case the Fund may reduce its Gold Investments and continue its Index Investments. |
||
| CFTC and commodity exchange rules impose speculative position limits on market participants
trading in gold. If position limits are applied to a Funds Gold Investment, the Fund may not
be able to achieve its objective of maintaining a dollar for dollar investment in gold. |
|
| There can be no assurance that any Fund will achieve profits or avoid losses, significant
or otherwise. |
|
| Each Fund is subject to numerous conflicts of interest. |
The Trustee
BNY Mellon Trust of Delaware, or the Trustee, a state bank chartered under the laws of the
State of Delaware, acts in a passive role as the sole trustee for each of the Funds. The Trustee
has only nominal duties and liabilities to each Fund. The Managing Owner has all of the power and
authority to manage the business and affairs of each Fund. The Trustee has no duty or liability to
supervise or monitor the Managing Owner, nor does the Trustee have any liability for the acts or
omissions of the Managing Owner.
Investment Objective of the Funds
The primary objective of each Fund is to maintain the approximate equivalent of a dollar for
dollar investment in gold, or the Gold Investment, while seeking appreciation of its assets over
time by trading and investing in long positions in exchange-traded futures contracts that reference
an appropriate securities, commodity, or other index, with a view to tracking the applicable index
investment over time, or the Index Investment. The notional value of each Funds futures contracts
with respect to each of its Gold Investment and Index Investment will be approximately equal to the
value of each Funds holdings of United States Treasury and other high credit quality short-term
fixed income securities, or the Funds Equity, upon establishment of each of these positions.
Therefore, the aggregate notional value of each
Funds futures contracts with respect to both its
Gold Investment and Index Investment will be double the value of the Funds Equity, which means
each Fund will have a leverage ratio at such time of 2:1. Because the notional value of each
Funds futures positions in the Gold Investment and
the Index Investment will rise or fall over
time, the leverage ratio could be higher or lower than the 2:1 leverage ratio. The use of leverage
will increase the potential for both trading profits and losses, depending on the changes, positive
and negative, in the Gold Investment and the Index Investment.
As a result of its use of leverage, each Fund will be required to deposit a greater proportion
of its net assets as margin, not expected to exceed 5-15% of its net assets, as applicable. This
represents margin deposit requirements approximately twice as great as would be required if each
Fund did not use leverage. Similarly, as a result of its use of leverage, each Fund will trade more
futures contracts and incur more brokerage commission expense than it would if it did not use
leverage. The additional amount of brokerage commission expense generally will be proportional to
each Funds leverage ratio.
Each Fund is designed to maintain through its Gold Investments a long position in gold futures
contracts in a U.S. dollar amount approximately equal to the total capital contributed to each Fund
at the time it begins its trading activities and, thereafter, equal to the total capital of each
Fund on a daily basis. The Gold Investments of each Fund is intended to de-link the Funds net
asset value, which is denominated in U.S. dollars, from the value of the U.S. dollar relative to
gold, essentially denominating the Funds net asset value in terms of gold. However, if the U.S.
dollar value of gold declines resulting in dollar losses for the Fund, there can be no assurance
that there will be a corresponding increase in the value or purchasing power of the U.S. dollar for
goods (other than gold) or services priced in dollars. Furthermore, there can be no assurance that
trading losses incurred in the Funds Index Investments will not result in overall losses for the
Fund, or that the Fund will not reduce its Gold Investments if gold futures margin requirements
increase significantly.
An investment in the Shares has the potential to help diversify traditional securities
portfolios. A diverse portfolio consisting of assets that perform in an unrelated manner, or
non-correlated assets, may increase overall return and/or reduce the volatility (a widely used
measure of risk) of a traditional portfolio of stocks and bonds. However, for a non-correlated
asset to increase a traditional portfolios overall returns, the non-correlated asset must
outperform either stocks or bonds over the period being measured. There can be no assurance that a
Fund will outperform other sectors of an investors portfolio or not produce losses.
4
Table of Contents
Each Fund will hold substantially all of its assets (including those assets used as margin
deposits for trading activities) in U.S. government securities and/or interest bearing deposit
accounts, segregated by Fund. Accordingly, each Fund, in addition to its potential to profit from
its Gold Investments and its Index Investments, will earn interest on all or almost all of its
assets.
The Shares of each Fund are designed for investors who want a cost-effective and convenient
way to invest in futures.
Advantages of investing in the Shares include:
| Ease and Flexibility of Investment. The Shares trade on the NYSE Arca and provide
institutional and retail investors with indirect access to the futures markets. The Shares
may be bought and sold on the NYSE Arca like other exchange-listed securities. Retail
investors may purchase and sell Shares through traditional brokerage accounts. |
|
| Margin. Shares are eligible for margin accounts. |
|
| Diversification. The Shares may help to diversify a portfolio because historically,
investments that include commodities have tended to exhibit low to negative correlation with
both equities and conventional bonds and positive correlation to inflation. |
Investing in the Shares does not insulate shareholders, or the Shareholders, from certain
risks, including price volatility.
Each Fund pursues its investment objective by investing in a portfolio of exchange-traded
futures contracts on the Gold Investments and the Index Investments.
Each of the following Funds intends to reflect the below sectors:
| Superfund Gold Large Cap Equity Fund is designed to maintain the approximate
equivalent of a dollar for dollar investment in gold while investing in futures contracts that
track a large cap U.S. equity securities index. The Index Investment of the Superfund Gold
Large Cap Equity Fund is comprised of E-mini Standard and Poors 500 Stock Price
IndexTM
Futures contracts, or the E-mini |
S&P 500 futures contracts, traded on the
Chicago Mercantile
Exchange, Inc., or the CME. The E-mini S&P 500 futures contracts serve as
a vehicle to provide an exposure to the benchmark for large-cap U.S. stocks. |
||
| Superfund Gold Mid Cap Equity Fund is designed to maintain the approximate
equivalent of a dollar for dollar investment in gold while investing in futures contracts that
track a mid cap U.S. equity securities index. The Index Investment of the Superfund Gold Mid
Cap Equity Fund is comprised of E-mini Standard and Poors Midcap 400 Stock Price
IndexTM Futures, or the E-mini S&P 400 futures contracts, traded on the CME. The
E-mini S&P 400 futures contracts serve as a vehicle to provide an exposure to a significant
benchmark for mid-cap U.S. stocks. The E-mini S&P 400 futures contracts reflect an underlying
benchmark of 400 medium-sized company stocks. Although past performance is not necessarily
indicative of future results, mid-cap equities have historically performed differently from
both large-caps and small-caps. |
|
| Superfund Gold Small Cap Equity Fund is designed to maintain the approximate
equivalent of a dollar for dollar investment in gold while investing in futures contracts that
track a small cap U.S. equity securities index. The Index Investment of the Superfund Gold
Small Cap Equity Fund is comprised of Russell 2000® Index Mini Futures, or the Russell 2000®
Mini futures contracts, traded on the ICE Futures U.S., Inc. The Russell 2000® Mini futures
contracts provide an exposure to a recognized benchmark generally reflecting 2000 of the
smallest companies in the small cap sector of U.S. equities. |
|
| Superfund Gold World Equity Fund is designed to maintain the approximate equivalent
of a dollar for dollar investment in gold while investing in futures contracts that track a
world equity securities index. The Index Investment of the Superfund Gold World Equity Fund
is comprised of E-Mini MSCI EAFE Index Futures, or the E-Mini MSCI EAFE futures contracts,
traded on the CME. The E-Mini MSCI EAFE futures contracts serve as a vehicle to provide an
exposure to a significant benchmark for international equity. The E-Mini MSCI EAFE futures
contracts reflect an underlying benchmark of more than 1,100 companies in Europe, Australasia,
and the Far East. |
5
Table of Contents
| Superfund Gold Commodities Fund is designed to maintain the approximate equivalent
of a dollar for dollar investment in gold while investing in futures contracts that track a
commodities index. The Index Investment of the Superfund Gold Commodities Fund is comprised
of S&P GSCITM Commodity Index Futures, or the S&P GSCITM Commodity Index
futures contracts, traded on the CME. The S&P GSCITM Commodity Index futures
contracts serve as a vehicle to provide an exposure to commodity sector returns. The S&P
GSCITM Commodity Index futures contracts reflect an underlying benchmark that
measures the returns of 24 commodity futures contracts in the following commodity sectors:
energy, precious and industrial metals, agricultural and livestock products. |
If the Managing Owner determines in its commercially reasonable judgment that it has become
impracticable or inefficient for any reason for any Fund to gain full or partial exposure to Gold
Investments or the Index Investments by investing in a specific futures contract, such Fund may
invest in an alternative futures contract referencing either gold or the corresponding Index
Investments other than the specific contract that the Fund currently invests in. The Managing
Owner may invest in an alternative and related futures contracts, forwards or swaps, if, in the
commercially reasonable judgment of the Managing Owner, such alternative futures contracts,
forwards or swaps tend to exhibit trading prices that correlate with a futures contract that
corresponds to the original Gold Investments or Index Investments.
Each Fund will make distributions at the discretion of the Managing Owner. To the extent that
a Funds actual and projected interest income from its holdings of United States Treasury
securities and other high credit quality short-term fixed income securities exceeds the actual and
projected fees and expenses of such Fund, the Managing Owner expects periodically to make
distributions of the amount of such excess. The Funds currently do not expect to make
distributions with respect to capital gains. Depending on the applicable Funds performance for the
taxable year and your own tax situation for such year, your income tax liability for the taxable
year for your allocable share of such Funds net ordinary income or loss and capital gain or loss
may exceed any distributions you receive with respect to such year.
Each Funds portfolio also will include United States Treasury securities and other high
credit quality short-term fixed income securities for deposit with each Funds Commodity Broker as
margin.
Under the Trust Declaration of each Fund, the Managing Owner has exclusive management and
control of all aspects of the business of each Fund. The Trustee has no duty or liability to
supervise or monitor the performance of the Managing Owner, nor does the Trustee have any liability
for the acts or omissions of the Managing Owner.
There can be no assurance that any Fund will achieve its investment objective or avoid
substantial losses. The Funds have no performance history.
If Gold Prices are Flat, Shares of Each Fund Should Track Closely the Value of its Index
Investment; Market Price per Share Should Track Closely the Net Asset Value per Share
Assuming the price of gold is flat, the Shares of each Fund are intended to provide investment
results, through each Funds Index Investments, that generally correspond to changes, positive or
negative, in the value of each Index Investment, over time.
The value of the Shares of each Fund is expected to fluctuate in relation to changes in the
value of its portfolio. The market price of the Shares of a Fund may not be identical to the net
asset value per Share, but these two valuations are expected to be very close.
Each Fund holds a portfolio of long futures contracts on gold and long positions in
exchange-traded futures contracts that reference an appropriate securities, commodity, or other
index, each of which are traded on various futures markets in the United States. Each Fund also
holds cash and United States Treasury securities and other high credit quality short-term fixed
income securities for deposit with its Commodity Broker as margin. Each Funds portfolio is traded
with a view to maintaining the approximate equivalent of a dollar for dollar investment in the Gold
Investments and the Index Investments, over time, whether the Gold Investments and the Index
Investments are rising, falling or flat over any particular period. The Funds are not managed by
traditional methods, which typically involve effecting changes in the composition of a portfolio on
the basis of judgments relating to economic, financial and market considerations with a view to
obtaining positive results under all market conditions.
6
Table of Contents
The Managing Owner
Superfund Advisors Inc., a New York corporation, serves as the Managing Owner, commodity pool
operator and trading advisor of each Fund and is responsible for the trading and administration of
each Fund. The Managing Owners offices, and the office of each Fund where its books and records
will be kept, are located at 489 Fifth Avenue, New York, New York 10017 and its telephone number is
(212) 878-4530.
The Managing Owner, a member of the Superfund group of affiliated companies which, in
aggregate, manage approximately $1.0 billion in assets worldwide as of September 30, 2009 in the
futures and forwards markets. The Managing Owner intends to delegate certain administrative
functions, including calculation of the Funds net asset values and distribution of reports to
investors, to The Bank of New York Mellon, or the Administrator. Certain Fund records will be
located at the offices of the Administrator at 2 Hanson Place, 12th Floor, Brooklyn,
N.Y. 11217.
Each Fund will pay the Managing Owner a Management Fee, monthly in arrears, in an amount equal
[0.85]% per annum of the daily net asset value of each Fund.
The Management Fee is paid in consideration of the Managing Owners commodity futures trading
advisory services.
The Introducing Broker
Superfund Asset Management, Inc., an affiliate of the Managing Owner, will serve as the
introducing broker, or the Introducing Broker, for each Fund. Its principal offices are located at
180 North LaSalle Street, Suite #3250, Chicago, IL 60601.
The Managing Owner will transmit trade instructions on behalf of each Fund to the Introducing
Broker. In turn, the Introducing Broker will, on behalf of each Fund, transmit the instructions to
the clearing and executing Commodity Brokers (as defined below).
Each Fund will pay a monthly flat-rate brokerage commission payable in [advance] [arrears] on
the [first] [last] day of each month equal to 1/12th of [0.15]% of each Funds net asset
value per annum ([0.15]% per annum),
which covers all brokerage fees and certain other trading
expenses incurred in
connection with each Funds futures interests trading, including floor
brokerage fees, exchange fees, clearinghouse fees, NFA fees, give-up or transfer fees, any costs
and fees, if applicable, for the execution of forward contract or swap transactions. A portion of
the brokerage commission will be paid to the Introducing Broker for serving as the introducing
broker for each Fund and a portion of the brokerage commission will be paid to the Commodity
Brokers for executing and clearing trades for each Fund.
The Commodity Brokers
ADM Investor Services, Inc. and Barclays Capital Inc. serve as the clearing and executing
commodity brokers, or Commodity Brokers, for the Funds.
ADM Investor Services, Inc. is a registered futures commission merchant and is a member of the
NFA. Its main office is located at 141 W. Jackson Blvd., Suite 1600A, Chicago, IL 60604.
Barclays Capital Inc. is a registered securities broker-dealer and a futures commission
merchant. Its business address is 200 Park Avenue, New York, NY 10166.
A portion of the brokerage commission will be paid to the Commodity Brokers for executing and
clearing trades for each Fund.
The Administrator
Each Fund has appointed The Bank of New York Mellon as the administrator, or the
Administrator, and each Fund has entered into an Administration Agreement in connection therewith.
The Bank of New York Mellon serves as custodian, or Custodian, of each Fund and has entered into a
Global Custody Agreement, or Custody Agreement, in connection therewith. The Bank of New York
Mellon serves as the transfer agent, or Transfer Agent, of each Fund and has entered into a
Transfer Agency and Service Agreement in connection therewith.
The Bank of New York Mellon, a banking corporation organized under the laws of the State of
New York with trust powers, has an office at 2 Hanson Place, 12th Floor, Brooklyn, N.Y.
11217. The Bank of New York Mellon is subject to supervision by the New York State Banking
7
Table of Contents
Department and the Board of Governors of the Federal Reserve System. Information regarding
the net asset value of each Fund, creation and redemption transaction fees and the names of the
parties that have executed a Participant Agreement may be obtained from The Bank of New York Mellon
by calling the following number: (718) 315 4412. A copy of the Administration Agreement is
available for inspection at The Bank of New Yorks trust office identified above.
Pursuant to the Administration Agreement, the Administrator performs or supervises the
performance of services necessary for the operation and administration of each Fund (other than
making investment decisions), including receiving and processing orders from Authorized
Participants to create and redeem Baskets, net asset value calculations, accounting and other fund
administrative services. The Administrator retains, separately for each Fund, certain financial
books and records, including: Basket creation and redemption books and records, Fund accounting
records, ledgers with respect to assets, liabilities, capital, income and expenses, the registrar,
transfer journals and related details and trading and related documents received from futures
commission merchants, c/o The Bank of New York Mellon, 2 Hanson Place, 12th Floor,
Brooklyn, New York 11217, telephone number (718) 315 4850.
The Administration Agreement will continue in effect from the commencement of trading
operations unless terminated on at least 90 days prior written notice by either party to the other
party. Notwithstanding the foregoing, the Administrator may terminate the Administration Agreement
upon 30 days prior written notice if any Fund has materially failed to perform its obligations
under the Administration Agreement.
The Administration Agreement provides for the exculpation and indemnification of the
Administrator from and against any costs, expenses, damages, liabilities or claims (other than
those resulting from the Administrators own bad faith, negligence or willful misconduct) which may
be imposed on, incurred by or asserted against the Administrator in performing its obligations or
duties under the Administration Agreement. Key terms of the Administration Agreement are
summarized under the heading Material Contracts.
The Administrators monthly fees will be paid on behalf of each Fund by the Managing Owner out
of the applicable Management Fee.
The Administrator and any of its affiliates may from time to time purchase or sell Shares for
their own account, as agent for their customers and for accounts over which they exercise
investment discretion.
The Administrator will receive a transaction processing fee in connection with orders from
Authorized Participants to create or redeem Baskets in the amount of $500 per order. These
transaction processing fees will be paid by the Authorized Participants and not by any Fund.
Each Fund retains the services of one or more additional service providers to assist with
certain tax reporting requirements of each Fund and the Shareholders of each Fund.
The Distributor
Superfund USA, Inc., in its capacity as the distributor of each Fund, or Distributor, will
assist the Administrator with certain functions and duties relating to distribution and marketing
of each Fund, including reviewing and approving marketing materials. The Distributor retains all
marketing materials separately for each Fund at 489 Fifth Avenue, New York, New York 10017;
telephone number (212) 878-4530. Investors may contact the Distributor toll-free in the U.S. at
1-888-50-SUPER. The Managing Owner, on behalf of each Fund, has entered into a Distribution
Services Agreement with the Distributor.
The Managing Owner, out of the relevant Management Fee, will pay the Distributor for
performing its duties as the Distributor of each Fund. The Distributor may receive additional
compensation in consideration of the performance of additional marketing, distribution and ongoing
support services to each Fund. Such additional services may include, among other services, the
development and implementation of a marketing plan and the utilization of certain resources, which
may include an extensive broker database and a network of internal and external wholesalers.
888 Number for Investors
Investors may contact the Managing Owner toll free in the U.S. at 1-888-50-SUPER.
8
Table of Contents
The Marketer
Superfund USA, Inc., in its capacity as the marketer of each Fund, or Marketer, will serve as
a marketing agent on behalf of each Fund and will assist the Administrator with certain functions
and duties such as providing various educational and marketing activities regarding each Fund,
primarily in the secondary trading market, which activities include, but are not limited to,
communicating each Funds name, characteristics, uses, benefits, and risks, consistent with this
Prospectus. The Marketer will not open or maintain customer accounts or handle orders for each
Fund.
The Managing Owner, out of the relevant Management Fee, will pay the Marketer for performing
its duties as the Marketer of each Fund.
Limitation of Liabilities
Investors cannot lose more than the amount of their investments and undistributed profits, if
any. Thus, investors receive the advantage of limited liability in a trading vehicle.
Creation and Redemption of Shares
The Funds create and redeem Shares from time-to-time, but only in one or more Baskets. A
Basket is a block of 100,000 Shares. Baskets may be created or redeemed only by Authorized
Participants. Except when aggregated in Baskets, the Shares are not redeemable securities.
Authorized Participants pay a transaction fee of $500 in connection with each order to create or
redeem a Basket. Authorized Participants may sell the Shares included in the Baskets they purchase
from the Funds to other investors.
See Creation and Redemption of Shares for more details.
The Offering
On [], 2010, [ ], as the Initial Purchaser, subject to certain
conditions, agreed to purchase and took delivery of 100,000 Shares with respect to each Fund, which
comprise the initial Baskets of each Fund, at a purchase price of $20.00 per Share ($2,000,000 per
Basket), as described in Plan of Distribution.
Shares will be continuously offered at their net asset value, stated in dollars, for
transaction purposes, and ounces
of gold, reflecting the U.S. dollar price per ounce of gold
established at the most recent London A.M. fixing, for reference.
Each Fund issues Shares in Baskets to Authorized Participants continuously as of noon, New
York time, on the business day immediately following the date on which a valid order to create a
Basket is accepted by the Fund, at the net asset value of 100,000 Shares of the Fund as of the
closing time of the NYSE Arca or the last to close of the exchanges on which the corresponding
Funds futures contracts are traded, whichever is later, on the date that a valid order to create a
Basket is accepted by the Fund.
Authorized Participants
Baskets may be created or redeemed only by Authorized Participants. Each Authorized
Participant must (1) be a registered broker-dealer or other securities market participant such as a
bank or other financial institution which is not required to register as a broker-dealer to engage
in securities transactions, (2) be a participant in DTC, and (3) have entered into an agreement
with a Fund and the Managing Owner, or a Participant Agreement. The Participant Agreement sets
forth the procedures for the creation and redemption of Baskets of Shares and for the delivery of
cash required for such creations or redemptions. A list of the current Authorized Participants may
be obtained from the Administrator. See Creation and Redemption of Shares for more details.
Net Asset Value
The net asset value of a Fund as of any date is the sum of all cash, plus U.S. Treasury bills
and other U.S. government securities valued at cost plus accrued interest, and other securities of
such Fund valued at fair value, plus the fair value of all open futures, forward, option and other
derivative positions maintained by such Fund, less all liabilities of such Fund, determined in
accordance with generally accepted accounting principles in the United States under the accrual
basis of accounting. The net asset value of a Share in a Fund will be equal to the net asset value
of the applicable Fund divided by the number of Shares in such Fund outstanding as of the date of
determination.
9
Table of Contents
Clearance and Settlement
The Shares of each Fund are evidenced by global certificates that the Fund issues to DTC. The
Shares of each Fund are available only in book-entry form. Shareholders may hold Shares of any
Fund through DTC, if they are participants in DTC, or indirectly through entities that are
participants in DTC.
Segregated Accounts/Interest Income
The proceeds of the offering of each Fund are deposited in cash in a segregated account in the
name of the Fund at the Commodity Broker (or another eligible financial institution, as applicable)
in accordance with CFTC investor protection and segregation requirements. Each Fund is credited
with 100% of the interest earned on its average net assets on deposit with the Commodity Broker or
such other financial institution [each week]. In an attempt to increase interest income earned,
the Managing Owner expects to invest non-margin assets of each Fund in United States government
securities (which include any security issued or guaranteed as to principal or interest by the
United States), or any certificate of deposit for any of the foregoing, including United States
Treasury bonds, United States Treasury bills and issues of agencies of the United States
government, and certain cash items such as money market funds, certificates of deposit (under nine
months) and time deposits or other instruments permitted by applicable rules and regulations.
Currently, the rate of interest expected to be earned by each Fund is estimated to be 0.05% per
annum, based upon the yield on 3-month U.S. Treasury bills as of January 20, 2010. This interest
income is used by each Fund to pay its own expenses. See Fees and Expenses for more details.
[Remainder of page left blank intentionally.]
10
Table of Contents
Fees and Expenses
Management Fee
|
Each Fund will pay the Managing
Owner a Management Fee, monthly in
arrears, in an amount equal to
[0.85]% per annum of the daily net
asset value of such Fund. The
Management Fee is paid in
consideration of the Managing
Owners commodity futures trading
advisory services. |
||||
Organization and Offering Expenses
|
Expenses incurred in connection with
organizing each Fund and the
offering of its Shares were paid by
the Managing Owner. Expenses
incurred in connection with the
continuous offering of Shares of
each Fund after the commencement of
its trading operations will be paid
by the Managing Owner. |
||||
Brokerage Commissions and Fees
|
Each Fund will pay a monthly
flat-rate brokerage commission
payable in [advance] [arrears] on
the [first] [last] day of each month
equal to 1/12th of
[0.15]% of each Funds net asset
value per annum ([0.15]% per annum),
which covers all brokerage fees and
certain other trading expenses
incurred in connection with each
Funds futures interests trading,
including floor brokerage fees,
exchange fees, clearinghouse fees,
NFA fees, give-up or transfer
fees, any costs and fees, if
applicable, for the execution of
forward contract or swap
transactions. A portion of the
brokerage commission will be paid to
the Introducing Broker for serving
as the introducing broker for each
Fund and a portion of the brokerage
commission will be paid to the
Commodity Brokers for executing and
clearing trades for each Fund. |
||||
Routine Operational, Administrative
and Other Ordinary Expenses
|
The Managing Owner will pay all of
the routine operational,
administrative and other ordinary
expenses of each Fund, including,
but not limited to, computer
services, the fees and expenses of
the Trustee, the legal and
accounting fees and expenses, [tax
preparation expenses], filing fees,
and printing, mailing and
duplication costs. |
||||
Non-Recurring and Unusual Fees and
Expenses
|
Each Fund will pay all non-recurring
and unusual fees and expenses,
(referred to as extraordinary fees
and expenses in the Trust
Agreement), if any, of itself, as
determined by the Managing Owner.
Non-recurring and unusual fees and
expenses are fees and expenses which
are non-recurring and unusual in
nature, such as legal claims and
liabilities, litigation costs or
indemnification or other
unanticipated expenses. Such
non-recurring and unusual fees and
expenses, by their nature, are
unpredictable in terms of timing and
amount. |
||||
Management Fee and Expenses to be
Paid First out of Interest Income
|
The Management Fee and the brokerage
commissions and fees of each Fund
will be paid first out of interest
income from such Funds holdings of
U.S. Treasury bills and other high
credit quality short-term fixed
income securities on deposit with
the Commodity Broker as margin or
otherwise. If interest income is
not sufficient to cover the fees and
expenses of a Fund during any
period, the excess of such fees and
expenses over such interest income
will be paid out of income from
futures trading, if any, or from
sales of the Funds fixed income
securities. |
||||
Selling Commission
|
Retail investors may purchase and
sell Shares through traditional
brokerage accounts. Investors are
expected to be charged a customary
commission by their brokers in
connection with purchases of Shares
that will vary from investor to
investor. Investors are encouraged
to review the terms of their
brokerage accounts for applicable
charges. |
||||
11
Table of Contents
Breakeven Amounts
The following table estimates the amount of (i) all fees and expenses which are anticipated to
be incurred by a new investor in Shares of each Fund during the first twelve months of investment,
reflected as the following percentage per annum of the net asset value of each Fund, (ii) the
current yield earned by each Fund on the 3-month U.S. Treasury bills as of January 20, 2010 and
(iii) the required net income that must be earned, assuming that each Fund does not experience
gains or losses from its futures trading, in order for an investor to break-even on an investment
during the first twelve months of an investment plus the amount of any commissions charged by the
investors broker in connection with an investors purchase of Shares:
Required | ||||||||||||||||||||||
Yield on | Income to | |||||||||||||||||||||
3-month | Break Even | |||||||||||||||||||||
U.S. | ||||||||||||||||||||||
Fees and | Treasury | |||||||||||||||||||||
Fund | Expenses | bills | % | $1 | ||||||||||||||||||
Large Cap Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
Mid Cap Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
Small Cap Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
World Equity Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
Commodities Fund |
[(1.00)] | % | 0.05 | % | [0.95] | [0.19] | ||||||||||||||||
1 The dollar amount as specified in the above table reflects that amount of
required income to break even per annum per Share assuming that the net asset value of each Share
is $20.00.
Each Fund will be subject to the approximate fees and expenses in the aggregate amounts
per annum set forth in the above table and elsewhere in this Prospectus. The Funds will be
successful only if their annual returns from futures trading, plus their annual interest income
from their holdings of United States Treasury securities and other high credit quality short-term
fixed income securities, exceed these fees and expenses. Each Fund is expected to earn interest
income equal to 0.05% per annum, based upon the yield of 3-month U.S. Treasury bills as of January
20, 2010, or a dollar amount as specified in the above table per annum per Share at $20.00 as the
net asset value per Share. Therefore, based upon the difference between the current yield of
3-month U.S. Treasury bills and the annual fees and expenses, each Fund will be required to earn a
net income equal to or greater than the approximate amount per annum set forth in the above table,
assuming that each Fund does not experience gains or losses from its futures trading, in order
for an investor to break-even on an investment during the first twelve months of an investment. Actual
interest income could be higher or lower than the current yield of 3-month U.S. Treasury bill.
Distributions
Each Fund will make distributions at the discretion of the Managing Owner. To the extent that
a Funds actual and projected interest income from its holdings of United States Treasury
securities and other high credit quality short-term fixed income securities exceeds the actual and
projected fees and expenses of such Fund, the Managing Owner expects periodically to make
distributions of the amount of such excess. The Funds currently do not expect to make
distributions with respect to capital gains. Depending on the applicable Funds performance for
the taxable year and your own tax situation for such year, your income tax liability for the
taxable year for your allocable share of such Funds net ordinary income or loss and capital gain
or loss may exceed any distributions you receive with respect to such year.
Fiscal Year
The fiscal year of each Fund ends on December 31 of each year.
Financial Information
The Funds have only recently been organized and have no financial histories.
U.S. Federal Income Tax Considerations
Subject to the discussion below in Material U.S. Federal Income Tax Considerations, each
Fund will be classified as a partnership for U.S. federal income tax purposes. Accordingly, none
of the Funds will incur U.S. federal income tax liability; rather, each beneficial owner of Shares
of a Fund will be required to take into account its allocable share of such Funds income, gain,
loss, deduction and other items for the Funds taxable year ending with or within the owners
taxable year.
Additionally, please refer to the Material U. S. Federal Income Tax Considerations section
below for information on the potential U.S. federal income
12
Table of Contents
tax consequences of the purchase, ownership and disposition of Shares.
Breakeven Table
The Breakeven Table on the following pages indicate the approximate percentage and dollar
returns required for the value of an initial $20.00 investment in a Share of each Fund to equal the
amount originally invested twelve months after issuance.
The Breakeven Table, as presented, is an approximation only. The capitalization of each Fund
does not directly affect the level of its charges as a percentage of its net asset value, other
than brokerage commissions.
[Remainder of page left blank intentionally.]
13
Table of Contents
Breakeven Table
Dollar Amount and Percentage of Expenses Per Fund | ||||||||||||||||||||||
Superfund Gold Large Cap Equity Fund9 | Superfund Gold Mid Cap Equity Fund9 | |||||||||||||||||||||
Expense1 | $ | % | $ | % | ||||||||||||||||||
Management Fee2 |
$[0.17] | [0.85]% | $[0.17] | [0.85]% | ||||||||||||||||||
Organization and Offering Expense
Reimbursement3 |
$0.00 | 0.00% | $0.00 | 0.00% | ||||||||||||||||||
Brokerage Commissions and Fees4 |
$[0.03] | [0.15]% | $[0.03] | [0.15]% | ||||||||||||||||||
Routine Operational, Administrative and
Other Ordinary Expenses5,6 |
$0.00 | 0.00% | $0.00 | 0.00% | ||||||||||||||||||
Interest Income7 |
$(0.01) | (0.05)% | $(0.01) | (0.05)% | ||||||||||||||||||
12-Month Breakeven8 |
$[0.19] | [0.95]% | $[0.19] | [0.95]% | ||||||||||||||||||
1. | The breakeven analysis assumes that the Shares have a constant month end Fund net asset
value and is based on $20.00 as the net asset value per Share. See Charges on page 46
for an explanation of the expenses included in the Breakeven Table. |
|
2. | From the Management Fee, the Managing Owner will be responsible for paying the fees and
expenses of the Administrator, the Distributor and the Marketer. |
|
3. | The Managing Owner is responsible for paying the organization and offering expenses and
the continuous offering costs of each Fund. |
|
4. | Each Fund will pay a monthly flat-rate brokerage commission payable in [advance]
[arrears] on the [first] [last] day of each month equal to 1/12th of [0.15]% of
each Funds net asset value per annum ([0.15]% per annum), which covers all brokerage fees
and certain other trading expenses incurred in connection with each Funds futures
interests trading, including floor brokerage fees, exchange fees, clearinghouse fees, NFA
fees, give-up or transfer fees, any costs and fees, if applicable, for the execution of
forward contract or swap transactions. A portion of the brokerage commission will be paid
to the Introducing Broker for serving as the introducing broker for each Fund and a
portion of the brokerage commission will be paid to the Commodity Brokers for executing
and clearing trades for each Fund. |
|
5. | The Managing Owner is responsible for paying all routine operational, administrative and
other ordinary expenses of each Fund. |
|
6. | In connection with orders to create and redeem Baskets, Authorized Participants will pay
a transaction fee in the amount of $500 per order. Because these transaction fees are de
minimis in amount, are charged on a transaction-by-transaction basis (and not on a
Basket-by-Basket basis), and are borne by the Authorized Participants, they have not been
included in the Breakeven Table. |
|
7. | Interest income currently is estimated to be earned at a rate of 0.05%, based upon the
yield on 3-month U.S. Treasury bills as of January 20, 2010. Actual interest income could
be higher or lower than the current yield of 3-month U.S. Treasury bills. |
|
8. | You may pay customary brokerage commissions in connection with purchases of the Shares.
