UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☑  Annual Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Fiscal Year Ended:  December 31, 2014

or

☐  Transition Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Commission File Number:  000-53647

 RICI® Linked – PAM Advisors Fund, LLC

(Exact name of registrant as specified in its charter)

 

c/o Price Asset Management, Inc.

141 West Jackson Blvd., Suite 1320A

Chicago, IL  60604

(Address of principal executive offices) (Zip code)

Registrant’s telephone number, including area code:   (877)-261-4400

Securities registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act:   RICI®  Linked – PAM Total Index Series LLC Interests

                     (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes [  ]   No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes [  ]   No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [X]   No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes [X]   No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]

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.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes [   ]   No [X]

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State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Not applicable.

Documents Incorporated by Reference

Registrant’s Financial Statements for the years ended December 31, 2014, 2013 and 2012 and Report of  Independent Registered Public Accounting Firm, the annual report to security holders for the fiscal year ended December 31, 2014, is incorporated by reference into Part I Item 1, Part II Item 8 and Part IV hereof and filed as an exhibit herewith.

 

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PART I

Item 1.   Business

(a)   General development of business

RICI® Linked – PAM Advisors Fund, LLC (the “Company”) is currently offering four series (each, a “Series”) of limited liability company interests: the RICI® Linked – PAM Total Index Series (the “Total Index Series”), the RICI® Linked – PAM Agricultural Sector Series (the “Agricultural Sector Series”), the RICI® Linked – PAM Energy Sector Series (the “Energy Sector Series”) and the RICI® Linked – PAM Metals Sector Series (the “Metals Sector Series”).  The Total Index Series, Agricultural Sector Series and Energy Sector Series commenced operations on May 8, 2007, February 7, 2008 and January 1, 2010, respectively.  The Energy Sector Series ceased operations after paying out withdrawal proceeds with respect to the July 31, 2010 withdrawal date.  The Metals Sector Series has not yet commenced operations.

Price Asset Management, Inc., an Illinois corporation (“PAM” or the “Managing Member”), acts as managing member, commodity pool operator (“CPO”) and commodity trading advisor (“CTA”) of the Company.  PAM is also registered with the Securities Exchange Commission (“SEC”) as a registered investment adviser.  The Company primarily invests its funds in a portfolio of futures contracts traded on recognized U.S. and non-U.S. markets, but may also trade over-the-counter forward or swap contracts, pursuant to the trading and investment methodology of PAM.   

The Company is a Delaware series limited liability company organized on October 3, 2006 under the Delaware Limited Liability Company Act (the “Act”) issuing different Series of limited liability company interests (the “Interests”).  Section 18-215 of the Act provides that, if certain conditions (as set forth in Section 18-215) are met, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable only against the assets of such series and not against the assets of the limited liability company generally or any other series and that the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to the limited liability company generally or any other series shall not be enforceable against the assets of such particular series.  Accordingly, the assets of any one Series include only those funds and other assets that are paid to, held by or distributed to the Company on account of and for the benefit of such Series, including, without limitation, funds delivered to the Company for the purchase of interests in such Series, and the liabilities of the Company generally or of any other Series are not chargeable against the assets of such Series; provided, however, that if there are assets or liabilities of the Company that are not readily associated with a particular Series, the Managing Member will allocate such assets or liabilities between or among any one or more Series in a fair and equitable manner in accordance with the terms of the Company’s Fourth Amended and Restated Limited Liability Company Agreement, as supplemented (the “Operating Agreement”) (see Section 6(b)).   

Under its Operating Agreement, the Company has delegated all aspects of the Company’s and Series’ management to PAM.  Accordingly, PAM controls and manages the business of the Company and each Series, and members of the Company (“Members”), all of whom hold Interests in one of the Series of the Company, have no right to participate in management or control of the Company or any Series.   

As of February 28, 2015, the aggregate net asset value of the Total Index Series was $119,069,979 and the aggregate net asset value of the Agricultural Sector Series was $2,473,716.   The Company’s fiscal year ends on December 31.

The Company has no subsidiaries.

A Series will terminate when the first of the following occurs: (i) dissolution of the Company; (ii) the Managing Member declares in writing that such Series shall be terminated and gives notification thereof to investors of such Series; or (iii) the entry of a decree of judicial dissolution of such Series under Section 18-215(1) of the Act.

None of the Series have, to date, (i) been the subject of any bankruptcy, receivership or similar proceeding, (ii) undergone any material reclassification, merger or consolidation or (iii) had any material amount of their assets acquired or disposed of other than in the ordinary course of their business.

   

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(b)   Financial information about industry segments

The Company’s business constitutes only one segment, i.e., a speculative commodity pool.  The Company does not engage in sales of goods and services.  Financial information regarding the Company’s business is set forth in the Company’s Financial Statements included as Exhibit 13.01 to this report.

(c)   Narrative description of business

General

 

The assets of the Company are managed by PAM to replicate, as closely as possible, the positions represented by the Rogers International Commodity Index®  (the “Index”), or a specific sub-sector of the Index (each, a “Sub-Index”).  The Index is a composite, U.S. dollar-based, total return index created by James Beeland Rogers, Jr. (“Mr. Rogers”) in July 1998. The Index was designed to meet the need for consistent investing in a broad based international vehicle; it represents the value of a basket of commodities consumed in the global economy, including agricultural, energy and metal products.  The Index is tracked via futures contracts on 37 different exchange-traded physical commodities, quoted in four currencies, listed on nine exchanges in six countries and weighted based on an assessment of each commodity’s relative importance to international commerce.  The specific components and weighting of the Index are determined by Mr. Rogers and a committee consisting of representatives of a number of providers and/or distributors of investment products linked to the Index (the “RICI® Committee”), although Mr. Rogers is the final arbiter with respect to any changes of the Index’s components or their weightings.   Each Sub-Index consists of between six and twenty-two commodity futures contracts, weighted within such Sub-Index as is reflected by the weighting of each such component within the Index as a whole.  For example, if corn represents 4.75% of the Index and agricultural commodities together represent 34.9% of the Index, corn will represent 13.61% of the agricultural Sub-Index.

The assets of the Company generally consist of cash, cash equivalents with maturities of three months or less at date of acquisition, U.S. government-sponsored enterprise securities or securities issued by federal agencies (or, to a limited extent, foreign government securities in connection with trading on non-U.S. exchanges), other investments authorized by the Commodity Futures Trading Commission (“CFTC”), shares of money market mutual funds, certain other money market instruments (e.g., bankers acceptances and Eurodollar or other time deposits) and, to replicate the Index or Sub-Index, as appropriate, futures contracts listed and actively traded on domestic and foreign regulated futures exchanges.  The assets could also include over-the-counter forward contracts and swaps in lieu of corresponding futures contracts if PAM, in its sole discretion, decides that such substitution is in the best interests of the Company.  The Company may also trade currency forward contracts in connection with hedging the Company’s currency exchange rate risk related to the Company’s non-U.S. dollar denominated futures positions.  PAM has authority over the Company’s assets to trade in the futures, forward and swap markets.  ADM Investor Services,  Inc. (“ADM”) and RBC Capital Markets, LLC (“RBC”) currently serve as the clearing brokers of the Company and Price Futures Group, Inc. (“Price”), an introducing broker registered with the CFTC, serves as introducing broker.    

In trading for the Company, PAM’s trading method is to replicate, as closely as possible, the positions represented by the Index or Sub-Index, as appropriate, and PAM will refrain from trading or investing on behalf of the Company in its absolute discretion.  The Company will invest its funds in a portfolio of futures contracts traded on recognized U.S. and non-U.S. exchanges as dictated by the Index or Sub-Index, as appropriate.  The only other products that the Company may utilize, from time to time, to access certain markets represented in the Index or Sub-Index, as appropriate, are “over-the-counter” forward and swap contracts, although PAM does not anticipate that any such forward or swap contracts will represent a significant portion of investments held by the Company.  The use of forward or swap contracts may cause the Company’s performance to deviate from the performance of the Index or Sub-Index, as appropriate,  more so than if the Company acquired such positions via futures contracts.

Since the Company’s portfolio is based on the Index, or a Sub-Index, there is no active trading by PAM in the traditional sense.  Unlike most other commodity pools, commodity futures are not bought or sold to take advantage of potential profitable price movement.  Instead, PAM engages in only two types of trading on behalf of the Company.  A substantial portion of the trading by PAM is made for the purpose of rolling positions from near delivery dates to later delivery dates in order to ensure that the Company will not take actual delivery of a physical commodity. PAM also engages in trading, monthly as necessary, to rebalance the Company’s exposure to each commodity to its intended weighting within the Index or Sub-Index, as appropriate. 

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The RICI® Committee reviews the Index at least annually to determine whether it may be necessary to change the components or relative weighting of the Index; however, such changes may be made at any time.  Mr. Rogers, as the founder and owner of the Index, chairs the RICI® Committee and is the final arbiter of its decisions.  If an adjustment is necessary to reflect an adjustment in the Index, PAM may add or subtract futures, forward or swap contracts and rebalance the portfolio accordingly. While the Index will be reviewed on at least an annual basis, there is no assurance that any adjustments will be made to the Index and the portfolio as a result.

The current components of the Index and each Sub-Index and their weightings are available at: http://www.rogersrawmaterials.com/weight.asp.

The Company does not and will not: (1) invest in any equity security (other than shares of money market mutual funds) or (2) make loans to any person or entity (other than by the purchase of debt instruments, such as those issued by U.S. government-sponsored enterprise securities or securities issued by federal agencies, as described above).

 

Any interest earned on a Series’ assets will accrue to such Series.

 

Each Series pays the Managing Member in respect of each Member in the Series, monthly in arrears, a management fee equal to 0.054167 of 1% of the month-end net asset value of each Member’s capital account in a Series (a 0.65% annual rate).   Each Series pays the Managing Member in respect of each Member in the Series, monthly in arrears, a support services fee equal to 0.0083 of 1% of the month-end net asset value of each Member’s capital account in a Series (a 0.10% annual rate).  Non-managing members introduced by an approved selling agent (a “Selling Agent”) will be charged a monthly servicing fee of up to 1% per annum as agreed, or as otherwise agreed, between the Member and such Member’s Selling Agent.  Each Series pays commodity brokerage commissions to the clearing broker of an average of approximately $12 per round-turn commodity futures contract, inclusive of execution costs and exchange and regulatory fees, however higher rates may apply for certain domestic contracts and on certain foreign exchanges.  PAM anticipates that the brokerage expense of each Series will not exceed 0.25% of such Series’ average month-end net asset value per year.  Each Series bears its direct operating, offering and organizational expenses, including legal, accounting and administrative expenses (including the fees and expenses of any administrative service providers), audit and tax preparation expenses, expenses associated with the administration of such Series, printing and mailing costs, government fees and taxes and any other operating expenses, including, but not limited to, any extraordinary charges incidental to its trading or the cost of any litigation in which it may become engaged.

