As filed with the Securities and Exchange Commission on October 31, 2012
File No. 333-31247
811-09170
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 16
TO
Form S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED
ON FORM N-8B-2
A.
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Exact name of Trust:
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SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST
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(formerly known as DIAMONDS TRUST SERIES 1 prior to February 26, 2010)
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B.
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Name of Depositor:
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PDR SERVICES LLC
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C.
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Complete address of Depositor's principal executive office:
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PDR SERVICES LLC
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c/o NYSE Euronext
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11 Wall Street
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New York, New York 10005
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D.
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Name and complete address of agent for service:
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Marija Willen, Esq.
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PDR SERVICES LLC
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c/o NYSE Euronext
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11 Wall Street
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New York, New York 10005
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Copy to:
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Nora M. Jordan, Esq.
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Davis Polk & Wardwell LLP
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450 Lexington Avenue
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New York, New York 10017
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It is proposed that this filing will become effective:
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[X] 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
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E.
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Title of securities being registered:
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An indefinite number of Units pursuant to Rule 24f-2 under the Investment Company Act of 1940.
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F.
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Approximate date of proposed public offering:
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AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THE REGISTRATION STATEMENT.
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o Check box if it is proposed that this filing will become effective on [date] at [time] pursuant to paragraph (b) of Rule 485.
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SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST
Cross Reference Sheet
Pursuant to Regulation C
Under the Securities Act of 1933, as amended
(Form N-8B-2 Items required by Instruction 1
as to Prospectus in Form S-6)
Form N-8B-2
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Form S-6
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Item Number
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Heading in Prospectus
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I. Organization and General Information
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1. (a) Name of Trust
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Registration Statement Front Cover
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(b) Title of securities issued
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Registration Statement Front Cover
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2. Name, address and Internal Revenue Service Employer Identification Number of depositor
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Sponsor
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3. Name, address and Internal Revenue Service Employer Identification Number of trustee
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Trustee
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4. Name, address and Internal Revenue Service Employer Identification Number of principal underwriter
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*
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5. State of organization of Trust
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Organization of the Trust
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6. (a) Dates of execution and termination of Trust Agreement
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Organization of the Trust
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(b) Dates of execution and termination of Trust Agreement
7. Changes of name
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Same as set forth in 6(a)
*
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8. Fiscal Year
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*
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9. Material Litigation
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*
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II. General Description of the Trust and Securities of the Trust
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10. (a) Registered or bearer securities
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Summary—Voting Rights; Book-Entry-Only System; Book-Entry-Only System
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(b) Cumulative or distributive
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Summary—Dividends; Dividends and Distributions; Additional Information Regarding Dividends and Distributions
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(c) Rights of holders as to withdrawal or redemption
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Summary—Redemption of Units; Purchases and Redemptions of Creation Units—Redemption
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(d) Rights of holders as to conversion, transfer, etc.
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Summary—Redemption of Units; Purchases and Redemptions of Creation Units—Redemption; Trust Agreement
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(e) Lapses or defaults in principal payments with respect to periodic payment plan certificates
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*
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(f) Voting rights
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Summary—Voting Rights; Book-Entry-Only System; Trust Agreement
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(g) Notice to holders as to change in:
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(1) Composition of Trust assets
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*
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(2) Terms and conditions of Trust’s securities
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Summary—Amendments to the Trust Agreement; Trust Agreement—Amendments to the Trust Agreement
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(3) Provisions of Trust Agreement
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Same as set forth in 10(g)(2)
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(4) Identity of depositor and trustee
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Sponsor; Trustee
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(h) Consent of holders required to change:
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(1) Composition of Trust assets
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*
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(2) Terms and conditions of Trust’s securities
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Summary—Amendments to the Trust Agreement; Trust Agreement—Amendments to the Trust Agreement
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(3) Provisions of Trust Agreement
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Same as set forth in 10(h)(2)
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(4) Identity of depositor and trustee
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Sponsor; Trustee
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____________
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Not applicable, answer negative or not required.