Because such brokerage commission rates will vary from investor to investor, such
brokerage commissions have not been included in the Breakeven Table. Investors are
encouraged to review the terms of their brokerage accounts for applicable charges. |
|
9. | Each Fund will be subject to (i) a Management Fee of [0.85]% per annum and (ii) brokerage
commissions and fees of [0.15]% per annum. Each Fund will be subject to fees and expenses
in the aggregate amount of [approximately] [1.00]% per annum. Each Fund will be
successful only if each of their annual returns from the Gold Investments and Index
Investments, including annual income from 3-month U.S. Treasury bills, exceeds
[approximately] [1.00]% per annum. The Funds are expected to earn 0.05% per annum, based
upon the yield of 3-month U.S. Treasury bills as of January 20, 2010. Therefore, based
upon the difference between the current yield of 3-month U.S. Treasury bills and the
annual fees and expenses, each Fund would be required to earn [approximately] [0.95]% per
annum, assuming that each Fund has not experienced either gains or losses resulting from
investing in the Gold Investments and Index Investments, in order for an investor to
break-even on an investment during the first twelve months of an investment. Actual
interest income could be higher or lower than the current yield of 3-month U.S. Treasury
bills. |
14
Table of Contents
Breakeven Table
Dollar Amount and Percentage of Expenses Per Fund | ||||||||||||||||||||||
Superfund Gold Small Cap Equity Fund9 | Superfund Gold World Equity Fund9 | |||||||||||||||||||||
Expense1 | $ | % | $ | % | ||||||||||||||||||
Management Fee2 | $[0.17] | [0.85]% | $[0.17] | [0.85]% | ||||||||||||||||||
Organization and Offering Expense Reimbursement3 | $0.00 | 0.00% | $0.00 | 0.00% | ||||||||||||||||||
Brokerage Commissions and Fees4 | $[0.03] | [0.15]% | $[0.03] | [0.15]% | ||||||||||||||||||
Routine Operational, Administrative and Other Ordinary Expenses5,6 | $0.00 | 0.00% | $0.00 | 0.00% | ||||||||||||||||||
Interest Income7 | $(0.01) | (0.05)% | $(0.01) | (0.05)% | ||||||||||||||||||
12-Month Breakeven8 | $[0.19] | [0.95]% | $[0.19] | [0.95]% | ||||||||||||||||||
1. | The breakeven analysis assumes that the Shares have a constant month end Fund net asset
value and is based on $20.00 as the net asset value per Share. See Charges on page 46
for an explanation of the expenses included in the Breakeven Table. |
|
2. | From the Management Fee, the Managing Owner will be responsible for paying the fees and
expenses of the Administrator, the Distributor and the Marketer. |
|
3. | The Managing Owner is responsible for paying the organization and offering expenses and
the continuous offering costs of each Fund. |
|
4. | Each Fund will pay a monthly flat-rate brokerage commission payable in [advance]
[arrears] on the [first] [last] day of each month equal to 1/12th of [0.15]% of
each Funds net asset value per annum ([0.15]% per annum), which covers all brokerage fees
and certain other trading expenses incurred in connection with each Funds futures
interests trading, including floor brokerage fees, exchange fees, clearinghouse fees, NFA
fees, give-up or transfer fees, any costs and fees, if applicable, for the execution of
forward contract or swap transactions. A portion of the brokerage commission will be paid
to the Introducing Broker for serving as the introducing broker for each Fund and a
portion of the brokerage commission will be paid to the Commodity Brokers for executing
and clearing trades for each Fund. |
|
5. | The Managing Owner is responsible for paying all routine operational, administrative and
other ordinary expenses of each Fund. |
|
6. | In connection with orders to create and redeem Baskets, Authorized Participants will pay
a transaction fee in the amount of $500 per order. Because these transaction fees are de
minimis in amount, are charged on a transaction-by-transaction basis (and not on a
Basket-by-Basket basis), and are borne by the Authorized Participants, they have not been
included in the Breakeven Table. |
|
7. | Interest income currently is estimated to be earned at a rate of 0.05%, based upon the
yield on 3-month U.S. Treasury bills as of January 20, 2010. Actual interest income could
be higher or lower than the current yield of 3-month U.S. Treasury bills. |
|
8. | You may pay customary brokerage commissions in connection with purchases of the Shares.
Because such brokerage commission rates will vary from investor to investor, such
brokerage commissions have not been included in the Breakeven Table. Investors are
encouraged to review the terms of their brokerage accounts for applicable charges. |
|
9. | Each Fund will be subject to (i) a Management Fee of [0.85]% per annum and (ii) brokerage
commissions and fees of [0.15]% per annum. Each Fund will be subject to fees and expenses
in the aggregate amount of [approximately] [1.00]% per annum. Each Fund will be
successful only if each of their annual returns from the Gold Investments and Index
Investments, including annual income from 3-month U.S. Treasury bills, exceeds
[approximately] [1.00]% per annum. The Funds are expected to earn 0.05% per annum, based
upon the yield of 3-month U.S. Treasury bills as of January 20, 2010. Therefore, based
upon the difference between the current yield of 3-month U.S. Treasury bills and the
annual fees and expenses, each Fund would be required to earn [approximately] [0.95]% per
annum, assuming that each Fund has not experienced either gains or losses resulting from
investing in the Gold Investments and Index Investments, in order for an investor to
break-even on an investment during the first twelve months of an investment. Actual
interest income could be higher or lower than the current yield of 3-month U.S. Treasury
bills. |
15
Table of Contents
Breakeven Table
Dollar Amount and Percentage of Expenses Per Fund | ||||||||||||
Superfund Gold Commodities Fund9 | ||||||||||||
Expense1 | $ | % | ||||||||||
Management Fee2 | $[0.17] | [0.85]% | ||||||||||
Organization and Offering Expense Reimbursement3 | $0.00 | 0.00% | ||||||||||
Brokerage Commissions and Fees4 | $[0.03] | [0.15]% | ||||||||||
Routine Operational, Administrative and Other Ordinary Expenses5,6 | $0.00 | 0.00% | ||||||||||
Interest Income7 | $(0.01) | (0.05)% | ||||||||||
12-Month Breakeven8 | $[0.19] | [0.95]% | ||||||||||
1. | The breakeven analysis assumes that the Shares have a constant month end Fund net asset
value and is based on $20.00 as the net asset value per Share. See Charges on page 46
for an explanation of the expenses included in the Breakeven Table. |
|
2. | From the Management Fee, the Managing Owner will be responsible for paying the fees and
expenses of the Administrator, the Distributor and the Marketer. |
|
3. | The Managing Owner is responsible for paying the organization and offering expenses and
the continuous offering costs of each Fund. |
|
4. | Each Fund will pay a monthly flat-rate brokerage commission payable in [advance]
[arrears] on the [first] [last] day of each month equal to 1/12th of [0.15]% of
each Funds net asset value per annum ([0.15]% per annum), which covers all brokerage fees
and certain other trading expenses incurred in connection with each Funds futures
interests trading, including floor brokerage fees, exchange fees, clearinghouse fees, NFA
fees, give-up or transfer fees, any costs and fees, if applicable, for the execution of
forward contract or swap transactions. A portion of the brokerage commission will be paid
to the Introducing Broker for serving as the introducing broker for each Fund and a
portion of the brokerage commission will be paid to the Commodity Brokers for executing
and clearing trades for each Fund. |
|
5. | The Managing Owner is responsible for paying all routine operational, administrative and
other ordinary expenses of each Fund. |
|
6. | In connection with orders to create and redeem Baskets, Authorized Participants will pay
a transaction fee in the amount of $500 per order. Because these transaction fees are de
minimis in amount, are charged on a transaction-by-transaction basis (and not on a
Basket-by-Basket basis), and are borne by the Authorized Participants, they have not been
included in the Breakeven Table. |
|
7. | Interest income currently is estimated to be earned at a rate of 0.05%, based upon the
yield on 3-month U.S. Treasury bills as of January 20, 2010. Actual interest income could
be higher or lower than the current yield of 3-month U.S. Treasury bills. |
|
8. | You may pay customary brokerage commissions in connection with purchases of the Shares.
Because such brokerage commission rates will vary from investor to investor, such
brokerage commissions have not been included in the Breakeven Table. Investors are
encouraged to review the terms of their brokerage accounts for applicable charges. |
|
9. | Each Fund will be subject to (i) a Management Fee of [0.85]% per annum and (ii) brokerage
commissions and fees of [0.15]% per annum. Each Fund will be subject to fees and expenses
in the aggregate amount of [approximately] [1.00]% per annum. Each Fund will be
successful only if each of their annual returns from the Gold Investments and Index
Investments, including annual income from 3-month U.S. Treasury bills, exceeds
[approximately] [1.00]% per annum. The Funds are expected to earn 0.05% per annum, based
upon the yield of 3-month U.S. Treasury bills as of January 20, 2010. Therefore, based
upon the difference between the current yield of 3-month U.S. Treasury bills and the
annual fees and expenses, each Fund would be required to earn [approximately] [0.95]% per
annum, assuming that each Fund has not experienced either gains or losses resulting from
investing in the Gold Investments and Index Investments, in order for an investor to
break-even on an investment during the first twelve months of an investment. Actual
interest income could be higher or lower than the current yield of 3-month U.S. Treasury
bills. |
16
Table of Contents
Reports to Shareholders
The Managing Owner will furnish you with an annual report of each Fund in which you are
invested within 90 calendar days after the end of such Funds fiscal year as required by the rules
and regulations of the SEC as well as with those reports required by the CFTC and the NFA,
including, but not limited to, an annual audited financial statement certified by independent
registered public accountants and any other reports required by any other governmental authority
that has jurisdiction over the activities of the Funds. You also will be provided with appropriate
information to permit you to file your U.S. federal and state income tax returns (on a timely
basis) with respect to your Shares. Monthly account statements conforming to CFTC and NFA
requirements are posted on the Managing Owners website at [http://www.superfund.com].
Additional reports may be posted on the Managing Owners website in the discretion of the Managing
Owner or as required by regulatory authorities.
Cautionary Note Regarding Forward-Looking Statements
This Prospectus includes forward-looking statements that reflect the Managing Owners current
expectations about the future results, performance, prospects and opportunities of the Funds. The
Managing Owner has tried to identify these forward-looking statements by using words such as may,
will, expect, anticipate, believe, intend, should, estimate or the negative of those
terms or similar expressions. These forward-looking statements are based on information currently
available to the Managing Owner and are subject to a number of risks, uncertainties and other
factors, both known, such as those described in Risk Factors in this Summary, in The Risks You
Face and elsewhere in this Prospectus, and unknown, that could cause the actual results,
performance, prospects or opportunities of the Funds to differ materially from those expressed in,
or implied by, these forward-looking statements.
You should not place undue reliance on any forward-looking statements. Except as expressly
required by the federal securities laws, the Managing Owner undertakes no obligation to publicly
update or revise any forward-looking statements or the risks, uncertainties or other factors
described in this Prospectus, as a result of new information, future events or changed
circumstances or for any other reason after the date of this Prospectus.
THE SHARES ARE SPECULATIVE AND
INVOLVE A HIGH DEGREE OF RISK.
INVOLVE A HIGH DEGREE OF RISK.
17
Table of Contents
Table of Contents
THE RISKS YOU FACE
You could lose money investing in Shares of a Fund. You should consider carefully the risks
described below before making an investment decision. You should also refer to the other
information included in this Prospectus.
The Funds and Market Related Risks
(1) The Value of the Shares of each Fund Relates Directly to the Value of the Futures
Contracts and Other Assets Held by It and Fluctuations in the Price of These Assets Could
Materially Adversely Affect an Investment in a Funds Shares.
The Shares of each Fund are designed to maintain the approximate equivalent of a dollar for
dollar investment in gold, or the Gold Investment, while seeking appreciation over time by trading
and investing in long positions in exchange-traded futures contracts that reference an appropriate
securities, commodity, or other index, with a view to tracking the applicable index investment over
time, or the Index Investment. The value of the Shares of each Fund relates directly to the value
of its portfolio, less the liabilities (including estimated accrued but unpaid expenses) of the
Fund. The price of the Gold Investments and the Index Investments may fluctuate widely. Several
factors may affect the prices of the Gold Investments and the Index Investments:
| Global supply and demand of gold which may be influenced by such factors as forward selling
by the various commodities producers, purchases made by the commodities producers to unwind
their hedge positions and production and cost levels in the major markets of gold; |
|
| Domestic and foreign interest rates and investors expectations concerning interest rates; |
|
| Domestic and foreign inflation rates and investors expectations concerning inflation
rates; |
|
| Investment and trading activities of mutual funds, hedge funds and commodity funds; and |
|
| Global or regional political, economic or financial events and situations. |
(2) Net Asset Value May Not Always Correspond to Market Price and, as a Result, Baskets may
be Created or Redeemed at a Value that Differs from the Market Price of the Shares.
The net asset value per share of the Shares of a Fund will change as fluctuations occur in the
market value of its portfolio. Investors should be aware that the public trading price of a Basket
of Shares of a Fund may be different from the net asset value of a Basket of Shares of the Fund
(i.e., 100,000 Shares may trade at a premium over, or a discount to, net asset value of a Basket of
Shares) and similarly the public trading price per Share of a Fund may be different from the net
asset value per Share of the Fund. Consequently, an Authorized Participant may be able to create
or redeem a Basket of Shares of a Fund at a discount or a premium to the public trading price per
Share of the Fund. This price difference may be due, in large part, to the fact that supply and
demand forces at work in the secondary trading market for Shares of a Fund is closely related, but
not identical to the same forces influencing the prices of the Gold Investments and the Index
Investments, trading individually or in the aggregate at any point in time. Investors also should
note that the size of each Fund in terms of total assets held may change substantially over time
and from time-to-time as Baskets are created and redeemed.
Authorized Participants or their clients or customers may have an opportunity to realize a
riskless profit if they can purchase a creation Basket at a discount to the public trading price of
the Shares of a Fund or can redeem a redemption Basket at a premium over the public trading price
of the Shares of the Fund. The Managing Owner expects that the exploitation of such arbitrage
opportunities by Authorized Participants and their clients and customers will tend to cause the
public trading price to track net asset value per Share of the Fund closely over time.
The value of a Share of a Fund may be influenced by non-concurrent trading hours between the
NYSE Arca and the various futures exchanges on which the Gold Investments and the Index Investments
corresponding to such Fund are traded. As a result, during periods when the NYSE Arca is open and
the futures exchanges on which the Gold Investments and the Index Investments with respect to each
Fund are traded is closed, trading spreads and the resulting premium or discount on the Shares may
widen and, therefore, increase the difference between the price of the Shares and the net asset
value of the Shares.
19
Table of Contents
(3) Regulatory and Exchange Position Limits and Other Rules May Restrict the Creation of
Baskets of One or More of the Funds.
CFTC and commodity exchange rules impose speculative position limits on market participants,
including the Funds, trading in futures contracts on the Gold Investments and the Index
Investments. These position limits prohibit any person from holding a position of more than a
specific number of such futures contracts.
It is possible that in the future, the CFTC may propose new rules with respect to position
limits in futures contracts on the Gold Investments and the Index Investments for traders engaged
in indexed-based trading, such as the trading engaged in by the Funds. Depending on the outcome of
any future CFTC rulemaking, the rules concerning position limits may be amended in a manner that is
either detrimental or favorable to the Funds. For example, if the amended rules are detrimental to
a Fund, the Fund may become unable to issue new Baskets or may become unable to reinvest income in
additional futures contracts with respect to the Gold Investments and the Index Investments, to the
extent these activities would cause the Fund to exceed the applicable position limits. A limit on
the number of gold futures contracts that the Fund may invest in may have an impact on the ability
on the Fund to acquire its dollar for dollar gold position. Limiting the size of the Fund may
affect the correlation between the price of the Shares of the Fund, as traded on the NYSE Arca, and
the net asset value of the Fund. That is, the inability to create additional Baskets could result
in Shares in the Fund trading at a premium or discount to net asset value of the Fund.
All accounts controlled by the Managing Owner, including the accounts of the Funds, are
combined for speculative position limit purposes. If positions in those accounts were to approach
the level of the particular speculative position limit, the Managing Owner may modify the trading
decisions for the Funds or be forced to liquidate certain futures positions, possibly resulting in
losses.
Each Fund purchases gold futures contracts traded on the NYMEX under the trading symbol GC
in connection with its Gold Investment. For speculative position limits purposes, investors in the
NYMEX GC gold contracts are limited to 6,000 net futures equivalent in any one month or all months,
but may not exceed 3,000 in the spot month.
Below is a chart that sets forth certain relevant information, including current speculative
position limits for each Index Investment that any person may hold, separately or in combination,
net long or net short, for the purchase or sale of any commodity futures contract or, on a
futures-equivalent basis, options thereon. Speculative position limit levels are subject to change
by the CFTC or the relevant exchanges.
Fund | Index Investment | Speculative Position Limits | |||||||||
Exchange | Symbol | ||||||||||
Large Cap Equity Fund | E-mini Standard and Poors 500 Stock Price IndexTM Futures | 100,000 E-mini Standard
and Poors 500 Stock Price
IndexTM Futures
contracts or equivalent
contracts net long or net
short in all contract
months combined, subject
to the next sentences.
(20,000 Standard and
Poors 500 Stock Price
Index contracts or
equivalent contracts net
long or net short in all
contract months combined.
For purposes of this rule
an E-Mini Standard and
Poors 500 Stock Price
Index futures contract
shall be deemed to be
equivalent to one-fifth
(0.20) of a Standard and
Poors 500 Stock Price
Index futures contract.) |
|||||||||
CME |
ES | ||||||||||
Mid Cap Equity Fund | E-mini Standard and Poors Midcap 400 Stock Price IndexTM Futures | 25,000 E-mini Standard and
Poors Midcap 400 Stock
Price IndexTM
Futures contracts or
equivalent contracts net
long or net short in all
contract months combined,
subject to the next
sentences. (5,000
Standard and Poors MidCap |
|||||||||
CME |
EMD | ||||||||||
20
Table of Contents
Fund | Index Investment | Speculative Position Limits | |||||||||
Exchange | Symbol | ||||||||||
400 Stock Price Index
contracts or equivalent
contracts net long or net
short in all contract
months combined. For
purposes of this rule an
E-Mini Standard and Poors
MidCap 400 Stock Price
Index futures contract
shall be deemed to be
equivalent to one-fifth
(0.20) of a Standard and
Poors MidCap 400 Stock
Price Index futures
contract.) |
|||||||||||
Small Cap Equity Fund | Russell 2000® Index Mini Futures | 50,000 single month |
|||||||||
ICE | TF | 50,000 all months |
|||||||||
World Equity Fund | E-Mini MSCI EAFE Index Futures | 10,000 contracts net long
or net short in all
contract months combined. |
|||||||||
CME | EFE | ||||||||||
Commodities Fund | S&P GSCI TM Commodity Index Futures | 10,000 contracts net long
or net short in all
contract months combined. |
|||||||||
CME | GI | ||||||||||
Legend:
CME means Chicago Mercantile Exchange, Inc., or its successor.
ICE means ICE Futures U.S., Inc., or its successor.
CME means Chicago Mercantile Exchange, Inc., or its successor.
ICE means ICE Futures U.S., Inc., or its successor.
(4) A Funds Performance, which Reflects the Results of its Gold Investments, Index
Investments and Treasuries, May Not Always Replicate Exactly the Changes in the Level of the
Index Underlying its Index Investments.
Because each Fund attempts to maintain, through its Gold Investments, the approximate
equivalent of a dollar for dollar investment in gold while investing in the Index Investments, each
Fund may not retain sufficient funds to permit a Fund to gain its full exposure to the Index
Investments, and in turn, the performance of a Funds Index Investment will not fully replicate the
changes in the level of the index underlying its Index Investments.
Furthermore, a Fund may not fully replicate the changes in the level of the index underlying
its Index Investments due to disruptions in the markets for the relevant and underlying index
components, the imposition of speculative position limits on the underlying index components (as
discussed in The Risks You Face (3) Regulatory and Exchange Position Limits and Other Rules May
Restrict the Creation of Baskets of One or More of the Funds), or due to other extraordinary
circumstances. As the applicable Fund approaches or reaches position
limits with respect
to
certain futures contracts that reference the Gold Investments or the Index Investments, the
applicable Fund may commence investing in other comparable futures, forwards or swaps contracts
that, in the commercially reasonable judgment of the Managing Owner, tend to exhibit trading prices
that correlate with a futures contract that reference the corresponding Gold Investments or the
Index Investments. In addition, the Funds are not able to replicate exactly the changes in the
level of their respective underlying indexes through their Index Investments because the total
return generated is changed due to their dollar for dollar investment in gold, is reduced by
expenses and transaction costs, including those incurred in connection with the Funds trading
activities, and increased by interest income from the Funds holdings of short-term high credit
quality fixed income securities.
21
Table of Contents
(5) None of the Funds Are Actively or Traditionally Managed and Each Tracks its Index
Investments During Periods in which the Index Investments Are Flat or Declining as well as when
the Index Investments Are Rising.
None of the Funds are actively managed by traditional methods. Therefore, if positions are
declining in value, a Fund will not close out such
positions. Through the Funds Index Investments, the net asset value of each Fund may track
its Index Investments during periods in which the Index Investments are flat or declining as well
as when the Index Investments are rising. Although each Fund is not actively managed, each Funds
trading results and their goal to achieve their investment objectives are dependent, in part, upon
the skills of the Managing Owner and its trading principals.
(6) A Change in the Ownership of the Index Underlying the Index Investment of a Fund May Change
the Determination or Valuation Methodology of the Underlying Index in a Manner that May be
Adverse to the Index Investments, and in turn, the Value of Your Shares.
The indexes underlying the Index Investments may be sold from time-to-time. Upon completion
of a sale of an underlying index, there can be no assurance that a new index sponsor will not
change the determination or valuation methodology of the applicable index in a manner that may be
adverse to the Index Investments, and in turn, the value of your Shares.
(7) Cessation of Publication of the Index Underlying the Corresponding Index Investments May
Materially and Adversely Affect the Activities of the Index Investments, and in turn, the
Managing Owner May Terminate the Affected Fund.
Each index underlying the corresponding Index Investment is administered, calculated and
published by an index sponsor, which has the right to cease publication of such index at its
discretion at any time. Certain index sponsors have agreed with the commodities exchange upon
which the Index Investments trade to negotiate in good faith with the commodities exchange if the
index sponsor has determined to cease publication of the relevant index in order to permit the
exchange to continue to calculate the discontinued index and in turn to permit
the Index
Investments to continue to trade on such commodity exchange.
However, even if the index sponsor
satisfied its obligations under its agreement with the commodities exchange, the Managing Owner
may, nevertheless, determine that, upon cessation of publication of an index, it may become
inadvisable to invest in the Index Investments. Furthermore, if the Managing Owner also determined
that no adequate substitute to the Index Investment exists, the Managing Owner may ultimately
decide to liquidate the affected Fund.
(8) You Have No Recourse to the Index Sponsors or Their Successors of Each Index Underlying the
Corresponding Index Investments.
The Shares of each Fund are not sponsored, endorsed, sold or promoted by the index sponsors or
their successors, or the Index Sponsors, of each index underlying the corresponding Index
Investments. The Index Sponsors make no representation or warranty, express or implied, to the
owners of the Shares or any member of the public regarding the advisability of investing in
securities generally or in the Shares particularly or the ability of the corresponding index
including, without limitation, all sub-indexes, to track the appropriate market performance. The
indexes are determined and composed by the Index Sponsors and calculated by the Index Sponsors or
their agents without regard to the Funds. The Index Sponsor has no obligation to take the needs of
the Funds or the Shareholders into consideration in determining, composing or calculating the
relevant index. The Index Sponsors are not responsible for and have not participated in the
determination of the prices and the number of Shares or the timing of the issuance of sale of
Shares or in the determination or calculation of the Baskets. The Index Sponsors have no
obligation or liability in connection with the administration, marketing or trading of the Shares.
The Index Sponsors do not guarantee the accuracy or the completeness of the relevant index or
any data included therein, and the Index Sponsors disclaim any and all liability for any errors,
omissions, or interruptions therein. The Index Sponsors make no warranty, express or implied, as
to the results to be obtained by the Funds, the Shareholders or any other person or entity from use
of the relevant index or any data included therein. The Index Sponsors make no express or implied
warranties, and expressly disclaim all warranties of merchantability or fitness for a particular
purpose or use with respect to the relevant indexes or any data
22
Table of Contents
included therein. Without limiting
any of the foregoing, the Index Sponsors expressly disclaim any and all liability for any special,
punitive, indirect, or consequential damages (including lost profits), even if notified of the
possibility of such damages.
(9) The Asset Class Underlying the Index Investments May Either Underperform or Outperform the
Sector of the Applicable Fund.
The securities or commodities in the underlying index of each Index Investment may
underperform the returns of other securities, commodities or related indexes that track other
industries, groups of industries, markets, asset classes or sectors. Various types of securities,
commodities or related indexes tend to experience cycles of outperformance and underperformance in
comparison to the general securities and/or commodities markets, as applicable.
(10) The NYSE Arca May Halt Trading in the Shares of a Fund Which Would Adversely Impact Your
Ability to Sell Shares.
Trading in Shares of a Fund may be halted due to market conditions or, in light of NYSE Arca
rules and procedures, for reasons that, in the view of the NYSE Arca, make trading in Shares of a
Fund inadvisable. In addition, trading is subject to trading halts caused by extraordinary market
volatility pursuant to circuit breaker rules that require trading to be halted for a specified
period based on a specified market decline. There can be no assurance that the requirements
necessary to maintain the listing of the Shares of a Fund will continue to be met or will remain
unchanged. A Fund will be terminated if its Shares are delisted.
(11) The Lack of Active Trading Markets for the Shares of a Fund May Result in Losses on Your
Investment in such Fund at the Time of Disposition of Your Shares.
Although the Shares of each Fund will be listed and traded on the NYSE Arca, there can be no
guarantee that an active trading market for the Shares of a Fund will develop or will be
maintained. If you need to sell your Shares at a time when no active market for them exists, the
price you receive for your Shares, assuming that you are able to sell them, likely will be lower
than that you would receive if an active market did exist.
(12) The Shares of each Fund Are New Securities Products and Their Value Could Decrease if
Unanticipated Operational or Trading Problems Arise.
The mechanisms and procedures governing the creation, redemption and offering of the Shares
have been developed specifically for these securities products. Consequently, there may be
unanticipated problems or issues with respect to the mechanics of the operations of the Funds and
the trading of the Shares of the Funds that could have a material adverse effect on an investment
in the Shares. In addition, although the Funds are not actively managed by traditional methods,
to the extent that unanticipated operational or trading problems or issues arise, the Managing
Owners past experience and qualifications may not be suitable for solving these problems or
issues.
(13) As the Managing Owner and its Principals have No History of Operating Investment Vehicles
like the Funds, their Experience may be Inadequate or Unsuitable to Manage the Funds.
The Managing Owner has no history of operating investment vehicles like the Funds. The past
performances of the Managing Owners management of other commodity pools, when available, are no
indication of its ability to manage investment vehicles such as the Funds. If the experience of
the Managing Owner and its principals is not adequate or suitable to manage investment vehicles
such as the Funds, the operations of the Funds may be adversely affected.
(14) You Will Be Relying on the Managing Owner and its Principals Alone to Direct the Funds
Investment and Daily Activities.
The incapacity of one or more of the Managing Owners principals could have a material and
adverse effect on its ability to discharge its obligations under the Trust Agreements. In turn,
the value of your Shares may be adversely affected.
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(15) Each Fund Is a Newly Formed Entity and Each Fund Has No Performance History for You to
Evaluate; You May Not Rely on Index Investment Results in Deciding Whether or Not to Invest in a
Fund.
Each Fund is a newly formed entity and thus each Fund has no performance history for you to
evaluate when making your investment decision. Although past performance is not necessarily
indicative of future results, if each Fund had a performance history, such performance history
might (or might not) provide you with more information on which to evaluate an investment in each
Fund. Likewise, each
Index Investment has a history which might be indicative of the future Index Investment
results, or of the future performance of each applicable Fund. Therefore, you will have to make
your decision to invest in each Fund on the basis of limited information. The past performance of
the Managing Owner or its affiliates is not necessarily indicative of the future results of any
Fund.
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(16) Price Variability May Possibly Cause the Total Loss of Your Investment.
Futures contracts have a high degree of price variability and are subject to occasional rapid
and substantial changes. Furthermore, the price of gold and the price of the Index Investments may
decrease substantially and rapidly. Consequently, you could lose all or substantially all of your
investment in any Fund.
The Managing Owner expects the performance of each Fund to be volatile.
The following table reflects the highest and lowest monthly gains and losses during the five
year period from October 1, 2004 to September 30, 2009 with respect to each Gold Investment and
Index Investment (except with respect to the Index Investment E-Mini MSCI EAFE Index Futures, which
commenced trading on March 20, 2006):
Gold Investment or Index Investment | Highest Monthly | ||||||||||||||
Exchange | Symbol | Gain (Month/Year) | Loss (Month/Year) | ||||||||||||
Gold Futures | 13.65 | % | -17.84 | % | |||||||||||
NYMEX |
GC | (11/08 | ) | (10/08 | ) | ||||||||||
E-mini Standard and Poors 500 Stock Price IndexTM Futures | 9.47 | % | -17.26 | % | |||||||||||
CME |
ES | (4/09 | ) | (10/08 | ) | ||||||||||
E-mini Standard and Poors Midcap 400 Stock Price IndexTM Futures | 14.78 | % | -22.17 | % | |||||||||||
CME |
EMD | (4/09 | ) | (10/08 | ) | ||||||||||
Russell 2000® Index Mini Futures | 15.52 | % | -20.92 | % | |||||||||||
ICE |
TF | (4/09 | ) | (10/08 | ) | ||||||||||
E-Mini MSCI EAFE Index Futures | 13.99 | % | -20.47 | % | |||||||||||
CME |
EFE | (5/09 | ) | (10/08 | ) | ||||||||||
S&P GSCI TM Commodity Index Futures | 21.16 | % | -27.93 | % | |||||||||||
CME |
GI | (5/09 | ) | (10/08 | ) | ||||||||||
Legend:
CME means Chicago Mercantile Exchange, Inc., or its successor.
ICE means ICE Futures U.S., Inc., or its successor.
NYMEX means the New York Mercantile Exchange Inc., or its successor.
CME means Chicago Mercantile Exchange, Inc., or its successor.
ICE means ICE Futures U.S., Inc., or its successor.
NYMEX means the New York Mercantile Exchange Inc., or its successor.
(17) Because each Funds Trading will be Leveraged, a Relatively
Small Movement in the Price of a Contract May Cause Greater Losses.
The long futures positions with respect to each of the Gold Investment and the Index
Investment of each Fund will each have a notional value approximately equal to each Funds net
asset value. Accordingly, the aggregate notional amount of the futures positions held by each Fund
through its Gold Investment and Index Investment is expected to be approximately, but not in excess
of, 200% of each Funds net asset value, upon establishment. Holding futures positions with a
notional amount in excess of each Funds net asset value constitutes a form of
leverage. The use
of leverage increases the potential for both trading profits and losses, depending on the changes
in market value of the Gold Investment and the Index Investment of each Fund.
Each Funds losses would be greater as a result of its leverage than would be the case were
each Fund to limit its overall exposure to its Gold Investment and Index Investment to an aggregate
notional value of 100% of the Funds net assets.
As a result of its use of leverage, each Fund will be required to deposit a greater proportion
of its net
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assets as margin, not expected to exceed 5-15% of its net assets, as applicable. This
represents margin
deposit requirements approximately twice as great as would be required if each Fund did not
use leverage. Similarly, as a result of its use of leverage, each Fund will trade more futures
contracts and incur more brokerage commission expense than it would if it did not use leverage.
The additional amount of brokerage commission expense generally will be proportional to each Funds
leverage ratio.
(18) Leverage Will Fluctuate and May be Greater or Less than the Established Leverage Ratio of
2:1.
Although each Fund does not establish positions in the Gold Investments and the Index
Investments that exceed a leverage ratio of 2:1 at the time of establishment, movements in the
market price of each Funds futures positions may increase or decrease the Funds leverage ratio.
Any such increase or decrease, respectively, in the Funds leverage ratio will magnify or decrease,
respectively, the potential for loss or gain of the Funds futures positions and, in turn, the
value of your Shares.
(19) Forward and Swap Transactions Are Not Regulated and Are Subject to the Risk of Counterparty
Non-Performance Resulting in a Fund Not Realizing a Trading Gain.
If speculative position limits with respect to either the Gold Investments and/or the Index
Investments have been reached, the Managing Owner may determine that a Fund may trade forward or
swap contracts through a dealer market which is dominated by major money center banks and is
substantially unregulated. Thus, you do not receive the same protection as provided to futures
traders in United States markets by the Commodity Futures Trading Commission, or CFTC, regulatory
scheme or the statutory scheme of the Commodity Exchange Act.