   

Regulation

 

Under the Commodity Exchange Act, as amended (“CEA”), commodity exchanges and futures trading are subject to regulation by the CFTC.  The National Futures Association (“NFA”), a “registered futures association” under the CEA, is the only non-exchange self-regulatory organization for futures industry professionals.  The CFTC has delegated to the NFA responsibility for the registration of CTAs, CPOs, futures commission merchants (an “FCM”), introducing brokers (an “IB”) and their respective associated persons and “floor brokers” and “floor traders.”  The CEA requires CPOs and CTAs, such as PAM, commodity brokers or FCMs, such as ADM and RBC, and IBs, such as Price, to be registered and to comply with various reporting and record keeping requirements.  The CFTC may suspend a CPO’s or a CTA’s registration if it finds that its trading practices tend to disrupt orderly market conditions or in certain other situations.  In the event that the registration of PAM as a CPO or a CTA were terminated or suspended, PAM would be unable to continue to manage the business of the Company.  Should PAM’s registration be suspended, termination of the Company might result.

In addition to such registration requirements, the CFTC and certain commodity exchanges have established limits on the maximum net long or net short positions which any person may hold or control in certain futures contracts.  Most exchanges also limit the changes in futures contract prices that may occur during a single trading day.  The CFTC has proposed a position limits rule covering 28 so-called “exempt” (i.e., metals and energy) and agricultural futures and options contracts and their economically equivalent swap contracts.  This proposed rule has not been finalized and is not yet effective.    All accounts controlled by the Managing Member are combined for speculative position limit purposes.  The Managing Member believes, if the CFTC’s position limit rule covering exempt commodities becomes effective, that the limits are sufficiently large that they should not restrict any Series.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Reform Act”), enacted in 2010, mandates that a substantial portion of over-the-counter derivatives be executed in regulated markets and submitted for clearing to regulated clearinghouses.  The mandates imposed by the Reform Act may result in the Company bearing

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higher upfront and mark-to-market margin, less favorable trade pricing, and the possible imposition of new or increased fees in connection with any forward or swap positions entered by the Company.

(i)   through (xii) - not applicable.

(xiii)   the Company has no employees.

(d)   Financial information about geographic areas

The Company does not engage in material operations in foreign countries (although it does trade from the U.S. on foreign futures exchanges), nor is a material portion of its revenues derived from foreign customers.

Item 1A.   Risk Factors

Risk of Loss.  An Investor may incur significant losses on an investment in the Company.  The Managing Member cannot provide any assurance that Members will not lose all or substantially all of their investment.

Past Performance is Not Necessarily Indicative of Future Results.  The past performance of each Series (if any) and of the Managing Member is not necessarily indicative of future results.  For a Series to be profitable, the aggregate value of the futures contracts in the Series’ portfolio (including interest income) must increase at a rate that exceeds the Series’ expenses.

Futures and Forward Contract Trading Is Volatile.  Trading in the futures and forward markets typically results in volatile performance.  Several occasions in the recent past have witnessed sudden and major reversals in these markets, resulting in major losses for traders. 

Highly Leveraged Trading.    Commodity futures contracts are traded on margin, which typically range from about 2% to 20% of the value of the contracts.  The average margin is less than 10% of the value of the contract.  Low margin provides a large amount of leverage, i.e., commodity contracts for a large number of units (bushels, pounds, etc.) of a commodity, having a value substantially greater than the margin, may be traded for a relatively small amount of money. The use of leverage can magnify both profits and losses. 

Markets May Be Illiquid or Disrupted.     Most U.S. futures exchanges limit fluctuations in some futures contract prices during a single day by regulations referred to as “daily limits.”  During a single trading day, no trades may be executed in such contracts at prices beyond the daily limit.  Once the price of a futures contract has increased or decreased to the limit point, positions can be neither taken nor liquidated.  Futures prices have occasionally moved to the daily limit for several consecutive days with little or no trading.  Similar occurrences could prevent a Series from executing trades and subject a Series to substantial losses.  Also, the CFTC or exchanges may suspend or limit trading.  Trading on non-U.S. exchanges and in the forward currency markets is not subject to daily limits, although such trading is also subject to periods of significant illiquidity.

Failure of Brokerage Firms and Forward and Swaps Market Participants.     The CEA requires a clearing broker to segregate all funds received from such broker’s customers in respect of futures (but not forward) transactions from such broker’s proprietary funds.  If any of a Series’ commodity brokers were not to do so to the full extent required by law, or in the event of a substantial default by one or more of such broker’s other customers, the assets of a Series might not be fully protected in the event of the bankruptcy of such broker.  Furthermore, in the event of such a bankruptcy, a Series would be limited to recovering only a pro rata share of all available funds segregated on behalf of the affected commodity broker’s combined customer accounts, even though certain property specifically traceable to a Series (for example, U.S. Treasury bills or cash deposited by a Series with such broker) was held by such broker, and customer funds held by a broker in bankruptcy may not be distributed promptly and may be subject to a lengthy claims process.  Commodity broker bankruptcies have occurred in which customers were not able to recover from the broker’s estate the full amount of their funds on deposit with such broker and owing to them, and it is possible in a commodity broker bankruptcy that customers recover nothing.  Commodity broker bankruptcies are not insured by any governmental agency, and Members would not have the benefit of any protection such as that afforded customers of bankrupt securities broker-dealers by the Securities Investor Protection Corporation (“SIPC”).

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Each Series intends to hold no more than 20% of its assets at CFTC-registered commodity brokers within customer segregated accounts.  The remainder will be held at one or more major federally chartered banks.

 

In respect of its forward or swaps trading, if any, a Series is subject to the risk of the inability or refusal to perform with respect to such contracts on the part of the principals or agents with or through which a Series trades.  Any failure or refusal to discharge their contractual obligations by the counterparties with which a Series deals on the forward or swaps markets, whether due to insolvency, bankruptcy or other causes, could subject a Series to substantial losses.  The Series intend to deal in the forward and swaps markets only with counterparties which the Managing Member considers to be creditworthy.  However, defaults have occurred in the forward and swaps markets, and the risk of such defaults cannot be eliminated from a Series’ trading.

Forwards, Swaps and Other Derivatives are Subject to Varying CFTC Regulation. The Reform Act requires that a substantial portion of over-the-counter derivatives must be executed in regulated markets and submitted for clearing to regulated clearinghouses.  Over-the-counter trades submitted for clearing will be subject to minimum initial and variation margin requirements set by the relevant clearinghouse, as well as possible SEC- or CFTC-mandated margin requirements.  The regulators also have broad discretion to impose margin requirements on non-cleared over-the-counter derivatives.  Over-the-counter derivative dealers also will be required to post margin to the clearinghouses through which they clear their customers’ trades instead of using such margin in their operations, as they currently are allowed to do.  This will further increase the dealers’ costs, which costs are expected to be passed through to other market participants in the form of higher fees and less favorable dealer marks.

Although the Reform Act will require many over-the-counter derivative transactions previously entered into on a principal-to-principal basis to be submitted for clearing by a regulated clearinghouse, certain of the derivatives that may be traded by a Series may remain principal-to-principal or over-the-counter contracts between such Series and third parties entered into privately.  The risk of counterparty nonperformance can be significant in the case of these over-the-counter instruments, and “bid-ask” spreads may be unusually wide in these heretofore substantially unregulated markets.  While the Reform Act is intended in part to reduce these risks, its success in this respect may not be evident for some time after the Reform Act is fully implemented, a process that may take several years. 

Trading on Futures Exchanges outside the U.S.     The Managing Member trades on futures exchanges outside the U.S. on behalf of a Series.  Trading on such exchanges is not regulated by any U.S. government agency and may involve certain risks not applicable to trading on U.S. exchanges.  For example, some foreign exchanges are “principals’ markets” in which performance is the responsibility only of the individual member with whom a Series has traded, not that of the exchange or a clearing facility.  In such cases, a Series will be subject to the risk that the Member with whom the Series has traded is unable or unwilling to perform its obligations under the transaction.  Trading on foreign exchanges also involves the additional risks of expropriation, burdensome or confiscatory taxation, moratoriums, exchange or investment controls and political or diplomatic disruptions, each of which might materially adversely affect a Series’ trading activities.  In trading on foreign exchanges, a Series is also subject to the risk of changes in the exchange rates between the U.S. dollar and the currencies in which the foreign contracts are settled.

Failure of Futures Commission Merchants.  FCMs are required to segregate assets pursuant to CFTC regulations.  If the assets of a Series were not so segregated, a Series would be subject to the risk of the failure of such FCMs.  Even given proper segregation, in the event of the insolvency of an FCM, a Series may be subject to a risk of loss of its funds and would be able to recover only a pro rata share (together with all other commodity customers of such FCM) of assets, such as U.S. Treasury bills, specifically traceable to the account of a Series and its investors.  In commodity broker insolvencies, customers have, in fact, been unable to recover from the broker’s estate the full amount of their “customer” funds.  In addition, under certain circumstances, such as the inability of another client of an FCM or the FCM itself to satisfy substantial deficiencies in such other client’s account, a client may be subject to a risk of loss of the funds on deposit with the FCM, even if such funds are properly segregated.  In the case of any such bankruptcy or client loss, a client might recover only a pro rata share of all property available for distribution to all of the FCM’s clients or possibly, nothing at all.

Substantial Charges to each Series.     Each Series is obligated to pay brokerage commissions to third party brokers, a monthly management fee and support services fee to the Managing Member, a servicing fee to Selling Agents (if applicable), and the operating expenses of such Series and the Company regardless of whether the Series is profitable. 

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Forward or swaps trading, if any, will be conducted in a principals’ market in which counterparties buy and sell among each other and include a “bid-ask” spread in their pricing.  These spreads represent an unknowable execution cost. 

A Bankruptcy Court Could Find the Assets of One Series to be Available to Offset the Liabilities of the Other Series.  The Company is organized as a limited liability company pursuant to Section 18-215 (“Section 18-215”) of the Act, with separate series of limited liability company interests and assets.  Section 18-215 provides that, if certain conditions (as set forth in Section 18-215) are met, the debts, liabilities, obligations and expenses incurred, contracted for or otherwise existing with respect to a particular series shall be enforceable only against the assets of such series and not against the assets of the limited liability company generally or any other series.  Accordingly, the assets of one Series of the Company include only those funds and other assets that are paid to, held by or distributed to the Company on account of and for the benefit of that Series, including, without limitation, funds delivered to the Company for the purchase of Interests in that Series.  However, the limitations on inter-series liability provided by Section 18-215 have never been tested in court.  Thus there is a risk that a court, and in particular, a bankruptcy court, could determine that the assets of one Series should be applied to meet the liabilities of the other Series or the liabilities of the Company generally where the assets of such other Series or of the Company generally are insufficient to meet its liabilities.

Multi-Class Structure.  The Company is issuing separate classes of Interests to Members who first invest in the Total Index Series or the Agricultural Sector Series on or after November 1, 2011.  The classes of Interests related to the same Series, whether issued before, on or after November 1, 2011, are not separate single legal entities and creditors of a Series may, absent contrary contractual provisions, enforce claims against all assets of such Series notwithstanding that the creditor’s claims may relate to a single class of Interests within that Series. 

Termination of License to the Index and of Trading Activities.   The Company has been granted a license to use the Index pursuant to a sub-licensing arrangement. If the license to the Index were to terminate, or the licensing arrangement with the Company were to otherwise terminate, and if the Company was not able to otherwise license the use of the Index, the Company will terminate the offering of its Interests and, if a Series were to experience sufficient withdrawals such that its assets were not sufficient to trade the Index or relevant Sub-Index, such Series would terminate its trading activities, possibly incurring losses in doing so.

Other Clients of the Managing Member and Its Affiliates.     The Managing Member manages accounts other than the Company’s, and may manage accounts in which the Managing Member, its principals and employees have significant investments.  Such accounts compete with the Company for the time and attention of the Managing Member as well as for the same or similar positions in the futures and forward markets.