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Form N-8B-2
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Form S-6
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Item Number
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Heading in Prospectus
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(i) Other principal features of the securities
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Summary—The Trust’s Investments and Portfolio Turnover; Summary—Redemption of Units; Summary—Amendments to the Trust Agreement; Purchases and Redemptions of Creation Units; Trust Agreement
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11. Type of securities comprising units
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Summary—The Trust’s Investments and Portfolio Turnover; Portfolio Adjustments
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12. Certain information regarding securities comprising periodic payment certificates
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*
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13. (a) Certain information regarding loads, fees, expenses and charges
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Summary—Fees and Expenses of the Trust; Summary—The Trust’s Investments and Portfolio Turnover; Expenses of the Trust; Purchases and Redemptions of Creation Units—Redemption
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(b) Certain information regarding periodic payment plan certificates
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*
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(c) Certain percentages
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Same as set forth in 13(a)
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(d) Reasons for certain differences in prices
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*
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(e) Certain other loads, fees, or charges payable by holders
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*
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(f) Certain profits receivable by depositor, principal underwriters, custodian, trustee or affiliated persons
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Summary—The Trust’s Investments and Portfolio Turnover; Portfolio Adjustments—Adjustments to the Portfolio Deposit
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(g) Ratio of annual charges and deductions to income
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*
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14. Issuance of Trust’s securities
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Purchases and Redemptions of Creation Units—Purchase (Creation)
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15. Receipt and handling of payments from purchasers
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Purchases and Redemptions of Creation Units
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16. Acquisition and disposition of underlying securities
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Purchases and Redemptions of Creation Units;
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Portfolio Adjustments; Trust Agreement
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17. (a) Withdrawal or redemption by holders
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Trust Agreement; Purchases and Redemptions of Creation Units—Redemption
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(b) Persons entitled or required to redeem or repurchase securities
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Same as set forth in 17(a)
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(c) Cancellation or resale of repurchased or redeemed securities
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Same as set forth in 17(a)
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18. (a) Receipt, custody and disposition of income
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Additional Information Regarding Dividends and Distributions—General Policies
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(b) Reinvestment of distributions
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Dividends and Distributions—No Dividend Reinvestment Service
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(c) Reserves or special funds
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Same as set forth in 18(a)
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(d) Schedule of distributions
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*
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19. Records, accounts and reports
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The DJIA; Additional Information Regarding Dividends and Distributions—General Policies;
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Investments by Investment Companies; Expenses of the Trust
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20. Certain miscellaneous provisions of Trust Agreement
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(a) Amendments
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Trust Agreement—Amendments to the Trust Agreement
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(b) Extension or termination
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Trust Agreement—Amendments to the Trust Agreement; Trust Agreement—Termination of the Trust Agreement; Organization of the Trust
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(c) Removal or resignation of trustee
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Trustee
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(d) Successor trustee
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Same as set forth in 20(c)
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(e) Removal or resignation of depositor
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Sponsor
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(f) Successor depositor
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Same as set forth in 20(e)
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21. Loans to security holders
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*
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22. Limitations on liabilities
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Trustee; Sponsor
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23. Bonding arrangements
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*
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24. Other material provisions of Trust Agreement
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*
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III. Organization, Personnel and Affiliated Persons of Depositor
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____________
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Not applicable, answer negative or not required.
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Form N-8B-2
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Form S-6
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Item Number
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Heading in Prospectus
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25. Organization of depositor
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Sponsor
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26. Fees received by depositor
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*
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27. Business of depositor
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Sponsor
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28. Certain information as to officials and affiliated persons of depositor
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Sponsor
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29. Ownership of voting securities of depositor
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Sponsor
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30. Persons controlling depositor
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Sponsor
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31. Payments by depositor for certain services rendered to Trust
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*
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32. Payments by depositor for certain other services rendered to Trust
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*
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33. Remuneration of employees of depositor for certain services rendered to Trust
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*
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34. Compensation of other persons for certain services rendered to Trust
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*
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IV. Distribution and Redemption of Securities
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35. Distribution of Trust’s securities in states
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*
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36. Suspension of sales of Trust’s securities
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*
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37. Denial or revocation of authority to distribute
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*
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38. (a) Method of distribution
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Purchases and Redemptions of Creation Units—Purchase (Creation)
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(b) Underwriting agreements
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Purchases and Redemptions of Creation Units
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(c) Selling agreements
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Same as set forth in 38(b)
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39. (a) Organization of principal underwriter
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Distributor
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(b) NASD membership of principal underwriter
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Distributor
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40. Certain fees received by principal underwriters
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*
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41. (a) Business of principal underwriters
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Purchases and Redemptions of Creation Units; Distributor
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(b) Branch offices of principal underwriters
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*
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(c) Salesmen of principal underwriters
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*
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42. Ownership of Trust’s securities by certain persons
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*
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43. Certain brokerage commissions received by principal underwriters
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*
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44. (a) Method of valuation for determining offering price
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Portfolio Adjustments; Determination of NAV
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(b) Schedule as to components of offering price
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*
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(c) Variation in offering price to certain persons
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*
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45. Suspension of redemption rights
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*
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46. (a) Certain information regarding redemption or withdrawal valuation
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Determination of NAV; Purchases and Redemptions of Creation Units—Redemption
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(b) Schedule as to components of redemption price
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*
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47. Maintenance of position in underlying securities
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Purchases and Redemptions of Creation Units; Portfolio Adjustments; Determination of NAV; Additional Information Regarding Dividends and Distributions—General Policies
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V. Information Concerning the Trustee or Custodian
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48. Organization and regulation of trustee
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Trustee
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49. Fees and expenses of trustee
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Summary—Fees and Expenses of the Trust; Expenses of the Trust; Purchases and Redemptions of Creation Units—Redemption
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50. Trustee’s lien
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Expenses of the Trust; Purchases and Redemptions of Creation Units—Redemption
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VI. Information Concerning Insurance of Holders of Securities
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51. (a) Name and address of insurance company
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*
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(b) Types of policies
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*
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(c) Types of risks insured and excluded
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*
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(d) Coverage
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*
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(e) Beneficiaries
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*
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____________
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Not applicable, answer negative or not required.
