ETF Managers Group Commodity Trust I just came out with a new prospectus, available here. This is an SEC requirement for firms looking to issue certain types of securities. An excerpt of the prospectus is provided below:
The Sponsor causes the Fund to transfer the proceeds from the sale
of Creation Baskets to the Custodian or other custodian for trading activities. The Sponsor will invest the proceeds in Freight Futures
and U.S. Treasuries with a maturity of 397 days or less, cash and/or cash equivalents. When the Fund purchases a futures contract, the
Fund is required to deposit with the selling FCM on behalf of the exchange a portion of the value of the contract or other interest as
security to ensure payment for the obligation at maturity. This deposit is known as initial margin. The Fund will receive or pay, depending
on market movement, variation margin as the value of the futures position increase or decreases. Shareholders will not be required to
post variation margin. The Sponsor will invest the assets that remain after margin and collateral are posted in U.S. Treasuries, cash
and/or cash equivalents. Subject to these margin and collateral requirements, the Sponsor has sole authority to determine the percentage
of assets that are:
To the extent that the Fund does not invest the proceeds of the offering
of the shares of the Fund in the manner described above on the day such proceeds are received, such proceeds will be deposited with the
Custodian in a non-interest bearing account. The Fund will invest proceeds from an Authorized Participant’s purchase of a Creation
Basket immediately. It is anticipated that the proceeds from the sale of the initial Creation Baskets will settle with the Custodian on
the same day as the Fund’s initial investment in Freight Futures, which will be the first day of trading of the Fund’s shares.
Therefore, there will be no time during which the Fund will hold funds from the sale of Creation Baskets prior to the commencement of
The assets deposited by the Fund with an FCM as margin must be segregated
pursuant to the regulations of the CFTC. Such segregated funds may be invested only in instruments approved by the CFTC, which include
(i) U.S. government securities, (ii) municipal securities, (iii) U.S. agency obligations, (iv) certificates of deposit, (v) commercial
paper guaranteed by the U.S. government, (vi) corporate notes or bonds guaranteed by the U.S. government, and (vii) interests in money
market mutual funds; however, the Sponsor anticipates that the Fund’s margin deposit assets will be invested only in U.S. Treasuries
or otherwise held as cash and/or cash equivalents.
Approximately 10%-40% of the Fund’s assets are expected to normally
be committed as margin for futures contracts and approximately 60% to 90% of the NAV will be held to pay current obligations and as reserves
in the form of U.S. Treasuries, cash and/or cash equivalents in segregated accounts with an FCM. However, from time to time, the percentage
of assets committed as margin may be substantially more, or less, than such range. Ongoing margin and collateral payments will generally
be required for Freight Futures based on changes in their value. Considering the differing requirements for initial payments under futures
contracts and the fluctuating nature of ongoing margin and collateral payments, it is not possible to estimate what portion of the Fund’s
assets will be posted as margin or collateral at any given time. The U.S. Treasuries, cash and cash equivalents held by the Fund will
constitute reserves that will be available to meet ongoing margin and collateral requirements. All interest income will be used for the
Fund’s benefit. The Sponsor invests the balance of the Fund’s assets not invested in futures in U.S. Treasuries with a maturity
of 397 days or less, cash and cash equivalents and such funds are available as reserves for changes in margin. All interest income is
used for the Fund’s benefit.
An FCM, counterparty, government agency or commodity exchange could
increase margin or collateral requirements applicable to the Fund to hold trading positions at any time. Moreover, margin is merely a
security deposit and has no bearing on the profit or loss potential for any positions held.
The assets of the Fund posted as margin for futures contracts will
be held in segregation pursuant to the Commodity Exchange Act and CFTC regulations.
Information You Should Know
This prospectus contains information you should consider when making
an investment decision about the shares. You may rely on the information contained in this prospectus. Neither the Fund nor the Sponsor
has authorized any person to provide you with different information and, if anyone provides you with different or inconsistent information,
you should not rely on it. This prospectus is not an offer to sell the shares in any jurisdiction where the offer or sale of the shares
is not permitted.
The information contained in this prospectus was obtained from us and
other sources believed by us to be reliable.
You should rely only on the information contained in this prospectus
or any applicable prospectus supplement or any information incorporated by reference to this prospectus. We have not authorized anyone
to provide you with any information that is different. If you receive any unauthorized information, you must not rely on it. You should
disregard anything we said in an earlier document that is inconsistent with what is included in this prospectus or any applicable prospectus
supplement or any information incorporated by reference to this prospectus. Where the context requires, when we refer to this “prospectus,”
we are referring to this prospectus and (if applicable) the relevant prospectus supplement.
You should not assume that the information in this prospectus or any
applicable prospectus supplement is current as of any date other than the date on the front page of this prospectus or the date on the
front page of any applicable prospectus supplement.
We include cross references in this prospectus to captions in these
materials where you can find further related discussions. The table of contents tells you where to find these captions.
Summary of Promotional and Sales Material
The Fund will utilize the following sales material:
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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