Possible Adverse Effects of Increasing the Assets Managed by the Managing Member.  The Managing Member has not agreed to limit the amount of additional investments which it may manage pursuant to the trading strategies applied to each Series.  The rates of return achieved by trading advisors often tend to degrade as assets under management increase.  Although the Managing Member pursues a long only index strategy, there can be no assurance that the Managing Member’s trading strategy will not be adversely affected by additional investments accepted by the Managing Member.

Dependence on Key Personnel.     Despite the systematic, index tracking method used by the Managing Member, it is dependent on the services of a limited number of key persons.  The loss of any such persons could make it more difficult for the Managing Member to continue to manage the Company.

Limited Ability to Liquidate Investment in Interests.     An investment in an Interest cannot be immediately liquidated by a Member.  Interests may be transferred only under limited circumstances and no market for Interests will exist at any time.  A Member can liquidate his investment through withdrawal of his Interest.  A Member may require a Series to withdraw all or a portion of his Interest as of the last day of any month, on five business days’ written notice to the Managing Member.  Because notices of withdrawal must be submitted in advance of the actual withdrawal date, the value received upon withdrawal may differ significantly from the value of the Interest at the time a decision to withdraw is made.  Furthermore, because withdrawals occur only after notice periods, Members are not able to select the value, or even the approximate value, at which they will withdraw their Interests.  Withdrawals from any Series made prior to the end of the sixth full calendar month following a non-managing members initial investment in such Series are also generally subject to a withdrawal charge, payable to the Series, equal to 1% of the amount withdrawn. 

Conflicts of Interest.     The Company is subject to a number of actual and potential conflicts of interest.  Such conflicts include, among other things, the possibility of the Managing Member, a commodity broker for the Company or

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any of their respective affiliates favoring other customer accounts or their own proprietary trading in certain respects over that of any Series. 

Members Will Not Participate in Management.     Members will not be entitled to participate in the management of the Company, a Series or the conduct of their business.

Possibility of Tax Audit of the Company.    There can be no assurance that the Company’s tax returns will not be audited by the Internal Revenue Service or that adjustments to such returns will not be made as a result of such an audit.  If an audit results in an adjustment, Members may be required to pay additional taxes, plus interest and possibly penalties.

Possible Changes in the Tax Code.    In recent years, the U.S. federal income tax law has undergone repeated and substantial changes, a number of which have been materially adverse, or potentially materially adverse, to investment partnerships.  It is impossible to predict what the effect of future changes in the Internal Revenue Code of 1986, as amended  will be on an investment in the Company.

Accounting for Uncertainty in Income Taxes.    Accounting Standards Codification Topic No. 740, “Income Taxes” (in part formerly known as FASB Interpretation No. 48 “FIN 48”) (“ASC 740”), provides guidance on the recognition of uncertain tax positions.  ASC 740 prescribes the minimum recognition threshold that a tax position is required to meet before being recognized in an entity’s financial statements.  It also provides guidance on recognition, measurement, classification and interest and penalties with respect to tax positions.  A prospective investor should be aware that, among other things, ASC 740 could have a material adverse effect on the periodic calculations of the Net Asset Value of a Series, including reducing the Net Asset Value of a Series to reflect reserves for income taxes, such as foreign withholding taxes, that may be payable by a Series.  This could cause benefits or detriments to certain investors, depending upon the timing of their entry and exit from a Series.

Statutory Regulation.     Although the Company and the Managing Member are subject to regulation by the CFTC, the Company is not registered under the Investment Company Act of 1940, as amended.  Investors are, therefore, not accorded the protection provided by such legislation.

Future Regulatory and Market Changes.   The regulation of the U.S. commodities markets has undergone substantial change in recent years, a process which is expected to continue, particularly as rules are enacted by the CFTC pursuant to the Reform Act. 

In addition to regulatory changes, the economic features of the markets to be traded by a Series have undergone, and are expected to continue to undergo, rapid and substantial changes as new strategies and instruments are introduced.  Furthermore, the number of participants, particularly institutional participants, in the futures, forward and swap markets appears to have expanded substantially.  There can be no assurance as to how the Managing Member will perform given the changes to, and increased competition in, the marketplace.

Item 1B.Unresolved Staff Comments

Not required.

Item 2.   Properties

The Company does not own or use any physical properties in the conduct of its business.  PAM performs all administrative services for the Company from PAM’s offices at 141 West Jackson Blvd., Suite 1320A, Chicago, IL, 60604.

Item 3.   Legal Proceedings

The Company is not aware of any pending legal proceedings to which either the Company is a party or to which any of its assets are subject.  In addition, there are no pending material legal proceedings involving PAM.  The Company has no subsidiaries.

Item 4.   Mine Safety Disclosures

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Not applicable.

PART II

 

Item 5.   Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasers of Equity Securities

 

(a)   Market Information

There is no trading market for the Interests, and none is likely to develop.  Interests may be withdrawn or transferred subject to the conditions imposed by the Operating Agreement.

(b)   Holders

As of February 28, 2015, there were 686 holders of Total Index Series Interests, 50 holders of Agricultural Sector Series Interests, 0 holders of Energy Sector Series Interests and 0 holders of Metal Sector Series Interests.

(c)   Dividends

None.

(d)   Securities Authorized for Issuance Under Equity Compensation Plans

None.

(e)   Recent Sales of Unregistered Securities

The Company uses proceeds from sales of securities for futures trading.

During the last fiscal quarter of 2014, the Total Index Series issued Interests, to both new and existing Members, in the following dollar amounts: October – $320,838, November – $0 and December –$190,514.

 

During the last fiscal quarter of 2014, the Agricultural Sector Series issued no new Interests.

 

Each of the foregoing Interests was privately offered and sold only to “accredited investors,” as defined in Rule 501(a) under the Securities Act of 1933, as amended (the “1933 Act”), in reliance on the exemption from registration provided by Rule 506 under the 1933 Act, and are persons with whom the Managing Member, Uhlmann Price Securities, LLC, the Company’s marketing representative (the “Marketing Representative”), or a Selling Agent have a pre-existing substantive relationship and with respect to whom it has been determined that the Interests are a suitable investment.

(f)   Issuer Purchases of Equity Securities    

Pursuant to the Operating Agreement, Members may withdraw capital from their capital accounts as of the end of each calendar month.  The withdrawal of capital by Members has no impact on the value of the capital accounts of other Members. 

The following table summarizes the withdrawals by Members from the Total Index Series during the three months ended December 31, 2014:

 

 

The following table summarizes the withdrawals by Members from the Agricultural Sector Series during the three months ended December 31, 2014:

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Item 6.   Selected Financial Data

The following selected financial data of the Total Index Series, the Agricultural Sector Series, the Energy Sector Series and the Company as of and for the years ended December 31, 2014, 2013, 2012, 2011 and 2010 is derived from the financial statements that have been audited by McGladrey LLP (“McGladrey”),  the Company’s independent registered public accounting firm.  This financial data should be read in conjunction with the Company's financial statements and the notes thereto included elsewhere in this Prospectus and with Management's Discussion and Analysis of Results of Operations and Financial Condition which follows.    

 

 

 

 

 

 

 

 

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* The Energy Sector Series commenced operations on January 1, 2010 but ceased operations after paying out withdrawal proceeds with respect to the July 31, 2010 withdrawal date.  

 

 

 

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Liquidity

 

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The Company generally holds approximately 90% of its assets as cash, cash equivalents with maturities of three months or less, U.S. government-sponsored enterprise securities or securities issued by federal agencies (or, to a limited extent, foreign government securities in connection with trading on non-U.S. exchanges), other CFTC-authorized investments, shares of mutual funds and certain other money market investments (e.g., bankers acceptances and Eurodollar or other time deposits) through one or more federally chartered U.S. banking institutions.  The aforementioned positions are withdrawn, as necessary, to pay withdrawals and expenses.  The Managing Member will commit the remaining assets of each Series to margin such Series’ futures, forward and swap positions such that the total market exposure of each Series is approximately equal to its net assets.  Other than potential market-imposed limitations on liquidity, due, for example, to limited open interest in certain futures markets or to daily price fluctuation limits, which are inherent in the Company’s futures trading, the Company’s assets are highly liquid and are expected to remain so.  During its operations through December 31, 2014, the Company experienced no meaningful periods of illiquidity in any of the markets traded by the Managing Member on behalf of the Company.

Capital Resources

The Company raises additional capital only through the sale of Interests and capital is increased through trading profits (if any) and through interest income.  The Company does not engage in borrowing.

The amount of capital raised for the Company should not have a significant impact on its operations, as the Company has no significant capital expenditure or working capital requirements other than for monies to pay trading losses, brokerage commissions and expenses.  Within broad ranges of capitalization, the Company’s trading positions should increase or decrease in approximate proportion to the size of the Company.

Due to the nature of the Company’s business, substantially all its assets are represented by cash, cash equivalents with maturities of three months or less, U.S. government-sponsored enterprise securities or securities issued by federal agencies (or, to a limited extent, foreign government securities in connection with trading on non-U.S. exchanges), other CFTC-authorized investments, shares of mutual funds and certain other money market investments (e.g., bankers acceptances and Eurodollar or other time deposits) through one or more federally chartered U.S. banking institutions, while the Company currently maintains its market exposure through open futures contract positions. 

The Company trades futures contracts on U.S. and non-U.S. markets, substantially all of which are subject to margin requirements.  The minimum amount of margin required for each contract is set from time to time in response to various market factors by the respective exchanges.  Further, the Company’s counterparties or brokers may require margin in excess of minimum exchange requirements.  Risk arises from changes in the value of these instruments (market risk) and the potential inability of counterparties or brokers to perform under the terms of their contracts (credit risk).  Market risk is generally to be measured by the notional value, or face amount, of the futures positions acquired and the volatility of the markets traded.  The credit risk from counterparty non-performance associated with these instruments is the net unrealized gain, if any, on these positions plus the value of the margin or collateral held by the counterparty.  The counterparty for futures contracts traded in the U.S. is the clearinghouse associated with the relevant exchange.  Clearinghouse arrangements are generally perceived to reduce credit risk because, in general, clearinghouses are backed by the corporate members of the clearinghouses, which are required to share any financial burden resulting from the non-performance of any one of the members of the clearinghouse. 

All of the contracts currently traded by the Managing Member on behalf of the Company are exchange-traded, although the Managing Member is authorized to, and may in the future, trade over-the-counter forward and swap contracts.  The risks associated with exchange-traded contracts are generally perceived to be less than those associated with over-the-counter transactions since, in over-the-counter transactions, the Company must rely solely on the credit of its respective trading counterparties, whereas exchange-traded contracts are generally, but not universally, backed by the collective credit of the members of the clearinghouse.  In the future, the Company may enter into non-exchange traded contracts and be subject to the credit risk associated with counterparty non-performance.  The Managing Member attempts to control credit risk associated with off-exchange transactions, if any, by dealing exclusively with large, well capitalized banks and dealers.

Critical Accounting Estimates

The Company’s securities and derivative financial instruments are recorded on a trade date basis and at fair value.  The fair values of exchange traded futures contracts are based upon exchange settlement prices.  Shares of mutual

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funds, which include money market funds, are valued at the net asset value based on quoted market prices.  Government-sponsored enterprise securities valued using quoted market prices. 