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Form N-8B-2
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Form S-6
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Item Number
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Heading in Prospectus
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(f) Terms and manner of cancellation
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*
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(g) Method of determining premiums
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*
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(h) Aggregate premiums paid
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*
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(i) Recipients of premiums
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*
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(j) Other material provisions of Trust Agreement relating to insurance
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*
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VII. Policy of Registrant
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52. (a) Method of selecting and eliminating securities from the Trust
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Purchases and Redemptions of Creation Units; Portfolio Adjustments; Trust Agreement
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(b) Elimination of securities from the Trust
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Portfolio Adjustments
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(c) Policy of Trust regarding substitution and elimination of securities
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Portfolio Adjustments; Trust Agreement
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(d) Description of any other fundamental policy of the Trust
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*
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(e) Code of Ethics pursuant to Rule 17j-1 of the 1940 Act
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Code of Ethics
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53. (a) Taxable status of the Trust
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Federal Income Taxes
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(b) Qualification of the Trust as a regulated investment company
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Same as set forth in 53(a)
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VIII. Financial and Statistical Information
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54. Information regarding the Trust’s last ten fiscal years
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*
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55. Certain information regarding periodic payment plan certificates
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*
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56. Certain information regarding periodic payment plan certificates
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*
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57. Certain information regarding periodic payment plan certificates
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*
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58. Certain information regarding periodic payment plan certificates
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*
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59. Financial statements (Instruction 1(c) to Form S-6)
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*
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____________
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Not applicable, answer negative or not required.
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Undertaking to File Reports
Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned registrant hereby undertakes to file with the Securities and Exchange Commission such supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulations of the Commission heretofore or hereafter duly adopted pursuant to authority conferred in that section.
Prospectus Dated October 31, 2012
Subject to Completion
SPDR® DOW JONES INDUSTRIAL AVERAGESM ETF Trust (“DIA” or the “Trust”)
(A Unit Investment Trust)
Principal U.S. Listing Exchange for SPDR® DOW JONES INDUSTRIAL AVERAGESM ETF Trust:
NYSE Arca, Inc. under the symbol “DIA”
[February ___, 2013]
The U.S. Securities and Exchange Commission has not approved or disapproved these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Securities of the Trust (“Units”) are not guaranteed or insured by the Federal Deposit Insurance Corporation or any other agency of the U.S. Government, nor are such Units deposits or obligations of any bank. Such Units of the Trust involve investment risks, including the loss of principal.
COPYRIGHT [2013] PDR Services LLC
THIS PAGE IS INTENTIONALLY LEFT BLANK.
Page
Summary
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1
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Investment Objective
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1
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Fees and Expenses of the Trust
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1
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The Trust’s Investments and Portfolio Turnover
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1
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Dividends
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2
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Redemption of Units
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2
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Voting Rights; Book-Entry-Only-System
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2
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Amendments to the Trust Agreement
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2
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Principal Risks of Investing in the Trust
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2
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Trust Performance
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3
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Purchase and Sale Information
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4
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Tax Information
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4
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The DJIA
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4
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Dividends and Distributions
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8
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Dividends and Capital Gains
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8
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No Dividend Reinvestment Service
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8
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Federal Income Taxes
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8
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Taxation of the Trust
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9
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Tax Consequences to U.S. Holders
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10
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Tax Consequences to Non-U.S. Holders
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12
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Report of Independent Registered Public Accounting Firm
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14
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Statement of Assets and Liabilities
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15
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Statements of Operations
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16
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Statements of Changes in Net Assets
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17
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Financial Highlights
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18
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Notes to Financial Statements
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19
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Other Information
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24
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Schedule of Investments
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25
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Organization of the Trust
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27
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Purchases and Redemptions of Creation Units
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27
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Purchase (Creation)
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27
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Redemption
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30
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Book-Entry-Only System
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33
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Portfolio Adjustments
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34
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Adjustments to the Portfolio Deposit
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35
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Exchange Listing and Trading
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36
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Secondary Trading on Exchanges
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36
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Trading Prices of Units
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37
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Continuous Offering of Units
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37
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Expenses of the Trust
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38
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Trustee Fee Scale
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39
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Determination of NAV
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40
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Additional Risk Information
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40
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Additional Information Regarding Dividends and Distributions
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41
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General Policies
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41
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Investments by Investment Companies
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43
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Annual Reports
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43
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Benefit Plan Investor Considerations
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43
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Index License
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44
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Sponsor
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45
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Trustee
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45
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Depository
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46
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Distributor
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46
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Trust Agreement
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47
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Amendments to the Trust Agreement
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47
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Termination of the Trust Agreement
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47
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Legal Opinion
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48
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Independent Registered Public Accounting Firm and Financial Statements
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48
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Code of Ethics
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48
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Information and Comparisons Relating to Secondary Market Trading and Performance
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48
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“Dow Jones Industrial AverageSM”, “DJIA®”, “Dow Jones®”, “The Dow®” and “DIAMONDS®” are trademarks and service marks of Standard & Poor’s Financial Services LLC and have been licensed for use by S&P Dow Jones Indices LLC (“S&P”) and sublicensed for use by State Street Global Markets, LLC. The Trust, PDR Services LLC and NYSE Arca, Inc. are permitted to use these trademarks and service marks pursuant to separate “Sublicenses.” The Trust is not sponsored, endorsed, sold or promoted by S&P, its affiliates or its third party licensors.