Markets in which a Fund may effect forwards and swap agreements are the over-the-counter
unregulated private markets. The participants and dealers in such markets are typically not
subject to the same level of credit evaluation and regulatory oversight as are members of the
exchange-based markets. This exposes a Fund to the risk that a counterparty will not settle a
transaction in accordance with its terms and conditions because of a credit or liquidity problem or
a dispute over the terms of the contract (whether or not bona fide), thus causing such Fund to
suffer a loss. Such counterparty risk is
accentuated for contracts with longer maturities where
events may intervene to prevent settlement, or in instances where a Fund has concentrated its
transactions with a single or small group of counterparties. Recent events surrounding the
bankruptcies or similar proceedings of various forwards and swaps counterparties and dealers have
demonstrated certain risks of a Fund engaging in these over-the-counter transactions in
unregulated private markets. Therefore, each Fund faces the risk of non-performance by the
counterparties to the forward and swap contracts and such non-performance may cause some or all of
a Funds gain, if any, on its forward trading to be unrealized.
(20) Forwards, Swaps and Other Derivatives Are Not Subject to CFTC Regulation; the Funds Could
Incur Losses due to Counterparty Default and Regulatory Risk of Proposed New Laws.
If speculative position limits with respect to either the Gold Investments and/or the Index
Investments have been reached, the Managing Owner may determine that a Fund may trade swaps and
other off-exchange contracts in addition to forward contracts. Swap agreements involve trading
income streams such as a fixed rate payment for a floating rate payment. These instruments are
generally traded over the counter in unregulated markets and participants must rely on the
creditworthiness of their counterparties to fulfill their obligations of the transaction. Each
Fund will not receive the protections provided by the CFTCs regulatory scheme with respect to
these transactions. Legislative proposals that have been introduced in Congress in 2009 such as
the Over-the-Counter Derivatives Market Act of 2009 would govern the current unregulated forward
and swaps markets and participants in these markets. Such legislation would require certain
forwards and swaps to be traded on regulated exchanges and cleared through clearinghouses, the
federal registration of dealers and major swap participants (it is possible that a Fund could be
considered to be a major swap participant depending on the volume and nature of its transactions),
impose new margin and collateral requirements, impose position limits on the number of transactions
a trader may engage in, require the reporting to regulators and/or swap repositories of
transactions, among other regulatory requirements. These proposed regulatory developments could
materially affect the decision of the Managing Owner to transact forwards and swaps, the manner in
which a Fund engages in these transactions and the costs of
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such transactions. The failure of a
counterparty to
fulfill its obligations under an off-exchange contract could result in losses for each Fund.
(21) A Computer Systems Failure Could Result in Losses for the Funds.
The Managing Owners strategies are dependent to a significant degree on the proper
functioning of its internal computer systems. Accordingly, systems failures, whether due to
failures by third parties upon which such systems are dependent or the failure of the Managing
Owners hardware or software, could disrupt trading or make trading impossible until such failure
is remedied. Any such failure, and consequential inability to trade (even for a short time),
could, in certain market conditions, cause a Fund to experience significant trading losses or to
miss opportunities for profitable trading. Any such failures could also cause a temporary delay in
reports to investors. Similarly, a systems failure of a Funds futures brokers or forward or swap
dealers or of any exchange on which the Fund is trading could cause a Fund to experience
significant trading losses or to miss opportunities for profitable trading.
(22) Unusually Long Peak-to-Valley Drawdown Periods With Respect To an Index Investment of a
Fund May Be Reflected in Equally Long Peak-to-Valley Drawdown Periods with Respect to the
Performance of the Shares of the Corresponding Fund.
Although past Index Investment performance is not necessarily indicative of future Index
Investment performance, the peak-to-valley drawdown periods that an Index Investment may experience
may be unusually long and may last for multi-year drawdown periods.
Because a Funds performance may be, to a large extent, based upon the performance of its
Index Investment, a Fund would suffer a continuous drawdown during the period that the
corresponding Index Investment suffers such a drawdown period, and in turn, the value of your
Shares will also suffer.
(23) Fees and Commissions are Charged Regardless of Profitability and May Result in Depletion of
Assets.
Each Fund is subject to fees and expenses described herein which are payable irrespective of
profitability. See Breakeven Table on page 13. Consequently, depending upon the
performance of
each Fund and the interest rate environment, the expenses of each Fund could, over time, result in
losses to your investment in a Fund. You may never achieve profits, significant or otherwise, by
investing in a Fund.
(24) A Fund Will Experience a Loss if it is Required to Sell Treasuries at a Price Lower than
the Price at which They were Acquired.
The value of Treasuries generally moves inversely with movements in interest rates. If a Fund
is required to sell Treasuries at a price lower than the price at which they were acquired, the
Fund will experience a loss.
(25) You Cannot Be Assured of the Managing Owners Continued Services, Which Discontinuance May
Be Detrimental to the Funds.
You cannot be assured that the Managing Owner will be willing or able to continue to service
the Funds for any length of time. If the Managing Owner discontinues its activities on behalf of
the Funds, the Funds may be adversely affected.
(26) Lack of Liquidity in the Markets in Which a Fund Trades Could Make It Impossible to Realize
Profits or Limit Losses.
Futures positions cannot always be liquidated at the desired price. It is difficult to
execute a trade at a specific price when there is a relatively small volume of buy and sell orders
in a market. A market disruption, such as when foreign governments may take or be subject to
political actions which disrupt the markets in their currency or major exports, can also make it
difficult to liquidate a position.
Unexpected market illiquidity has caused major losses in the recent past in such sectors as
emerging markets, mortgage-backed securities and other credit related instruments. There can be no
assurance that the same will not happen in the futures markets generally, or in certain futures
markets, at any time or from time-to-time. The large size of the positions a Fund may take
increases the risk of illiquidity by both making its positions more difficult to liquidate and
increasing the losses incurred while trying to do so.
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United States commodity exchanges impose limits over the amount the price of some, but not
all,
futures contracts may change on any day. If a market has moved adversely to a Funds position
and has reached the daily price limit, it may be impossible for the Fund to liquidate its position
until the limit is expanded by the exchange or the contract begins to trade away from the limit
price. In addition, even if futures prices have not reached the daily price limit, a Fund may not
be able to execute futures trades at favorable prices if little trading in such contracts is taking
place.
(27) You May Be Adversely Affected by Redemption Orders that Are Subject To Postponement,
Suspension or Rejection Under Certain Circumstances.
Each Fund may, in its discretion, suspend the right of redemption or postpone the redemption
settlement date, (1) for any period during which an emergency exists as a result of which the
redemption distribution is not reasonably practicable, or (2) for such other period as the Managing
Owner determines to be necessary for the protection of the Shareholders of a Fund. In addition, a
Fund will reject a redemption order if the order is not in proper form as described in the
Participant Agreement or if the fulfillment of the order, in the opinion of its counsel, might be
unlawful. Any such postponement, suspension or rejection could adversely affect a redeeming
Authorized Participant. For example, the resulting delay may adversely affect the value of the
Authorized Participants redemption proceeds if the net asset value of the applicable Fund declines
during the period of delay. Each Fund disclaims any liability for any loss or damage that may
result from any such suspension or postponement.
(28) Because Futures Contracts Have No Intrinsic Value, the Positive Performance of Your
Investment Is Wholly Dependent Upon an Equal and Offsetting Loss.
Futures trading is a risk transfer economic activity. For every gain there is an equal and
offsetting loss rather than an opportunity to participate over time in general economic growth.
Unlike most alternative investments, an investment in Shares of a Fund does not involve acquiring
any asset with intrinsic value. Overall stock and bond prices could rise significantly and the
economy as a whole prosper while Shares of a Fund trade unprofitably.
(29) Various Actual and Potential Conflicts of Interest May Be Detrimental to Shareholders.
The Funds are subject to numerous actual and potential conflicts of interest, including: (1)
the Managing Owner will not select any other trading advisor for the Funds even if doing so would
be beneficial to the Funds; (2) the affiliation between the Managing Owner and Superfund Asset
Management, Inc. creates an incentive for the Managing Owner to retain Superfund Asset Management,
Inc. as the Introducing Broker; (3) the affiliation between the Managing Owner and Superfund USA,
Inc. creates an incentive for the Managing Owner to retain Superfund USA, Inc. as the Distributor
and Marketer; and (4) the proprietary trading of the Managing Owner, its principals, or of the
Funds Commodity Brokers and their affiliates and personnel may increase competition for positions
sought to be entered by the Funds making it more difficult for the Funds to enter positions at
favorable prices. See Conflicts of Interest.
Because the Managing Owner has not established any formal procedures for resolving conflicts
of interest and because there is no independent control over how conflicts of interest are
resolved, you will be dependent on the good faith of the parties with conflicts to resolve the
conflicts equitably. The Managing Owner cannot assure that conflicts of interest will not result
in losses for the Funds.
(30) Failure of Futures Commission Merchants or Commodity Brokers to Segregate Assets May
Increase Losses; Despite Segregation of Assets, a Fund Remains at Risk of Significant Losses
Because a Fund May Only Receive a Pro-Rata Share of the Assets, or No Assets at All.
The Commodity Exchange Act requires a clearing broker to segregate all funds received from
customers from such brokers proprietary assets. If the Commodity Broker fails to do so, the
assets of each Fund might not be fully protected in the event of the Commodity Brokers bankruptcy.
Furthermore, in the event of the Commodity Brokers bankruptcy, a Fund could be limited to
recovering either a pro rata share of all available funds segregated on behalf of the Commodity
Brokers combined customer accounts or a Fund may not recover any assets at all, even though
certain property specifically traceable to a particular Fund was held by the Commodity Broker. The
Commodity Broker may, from time-to-time, have been the subject of certain regulatory and
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private causes of action. Such material actions, if any, are described under The Commodity
Broker.
In the event of a bankruptcy or insolvency of any exchange or a clearing house, a Fund could
experience a loss of the funds deposited through its Commodity Broker as margin with the exchange
or clearing house, a loss of any profits on its open positions on the exchange, and the loss of
unrealized profits on its closed positions on the exchange.
(31) Lack of Independent Advisers Representing Investors.
The Managing Owner has consulted with counsel, accountants and other advisers regarding the
formation and operation of the Funds. No counsel has been appointed to represent you in connection
with the offering of the Shares. Accordingly, you should consult your own legal, tax and financial
advisers regarding the desirability of an investment in the Shares.
(32) Possibility of Termination of a Fund May Adversely Affect Your Portfolio.
The Managing Owner may withdraw from a Fund upon 120 days notice, which would cause the Fund
to terminate unless a substitute managing owner were obtained. Furthermore, the Managing Owner may
make the determination that a Fund should be terminated for any reason or no reason at all.
Neither the Managing Owner nor its principals are under any obligation to devote a minimum amount
of time to the operation of a Fund. Owners of 50% of the Shares of any Fund have the power to
terminate the Fund. If it is so exercised, investors who may wish to continue their initial
investment in a Fund will have to find another vehicle, and may not be able to find another vehicle
that offers the same features as the Fund. See Description of the Shares, the Funds; Summary
Description of Certain Material Terms of the Amended and Restated
Trust Agreements Dissolution
and Termination of the Funds for a summary of termination events. Such detrimental developments
could cause you to liquidate your investments and upset the overall maturity and timing of your
investment portfolio. If the registrations with the CFTC or memberships in the NFA of the Managing
Owner or the Commodity Broker were revoked or suspended, such entity would no longer be able to
provide services to the Funds.
(33) Shareholders Do Not Have the Rights Enjoyed by Investors in Certain Other Vehicles.
As beneficial interests in a Delaware statutory trust, the Shares do not have all of the
statutory rights normally associated with the ownership of shares of a corporation (including, for
example, the right to bring oppression actions). In addition, the Shares have limited voting and
distribution rights (for example, Shareholders do not have the right to elect management and the
Funds are not required to pay regular distributions, although the Funds may pay distributions in
the discretion of the Managing Owner).
(34) An Investment in Shares of a Fund May Be Adversely Affected by Competition From Other
Methods of Investing in the Index Investments.
The Funds constitute a relatively new, and thus initially untested, type of investment
vehicle. They compete with other financial vehicles, including other commodity pools, hedge funds,
traditional debt and equity securities issued by companies in the Index Investments industries,
other securities backed by or linked to such Index Investments, and direct investments in the
underlying Index Investments. Market and financial conditions, and other conditions beyond the
Managing Owners control, may make it more attractive to invest in other financial vehicles or to
invest in such Index Investments directly, which could limit the market for the Shares of each Fund
and reduce the liquidity of the Shares of each Fund.
(35) Competing Claims Over Ownership of Intellectual Property Rights Related to the Funds Could
Adversely Affect the Funds and an Investment in Shares.
While the Managing Owner believes that all intellectual property rights needed to operate the
Funds are either owned by or licensed to the Managing Owner or have been obtained, third parties
may allege or assert ownership of intellectual property rights which may be related to the design,
structure and operations of the Funds. To the extent any claims of such ownership are brought or
any proceedings are instituted to assert such claims, the negotiation, litigation or settlement of
such claims, or the ultimate disposition of such claims in a court of law if a suit is brought, may
adversely affect the Funds and an investment in the Shares, for example,
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resulting in expenses or damages or the termination of the Funds.
(36) The Value of the Shares Will be Adversely Affected if a Fund is Required to Indemnify the
Trustee or the Managing Owner.
Under the Funds Trust Agreements, the Trustee and the Managing Owner have the right to be
indemnified for any liability or expense either incurs without gross negligence, bad faith or
willful misconduct. That means the Managing Owner may require the assets of one or more of the
Funds to be sold in order to cover losses or liability suffered by it or by the Trustee. Any sale
of that kind would reduce the net asset value of the Funds and, in turn, the value of its
corresponding Shares.
(37) The Net Asset Value Calculation of the Funds May Be Overstated or Understated Due to the
Valuation Method Employed When a Settlement Price is not Available on the Date of the Net Asset
Value Calculation.
Calculating the net asset value of each Fund includes, in part, any unrealized profits or
losses on open futures contracts. Under normal circumstances, the net asset value of each Fund
reflects the settlement price of open futures contracts on the date when the net asset value is
being calculated. However, if a futures contract traded on an exchange (both U.S. and, to the
extent it becomes applicable, non-U.S. exchanges) could not be liquidated on such day (due to the
operation of daily limits or other rules of the exchange upon which that position is traded or
otherwise), the settlement price on the most recent day on which the position could have been
liquidated will be the basis for determining the market value of such position for such day. In
such a situation, there is a risk that the calculation of the net asset value of the applicable
Fund on such day will not accurately reflect the realizable market value of such futures contract.
For example, daily limits are generally triggered in the event of a significant change in market
price of a futures contract. Therefore, as a result of the daily limit, the current settlement
price is unavailable. Because the settlement price on the most recent day on which the position
could have been liquidated would be used in lieu of the actual settlement price on the date of
determination, there is a risk that the resulting calculation of the net asset value of the
applicable Fund could be overstated or understated, perhaps to a significant degree.
The Funds and Regulatory Related Risks
(38) Shareholders Will Not Have the Protections Associated With Ownership of Shares in an
Investment Company Registered Under the Investment Company Act of 1940.
None of the Funds are registered as an investment company under the Investment Company Act of
1940, and none of them are required to register under such Act. Consequently, Shareholders will not
have the regulatory protections provided to investors in registered and regulated investment
companies.
(39) Each Fund May Trade in Foreign Markets Which May Not Be Subject to the Same Level of
Regulatory Oversight as Trading in Domestic Markets.
If speculative position limits with respect to either the Gold Investments and/or the Index
Investments have been reached, a portion of a Funds trades may take place on markets or exchanges
outside the United States. The risk of loss in trading foreign futures contracts and foreign
options can be substantial. Non-U.S. markets may not be subject to the same degree of regulation
as their U.S. counterparts. None of the CFTC, National Futures Association, or NFA, or any
domestic exchange regulates activities of any foreign boards of trade or has the power to compel
enforcement of the rules of a foreign board of trade or any applicable foreign laws. In addition,
some foreign exchanges are principals markets in which performance is the responsibility only of
the individual exchange member counterparty, not of the exchange or a clearing facility. In such
cases, the applicable Fund will be subject to the risk that the member with whom the Fund has
traded is unable or unwilling to perform its obligations under the transaction.
Trading on foreign exchanges also presents the risk of loss due to the possible imposition of
exchange controls (making it difficult or impossible for a Fund to repatriate some or all of the
Funds assets held by foreign counterparties), government expropriation of assets, taxation,
government intervention in markets, limited rights in the event of bankruptcy of a foreign
counterparty or exchange and variances in foreign exchange rates between the time a position is
entered and the time it is exited.
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(40) Regulatory Changes
or Actions May Alter the Nature of an Investment in a Fund.
Considerable regulatory attention has been focused on non-traditional investment pools which
are publicly distributed in the United States. There is a possibility of future regulatory changes
altering, perhaps to a material extent, the nature of an investment in a Fund or the ability of a
Fund to continue to implement its investment strategy.
The futures markets are subject to comprehensive statutes, regulations, and margin
requirements. In addition, the CFTC and the exchanges are authorized to take extraordinary actions
in the event of a market emergency, including, for example, the retroactive implementation of
speculative position limits or higher margin requirements, the establishment of daily price limits
and the suspension of trading. The regulation of futures transactions in the United States is a
rapidly changing area of law and is subject to modification by government and judicial action. The
effect of any future regulatory change on a Fund is impossible to predict, but could be substantial
and adverse.
The Funds and Tax Related Risks
(41) Shareholders of a Fund Will Be Subject to Taxation on Their Share of the Funds Taxable
Income, Whether or Not They Receive Cash Distributions.
Shareholders in a Fund will be subject to U.S. federal income taxation and, in some cases,
state, local, or foreign income taxation on their share of the Funds taxable income, whether or
not they receive cash distributions from the Fund. Shareholders in a Fund may not receive cash
distributions equal to their share of the Funds taxable income or even the tax liability that
results from such income.
(42) Items of Income, Gain, Loss and Deduction With Respect to Shares of a Fund could be
Reallocated if the IRS does not Accept the Assumptions or Conventions Used by a Fund in
Allocating Such Tax Items.
U.S. federal income tax rules applicable to partnerships are complex and often difficult to
apply to publicly traded partnerships. Each Fund will apply certain assumptions and conventions in
an attempt to comply with the applicable rules and to report items of income, gain, loss and
deduction to Shareholders in such Fund in a manner that reflects the
Shareholders beneficial
interests in such tax items, but these assumptions and conventions may not be considered to be in
compliance with all aspects of the applicable tax requirements. It is possible that the IRS will
successfully assert that the conventions and assumptions used by a Fund do not satisfy the
technical requirements of the Code and/or Treasury Regulations and could require that items of
income, gain, loss or deduction be adjusted or reallocated in a manner that adversely affects one
or more Shareholders.
(43) The Current Treatment of Long-Term Capital Gains Under Current U.S. Federal Income Tax Law
May Be Adversely Affected, Changed or Repealed in the Future.
Under current law, long-term capital gains are taxed to non-corporate investors at a maximum
U.S. federal income tax rate of 15%. This tax treatment may be adversely affected, changed or
repealed by future changes in tax laws at any time and is currently scheduled to expire for tax
years beginning after December 31, 2010.
PROSPECTIVE INVESTORS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISERS AND COUNSEL WITH
RESPECT TO THE POSSIBLE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE SHARES OF A FUND; SUCH TAX
CONSEQUENCES MAY DIFFER FOR DIFFERENT INVESTORS.
The Funds and Gold Investment Related Risks
(44) Gains, If Any, From a Funds Futures Trading With Respect to the Corresponding Index
Investment May Be Offset by Losses on Its Gold Investment, and Gains, If Any, on Its Gold
Investment May be Offset by Losses From Its Futures Trading With Respect to the Corresponding
Index Investment, Resulting in No Gains or Aggregate Losses for the Fund.
An investment in a Fund is not equivalent to an investment in gold. Rather, it is an
investment in a product that combines a Gold Investment and an Index Investment. The Gold
Investment is intended to de-link each Funds net asset value, which is denominated in U.S.
dollars, from the value of the U.S. dollar relative to gold, essentially denominating the Funds
net asset value in terms of gold.
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Consequently, if the U.S. dollar value of gold declines, gains, if any, from the Funds
futures trading in connection with the Index Investments may not be sufficient for the Fund to
avoid a decline in the net asset value of its Shares expressed in U.S. dollars, the currency in
which Shares are redeemed. Likewise, losses from a Funds futures trading in connection with the
Index Investments may be greater than any increase in the U.S. dollar value of gold resulting in a
decline in the net asset value of the Shares. Additionally, there can be no assurance that, if the
value of gold declines relative to the U.S. dollar, there will be any corresponding increase in the
value or purchasing power of the U.S. dollar for goods (other than gold) or services priced in U.S.
dollars.
(45) A Fund May Reduce Its Gold Investment or Its Futures Trading Activity With Respect to the
Corresponding Index Investment If Gold Margin Requirements Increase Substantially, Thereby
Changing the Nature of Your Investment in the Fund.
If the margin requirements for a Funds Gold Investment should increase substantially, the
Managing Owner, in its discretion, may reduce, or eliminate, the Funds Gold Investment so as to be
able to continue the Funds futures trading activity with respect to investing in exchange listed
futures contracts on the corresponding Index Investment. If the Managing Owner reduces a Funds
Gold Investment, the Fund will not achieve its objective of maintaining a Gold Investment
approximately equal to the net asset value of the Fund, possibly resulting in a lost profit
opportunity if the value of gold should thereafter appreciate relative to the U.S. dollar and
possibly resulting in a decline in purchasing power of the net asset value of the Fund, expressed
in U.S. dollars, if the appreciation in the U.S. dollar value of gold is the result of inflation in
the U.S. dollar price of goods and services. Conversely, the Managing Owner, in its discretion,
may reduce, or eliminate, the Funds futures trading activities with respect to investing in
exchange listed futures contracts on the corresponding Index Investment so as to be able to
maintain the Funds Gold Investment. If the Managing Owner reduces a Funds futures trading
activity with respect to investing in exchange listed futures contracts on the corresponding Index
Investment, the Funds investment objective of reflecting a certain sector through investing in
exchange listed futures contracts on the corresponding Index Investment may be impaired and the
performance of the Fund will become more
similar to the performance of an unleveraged investment in
gold.
(46) The U.S. Dollar Price of Gold Has Fluctuated Widely over the Past Several Years. A Decline
in the Price of Gold May Result in a Decline in the Value of the Shares, Possibly Resulting in
an Overall Loss on Your Investment.
While generally advancing, the price of gold has fluctuated widely over the past several
years. Several factors may affect the price of gold, including: global gold supply and demand,
which is influenced by such factors as forward selling by producers, purchases made by producers to
unwind hedge positions, central bank purchases and sales, and production and cost levels in major
gold producing countries such as South Africa, the United States and Australia; investors
expectations with respect to the rate of inflation; currency exchange rates; interest rates;
investment and trading activities of investment funds; and global or regional political, economic
or financial events and situations. You should be aware that there is no assurance that gold will
maintain its value against the U.S. dollar in terms of purchasing power. There can be no assurance
that the price of gold will continue to advance or not decline. Unless offset by trading profits
from the Index Investments and interest income, a decline in the price of gold will result in a
decline in the net asset value of the Shares expressed in U.S. dollars, the currency in which
Shares are redeemed, possibly resulting in an overall loss on your investment.
(47) Large-Scale Sales of Gold May Lead to a Decline in the Price of Gold and a Decline in the
Value of the Shares, Possibly Resulting in an Overall Loss on Your Investment.
The possibility of large-scale distress sales of gold in times of crisis may have a short-term
negative impact on the price of gold and adversely affect the value of the Shares. For example,
the 1997 Asian financial crisis resulted in significant sales of gold by individuals which
depressed the price of gold. Crises in the future may impair golds price performance which would,
in turn, adversely affect an investment in the Shares. Moreover, substantial sales of gold by the
official sector could adversely affect an investment in the Shares. The official sector consists
of central banks, other governmental agencies and multilateral institutions that buy, sell and hold
gold as part of their reserve assets. Since 1999, most gold sales by the official sector have been
made in a
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coordinated manner under the terms of the Central Bank Gold Agreement. In the event that
future economic, political or social conditions or pressures result in members of the official
sector liquidating their gold assets all at once or in an uncoordinated manner, the demand for gold
might not be sufficient to accommodate the sudden increase in supply. Consequently, the price of
gold could decline significantly, which would adversely affect the value of the Shares expressed in
U.S. dollars, the currency in which Shares are redeemed, possibly resulting in an overall loss on
your investment.
(48) Widening Interest Rate Differentials Between the Cost of Money and the Cost of Borrowing
Gold Could Result in Increased Sales and a Decline in the Price of Gold, Possibly Resulting in a
Decline in the Value of the Shares and a Loss on Your Investment in a Fund.
A combination of rising interest rates and a continuation of the current low cost of borrowing
gold (the gold lease rate) could improve the economics of selling gold forward. This could result
in increased hedging by gold mining companies and short selling by speculators, which could
adversely affect the price of gold and thus the value of the Shares expressed in U.S. dollars, the
currency in which Shares are redeemed, possibly resulting in an overall loss on your investment in
a Fund.
In addition to the risks disclosed above, investors in each of the Funds will be also be
subject to risk factors that may be either common among some or all of the Funds or particular only
to certain specific Funds. These additional risk factors follow below.
Risks Related to Investments in the Large Cap
Equity Fund, Mid Cap Equity Fund, Small Cap
Equity Fund, and World Equity Fund
Equity Fund, Mid Cap Equity Fund, Small Cap
Equity Fund, and World Equity Fund
The following risk factors apply to the Large Cap Equity Fund, Mid Cap Equity Fund, Small Cap
Equity Fund, and World Equity Fund, or collectively, the Equity Funds.
(49) To the Extent that the Index Underlying an Index Investment is Concentrated in Certain
Securities, Such Concentration May Amplify Certain Potentially Adverse Effects Upon the
Corresponding Equity Fund.
To the extent that the index underlying an Index Investment is concentrated in the securities
of companies in a particular market, industry, group of industries, sector or asset class, the
Equity Funds may be adversely affected by the performance of those securities, may be subject to
increased price volatility and may be more susceptible to adverse economic, market, political or
regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
(50) The Equity Funds are Subject to Issuer Risk.
The performance of the Index Investments with respect to each Equity Fund depends upon the
performance of individual companies comprising the corresponding index. Any issuer may perform
poorly, causing the value of its securities to decline. Poor performance may be caused by poor
management decisions, competitive pressures, changes in technology, disruptions in supply, labor
problems or shortages, corporate restructurings, fraudulent disclosures or other factors. Issuers
may, in times of distress or on their own discretion, decide to reduce or eliminate dividends,
which may also cause their stock prices to decline, which may negatively impact the Index
Investments, and in turn, the Equity Funds.
(51) The Equity Funds are Subject to Market Risk.
The Equity Funds net asset values are based, in part, upon the changes in the value of the
underlying Index Investments, which in turn, react to securities market movements. You could lose
money over short periods due to fluctuations in the Equity Funds net asset values in response to
short term market movements and over longer periods during market downturns. Securities may
decline in value due to factors affecting the securities markets generally or particular industries
represented in the markets. The value of a security may decline due to general market conditions,
economic trends or events that are not specifically related to the issuer of the security or to
factors that affect a particular industry or industries. Equity securities are subject to volatile
changes in value that may be attributable to market perception of
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an individual issuer or to general stock market fluctuations that affect all issuers.
Investments in equity securities may be more volatile than investments in other asset classes.
During a general economic downturn in the securities markets, multiple asset classes may be
negatively affected, which would adversely affect the Index Investments, and ultimately the Shares
of the Equity Funds.
(52) A Liquid Trading Market for Shares of the Issuers Underlying the Index Investments May Not
Develop or Exist, which in turn, May Adversely Affect the Value of the Shares of your Equity
Funds.
Although most of the shares of the issuers underlying the Index Investments, or Portfolio
Securities, are listed on national securities exchanges, the principal trading market for certain
of the Portfolio Securities may be in the over-the-counter market. The existence of a liquid
trading market for certain of the Portfolio Securities may depend upon whether dealers will make a
market in such Portfolio Securities.
There can be no assurance that a market will be made for any Portfolio Securities, that any
market will be maintained or that any such market will be or remain liquid with respect to the
Portfolio Securities. The price at which Portfolio Securities may be sold will be adversely
affected if trading markets for Portfolio Securities are limited or absent, which would then
adversely affect the value of the Index Investments of the affected Equity Funds, and in turn, the
value of your Shares.
Risks Related to the Large Cap Equity Fund and
the Mid Cap Equity Fund
the Mid Cap Equity Fund
Investors in the Large Cap Equity Fund and the Mid Cap Equity Fund have the following
underlying risks that are associated with the Large Cap Equity Funds and the Mid Cap Equity Funds
Index Investments, respectively.
(53) Investment in the Large Cap Equity Fund or the Mid Cap Equity Fund Involves the Risks
Inherent in an Investment in any Equity Security.
An investment in the Large Cap Equity Fund or the Mid Cap Equity Fund is subject to the risks
of any investment in a broadly based portfolio of 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
Shares may fluctuate in accordance with changes in the financial
condition of the issuers of Shares, the value of common stocks generally and other factors. The
identity and weighting of component stocks of the relevant indexes and the shares underlying each
Index Investment also change from time to time.
The financial condition of the issuers may become impaired or the general condition of the
stock market may deteriorate which may then cause a decrease in the value of the Index Investments
of either the Large Cap Equity Fund or the Mid Cap Equity Fund and thus in the corresponding value
of your Shares. 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 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 inferior 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.
There can be no assurance that the issuers of Shares will pay dividends. Distributions
generally depend upon the declaration of dividends by the issuers of Shares and the declaration of
such dividends generally depends upon various factors, including the financial condition of the
issuers and general economic conditions. If an issuer discontinues the payment of dividends, the
issuers shares may decrease in value, which may then adversely impact both the index underlying
the Index Investments and ultimately the value of the Shares of the Funds.
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Risks Related to the Small Cap Equity Fund
Investors in the Small Cap Equity Fund have the following underlying risks that are associated
with the Small Cap Equity Funds Index Investments.
(54) The Small Cap Equity Fund is Subject to Additional Risks Specific to Smaller Companies.
Many of the companies included in the index underlying the Index Investments of the Small Cap
Equity Fund may be considered small-capitalization companies. Stock prices of small-capitalization
companies may be more volatile than those of larger companies and therefore the Small Cap Equity
Funds Share price may be more volatile than those of funds that track larger-capitalization
companies such as the Large Cap Equity Fund and the Mid Cap Equity Fund. Stock prices of
small-capitalization companies are also more vulnerable than those of large-capitalization
companies to adverse business and economic developments, and the stocks of small-capitalization
companies may be thinly traded, making it difficult for the investors to buy and sell them. In
addition, small-capitalization companies are typically less stable financially than
large-capitalization companies and may depend on a small number of key personnel, making them more
vulnerable to loss of personnel. Small-capitalization companies also generally have less diverse
product lines than large-capitalization companies and are more susceptible to adverse developments
related to their products. Therefore, the Index Investments of the Small Cap Equity Fund may be
more volatile and may adversely impact the value of your Shares.
Risks Related to the World Equity Fund
Investors in the World Equity Fund have the following underlying risks associated with the
World Equity Funds Index Investments.
(55) To the Extent that the Performance of the Index Investments of the World Equity Fund Is
Based Upon Foreign Securities, the World Equity Fund Will be Subject to the Risks Associated
With Investing in Foreign Securities.
Investments in the securities of non-U.S. issuers are subject to all the risks of investing in
the market of such issuers, including,
among other factors, market fluctuations caused by economic
and political developments. To the extent that the index
underlying the Index Investments requires
an investment in foreign securities, the World Equity Fund may be subject to increased risk of loss
caused by any or all of the factors listed below:
| Lower levels of liquidity and market efficiency; |
||
| Greater securities price volatility; |
||
| Exchange rate fluctuations and exchange controls; |
||
| Less availability of public information about issuers; |
||
| Limitations on foreign ownership of securities; |
||
| Imposition of withholding or other taxes; |
||
| Imposition of restrictions on the expatriation of the funds or other assets of
the World Equity Fund; |
||
| Higher transaction and custody costs and delays in settlement procedures; |
||
| Difficulties in enforcing contractual obligations; |
||
| Lower levels of regulation of the securities market; |
||
| Weaker accounting, disclosure and reporting requirements; and |
||
| Legal principles relating to corporate governance, directors fiduciary duties
and liabilities and stockholders rights in markets in which the World Equity Fund
invests may not be as extensive as those that apply in the United States. |
(56) The World Equity Fund May be Subject to Geographic Risks.
Certain markets included in the index underlying the Index Investment of the World Equity Fund
are located in parts of the world that have historically been prone to natural disasters such as
earthquakes, volcanoes, droughts, floods and tsunamis or are economically sensitive to
environmental events. Any natural disaster in these markets may have a significant adverse impact
on the economies of these geographic areas and in turn the Index Investment, which would then
adversely impact the value of your Shares.
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(57) Adverse Economic Events in Any One Asian Country May Have a Significant Economic Effect on
the Entire Asian Region, and in turn, the Value of Your Shares in the World Equity Fund.
