typically
provide that a Fund will remain liable for paying to the relevant
FCM, on demand, the amount of any deficiency in such Fund’s
account
with that FCM.
The Futures Account Agreement between a Fund and an FCM generally
requires the Fund to indemnify and hold harmless the FCM,
its directors,
officers, employees, agents and affiliates (collectively,
“indemnified persons”) from and against all claims, damages, losses
and costs (including
reasonable attorneys’ fees) incurred by the indemnified persons, in
connection with: (1) any failure by the Fund to perform its
obligations
under the Futures Account Agreement and the FCM’s exercise of its
rights and remedies thereunder; (2) any failure by a Fund to
comply
with applicable law; (3) any action reasonably taken by the
indemnified persons pursuant to the Futures Account Agreement to
comply with
applicable law; and (4) any actions taken by the FCM in reliance on
instructions, notices and other communications that the FCM and
its relevant
personnel, as applicable, reasonably believes to originate from a
person authorized to act on behalf of the Fund.
To the extent that the Funds trade in futures contracts on U.S.
exchanges, the assets deposited by the Funds with the FCMs as
margin must be
segregated pursuant to the regulations of the CFTC. Such segregated
funds may be invested only in a limited range of
instruments—principally U.S. government obligations.
Each Fund currently uses BofA Securities, Inc. (“BofAS”), RBC
Capital Markets, LLC (“RBC”), ED&F Man Capital Markets
(“Man”), Marex
North America LLC (“Marex”) Deutsche Bank Securities Inc. (“DBSI”)
SG Americas Securities, LLC (“SGAS”), Barclays Capital Inc.
(“BCI”),
UBS Securities LLC (“UBSS”), Credit Suisse Securities USA LLC
(“CSS”), StoneX Financial Inc. (“StoneX”), Goldman Sachs &
Co. LLC
(“GS”), and Goldman Sachs International (“GSI”) as an FCM. The FCMs
used by a Fund may change from time to time. The above
discussion
relating to BofAS, RBC, Man, Marex, DBSI, SGAS, BCI, UBSS, CSS,
StoneX, GS, and GSI also would apply to other firms that
serve as
an FCM to the Funds in the future. Each of BofAS, RBC, Man, Marex,
DBSI, SGAS, BCI, UBSS, CSS, StoneX, GS, and GSI in its
capacity
as a registered FCM, serves as a clearing broker to the Trust and
the Funds and certain other funds of the Trust and as such arranges
for the
execution and clearing of the Funds’ futures transactions. All of
BofAS, RBC, Man, Marex, DBSI, SGAS, BCI, UBSS, CSS, StoneX,
GS, and GSI
acts as clearing broker for many other funds and individuals. A
variety of executing brokers may execute futures transactions on
behalf of the
Funds. The executing brokers will give-up all such transactions to
BofAS, RBC, Man, Marex, DBSI, SGAS, BCI, UBSS, CSS, StoneX,
GS, and
GSI as applicable. Each of BofAS, RBC, Man, Marex, DBSI, SGAS, BCI,
UBSS, CSS, StoneX, and GS is registered as an FCM with
the CFTC
and is a member of the NFA. BofAS, RBC, Man, Marex, DBSI, SGAS,
BCI, UBSS, CSS, StoneX, and GS are clearing members of
the
CBOT, CME, NYMEX, and all other major U.S. futures exchanges. None
of BofAS, RBC, Man, Marex, DBSI, SGAS, BCI, UBSS, CSS,
StoneX,
GS, or GSI is affiliated with or acts as a supervisor of the Trust,
the Funds, the Sponsor, the Trustee or BNYM (the
Administrator, Transfer
Agent and the Custodian). None of BofAS, RBC, Man, Marex, DBSI,
SGAS, BCI, UBSS, CSS, StoneX, GS, or GSI in its capacity as
FCM, is
acting as an underwriter or sponsor of the offering of the Shares,
or has passed upon the merits of participating in this offering.
None of BofAS,
RBC, Man, Marex, DBSI, SGAS, BCI, UBSS, CSS, StoneX, GS, or GSI has
passed upon the adequacy of this Prospectus or on the
accuracy
of the information contained herein. None of BofAS, RBC, Man,
Marex, DBSI, SGAS, BCI, UBSS, CSS, StoneX, GS, or GSI
provides
any commodity trading advice regarding the Funds’ trading
activities. Investors should not rely upon BofAS, RBC, Man,
Marex, DBSI,
SGAS, BCI, UBSS, CSS, StoneX, GS, or GSI in deciding whether to
invest in the Funds or retain their interests in the Funds.
Prospective investors
should also note that the Sponsor may select additional clearing
brokers or replace BofAS, RBC, Man, Marex, DBSI, SGAS, BCI,
UBSS,
CSS, StoneX, GS, and/or GSI as the Funds’ clearing
broker.
To the extent, if any, that a Fund enters into trades in futures on
markets other than regulated U.S. futures exchanges, funds
deposited to margin
positions held on such exchanges are invested in bank deposits or
in instruments of a credit standing generally comparable to
those authorized
by the CFTC for investment of “customer segregated funds,” although
applicable CFTC rules prohibit funds employed in trading on
foreign
exchanges from being deposited in “customer segregated fund
accounts” for trading on domestic exchanges. Instead, funds
employed in trading
on foreign exchanges are deposited in “customer secured amount
accounts.”
Forward Contracts
A forward contract is a contractual obligation to purchase or sell
a specified quantity of a particular underlying asset at or before
a specified
date in the future at a specified price and, therefore, is
economically similar to a futures contract. Unlike futures
contracts, however, forward
contracts are typically traded in the OTC markets and are not
standardized contracts. Forward contracts for a given commodity
or currency
are generally available for various amounts and maturities and are
subject to individual negotiation between the parties
involved. Moreover,
there is generally no direct means of offsetting or closing out a
forward contract by taking an offsetting position as one would
a