“SPDR®” is a trademark of Standard & Poor’s Financial Services LLC and has been licensed for use by S&P and sublicensed for use by State Street Global Markets, LLC. No financial product offered by State Street Global Markets, LLC or its affiliates is sponsored, endorsed, sold or promoted by S&P or its affiliates, and S&P, its affiliates or its third party licensors.
SUMMARY
Investment Objective
SPDR® Dow Jones Industrial AverageSM ETF Trust (the “Trust”) seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Dow Jones Industrial Average (the “DJIA”).
Fees and Expenses of the Trust
This table estimates the fees and expenses that the Trust pays on an annual basis, which you therefore pay indirectly when you buy and hold Units. It does not reflect brokerage commissions that you may pay for purchases and sales of Units on the secondary markets.
Unitholder Fees:
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None
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(fees paid directly from your investment)
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[Estimated Annual Trust Ordinary Operating Expenses:
(expenses that you pay each year as a percentage of the value of your investment)
Current Estimated Annual Trust Ordinary Operating Expenses
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As a % of Trust Average
Net Assets
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Trustee’s Fee
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[____]%
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S&P License Fee
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[____]%
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Marketing
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[____]%
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Other Operating Expenses
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[____]%
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Net Expenses *
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[____]%
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Future expense accruals will depend primarily on the level of the Trust’s net assets and the level of expenses.]
_____________________________
*
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[Until the Sponsor otherwise determines, the Sponsor has undertaken that the ordinary operating expenses of the Trust will not be permitted to exceed [0.18]% of the Trust’s daily NAV. Gross expenses of the Trust for the year ended October 31, 2012, without regard to this undertaking, did not exceed [0.18]% of the daily NAV of the Trust and therefore no expenses of the Trust were assumed by the Sponsor. The Sponsor reserves the right to discontinue this undertaking in the future. Therefore, there is no guarantee that the Trust’s ordinary operating expenses will not exceed [0.18]% of the Trust’s daily NAV. Trust expenses were reduced during the same period by a Trustee’s earnings credit of less than [0.01]% of the Trust’s daily NAV as a result of uninvested cash balances in the Trust. The amount of earnings credit will be equal to the then current Federal Funds Rate, as reported in nationally distributed publications, multiplied by each day’s daily cash balance, if any, in the Trust’s cash account, reduced by the amount of reserves, if any, for that account required by the Federal Reserve Board of Governors.]
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Growth of $10,000 Investment Since Inception
[LINE GRAPH TO BE PROVIDED]
____________
(1)
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Past performance is not necessarily an indication of how the Trust will perform in the future.
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The Trust’s Investments and Portfolio Turnover
The Trust seeks to achieve its investment objective by holding a portfolio of the common stocks that are included in the DJIA (the “Portfolio”), with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the DJIA.
In this prospectus, the term “Portfolio Securities” refers to the common stocks that are actually held by the Trust and make up the Trust’s Portfolio, while the term “Index Securities” refers to the common stocks that are included in the DJIA, as determined by S&P Dow Jones Indices LLC (“S&P”). At any time, the Portfolio will consist of as many of the Index Securities as is practicable. To maintain the correspondence between the composition and weightings of Portfolio Securities and Index Securities, State Street Bank and Trust Company, the trustee of the Trust (the “Trustee”), adjusts the Portfolio from time to time to conform to periodic changes made by S&P to the identity and/or relative weightings of Index Securities in the DJIA. The Trustee generally makes these adjustments to the Portfolio within three (3) Business Days (as defined below in “Purchases and Redemptions of Creation Units—Purchase (Creation)) before or after the day on which changes in the DJIA are scheduled to take effect.
The Trust may pay transaction costs, such as brokerage commissions, when it buys and sells securities (or “turns over” its Portfolio). Such transaction costs may be higher if there are significant rebalancings of Index Securities in the Index, which may also result in higher taxes when Units are held in a taxable account. These costs, which are not reflected in estimated annual Trust ordinary operating expenses, affect the Trust’s performance. During the most recent fiscal year, the Trust’s portfolio turnover rate was [____]% of the average value of its portfolio. The Trust’s portfolio turnover rate does not include securities received or delivered from processing creations or redemptions of Units. Portfolio turnover will be a function of changes to the DJIA as well as requirements of the Trust Agreement (as defined below in “Organization of the Trust”).
Although the Trust may fail to own certain Index Securities at any particular time, the Trust generally will be substantially invested in Index Securities, which should result in a close correspondence between the performance of the DJIA and the performance of the Trust. See “The DJIA” below for more information regarding the DJIA.
Dividends
Payments of dividends are made monthly, on the Monday preceding the third (3rd) Friday of the next calendar month. See “Dividends and Distributions” and “Additional Information Regarding Dividends and Distributions.”
Redemption of Units
Only certain institutional investors (typically market makers or other broker-dealers) are permitted to purchase or redeem Units directly with the Trust, and they may do so only in large blocks of 50,000 Units known as “Creation Units.” See “Purchases and Redemptions of Creation Units—Redemption” and “Trust Agreement” for more information regarding the rights of Beneficial Owners (as defined in “Book-Entry-Only System”).
Voting Rights; Book-Entry-Only-System
Beneficial Owners shall not have the right to vote concerning the Trust, except with respect to termination and as otherwise expressly set forth in the Trust Agreement. See “Trust Agreement.” Units are represented by one or more global securities registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”) and deposited with, or on behalf of, DTC. See “Book-Entry-Only System.”