Certain Asian economies have experienced over-extension of credit, currency devaluations and
restrictions, high unemployment, high inflation, decreased exports and economic recessions.
Economic events in any one country may have a significant and adverse economic effect on the entire
Asian region as well as on major trading partners outside Asia. Furthermore, any adverse event in
the Asian markets may have a significant adverse ripple effect on other Asian economies.
(58) Adverse Economic Events Affecting Certain Sectors or Key Trading Partners May Have a
Significant Economic Effect on the Australasia Region, and in turn, the Value of Your Shares in
the World Equity Fund.
The economies of Australasia, which includes Australia and New Zealand, are dependent on
exports from the agricultural and mining sectors. This makes Australasian economies susceptible to
fluctuations in the commodity markets. Australasian economies are also increasingly dependent on
their growing service industries. Because the economies of Australasia are dependent on the
economies of Asia, Europe and the United States as key trading partners and investors, reduction in
spending by one or more of these trading partners on Australasian products and services or negative
changes in one or more of these economies may cause an adverse impact on the Australasian
economies.
(59) Adverse Economic Events Affecting the European Union May Have a Significant Economic Effect
on the European Union and Other Major Trading Partners, and in turn, the Value of Your Shares in
the World Equity Fund.
The economic and monetary union of the European Union, or the EU, requires compliance with
restrictions on inflation rates, deficits, interest rates, debt levels and fiscal and monetary
controls, each of which may significantly affect every country in Europe. Decreasing imports or
exports, changes in governmental regulations on trade, changes in the exchange rate of the Euro and
recessions among EU members may have a significant adverse effect on the economies of other EU
members and on major
trading partners outside Europe.
(60) The World Equity Fund is Subject to Currency Risk.
Because the World Equity Funds net asset value is determined on the basis of the U.S. dollar,
you may lose money if the currency of a foreign market in which the World Equity Fund invests
depreciates against the U.S. dollar, even if the local currency value of the World Equity Funds
holdings in that market increases.
(61) The World Equity Fund May Invest in Less Developed Markets and Will Become Subject to
Additional Custody Risk.
Custody risk refers to the risks in the process of clearing and settling trades and to the
holding of securities by local banks, agents and depositories. Low trading volumes and volatile
prices in less developed markets make trades harder to complete and settle, and governments or
trade groups may compel local agents to hold securities in designated depositories that are not
subject to independent evaluation. Local agents are held only to the standards of care of their
local markets. The less developed a countrys securities market is, the greater the likelihood of
custody problems.
(62) The World Equity Fund is Subject to Privatization Risk.
Some countries included in the index underlying the Index Investment of the World Equity Fund
have begun a process of privatizing certain entities and industries. Historically, investors in
some recently privatized entities have suffered losses due to the inability of the recently
privatized company to adjust quickly to a competitive environment or changing regulatory and legal
standards or, in some cases, due to re-nationalization of such privatized entities. There is no
assurance that such losses will not recur.
(63) The World Equity Fund is Subject to International and Internal Security Risks.
Some geographic areas included in the index underlying the Index Investment of the World
Equity Fund have experienced acts of terrorism or strained international relations due to
territorial disputes, historical animosities or other defense concerns. These situations may cause
uncertainty in the markets
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of these geographic areas and may adversely affect the performance of their economies.
Risks Related to the Commodities Fund
Investors in the Commodities Fund have the following underlying risks that are associated with
the Commodities Funds Index Investments.
(64) Backwardation or Contango in the Market Prices of the Commodities that Comprise the
Index Underlying the Index Investment Will Affect the Value of Your Shares.
As the futures contracts in the index that underlies the Index Investment near expiration,
they are replaced by contracts that have a later expiration. Thus, for example, a contract
purchased and held in August 2011 may specify an October 2011 expiration. As that contract nears
expiration, it may be replaced by selling the October 2011 contract and purchasing the contract
expiring in December 2011. This process is referred to as rolling. Historically, the prices of
certain commodities have frequently been higher for contracts with shorter-term expirations than
for contracts with longer-term expirations, which is referred to as backwardation. In these
circumstances, absent other factors, the sale of the October 2011 contract would take place at a
price that is higher than the price at which the December 2011 contract is purchased, thereby
creating a gain in connection with rolling. While certain commodities have historically exhibited
consistent periods of backwardation, backwardation will likely not exist in these markets at all
times. The absence of backwardation in certain commodities will adversely affect the value of the
index underlying the Index Investment, and, accordingly, decrease the value of your Shares.
Conversely, certain of the commodities that comprise the index underlying the Index Investment
historically exhibit contango markets rather than backwardation. Contango markets are those in
which the prices of contracts are higher in the distant delivery months than in the nearer delivery
months due to the costs of long-term storage of a physical commodity prior to delivery or other
factors. Although certain of these commodities may have historically exhibited consistent periods
of contango, contango will likely not exist in these markets at all times. Contango in certain
commodities will adversely affect the value of the index underlying the Index Investment, and,
accordingly, decrease the value of your Shares.
(65) If the Commodities Fund Does Not Perform in a Manner Non-Correlated with the General
Financial Markets or Does Not Perform Successfully, You Will Not Obtain Any Diversification
Benefits by Investing in the Shares of the Commodities Fund and You May Have No Gains to Offset
Your Losses from Other Investments.
Historically, commodities futures funds have been generally non-correlated to the performance
of other asset classes such as stocks and bonds. Non-correlation means that there is no
statistically valid relationship between the past performance of commodities futures and forward
contracts on the one hand and stocks or bonds on the other hand. Non-correlation should not be
confused with negative correlation, where the performance of two asset classes would be opposite
each other. Because of this non-correlation, the Commodities Fund cannot be expected to be
automatically profitable during unfavorable periods for the stock or bond markets, or vice versa.
If the Commodities Fund does not perform in a manner non-correlated with the general financial
markets or does not perform successfully, you will not obtain any diversification benefits by
investing in the Shares of the Commodities Fund and you may have no gains to offset your losses
from other investments.
(66) Because Investors in the Commodities Fund Gain an Exposure to Gold Through Both the Gold
Investments and the Index Investments, Any Negative Movement in the Price of Gold will Decrease
the Value of Both the Gold Investments and the Index Investments, and Ultimately the Value of
Your Shares.
Investors should be aware that in addition to investing in a Fund that is gold denominated,
the index that underlies the Index Investment of the Commodities Fund includes a gold component.
Therefore, if the price of gold falls, the value of both the Gold Investments and the Index
Investments of the Commodities Fund will decrease, and in turn, the value of your Shares will be
adversely affected.
THE MANAGING OWNER
Description
Superfund Advisors Inc., a New York corporation incorporated on November 13, 2009, serves as
the Managing Owner, commodity pool
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operator and trading advisor of each Fund and is responsible for the trading and
administration of each Fund. The Managing Owners offices, and the office of each Fund where its
books and records will be kept, are located at 489 Fifth Avenue, New York, New York 10017 and its
telephone number is (212) 878-4530.
The Managing Owners sole business is the trading and management of discretionary futures
accounts, including commodity pools. The Managing Owner has been registered with the CFTC as a
commodity pool operator and has been a member of the NFA since November 24, 2009. As of September
30, 2009, the affiliates of the Managing Owner had approximately $1.0 billion in assets under
management worldwide in the futures and forward markets.
NEITHER THIS POOL OPERATOR NOR ANY OF ITS TRADING PRINCIPALS HAS PREVIOUSLY OPERATED ANY OTHER
POOLS OR TRADED ANY OTHER ACCOUNTS.
Pursuant to each Funds Trust Agreement, the Managing Owner has the sole authority and
responsibility for managing each Fund and for directing the investment and reinvestment of each
Funds assets.
The principals of the Managing Owner are Paul Wigdor, Christian Baha, Vito Fossella, Heather
Trigg, and Jeffrey E. Kopiwoda. Messrs. Wigdor, Fossella and Kopiwoda also serve as Directors of
the Managing Owner. Mr. Wigdor is responsible for the firms trading decisions, although the Funds
are not managed by traditional methods, which typically involve effecting changes in the
composition of a portfolio on the basis of judgments relating to economic, financial and market
considerations with a view to obtaining positive results under all market conditions. The
principals of the Managing Owner do not intend to purchase Shares. The background of each of the
principals of the Managing Owner is set forth below.
Paul Wigdor, age 41, is a Director, President and Chief Financial Officer of the Managing
Owner, a position he has held since November 2009. Mr. Wigdor was listed as a principal and
associated person of the Managing Owner on November 20, 2009 and November 24, 2009, respectively.
Mr. Wigdor is President of Superfund USA, Inc. (Superfund USA), a position he has held since
January 2009. Previously he served as Chief Operating Officer of Superfund USA from November 2008
through
December 2008. Mr. Wigdor was listed as a principal and associated person of Superfund USA
on August 13, 2009 and August 14, 2009, respectively. Prior to his employment with Superfund USA,
Mr. Wigdor was Chief Operating Officer of Superfund Asset Management, Inc., a SEC registered
broker-dealer and a member of the Superfund group of affiliated companies, from May 2006 to
November 2008. Prior to joining the Superfund group of affiliated companies, Mr. Wigdor was
unemployed during the months of March and April 2006 after having served as Managing Director and
General Counsel of Pershing, LLC, a SEC registered broker-dealer, from January 1999 through
February 2006. Mr. Wigdor was Legal Counsel at Bear Stearns & Co., Inc., a SEC registered
broker-dealer from December 1994 through December 1998 and at the Chicago Board of Options Exchange
from October 1993 through December 1994. Mr. Wigdor received his bachelor of arts degree from
Brandeis University in 1990 and a law degree from Fordham Universitys School of Law in 1993.
Christian Baha, age 41, is the Managing Owners founder and sole owner. Mr. Baha is also
Superfund USAs founder and sole owner. By December 1991, Mr. Baha began working independently to
develop software for the technical analysis of financial data in Austria. In January 1995, Mr. Baha
founded the first members of the Superfund group of affiliated companies specializing in managed
futures funds and began to develop a worldwide distribution network. With profit sharing rights
certificates, Mr. Baha launched an alternative investment vehicle for private investors. Launched
on March 8, 1996, this product is called the Superfund Unternehmens-Beteiligungs-Aktiengesellschaft
(Superfund Q-AG), and was formerly known as Quadriga Beteiligungs & Vermogens AG (Quadriga AG). In
March 2003, a new generation of managed futures funds was internationally launched under the brand
name Superfund and previously existing products have since been re-branded under this name.
Simultaneously with the development of the Quadriga/Superfund group of affiliated companies, Mr.
Baha founded the software company TeleTrader AG, which has been listed on the Vienna Stock Exchange
since March 2001. He has been listed as a principal of Superfund Capital Management, Inc, a CFTC
registered commodity pool operator since May 9, 2001 and was an associated person of that company
from May 9, 2001 through February 17, 2009. He is also an associated person and principal of
Superfund Asset Management, Inc., a CFTC registered introducing broker, positions which he has held
since July 23, 1999 and June 24, 1997,
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respectively. He became registered as a principal of Superfund USA on August 13, 2009. He
became registered as a principal of the Managing Owner on November 20, 2009. He is a graduate of
the police academy in Vienna, Austria and studied at the Business University of Vienna, Austria.
Mr. Baha is a citizen of Austria.
Vito Fossella, age 44, is a Director, Vice President and Chief Operating Officer of the
Managing Owner. He has been employed by the Managing Owner since November 2009. Mr. Fossella was
listed as a principal of the Managing Owner on November 20, 2009. Mr. Fossella is Chief Operating
Officer of Superfund USA. He has been employed by Superfund USA since February 2009. Previously,
Mr. Fossella was an elected member of the U.S. House of Representatives, representing the 13th
Congressional District of New York from November 1997. Mr. Fossella receive his bachelors of
science degree in economics from the Wharton School of Business and his juris doctorate from the
Fordham University School of Law.
Heather Trigg, age 29, is the Chief Compliance Officer of the Managing Owner and was listed as
a principal on November 20, 2009. Ms. Trigg is the Chief Compliance Officer of Superfund USA and
was listed as a principal on August 12, 2009. From November 2002 to November
2008, Ms. Trigg worked for Superfund Asset Management, Inc., a SEC registered broker-dealer, where
she was responsible for managing the Fund Administration Department. Ms. Trigg graduated from the
State University of New York at Buffalo with a Bachelors Degree
in Psychology in May 2002.
Jeffrey E. Kopiwoda, age 40, is a director of the Managing Owner. He is also a director of
Superfund USA. Mr. Kopiwoda was listed as a principal of the Managing Owner and Superfund USA on
November 20, 2009 and August 4, 2009, respectively. Since September, 2007, Mr. Kopiwoda has been
President of Superfund Strategies, Inc., a captive consulting firm that provides professional
services to other members of the Superfund group of affiliated companies, including consulting
services in the fields of product structuring, legal and compliance, finance and software
development. From August, 2005, until August, 2007, he served as Chief Legal Officer of Superfund
Group Monaco S.A.M. From April, 2004, until July, 2005, he served as General Counsel of Superfund
Asset Management, Inc., an introducing broker
registered with the CFTC and a member of the NFA in
that capacity. From February, 2000, through March, 2004, Mr. Kopiwoda was the principal of his own
law firm, which he launched after practicing as an associate attorney for Brown, Udell & Pomerantz,
Ltd. from December, 1997, through January, 2000, and previously for Levin & Funkhouser, Ltd. from
June, 1995 through November, 1997. He received his Bachelor of Arts degree from the College of
Business at Michigan State University in August of 1991, and he received his Juris Doctorate from
Chicago-Kent College of Law in June of 1995.
INVESTMENT OBJECTIVES OF THE FUNDS
The primary objective of each Fund is to maintain the approximate equivalent of a dollar for
dollar investment in gold, or the Gold Investment, while seeking appreciation of its assets over
time by trading and investing in long positions in exchange-traded futures contracts that reference
an appropriate securities, commodity, or other index, with a view to tracking the applicable index
investment over time, or the Index Investment. The notional value of each Funds futures contracts
with respect to each of its Gold Investment and Index Investment will be approximately equal to the
value of each Funds holdings of United States Treasury and other high credit quality short-term
fixed income securities, or the Funds Equity, upon establishment of each of these positions.
Therefore, the aggregate notional value of each Funds futures contracts with respect to both its
Gold Investment and Index Investment will be double the value of the Funds Equity, which means
each Fund will have a leverage ratio at such time of 2:1. Because the notional value of each
Funds futures positions in the Gold Investment and the Index Investment will rise or fall over
time, the leverage ratio could be higher or lower than the 2:1 leverage ratio. The use of leverage
will increase the potential for both trading profits and losses, depending on the changes, positive
and negative, in the Gold Investment and the Index Investment.
As a result of its use of leverage, each Fund will be required to deposit a greater proportion
of its net assets as margin, not expected to exceed 5-15% of its net assets, as applicable. This
represents margin deposit requirements approximately twice as great as would be required if each
Fund did not use leverage. Similarly, as a result of its use of leverage, each Fund will trade more
futures contracts and incur more brokerage commission expense than it would if it did not use
leverage. The additional amount of
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brokerage commission expense generally will be proportional to each Funds leverage ratio.
Each Fund is designed to maintain through its Gold Investments a long position in gold futures
contracts in a U.S. dollar amount approximately equal to the total capital contributed to each Fund
at the time it begins its trading activities and, thereafter, equal to the total capital of each
Fund on a daily basis. The Gold Investments of each Fund is intended to de-link the Funds net
asset value, which is denominated in U.S. dollars, from the value of the U.S. dollar relative to
gold, essentially denominating the Funds net asset value in terms of gold. However, if the U.S.
dollar value of gold declines resulting in dollar losses for the Fund, there can be no assurance
that there will be a corresponding increase in the value or purchasing power of the U.S. dollar for
goods (other than gold) or services priced in dollars. Furthermore, there can be no assurance that
trading losses incurred in the Funds Index Investments will not result in overall losses for the
Fund, or that the Fund will not reduce its Gold Investments if gold futures margin requirements
increase significantly.
To obtain their dollar for dollar gold position, the Funds will enter into futures contracts
to purchase gold in a dollar amount approximately equal to the amount of capital invested in each
Fund. The Managing Owner will adjust each Funds Gold Investment daily, to reflect additions to
and redemptions of a Funds capital, as well as to reflect profits and losses from the Funds Index
Investment and interest income, so as to maintain a Gold Investment with a notional, or face, value
approximately equal to the Funds net asset value on a daily basis. You should note, however, that
because each Funds Gold Investment is adjusted daily, profits or losses incurred on a Funds Gold
Investment or from a Funds Index Investment and interest income earned by a Fund may cause the
notional, or face, value of a Funds Gold Investment intraday to be greater than or less than a
Funds net asset value at the end of the day.
An investment in the Shares has the potential to help diversify traditional securities
portfolios. A diverse portfolio consisting of assets that perform in an unrelated manner, or
non-correlated assets, may increase overall return and/or reduce the volatility (a widely used
measure of risk) of a traditional portfolio of stocks and bonds. However, for a non-correlated
asset to increase a traditional portfolios overall returns, the non-correlated asset must
outperform either stocks or bonds over the period being measured. There can be no assurance that a
Fund
will outperform other sectors of an investors portfolio or not produce losses.
Each Fund will hold substantially all of its assets (including those assets used as margin
deposits for trading activities) in U.S. government securities and/or interest bearing deposit
accounts, segregated by Fund. Accordingly, each Fund, in addition to its potential to profit from
its Gold Investments and its Index Investments, will earn interest on all or almost all of its
assets.
The Shares of each Fund are designed for investors who want a cost-effective and convenient
way to invest in futures.
Advantages of investing in the Shares include:
| Ease and Flexibility of Investment. The Shares trade on the NYSE Arca and provide
institutional and retail investors with indirect access to the futures markets. The Shares
may be bought and sold on the NYSE Arca like other exchange-listed securities. Retail
investors may purchase and sell Shares through traditional brokerage accounts. |
|
| Margin. Shares are eligible for margin accounts. |
|
| Diversification. The Shares may help to diversify a portfolio because historically,
investments that include commodities have tended to exhibit low to negative correlation with
both equities and conventional bonds and positive correlation to inflation. |
Investing in the Shares does not insulate Shareholders from certain risks, including price
volatility.
Each Fund pursues its investment objective by investing in a portfolio of exchange-traded
futures contracts on the Gold Investments and the Index Investments.
Each of the following Funds intends to reflect the below sectors:
| Superfund Gold Large Cap Equity Fund is designed to maintain the approximate
equivalent of a dollar for dollar investment in gold while investing in futures contracts that
track a large cap U.S. equity securities index. The Index Investment of the Superfund Gold
Large Cap Equity Fund is comprised of E-mini Standard |
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and Poors 500 Stock Price IndexTM Futures contracts, or the E-mini S&P 500 futures
contracts, traded on the Chicago Mercantile Exchange, Inc., or the CME. The E-mini S&P 500
futures contracts serve as a vehicle to provide an exposure to the benchmark for large-cap U.S.
stocks. |
||
| Superfund Gold Mid Cap Equity Fund is designed to maintain the approximate
equivalent of a dollar for dollar investment in gold while investing in futures contracts that
track a mid cap U.S. equity securities index. The Index Investment of the Superfund Gold Mid
Cap Equity Fund is comprised of E-mini Standard and Poors Midcap 400 Stock Price
IndexTM Futures, or the E-mini S&P 400 futures contracts, traded on the CME. The
E-mini S&P 400 futures contracts serve as a vehicle to provide an exposure to a significant
benchmark for mid-cap U.S. stocks. The E-mini S&P 400 futures contracts reflect an underlying
benchmark of 400 medium-sized company stocks. Although past performance is not necessarily
indicative of future results, mid-cap equities have historically performed differently from
both large-caps and small-caps. |
|
| Superfund Gold Small Cap Equity Fund is designed to maintain the approximate
equivalent of a dollar for dollar investment in gold while investing in futures contracts that
track a small cap U.S. equity securities index. The Index Investment of the Superfund Gold
Small Cap Equity Fund is comprised of Russell 2000® Index Mini Futures, or the Russell 2000®
Mini futures contracts, traded on the ICE Futures U.S., Inc. The Russell 2000® Mini futures
contracts provide an exposure to a recognized benchmark generally reflecting 2000 of the
smallest companies in the small cap sector of U.S. equities. |
|
| Superfund Gold World Equity Fund is designed to maintain the approximate equivalent
of a dollar for dollar investment in gold while investing in futures contracts that track a
world equity securities index. The Index Investment of the Superfund Gold World Equity Fund
is comprised of E-Mini MSCI EAFE Index Futures, or the E-Mini MSCI EAFE futures contracts,
traded on the CME. The E-Mini MSCI EAFE futures contracts serve as a vehicle to provide an
exposure to a significant benchmark for international equity. The E-Mini MSCI EAFE futures
contracts reflect an underlying benchmark of more than |
1,100 companies in Europe, Australasia,
and the Far East. |
||
| Superfund Gold Commodities Fund is designed to maintain the approximate equivalent
of a dollar for dollar investment in gold while investing in futures contracts that track a
commodities index. The Index Investment of the Superfund Gold Commodities Fund is comprised
of S&P GSCITM Commodity Index Futures, or the S&P GSCITM Commodity Index
futures contracts, traded on the CME. The S&P GSCITM Commodity Index futures
contracts serve as a vehicle to provide an exposure to commodity sector returns. The S&P
GSCITM Commodity Index futures contracts reflect an underlying benchmark that
measures the returns of 24 commodity futures contracts in the following commodity sectors:
energy, precious and industrial metals, agricultural and livestock products. |
If the Managing Owner determines in its commercially reasonable judgment that it has become
impracticable or inefficient for any reason for any Fund to gain full or partial exposure to Gold
Investments or the Index Investments by investing in a specific futures contract, such Fund may
invest in an alternative futures contract referencing either gold or the corresponding Index
Investments other than the specific contract that the Fund currently invests in. The Managing
Owner may invest in an alternative and related futures contracts, forwards or swaps, if, in the
commercially reasonable judgment of the Managing Owner, such alternative futures contracts,
forwards or swaps tend to exhibit trading prices that correlate with a futures contract that
corresponds to the original Gold Investments or Index Investments.
Each Fund will make distributions at the discretion of the Managing Owner. To the extent that
a Funds actual and projected interest income from its holdings of United States Treasury
securities and other high credit quality short-term fixed income securities exceeds the actual and
projected fees and expenses of such Fund, the Managing Owner expects periodically to make
distributions of the amount of such excess. The Funds currently do not expect to make
distributions with respect to capital gains. Depending on the applicable Funds performance for the
taxable year and your own tax situation for such year, your income tax liability for the taxable
year for your allocable share of such Funds net ordinary income or loss and capital gain or loss may exceed
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any distributions you receive with respect
to such year.
Each Funds portfolio also will include United States Treasury securities and other high
credit quality short-term fixed income securities for deposit with each Funds Commodity Broker as
margin.
Under the Trust Declaration of each Fund, the Managing Owner has exclusive management and
control of all aspects of the business of each Fund. The Trustee has no duty or liability to
supervise or monitor the performance of the Managing Owner, nor does the Trustee have any liability
for the acts or omissions of the Managing Owner.
The value of the Shares of each Fund is expected to fluctuate in relation to changes in the
value of its portfolio. The market price of the Shares of a Fund may not be identical to the net
asset value per Share, but these two valuations are expected to be very close. See The Risks You
Face (2) Net Asset Value May Not Always Correspond to Market Price and, as a Result, Baskets may
be Created or Redeemed at a Value that Differs from the Market Price of the Shares.
The current trading price per Share of each Fund (quoted in U.S. dollars) will be published
continuously under its ticker symbol as trades occur throughout each trading day on the
consolidated tape, Reuters and/or Bloomberg and on the Managing Owners website at
[http://www.superfund.com], or any successor thereto.
The most recent end-of-day net asset value of each Fund will be published under its own symbol
as of the close of business on Reuters and/or Bloomberg and on the Managing Owners website at
[http://www.superfund.com], or any successor thereto. In addition, the most recent end-of-day net
asset value of each Fund will be published the following morning on the consolidated tape.
End-of-Day Net Asset Value Symbols
The end-of-day net asset value of each Fund will be published under the following symbols:
Fund | Symbol | ||||
Large Cap Equity Fund
|
[ ] | ||||
Mid Cap Equity Fund
|
[ ] | ||||
Small Cap Equity Fund
|
[ ] | ||||
World Equity Fund
|
[ ] | ||||
Commodities Fund
|
[ ] | ||||
The Managing Owner will publish the net asset value of each Fund and the net asset value per
Share of each Fund daily. Additionally, the Managing Owner will publish the indicative value per
Share of each Fund (quoted in U.S. dollars) once every fifteen seconds throughout each trading day
on the consolidated tape, Reuters and/or Bloomberg and on the Managing Owners website at
[http://www.superfund.com], or any successor thereto.
All of the foregoing information will be published under the following symbols:
Intra-Day Indicative Values Per Share Symbols
The intra-day indicative value per Share of each Fund will be published under the following
symbols:
Fund | Symbol | ||||
Large Cap Equity Fund
|
[ ] | ||||
Mid Cap Equity Fund
|
[ ] | ||||
Small Cap Equity Fund
|
[ ] | ||||
World Equity Fund
|
[ ] | ||||
Commodities Fund
|
[ ] | ||||
The intra-day indicative value per Share of each Fund will be based on the prior days final
net asset value, adjusted four times per minute throughout the day to reflect the continuous price
changes of the Funds futures positions. The final net asset value of each Fund and the final net
asset value per Share of each Fund will be calculated as of the closing time of the NYSE Arca or
the last to close of the exchanges on which the Funds futures contracts are traded, whichever is
later, and posted in the same manner. Although a time gap may exist between the close of the NYSE
Arca and the close of the exchanges on which the Funds futures contracts will be traded, there
will be no effect on the net asset value calculations as a result.
There can be no assurance that each Fund will achieve its investment objective or avoid
substantial losses. Each Fund does not have any performance history.
Role of Managing Owner
The Managing Owner serves as the commodity pool operator and trading advisor of each Fund.
With respect to each Fund, the Managing Owner:
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| selects the trustee, administrator, distributor, marketing agent, introducing broker,
commodity brokers and auditor; |
|
| negotiates various agreements and fees; |
|
| monitors the performance results of each Funds portfolio and reallocates assets within
such portfolio with a view to maintaining the appropriate level of investment in both the Gold
Investment and Index Investment of each Fund in a manner consistent with the applicable
investment objective; and |
|
| performs such other services as the Managing Owner believes that each Fund may from
time-to-time require. |
The Managing Owner is registered as a commodity pool operator with the Commodity Futures
Trading Commission and is a member of the National Futures Association.
The Managing Owners offices and the offices of each Fund are located at 489 Fifth Avenue, New
York, New York 10017 and the telephone number is (212) 878-4530.
Market Diversification
As global markets and investing become more complex, the inclusion of futures may continue to
increase in traditional portfolios of stocks and bonds managed by advisors seeking improved balance
and diversification. The globalization of the worlds economy has the potential to offer
significant investment opportunities, as major political and economic events continue to have an
influence, in some cases a dramatic influence, on the worlds markets, creating risk but also
providing the potential for profitable trading opportunities. By allocating a portion of the risk
segment of their portfolios to one or more of the Funds, each of which invests in futures contracts
on gold and on its corresponding Index Investment, investors have the potential, if their
investments are successful, to reduce the volatility of their portfolios over time and the
dependence of such portfolios on any single nations economy.
MANAGEMENTS DISCUSSION AND
ANALYSIS OF PROSPECTIVE OPERATIONS
ANALYSIS OF PROSPECTIVE OPERATIONS
Each Fund was organized as a series trust on January 15, 2010 under the Delaware Statutory
Trust Act. Each Fund is a
speculative commodity pool. Each Fund will invest in long positions in
exchange-traded futures contracts with respect to its Gold Investment and its applicable Index
Investment, each in an amount approximately equal to the total capital of each Fund as of the
beginning of operations and, thereafter, on a daily basis.
There is no way to predict how the Funds strategies will perform in the future, and if they
do not perform successfully, investors may lose all or substantially all of their investment.
Although each Fund is designed to maintain a long position in gold in a U.S. dollar amount
approximately equal to its total capital adjusted on a daily basis, investors must recognize that
an investment in Shares is not the equivalent of an investment in gold. Rather, it is an
investment in a product that combines a gold investment with an investment in the applicable
exchange-traded futures contract that is intended to track a specific sector. The Gold Investment
is intended to de-link each Funds net asset value, which is denominated in U.S. dollars, from the
value of the U.S. dollar relative to gold, essentially denominating the Funds net asset value in
terms of gold. Consequently, if a Fund suffers net losses due to losses from its Index
Investments, the Managing Owner will generally reduce the size of the Funds Gold Investment.
Additionally, there can be no assurance that, if the value of gold declines relative to the U.S.
dollar, there will be any corresponding increase in the value or purchasing power of the U.S.
dollar for goods (other than gold) or services priced in U.S. dollars.
Capital Resources
Each Fund will raise capital only through the sale of Shares offered pursuant to the initial
and continuing offering and does not intend to raise any capital through borrowings. Due to the
nature of each Funds business, each Fund will make no capital expenditures and will have no
capital assets which are not operating capital or assets.
Liquidity
Most United States commodity exchanges limit fluctuations in futures contracts prices during a
single day by regulations referred to as daily price fluctuation limits or daily limits.
During a single trading day, no trades may be executed at prices beyond the daily limit. This may
affect each Funds ability to initiate new positions or close existing ones or may prevent it from
having orders executed.
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Futures prices have occasionally moved the daily limit for several consecutive days with
little or no trading. Similar occurrences could prevent a Fund from promptly liquidating
unfavorable positions and subject the Fund to substantial losses, which could exceed the margin
initially committed to such trades. In addition, even if futures prices have not moved the daily
limit, a Fund may not be able to execute futures trades at favorable prices if little trading in
such contracts is taking place. Other than these limitations on liquidity, which are inherent in
each Funds futures trading operations, each Funds assets are expected to be liquid.
Financial Instrument Risk
In the normal course of its business, each Fund will be a party to financial instruments with
off-balance sheet risk, including exchange traded futures contracts and, possibly from
time-to-time, over-the-counter, or OTC, forward contracts and/or swap contracts. The term
off-balance sheet risk refers to an unrecorded potential liability that, even though it does not
appear on the balance sheet, may result in a future obligation or loss. These financial
instruments may be traded on an exchange or OTC. Exchange traded instruments are standardized and
include futures and certain option contracts. OTC contracts are negotiated between contracting
parties and include forwards and certain options. Each of these instruments is subject to various
risks including market and credit risk. In general, the risks associated with OTC contracts are
greater than those associated with exchange traded instruments because of the greater risk of
default by the counterparty to an OTC contract.
Market risk is the potential for changes in the value of the financial instruments to be
traded by each Fund due to market changes. In entering into these contracts, there exists a market
risk that such contracts may be significantly influenced by conditions, such as interest rate
volatility, resulting in such contracts being less valuable. If the markets should move against
all of a Funds open positions at the same time, the Fund could experience substantial losses.
In addition to market risk, in entering into futures, and from time-to-time, forward and/or
swap contracts, there is a risk that a counterparty will not perform according to the terms of a
contract entered into with a Fund, that is, credit risk. Credit risk with respect to
exchange-traded instruments is reduced to the extent that an exchange or clearing organization acts
as a counterparty to the transactions. A Funds risk of loss in the event of counterparty
default
is typically limited to the amounts recognized in the statements of assets and liabilities and not
represented by the contract or notional amounts of the instruments. A Fund has credit risk and
concentration risk with respect to the brokers and dealers through which a Fund conducts its
operations.
Forwards and swap agreements that a Fund may enter into are currently transacted in the
unregulated over-the-counter market. Legislative proposals that have been introduced in Congress
in 2009 such as the Over-the-Counter Derivatives Market Act of 2009 would govern the current
unregulated forward and swaps markets and participants in these markets. Such legislation would
require certain forwards and swaps to be traded on regulated exchanges and cleared through
clearinghouses, the federal registration of dealers and major swap participants (it is possible
that a Fund could be considered to be a major swap participant depending on the volume and nature
of its transactions), impose new margin and collateral requirements, impose position limits on the
number of transactions a trader may engage in, require the reporting to regulators and/or swap
repositories of transactions, among other regulatory requirements. These proposed regulatory
developments could materially affect the decision of the Managing Owner to transact forwards and
swaps, the manner in which a Fund engages in these transactions and increase the costs of such
transactions.
On-line monitoring systems provide account analysis of futures, forward and/or swap positions
by sector, margin requirements, gain and loss transactions, and collateral positions. The Managing
Owner will attempt to mitigate each Funds credit risk by transacting only with large,
well-capitalized institutions.
Off-Balance Sheet Arrangements
The Funds do not expect to utilize in the future special purpose entities to facilitate
off-balance sheet financing arrangements and will have no loan guarantee arrangements or
off-balance sheet arrangements of any kind, other than agreements entered into in the normal course
of business and as noted above.