The Company accounts for subscriptions, allocations and withdrawals on a per Member capital account basis.  Income or loss is allocated pro rata to the capital accounts of all Members.

The preparation of financial statements in conformity with GAAP requires the Managing Member to make estimates and assumptions, such as accrual of expenses, that affect the amounts and disclosures reported in the financial statements.  Based on the nature of the business and operations of the Company, the Managing Member believes that the estimates utilized in preparing the Company’s financial statements are appropriate and reasonable; however, actual results could differ from these estimates. 

The estimates used do not provide a range of possible results that would require the exercise of subjective judgment.  The Managing Member further believes that, based on the nature of the business and operations of the Company, no other reasonable assumptions relating to the application of the Company’s critical accounting estimates other than those currently used would likely result in materially different amounts from those reported.

Results of Operations

The rules the Managing Member follows in replicating the Index or a Sub-Index, as appropriate, on behalf of the Company do not predict price movements, nor do they rely on fundamental economic supply or demand analysis or on macroeconomic assessments of the relative strengths of different national economies or economic sectors.  Instead, the rules are designed to follow passively, on an essentially unleveraged basis, changes in an index of raw materials traded in the world markets and, unlike with operating companies, operational or micro-economic trends have no relevance.  Generally, if prices of commodities rise, then the value of an investment should appreciate. Correspondingly, if commodity prices decline, then the value of an investment should go down. 

The performance summary set forth below is an outline description of how the Company, on a Series by Series basis, has performed in the past.  The portfolios of the Series are marked-to-market every trading day and their trading accounts are credited or debited with their daily gains or losses.  Each Series’ past performance is not necessarily indicative of how it will perform in the future.

 

Three Months ended December 31, 2014

Total Index Series

During the fourth quarter of 2014, the Total Index Series achieved a net realized and unrealized loss of $30,583,411 from its trading operations, which is net of brokerage commissions of $105,209.  The Total Index Series incurred total expenses of $423,462 including $282,403 in Management Fees (paid to the Managing Member), $14,824 in Servicing Fees (paid to selling agents), $83,812 in operating expenses, and $43,423 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index series earned $1,846 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

The Total Index Series posted a net loss of (1.71)% in October. The agricultural sector posted a gain of 2.49% and the energy and metals sectors posted a net loss of (3.84)% and (0.35)%, respectively.    Highest grossing commodities for the Total Index Series’ performance in October were corn, wheat, soybeans, aluminum, and soybean meal.

 

The Total Index Series posted a net loss of (6.55)% in November. All three sectors, agricultural, energy and metals posted losses of (0.18)%, (5.92)% and (0.45)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in November were wheat, natural gas, KC wheat, milling wheat and orange juice.

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The Total Index Series posted a net loss of (8.67)% in December. All three sectors, agricultural, energy and metals  posted a loss of (0.17)%, (7.86)% and (0.65)%, respectively.  The highest grossing commodities for the Total Index Series’ performance in December were wheat, corn, milling wheat, rubber, and cocoa.  

Agricultural Sector Series

During the fourth quarter of 2014, the Agricultural Sector Series achieved a net realized and unrealized gain of $183,294 from its trading operations, which is net of brokerage commissions of $3,146.  The Agricultural Sector Series incurred total expenses of $19,353, including $4,886 in Management Fees (paid to the Managing Member), $1,927 in Servicing Fees (paid to selling agents), $11,788 in operating expenses, and $751 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $232 in interest income.  

 

The Agricultural Sector Series posted a net gain of 6.96% in October. Highest grossing commodities for the Agricultural Sector Series’ performance in October were corm, CBT wheat, soybeans, soybean meal, and cotton.

 

The Agricultural Sector Series posted a net loss of (0.65)% in November. Highest grossing commodities for the Agricultural Sector Series’ performance in November were CBT wheat, KC wheat, orange juice, milling wheat, and live cattle.

 

The Agricultural Sector Series posted a net loss of (6.65)% in December. Highest grossing commodities for the Agricultural Sector Series’ performance in December were CBT wheat, corn, milling wheat, rubber, and Euro rapeseed.

 

Three Months ended September 30, 2014

Total Index Series

During the third quarter of 2014, the Total Index Series achieved a net realized and unrealized loss of $27,725,290 from its trading operations, which is net of brokerage commissions of $99,367.  The Total Index Series incurred total expenses of $521,638 including $339,313 in Management Fees (paid to the Managing Member), $17,945 in Servicing Fees (paid to selling agents), $112,206 in operating expenses, and $52,174 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index series earned $2,382 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

The Total Index Series posted a net loss of (5.07)% in July. The metals sector posted a modest gain of 0.13% and the agricultural and energy sectors posted a net loss of (2.52)% and (2.68)%, respectively.    Highest grossing commodities for the Total Index Series’ performance in July were oats, zinc, aluminum, robusta coffee and palladium.

 

The Total Index Series posted a net loss of (0.97)% in August. All three sectors, agricultural, energy and metals posted losses of (0.38)%, (0.46)% and (0.13)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in August were milk, cotton, natural gas, lumber and aluminum.

 

The Total Index Series posted a net loss of (6.63)% in September. All three sectors, agricultural, energy and metals  posted a loss of (2.61)%, (2.17)% and (1.85)%, respectively.  The highest grossing commodities for the Total Index Series’ performance in September were live cattle, milk, lean hogs, soybean oil and rice.

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Agricultural Sector Series

During the third quarter of 2014, the Agricultural Sector Series achieved a net realized and unrealized loss of $542,510 from its trading operations, which is net of brokerage commissions of $3,146.  The Agricultural Sector Series incurred total expenses of $20,170, including $5,118 in Management Fees (paid to the Managing Member), $2,012 in Servicing Fees (paid to selling agents), $12,252 in operating expenses, and $788 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $248 in interest income.  

The Agricultural Sector Series posted a net loss of (7.60)% in July. Highest grossing commodities for the Agricultural Sector Series’ performance in July were oats, robusta coffee, live cattle, milk and cocoa.

 

The Agricultural Sector Series posted a net loss of (1.32)% in August. Highest grossing commodities for the Agricultural Sector Series’ performance in August were milk, cotton, lumber, orange juice and oats.

 

The Agricultural Sector Series posted a net loss of (7.71)% in September. Highest grossing commodities for the Agricultural Sector Series’ performance in September were live cattle, milk, lean hogs, soybean oil and rice.

Three Months ended June 30, 2014

Total Index Series

 

During the second quarter of 2014, the Total Index Series achieved a net realized and unrealized gain of $1,142,704 from its trading operations, which is net of brokerage commissions of $108,019.  The Total Index Series incurred total expenses of $530,691 including $354,399 in Management Fees (paid to the Managing Member), $20,056 in Servicing Fees (paid to Selling Agents), $101,032 in operating expenses, and $58,626 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).   The Total Index Series earned $3,422 in interest income.  An analysis of trading losses (net of all trading fees and expenses) by market sector is as follows:

 

 

             The Total Index Series posted a net gain of 1.17% in April.  All three sectors, agricultural, energy and metals posted gains of .56, .41%, and .19%, respectively.  Highest grossing commodities for the Total Index Series’ performance in April were nickel, natural gas, soybean meal, hard red winter wheat and soybeans.

 

The Total Index Series posted a net loss of (1.78)% in May.  The energy sector posted a gain of .52% while the agricultural and metals sectors posted losses of (2.28)% and (.02%), respectively. Highest grossing commodities for the Total Index Series’ performance in May were nickel, cocoa, copper, palladium and crude oil.

 

The Total Index Series posted a net gain of 1.15% in June.  The energy and metals sectors posted a gain of 1.10% and 1.20%, respectively, while the agricultural sector posted a loss of (1.14)%. Highest grossing commodities for the Total Index Series’ performance in June were silver, live cattle, zinc, lumber and lean hogs.

 

Agricultural Sector Series 

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During the second quarter of 2014, the Agricultural Sector Series achieved a net realized and unrealized loss of $329,416, from its trading operations, which is net of brokerage commissions of $3,172.  The Agricultural Sector Series incurred total expenses of $23,267, including $6,218 in Management Fees (paid to the Managing Member), $2,401 in Servicing Fees (paid to selling agents), $13,692 in operating expenses, and $956 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $485 in interest income.  

 

The Agricultural Sector Series posted a net gain of 1.34% in April. Highest grossing commodities for the Agricultural Sector Series’ performance in April were soybean meal, hard red winter wheat, soybeans, orange juice and robusta coffee.

 

The Agricultural Sector Series posted a net loss of (6.66)% in May. Highest grossing commodities for the Agricultural Sector Series’ performance in May were cocoa, oats, lean hogs, live cattle and soybean meal.

 

The Agricultural Sector Series posted a net loss of (3.52) in June. Highest grossing commodities for the Agricultural Sector Series’ performance in June were live cattle, lumber, lean hogs, rubber and robusta coffee.

 

The performance summary set forth below is an outline description of how the Company, on a Series by Series basis, has performed in the past.  The portfolios of the Series are marked-to-market every trading day and their trading accounts are credited or debited with their daily gains or losses.  Past performance is not necessarily indicative of how they will perform in the future.  The activities of the Company on a consolidating basis are explained through the activity of the underlying Series.  Please refer to the discussion of the Series activities in relation to the Company on a consolidating basis. 

 

Three Months ended March 2014

 

Total Index Series

 

During the first quarter of 2014, the Total Index Series achieved a net realized and unrealized gain of $10,561,459 from its trading operations, which is net of brokerage commissions of $129,916.  The Total Index Series incurred total expenses of $540,569 including $366,721 in Management Fees (paid to the Managing Member), $19,837 in Servicing Fees (paid to selling agents), $96,845 in operating expenses, and $57,166 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index series earned $4,736 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

 

The Total Index Series posted a net loss of (1.27)% in January. All three sectors, agricultural, energy and metals posted losses of (0.29)%, (0.46)% and (0.51)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in January were milk, natural gas, oats, robusta coffee and cocoa.

 

The Total Index Series posted a gain of 5.38% in February. All three sectors, agricultural, energy and metals posted gains of 2.54%, 1.89% and 0.94%, respectively.  Highest grossing commodities for the Total Index Series’ performance in February were live cattle, lean hogs, robusta coffee, sugar and white sugar.

 

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The Total Index Series posted a net gain of 0.80% in March. The agricultural sector posted a gain of 2.01% and the energy and metals  posted a loss of (0.40)% and (0.80)%, respectively.  The highest grossing commodities for the Total Index Series’ performance in March were milk, hard red winter wheat, lean hogs, soft red winter wheat and corn.

 

 

 

Agricultural Sector Series

 

During the first quarter of 2014, the Agricultural Sector Series achieved a net realized and unrealized gain of $803,937 from its trading operations, which is net of brokerage commissions of $5,865.  The Agricultural Sector Series incurred total expenses of $29,669, including $11,827 in Management Fees (paid to the Managing Member), $2,468 in Servicing Fees (paid to selling agents), $13,557 in operating expenses, and $1,818 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $528 in interest income.  

 

The Agricultural Sector Series posted a net loss of (0.93)% in January. Highest grossing commodities for the Agricultural Sector Series’ performance in January were milk, oats, robusta coffee, cocoa and lean hogs.

 

The Agricultural Sector Series posted a net gain of 6.51% in February. Highest grossing commodities for the Agricultural Sector Series’ performance in February were live cattle, lean hogs, robusta coffee, sugar and white sugar.