Amendments to the Trust Agreement
The Trust Agreement (as defined below in “Organization of the Trust”) may be amended from time to time by the Trustee and PDR Services, LLC (the “Sponsor”) without the consent of any Beneficial Owners under certain circumstances described herein. The Trust Agreement may also be amended by the Sponsor and the Trustee with the consent of the Beneficial Owners to modify the rights of Beneficial Owners under certain circumstances. Promptly after the execution of an amendment to the Trust Agreement, the Trustee arranges for written notice to be provided to Beneficial Owners. See “Trust Agreement—Amendments to the Trust Agreement.”
Principal Risks of Investing in the Trust
As with all investments, there are certain risks of investing in the Trust, and you could lose money on an investment in the Trust. Prospective investors should carefully consider the risk factors described below, as well as the additional risk factors under “Additional Risk Information” and the other information included in this prospectus, before deciding to invest in Units.
Passive Strategy/Index Risk. The Trust is not actively managed. Rather, the Trust attempts to track the performance of an unmanaged index of securities. This differs from an actively managed fund, which typically seeks to outperform a benchmark index. As a result, the Trust will hold constituent securities of the DJIA regardless of the current or projected performance of a specific security or a particular industry or market sector. Maintaining investments in securities regardless of market conditions or the performance of individual securities could cause the Trust’s return to be lower than if the Trust employed an active strategy.
Index Tracking Risk. While the Trust is intended to track the performance of the DJIA as closely as possible (i.e., achieve a high degree of correlation with the DJIA), the Trust’s return may not match or achieve a high degree of correlation with the return of the DJIA due to expenses and transaction costs incurred in adjusting the actual balance of the Portfolio. In addition, it is possible that the Trust may not always fully replicate the performance of the DJIA due to the unavailability of certain Index Securities in the secondary market or due to other extraordinary circumstances. In addition, the Trust’s portfolio may deviate from the DJIA to the extent required to ensure continued qualification as a “regulated investment company” under Subchapter M of the Code.
Equity Investing Risk. An investment in the Trust involves risks similar to those of investing in any fund of equity securities, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in securities prices.
An investment in the Trust is subject to the risks of any investment in a portfolio of large-capitalization common stocks, including the risk that the general level of stock prices may decline, thereby adversely affecting the value of such investment. The value of Portfolio Securities may fluctuate in accordance with changes in the financial condition of the issuers of Portfolio Securities, the value of common stocks generally and other factors. The identity and weighting of Index Securities and the Portfolio Securities change from time to time.
The financial condition of issuers of Portfolio Securities may become impaired or the general condition of the stock market may deteriorate, either of which may cause a decrease in the value of the Portfolio and thus in the value of Units. Since the Trust is not actively managed, the adverse financial condition of an issuer will not result in its elimination from the Trust unless such issuer is removed from the DJIA. Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. These investor perceptions are based on various and unpredictable factors including expectations regarding government, economic, monetary and fiscal policies, inflation and interest rates, economic expansion or contraction, and global or regional political, economic and banking crises.
Holders of common stocks of any given issuer incur more risk than holders of preferred stocks and debt obligations of the issuer because the rights of common stockholders, as owners of the issuer, generally are subordinate to the rights of creditors of, or holders of debt obligations or preferred stocks issued by, such issuer. Further, unlike debt securities that typically have a stated principal amount payable at maturity, or preferred stocks that typically have a liquidation preference and may have stated optional or mandatory redemption provisions, common stocks have neither a fixed principal amount nor a maturity. Common stock values are subject to market fluctuations as long as the common stock remains outstanding. The value of the Portfolio will fluctuate over the entire life of the Trust.
The Trust may have significant investments in one or more specific industries or sectors, subjecting it to risks greater than general market risk.
There can be no assurance that the issuers of Portfolio Securities will pay dividends. Distributions generally depend upon the declaration of dividends by the issuers of Portfolio Securities and the declaration of such dividends generally depends upon various factors, including the financial condition of the issuers and general economic conditions.
Trust Performance
The following bar chart and table provide an indication of the risks of investing in the Trust by showing changes in the Trust’s performance based on net assets from year to year and by showing how the Trust’s average annual return for certain time periods compares with the average annual return of the DJIA. The Trust’s past performance (before and after taxes) is not necessarily an indication of how the Trust will perform in the future. Updated performance information is available online at http://www.spdrs.com.