Contractual Obligations
Each Fund will not enter into contractual obligations or commercial commitments to make future
payments of a type that would be typical for an
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operating company. Each Funds sole business will be trading long futures contracts and, when
applicable, forward contracts, and possibly swap contracts. All such contracts are settled by
offset, not delivery. Substantially all such contracts will be for settlement within four months
of the trade date and substantially all such contracts will be held by each Fund for less than four
months before being offset or rolled over into new contracts with similar maturities. The
Financial Statements of each Fund will present a Condensed Schedule of Investments setting forth
net unrealized appreciation (depreciation) of each Funds open future and, as applicable, forward
and/or swap contracts at the end of the reporting period for which such statements are prepared.
Critical Accounting Policies Valuation of each Funds Positions
The Managing Owner believes that the accounting policies that will be most critical to each
Funds financial condition and results of operations relate to the valuation of each Funds
positions. The majority of each Funds positions will be exchange-traded futures contracts, which
will be valued daily at settlement prices published by the exchanges. As applicable, any spot,
forward and/or swap contracts held by a Fund will also be valued at published daily settlement
prices or at dealers quotes. Each Fund will use the amortized cost method for valuing U.S.
Treasury bills; accordingly, the cost of securities plus accreted discount, or minus amortized
premium, approximates fair value. Thus, the Managing Owner expects that under normal circumstances
substantially all of each Funds assets will be valued on a daily basis at fair value using
objective measures.
USE OF PROCEEDS
A substantial amount of proceeds of the offering of the Shares of each Fund will be credited
to each Funds bank and brokerage accounts, as described below, and will be used by each Fund for
the purpose of engaging in and supporting the futures trading activities described in this
Prospectus with respect to each Funds Gold Investments and corresponding Index Investments.
The Fund will deposit each Funds assets in cash or U.S. government securities in separate
accounts in the name of each Fund with each Funds clearing brokers for use as margin, in accounts
at [ Bank, City], and, when applicable, with forward and/or swap counterparties, as
collateral. The assets deposited for margin purposes with each Funds
clearing brokers will be
held in customer segregated funds accounts or foreign futures and foreign options secured amount
accounts, as required by the Commodity Exchange Act and CFTC regulations. Assets held by the
clearing brokers will be held in cash or in U.S. government securities and possibly other
instruments approved by the CFTC for the investment of customer segregated funds.
Should a Fund trade in the forward and/or swap markets, such Fund will deposit assets with
forward and/or swap counterparties in order to initiate and maintain forward and/or swap contracts.
Such assets will be held in U.S. government securities or in cash, for which each Fund will
receive interest credits at short-term rates. The forward counterparties may receive a benefit as
a result of the deposit of such cash in the form of a reduction in their outstanding overnight
borrowings, despite such cash belonging to a Fund, not the counterparties. These accounts are not
subject to the segregation regulations of the CFTC and thus may offer less protection than
segregated funds accounts in the event of the bankruptcy of a foreign exchange counterparty.
The Managing Owner expects, based on current margin requirements, that approximately 5-15% of
each Funds assets will be committed as margin and collateral at any one time to support each
Funds Index Investments, although the margin-to-equity ratio of each Fund may change due to
factors such as market volatility and changes in margin requirements. In addition, the Managing
Owner expects, based on current margin requirements, that approximately 4% to 6% of each Funds
assets will be committed as margin and collateral at any one time to support each Funds Gold
Investments, although the margin-to-equity ratio of each Fund may change if the current margin
requirements for gold are modified.
On an ongoing basis, the Managing Owner expects that each Fund will be able to earn interest
on approximately 95% of its daily net assets. All interest earned on each Funds assets will
accrue to the benefit of each Fund, and the Managing Owner will not receive any benefit from the
approximately 5% of each Funds assets which do not earn interest.
Each Fund will make distributions at the discretion of the Managing Owner. To the extent that
a Funds actual and projected interest income from its holdings of United States Treasury
securities and other high credit quality short-term fixed income securities exceeds the actual and
projected fees and expenses of such Fund, the Managing Owner expects
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periodically to make distributions of the amount of such excess. The Funds currently do not
expect to make distributions with respect to capital gains.
The Funds will not lend any assets to any person or entity other than through permitted
securities investments. The Managing Owner will not commingle the property of the Funds with the
property of any other person, provided, however, that deposits with banks, futures or securities
brokers or foreign exchange and derivative dealers shall not be considered a prohibited
commingling.
CHARGES
See Summary Breakeven Amounts and Summary Breakeven Table for additional breakeven
related information.
Management Fee
Each Fund will pay the Managing Owner a Management Fee, monthly in arrears, in an amount equal
to [0.85]% per annum of the daily net asset value of such Fund. The Management Fee is paid in
consideration of the Managing Owners commodity futures trading advisory services.
The Managing Owner, out of the relevant Management Fee, will pay the Distributor, monthly in
arrears, in an amount equal to [___]% per annum of the daily net asset value of the relevant Fund.
The Managing Owner, out of the relevant Management Fee, will pay the Marketer, monthly in
arrears, in an amount equal to [___]% per annum of the daily net asset value of the relevant Fund.
Organization and Offering Expenses
Expenses incurred in connection with organizing each Fund and the offering of its Shares were
paid by the Managing Owner. Expenses incurred in connection with the continuous offering of Shares
of each Fund after the commencement of its trading operations will be paid by the Managing Owner.
Organization and offering expenses relating to the Funds means those expenses incurred in
connection with their formation, the qualification and registration of the Shares of such
Funds and
in offering, distributing and processing the Shares of each Fund under applicable federal law, and
any other expenses actually incurred and, directly or indirectly, related to the organization of
each Fund, or the offering of the Shares of each Fund, including, but not limited to, expenses such
as:
| initial and ongoing registration fees, filing fees and taxes; |
|
| costs of preparing, printing (including typesetting), amending, supplementing, mailing and
distributing the Registration Statement, the exhibits thereto and the Prospectus; |
|
| the costs of qualifying, printing (including typesetting), amending, supplementing, mailing
and distributing sales materials used in connection with the offering and issuance of the
Shares; |
|
| travel, telegraph, telephone and other expenses in connection with the offering and
issuance of the Shares; and |
|
| accounting, auditing and legal fees (including disbursements related thereto) incurred in
connection therewith. |
The Managing Owner will not allocate to the Funds the indirect expenses of the Managing Owner.
The aggregate amount of the original organization and offering expenses was approximately
$[ ].
Brokerage Commissions and Fees
Each Fund will pay a monthly flat-rate brokerage commission payable in [advance] [arrears] on
the [first] [last] day of each month equal to 1/12th of [0.15]% of each Funds net asset
value per annum ([0.15]% per annum), which covers all brokerage fees and certain other trading
expenses incurred in connection with each Funds futures interests trading, including floor
brokerage fees, exchange fees, clearinghouse fees, NFA fees, give-up or transfer fees, any costs
and fees, if applicable, for the execution of forward contract or swap transactions. A portion of
the brokerage commission will be paid to the Introducing Broker for serving as the introducing
broker for each Fund and a portion of the brokerage commission will be paid to the Commodity
Brokers for executing and clearing trades for each Fund.
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Routine Operational, Administrative and Other Ordinary Expenses
The Managing Owner will pay all of the routine operational, administrative and other ordinary
expenses of each Fund, including, but not limited to, computer services, the fees and expenses of
the Trustee, the legal and accounting fees and expenses, [tax preparation expenses], filing fees,
and printing, mailing and duplication costs. The Managing Owner expects that all of the routine
operational, administrative and other ordinary expenses of each Fund will be approximately [___]%.
Non-Recurring and Unusual Fees and Expenses
Each Fund will pay all non-recurring and unusual fees and expenses, (referred to as
extraordinary fees and expenses in each Trust Agreement), if any, of itself as determined by the
Managing Owner. Non-recurring and unusual fees and expenses are fees and expenses which are
non-recurring and unusual in nature, such as legal claims and liabilities, litigation costs or
indemnification or other unanticipated expenses. Non-recurring and unusual fees and expenses will
also include material expenses which are not currently anticipated obligations of the Funds or of
managed futures funds in general. Routine operational, administrative and other ordinary expenses
will not be deemed non-recurring and unusual expenses.
Management Fee and Expenses to be Paid First out of Interest Income
The Management Fee and the brokerage commissions and fees of each Fund will be paid first out
of interest income from such Funds holdings of U.S. Treasury bills and other high credit quality
short-term fixed income securities on deposit with the Commodity Broker as margin or otherwise. If
interest income is not sufficient to cover the fees and expenses of a Fund during any period, the
excess of such fees and expenses over such interest income will be paid out of income from futures
trading, if any, or from sales of the Funds fixed income securities.
Selling Commission
Retail investors may purchase and sell Shares through traditional brokerage accounts.
Investors are expected to be charged a customary commission by their brokers in connection with
purchases of Shares that will vary from investor
to investor. Investors are encouraged to review
the terms of their brokerage accounts for applicable charges. Also, the excess, if any, of the
price at which any Initial Purchaser or an Authorized Participant sells a Share over the price paid
by the Initial Purchaser or such Authorized Participant in connection with the creation of such
Share in a Basket will be deemed to be underwriting compensation.
WHO MAY SUBSCRIBE
Baskets may be created or redeemed only by Authorized Participants. Each Authorized
Participant must (1) be a registered broker-dealer or other securities market participant such as a
bank or other financial institution which is not required to register as a broker-dealer to engage
in securities transactions, (2) be a participant in DTC, and (3) have entered into an agreement
with a Fund and the Managing Owner, or a Participant Agreement. The Participant Agreement sets
forth the procedures for the creation and redemption of Baskets of Shares and for the delivery of
cash required for such creations or redemptions. A list of the current Authorized Participants can
be obtained from the Administrator. See Creation and Redemption of Shares for more details.
CREATION AND REDEMPTION OF SHARES
Each Fund creates and redeems Shares from time-to-time, but only in one or more Baskets. A
Basket is a block of 100,000 Shares. Baskets may be created or redeemed only by Authorized
Participants. Except when aggregated in Baskets, the Shares are not redeemable securities.
Authorized Participants will pay a transaction fee of $500 in connection with each order to create
or redeem a Basket of Shares. Authorized Participants may sell the Shares included in the Baskets
they purchase from a Fund to other investors.
Authorized Participants are the only persons that may place orders to create and redeem
Baskets. Authorized Participants must be (1) registered broker-dealers or other securities market
participants, such as banks and other financial institutions, which are not required to register as
broker-dealers to engage in securities transactions, and (2) participants in DTC. To become an
Authorized Participant, a person must enter into a Participant Agreement with a Fund and the
Managing Owner. The Participant Agreement sets forth the procedures for the creation and
redemption of Baskets and for the payment of
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cash required for such creations and redemptions. The Managing Owner may delegate its duties
and obligations under the Participant Agreement to the [Distributor], the [Marketer] or the
Administrator without consent from any Shareholder or Authorized Participant. The Participant
Agreement and the related procedures attached thereto may be amended by the Managing Owner without
the consent of any Shareholder or Authorized Participant. To compensate the Administrator for
services in processing the creation and redemption of Baskets, an Authorized Participant will be
required to pay a transaction fee of $500 per order to create or redeem Baskets. Authorized
Participants who purchase Baskets from a Fund receive no fees, commissions or other form of
compensation or inducement of any kind from either the Managing Owner or the Fund, and no such
person has any obligation or responsibility to the Managing Owner or the Fund to effect any sale or
resale of Shares.
Authorized Participants are cautioned that some of their activities will result in their being
deemed participants in a distribution in a manner which would render them statutory underwriters
and subject them to the prospectus delivery and liability provisions of the Securities Act of 1933,
or the Securities Act, as described in Plan of Distribution.
Each Authorized Participant must be registered as a broker-dealer under the Securities
Exchange Act of 1934, or the Exchange Act, and regulated by the Financial Industry Regulatory
Authority, or FINRA, or exempt from being, or otherwise not be required to be, so regulated or
registered, and qualified to act as a broker or dealer in the states or other jurisdictions where
the nature of its business so requires. Certain Authorized Participants may be regulated under
federal and state banking laws and regulations. Each Authorized Participant will have its own set
of rules and procedures, internal controls and information barriers as it determines is appropriate
in light of its own regulatory regime.
Authorized Participants may act for their own accounts or as agents for broker-dealers,
custodians and other securities market participants that wish to create or redeem Baskets.
Persons interested in purchasing Baskets should contact the Managing Owner or the
Administrator to obtain the contact information for the Authorized Participants. Shareholders who
are not Authorized Participants will only be able to redeem their Shares through an Authorized
Participant.
Under the Participant Agreements, the Managing Owner has agreed to indemnify the Authorized
Participants against certain liabilities, including liabilities under the Securities Act, and to
contribute to the payments the Authorized Participants may be required to make in respect of those
liabilities. The Managing Owner has agreed to reimburse the Authorized Participants, solely from
and to the extent of the applicable Funds assets, for indemnification and contribution amounts due
from the Managing Owner in respect of such liabilities to the extent the Managing Owner has not
paid such amounts when due.
The following description of the procedures for the creation and redemption of Baskets is only
a summary and an investor should refer to the relevant provisions of the Trust Agreements and the
form of Participant Agreement for more detail. The Trust Agreements and the form of Participant
Agreement are filed as exhibits to the registration statement of which this Prospectus is a part.
Creation Procedures
On any business day, an Authorized Participant may place an order with the Managing Owner to
create one or more Baskets. For purposes of processing both purchase and redemption orders, a
business day means any day other than a day when banks in New York City are required or permitted
to be closed. Purchase orders must be placed by 10:00 a.m., New York time. The day on which the
Managing Owner receives a valid purchase order is the purchase order date. Purchase orders are
irrevocable. By placing a purchase order, and prior to delivery of such Baskets, an Authorized
Participants DTC account is charged the non-refundable transaction fee due for the purchase order.
Determination of required payment
The total payment required to create each Basket is the net asset value of 100,000 Shares of
the applicable Fund as of the closing time of the NYSE Arca or the last to close of the exchanges
on which the corresponding Funds futures contracts are traded, whichever is later, on the purchase
order date. Baskets are issued as of noon, New York time, on the Business Day immediately
following the purchase order date at the applicable net asset value per Share as of the closing
time of the NYSE Arca or the last to close of the exchanges on which the corresponding Funds
futures contracts are traded, whichever is later, on the purchase order date, but only if the
required payment has been timely received.
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Because orders to purchase Baskets must be placed by 10:00 a.m., New York time, but the total
payment required to create a Basket will not be determined until 4:00 p.m., New York time, on the
date the purchase order is received, Authorized Participants will not know the total amount of the
payment required to create a Basket at the time they submit an irrevocable purchase order for the
Basket. The net asset value of a Fund and the total amount of the payment required to create a
Basket could rise or fall substantially between the time an irrevocable purchase order is submitted
and the time the amount of the purchase price in respect thereof is determined.
Rejection of purchase orders
The Managing Owner may reject a purchase order if:
| It determines that the purchase order is not in proper form; |
|
| The Managing Owner believes that the purchase order would have adverse tax consequences to
any Fund or its Shareholders; or |
|
| Circumstances outside the control of the Managing Owner make it, for all practical
purposes, not feasible to process creations of Baskets. |
The Managing Owner will not be liable for the rejection of any purchase order.
Redemption Procedures
The procedures by which an Authorized Participant can redeem one or more Baskets mirror the
procedures for the creation of Baskets. On any business day, an Authorized Participant may place
an order with the Managing Owner to redeem one or more Baskets. Redemption orders must be placed
by 10:00 a.m., New York time. The day on which the Managing Owner receives a valid redemption
order is the redemption order date. Redemption orders are irrevocable. The redemption procedures
allow Authorized Participants to redeem Baskets. Individual Shareholders may not redeem directly
from a Fund. Instead, individual Shareholders may only redeem Shares in integral multiples of
100,000 and only through an Authorized Participant.
By placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be
redeemed through DTCs
book-entry system to the applicable Fund not later than noon, New York time,
on the business day immediately following the redemption order date. By placing a redemption
order, and prior to receipt of the redemption proceeds, an Authorized Participants DTC account is
charged the non-refundable transaction fee due for the redemption order.
Determination of redemption proceeds
The redemption proceeds from a Fund consist of the cash redemption amount. The cash
redemption amount is equal to the net asset value of the number of Basket(s) of such Fund requested
in the Authorized Participants redemption order as of the closing time of the NYSE Arca or the
last to close of the exchanges on which such corresponding Funds futures contracts are traded,
whichever is later, on the redemption order date. The Managing Owner will distribute the cash
redemption amount at noon, New York time, on the business day immediately following the redemption
order date through DTC to the account of the Authorized Participant as recorded on DTCs book-entry
system.
Delivery of redemption proceeds
The redemption proceeds due from a Fund are delivered to the Authorized Participant at noon,
New York time, on the business day immediately following the redemption order date if, by such time
on such business day immediately following the redemption order date, the Funds DTC account has
been credited with the Baskets to be redeemed. If the Funds DTC account has not been credited
with all of the Baskets to be redeemed by such time, the redemption distribution is delivered to
the extent of whole Baskets received. Any remainder of the redemption distribution is delivered on
the next business day to the extent of remaining whole Baskets received if the Managing Owner
receives the fee applicable to the extension of the redemption distribution date which the Managing
Owner may, from time-to-time, determine and the remaining Baskets to be redeemed are credited to
the Funds DTC account by noon, New York time, on such next business day. Any further outstanding
amount of the redemption order shall be cancelled. The Managing Owner is also authorized to
deliver the redemption distribution notwithstanding that the Baskets to be redeemed are not
credited to the Funds DTC account by noon, New York time, on the business day immediately
following the redemption order date if the Authorized Participant has collateralized its obligation
to deliver the Baskets through DTCs
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book-entry system on such terms as the Managing Owner may determine from time-to-time.
Suspension or rejection of redemption orders
In respect of any Fund, the Managing Owner may, in its discretion, suspend the right of
redemption, or postpone the redemption settlement date, (1) for any period during which an
emergency exists as a result of which the redemption distribution is not reasonably practicable, or
(2) for such other period as the Managing Owner determines to be necessary for the protection of
the Shareholders. The Managing Owner will not be liable to any person or in any way for any loss
or damages that may result from any such suspension or postponement.
The Managing Owner will reject a redemption order if the order is not in proper form as
described in the Participant Agreement or if the fulfillment of the order, in the opinion of its
counsel, might be unlawful.
Creation and Redemption Transaction Fee
To compensate the Administrator for services in processing the creation and redemption of
Baskets, an Authorized Participant will be required to pay a transaction fee of $500 per order to
create or redeem Baskets. An order may include multiple Baskets. The transaction fee may be
reduced, increased or otherwise changed by the Managing Owner. The Managing Owner will notify DTC
of any agreement to change the transaction fee and will not implement any increase in the fee for
the redemption of Baskets until 30 days after the date of the notice.
Monthly account statements conforming to CFTC and NFA requirements will be posted on the
Managing Owners website at [http://www.superfund.com]. Additional reports may be posted
on the Managing Owners website in the discretion of the Managing Owner or as required by
regulatory authorities.
THE INTRODUCING BROKER
Superfund Asset Management, Inc., an affiliate of the Managing Owner, will serve as the
introducing broker, or the Introducing Broker, for each Fund. Its principal offices are located at
180 North LaSalle Street, Suite #3250, Chicago, IL 60601.
The Managing Owner will transmit trade instructions on behalf of each Fund to the Introducing
Broker. In turn, the Introducing Broker will, on behalf of each Fund, transmit the instructions to
the clearing and executing Commodity Brokers (as defined below).
Each Fund will pay a monthly flat-rate brokerage commission payable in [advance] [arrears] on
the [first] [last] day of each month equal to 1/12th of [0.15]% of each Funds net asset
value per annum ([0.15]% per annum), which covers all brokerage fees and certain other trading
expenses incurred in connection with each Funds futures interests trading, including floor
brokerage fees, exchange fees, clearinghouse fees, NFA fees, give-up or transfer fees, any costs
and fees, if applicable, for the execution of forward contract or swap transactions. A portion of
the brokerage commission will be paid to the Introducing Broker for serving as the introducing
broker for each Fund and a portion of the brokerage commission will be paid to the Commodity
Brokers for executing and clearing trades for each Fund.
In 2007 George Fountas, a former employee and minority shareholder, sued Superfund Asset
Management, Inc. alleging breach of contract and oppression of a minority shareholder. Fountas
also sued the majority shareholder and the remaining two members of the board of directors of
Superfund Asset Management, Inc. alleging, in addition to the foregoing, breach of fiduciary duty
and tortious interference with prospective economic advantage. The claims stem from Fountas
disagreement with the for cause termination of his employment by the company, and Fountas has
sought damages equivalent to one third of the value of Superfund Asset Management, Inc.s shares.
Superfund Asset Management, Inc. deems Fountas claims to be without merit, has denied the claims
and has filed counterclaims against Fountas for amounts substantially exceeding the amounts claimed
by Fountas. Neither the claims nor the counterclaims involve any client assets or the level or
quality of service provided to clients of Superfund Asset Management, Inc. The proceedings are in
the early stages of discovery and Superfund Asset Management, Inc. does not expect the outcome to
have a material adverse effect on its financial condition, results of operations or liquidity.
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THE COMMODITY BROKERS
ADM Investor Services, Inc. and Barclays Capital Inc. will serve as the clearing and executing
commodity brokers, or Commodity Brokers, for the Funds.
A portion of the brokerage commission will be paid to the Commodity Brokers for executing and
clearing trades for each Fund.
ADM Investor Services, Inc., or ADMIS, is a registered futures commission merchant and is a
member of the NFA. Its main office is located at 141 W. Jackson Blvd., Suite 1600A, Chicago, IL
60604.
In the normal course of its business, ADMIS is involved in various legal actions incidental to
its commodities business. None of these actions are expected either individually or in aggregate
to have a material adverse impact on ADMIS.
Neither ADMIS nor any of its principals have been the subject of any material administrative,
civil or criminal actions within the past five years.
Barclays Capital Inc., or BCI, is a registered securities broker-dealer and a futures
commission merchant. Its business address is 200 Park Avenue, New York, NY 10166.
BCI is involved in a number of judicial and arbitration matters arising in connection with the
conduct of its business, including some proceedings relating to the collapse of Enron. BCIs
management believes, based on currently available information, that the results of such proceedings
will not have a significant adverse effect on BCIs financial condition. There have been no other
administrative civil or criminal actions, whether pending or concluded, against BCI within the last
five years that would be considered to be material as defined in regulations under the Commodity
Exchange Act.
CONFLICTS OF INTEREST
General
The Managing Owner has not established any formal procedures to resolve the conflicts of
interest described below.
You should be aware that no such procedures have been established and
that there is no independent control on how conflicts of interest are resolved. Consequently, you
will be dependent on the good faith of the respective parties subject to such conflicts to resolve
such conflicts equitably. Although the Managing Owner will attempt to resolve conflicts in good
faith, there can be no assurance that these conflicts will not, in fact, result in losses for the
Funds.
Prospective investors should be aware that the Managing Owner presently intends to assert that
Shareholders have, by subscribing for Shares of a Fund, consented to the following conflicts of
interest in the event of any proceeding alleging that such conflicts violated any duty owed by the
Managing Owner to investors.
The Managing Owner
Conflicts exist between the Managing Owners interests in and its responsibilities to the
Funds. The conflicts are inherent in the Managing Owner acting as managing owner for and trading
advisor to the Funds. These conflicts and the potential detriments to each Funds shareholders,
are described below. The Managing Owners selection of itself as trading advisor was not
objective, because it is also the managing owner of each Fund, and the Managing Owner will not
replace itself as the trading advisor even if doing so would be beneficial to the Funds. The
advisory relationship with respect to the Funds and the Managing Owner, including the fee
arrangements, were not negotiated at arms length. Investors should note, however, that the
Managing Owner believes that the fee arrangements are fair and competitive with compensation
arrangements in pools involving independent managing owners and advisors.
Neither the Managing Owner nor its principals devote their time exclusively to managing the
Funds. The Managing Owner acts as managing owner to other commodity pools and the principals are
involved in the activities of affiliates of the Managing Owner, some of which serve as trading
advisor to other accounts which may compete with the Funds for futures positions and the Managing
Owners (and/or its principals) services. Thus, the Managing Owner and/or its principals could
have a conflict between responsibilities owed to the Funds and those owed to other pools and
accounts. The Managing Owner believes that it has sufficient resources to discharge its
responsibilities in this regard in a fair manner. The Managing Owner or its affiliates may receive
advisory fees from some of those other accounts. The Managing Owner and its affiliates,
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however, trade all accounts pursuing the same or a substantially similar trading and
investment strategy in a substantially similar manner, given the differences in size and timing of
the capital additions and withdrawals, and, in the case of the Funds, giving due consideration to
the dollar for dollar gold position.
In addition, the Managing Owner may find that the Gold Investments and Index Investments
established for the benefit of each Fund, when aggregated with futures positions in other accounts
managed by the Managing Owner, may approach the applicable speculative position limits in a
particular futures contract or a commodity. The Managing Owner may decide to address this
situation by liquidating positions in the futures contract that is approaching speculative position
limits and reapportioning the affected Funds portfolio in other futures contracts by trading
contracts in other markets which do not have restrictive limits, or by trading in either related
forwards or swaps. The Managing Owner, and its affiliates, will treat all affected accounts
equitably, giving due consideration to differences in account size, leverage level and investment
objectives, including each Funds dollar for dollar Gold Investment. The principals of the
Managing Owner are not prohibited from trading futures and related contracts for their own
accounts, although they are not doing so as of the date of this Prospectus. Trading records for
any such proprietary trading are not available for review by clients or investors. Employees of
the Managing Owner are prohibited from trading for their own accounts.
Because the Managing Owner and/or its principals may trade for their own accounts at the same
time that they are managing each Fund, investors should be aware that, as a result of a neutral
allocation system, testing a new trading system, trading their proprietary accounts more
aggressively or other actions not constituting a violation of fiduciary duty, such persons may from
time-to-time take positions in their proprietary accounts which are opposite, or ahead of, the
positions taken for a Fund. This proprietary trading could, if substantial in size, cause losses
for a Fund by increasing the cost at which they acquire and liquidate positions. The results of
any such trading will not be made available to the Shareholders.
Superfund USA, Inc.
Superfund USA, Inc., an affiliate of the Managing Owner, will serve as the Distributor and
Marketer for each Fund and, as such, receive a portion of the Management Fee to be paid to the
Managing Owner by the Funds. The affiliation between Superfund USA, Inc. and the Managing Owner
gives rise to a conflict of interest in that the Managing Owner has an incentive to retain
Superfund USA, Inc. as the Distributor and Marketer for each Fund.
Superfund Asset Management, Inc.
Superfund Asset Management, Inc., an affiliate of the Managing Owner, will serve as an
introducing broker for each Fund and, as such, receive a portion of the brokerage commissions to be
paid by the Funds. The affiliation between Superfund Asset Management, Inc. and the Managing Owner
gives rise to a conflict of interest in that the Managing Owner has an incentive to retain
Superfund Asset Management, Inc. as the Introducing Broker for each Fund. Additionally, the
flat-rate brokerage commission to be paid by the Funds to Superfund Asset Management, Inc. was not
negotiated at arms length.
The Commodity Brokers
The Commodity Brokers, and the affiliates and personnel of such entities, may trade futures
and forward contracts for their own accounts and, in doing so, may compete with the Funds for the
same positions potentially making it more difficult for the Funds to effect transactions at
favorable prices potentially resulting in losses for the Funds. Likewise, the Commodity Brokers
may serve as brokers for accounts in which they or an affiliate has a financial interest, for
example, a pool sponsored by the Commodity Brokers or any affiliate, which could give rise to
conflicts of interest between their responsibility to the Funds and to those accounts with respect
to the execution of trades for such accounts and the Funds, potentially resulting in losses for the
Funds. However, the Managing Owner has no reason to believe that the Commodity Brokers would
knowingly or deliberately favor any account over the Funds accounts with respect to trade
execution.
Fiduciary Duty and Remedies
In evaluating the foregoing conflicts of interest, a prospective investor should be aware that
the Managing Owner has a responsibility to the Shareholders to exercise good faith and fairness in
all dealings affecting the Funds. The fiduciary responsibility of a managing owner to the
Shareholders is a developing and changing area of
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the law and investors or prospective investors who have questions concerning the duties of the
Managing Owner as managing owner should consult their own professional advisors.
If a Shareholder believes that the Managing Owner has violated its fiduciary duty to the
Shareholders, he may seek legal relief individually or on behalf of such Fund in which he holds
Shares under applicable laws, including under the Delaware Statutory Trust Act and under
commodities laws, to recover damages from or require an accounting by the Managing Owner. Each
Trust Agreement is governed by Delaware law and any breach of the Managing Owners fiduciary duty
under a Trust Agreement will generally be governed by Delaware law. The
Managing Owner may assert as a defense to claims of breach of fiduciary duty that the conflicts of
interest and fees payable to the Managing Owner have been disclosed in this Prospectus.
DESCRIPTION OF THE SHARES AND THE
FUNDS; SUMMARY DESCRIPTION OF
CERTAIN MATERIAL TERMS OF THE
AMENDED AND RESTATED TRUST
AGREEMENTS
FUNDS; SUMMARY DESCRIPTION OF
CERTAIN MATERIAL TERMS OF THE
AMENDED AND RESTATED TRUST
AGREEMENTS
The following summary describes in brief the Shares, the Funds and certain aspects of the
operation of each Fund and the responsibilities of the Trustee and the Managing Owner concerning
each Fund and the material terms of the Trust Agreements. Prospective investors should carefully
review the Form of Amended and Restated Trust Agreement filed as an exhibit to the registration
statement of which this Prospectus is a part and consult with their own advisers concerning the
implications to such prospective subscribers of investing in a Delaware statutory trust.
Capitalized terms used in this section and not otherwise defined have such meanings assigned to
them under the Trust Agreements.
Organization
Each Fund is organized under the Delaware Statutory Trust Act as a series statutory trust
pursuant to Section 3804(a) of the Delaware Statutory Trust Act. The existence of a trustee should
not be taken as an indication of any additional level of management or supervision over a Fund. To
the greatest extent possible, the Trustee acts in an entirely passive role and the
Managing Owner
has all authority over the operation of the Funds.
Description of the Shares and Limitation of Liability
Each Fund issues common units of beneficial interest, or Shares, which represent ownership of
such Fund only.
The Shares of each Fund are listed on the NYSE Arca under the following symbols:
Fund | NYSE Arca Symbol | ||||
Large Cap Equity Fund
|
[_____] | ||||
Mid Cap Equity Fund
|
[_____] | ||||
Small Cap Equity Fund
|
[_____] | ||||
World Equity Fund
|
[_____] | ||||
Commodities Fund
|
[_____] | ||||
The Shares may be purchased from each Fund or redeemed on a continuous basis, but only by
Authorized Participants and only in blocks of 100,000 Shares, or Baskets. Individual Shares may
not be purchased or redeemed from each Fund. Shareholders that are not Authorized Participants may
not purchase from each Fund or redeem Shares or Baskets.
The Shares are limited liability investments; investors may not lose more than the amount that
they invest plus any profits recognized on their investment. However, Shareholders could be
required, as a matter of bankruptcy law, to return to the estate of the applicable Fund any
distribution they received at a time when such Fund was in fact insolvent or in violation of its
Trust Agreement. In addition, although the Managing Owner is not aware of this provision ever
having been invoked in the case of any public futures fund, Shareholders agree in the Trust
Agreement that they will indemnify the Fund for any harm suffered by it as a result of
Shareholders actions unrelated to the business of the Fund, or
taxes separately imposed on the Fund by any state, local or foreign taxing
authority.
The foregoing repayment of distributions and indemnity provisions (other than the provision
for Shareholders indemnifying the Fund for taxes
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imposed upon it by a state, local or foreign taxing authority, which is included only as a
formality due to the fact that many states do not have statutory trust statutes so that the tax
status of the Fund in such states might, theoretically, be challenged although the Managing Owner
is unaware of any instance in which this has actually occurred) are commonplace in statutory trusts
and limited partnerships.
Principal Office; Location of Records
The Managing Owners offices, and the offices of each Fund are located at 489 Fifth Avenue,
New York, New York 10017 and the telephone number is (212) 878-4530.
The books and records of each Fund are maintained as follows: Basket creation and redemption
books and records, certain financial books and records (including Fund accounting records, ledgers
with respect to assets, liabilities, capital, income and expenses, the registrar, transfer journals
and related details) and trading and related documents received from futures commission merchants
are maintained by The Bank of New York Mellon, 2 Hanson Place, 12th Floor, Brooklyn,
N.Y. 11217. All marketing materials and all other books and records of each Fund (including minute
books and other general corporate records, trading records and related reports and other items
received from each Funds Commodity Brokers) are maintained at the Managing Owners principal
office located at 489 Fifth Avenue, New York, New York 10017.