 

The Agricultural Sector Series posted a net gain of 5.44% in March. Highest grossing commodities for the Agricultural Sector Series’ performance in March were milk, soft red winter wheat, lean hogs, hard red winter wheat and corn.

Three Months ended December 31, 2013

 

Total Index Series

 

During the fourth quarter of 2013, the Total Index Series achieved a net realized and unrealized loss of $3,505,903 from its trading operations, which is net of brokerage commissions of $114,738.  The Total Index Series incurred total expenses of $549,852 including $377,762 in Management Fees (paid to the Managing Member), $20,226 in Servicing Fees (paid to selling agents), $93,790 in operating expenses, and $58,085 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index Series earned $4,277 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

 

The Total Index Series posted a net loss of (1.89)% in October. The agricultural and energy sectors posted losses of (.90)% and (1.12)%, respectively and the metals sector posted a net gain of 0.13%  Highest grossing commodities for the Total Index Series’ performance in October were milk, nickel, milling wheat, lumber and oats.

 

The Total Index Series posted a net loss of (1.21)% in November. The energy and metals sectors posted losses of (.34)% and (1.14)%, respectively and the agricultural sector posted a net gain of 0.27%.  Highest grossing commodities

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for the Total Index Series’ performance in November were orange juice, robusta coffee, soybean meal, natural gas and oats.

 

The Total Index Series posted a net gain of 1.68% in December. The energy and metals sectors posted gains of 1.86% and 0.41%, respectively and the agricultural sector posted a net loss of (0.59)%.  The highest grossing commodities for the Total Index Series’ performance in December were zinc, milk, natural gas, oats and cotton.  

Agricultural Sector Series

 

During the fourth quarter of 2013, the Agricultural Sector Series achieved a net realized and unrealized loss of $272,760 from its trading operations, which is net of brokerage commissions of $5,014.  The Agricultural Sector Series incurred total expenses of $30,673, including $12,603 in Management Fees (paid to the Managing Member), $2,539 in Servicing Fees (paid to selling agents), $13,595 in operating expenses, and $1,937 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $329 in interest income.  

 

The Agricultural Sector Series posted a net loss of (2.67)% in October. Highest grossing commodities for the Agricultural Sector Series’ performance in October were milk, milling wheat, lumber, oats and lean hogs.

The Agricultural Sector Series posted a net gain of 0.58% in November. Highest grossing commodities for the Agricultural Sector Series’ performance in November were orange juice, robusta coffee, oats, soybean meal and soybeans.

 

The Agricultural Sector Series posted a net loss of (1.76)% in December. Highest grossing commodities for the Agricultural Sector Series’ performance in December were milk, oats, cotton, robusta coffee and rubber.

 

Three Months ended September 30, 2013

 

Total Index Series

 

During the third quarter of 2013, the Total Index Series achieved a net realized and unrealized gain of $10,485,263 from its trading operations, which is net of brokerage commissions of $110,876.  The Total Index Series incurred total expenses of $604,633 including $399,333 in Management Fees (paid to the Managing Member), $21,928 in Servicing Fees (paid to selling agents), $121,969 in operating expenses, and $61,403 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index Series earned $2,856 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

The Total Index Series posted a net gain of 3.35% in July. The energy and metals sectors posted gains of 3.15% and 0.50%, respectively and the agricultural sector posted a net loss of (0.30)%  Highest grossing commodities for the Total Index Series’ performance in July were orange juice, RBOB gasoline, palladium, cocoa and crude oil.

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The Total Index Series posted a gain of 3.42% in August. All three sectors, agricultural, energy and metals posted gains of 0.52%, 1.93% and 0.97%, respectively.  Highest grossing commodities for the Total Index Series’ performance in August were silver, soybean meal, soybeans, rubber and platinum.

 

The Total Index Series posted a net loss of (2.38)% in September. All three sectors, agricultural, energy and metals  posted a loss of (0.26)%, (1.89)% and (0.23)%, respectively.  The highest grossing commodities for the Total Index Series’ performance in September were tin, lumber, sugar, cocoa and milling wheat.

 

 

Agricultural Sector Series

 

During the third quarter of 2013, the Agricultural Sector Series achieved a net realized and unrealized loss of $16,966 from its trading operations, which is net of brokerage commissions of $4,773.  The Agricultural Sector Series incurred total expenses of $33,071, including $14,916 in Management Fees (paid to the Managing Member), $2,882 in Servicing Fees (paid to selling agents), $12,979 in operating expenses, and $2,294 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $291 in interest income.  

 

The Agricultural Sector Series posted a net loss of (1.02)% in July. Highest grossing commodities for the Agricultural Sector Series’ performance in July were orange juice, cocoa, robusta coffee, lumber and rubber.

 

The Agricultural Sector Series posted a net gain of 1.35% in August. Highest grossing commodities for the Agricultural Sector Series’ performance in August were soybean meal, soybeans, rubber, rapeseed and lean hogs.

 

The Agricultural Sector Series posted a net loss of (0.81)% in September. Highest grossing commodities for the Agricultural Sector Series’ performance in September were lumber, sugar, cocoa, milling wheat and  hard red winter wheat.

 

Three Months ended June 30, 2013

 

Total Index Series

 

During the second quarter of 2013, the Total Index Series achieved a net realized and unrealized loss of $19,932,997 from its trading operations, which is net of brokerage commissions of $146,973.  The Total Index Series incurred total expenses of $603,750 including $408,277 in Management Fees (paid to the Managing Member), $22,591 in Servicing Fees (paid to Selling Agents), $110,104 in operating expenses, and $62,778 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).   The Total Index Series earned $3,629 in interest income.  An analysis of trading losses (net of all trading fees and expenses) by market sector is as follows:

 

 

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             The Total Index Series posted a net loss of (3.72)% in April.  All three sectors, agricultural, energy and metals, posted losses of (0.15)%, (2.19)% and (1.38)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in April were hard red winter wheat, natural gas, cocoa, soft red winter wheat and orange juice.

 

The Total Index Series posted a net loss of (1.71)% in May.  The metals sector posted a gain of .03% while the agricultural and energy sectors posted losses of (.77)% and (.97)%, respectively. Highest grossing commodities for the Total Index Series’ performance in May were lead, soybean meal, soybeans, orange juice and palladium.

 

The Total Index Series posted a net loss of (2.31)% in June.  The energy sector posted a gain of 1.02% while the agricultural and metals sectors posted losses of (1.49)% and (1.84)%, respectively. Highest grossing commodities for the Total Index Series’ performance in June were corn, oats, soybean meal, soft red winter wheat and natural gas.

 

 

 

Agricultural Sector Series 

 

During the second quarter of 2013, the Agricultural Sector Series achieved a net realized and unrealized loss of $714,480, from its trading operations, which is net of brokerage commissions of $8,323.  The Agricultural Sector Series incurred total expenses of $37,941, including $16,568 in Management Fees (paid to the Managing Member), $3,551 in Servicing Fees (paid to selling agents), $15,275 in operating expenses, and $2,547 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $320 in interest income.  

 

The Agricultural Sector Series posted a net loss of (0.65)% in April. Highest grossing commodities for the Agricultural Sector Series’ performance in April were heard red winter wheat, cocoa, soft red winter wheat, orange juice and soybean meal.

 

The Agricultural Sector Series posted a net loss of (2.30)% in May. Highest grossing commodities for the Agricultural Sector Series’ performance in May were soybean meal, soybeans, orange juice, corn and lean hogs.

 

The Agricultural Sector Series posted a net loss of (4.35%) in June. Highest grossing commodities for the Agricultural Sector Series’ performance in June were white sugar, lean hogs, cotton, live cattle and rice.

 

Three Months ended March 31, 2013

 

Total Index Series

 

During the first quarter of 2013, the Total Index Series achieved a net realized and unrealized gain of $314,805 from its trading operations, which is net of brokerage commissions of $120,863.  The Total Index Series incurred total expenses of $667,294 including $458,497 in Management Fees (paid to the Managing Member), $26,955 in Servicing Fees (paid to selling agents), $111,342 in operating expenses, and $70,500 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index Series earned $5,503 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

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The Total Index Series posted a net gain of 3.83% in January. All three sectors, agricultural, energy and metals, posted gains of 0.96%, 2.28% and 0.59%, respectively.  Highest grossing commodities for the Total Index Series’ performance in January were cotton, RBOB gasoline, platinum, nickel and soybean oil.

 

The Total Index Series posted a net loss of (4.35)% in February. All three sectors, agricultural, energy and metals, posted losses of (1.18)%, (1.89)% and (1.28)%, respectively. Highest grossing commodities for the Total Index Series’ performance in February were lumber, orange juice, robusta coffee, soybean meal and oats.

 

The Total Index Series posted a net gain of .39% in March. The energy sector posted a net gain of 1.53%, and the agricultural and metals sector posted a net loss of (.44)% and (.70)%, respectively.   Highest grossing commodities for the Total Index Series’ performance in March were natural gas, orange juice, crude oil, oats and palladium.

 

 

 

Agricultural Sector Series

During the first quarter of 2013, the Agricultural Sector Series achieved a net realized and unrealized loss of $189,479 from its trading operations, which is net of brokerage commissions of $6,491.  The Agricultural Sector Series incurred total expenses of $39,686, including $19,191 in Management Fees (paid to the Managing Member), $4,379 in Servicing Fees (paid to selling agents), $13,165 in operating expenses, and $2,951 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $262 in interest income.  

 

The Agricultural Sector Series posted a net gain of 2.71% in January. Highest grossing commodities for the Agricultural Sector Series’ performance in January were cotton, soybean oil, corn, canola and soybeans.

 

The Agricultural Sector Series posted a net loss of (3.25)% in February.   Highest grossing commodities for the Agricultural Sector Series’ performance in February were lumber, orange juice, robusta coffee soybean meal and oats.

 

The Agricultural Sector Series posted a net loss of (1.31)% in March. Highest grossing commodities for the Agricultural Sector Series’ performance in March were orange juice, oats, cotton, soybean oil and cocoa.

Three Months ended December 31, 2012

Total Index Series

During the fourth quarter of 2012, the Total Index Series achieved a net realized and unrealized loss of $10,092,028 from its trading operations, which is net of brokerage commissions of $125,418.  The Total Index Series incurred total expenses of $675,300, including $468,770 in management fees (paid to the Managing Member), $27,046 in servicing fees (paid to Selling Agents) and $107,406 in operating expenses, and $72,078 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related to services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member.  The Total Index Series earned $8,895 in interest income.  An analysis of trading losses (net of all trading fees and expenses) by market sector is as follows:

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The Total Index Series posted a net loss of (4.29)% in October. All three sectors, agricultural, energy and metals, posted losses of (0.70)%,  (1.99)% and (1.60)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in October were lumber, lean hogs, oats, natural gas and canola.  

The Total Index Series posted a net gain of 1.83% in November. The energy and metals sectors posted gains of 0.96% and 1.17%, respectively, while the agricultural sector posted a loss of (0.30)%.  Highest grossing commodities for the Total Index Series’ performance in November were orange juice, palladium, tin, aluminum and zinc.

The Total Index Series posted a net loss of (0.89)% in December. The energy sector posted a  gain of 0.45%, while the agricultural and metals sectors posted losses of (1.04)% and (0.30)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in December were cocoa, soft red winter wheat, hard red winter wheat and oats.

