Key Risk Factors:
The Funds are not intended to be used as long-term passive investment vehicles and should be used by investors who understand the risks of the volatility market. By purchasing the Up Shares, investors should have an expectation that the Underlying Index will increase during the period between Distribution Dates. If the Underlying Index decreases during the time between Distribution Dates, investors in the Up Shares will experience a significant loss and could lose their entire investment. The Funds are not appropriate for you if you do not intend to actively monitor and manage your holdings in the Funds before and immediately following each Fund distribution date. By purchasing the Down Shares, investors should have an expectation that the Underlying Index will decrease during the period between Distribution Dates. If the Underlying Index increases during the time between Distribution Dates, investors in the Down Shares will experience a significant loss and could lose their entire investment. Funds are not appropriate for you if you do not intend to actively monitor and manage your holdings in the Funds before and immediately following each Fund distribution date.
Investing in the Fund involves substantial risk and high volatility, including possible loss of entire principal. Receipt of distributions of cash or shares will reduce an investor's opportunity for gains in subsequent periods. Special Distributions will alter the timing of distributions to investors and reduce an investor's opportunity for gains in subsequent periods. A Corrective Distribution will eliminate an investor's opportunity for gains relating to the Underlying Index if an investor fails to rebalance his/her investments. Net income distributions may not occur.
Decreases in Class Values per Share from distributions and/or net losses may reduce Class Values per Share leading to an adverse effect on the liquidity of the market for the Fund's Shares and may deplete the Fund's assets. Additionally, a less liquid market for the fund's shares would increase the difficulty for investors seeking to acquire or sell fund shares at any price. Moreover, a significant decline in the fund's class values may cause the sponsor to terminate the fund if its continued operation would be uneconomical.
AccuShares Trust I (formally known as AccuShares Commodity Trust I) is a Delaware statutory trust organized by AccuShares Management LLC, the trust's sponsor, into separate Fund series. Neither the Fund nor the Trust is an investment company under the Investment Company Act of 1940 or is subject to regulation under the Commodities Exchange Act or by the Commodity Futures Trading Commission, and investors in the Fund are not afforded protection under such laws and regulations. Each Fund's shares represent fractional undivided interests in and ownership of that Fund only. Each Fund will offer its shares on a continuous basis and be listed on the NASDAQ OMX.
Distributions and Exposure to Underlying Index:
Exposure to changes in an Underlying Index will be achieved through the allocation of the Fund's liquidation value to each of its share classes, and the resulting distribution to Fund shareholders of cash or cash and paired Up and Down shares on prescribed distribution dates. A Fund's Up shares will be entitled to a distribution when the Fund's Underlying Index has increased as of specified dates ("Regular Distributions") or by 75% ("Special Distributions"). Similarly, a Fund's Down shares will be entitled to a distribution when the Fund's Underlying Index has decreased as of specified dates ("Regular Distributions") or by 75% ("Special Distributions"). Any Regular or Special Distribution will not take into account any index change of more than 90%, in either direction, since the previous distribution date.
Regular and Special Distributions are expected to be made principally in cash, though the sponsor reserves the right to make all or any part of any such distribution in paired shares.
Distributions in Full or in Part:
Regular and/or Special Distributions will be paid in full or in part via paired shares in various circumstances: After the first six months of trading, where further cash distributions would adversely affect the liquidity of the market for the Fund's shares or impact the Fund's ability to meet minimum asset size Exchange listing standards. After the first six months of trading, if a distribution in cash would result in the Fund having aggregate Class Values of less than $25 million. If the Fund cannot liquidate its eligible Treasurys or eligible repos on reasonably acceptable terms. If the Sponsor becomes aware of any specific or general fund size limitation in the formal and written policy of any institutional investor who may hold shares of the Fund.
Investors who receive distributions in the form of paired shares should determine whether the distributed shares have altered the intended exposure. In the event of a paired share distribution, shares will be received that provide the opposite exposure, and as a result, an investor might consider selling the unwanted shares and purchasing the desired share class.
Sales and purchases of shares to maintain a desired exposure are subject to regular commissions and transaction costs.
The share class having an adverse experience from Underlying Index changes will receive no Regular or Special Distribution and will experience dilution in value caused by the distribution to the opposing share class. Please see the prospectus for other factors that could trigger a distribution of paired shares instead of cash.
Corrective distributions of shares ("Corrective Distributions") may occur if the Fund's share classes' exchange-trading prices deviate persistently from the value per share representing their share class' relative portion of the Fund's liquidation value ("Class Value per Share"). See "Investment Objectives," "Distributions and Distribution Dates" and "Description of the Shares & Certain Terms of the Trust Agreement."
Each Fund will hold only cash, short-dated U.S. Treasurys or eligible repurchase agreements collateralized by U.S. Treasurys. The Fund will not invest in commodities, futures, swaps or other derivatives. The Fund does not directly invest in the index, or in the securities it tracks.
Redemptions by Authorized Participants:
Fund Shares are not individually redeemable and will be issued and redeemed at their Class Value per Share only through certain authorized broker-dealers in blocks of Shares called creation units, consisting of 25,000 Up Shares and 25,000 Down Shares.
Authorized participants will pay a transaction fee of $600 per order plus 0.005% of the aggregate order value in connection with each order for the creation or redemption of creation units.
All other investors may only buy or sell a Fund's shares in the secondary market at current market prices, and may incur fees or brokerage commissions on their transactions. A Fund's Up and Down Shares will trade separately.
Secondary Market Purchases:
All other investors may only buy or sell a Fund's shares in the secondary market at current prices and may incur fees or brokerage commissions on their transactions. A Fund's Up and Down Shares will trade separately.
The Funds have been designed to be used by investors who are prepared to reassess their holding of the shares at least as frequently as each Distribution Date.
Investors in a Fund who wish to maintain a maximum exposure, a targeted absolute exposure or a targeted relative exposure to such Fund's Underlying Index over multiple Distribution Dates should reassess their positions following all cash, share and Net Income Distributions, and all Fund resets relating to the Share Index Factors.
The Funds will not compound investor gains or otherwise rebalance investor positions to maximize investor exposure.
The Funds are designed to make Regular Distributions of cash, and in some cases, shares to facilitate regular distribution of investor gains and to promote a deliberate and regular reassessment by investors of their investment in the Funds.
Investors who hold shares over one or more consecutive Distribution Dates without reassessment of their Fund share portfolio may experience decreased exposure to the Fund's Underlying Index as well as a reduced opportunity for gain and loss.
Class Value per Share:
As the funds make Regular and Special Distributions, in cash or in paired shares, the Class Value per Share will decline over time.
The fund anticipates making periodic reverse share splits in order to maintain NASDAQ OMX listing requirements. Reverse Splits are expected to occur in the event of a Special Distribution.
Foreside Fund Services, LLC Marketing Agent