The books and records of the Funds are located at the foregoing addresses, and available for
inspection and copying (upon payment of reasonable reproduction costs) by Shareholders of each Fund
or their representatives for any purposes reasonably related to a Shareholders interest as a
beneficial owner of such Fund during regular business hours as provided in each Trust Agreement.
The Managing Owner will maintain and preserve the books and records of the Funds for a period of
not less than six years.
The Trustee
BNY Mellon Trust of Delaware, or the Trustee, a state bank chartered under the laws of the
State of Delaware, is the sole trustee for each of the Funds. The Trustees principal offices are
located at 100 White Clay Center Drive, Newark, Delaware 19711-5465. The Trustee is unaffiliated
with the Managing
Owner. The Trustees duties and liabilities with respect to the offering of the
Shares and the management of each Fund are limited to its express obligations under the Trust
Declarations.
The rights and duties of the Trustee, the Managing Owner and the Shareholders are governed by
the provisions of the Delaware Statutory Trust Act and by the applicable Trust Declaration.
The Trustee serves in a passive role as the sole trustee of each Fund in the State of
Delaware. The Trustee accepts service of legal process on the Funds in the State of Delaware and
will make certain filings under the Delaware Statutory Trust Act. The Trustee does not owe any
other duties to the Funds, the Managing Owner or the Shareholders of any Fund. The Trustee is
permitted to resign upon at least thirty (30) days notice to the Funds, provided, that any such
resignation will not be effective until a successor Trustee is appointed by the Managing Owner.
Each of the Trust Declarations provides that the Trustee is compensated by each Fund. Furthermore,
each of the Trust Declarations provides that the Trustee is indemnified by each Fund against any
expenses it incurs relating to or arising out of the formation, operation or termination of such
Fund, or the performance of its duties pursuant to the Trust Declarations, except to the extent
that such expenses result from the gross negligence or willful misconduct of the Trustee. The
Trust Declarations also provide that the Trustee is not liable for any indirect, consequential or
special damages or for losses resulting from any event beyond the reasonable control of the
Trustee. The Managing Owner has the discretion to replace the Trustee.
Only the Managing Owner has signed the registration statement of which this Prospectus is a
part, and only the assets of each Fund and the Managing Owner are subject to issuer liability
under the federal securities laws for the information contained in this Prospectus and under
federal securities laws with respect to the issuance and sale of the Shares. Under such laws,
neither the Trustee, either in its capacity as Trustee or in its individual capacity, nor any
director, officer or controlling person of the Trustee is, or has any liability as, the issuer or a
director, officer or controlling person of the issuer of the Shares. The Trustees liability in
connection with the issuance and sale of the Shares is limited solely to the express obligations of
the Trustee set forth in each Trust Declaration.
Under each Trust Declaration, the Managing Owner has exclusive management and control of all
aspects of the business of the Funds. The Trustee has
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no duty or liability to supervise or monitor the performance of the Managing Owner, nor does
the Trustee have any liability for the acts or omissions of the Managing Owner. The Shareholders
have no voice in the day-to-day management of the business and operations of the Funds, other than
certain limited voting rights as set forth in each Trust Declaration. In the course of its
management of the business and affairs of the Funds, the Managing Owner may, in its sole and
absolute discretion, appoint an affiliate or affiliates of the Managing Owner as additional
managing owners (except where the Managing Owner has been notified by the Shareholders that it is
to be replaced as the managing owner) and retain such persons, including affiliates of the Managing
Owner, as it deems necessary for the efficient operation of the Funds.
Because the Managing Owner has substantially all of the authority over the operation of the
Funds, the Trustee itself is not registered with the CFTC as a commodity pool operator of the
Funds.
Registered Agent; Tax Matters Partner
BNY Mellon Trust of Delaware will accept service of legal process on the Funds in the State of
Delaware.
The Managing Owner has been designated as the tax matters partner of the Funds for purposes
of the Internal Revenue Code of 1986, as amended, or the Code.
Ownership or Beneficial Interest in the Funds
The Managing Owner has made and expects to maintain an aggregate investment of $[1,000] in
each of the Funds. As of the date of this Prospectus, principals of the Managing Owner own less
than 1% of the Shares of any Fund.
Shares Freely Transferable
The Shares of each Fund trade on the NYSE Arca and provide institutional and retail investors
with direct access to each Fund. The Shares of each Fund may be bought and sold on the NYSE Arca
like any other exchange-listed security.
Book-Entry Form
Individual certificates will not be issued for the Shares.
Instead, global certificates are
deposited with DTC and registered in the name of Cede & Co., as nominee for DTC. The global
certificates evidence all of the Shares outstanding at any time. Under each Trust Agreement,
Shareholders are limited to (1) participants in DTC such as banks, brokers, dealers and trust
companies (DTC Participants), (2) those who maintain, either directly or indirectly, a custodial
relationship with a DTC Participant (Indirect Participants), and (3) those banks, brokers, dealers,
trust companies and others who hold interests in the Shares through DTC Participants or Indirect
Participants. The Shares are only transferable through the book-entry system of DTC. Shareholders
who are not DTC Participants may transfer their Shares through DTC by instructing the DTC
Participant holding their Shares (or by instructing the Indirect Participant or other entity
through which their Shares are held) to transfer the Shares. Transfers are made in accordance with
standard securities industry practice.
Net Asset Value
The net asset value of a Fund as of any date is the sum of all cash, plus U.S. Treasury bills
and other U.S. government securities valued at cost plus accrued interest, and other securities of
such Fund valued at fair value, plus the fair value of all open futures, forward, option and other
derivative positions maintained by such Fund, less all liabilities of such Fund, determined in
accordance with generally accepted accounting principles in the United States under the accrual
basis of accounting. The net asset value of a Share in a Fund will be equal to the net asset value
of the applicable Fund divided by the number of Shares in such Fund outstanding as of the date of
determination.
Sharing of Profits and Losses
Each Shareholder within a Fund will, though ownership of the Shares of the applicable Fund,
share his portion of such Funds gains or losses as reflected by changes in the net asset value for
such Fund.
Federal Tax Allocations
At year-end, the Managing Owner will determine the total taxable income or loss for the year
attributable to each Fund. Based on a monthly allocation convention, the taxable gain or loss is
allocated to each Shareholder within a Fund in proportion to his holdings of Shares therein and
each Shareholder is responsible for his share of taxable income attributable to such Fund. Each
Shareholders tax basis in his Shares is increased by
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the taxable income allocated to him and reduced by any distributions received and losses
allocated to him. Upon liquidation of a Fund, each Shareholder within such Fund will receive his
proportionate share of Fund assets attributable to such Fund.
Dissolution and Termination of a Fund
A Fund will dissolve at any time upon the happening of any of the following events:
| the filing of a certificate of dissolution or revocation of the Managing Owners charter
(and the expiration of 90 days after the date of notice to the Managing Owner of revocation
without a reinstatement of its charter) or upon the withdrawal, removal, adjudication or
admission of bankruptcy or insolvency of the Managing Owner, or an event of withdrawal unless
(i) at the time there is at least one remaining Managing Owner and that remaining Managing
Owner carries on the business of the Fund or (ii) within 90 days of such event of withdrawal
all the remaining Shareholders agree in writing to continue the business of a Fund and to
select, effective as of the date of such event, one or more successor Managing Owners. If a
Fund is dissolved as the result of an event of withdrawal and a failure of all remaining
Shareholders to continue the business of the Fund and to appoint a successor Managing Owner as
provided above within 120 days of such event of withdrawal, Shareholders holding Shares
representing at least a majority (over 50%) of the net asset value of each Fund (not including
Shares held by the Managing Owner and its affiliates) may elect to continue the business of
the Fund by forming a new statutory trust, on the same terms and provisions as set forth in
the applicable Trust Agreement. Any such election must also provide for the election of a
Managing Owner to the reconstituted Fund. If such an election is made, all Shareholders of a
Fund will be bound thereby and continue as Shareholders of the reconstituted Fund; |
|
| Shareholders owning more than 50% of the outstanding Shares of a Fund vote to dissolve such
Fund, as applicable; |
|
| the Managing Owner withdraws as managing owner and no new managing owner is appointed; |
| the Managing Owner makes the determination that a Fund should be dissolved for any reason
or no reason at all; |
|
| in the event of the suspension, revocation or termination of the Managing Owners
registration as a commodity pool operator, or membership as a commodity pool operator with the
NFA (if, in either case, such registration is required at such time unless at the time there
is at least one remaining Managing Owner whose registration or membership has not been
suspended, revoked or terminated); |
|
| any Fund becomes insolvent or bankrupt; |
|
| the determination of the Managing Owner that the aggregate net assets of a Fund in relation
to the operating expenses of such Fund make it unreasonable or imprudent to continue the
business of such Fund, or, in the exercise of its reasonable discretion, the determination by
the Managing Owner to dissolve the Fund because the aggregate net asset value of such Fund as
of the close of business on any business day declines below $[10 million]; |
|
| the continued existence of a Fund becomes unlawful; |
|
| the Fund is dissolved by operation of law; |
|
| any Fund becoming required to be registered as an investment company under the Investment
Company Act of 1940; or |
|
| DTC is unable or unwilling to continue to perform its functions, and a comparable
replacement is unavailable. |
Amendments and Meetings
Each Trust Agreement may be amended with the approval of more than 50% of the Shares then
owned by the Shareholders of each Fund. The Managing Owner may make minor changes to each Trust
Agreement without the approval of the Shareholders. These minor changes may be for clarifications
of inaccuracies or ambiguities, modifications in response to changes in the Code or Treasury
regulations or for any other changes the Managing Owner deems advisable so long as they do not
change the basic investment program of a Fund and are for the benefit of or not adverse to the
Shareholders. Shareholders owning at least 10% of
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the outstanding Shares of a Fund can call a
meeting of Shareholders of such Fund. At that meeting, the Shareholders, provided that the
Shareholders owning a majority of the outstanding Shares of such Fund concur, can vote to:
| amend the Trust Agreement with respect to such Fund without the consent of the Managing
Owner; |
|
| terminate such Fund; |
|
| terminate contracts with the Managing Owner; |
|
| approve the sale of the assets attributable to the Fund; and |
|
| remove and replace the Managing Owner with respect to the Fund. |
Indemnification and Standard of Liability
The Managing Owner and its controlling persons may not be liable to the Funds or any
Shareholders for errors in judgment or other acts or omissions not amounting to gross negligence,
bad faith or willful misconduct or, as a consequence of the indemnification and exculpatory
provisions described in the following paragraph. Purchasers of Shares may have more limited rights
of action than they would absent such provisions.
Each Fund will indemnify the Managing Owner and its affiliates performing services for the
Fund for actions taken on behalf of such Fund, provided that the Managing Owners or its
affiliates conduct was determined, in good faith, by the Managing Owner to be in the best
interests of such Fund and the conduct was not the result of gross negligence, bad faith or willful
misconduct by the Managing Owner or its affiliates. Indemnification for alleged violation of
securities laws is only available if the following conditions are satisfied:
| a successful adjudication on the merits of each count alleged has been obtained; or |
|
| such claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction; or |
|
| a court of competent jurisdiction approves a settlement of the claims and finds
indemnification of the settlement and related costs should be made; and |
| in the case of the immediately preceding bullet point, the court has been advised of the
position of the SEC and certain states in which the Shares were offered and sold as to
indemnification for the violations. |
Reports to Shareholders
The Managing Owner will furnish you with an annual report of each Fund in which you are
invested within 90 calendar days after the end of such Funds fiscal year as required by the rules
and regulations of the SEC as well as with those reports required by the CFTC and the National
Futures Association, or the NFA, including, but not limited to, an annual audited financial
statement certified by independent registered public accountants and any other reports required by
any other governmental authority that has jurisdiction over the activities of the Funds. You also
will be provided with appropriate information to permit you to file your U.S. federal and state
income tax returns (on a timely basis) with respect to your Shares. Monthly account statements
conforming to CFTC and NFA requirements are posted on the Managing Owners website at
[http://www.superfund.com]. Additional reports may be posted on the Managing Owners
website in the discretion of the Managing Owner or as required by applicable regulatory
authorities.
The Managing Owner will notify Shareholders of any change in the fees paid by the Funds or of
any material changes to any Fund by filing with the SEC a supplement to this Prospectus and a Form
8-K, which will be publicly available at http://www.sec.gov and at the Managing Owners
website at [http://www.superfund.com]. Any such notification will include a description of
Shareholders voting rights, as necessary.
DISTRIBUTIONS
The Managing Owner has discretionary authority over all distributions made by each Fund. To
the extent that a Funds actual and projected interest income from its holdings of United States
Treasury securities and other high credit quality short-term fixed income securities exceeds the
actual and projected fees and expenses of the Fund, the Managing Owner expects periodically to make
distributions of the amount of such excess. The
Funds currently do not expect to make distributions with respect to capital gains. Depending
on the applicable Funds performance for the taxable year and your own tax situation for such year,
your
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income tax liability for the taxable year for your allocable share of such Funds net ordinary
income or loss and capital gain or loss may exceed any distributions you receive with respect to
such year.
THE ADMINISTRATOR
Each Fund has appointed The Bank of New York Mellon as the administrator, or the
Administrator, and each Fund has entered into an Administration Agreement in connection therewith.
The Bank of New York Mellon serves as custodian, or Custodian, of each Fund and has entered into a
Global Custody Agreement, or Custody Agreement, in connection therewith. The Bank of New York
Mellon serves as the transfer agent, or Transfer Agent, of each Fund and has entered into a
Transfer Agency and Service Agreement in connection therewith.
The Bank of New York Mellon, a banking corporation organized under the laws of the State of
New York with trust powers, has an office at 2 Hanson Place, 12th Floor, Brooklyn, New
York 11217. The Bank of New York Mellon is subject to supervision by the New York State Banking
Department and the Board of Governors of the Federal Reserve System. Information regarding the net
asset value of each Fund, creation and redemption transaction fees and the names of the parties
that have executed a Participant Agreement may be obtained from The Bank of New York Mellon by
calling the following number: (718) 315 4412. A copy of the Administration Agreement is available
for inspection at The Bank of New Yorks trust office identified above.
The Administrator retains certain financial books and records, including: Basket creation and
redemption books and records, Fund accounting records, ledgers with respect to assets, liabilities,
capital, income and expenses, the registrar, transfer journals and related details and trading and
related documents received from futures commission merchants, c/o The Bank of New York Mellon, 2
Hanson Place, 12th Floor, Brooklyn, New York 11217, telephone number (718) 315 4850.
A summary of the material terms of the Administration Agreement is disclosed in the Material
Contracts section.
The Administrators monthly fees of up to [___]% per annum will be paid on behalf of each Fund
by the Managing Owner out of each Funds Management Fee.
The Administrator and any of its affiliates may from time to time purchase or sell Shares for
their own account, as agent for their customers and for accounts over which they exercise
investment discretion.
The Administrator and any successor administrator must be a participant in DTC or such other
securities depository as shall then be acting.
The Administrator will receive a transaction processing fee in connection with orders from
Authorized Participants to create or redeem Baskets in the amount of $500 per order. These
transaction processing fees are paid by the Authorized Participants and not by any Fund.
Each Fund retains the services of one or more additional service providers to assist with
certain tax reporting requirements of each Fund and the Shareholders of each Fund.
THE DISTRIBUTOR
Superfund USA, Inc., in its capacity as the distributor of each Fund, or Distributor, will
assist the Administrator with certain functions and duties relating to distribution and marketing
of each Fund, which include the following: consultation with the marketing staff of the Managing
Owner and its affiliates with respect to FINRA compliance in connection with marketing efforts;
review and filing of marketing materials with FINRA; and consultation with the Managing Owner and
its affiliates in connection with marketing and sales strategies. Investors may contact the
Distributor toll-free in the U.S. at 1-888-50-SUPER.
The Distributor retains all marketing materials separately for each Fund at 489 Fifth Avenue,
New York, New York 10017; telephone number (212) 878-4530.
The Managing Owner, out of the relevant Management Fee, will pay the Distributor for
performing its duties as the Distributor of each Fund. The Distributor may receive additional
compensation in consideration of the performance of additional marketing, distribution and ongoing
support services to each Fund. Such additional services may include,
among other services, the development and implementation of a marketing plan and the
utilization of certain resources, which may include an extensive broker database and a network of
internal and external wholesalers.
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888 Number for Investors
Investors may contact the Managing Owner toll free in the U.S. at 1-888-50-SUPER.
THE MARKETER
Superfund USA, Inc., in its capacity as the marketer of each Fund, or Marketer, will serve as
a marketing agent on behalf of each Fund and will assist the Administrator with certain functions
and duties such as providing various educational and marketing activities regarding each Fund,
primarily in the secondary trading market, which activities include, but are not limited to,
communicating each Funds name, characteristics, uses, benefits, and risks, consistent with this
Prospectus. The Marketer will not open or maintain customer accounts or handle orders for each
Fund. The Marketer engages in public seminars, road shows, conferences, media interviews, and
distributing sales literature and other communications (including electronic media) regarding each
Fund.
The Managing Owner, out of the relevant Management Fee, will pay the Marketer for performing
its duties as the Marketer of each Fund.
THE SECURITIES DEPOSITORY; BOOK-
ENTRY-ONLY SYSTEM; GLOBAL SECURITY
ENTRY-ONLY SYSTEM; GLOBAL SECURITY
DTC acts as securities depository for the Shares. 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 Exchange Act. DTC was created
to hold securities of DTC Participants and to facilitate the clearance and settlement of
transactions in such securities among the DTC Participants through electronic book-entry changes.
This eliminates the need for physical movement of securities certificates. DTC Participants
include securities brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations, some of whom (and/or their representatives) own DTC. Access to the DTC system
is also 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. DTC has
agreed to administer its book-entry system in accordance with its rules and by-laws and the
requirements of law.
Individual certificates will not be issued for the Shares. Instead, global certificates are
signed by the Managing Owner on behalf of each Fund, registered in the name of Cede & Co., as
nominee for DTC, and deposited with DTC. The global certificates evidence all of the Shares of
each Fund outstanding at any time. The representations, undertakings and agreements made on the
part of each Fund in the global certificates are made and intended for the purpose of binding only
the applicable Fund and not the Trustee or the Managing Owner individually.
Upon the settlement date of any creation, transfer or redemption of Shares, DTC credits or
debits, on its book-entry registration and transfer system, the amount of the Shares so created,
transferred or redeemed to the accounts of the appropriate DTC Participants. The Managing Owner
and the Authorized Participants designate the accounts to be credited and charged in the case of
creation or redemption of Shares.
Beneficial ownership of the Shares is limited to DTC Participants, Indirect Participants and
persons holding interests through DTC Participants and Indirect Participants. Owners of beneficial
interests in the Shares is shown on, and the transfer of ownership is effected only through,
records maintained by DTC (with respect to DTC Participants), the records of DTC Participants (with
respect to Indirect Participants), and the records of Indirect Participants (with respect to
Shareholders that are not DTC Participants or Indirect Participants). Shareholders are expected to
receive from or through the DTC Participant maintaining the account through which the Shareholder
has purchased their Shares a written confirmation relating to such purchase.
Shareholders that are not DTC Participants may transfer the Shares through DTC by instructing
the DTC Participant or Indirect Participant through which the Shareholders hold their Shares to
transfer the Shares. Shareholders that are DTC Participants may transfer the Shares by instructing
DTC in accordance with the rules of DTC. Transfers are made in accordance with standard securities
industry practice.
DTC may decide to discontinue providing its service with respect to Baskets and/or the Shares
of each Fund by giving notice to the Managing Owner. Under such circumstances, the Managing Owner
will either find a replacement for DTC to perform its functions at a comparable cost or, if a
replacement is unavailable, terminate such Fund.
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The rights of the Shareholders generally must be exercised by DTC Participants acting on their
behalf in accordance with the rules and procedures of DTC. Because the Shares can only be held in
book-entry form through DTC and DTC Participants, investors must rely on DTC, DTC Participants and
any other financial intermediary through which they hold the Shares to receive the benefits and
exercise the rights described in this section. Investors should consult with their broker or
financial institution to find out about procedures and requirements for securities held in
book-entry form through DTC.
SHARE SPLITS
If the Managing Owner believes that the per Share price of a Fund in the secondary market has
fallen outside a desirable trading price range, the Managing Owner may declare a split or reverse
split in the number of Shares outstanding and to make a corresponding change in the number of
Shares of such Fund constituting a Basket.
MATERIAL CONTRACTS
Introducing Broker Agreement
[TBD.]
Commodity Broker Agreements
[TBD.]
Administration Agreement
[TBD.]
Global Custody Agreement
[TBD.]
Transfer Agency and Service Agreement
[TBD.]
Distribution Services Agreement
[TBD].
Marketing Agreement
[TBD].
MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS
CONSIDERATIONS
The following discussion describes the material U.S. federal (and certain state and local)
income tax considerations associated with the purchase, ownership and disposition of Shares as of
the date hereof by U.S. Shareholders (as defined below) and non-U.S. Shareholders (as defined
below). Except where noted, this discussion deals only with Shares held as capital assets by
Shareholders who acquired Shares by purchase and does not address special situations, such as those
of:
| dealers in securities, commodities or currencies; |
|
| financial institutions; |
|
| regulated investment companies (RICs), other than the status of the Funds as qualified
publicly traded partnerships (qualified PTPs) within the meaning of the Code; |
|
| real estate investment trusts; |
|
| tax-exempt organizations; |
|
| insurance companies; |
|
| persons holding Shares as a part of a hedging, integrated or conversion transaction or a
straddle; |
|
| traders in securities or commodities that elect to use a mark-to-market method of
accounting for their securities or commodities holdings; or |
|
| persons liable for alternative minimum tax. |
Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the Code), the Treasury Regulations promulgated thereunder (the
Regulations), and administrative and judicial interpretations thereof, all as of the date hereof,
and such authorities may be repealed, revoked, modified or subject to differing interpretations,
possibly on a retroactive basis, so as to result in U.S. federal income tax consequences different
from those described below.
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A U.S. Shareholder of Shares means a beneficial owner of Shares that is for U.S. federal
income tax purposes:
| an individual citizen or resident of the United States; |
|
| a corporation (or other entity taxable as a corporation) created or organized in or under
the laws of the United States or any state thereof or the District of Columbia; |
|
| an estate the income of which is subject to U.S. federal income taxation regardless of its
source; or |
|
| a trust if it (1) is subject to the primary supervision of a court within the United States
and one or more U.S. persons have the authority to control all substantial decisions of such
trust or (2) has a valid election in effect under applicable Regulations to be treated as a
U.S. person. |
A non-U.S. Shareholder means a beneficial owner of Shares that is not a U.S. Shareholder.
If a partnership or other entity or arrangement treated as a partnership for U.S. federal
income tax purposes holds Shares, the tax treatment of a partner in such partnership will generally
depend upon the status of the partner and the activities of the partnership. If you are a partner
in a partnership holding Shares, we urge you to consult your own tax adviser.
No statutory, administrative or judicial authority directly addresses the treatment of Shares
or instruments similar to Shares for U.S. federal income tax purposes. As a result, we cannot
assure you that the United States Internal Revenue Service (the IRS), or the courts will agree
with the tax consequences described herein. A different treatment from that described below could
adversely affect the amount, timing and character of income, gain, loss or deduction in respect of
an investment in the Shares. If you are considering the purchase of Shares, we urge you to consult
your own tax adviser concerning the particular U.S. federal income tax consequences to you of the
purchase, ownership and disposition of Shares, as well as any consequences to you arising under the
laws of any other taxing jurisdiction.
Status of the Funds
Under current law and assuming full compliance with the terms of the Trust Agreements and
applicable law (and other relevant documents), in the opinion of Sidley Austin llp, each
of the Funds will be classified as a partnership for U.S. federal income tax purposes.
Accordingly, subject to the discussion below regarding publicly traded partnerships, none of the
Funds will be a taxable entity for U.S. federal income tax purposes and none of the Funds will
incur U.S. federal income tax liability.
Special Rules for Publicly Traded Partnerships
A partnership is not a taxable entity and incurs no U.S. federal income tax liability.
Section 7704 of the Code provides that publicly traded partnerships will, as a general rule, be
taxed as corporations. However, an exception exists with respect to publicly traded partnerships
of which 90% or more of the gross income during each taxable year consists of qualifying income
within the meaning of Section 7704(d) of the Code (the qualifying income exception). Qualifying
income includes dividends, interest, capital gains from the sale or other disposition of stocks and
debt instruments and, in the case of a partnership (such as each Fund) a principal activity of
which is the buying and selling of commodities or futures contracts with respect to commodities,
income and gains derived from commodities or futures contracts with respect to commodities. Each
Fund anticipates that at least 90% of its gross income for each taxable year will constitute
qualifying income within the meaning of Section 7704(d) of the Code.
There can be no assurance that the IRS will not assert that a Fund should be treated as a
publicly traded partnership taxable as a corporation. No ruling has been or will be sought from
the IRS, and the IRS has made no determination as to the status of any Fund for U.S. federal income
tax purposes or whether any Funds operations generate qualifying income under Section 7704(d) of
the Code. Whether a Fund will continue to meet the qualifying income exception is a matter that
will be determined
by such Funds operations and the facts existing at the time of future determinations.
However, each Funds Managing Owner will use its reasonable efforts to cause each Fund to operate
in such manner as is necessary for such Fund to meet the qualifying income exception.
If a Fund were taxable as a corporation in any taxable year, either as a result of a failure
to meet the
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qualifying income exception described above or otherwise, such Funds items of income,
gain, loss and deduction would be reflected only on its tax return rather than being passed through
to the Shareholders in such Fund, and the Funds net income would be taxed to it at the income tax
rates applicable to domestic corporations. In addition, if a Fund were taxable as a corporation,
any distribution made by such Fund to a Shareholder would be treated as taxable dividend income, to
the extent of such Funds current or accumulated earnings and profits, or, in the absence of
current and accumulated earnings and profits, as a nontaxable return of capital to the extent of
the Shareholders tax basis in its Shares of such Fund, or as taxable capital gain, after the
Shareholders tax basis in its Shares is reduced to zero. Taxation of a Fund as a corporation
could result in a material reduction in a Shareholders cash flow and after-tax return and thus
could result in a substantial reduction of the value of the Shares in such Fund.
The
discussion below is based on Sidley Austin llps opinion that each of the Funds
will be classified as a partnership for U.S. federal income tax purposes that is not subject to
corporate income tax for U.S. federal income tax purposes.
U.S. Shareholders
Treatment of Fund Income
A partnership does not incur U.S. federal income tax liability. Instead, each partner of a
partnership is required to take into account its share of items of income, gain, loss, deduction
and other items of the partnership. Accordingly, each Shareholder in a Fund will be required to
include in income its allocable share of such Funds income, gain, loss, deduction and other items
for the Funds taxable year ending with or within its taxable year. In computing a partners U.S.
federal income tax liability, such items must be included, regardless of whether cash distributions
are made by the partnership. Thus, Shareholders in a Fund may be required to take into account
taxable income without a corresponding current receipt of cash if such Fund generates taxable
income but does not make cash distributions in an amount equal to such taxable income, or if the
Shareholder is not able to deduct, in whole or in part, such Shareholders allocable share of the
Funds expenses or capital losses. Each Funds taxable year will end on December 31 unless
otherwise required by law. Each Fund will use the accrual method of accounting.
Shareholders in a Fund will take into account their share of ordinary income realized by such
Fund from accruals of interest on U.S. Treasury securities held in the Funds portfolio. Each Fund
may hold U.S. Treasury securities or other debt instruments with acquisition discount or
original issue discount, in which case Shareholders in such Fund would be required to include
accrued amounts in taxable income on a current basis even though receipt of those amounts may occur
in a subsequent year. Each Fund may also acquire debt instruments with market discount. Upon
disposition of such obligations, gain would generally be required to be treated as interest income
to the extent of the market discount and Shareholders in a Fund would be required to include as
ordinary income their share of such market discount that accrued during the period the obligations
were held by the Fund.
It is expected that the Funds investments in exchange-traded futures contracts on the Gold
Investment and the Index Investments will be Section 1256 Contracts. The Code generally applies a
mark-to-market system of taxing unrealized gains and losses on, and otherwise provides for
special rules of taxation with respect to futures and other contracts that are Section 1256
Contracts. A Section 1256 Contract includes certain regulated futures contracts. Section 1256
Contracts held by a Fund at the end of a taxable year of such Fund will be treated for U.S. federal
income tax purposes as if they were sold by the Fund at their fair market value on the last
business day of the taxable year. The net gain or loss, if any, resulting from these deemed sales
(known as marking-to-market), together with any gain or loss resulting from any actual sales of
Section 1256 Contracts (or other termination of a Funds obligations under such contracts), must be
taken into account by the Fund in computing its taxable income for the year. If a Section 1256
Contract held by a Fund at the end of a taxable year is sold in the following year, the amount of
any gain or loss realized on the sale will be adjusted to reflect the gain or loss previously taken
into account under the mark-to-market rules.
Capital gains and losses from Section 1256 Contracts generally are characterized as short-term
capital gains or losses to the extent of 40% of the gains or losses and as long-term capital gains
or losses to the extent of 60% of the gains or losses. Thus, Shareholders in a Fund will generally
take into account their pro rata share of the long-term capital gains and losses and short-term
capital gains and losses from Section 1256 Contracts held by such Fund and taken into account by
the Fund in
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computing its taxable income. If a non-corporate taxpayer incurs a net capital loss
for a year, the portion of the loss, if any, which consists of a net loss on Section 1256 Contracts
may, at the election of the taxpayer, be carried back three years. A loss carried back to a year
by a non-corporate taxpayer may be deducted only to the extent (1) the loss does not exceed the net
gain on Section 1256 Contracts for the year and (2) the allowance of the carryback does not
increase or produce a net operating loss for the year.
A Fund may also invest in other futures contracts, forwards or swaps, as described above under
Investment Objectives of the Funds. A Funds investment in these other futures contracts,
forwards or swaps may have various tax consequences, requiring Shareholders in such Fund to
recognize ordinary income or loss or capital gain or loss. In addition, the proper tax treatment
of certain investments may not be entirely free from doubt. Potential investors should consult
their tax advisors regarding an investment in the Funds.
Allocation of the Funds Profits and Losses
For U.S. federal income tax purposes, a Shareholders distributive share of a Funds income,
gain, loss, deduction and other items will be determined by the Trust Agreements, unless an
allocation under the Trust Agreements does not have substantial economic effect, in which case
the allocations will be determined in accordance with the partners interests in the partnership.
Subject to the discussion below under Monthly Allocation and Revaluation Conventions and
Section 754 Election, the allocations pursuant to the Trust Agreements should be considered to
have substantial economic effect or deemed to be made in accordance with the partners interests in
the partnership.
If the allocations provided by the Trust Agreement were successfully challenged by the IRS,
the amount of income or loss allocated to Shareholders in a Fund for U.S. federal income tax
purposes under such Funds Trust Agreement could be increased or reduced or the character of the
income or loss could be modified.
As described in more detail below, the U.S federal income tax rules that apply to partnerships
are complex and their application is not always clear. Additionally, the rules generally were not
written for, and in some respects are difficult to apply to, publicly traded partnerships. Each
Fund will apply certain assumptions
and conventions intended to comply with the intent of the rules and to report income, gain, deduction, loss and credit to Shareholders in such Fund in a manner
that reflects the economic gains and losses, but these assumptions and conventions may not comply
with all aspects of the applicable Regulations. It is possible therefore that the IRS will
successfully assert that assumptions made and/or conventions used do not satisfy the technical
requirements of the Code or the Regulations and will require that tax items be adjusted or
reallocated in a manner that could adversely impact Shareholders in a Fund.
Monthly Allocation and Revaluation Conventions
In general, each Funds taxable income and losses will be determined monthly and will be
apportioned among the Shareholders in such Fund in proportion to the number of Shares owned by each
of them as of the close of the last trading day of the preceding month. By investing in Shares, a
U.S. Shareholder agrees that, in the absence of an administrative determination or judicial ruling
to the contrary, it will report income and loss under the monthly allocation and revaluation
conventions described below.
Under the monthly allocation convention, whomever is treated for U.S. federal income tax
purposes as holding Shares as of the close of the last trading day of the preceding month will be
treated as continuing to hold the Shares until immediately before the close of the last trading day
of the following month. As a result, a Shareholder who has disposed of Shares prior to the close of
the last trading day of a month may be allocated income, gain, loss and deduction realized after
the date of transfer.
The Code generally requires that items of partnership income and deductions be allocated
between transferors and transferees of partnership interests on a daily basis. It is possible that
transfers of Shares could be considered to occur for U.S. federal income tax purposes when the
transfer is completed without regard to a Funds monthly
convention for allocating income and deductions. If this were to occur, a Funds allocation
method might be deemed to violate that requirement.