Annual Total Return (years ended 12/31)
|
[BAR CHART TO BE PROVIDED]
|
Highest Quarterly Return: [________________]
Lowest Quarterly Return: [________________]
Average Annual Total Returns* (for periods ending December 31, 2012)
The after-tax returns presented in the table are calculated using the highest historical individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Your actual after-tax returns will depend on your specific tax situation and may differ from those shown below. After-tax returns are not relevant to investors who hold Units through tax-deferred arrangements, such as 401(k) plans or individual retirement accounts. The returns after taxes can exceed the return before taxes due to an assumed tax benefit for a holder of Units from realizing a capital loss on a sale of Trust Units.
|
Past
One Year
|
Past
Five Years
|
Past
Ten Years
|
Trust
|
|
|
|
Return Before Taxes
|
[___]%
|
[___]%
|
[___]%
|
Return After Taxes on Distributions
|
[___]%
|
[___]%
|
[___]%
|
Return After Taxes on Distributions and Sale or Redemption of Creation Units
|
[___]%
|
[___]%
|
[___]%
|
Index (reflects no deduction for fees, expenses or taxes)
|
[___]%
|
[___]%
|
[___]%
|
__________________________
*
|
Total returns assume that dividends and capital gain distributions have been reinvested in the Trust at the net asset value per Unit.
|
PURCHASE AND SALE INFORMATION
Individual Units of the Trust may be purchased and sold on NYSE Arca, Inc. (the “Exchange”), under the market symbol “DIA”, through your broker-dealer at market prices. Units trade at market prices that may be greater than net asset value (“NAV”) (premium) or less than NAV (discount). Units are also listed and traded on the Singapore Exchange Securities Trading Limited and Euronext Amsterdam. In the future, Units may be listed and traded on other non-U.S. exchanges. Units may be purchased on other trading markets or venues in addition to the Exchange, the Singapore Exchange Securities Trading Limited and Euronext Amsterdam. Euronext Amsterdam is an indirect wholly owned subsidiary of NYSE Euronext.
Only certain institutional investors (typically market makers or other broker-dealers) are permitted to purchase or redeem Units directly with the Trust, and they may do so only in large blocks of 50,000 Units known as “Creation Units.” Creation Unit transactions are conducted in exchange for the deposit or delivery of in-kind securities and/or cash constituting a substantial replication of the securities included in the DJIA.
TAX INFORMATION
The Trust will make distributions that are expected to be taxable currently to you as ordinary income and/or capital gains, unless you are investing through a tax-deferred arrangement, such as a 401(k) plan or individual retirement account.
THE DJIA
The DJIA was first published in 1896. Initially comprised of 12 companies, the DJIA has evolved into the most recognizable stock indicator in the world, and the only index composed of companies that have sustained earnings performance over a significant period of time. In its second century, the DJIA is the oldest continuous barometer of the U.S. stock market, and the most widely quoted indicator of U.S. stock market activity.
The companies represented by the 30 stocks now comprising the DJIA are all leaders in their respective industries, and their stocks are widely held by individuals and institutional investors.