 

On November 1, 2012, the Company sold its MF Global claims for both the Total Index Series and the Agricultural Sector Series.  The U.S. trading account claims (4d) were sold for 97.75% of the total claim amount and the foreign futures trading accounts (30.7) were sold for 92.75% of the total claim amount.  The sale amount of the claims was recorded on October 31, 2012 and the proceeds were received on November 2, 2012 for the Total Index Series in the amount of $16,047,085. The gains from the sale of the claims was $3,498,086.

Agricultural Sector Series

During the fourth quarter of 2012, the Agricultural Sector Series achieved a net realized and unrealized loss of $767,766 from its trading operations, which is net of brokerage commissions of $7,592.  The Agricultural Sector Series incurred total expenses of  $42,036, including $20,679 in Management Fees (paid to the Managing Member), $4,590 in Servicing Fees (paid to selling agents), and $13,586 in operating expenses, and $3,181 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related to services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member. The Agricultural Sector Series earned $536 in interest income.  

 

The Agricultural Sector Series posted a net gain of .11% in October.  Highest grossing commodities for the Agricultural Sector Series’ performance in October were lumber, lean hogs, oats, canola and milk.

 

The Agricultural Sector Series posted a net loss of (0.96)% in November.  Highest grossing commodities for the Agricultural Sector Series’ performance in November were orange juice, cocoa, cotton, lean hogs and lumber.

 

The Agricultural Sector Series posted a net loss of (3.13)% in December.  Highest grossing commodities for the Agricultural Sector Series’ performance in December were rubber, lumber, cotton, live cattle and sugar.

 

On November 1, 2012, the Company sold its MF Global claims for both the Total Index Series and the Agricultural Sector Series.  The U.S. trading account claims (4d) were sold for 97.75% of the total claim amount and the foreign futures trading accounts (30.7) were sold for 92.75% of the total claim amount.  The sale amount of the claims was recorded on October 31, 2012 and the proceeds were received on November 2, 2012 for the Agricultural Sector Series in the amount of  and $1,339,829.  The gains from the sale of the claims was $298,818.

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Three Months ended September 30, 2012

Total Index Series

During the third quarter of 2012, the Total Index Series achieved a net realized and unrealized gain of $30,641,928 from its trading operations, which is net of brokerage commissions of $116,346.  The Total Index Series incurred total expenses of $691,414 including $483,149 in Management Fees (paid to the Managing Member), $28,340 in Servicing Fees (paid to selling agents), $105,634 in operating expenses, and $74,291 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index Series earned $8,032 in interest income.  An analysis of trading gains and losses by market sector is as follows:

 

 

The Total Index Series posted a net gain of 5.76% in July. The agricultural and energy sectors posted gains of 3.42% and 2.56%, respectively and the metals sector posted a net loss of (0.22)%  Highest grossing commodities for the Total Index Series’ performance in July were corn, soybean meal, hard red winter wheat, soft red winter wheat and soybeans.

 

The Total Index Series posted a net gain of 4.82% in August. All three sectors, agricultural, energy and metals posted gains of 0.42%,  3.70% and 0.70%, respectively.  Highest grossing commodities for the Total Index Series’ performance in September were RBOB gasoline, silver, heating oil, brent oil and gas oil.

The Total Index Series posted a net gain of 0.36% in September.  The metals sector posted a gain of 2.10% and the agricultural and energy sectors posted losses of (0.92)% and (0.82)%, respectively.  The highest grossing commodities for the Total Index Series’ performance in August were rubber, lead, nickel, zinc and natural gas.

 

Agricultural Sector Series

During the third quarter of 2012, the Agricultural Sector Series achieved a net realized and unrealized gain of $1,074,972 from its trading operations, which is net of brokerage commissions of $5,118.  The Agricultural Sector Series incurred total expenses of $43,037, including $21,991 in Management Fees (paid to the Managing Member), $4,940 in Servicing Fees (paid to selling agents), $12,726 in operating expenses, and $3,380 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $570 in interest income.  

The Agricultural Sector Series posted a net gain of 9.86% in July. Highest grossing commodities for the Agricultural Sector Series’ performance in July were corn, soybean meal, hard red winter wheat, soft red winter wheat and soybeans.

 

The Agricultural Sector Series posted a net gain of 1.11% in August. Highest grossing commodities for the Agricultural Sector Series’ performance in August were cocoa, orange juice, cotton, soybean meal and soybeans.

 

The Agricultural Sector Series posted a net loss of (2.44)% in September. Highest grossing commodities for the Agricultural Sector Series’ performance in September were rubber, milk, coffee, hard red winter wheat and milling wheat.

Three Months ended June 30, 2012

Total Index Series

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During the second quarter of 2012, the Total Index Series achieved a net realized and unrealized loss of $30,137,196 from its trading operations, which is net of brokerage commissions of $136,264.  The Total Index Series incurred total expenses of $670,777 including $460,154 in Management Fees (paid to the Managing Member), $27,356 in Servicing Fees (paid to Selling Agents), $112,512 in operating expenses, and $70,755 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).   The Total Index Series earned $4,866 in interest income.  An analysis of trading losses (net of all trading fees and expenses) by market sector is as follows:

 

 

The Total Index Series posted a net loss of (0.7)% in April.  All three sectors, agricultural, energy and metals, posted losses of (0.55)%, (0.12)% and (0.06)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in April were soybean meal, azuki beans, soybeans, lumber and lead.

 

The Total Index Series posted a net loss of (11.5)% in May.  All three sectors, agricultural, energy and metals, posted losses of (3.04)%, (6.49)% and (1.98)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in May were milk, lean hogs, live cattle, natural gas and milling wheat.

 

The Total Index Series posted a net gain of 2.8% in June.  The agricultural sector posted a gain of 3.10% while the energy and metals sectors posted losses of (0.51)% and (0.03)%, respectively. Highest grossing commodities for the Total Index Series’ performance in June were corn, oats, soybean meal, soft red winter wheat and natural gas.

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Agricultural Sector Series

During the second quarter of 2012, the Agricultural Sector Series achieved a net realized and unrealized loss of $327,138 from its trading operations, which is net of brokerage commissions of $7,901.  The Agricultural Sector Series incurred total expenses of $42,550, including $21,267 in Management Fees (paid to the Managing Member), $4,363 in Servicing Fees (paid to selling agents), $13,650 in operating expenses, and $3,270 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series earned $412 in interest income.  

 

The Agricultural Sector Series posted a net loss of (1.64)% in April. Highest grossing commodities for the Agricultural Sector Series’ performance in April were soybean meal, azuki beans, soybeans, lumber and rapeseed.

 

The Agricultural Sector Series posted a net loss of (8.74)% in May. Highest grossing commodities for the Agricultural Sector Series’ performance in May were milk, lean hogs, live cattle, milling wheat and hard red winter wheat.

 

The Agricultural Sector Series posted a net gain of 8.51% in June. Highest grossing commodities for the Agricultural Sector Series’ performance in June were corn, oats, soybean meal, soft red winter wheat and soybeans.

Three Months ended March 31, 2012 

Total Index Series

During the first quarter of 2012, the Total Index Series achieved a net realized and unrealized gain of $14,961,159 from its trading operations, which is net of brokerage commissions of $150,473.  The Total Index Series incurred total expenses of $729,372, including $504,342 in Management Fees (paid to the Managing Member), $26,896 in Servicing Fees (paid to selling agents), $120,585 in operating expenses, and $77,549 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Total Index Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Total Index Series earned $366 in interest income.  An analysis of trading gains (net of all trading fees and expenses) by market sector is as follows:

 

 

The Total Index Series posted a net gain of 3.4% in January. All three sectors, agricultural, energy and metals, posted gains of 0.89%, 0.35% and 2.20%, respectively.  Highest grossing commodities for the Total Index Series’ performance in January were tin, orange juice, silver, rubber and zinc.

 

The Total Index Series posted a net gain of 4.4% in February. All three sectors, agricultural, energy and metals, posted gains of 0.66%, 3.68% and 0.08%, respectively.  Highest grossing commodities for the Total Index Series’ performance in February were brent oil, soybean meal, canola, soybeans and crude oil.

 

The Total Index Series posted a net loss of (2.6)% in March. All three sectors, agricultural, energy and metals, posted losses of (2.54)%, (0.04)% and (0.08)%, respectively.  Highest grossing commodities for the Total Index Series’ performance in March were soybean meal, oats, canola, rapeseed and soybeans.

Agricultural Sector Series

During the first quarter of 2012, the Agricultural Sector Series achieved a net realized and unrealized gain of $240,093 from its trading operations, which is net of brokerage commissions of $7,152.  The Agricultural Sector Series

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incurred total expenses of $42,177, including $20,945 in Management Fees (paid to the Managing Member), $4,526 in Servicing Fees (paid to selling agents), $13,485 in operating expenses, and $3,221 in Support Services Fees (paid to the Managing Member; the Managing Member anticipates that a substantial majority of the Support Services Fees will be used to pay broker-dealers for distribution related services to the Agricultural Sector Series such as hosting distribution platforms or providing custody solutions and thus will not be retained by the Managing Member).  The Agricultural Sector Series incurred $227 in interest expense due to market fluctuations as treasury bills are marked to market.

 

The Agricultural Sector Series posted a net gain of 1.19% in January. Highest grossing commodities for the Agricultural Sector Series’ performance in January were orange juice, rubber, milling wheat, cocoa and rapeseed.

 

The Agricultural Sector Series posted a net gain of 1.38% in February. Highest grossing commodities for the Agricultural Sector Series’ performance in February were soybean meal, canola, soybeans, sugar and oats.

 

The Agricultural Sector Series posted a net loss of (0.83)% in March. Highest grossing commodities for the Agricultural Sector Series’ performance in March were soybean meal, oats, canola, rapeseed and rubber.

 

Off-Balance Sheet Risk

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. The Company trades in futures, and may trade in forward and swap contracts and is therefore a party to financial instruments with elements of off-balance sheet market and credit risk. 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 the futures interests positions of the Company at the same time, the Company could experience substantial losses.  Because the Company is designed to replicate the Index, or a Sub-Index, the Managing Member adjusts the Company’s portfolio only as necessary to accommodate expirations in particular commodity futures contracts and to adjust overall position size for changes resulting from subscriptions and withdrawals to the Company.  The Managing Member does not exercise discretion over the positions the Company maintains.  Consequently, the Managing Member does not apply risk management techniques in its trading decisions.  The Company  initiates positions only on the “long” side of the market and does not employ “stop-loss” techniques.  The Company maintains approximately 90% of the Company’s assets in cash, cash equivalents with maturities of three months or less, U.S. government-sponsored enterprise securities or securities issued by federal agencies (or, to a limited extent, foreign government securities in connection with trading on non-U.S. exchanges), other CFTC-authorized investments, shares of mutual funds and certain money market instruments (e.g., bankers acceptances and Eurodollar or other time deposits) through one or more federally chartered U.S. banking institutions, for which the Managing Member believes the market-risk to be minimal.   

 

In addition to market risk, in entering into futures, and potentially forward and swap, contracts there is a credit risk that a counterparty will not be able to meet its obligations to the Company. The counterparty for futures contracts traded in the U.S. and on most foreign exchanges is the clearinghouse associated with such exchange. In general, clearinghouses are backed by the corporate members of the clearinghouse who are required to share any financial burden resulting from the non-performance by one of their members and, as such, should significantly reduce this credit risk. In cases where the clearinghouse is not backed by the clearing members, like some foreign exchanges, it is normally backed by a consortium of banks or other financial institutions.