In addition, for any month in which a creation or redemption of Shares in a Fund takes place,
such Fund generally will credit or debit, respectively, the book capital accounts of the existing
Shareholders in such Fund with any unrealized gain or loss in the Funds assets. This will result
in the allocation of items of the Funds income, gain, loss, deduction and
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credit to existing
Shareholders in the Fund to account for the difference between the tax basis and fair market value
of property owned by the Fund at the time new Shares are issued or old Shares are redeemed
(reverse section 704(c) allocations). The intended effect of these allocations is to allocate
any built-in gain or loss in a Funds assets at the time of a creation or redemption of Shares to
the investors that economically have earned such gain or loss.
As with the other allocations described above, each Fund generally will use a monthly
convention for purposes of the reverse section 704(c) allocations. More specifically, each Fund
generally will credit or debit, respectively, the book capital accounts of the existing
Shareholders with any unrealized gain or loss in the Funds assets based on a calculation utilizing
the average price of the corresponding Funds Shares during the month in which the creation or
redemption transaction takes place, rather than the fair market value of its assets at the time of
such creation or redemption (the revaluation convention). As a result, it is possible that, for
U.S. federal income tax purposes, (i) a purchaser of newly issued Shares will be allocated some or
all of the unrealized gain in the Funds assets at the time it acquires the Shares or (ii) an
existing Shareholder will not be allocated its entire share in the unrealized loss in the Funds
assets at the time of such acquisition. Furthermore, the applicable Regulations generally require
that the book capital accounts be adjusted based on the fair market value of partnership property
on the date of adjustment and do not explicitly allow the adoption of a monthly revaluation
convention.
The Code and applicable Regulations generally require that items of partnership income and
deductions be allocated between transferors and transferees of partnership interests on a daily
basis, and that adjustments to book capital accounts be made based on the fair market value of
partnership property on the date of adjustment. The Code and Regulations do not contemplate monthly
allocation or revaluation conventions. If the IRS does not accept a Funds monthly allocation or
revaluation convention, the IRS may contend that taxable income or losses of such Fund must be
reallocated among the Shareholders in the Fund. If such a contention were sustained, the
Shareholders respective tax liabilities would be adjusted to the possible detriment of certain
Shareholders in the Fund. The Managing Owner of each Fund is authorized to revise the Funds
allocation and revaluation methods in order to comply with applicable law or to allocate items of
partnership income and deductions in a manner that
reflects more accurately the Shareholders
interests in the Fund.
Section 754 Election
Each Fund intends to make the election permitted by Section 754 of the Code. Such an
election, once made, is irrevocable without the consent of the IRS. The making of such election by
a Fund will generally have the effect of requiring a purchaser of Shares in such Fund to adjust its
proportionate share of the basis in the Funds assets, or the inside basis, pursuant to Section
743(b) of the Code to fair market value (as reflected in the purchase price for the purchasers
Shares), as if it had acquired a direct interest in the Funds assets. The Section 743(b)
adjustment is attributed solely to a purchaser of Shares and is not added to the bases of the
Funds assets associated with all of the other Shareholders in such Fund. Depending on the
relationship between a Shareholders purchase price for Shares and its unadjusted share of the
Funds inside basis at the time of the purchase, the Section 754 election may be either
advantageous or disadvantageous to the Shareholder as compared to the amount of gain or loss a
Shareholder would be allocated absent the Section 754 election.
The calculations under Section 754 of the Code are complex, and there is little legal
authority concerning the mechanics of the calculations, particularly in the context of publicly
traded partnerships. Therefore, assuming a Fund makes the election under Section 754 of the Code,
it is expected that such Fund will apply certain conventions in determining and allocating the
Section 743 basis adjustments to help reduce the complexity of those calculations and the resulting
administrative costs. It is possible that the IRS will successfully assert that some or all of
such conventions utilized by a Fund do not satisfy the technical requirements of the Code or the
Regulations and, thus, will require different basis adjustments to be made.
In order to make the basis adjustments permitted by Section 754, each Fund will be required to
obtain information regarding each Shareholders secondary market transactions in Shares as well as
creations and redemptions of Shares. Each Fund will seek such information from the record
Shareholders, and, by purchasing Shares, each beneficial owner of Shares will be deemed to have
consented to the provision of such information by the record owner of such beneficial owners
Shares. Notwithstanding the foregoing, however, there can be no guarantee that any Fund will be
able to obtain such information
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from record owners or other sources, or that the basis adjustments
that any Fund makes based on the information it is able to obtain will be effective in eliminating
disparity between a Shareholders outside basis in its Shares.
Constructive Termination
A Fund will experience a constructive termination for tax purposes if there is a sale or
exchange of 50 percent or more of the total Shares in such Fund within a 12-month period. A
constructive termination results in the closing of a Funds taxable year for all Shareholders in
such Fund. In the case of a Shareholder reporting on a taxable year other than the taxable year
used by a Fund (which is a fiscal year ending December 31), the early closing of the Funds taxable
year may result in more than 12 months of its taxable income or loss being includable in such
Shareholders taxable income for the year of termination. A Fund would be required to make new tax
elections after a termination, including a new election under Section 754. A termination could also
result in penalties if a Fund were unable to determine that the termination had occurred.
Treatment of Distributions
Distributions of cash by a partnership are generally not taxable to the distributee to the
extent the amount of cash does not exceed the distributees tax basis in its partnership interest.
Thus, any cash distributions made by a Fund will be taxable to a Shareholder in such Fund only to
the extent such distributions exceed the Shareholders tax basis in the Shares it is treated as
owning (see Tax Basis in Fund Shares below). Any cash distributions in excess of a
Shareholders tax basis generally will be considered to be gain from the sale or exchange of the
Shares (see Disposition of Shares below).
Creation and Redemption of Share Baskets
Shareholders, other than Authorized Participants (or holders for which an Authorized
Participant is acting), generally will not recognize gain or loss as a result of an Authorized
Participants creation or redemption of a Basket. If a Fund disposes of assets in connection with
the redemption of a Basket, however, the disposition may give rise to gain or loss that will be
allocated in part to Shareholders in such Fund. An Authorized Participants creation or redemption
of a Basket also may affect a Shareholders share of a Funds tax basis in its assets, which could
affect the amount of gain or loss allocated to such
Shareholder on the sale or disposition of
portfolio assets by such Fund.
Disposition of Shares
If a U.S. Shareholder transfers Shares of a Fund and such transfer is a sale or other taxable
disposition, the U.S. Shareholder will generally be required to recognize gain or loss measured by
the difference between the amount realized on the sale and the U.S. Shareholders adjusted tax
basis in the Shares sold. The amount realized will include an amount equal to the U.S.
Shareholders share of such Funds liabilities, as well as any proceeds from the sale. The gain or
loss recognized will generally be taxable as capital gain or loss. Capital gain of non-corporate
U.S. Shareholders is eligible to be taxed at reduced rates where the Shares sold are considered
held for more than one year. Capital gain of corporate U.S. Shareholders is taxed at the same rate
as ordinary income. Any capital loss recognized by a U.S. Shareholder on a sale of Shares will
generally be deductible only against capital gains, except that a non-corporate U.S. Shareholder
may also offset up to $3,000 per year of ordinary income with capital losses.
Tax Basis in Fund Shares
A U.S. Shareholders initial tax basis in its Shares will equal the sum of (a) the amount of
cash paid by such U.S. Shareholder for its Shares and (b) such U.S. Shareholders share of the
Funds liabilities. A U.S. Shareholders tax basis in its Shares will be increased by (a) the U.S.
Shareholders share of the Funds taxable income, including capital gain, (b) the U.S.
Shareholders share of the Funds income, if any, that is exempt from tax and (c) any increase in
the U.S. Shareholders share of the Funds liabilities. A U.S. Shareholders tax basis in its
Shares will be decreased (but not below zero) by (a) the amount of any cash distributed (or deemed
distributed) to the U.S. Shareholder, (b) the U.S. Shareholders share of the Funds losses and
deductions, (c) the U.S.
Shareholders share of the Funds expenditures that are neither deductible nor properly
chargeable to its capital account and (d) any decrease in the U.S. Shareholders share of the
Funds liabilities.
Limitations on Interest Deductions
The deductibility of a non-corporate U.S. Shareholders investment interest expense is
generally limited to the amount of such Shareholders net investment income. Investment interest
expense would generally include interest expense
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incurred by a Fund, if any, and investment
interest expense incurred by the U.S. Shareholder on any margin account borrowing or other loan
incurred to purchase or carry Shares. Net investment income includes gross income from property
held for investment and amounts treated as portfolio income, such as dividends and interest, under
the passive loss rules, less deductible expenses, other than interest, directly connected with the
production of investment income. For this purpose, any long-term capital gain or qualifying
dividend income that is taxable at long-term capital gains rates is excluded from net investment
income unless the U.S. Shareholder elects to pay tax on such capital gain or dividend income at
ordinary income rates.
Organization, Syndication and Other Expenses
In general, expenses incurred that are considered miscellaneous itemized deductions may be
deducted by a U.S. Shareholder that is an individual, estate or trust only to the extent that they
exceed 2% of the adjusted gross income of such U.S. Shareholder. The Code imposes additional
limitations (which limitations are currently being phased out through 2010) on the amount of
certain itemized deductions allowable to individuals, by reducing the otherwise allowable portion
of such deductions by an amount equal to the lesser of:
| 3% of the individuals adjusted gross income in excess of certain threshold amounts; or |
|
| 80% of the amount of certain itemized deductions otherwise allowable for the taxable year. |
In addition, these expenses are also not deductible in determining the alternative minimum tax
liability of a U.S. Shareholder. Each Fund will report such expenses on a pro rata basis to the
Shareholders, and each U.S. Shareholder will determine separately to what extent they are
deductible on such U.S. Shareholders tax return. A U.S. Shareholders inability to deduct all or
a portion of such expenses could result in an amount of taxable income to such U.S. Shareholder
with respect to a Fund that exceeds the amount of cash actually distributed to such U.S.
Shareholder for the year. It is anticipated that management fees each Fund will pay will
constitute miscellaneous itemized deductions.
Under Section 709(b) of the Code, amounts paid or incurred to organize a partnership may, at
the election of the partnership, be treated as deferred expenses, which are allowed as a deduction
ratably over a period of 180 months. No Fund has yet determined whether it will make such an
election. A non-corporate U.S. Shareholders allocable share of such organizational expenses would
constitute miscellaneous itemized deductions. Expenditures in connection with the issuance and
marketing of Shares (so called syndication fees) are not eligible for the 180-month amortization
provision and are not deductible.
Passive Activity Income and Loss
Individuals are subject to certain passive activity loss rules under Section 469 of the
Code. Under these rules, losses from a passive activity generally may not be used to offset income
derived from any source other than passive activities. Losses that cannot be currently used under
this rule may generally be carried forward. Upon an individuals disposition of an interest in the
passive activity, the individuals unused passive losses may generally be used to offset other
(i.e., non-passive) income. Under current Regulations, income or loss from a Funds investments
generally will not constitute income or losses from a passive activity. Therefore, income or loss
realized by Shareholders in a Fund will not be available to offset a U.S. Shareholders passive
losses or passive income from other sources.
Transferor/Transferee Allocations
In general, a Funds taxable income and losses will be determined monthly and will be
apportioned among the Funds Shareholders in proportion to the number of Shares owned by each of
them as of the close of the last trading day of the preceding month. With respect to any Shares
that were not treated as outstanding as of the close of the last trading day of the preceding
month, the first person that is treated as holding such Shares (other than an underwriter or other
person holding in a similar capacity) for U.S. federal income tax purposes will be treated as
holding such Shares for this purpose as of the close
of the last trading day of the preceding month. As a result, a Shareholder transferring its
Shares may be allocated income, gain, loss and deduction realized after the date of transfer.
Section 706 of the Code generally requires that items of partnership income and deductions be
allocated between transferors and transferees of partnership interests on a daily basis. It is
possible that transfers of Shares could be considered to occur for U.S. federal income tax purposes
when the transfer is completed without regard to a Funds
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convention for allocating income and
deductions. In that event, a Funds allocation method might be considered a monthly convention
that does not literally comply with that requirement.
If the IRS treats transfers of Shares as occurring throughout each month and a monthly
convention is not allowed by the Regulations (or only applies to transfers of less than all of a
Shareholders Shares) or if the IRS otherwise does not accept a Funds convention, the IRS may
contend that taxable income or losses of the Fund must be reallocated among the Shareholders in
such Fund. If such a contention were sustained, the Shareholders respective tax liabilities would
be adjusted to the possible detriment of certain Shareholders. Each Funds Managing Owner is
authorized to revise such Funds methods of allocation between transferors and transferees (as well
as among Shareholders whose interests otherwise vary during a taxable period).
Reporting by each Fund to its Shareholders
Each Fund will file a partnership tax return. Accordingly, tax information will be provided
to investors on Schedule K-1 for each calendar year as soon as practicable after the end of such
taxable year but in no event later than March 15. Each Schedule K-1 provided to a Shareholder will
set forth the Shareholders share of the Funds tax items (i.e., interest income from U.S. Treasury
securities, short-term and long-term capital gain or loss with respect to the futures contracts,
and investment expenses for such year) in a manner sufficient for a U.S. Shareholder to complete
its tax return with respect to its investment in the Shares.
Each Shareholder, by its acquisition of Shares of a Fund, will be deemed to agree to allow
brokers and nominees to provide to the Fund its name and address and such other information and
forms as may be reasonably requested by the Fund for purposes of complying with its tax reporting
and withholding obligations (and to waive any confidentiality rights with respect to such
information and forms for such purpose) and to provide such information or forms upon request.
Given the lack of authority addressing structures similar to that of the Funds, it is not
certain that the IRS will agree with the manner in which tax reporting by the Funds will be
undertaken. Therefore, Shareholders should be aware that future IRS interpretations or revisions
to Regulations could alter the manner in which tax reporting by the Funds and any nominee will be
undertaken.
Audits and Adjustments to Tax Liability
Any challenge by the IRS to the tax treatment by a partnership of any item must be conducted
at the partnership, rather than at the partner, level. A partnership ordinarily designates a tax
matters partner (as defined under Section 6231 of the Code) as the person to receive notices and
to act on its behalf in the conduct of such a challenge or audit by the IRS.
Pursuant to the governing documents, the Managing Owner will be appointed the tax matters
partner of each Fund for all purposes of the Code. The tax matters partner, which is required by
the Trust Agreements to notify all U.S. Shareholders of any U.S. federal income tax audit of any
Fund, will have the authority under the Trust Agreements to conduct any IRS audits of each Funds
tax returns or other tax related administrative or judicial proceedings and to settle or further
contest any issues in such proceedings. The decision in any proceeding initiated by the tax
matters partner will be binding on all U.S. Shareholders in such Fund. As the tax matters partner,
the Managing Owner will have the right on behalf of all Shareholders to extend the statute of
limitations relating to the Shareholders U.S. federal income tax liabilities with respect to Fund
items.
A U.S. federal income tax audit of a Funds partnership tax return may result in an audit of
the returns of the U.S. Shareholders, which, in turn, could result in adjustments of items of a
Shareholder that are unrelated to the Fund as well as to the Funds related items. In particular,
there can be no assurance that the IRS, upon an audit of a partnership tax return of a Fund or of
an income tax return of a U.S. Shareholder, might not take a position that differs from the
treatment thereof by the Fund. A U.S. Shareholder would be liable for interest on any deficiencies
that resulted from any adjustments. Prospective U.S. Shareholders should also recognize
that they might be forced to incur substantial legal and accounting costs in resisting any
challenge by the IRS to items in their individual returns, even if the challenge by the IRS should
prove unsuccessful.
Non-U.S. Shareholders
Each Fund will conduct its activities in such a manner that a non-U.S. Shareholder who is not
otherwise carrying on a trade or business in the United States will not be considered to be engaged
in a trade or business in the United States as a result of an investment in the Shares of a Fund.
A non-U.S.
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Shareholders share of the interest income realized by a Fund on its holdings of U.S.
Treasury securities will be exempt from U.S. withholding tax provided the non-U.S. Shareholder
certifies on IRS Form W-8BEN (or other applicable form) that such Shareholder is not a U.S. person,
provides name and address information and otherwise satisfies applicable documentation
requirements.
Non-U.S. Shareholders will not be subject to U.S. federal income tax on gains realized on the
sale of Shares of a Fund or on such Shareholders share of the Funds gains. However, in the case
of an individual non-U.S. Shareholder, such Shareholder will be subject to U.S. federal income tax
on gains on the sale of Shares or such Shareholders distributive share of gains if such
Shareholder is present in the United States for 183 days or more during a taxable year and certain
other conditions are met.
Non-U.S. Shareholders that are individuals will be subject to U.S. federal estate tax on the
value of U.S. situs property owned at the time of their death (unless a statutory exemption or tax
treaty exemption applies). It is unclear whether partnership interests (such as the Shares of a
Fund) will be considered U.S. situs property. Accordingly, non-U.S. Shareholders may be subject to
U.S. federal estate tax on all or part of the value of the Shares owned at the time of their death.
Non-U.S. Shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in the Shares of a Fund.
Regulated Investment Companies
RICs may invest up to 25% of their assets in qualified PTPs and net income derived from such
investments is qualifying income under the income source test applicable to entities seeking to
qualify for the special tax treatment available to RICs under the Code. In addition, interests in
a qualified PTP are treated as issued by such PTP and a RIC is not required to look through to the
underlying partnership assets when testing compliance with the asset diversification tests
applicable to RICs under the Code. Each Fund anticipates that it will qualify as a qualified PTP
for any taxable year in which such Fund realizes sufficient gross income from its commodities
futures transactions. However, qualification of a Fund as a qualified PTP depends on performance
of the Fund for the particular tax year and there is no assurance that it will qualify in a given
year or that future results
of any Index will conform to prior experience. Additionally, there is,
to date, no regulatory guidance on the application of these rules, and it is possible that future
guidance may adversely affect qualification of a Fund as a qualified PTP. In a 2005 revenue
ruling, the IRS clarified that derivative contracts owned by a RIC that provide for a total-return
exposure on a commodity index will not produce qualifying income for purposes of the RIC
qualification rules. The IRS interpretation set forth in such ruling, however, does not adversely
affect a Funds ability to be treated as a qualified PTP for purposes of applying the RIC
qualification rules. RIC investors are urged to monitor their investment in a Fund and consult
with a tax advisor concerning the impact of such an investment on their compliance with the income
source and asset diversification requirements applicable to RICs. Each Fund will make available on
the Managing Owners website periodic tax information designed to enable RIC investors in its
Shares to make a determination as to the Funds status under the qualified PTP rules.
Tax-Exempt Organizations
An organization that is otherwise exempt from U.S. federal income tax is nonetheless subject
to taxation with respect to its unrelated business taxable income (UBTI). Except as noted
below with respect to certain categories of exempt income, UBTI generally includes income or gain
derived (either directly or through a partnership) from a trade or business, the conduct of which
is substantially unrelated to the exercise or performance of the organizations exempt purpose or
function.
UBTI generally does not include passive investment income, such as dividends, interest and
capital gains, whether realized by the organization directly or indirectly through a partnership
(such as a Fund) in which it is a partner. This type of income is exempt, subject to the
discussion of unrelated debt-financed income below, even if it is realized from
securities trading activity that constitutes a trade or business.
UBTI includes not only trade or business income or gain as described above, but also
unrelated debt-financed income. This latter type of income generally consists of (1) income
derived by an exempt organization (directly or through a partnership) from income producing
property with respect to which there is acquisition indebtedness at any time during the taxable
year and (2) gains derived by an exempt organization (directly or through a partnership) from the
disposition of
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property with respect to which there is acquisition indebtedness at any time during
the twelve-month period ending with the date of the disposition.
All of the income realized by a Fund is expected to be short-term or long-term capital gain
income, interest income or other passive investment income of the type specifically exempt from
UBTI as discussed above. None of the Funds will borrow funds for the purpose of acquiring or
holding any investments or otherwise incur acquisition indebtedness with respect to such
investments. Therefore, a tax-exempt entity purchasing Shares of a Fund would not incur any UBTI by
reason of its investment in the Shares or upon sale of such Shares provided that such tax-exempt
entity does not borrow funds for the purpose of investing in the Shares.
Certain State and Local Taxation Matters
Prospective investors should consider, in addition to the U.S. federal income tax consequences
described, potential state and local tax considerations in investing in the Shares.
State and local laws often differ from U.S. federal income tax laws with respect to the
treatment of specific items of income, gain, loss, deduction and credit. A Shareholders
distributive share of the taxable income or loss of a Fund generally will be required to be
included in determining its reportable income for state and local tax purposes in the jurisdiction
in which the Shareholder is a resident. Each Fund may have income in one or more jurisdictions
that will subject a Shareholder to tax (and require a Shareholder to file an income tax return with
the jurisdiction in respect to the Shareholders share of the income derived from that business).
A prospective investor should consult its tax adviser with respect to the availability of a credit
for such tax in the jurisdiction in which the Shareholder is resident.
Under current law and assuming full compliance with the terms of the Trust Agreements (and
other relevant documents), none of the Funds should be subject to the New York City unincorporated
business tax because such tax is not imposed on an entity that is primarily engaged in the purchase
and sale of financial instruments and securities for its own account. By reason of a similar
own account exemption, it is also expected that a nonresident individual U.S. Shareholder should
not be subject to New York State personal income tax with respect to his
or her share of income or
gain recognized by any Fund. A nonresident individual U.S. Shareholder will not be subject to New
York City earnings tax on nonresidents with respect to his or her investment in any Fund. New York
State and New York City residents will be subject to New York State and New York City personal
income tax on their income recognized in respect of Shares. Because each Fund may conduct its
business, in part, in New York City, corporate U.S. Shareholders generally will be subject to the
New York franchise tax and the New York City general corporation tax by reason of their investment
in a Fund, unless certain exemptions apply. However, pursuant to applicable regulations, non-New
York corporate U.S. Shareholders not otherwise subject to New York State franchise tax or New York
City general corporation tax should not be subject to these taxes solely by reason of investing in
shares based on qualification of a Fund as a portfolio investment partnership under applicable
rules. No ruling from the New York State Department of Taxation and Finance or the New York City
Department of Finance has been, or will be, requested regarding such matters.
Backup Withholding
Each Fund is required in certain circumstances to backup withhold on certain payments paid to
non-corporate Shareholders who do not furnish the Fund with their correct taxpayer identification
number (in the case of individuals, their social security number) and certain certifications, or
who are otherwise subject to backup withholding. Backup withholding is not an additional tax. Any
amounts withheld from payments made to a Shareholder may be refunded or credited against such
Shareholders U.S. federal income tax liability, if any, provided that the required information is
furnished to the IRS in a timely manner.
Shareholders should be aware that certain aspects of the U.S. federal, state and local income
tax treatment regarding the purchase, ownership and
disposition of Shares are not clear under existing law. Thus, Shareholders are urged to
consult their own tax advisers to determine the tax consequences of ownership of the Shares in
their particular circumstances, including the application of U.S. federal, state, local and foreign
tax laws.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS BEFORE DECIDING WHETHER TO INVEST IN
THE SHARES.
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PURCHASES BY EMPLOYEE BENEFIT
PLANS
PLANS
Although there can be no assurance that an investment in a Fund, or any other managed futures
product, will achieve the investment objectives of an employee benefit plan in making such
investment, futures investments have certain features which may be of interest to such a plan. For
example, the futures markets are one of the few investment fields in which employee benefit plans
can participate in leveraged strategies without being required to pay tax on unrelated business
taxable income. See Federal Income Tax Considerations Tax-Exempt Organizations at page 68.
In addition, because they are not taxpaying entities, employee benefit plans are not subject to
paying annual tax on profits (if any) of a Fund.
General
The following section sets forth certain consequences under the Employee Retirement Income
Security Act of 1974, as amended (ERISA), and the Code, which a fiduciary of an employee benefit
plan as defined in, and subject to the fiduciary responsibility provisions of, ERISA or of a
plan as defined in and subject to Section 4975 of the Code who has investment discretion should
consider before deciding to invest the plans assets in a Fund (such employee benefit plans and
plans being referred to herein as Plans, and such fiduciaries with investment discretion being
referred to herein as Plan Fiduciaries). The following summary is not intended to be complete,
but only to address certain questions under ERISA and the Code which are likely to be raised by the
Plan Fiduciarys own counsel.
In general, the terms employee benefit plan as defined in ERISA and plan as defined in
Section 4975 of the Code together refer to any plan or account of various types which provide
retirement benefits or welfare benefits to an individual or to an employers employees and their
beneficiaries. Such plans and accounts include, but are not limited to, corporate pension and
profit-sharing plans, simplified employee pension plans, Keogh plans for self-employed
individuals (including partners), individual retirement accounts described in Section 408 of the
Code and medical benefit plans.
Each Plan Fiduciary must give appropriate consideration to the facts and circumstances that
are relevant to an investment in each Fund, including the role an investment in such Fund plays in
the Plans investment portfolio. Each Plan Fiduciary, before deciding to invest in a Fund, must be
satisfied that such investment in such Fund is a prudent investment for the Plan, that the
investments of the Plan, including the investment in a Fund, are diversified so as to minimize the
risk of large losses and that an investment in a Fund complies with the documents of the Plan and
related trust.
EACH PLAN FIDUCIARY CONSIDERING ACQUIRING SHARES MUST CONSULT WITH ITS OWN LEGAL AND TAX
ADVISERS BEFORE DOING SO. AN INVESTMENT IN ANY FUND IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. THE FUNDS ARE NOT INTENDED AS A COMPLETE INVESTMENT PROGRAM.
Plan Assets
ERISA and a regulation issued thereunder (the Plan Asset Rules) contain rules for
determining when an investment by a Plan in an entity will result in the underlying assets of such
entity being assets of the Plan for purposes of ERISA and Section 4975 of the Code (i.e., plan
assets). Those rules provide that assets of an entity will not be plan assets of a Plan which
purchases an interest therein if certain exceptions apply, including (i) an exception applicable if
the equity interest purchased is a publicly-offered security (the Publicly-Offered Security
Exception) and (ii) an exception applicable if the investment by all benefit plan investors is
not significant or certain other exceptions apply (the Insignificant Participation Exception).
The Publicly-Offered Security Exception applies if the equity interest is a security that is
(1) freely
transferable, (2) part of a class of securities that is widely held and (3) either (a) part
of a class of securities registered under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, or (b) sold to the Plan as part of a public offering pursuant to an effective registration
statement under the Securities Act of 1933 and the class of which such security is a part is
registered under the Securities Exchange Act of 1934 within 120 days (or such later time as may be
allowed by the SEC) after the end of the fiscal year of the issuer in which the offering of such
security occurred. The Plan Asset Rules state that the determination of whether a security is
freely
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transferable is to be made based on all relevant facts and circumstances. Under the Plan
Asset Rules, a class of securities is widely held only if it is of a class of securities owned by
100 or more investors independent of the issuer and of each other.
It is expected that the Shares of each Fund should be considered to be publicly-offered
securities. First, the Shares will be sold only as part of a public offering pursuant to an
effective registration statement under the Securities Act of 1933, and the Shares will be timely
registered under the Securities Exchange Act of 1934. Second, it appears that the Shares should be
freely transferable because it is expected that the Shares of each Fund may be freely bought and
sold on NYSE Arca like any other exchange-listed security. Third, it is expected that the Shares
of each Fund will be owned by at least 100 investors independent of such Fund and of each other
from the date the Shares will be first sold. Therefore, it is expected that the underlying assets
of each Fund should not be considered to constitute assets of any Plan which purchases Shares.
Ineligible Purchasers
In general, Shares may not be purchased with the assets of a Plan if the Managing Owner, the
Introducing Broker, the Commodity Brokers, the Distributor, the Marketer, or any of their
respective affiliates or any of their respective employees either: (a) has investment discretion
with respect to the investment of such plan assets; (b) has authority or responsibility to give or
regularly gives investment advice with respect to such plan assets, for a fee, and pursuant to an
agreement or understanding that such advice will serve as a primary basis for investment decisions
with respect to such plan assets and that such advice will be based on the particular investment
needs of the Plan; or (c) is an employer maintaining or contributing to such Plan. A party that is
described in clause (a) or (b) of the preceding sentence is a fiduciary under ERISA and the Code
with respect to the Plan, and any such purchase might result in a prohibited transaction under
ERISA and the Code.
Except as otherwise set forth, the foregoing statements regarding the consequences under ERISA
and the Code of an investment in a Fund are based on the provisions of the Code and ERISA as
currently in effect, and the existing administrative and judicial interpretations thereunder. No
assurance can be given that administrative, judicial or legislative changes will not occur that
will not make the foregoing statements incorrect or incomplete.
THE PERSON WITH INVESTMENT DISCRETION SHOULD CONSULT WITH HIS OR HER ATTORNEY AND FINANCIAL
ADVISERS AS TO THE PROPRIETY OF AN INVESTMENT IN A FUND IN LIGHT OF THE CIRCUMSTANCES OF THE
PARTICULAR PLAN AND CURRENT TAX LAW.
PLAN OF DISTRIBUTION
Initial Purchaser
[ ] is the Initial Purchaser with respect to each Fund. On [___], 2010, the
Initial Purchaser purchased and took delivery of 100,000 Shares of each Fund, which comprise the
initial Baskets of each Fund, at a purchase price of $20.00 per Share ($2,000,000 per Basket),
pursuant to an Initial Purchaser Agreement. The Initial Purchaser proposes to offer to the public
these 100,000 Shares of each Fund at a per-Share offering price that will vary depending, upon,
among other factors, the trading price of the Shares on the NYSE Arca, the net asset value per
Share and the supply of and demand for the Shares at the time of the offer. Shares offered by the
Initial Purchaser at different times may have different offering prices. The excess, if any, of
the price at which the Initial Purchaser sells a Share over the price paid by the Initial Purchaser
in connection with the initial purchase of such Share will be deemed to be underwriting
compensation. The Initial Purchaser will not receive from the Fund, the Managing Owner or any of
their affiliates, any fee or other compensation in connection with the sale of the Shares to the
public.
The Fund will not bear any expenses in connection with the offering or sales of the Shares
composing the initial Baskets.
The Managing Owner has agreed to indemnify the Initial Purchaser against certain liabilities,
including liabilities under the Securities Act of 1933, and to contribute to payments that the
Initial Purchaser may be required to make in respect thereof.
The Initial Purchaser will not act as an Authorized Participant with respect to the initial
Baskets, and its activities with respect to the initial Baskets will be distinct from those of an
Authorized Participant.
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Authorized Participants
Each Fund issues Shares in Baskets to Authorized Participants continuously as of noon, New
York time, on the business day immediately following the date on which a valid order to create a
Basket is accepted by the Fund, at the net asset value of 100,000 Shares of the Fund as of the
closing time of the NYSE Arca or the last to close of the exchanges on which the corresponding
Funds futures contracts are traded, whichever is later, on the date that a valid order to create a
Basket is accepted by the Fund.
Authorized Participants may offer to the public, from time-to-time, Shares from any Baskets
they create. Shares offered to the public by Authorized Participants will be offered at a per
Share offering price that will vary depending on, among other factors, the trading price of the
Fund on the NYSE Arca, the net asset value per Share and the supply of and demand for the Shares at
the time of the offer. Shares initially comprising the same Basket but offered by Authorized
Participants to the public at different times may have different offering prices. The excess, if
any, of the price at which an Authorized Participant sells a Share over the price paid by such
Authorized Participant in connection with the creation of such Share in a Basket will be deemed to
be underwriting compensation by the FINRA Corporate Financing Department. Authorized Participants
will not receive from the Fund, the Managing Owner or any of their affiliates, any fee or other
compensation in connection with their sale of Shares to the public, although investors are expected
to be charged a customary commission by their brokers in connection with purchases of Shares that
will vary from investor to investor. Investors are encouraged to review the terms of their
brokerage accounts for applicable charges.
As of the date of this Prospectus, [ ] has/have [each] executed a Participant Agreement
and are the only Authorized Participants.
Likelihood of Becoming a Statutory Underwriter
Each Fund has issued the initial Basket to the Initial Purchaser and will issue Shares in
Baskets to Authorized Participants from time-to-time in exchange for cash. Because new Shares can
be created and issued on an ongoing basis at any point during the life of each Fund, a
distribution, as such term is used in the Securities Act, will be occurring. An Authorized
Participant, other broker-dealer firm or its client will be deemed a statutory
underwriter, and
thus will be subject to the prospectus-delivery and liability provisions of the Securities Act, if
it purchases a Basket from any Fund, breaks the Basket down into the constituent Shares and sells
the Shares to its customers; or if it chooses to couple the creation of a supply of new Shares with
an active selling effort involving solicitation of secondary market demand for the Shares.
Similarly, the Initial Purchaser will be deemed a statutory underwriter. 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 would
lead to categorization as an underwriter. Authorized Participants, other broker-dealers and other
persons are cautioned that some of their activities will result in their being deemed participants
in a distribution in a manner which would render them statutory underwriters and subject them to
the prospectus-delivery and liability provisions of the Securities Act.
Dealers who are neither Authorized Participants nor underwriters but are participating in a
distribution (as contrasted to ordinary secondary trading transactions), and thus dealing with
Shares that are part of an unsold allotment within the meaning of section 4(3)(C) of the
Securities Act, would be unable to take advantage of the prospectus delivery exemption provided by
section 4(3) of the Securities Act.