S&P is not responsible for and shall not participate in the creation or sale of Units or in the determination of the timing, pricing, or quantities and proportions of purchases or sales of Index Securities or Portfolio Securities by the Trust. The information in this prospectus concerning S&P and the DJIA has been obtained from sources that the Sponsor believes to be reliable, but the Sponsor takes no responsibility for the accuracy of such information.
The following table shows the actual performance of the DJIA for the years 1896 through 2012. The results shown should not be considered representative of the income yield or capital gain or loss that may be generated by the DJIA in the future. THE RESULTS SHOULD NOT BE CONSIDERED REPRESENTATIVE OF THE PERFORMANCE OF THE TRUST.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012
|
|
[______]
|
|
|
[______]
|
|
|
[___]%
|
|
|
[____]
|
|
|
[___]%
|
|
2011
|
|
|
12217.56 |
|
|
|
640.05 |
|
|
|
5.53 |
|
|
|
318.70 |
|
|
|
2.71 |
|
2010
|
|
|
11577.51 |
|
|
|
1149.46 |
|
|
|
11.02 |
|
|
|
286.88 |
|
|
|
2.54 |
|
2009
|
|
|
10428.05 |
|
|
|
1651.66 |
|
|
|
18.82 |
|
|
|
277.38 |
|
|
|
2.63 |
|
2008
|
|
|
8776.39 |
|
|
|
-4488.42 |
|
|
|
-33.84 |
|
|
|
316.40 |
|
|
|
3.61 |
|
2007
|
|
|
13264.82 |
|
|
|
801.67 |
|
|
|
6.43 |
|
|
|
298.97 |
|
|
|
2.35 |
|
2006
|
|
|
12463.15 |
|
|
|
1745.65 |
|
|
|
16.29 |
|
|
|
267.75 |
|
|
|
2.24 |
|
2005
|
|
|
10717.50 |
|
|
|
-65.51 |
|
|
|
-.61 |
|
|
|
246.85 |
|
|
|
2.30 |
|
2004
|
|
|
10783.01 |
|
|
|
329.09 |
|
|
|
3.15 |
|
|
|
239.27 |
|
|
|
2.22 |
|
2003
|
|
|
10453.92 |
|
|
|
2112.29 |
|
|
|
25.32 |
|
|
|
209.42 |
|
|
|
2.00 |
|
2002
|
|
|
8341.63 |
|
|
|
-1679.87 |
|
|
|
-16.76 |
|
|
|
189.68 |
|
|
|
2.27 |
|
2001
|
|
|
10021.50 |
|
|
|
-765.35 |
|
|
|
-7.10 |
|
|
|
181.07 |
|
|
|
1.81 |
|
2000
|
|
|
10786.85 |
|
|
|
-710.27 |
|
|
|
-6.18 |
|
|
|
172.08 |
|
|
|
1.60 |
|
1999
|
|
|
11497.12 |
|
|
|
2315.69 |
|
|
|
25.20 |
|
|
|
168.52 |
|
|
|
1.47 |
|
1998
|
|
|
9181.43 |
|
|
|
1273.18 |
|
|
|
16.10 |
|
|
|
151.13 |
|
|
|
1.65 |
|
1997
|
|
|
7908.25 |
|
|
|
1459.98 |
|
|
|
22.60 |
|
|
|
136.10 |
|
|
|
1.72 |
|
1996
|
|
|
6448.27 |
|
|
|
1331.20 |
|
|
|
26.00 |
|
|
|
131.14 |
|
|
|
2.03 |
|
1995
|
|
|
5117.12 |
|
|
|
1282.70 |
|
|
|
33.50 |
|
|
|
116.56 |
|
|
|
2.28 |
|
1994
|
|
|
3834.44 |
|
|
|
80.30 |
|
|
|
2.10 |
|
|
|
105.66 |
|
|
|
2.76 |
|
1993
|
|
|
3754.09 |
|
|
|
453.00 |
|
|
|
13.70 |
|
|
|
99.66 |
|
|
|
2.65 |
|
1992
|
|
|
3301.11 |
|
|
|
132.30 |
|
|
|
4.20 |
|
|
|
100.72 |
|
|
|
3.05 |
|
1991
|
|
|
3168.83 |
|
|
|
535.20 |
|
|
|
20.30 |
|
|
|
95.18 |
|
|
|
3.00 |
|
1990
|
|
|
2633.66 |
|
|
|
-119.50 |
|
|
|
-4.30 |
|
|
|
103.70 |
|
|
|
3.94 |
|
1989
|
|
|
2753.20 |
|
|
|
584.60 |
|
|
|
27.00 |
|
|
|
103.00 |
|
|
|
3.74 |
|
1988
|
|
|
2168.57 |
|
|
|
229.70 |
|
|
|
11.80 |
|
|
|
79.53 |
|
|
|
3.67 |
|
1987
|
|
|
1938.83 |
|
|
|
42.90 |
|
|
|
2.30 |
|
|
|
71.20 |
|
|
|
3.67 |
|
1986
|
|
|
1895.95 |
|
|
|
349.30 |
|
|
|
22.60 |
|
|
|
67.04 |
|
|
|
3.54 |
|
1985
|
|
|
1546.67 |
|
|
|
335.10 |
|
|
|
27.70 |
|
|
|
62.03 |
|
|
|
4.01 |
|
1984
|
|
|
1211.57 |
|
|
|
-47.10 |
|
|
|
-3.70 |
|
|
|
60.63 |
|
|
|
5.00 |
|
1983
|
|
|
1258.64 |
|
|
|
212.10 |
|
|
|
20.30 |
|
|
|
56.33 |
|
|
|
4.48 |
|
1982
|
|
|
1046.54 |
|
|
|
171.50 |
|
|
|
19.60 |
|
|
|
54.14 |
|
|
|
5.17 |
|
1981
|
|
|
875.00 |
|
|
|
-89.00 |
|
|
|
-9.20 |
|
|
|
56.22 |
|
|
|
6.43 |
|
1980
|
|
|
963.99 |
|
|
|
125.30 |
|
|
|
14.90 |
|
|
|
54.36 |