Off-Balance Sheet Arrangements

The Company does not enter into off-balance sheet arrangements with other entities.

Contractual Obligations

The Company does not enter into any contractual obligations or commercial commitments to make future payments of a type that would be typical for an operating company or that would affect its liquidity or capital resources.  The Company’s sole business is trading long (contracts to buy) futures, and potentially forward and swap, contracts.  All such contracts are settled by offset, not delivery.  The Financial Statements of the Company present Condensed Schedules of Investments setting forth net unrealized appreciation (depreciation) of the Company’s open futures and other investments at December 31, 2014 and 2013.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Introduction

 

Past Results Are Not Necessarily Indicative of Future Performance

 

The Company is a speculative index fund designed to replicate positions in a commodity index.   Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Company’s main line of business.

 

Market movements result in frequent changes in the fair market value of the Company’s open positions and, consequently, in its earnings and cash flow.  The Company’s market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, the market value of financial instruments and contracts, the diversification effects among the Company’s open positions and the liquidity of the markets in which it trades.

 The Company can rapidly acquire and/or liquidate long positions in a wide range of commodity  markets.  Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the Company’s past performance is not necessarily indicative of its future results.

 

Value at Risk is a measure of the maximum amount which the Company could reasonably be expected to lose in a given market sector.  However, the inherent uncertainty of the Company’s speculative trading and the recurrence in the markets traded by the Company of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Company’s experience to date (i.e., “risk of ruin”).  In light of the foregoing as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification included in this section should not be considered to constitute any assurance or representation that the Company’s losses in any market sector will be limited to Value at Risk or by the Company’s attempts to manage its market risk.

 

Materiality, as used in this section “Quantitative and Qualitative Disclosures About Market Risk,” is based on an assessment of reasonably possible market movements and the potential losses caused by such movements, taking into account the leverage, and multiplier features of the Company’s market sensitive instruments.

 

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Quantifying the Company’s Trading Value at Risk

Quantitative Forward-Looking Statements

 

The following quantitative disclosures regarding the Company’s market risk exposures contain “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the 1933 Act and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”)).  All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact.

 

The Company’s risk exposure in the various market sectors traded by the Managing Member is quantified below in terms of Value at Risk.  Due to the Company’s mark-to-market accounting, any loss in the fair value of the Company’s open positions is directly reflected in the Company’s earnings (realized or unrealized) and cash flow (at least in the case of exchange-traded contracts in which profits and losses on open positions are settled daily through variation margin).

 

Exchange maintenance margin requirements have been used by the Company as the measure of its Value at Risk.  Maintenance margin requirements are set by exchanges to equal or exceed 95-99% of the maximum one day losses in the fair value of any given contract incurred during the time period over which historical price fluctuations are researched for purposes of establishing margin levels.  The maintenance margin levels are established by exchanges using historical price studies as well as an assessment of current market volatility (including the implied volatility of the options on a given futures contract) and economic fundamentals to provide a probabilistic estimate of the maximum expected near-term one day price fluctuation.

 

In quantifying the Company’s Value at Risk, 100% positive correlation in the different positions held in each market risk category has been assumed.  Consequently, the margin requirements applicable to the open contracts have simply been aggregated to determine each trading category’s aggregate Value at Risk.  The diversification effects resulting from the fact that the Company’s positions are rarely, if ever, 100% positively correlated have not been reflected.

 

Value at Risk as calculated herein may not be comparable to similarly titled measures used by others. 

The Company’s Trading Value at Risk in Different Market Sectors

 

The following tables indicate the average, highest and lowest amounts of trading Value at Risk associated with the Company’s open positions by market category for each Series for the fiscal year ended December 31, 2014 and 2013. 

 

As of December 31, 2014, the Total Index Series’ total capitalization was $148,440,378.

 

As of December 31, 2013, the Total Index Series’ total capitalization was $221,471,391.

 

 

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Average, highest and lowest Value at Risk amounts relate to the month-end amounts during the fiscal year.  Average Capitalization is the average of the Total Index Series’ capitalization at the end of each month during the fiscal year.  Dollar amounts represent millions of dollars.

 

As of December 31, 2014, the Agricultural Sector Series’ total capitalization was $2,757,133.

 

 

As of December 31, 2013, the Agricultural Sector Series’ total capitalization was $7,039,008.

 

 

Average, highest and lowest Value at Risk amounts relate to the month-end amounts during the fiscal year.  Average Capitalization is the average of the Agricultural Sector Series’ capitalization at the end of each month during the fiscal year.  Dollar amounts represent millions of dollars.

 

Material Limitations on Value at Risk as an Assessment of Market Risk

 

The face value of the market sector instruments held by the Company may typically be many times the applicable maintenance margin requirement (maintenance margin requirements generally ranging between approximately 1% and 10% of contract face value) as well as potentially many times the capitalization of the Company. The magnitude of the Company’s open positions could create a “risk of ruin” not typically found in most other investment vehicles. Because of the size of its positions, certain market conditions — unusual, but historically recurring from time to time — could cause the Company to incur severe losses over a short period of time. The Value at Risk tables — as well as the past performance of the Company — give no indication of this “risk of ruin.”

 

Non-Trading Risk

 

The Company may experience non-trading market risk on any foreign cash balances not needed for margin. However, these balances (as well as the market risk they represent) are expected to be immaterial. The Company also may have non-trading market risk as a result of investing in U.S. Treasury instruments. The market risk represented by these investments is expected to be immaterial.

 

Qualitative Disclosures Regarding Primary Trading Risk Exposures

 

The following qualitative disclosures regarding the Company’s market risk exposures — except for those disclosures that are statements of historical fact — constitute forward-looking statements within the meaning of Section 27A of the 1933 Act and Section 21E of the Exchange Act. The Company’s primary market risk exposures are subject to numerous uncertainties, contingencies and risks. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures of the Company. There can be no assurance that the

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Company’s current market exposure will not change materially. Members must be prepared to lose all or substantially all of their investment in the Company.

 

    The following were the primary trading risk exposures of the Company as of December 31, 2014 by market sector.

Energy. The Company’s primary energy market exposure is to six different contracts with the largest exposure in crude oil and brent oil price movements, often resulting from political developments in the Middle East. Oil prices can be volatile and substantial profits and losses have been and are expected to continue to be experienced in this market.

Metals. The Company’s primary metal market exposure is to ten different contracts with the largest exposure  in aluminum, copper and gold. Each of these metals is subject to substantial pricing fluctuations based on international supply and demand.

Agricultural. The Company’s primary commodities exposure is to agricultural pricing movements in twenty-one different contracts with the largest exposure to corn, wheat, cotton and soybeans. Each of these are often directly affected by severe or unexpected weather conditions or by the level of import and export activity between countries. 

 

Qualitative Disclosures Regarding Means of Managing Risk Exposure

 

Because the Company is designed to replicate the composition of a commodity index, PAM adjusts the Company’s portfolio only as necessary to accommodate expirations in particular commodity futures contracts and to adjust overall position size for changes resulting from subscriptions and withdrawals. PAM might also initiate an adjustment to reflect a change in the commodity index itself. Except as may be involved in these situations, PAM has no discretion over the positions the Company maintains. Consequently, PAM does not apply risk management techniques in its trading decisions as such decisions depend largely on factors such as contract expiration and the level of investor participation in the Company which are exogenous to market prices. The Company initiates positions only on the “long” side of the market and does not employ “stop-loss” techniques.

 

Item 8.   Financial Statements and Supplementary Data

The Company’s financial statements as required by this item, for the fiscal years ended December 31, 2014, 2013 and 2012 are included as Exhibit 13.01 to this report. 

The following summarized quarterly financial information presents the results of operations for the three month periods ended March 31, June 30, September 30 and December 31, 2014 and 2013.  This information has not been audited.  However, in the opinion of the Company, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been made.  Interim results are subject to significant seasonal variations and are not indicative of the results of operations to be expected for a full fiscal year.

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 9.   Changes in and Disagreements with Accounting and Financial Disclosure

None.

Item 9A.   Controls and Procedures

The Managing Member, with the participation of its principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures with respect to the Company and each Series as of the end of the period covered by this annual report, and, based on its evaluation, has concluded that these disclosure controls and procedures are effective. 

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s or any of the Series’ internal control over financial reporting during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Managing Member’s internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

   PAM is responsible for establishing and maintaining adequate internal control over the financial reporting of each Series individually, as well as the Company as a whole. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.  PAM’s internal control over financial reporting includes those policies and procedures that:

 

 •pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of each Series individually, as well as the Company as a whole; 

 

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of each Series’, as well as the Company’s, financial statements in accordance with GAAP, and that the receipts and expenditures of each Series individually, as well as the Company as a whole, are being made only in accordance with authorizations of PAM’s management and directors; and 

 

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of each Series individually, as well as the Company as a whole, that could have a material effect on the Series’ or the Company’s financial statements. 

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

     The management of PAM assessed the effectiveness of its internal control over financial reporting with respect to each Series individually, as well as the Company as a whole, as of December 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework issued in 1992.  Based on its assessment, management has concluded that, as of December 31, 2014, PAM’s internal control over financial reporting with respect to each Series individually, as well as the Company as a whole, is effective based on those criteria.

 

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The Rule 13a-14(a)/15d-14(a) and Section 1350 Certifications included as exhibits hereto apply with respect to each Series as well as to the Company as a whole. 

 

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Item 9B.   Other Information    

None.

PART III

Item 10.   Directors, Executive Officers and Corporate Governance

(a, b)  Identification of Directors and Executive Officers

The Company has no officers, directors or employees.  The Company’s affairs are managed by PAM.  Trading decisions are made by PAM on behalf of the Company.

The executive officers of PAM and their business backgrounds are as follows.

Roxanne M. Bennett, 56, is the executive vice president and managing director of the Managing Member, which she joined in February 2007.  Ms. Bennett became an associated person of the Managing Member on April 24, 2007 and became a principal on May 8, 2007.  In her capacity as director, Ms. Bennett concentrates on the development and marketing of investment products offered by the Managing Member and its affiliates.  Ms. Bennett is responsible for overseeing the day-to-day activity of the Managing Member.  Ms. Bennett is also an associated person (since April 24, 2007) of Price.  Prior to joining the Managing Member, Ms. Bennett was a director with UBS Securities LLC (“UBS”), a bank owned FCM, from September 2006 to February 2007.  From January 1997 until the purchase of ABN AMRO Inc. by UBS Securities LLC in September 2006, Ms. Bennett was a director of ABN AMRO Incorporated, a bank owned FCM, and ABN AMRO Clearing and Management Services Inc., a registered commodity pool operator and commodity trading advisor (collectively “ABN AMRO”).  At ABN AMRO, Ms. Bennett was responsible for the development and distribution of alternative investment products and was a member of the investment committee selecting commodity trading advisors and hedge funds for asset allocations. In addition, Ms. Bennett oversaw the day-to-day administration and risk management for various alternative investment products.