General
Retail investors may purchase and sell Shares through traditional brokerage accounts.
Investors who purchase Shares through a commission/fee-based brokerage account may pay
commissions/fees charged by the brokerage account. Investors are encouraged to review the terms of
their brokerage accounts for applicable charges.
Investors intending to create or redeem Baskets through Authorized Participants in
transactions not involving a broker-dealer registered in such investors state of domicile or
residence should consult their legal advisor regarding applicable broker-dealer or securities
regulatory requirements under the state securities laws prior to such creation or redemption.
The Managing Owner has agreed to indemnify certain parties against certain liabilities,
including
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liabilities under the Securities Act, and to contribute to payments that such parties may
be required to make in respect of those liabilities. Such parties may also be reimbursed, solely
from and to the extent of each respective Funds assets, for indemnification and contribution
amounts due from the Managing Owner in respect of such liabilities to the extent the Managing Owner
has not paid such amounts when due.
The offering of Baskets is being made in compliance with FINRA Rule 2310. Accordingly, neither
the Initial Purchaser nor the Authorized Participants will make any sales to any account over which
they have discretionary authority without the prior written approval of a purchaser of Shares. The
maximum amount of items of value to be paid to FINRA Members in connection with the offering of the
Shares by a Fund will not exceed 10% plus 0.5% for bona fide due diligence.
The Initial Purchaser will not charge a commission of greater than 1% (which represents a
maximum of $100,000 of the amount registered hereby) of the price per Share of each Fund in
offering and selling the Shares comprising the Initial Baskets of each Fund.
Pursuant to the Distribution Services Agreement, the Distributor will be paid out of the
Management Fee of each Fund in an amount of approximately $[ ] per annum with respect to each
Fund, plus any fees or disbursements incurred by the Distributor in connection with the performance
by the Distributor of its duties on behalf of each Fund.
Pursuant to the Marketing Agreement, the Marketer will be paid the following fees out of the
Management Fee of each Fund in the following amounts: [ ]
The payments to the Distributor and the Marketer will not, in the aggregate (of all Funds),
exceed [ ]% and [ ]%, respectively, of the aggregate dollar amount of the offering (or in an
amount equal to $[ ] and $[ ], respectively, of the $10,000,000 registered on the initial
Registration Statement on Form S-1 in respect of the Funds). The Funds will advise the
Distributors if the payments described hereunder must be limited, when combined with selling
commissions charged by other FINRA members, in order to comply with the 10% limitation on total
underwriters compensation pursuant to FINRA Rule 2310.
The Shares of each Fund will be listed on the NYSE Arca under the following symbols:
Fund | NYSE Arca Symbol | ||||
Large Cap Equity Fund
|
[_____] | ||||
Mid Cap Equity Fund
|
[_____] | ||||
Small Cap Equity Fund
|
[_____] | ||||
World Equity Fund
|
[_____] | ||||
Commodities Fund
|
[_____] | ||||
LEGAL MATTERS
Sidley Austin llp has advised the Managing Owner in connection with the Shares being
offered hereby. Sidley Austin llp also advises the Managing Owner with respect to its
responsibilities as managing owner of, and with respect to matters relating to, the Funds.
Sidley Austin llp has prepared the sections Material U.S. Federal Income Tax
Considerations and Purchases By Employee Benefit Plans with respect to ERISA. Sidley Austin
llp has not represented, nor will it represent, the Funds or the Shareholders in matters
relating to the Funds and no other counsel has been engaged to act on their behalf. Certain
opinions of counsel have been filed with the SEC as exhibits to the
Registration Statement of which this
Prospectus is a part.
Richards, Layton & Finger, P.A., special Delaware counsel to the Funds, has advised the Funds
in connection with the legality of the Shares being offered hereby.
EXPERTS
[TBD.]
ADDITIONAL INFORMATION
This Prospectus constitutes part of the Registration Statement filed by each Fund with the SEC
in Washington, D.C. This Prospectus does not contain all of the information set forth in such
Registration Statement, certain portions of which
have been omitted pursuant to the rules and regulations of the SEC, including, without
limitation, certain exhibits thereto. The descriptions contained herein of agreements included as
exhibits to the Registration Statement are necessarily summaries; the exhibits themselves may be
inspected without charge at the public reference facilities maintained by the SEC in Washington,
D.C., and copies of all or part thereof may be obtained from the SEC upon payment of the
prescribed fees. The SEC
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maintains a website that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the SEC. The
address of such site is http://www.sec.gov.
RECENT FINANCIAL INFORMATION AND
ANNUAL REPORTS
ANNUAL REPORTS
The Managing Owner will furnish you with an annual report of each Fund in which you are
invested within 90 calendar days after the end of its fiscal year as required by the rules and
regulations of the SEC as well as with those reports required by the CFTC and the NFA, including,
but not limited to, an annual audited financial statement certified by independent registered
public accountants and any other reports required by any other governmental authority that has
jurisdiction over the activities of the Funds. You also will be provided with appropriate
information to permit you to file your U.S. federal and state income tax returns (on a timely
basis) with respect to your Shares. Monthly account statements conforming to CFTC and NFA
requirements will be posted on the Managing Owners website at [http://www.superfund.com].
Additional reports may be posted on the Managing Owners website in the discretion of the Managing
Owner or as required by regulatory authorities.
PRIVACY POLICY OF THE MANAGING
OWNER
OWNER
The Managing Owner collects non-public information about you from the following sources: (i)
information received from you on applications or other forms; and (ii) information about your
transactions with the Managing Owner and others. The Managing Owner does not disclose any
non-public personal information about you to anyone, other than as set forth below, as permitted by
applicable law and regulation. The Managing Owner may disclose non-public personal information
about you to the Funds in which you invest. The Managing Owner may disclose non-public personal
information about you to non-affiliated companies that work with the Managing Owner to service your
account(s), or to provide services or process transactions that you have requested. The Managing
Owner may disclose non-public personal information about you to parties representing you, such as
your investment representative, your accountant, your tax adviser, or to other third parties at
your direction/consent. If you decide to close your account(s) or become an inactive customer, the
Managing Owner will adhere to the privacy policies and
practices as described in this notice. The
Managing Owner restricts access to your personal and account information to those employees who
need to know that information to provide products and services to you. The Managing Owner
maintains appropriate physical, electronic and procedural safeguards to guard your non-public
personal information.
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INDEX TO FINANCIAL STATEMENTS
Superfund Gold Large Cap Equity Fund |
Superfund Gold Mid Cap Equity Fund |
Superfund Gold Small Cap Equity Fund |
Superfund Gold World Equity Fund |
Superfund Gold Commodities Fund |
Superfund Advisors Inc. |
* To be furnished by amendment |
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Table of Contents
Report of Independent Registered Public Accounting Firm*
The Shareholder
Superfund Gold Large Cap Equity Fund:
Superfund Gold Large Cap Equity Fund:
*To be furnished by amendment.
Table of Contents
SUPERFUND GOLD LARGE CAP EQUITY FUND
Form of Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD LARGE CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS
OR LIABILITIES.
SUPERFUND GOLD LARGE CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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SUPERFUND GOLD LARGE CAP EQUITY FUND
Form of Statement of Cash Flows*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD LARGE CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS
OR LIABILITIES.
SUPERFUND GOLD LARGE CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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SUPERFUND GOLD LARGE CAP EQUITY FUND
Notes to Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD LARGE CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS
OR LIABILITIES.
SUPERFUND GOLD LARGE CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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Report of Independent Registered Public Accounting Firm*
The Shareholder
Superfund Gold Mid Cap Equity Fund:
Superfund Gold Mid Cap Equity Fund:
*To be furnished by amendment.
Table of Contents
SUPERFUND GOLD MID CAP EQUITY FUND
Form of Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD MID CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD MID CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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SUPERFUND GOLD MID CAP EQUITY FUND
Form of Statement of Cash Flows*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD MID CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD MID CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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SUPERFUND GOLD MID CAP EQUITY FUND
Notes to Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD MID CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD MID CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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Report of Independent Registered Public Accounting Firm*
The Shareholder
Superfund Gold Small Cap Equity Fund:
Superfund Gold Small Cap Equity Fund:
*To be furnished by amendment.
Table of Contents
SUPERFUND GOLD SMALL CAP EQUITY FUND
Form of Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD SMALL CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS
OR LIABILITIES.
SUPERFUND GOLD SMALL CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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SUPERFUND GOLD SMALL CAP EQUITY FUND
Form of Statement of Cash Flows*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD SMALL CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS
OR LIABILITIES.
SUPERFUND GOLD SMALL CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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SUPERFUND GOLD SMALL CAP EQUITY FUND
Notes to Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD SMALL CAP EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS
OR LIABILITIES.
SUPERFUND GOLD SMALL CAP EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE
HISTORY.
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Report of Independent Registered Public Accounting Firm*
The Shareholder
Superfund Gold World Equity Fund:
Superfund Gold World Equity Fund:
*To be furnished by amendment.
Table of Contents
SUPERFUND GOLD WORLD EQUITY FUND
Form of Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD WORLD EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD WORLD EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY.
Table of Contents
SUPERFUND GOLD WORLD EQUITY FUND
Form of Statement of Cash Flows*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD WORLD EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD WORLD EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY.
Table of Contents
SUPERFUND GOLD WORLD EQUITY FUND
Notes to Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD WORLD EQUITY FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD WORLD EQUITY FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY.
Table of Contents
Report of Independent Registered Public Accounting Firm*
The Shareholder
Superfund Gold Commodities Fund:
Superfund Gold Commodities Fund:
*To be furnished by amendment.
Table of Contents
SUPERFUND GOLD COMMODITIES FUND
Form of Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD COMMODITIES FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD COMMODITIES FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY.
Table of Contents
SUPERFUND GOLD COMMODITIES FUND
Form of Statement of Cash Flows*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD COMMODITIES FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD COMMODITIES FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY.
Table of Contents
SUPERFUND GOLD COMMODITIES FUND
Notes to Statement of Financial Condition*
, 2010
*To be furnished by amendment.
SUPERFUND GOLD COMMODITIES FUND HAS NOT COMMENCED OPERATIONS AND, CONSEQUENTLY, HAS NO ASSETS OR
LIABILITIES.
SUPERFUND GOLD COMMODITIES FUND HAS NOT COMMENCED TRADING AND DOES NOT HAVE A PERFORMANCE HISTORY.
Table of Contents
Report of Independent Registered Public Accounting Firm*
The Shareholder
Superfund Advisors Inc.:
Superfund Advisors Inc.:
*To be furnished by amendment.
Table of Contents
SUPERFUND ADVISORS INC.
Form of Statement of Financial Condition*
, 2010
*To be furnished by amendment.
Table of Contents
SUPERFUND ADVISORS INC.
Form of Statement of Changes in Shareholder Capital*
, 2010
*To be furnished by amendment.
Table of Contents
Table of Contents
SUPERFUND ADVISORS INC.
Notes to Statement of Financial Condition*
, 2010
*To be furnished by amendment.
Table of Contents
PART TWO
STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF ADDITIONAL INFORMATION
SUPERFUND GOLD LARGE CAP EQUITY FUND
SUPERFUND GOLD MID CAP EQUITY FUND
SUPERFUND GOLD SMALL CAP EQUITY FUND
SUPERFUND GOLD WORLD EQUITY FUND
SUPERFUND GOLD COMMODITIES FUND
SUPERFUND GOLD MID CAP EQUITY FUND
SUPERFUND GOLD SMALL CAP EQUITY FUND
SUPERFUND GOLD WORLD EQUITY FUND
SUPERFUND GOLD COMMODITIES FUND
Common Units of Beneficial Interest
The Shares are speculative securities which involve the risk of loss.
Past performance is not necessarily indicative of future results.
Past performance is not necessarily indicative of future results.
See The Risks You Face beginning at page 19 in Part One.
THIS PROSPECTUS IS IN TWO PARTS:
A DISCLOSURE DOCUMENT AND A STATEMENT OF ADDITIONAL INFORMATION.
THESE PARTS ARE BOUND TOGETHER, AND BOTH CONTAIN
IMPORTANT INFORMATION. YOU MUST READ THE
STATEMENT OF ADDITIONAL INFORMATION
IN CONJUNCTION WITH THE
DISCLOSURE DOCUMENT.
A DISCLOSURE DOCUMENT AND A STATEMENT OF ADDITIONAL INFORMATION.
THESE PARTS ARE BOUND TOGETHER, AND BOTH CONTAIN
IMPORTANT INFORMATION. YOU MUST READ THE
STATEMENT OF ADDITIONAL INFORMATION
IN CONJUNCTION WITH THE
DISCLOSURE DOCUMENT.
[ ], 2010
Superfund Advisors Inc.
Managing Owner
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PART TWO
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
103 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
103 | ||||
104 | ||||
104 | ||||
104 | ||||
105 | ||||
105 | ||||
105 | ||||
105 | ||||
Alternative Asset Classes |
105 | |||
106 | ||||
106 | ||||
106 | ||||
106 | ||||
106 | ||||
Exhibit APrivacy Notice |
P1 |
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STRATEGY
General
The primary objective of each Fund is to maintain the approximate equivalent of a dollar for
dollar investment in gold, or the Gold Investment, while seeking appreciation of its assets over
time by trading and investing in long positions in exchange-traded futures contracts that reference
an appropriate securities, commodity, or other index, with a view to tracking the applicable index
over time, or the Index Investment. The notional value of each Funds futures contracts with
respect to each of its Gold Investment and Index Investment will be approximately equal to the
value of each Funds holdings of United States Treasury and other high credit quality short-term
fixed income securities, or the Funds Equity, upon establishment of each of these positions.
Therefore, the aggregate notional value of each Funds futures contracts with respect to both its
Gold Investment and Index Investment will be double the value of the Funds Equity, which means
each Fund will have a leverage ratio at such time of 2:1. Because the notional value of each
Funds futures positions in the Gold Investment and the Index Investment will rise or fall over
time, the leverage ratio could be higher or lower than the 2:1 leverage ratio. The use of leverage
will increase the potential for both trading profits and losses, depending on the changes, positive
and negative, in the Gold Investment and the Index Investment.
Investors attention is drawn to the fact that, if gold futures margin requirements should
increase substantially, each Funds Gold Investment may be reduced below the equivalent of such
Funds net asset value (expressed in U.S. dollars). Thus, there can be no assurance that the
returns of a Funds Gold Investment will reflect variations in the U.S. dollar price of a Gold
Investment equal to the net asset value of the Fund (expressed in U.S. dollars) at any given time.
WHY SUPERFUND?
Why A Futures Fund?
Futures investments are intended to generate medium to long-term capital growth and provide
global portfolio diversification, as described above. A primary reason to invest in a futures
product, such as the Funds, is to provide a non-correlated investment to a portfolio of traditional
stock and bond investments that has the potential to improve returns and lower the portfolios
volatility. This is possible because futures products historically have not been correlated to
traditional markets, such as stocks and bonds.
Why Now?
Stock market performance at the beginning of this decade has demonstrated that long-only
equity portfolios generally do not make money during downward cycles. For continued portfolio
performance, it is potentially advantageous for investors to own investments that have the
potential to appreciate in any economic environment.
Why Gold?
As discussed below under Investment Considerations, gold has historically been viewed as a
hedge against insecurity, inflation and a fluctuating dollar. As a result, gold has been
attractive to investors as a means of providing a safe haven in troubled times.
Historical Non-Correlated Performance and Potential Market Diversification
Historically, futures investments have had very little correlation to the stock and bond
markets. An investment in the Shares has the potential to help diversify traditional securities
portfolios. A diverse portfolio consisting of assets that perform in an unrelated manner, or
non-correlated assets, may increase overall return and/or reduce the volatility (a widely used
measure of risk) of a traditional portfolio of stocks and bonds. However, for a non-correlated
asset to increase a traditional portfolios overall returns, the non-correlated asset must
outperform either stocks or bonds over the period being measured. While there is no guarantee of
positive performance in a futures component of a portfolio, the non-correlation characteristic of
futures may improve risk adjusted returns in a diversified investment portfolio. There can be no
assurance that a Fund will outperform other sectors of an investors portfolio or not produce
losses. There can be no assurance, however, that the Funds will trade profitably in the futures,
and as applicable, the swap and/or forward markets, or not incur losses.
THE FUTURES AND FORWARD MARKETS
Futures Contracts
Futures contracts are standardized agreements traded on commodity exchanges that call for the
future delivery of the commodity or financial instrument at a specified time and place. A futures
trader that enters into a contract to take delivery of the underlying commodity is long the
contract, or
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has bought the contract. A trader that is obligated to make delivery is short the
contract or has sold the contract. Actual delivery on the contract rarely occurs. Futures
traders usually offset (liquidate) their contract obligations by entering into equal but offsetting
futures positions. For example, a trader who is long one September Treasury bond contract on the
Chicago Board of Trade can offset the obligation by entering into a short position in a September
Treasury bond contract on that exchange. Futures positions that have not yet been liquidated are
known as open contracts or positions. Futures contracts are traded on a wide variety of
commodities and financial products, including agricultural products, metals, livestock products,
government securities, currencies and stock market indices. Options on futures contracts are also
traded on commodity exchanges.
Forward Contracts
Currencies and other commodities may be purchased or sold for future delivery or cash
settlement through banks or dealers pursuant to forward or swap contracts. Currencies also can be
traded pursuant to futures contracts on organized futures exchanges. Such dealers will act as
principals in these transactions and will include their profit in the price quoted on the
contracts. Unlike futures contracts, foreign exchange forward contracts are not standardized. In
addition, the forward market is largely unregulated. Forward contracts are not cleared or
guaranteed by a third party. Neither the CFTC nor the federal or state banking authorities
regulate forward trading or forward dealers.
Swap Transactions
A Fund may periodically enter into transactions in the forward or other markets which could be
characterized as swap transactions and which may involve commodities, stock indices, and, possibly,
other items. A swap transaction is an individually negotiated, non-standardized agreement between
two parties to exchange cash flows measured by different interest rates, exchange rates, or prices,
with payments calculated by reference to a principal (notional) amount or quantity. Transactions
in these markets present certain risks similar to those in the futures, forward and options
markets: (1) the swap markets are generally not regulated by any United States or foreign
governmental authorities; (2) there are generally no limitations on daily price moves in swap
transactions; (3) speculative position limits are not applicable to swap transactions, although the
counterparties with which a Fund may deal may limit the size or duration of positions available as
a consequence of credit considerations; (4) participants in the swap markets are not required to
make continuous markets in swaps contracts; and (5) the swap markets are principal markets, in
which performance with respect to a swap contract is the responsibility only of the counterparty
with which the trader has entered into a contract (or its guarantor, if any), and not of any
exchange or clearinghouse. As a result, each Fund will be subject to the risk of the inability of
or refusal to perform with respect to such contracts on the part of the counterparties with which a
Fund trades. Also, the CFTC or a court could conclude in the future that certain, primarily
agricultural, swap transactions entered into by a Fund constitute unauthorized futures or commodity
option contracts. Such a conclusion could limit a Funds access to certain agricultural markets in
the United States, possibly to the detriment of a Fund.
REGULATION
The U.S. futures markets are regulated under the Commodity Exchange Act, which is administered
by the CFTC, a federal agency created in 1974. The CFTC licenses and regulates commodity
exchanges, commodity pool operators, commodity trading advisors and clearing firms which are
referred to in the futures industry as futures commission merchants. The Managing Owner is
registered with the CFTC as a commodity pool operator. Futures professionals are also regulated by
the NFA, a self-regulatory organization for the futures industry that supervises the dealings
between futures professionals and their customers. If the pertinent CFTC licenses or NFA
memberships were to lapse, be suspended or be revoked, the Managing Owner would be unable to
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act as a Funds commodity pool operator. The CFTC has adopted disclosure, reporting and
recordkeeping requirements for commodity pool operators. Unless exempt, the reporting rules
require pool operators to furnish to the participants in their pools a monthly statement of
account, showing the pools income or loss and change in net asset value, and an annual financial
report, audited by an independent certified public accountant. The CFTC and the exchanges have
pervasive powers over the futures markets, including the emergency power to suspend trading and
order trading for liquidation of existing positions only. The exercise of such powers could
adversely affect a Funds trading.
In order to establish and maintain a futures position, a trader must make a type of good-faith
deposit with its broker, known as margin, of approximately 2%-10% of contract value. Minimum
margins are established for each futures contract by the exchange on which the contract is traded.
The exchanges alter their margin requirements from time to time, sometimes significantly. For
their protection, clearing brokers may require higher margins from their customers than the
exchange minimums. When a position is established, initial margin is deposited. On most
exchanges, at the close of each trading day variation margin, representing the unrealized gain or
loss on the open positions, is either credited to or debited from a traders account. If
variation margin payments cause a traders initial margin to fall below maintenance margin
levels, a margin call is made, requiring the trader to deposit additional margin or have his
position closed out. Collateral is deposited in connection with forward contracts but is not
required by any applicable regulation. Additional collateral may be required by the relevant
dealer to maintain a forward contract position, similar to variation margin payments.
INVESTMENT CONSIDERATIONS
A Gold Denominated Investment
Gold has often been viewed as a hedge against inflation and thus has often been viewed as a
safe haven in troubled or uncertain economic times. Gold has also been used as a hedge against
fluctuations in the value of the U.S. dollar against other currencies. Historically, when the
dollar has depreciated against foreign currencies generally, the dollar price of gold has risen,
and vice versa. However, there can be no assurance that historical patterns will persist into the
future.
The Funds are designed to combine an investment in gold with an investment in exchange-
traded
futures contracts that reference a corresponding Index Investment. The Gold Investment of each
Fund is intended to de-link the Funds net asset value, which is denominated in U.S. dollars, from
the value of the U.S. dollar relative to gold, essentially denominating the Funds net asset value
in terms of gold. However, if the U.S. dollar value of gold declines resulting in dollar losses
for the Funds, there can be no assurance that there will be a corresponding increase in the value
or purchasing power of the U.S. dollar for goods (other than gold) or services priced in dollars.
Further, there can be no assurance that trading losses incurred in the Funds futures trading will
not result in overall losses for the Funds or that the Funds will not reduce their gold position if
gold futures margin requirements increase significantly.
Potential Advantages of Futures
Both the futures and forward markets and funds investing in those markets offer many
structural advantages that make futures an efficient way to participate in global markets.
Enhanced Profit Potential
A number of futures funds, including certain Superfund funds, have produced strong absolute
returns and, in specific cases, have outperformed stocks and bonds during periods in which those
asset classes have not performed well. There can be no assurance, however, that a Fund will
perform positively under any given set of market conditions or that it will not incur losses.
Potentially Low Correlation to Traditional Asset Classes and Other Alternative Asset Classes
Because certain futures funds may trade in a significant number of financial and commodities
futures markets, such futures funds, in aggregate, may have historically experienced low long-term
correlation to most traditional asset classes, including stocks, bonds, and real estate. Futures
funds, such as the Funds, may provide a valuable element of diversification to an investors
portfolio, even one in which other alternative asset classes are represented, because of the
potentially low correlation of their returns to the returns of other alternative asset classes,
including many hedge fund strategies. There can be no assurance, however, that a Funds
performance will be non-correlated to the performance of traditional asset classes or that it will
not experience sustained periods of significant correlation to the performance of traditional asset
classes.
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Interest Credit
Unlike some alternative, or non-traditional, investment funds, the Funds will not borrow money
to obtain leverage and will not incur any interest expense. Rather, margin deposits and reserve
assets will be maintained in cash in interest bearing accounts and in cash equivalents, such as
U.S. Treasury bills, and interest will be earned on all or nearly all of the Funds assets, which
include unrealized profits credited to the Funds accounts.
Potential Global Diversification through an Investment in One or More Funds
Futures and related contracts may be traded in many countries, which makes it possible to
diversify risk around the globe. This diversification is available both geographically and across
market sectors. For example, an investor may trade interest rates, stock indices and currencies in
several countries around the world, as well as energy and metals. While certain Funds may trade
across a diverse selection of global markets, an investment in one or more Funds is not a complete
investment program but, rather, should be considered as a diversification opportunity for an
overall portfolio. However, if the Funds do not trade profitably, and there can be no assurance
that they will do so, the potential diversification benefits of an investment in the Funds will not
be realized.
Convenience
Through an investment in the Shares, investors can participate in global markets and
opportunities without needing to master complex trading strategies and monitor multiple
international markets.
Liquidity
In most cases the markets to be traded by the Funds are liquid. Some markets may trade 24
hours on business days. There can be cases where there may be no buyer or seller for a particular
futures contract. Exchanges impose limits on the amount that a futures price can move in one day.
Situations in which markets have moved the limit for several days in a row have not been common,
but do occur. See The Risks You Face (26) Lack of Liquidity in the Markets in Which a Fund Trades
Could Make It Impossible to Realize Profits or Limit Losses.
Limited Liability
Investors liability is generally limited to the amount of their investment in each Fund.
Investors will not be required to contribute additional capital to any Fund.
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EXHIBIT A
PRIVACY NOTICE
The importance of protecting the investors privacy is recognized by Superfund Gold Large Cap
Equity Fund, Superfund Gold Mid Cap Equity Fund, Superfund Gold Small Cap Equity Fund, Superfund
Gold World Equity Fund, and Superfund Gold Commodities Fund (collectively, the Funds) and
Superfund Advisors Inc. (the Managing Owner). The Funds and the Managing Owner protect personal
information they collect about you by maintaining physical, electronic and procedural safeguards to
maintain the confidentiality and security of such information.
Categories Of Information Collected. In the normal course of business, the Funds and the
Managing Owner may collect the following types of information concerning investors in the Funds who
are natural persons:
Information provided in the Participant Agreements and other forms (including name, address,
social security number, income and other financial-related information); and
Data about investor transactions (such as the types of investments the investors have made and
their account status).
How the Collected Information is Used. Any and all nonpublic personal information received by
the Funds or the Managing Owner with respect to the investors who are natural persons, including
the information provided to the Funds by such an investor in a Participant Agreement, will not be
shared with nonaffiliated third parties which are not service providers to the Funds or the
Managing Owner without prior notice to such investors. Such service providers include but are not
limited to the Selling Agents, the Distributor, the Marketer, the Introducing Broker, the Commodity
Brokers, administrators, auditors and the legal advisers of the Funds. Additionally, the Funds
and/or the Managing Owner may disclose such nonpublic personal information as required by
applicable laws, statutes, rules and regulations of any government, governmental agency or
self-regulatory organization or a court order. The same privacy policy will also apply to the
Shareholders who have fully redeemed.
For questions about the privacy policy, please contact the Managing Owner.
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PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution.
Superfund Advisors Inc. (the Managing Owner) will pay all expenses in connection with the
offering of the Shares without reimbursement by the Registrant. The following is an estimate of
the initial expenses to be paid by the Managing Owner in connection with this offering.
Approximate | ||||
Amount | ||||
Securities and Exchange Commission Registration Fee |
$ | 143 | ||
Financial Industry Regulatory Authority Filing Fee |
300 | |||
Printing Expenses |
40,000 | |||
Fees of Certified Public Accountants |
20,000 | |||
Fees of Counsel |
150,000 | |||
Total |
$ | 210,443 | * | |
* | Represents an estimate of the portion of fees and expenses of Superfund Gold Large Cap Equity Fund that are common to this Registration Statement and the Registration Statement for each of Superfund Gold Mid Cap Equity Fund (SEC File No. 333-[-]), Superfund Gold Small Cap Equity Fund (SEC File No. 333-[-]), Superfund Gold World Equity Fund (SEC File No. 333-[-]) and Superfund Gold Commodities Fund (SEC File No. 333-[-]), which are being filed concurrently with this Registration Statement. |
Item 14. Indemnification of Directors and Officers.
Section 17 of the Form of Amended and Restated Trust Agreement provides for the
indemnification of the Managing Owner and certain of its controlling persons by the Fund in certain
circumstances. Such indemnification is limited to claims sustained by such persons in connection
with the Fund; provided that such claims were not the result of gross negligence, bad faith or
willful misconduct on the part of the Managing Owner or such controlling persons. The Fund is
prohibited from incurring the cost of any insurance covering any broader indemnification than that
provided above. Advances of the Funds funds to cover legal expenses and other costs incurred as a
result of any legal action initiated against the Managing Owner by a shareholder are prohibited
unless specific court approval is obtained.
Item 15. Recent Sales of Unregistered Securities.
None.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless otherwise indicated) are filed herewith and made a part of
this Registration Statement:
Exhibit Number | Description of Document | |
1.1
|
Form of Initial Purchaser Agreement* | |
4.1
|
Form of Trust Agreement of the Registrant |
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Exhibit Number | Description of Document | |
4.2
|
Form of Amended and Restated Trust Agreement of the Registrant* | |
4.3
|
Form of Participant Agreement* | |
4.4
|
Form of Privacy Notice (annexed to the Prospectus as Exhibit A) | |
5.1
|
Form of Opinion of Richards, Layton & Finger as to legality* | |
8.1
|
Form of Opinion of Sidley Austin llp as to federal income tax matters* | |
10.1
|
Form of Introducing Broker Agreement* | |
10.2
|
Form of Commodity Broker Agreement* | |
10.3
|
Form of Administration Agreement between the Registrant and the Administrator* | |
10.4
|
Form of Global Custody Agreement* | |
10.5
|
Form of Transfer Agency and Service Agreement* | |
10.6
|
Form of Distribution Services Agreement* | |
10.7
|
Form of Marketing Agreement* | |
23.1
|
Form of Consent of Sidley Austin llp is included as part of this Registration Statement | |
23.2
|
Form of Consent of Richards, Layton & Finger (included in Exhibit 5.1)* | |
23.4
|
Form of Consent of Sidley Austin llp as tax counsel (included in Exhibit 8.1)* | |
23.5
|
Consent of [accountant]* |
* | To be filed by amendment |
The following financial statements are included in the Prospectus:
(1) Superfund Gold Large Cap Equity Fund
(i) | Report of Independent Registered Public Accounting Firm dated [_________], 2010* | ||
(ii) | Statement of Financial Condition dated [_________], 2010* | ||
(iii) | Statement of Cash Flows* | ||
(iv) | Notes to Statement of Financial Condition* |
(2) Superfund Advisors Inc.
(i) | Report of Independent Registered Public Accounting Firm dated [_________], 2010* | ||
(ii) | Statement of Financial Condition * | ||
(iii) | Statement of Changes in Shareholder Capital* | ||
(iv) | Statement of Cash Flows* | ||
(v) | Notes to Statement of Financial Condition* |
* | To be filed by amendment |
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Item 17.
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being made, a post
effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation from
the low or high and of the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the Calculation of Registration Fee
table in the effective registration statement.
(iii) To include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change to such
information in the registration statement.
Provided, however, that:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the
registration statement is on Form S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of
the Securities Exchange Act of 1934, as amended (Securities Exchange Act of 1934) (15
U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement;
and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply
if the registration statement is on Form S-3 or Form F-3 and the information required to
be included in a post-effective amendment by those paragraphs is contained in reports
filed with or furnished to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement, or is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, as
amended (Securities Exchange Act of 1933) each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933
to any purchaser:
(i) | If the registrant is relying on Rule 430B: |
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3)
shall be deemed to be part of the registration statement as of the date the
filed prospectus was deemed part of and included in the registration
statement; and
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(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule
430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
(x) for the purpose of providing the information required by section 10(a)
of the Securities Act of 1933 shall be deemed to be part of and included in
the registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the prospectus.
As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be
a new effective date of the registration statement relating to the
securities in the registration statement to which that prospectus relates,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective date; or
(ii) | If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) That, for the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating
to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its securities
provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and
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contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each
post-effective amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant pursuant to the
provisions described in Item 14 above, or otherwise, the Registrant had been advised that in the
opinion of the Securities and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant in the successful
defense of any such action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Managing Owner of the
Registrant has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York,
State of New York, on the 28th day
of January, 2010.
Superfund Gold Large Cap Equity Fund |
||||
By: | Superfund Advisors Inc., | |||
its Managing Owner | ||||
By: | /s/ Paul Wigdor | |||
Name: | Paul Wigdor | |||
Title: | President | |||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has
been signed below by the following persons on behalf of the Managing Owner of the Registrant, in
the capacities and on the date indicated.
Signature | Title with Registrant | Date | ||
Superfund Advisors Inc., Managing Owner of Registrant |
||||
/s/ Paul Wigdor |
President and Chief Financial Officer |
January 28, 2010 | ||
|
(Principal Executive Officer and Principal Financial Officer) |
Being the principal executive officer, the principal financial and accounting officer and all
of the directors of Superfund Advisors Inc.
Signature
|
Title with Registrant | Date | ||
Superfund Advisors Inc., Managing Owner of Registrant |
||||
/s/ Paul Wigdor |
Director, President and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
January 28, 2010 | ||
/s/ Vito Fossella
|
Director, Vice President and Chief Operating Officer |
January 28, 2010 | ||
/s/ Jeffrey E. Kopiwoda
|
Director | January 28, 2010 |