 Marilyn S. Cleeff, 62, is the chief financial officer of Beeland Management Company, which she joined in December 2014.  Prior to joining Beeland, Ms. Cleeff devoted over 25 years as a senior executive and independent consultant to successful organizations providing client services to the financial industry.  Ms. Cleeff has a unique and diverse mix of accounting, audit, regulatory and operations experience that has enabled her to serve as a key resource in the development and control of financial reporting systems for broker-dealers, proprietary trading companies, fund advisors, and fund administrators.  Ms. Cleeff was North American Controller of MF Global, Inc. a broker dealer; Chief Financial Officer of Iowa Grain Company, a futures clearing firm; Director of Treasury for Mizuho Securities, Inc. in Chicago; and Managing Director of Spectrum Global Fund Administration. Ms. Cleeff holds an M.B.A. from Northwestern University’s Kellogg School of Management and a BS in accounting from the University of Illinois.  Ms. Cleeff is a CPA and an NFA principal.  Ms. Cleeff is on the board of directors of Reading Power, Inc., a non-profit literacy tutoring program, and the Kellogg Executive Women’s Network.

John D. Reese,  60, is the chief executive officer of the Managing Member, which he joined in January 2012.  Mr. Reese has been listed as a principal and registered as an associated person of the Managing Member since January 11, 2012 and January 23, 2012, respectively.  Mr. Reese is also founder and managing partner of Peak View Capital LLC, a private investment firm focused on acquisitions in the asset management industry, which he established in 2010.  From January 2008 to March 2010, Mr. Reese was executive managing director and senior vice-president of Wells Fargo Asset Management’s Evergreen Investments division, where he was principally responsible for its investment subsidiary business in North America, European Credit Management Ltd. (“ECM”), a London-based fixed income manager that was acquired by Wachovia Bank in 2007 and then by Wells Fargo in its acquisition of Wachovia Bank in 2008.  Prior to Wachovia Bank’s acquisition of ECM, Mr. Reese was president of ECM, Inc., the U.S.-based investment business of ECM, and partner and member of the board of directors of ECM’s parent firm from May 2002 to December 2007.  From October 1981 to December 2001, Mr. Reese was employed by Merrill Lynch in a variety of capacities, including most recently as managing director in the Global Debt Markets division in New York.  Mr. Reese earned a B.A. in Economics from Westminster College, with continuing study focusing on behavioral finance, portfolio management strategies, and global macro at Harvard’s Kennedy School, University of Chicago’s Booth GSB, Wharton, and MIT.  He holds FINRA Series 3, 5, 7, 8, 24, and 63 licenses.

David F. Schink, 45, is the chief operating officer and general counsel of the Managing Member, which he joined in January 2012.  Mr. Schink has been listed as a principal and registered as an associated person of the Managing

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Member since February 29, 2012.  Mr. Schink is also a managing partner of Peak View Capital LLC, which he joined in April 2011. From June 2004 to March 2011, Mr. Schink was chief operating officer and general counsel of Contego Capital Partners, LLC, a Chicago-based registered investment advisor specializing in hedge fund investing where he was involved in strategic and day-to-day business affairs and was responsible for legal and regulatory risk management.  From April 2000 to May 2004, Mr. Schink was an associate at Kirkland & Ellis, LLP, where he represented private equity funds, registered investment advisors and other investment vehicles in a variety of transactions, and from October 1998 to March 2000 he was an associate at Sidley & Austin, where he represented financial institutions in structuring and negotiating structured finance and secured lending transactions.  Mr. Schink holds a B.A. from Hamilton College and a J.D. from Boston University School of Law.

Krishnan Seshadri, 65, is an officer of the Managing Member.  Mr. Seshadri joined the Managing Member in March 2007 and was registered as an associated person of the Managing Member on April 24, 2007, a principal of the Managing Member on March 1, 2010 and an associated person of Price on April 24, 2007.  He is responsible for the Managing Member’s day-to-day internal fund administration and accounting.  Prior to joining the Managing Member, Mr. Seshadri was an associated person of UBS from September 30, 2006 until March 9, 2007 and served as an associate director of UBS from October 2006 to March 2007 where he was responsible for overseeing the administration and fund accounting for various funds sponsored by UBS.  In September 2006, UBS acquired ABN AMRO Incorporated where Mr. Seshadri was an associated person from April 29, 2003 until September 30, 2006 and a vice-president from September 1999 to September 2006.  At ABN AMRO Incorporated, Mr. Seshadri was responsible for overseeing the administration and fund accounting for various funds sponsored by ABN AMRO Incorporated.  

(c)   Identification of Certain Significant Employees

None.

(d)   Family Relationships

None.

(e)   Business Experience

See Item 10 (a, b) above.

(f)   Involvement in Certain Legal Proceedings

None.

(g)   Section 16(a) Beneficial Ownership Reporting Compliance

 None. 

(h)   Code of Ethics

The Company has no employees, officers or directors and is managed by the Managing Member.  The Managing Member has adopted an Executive Code of Ethics that applies to its principal executive officer, principal financial officer and principal accounting officer.  A copy of this Executive Code of Ethics may be obtained at no charge by written request to Price Asset Management Inc., 141 West Jackson Blvd., Suite 1320A, Chicago, IL, 60604.

(i)   Audit Committee Financial Expert

Because the Company has no employees, officers or directors, the Company has no audit committee.  The Company is managed by the Managing Member.  Marilyn S. Cleeff, Chief Financial Officer, serves as the Managing Member’s “audit committee financial expert.”  Ms. Clark is not independent of the management of the Managing Member.  The Managing Member is a privately owned corporation managed by its shareholders.  It has no independent directors.

 

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Item 11.  Executive Compensation

The Company itself has no officers, directors or employees.  None of the principals of PAM receive compensation from the Company.  Each Series pays the Managing Member in respect of each Member in the Series, monthly in arrears, a management fee equal to 0.054167 of 1% of the month-end net asset value of each Member’s capital account in a Series (a 0.65% annual rate).  Each Series pays the Managing Member in respect of each Member in the Series, monthly in arrears, a support services fee equal to 0.0083 of 1% of the month-end net asset value of each Member’s capital account in a Series (a 0.10% annual rate).    

The principals of PAM are compensated by an affiliate in their respective positions.  The principals receive no “other compensation” from the Company.  There are no compensation plans or arrangements relating to a change in control of either the Company or PAM.

Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

(a)   Security Ownership of Certain Beneficial Owners

As of February 28, 2015, PAM knows of no person who beneficially owns more than 5% of the Company’s Interests.

(b)   Security Ownership of Management

The Company has no officers or directors.  Under the terms of the Operating Agreement, the Company’s affairs are managed by PAM, which has discretionary authority over the Company’s trading.  As of February 28, 2015, PAM’s interest in the Total Index Series was valued at $27,625, which constituted 0.0232% of the Total Index Series’ total assets.  As of February 28, 2015, PAM’s interest in the Agricultural Sector Series was valued at $28,051, which constituted 1.1340% of the Agricultural Sector Series’ total assets.

As of February 28, 2015, PAM’s principals did not beneficially own Company Interests. 

(c)   Changes in Control

There have been no changes in control of the Company.

(d)   Securities Authorized for Issuance Under Equity Compensation Plans

None.

Item 13.   Certain Relationships and Related Transactions, and Director Independence

The Company has no directors, officers or employees and is managed by PAM.  PAM is managed by its principals, none of whom is independent of PAM.  Price Holdings, Inc. owns 100% of PAM, Price and the Marketing Representative, but does not participate in making any trading or operational decisions for the Company or any Series.   Price Holdings, Inc. ESOP, an “employee stock ownership plan,” holds 100% of the stock of Price Holdings, Inc. for the benefit of its employees.

The Company paid PAM $1,390,886 in management fees for the year ended December 31, 2014 and $215,702 in support services fees for the year ended December 31, 2014.  PAM anticipates that a substantial majority of the support services fee will be used to pay broker-dealers for distribution related services to the Company such as hosting distribution platforms or providing custody solutions and thus will not be retained by PAM.

Price, in its capacity as the IB for the Company, receives from ADM and RBC, the Company’s clearing brokers, a portion of the brokerage commissions paid by the Company to the brokers.  PAM shares a portion of the management fees it receives with the Marketing Representative which may share such fees with its eligible registered representatives. 

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The Company has not and does not make any loans to PAM, its affiliates, their respective officers, directors or employees or the immediate family members of any of the foregoing, or to any entity, trust or other estate in which any of the foregoing has any interest, or to any other person.

None of PAM, its affiliates, their respective officers, directors and employees or the immediate family members of any of the foregoing, or any entity trust or other estate in which any of the foregoing has any interest has, to date, sold any asset, directly or indirectly, to the Company.

 

Item 14.   Principal Accountant Fees and Services

(1)Audit Fees

The aggregate fees for professional services rendered by McGladrey, the Company’s independent registered public accounting firm, in connection with their audit of the Company’s financial statements in connection with the statutory and regulatory filings for the years ended December 31, 2014 and 2013 were approximately $158,500 and $156,000 respectively.

(2)Audit-Related Fees

There were no audit-related fees for professional services rendered by McGladrey for the benefit of the Company for the years ended December 31, 2014 and 2013. 

(3)Tax Fees

The aggregate fees for professional services rendered by McGladrey,  for the benefit of the Company for the years ended December 31, 2014 and 2013 were approximately $48,500 and $55,500 respectively.  The fees paid were for the federal and state tax returns as well as for the preparation of Schedule K-1s for Members. 

(4)All Other Fees

There were no other fees for professional services rendered by McGladrey for the benefit of the Company for the years ended December 31, 2014 and 2013. 

(5)Pre-Approval Policies

The Managing Member pre-approves the engagement of the Company’s auditor for all services to be provided by the auditor.  The Managing Member has determined that the payments made to McGladrey for these services during 2014 and 2013 are compatible with maintaining the independence of McGladrey.

PART IV

Item 15.   Exhibits and Financial Statement Schedules

 

(a)(1)   Financial Statements

The following are included with the 2014 Report of Independent Registered Public Accounting Firm, a copy of which is filed herewith as Exhibit 13.01.

Report of Independent Registered Public Accounting Firm

Statements of Financial Condition

Condensed Schedules of Investments

Statements of Operations

Statements of Changes in Members’ Equity (Net Assets)

Notes to Financial Statements

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(a)(2)   Financial Statement Schedules

All Schedules are omitted for the reason that they are not required or are not applicable because equivalent information has been included in the financial statements or the notes thereto.

(a)(3)   Exhibits as required by Item 601 of Regulation S-K

The following exhibits are included herewith.

DesignationDescription

13.01Report of Independent Registered Public Accounting Firm

31.1Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1Section 1350 Certification of Principal Executive Officer

32.2Section 1350 Certification of Principal Financial Officer

The following exhibits were filed by the Company as a part of its Registration Statement on Form 10 (Reg. No. 000-53647) on April 29, 2009 and are incorporated herein by reference.

 

The Following exhibit filed with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (filed March 30, 2012) is incorporated herein by reference.

 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 30th day of March, 2015.

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Managing Member of the Registrant and in the capacities and on the date indicated.

 

 

(Being the principal executive officer, the principal financial officer and the principal accounting officer, and a majority of the directors of the Managing Member)

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EXHIBIT INDEX

 

The following exhibits are included herewith.

DesignationDescription

13.012013 Report of Independent Registered Public Accounting Firm

31.1Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer

31.2Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.1Section 1350 Certification of Principal Executive Officer

32.2Section 1350 Certification of Principal Financial Officer

The following exhibits were filed by the Company as a part of its Registration Statement on Form 10 (Reg. No. 000-53647) on April 29, 2009 and are incorporated herein by reference.

 

The Following exhibit filed with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (filed March 30, 2012) is incorporated herein by reference.

 

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