|
|
|
5.64 |
|
1979
|
|
|
838.74 |
|
|
|
33.70 |
|
|
|
4.20 |
|
|
|
50.98 |
|
|
|
6.08 |
|
1978
|
|
|
805.01 |
|
|
|
-26.20 |
|
|
|
-3.10 |
|
|
|
48.52 |
|
|
|
6.03 |
|
1977
|
|
|
831.17 |
|
|
|
-173.50 |
|
|
|
-17.30 |
|
|
|
45.84 |
|
|
|
5.52 |
|
1976
|
|
|
1004.65 |
|
|
|
152.20 |
|
|
|
17.90 |
|
|
|
41.40 |
|
|
|
4.12 |
|
1975
|
|
|
852.41 |
|
|
|
236.20 |
|
|
|
38.30 |
|
|
|
37.46 |
|
|
|
4.39 |
|
1974
|
|
|
616.24 |
|
|
|
-234.60 |
|
|
|
-27.60 |
|
|
|
37.72 |
|
|
|
6.12 |
|
1973
|
|
|
850.86 |
|
|
|
-169.20 |
|
|
|
-16.60 |
|
|
|
35.33 |
|
|
|
4.15 |
|
1972
|
|
|
1020.02 |
|
|
|
129.80 |
|
|
|
14.60 |
|
|
|
32.27 |
|
|
|
3.16 |
|
1971
|
|
|
890.20 |
|
|
|
51.30 |
|
|
|
6.10 |
|
|
|
30.86 |
|
|
|
3.47 |
|
1970
|
|
|
838.92 |
|
|
|
38.60 |
|
|
|
4.80 |
|
|
|
31.53 |
|
|
|
3.76 |
|
1969
|
|
|
800.36 |
|
|
|
-143.40 |
|
|
|
-15.20 |
|
|
|
33.90 |
|
|
|
4.24 |
|
1968
|
|
|
943.75 |
|
|
|
38.60 |
|
|
|
4.30 |
|
|
|
31.34 |
|
|
|
3.32 |
|
1967
|
|
|
905.11 |
|
|
|
119.40 |
|
|
|
15.20 |
|
|
|
30.19 |
|
|
|
3.34 |
|
1966
|
|
|
785.69 |
|
|
|
-183.60 |
|
|
|
-18.90 |
|
|
|
31.89 |
|
|
|
4.06 |
|
1965
|
|
|
969.26 |
|
|
|
95.10 |
|
|
|
10.90 |
|
|
|
28.61 |
|
|
|
2.95 |
|
1964
|
|
|
874.13 |
|
|
|
111.20 |
|
|
|
14.60 |
|
|
|
31.24 |
|
|
|
3.57 |
|
1963
|
|
|
762.95 |
|
|
|
110.90 |
|
|
|
17.00 |
|
|
|
23.41 |
|
|
|
3.07 |
|
1962
|
|
|
652.10 |
|
|
|
-79.00 |
|
|
|
-10.80 |
|
|
|
23.30 |
|
|
|
3.57 |
|
1961
|
|
|
731.14 |
|
|
|
115.30 |
|
|
|
18.70 |
|
|
|
22.71 |
|
|
|
3.11 |
|
1960
|
|
|
615.89 |
|
|
|
-63.50 |
|
|
|
-9.30 |
|
|
|
21.36 |
|
|
|
3.47 |
|
1959
|
|
|
679.36 |
|
|
|
95.70 |
|
|
|
16.40 |
|
|
|
20.74 |
|
|
|
3.05 |
|
1958
|
|
|
583.65 |
|
|
|
148.00 |
|
|
|
34.00 |
|
|
|
20.00 |
|
|
|
3.43 |
|
1957
|
|
|
435.69 |
|
|
|
-63.80 |
|
|
|
-12.80 |
|
|
|
21.61 |
|
|
|
4.96 |
|
1956
|
|
|
499.47 |
|
|
|
11.10 |
|
|
|
2.30 |
|
|
|
22.99 |
|
|
|
4.60 |
|
1955
|
|
|
488.40 |
|
|
|
84.00 |
|
|
|
20.80 |
|
|
|
21.58 |
|
|
|
4.42 |
|
1954
|
|
|
404.39 |
|
|
|
123.50 |
|
|
|
44.00 |
|
|
|
17.47 |
|
|
|
4.32 |
|
1953
|
|
|
280.90 |
|
|
|
-11.00 |
|
|
|
-3.80 |
|
|
|
16.11 |
|
|
|
5.74 |
|
1952
|
|
|
291.90 |
|
|
|
22.70 |
|
|
|
8.40 |
|
|
|
15.43 |
|
|
|
5.29 |
|
1951
|
|
|
269.23 |
|
|
|
33.80 |
|
|
|
14.40 |
|
|
|
16.34 |
|
|
|
6.07 |
|
1950
|
|
|
235.41 |
|
|
|
35.30 |
|
|
|
17.60 |
|
|
|
16.13 |
|
|
|
6.85 |
|
1949
|
|
|
200.13 |
|
|
|
22.80 |
|
|
|
12.90 |
|
|
|
12.79 |
|
|
|
6.39 |
|
1948
|
|
|
177.30 |
|
|
|
-3.90 |
|
|
|
-2.10 |
|
|
|
11.50 |
|
|
|
6.49 |
|
1947
|
|
|
181.16 |
|
|
|
4.00 |
|
|
|
2.20 |
|
|
|
9.21 |
|
|
|
5.08 |
|
1946
|
|
|
177.20 |
|
|
|
-15.70 |
|
|
|
-8.10 |
|
|
|
7.50 |
|
|
|
4.23 |
|
1945
|
|
|
192.91 |
|
|
|
40.60 |
|
|
|
26.60 |
|
|
|
6.69 |
|
|
|
3.47 |
|
1944
|
|
|
152.32 |
|
|
|
16.40 |
|
|
|
12.10 |
|
|
|
6.57 |
|
|
|
4.31 |
|
1943
|
|
|
135.89 |
|
|
|
16.50 |
|
|
|
13.80 |
|
|
|
6.30 |
|
|
|
4.64 |
|
1942
|
|
|
119.40 |
|
|
|
8.40 |
|
|
|
7.60 |
|
|
|
6.40 |
|
|
|
5.36 |
|
1941
|
|
|
110.96 |
|
|
|
-20.20 |
|
|
|
-15.40 |
|
|
|
7.59 |
|
|
|
6.84 |
|
1940
|
|
|
131.13 |
|
|
|
-19.10 |
|
|
|
-12.70 |
|
|
|
7.06 |
|
|
|
5.38 |
|
1939
|
|
|
150.24 |
|
|
|
-4.50 |
|
|
|
-2.90 |
|
|
|
6.11 |
|
|
|
4.07 |
|
1938
|
|
|
154.76 |
|
|
|
33.90 |
|
|
|
28.10 |
|
|
|
4.98 |
|
|
|
3.22 |
|
1937
|
|
|
120.85 |
|
|
|
-59.10 |
|
|
|
-32.80 |
|
|
|
8.78 |
|
|
|
7.27 |
|
1936
|
|
|
179.90 |
|
|
|
35.80 |
|
|
|
24.80 |
|
|
|
7.05 |
|
|
|
3.92 |
|
1935
|
|
|
144.13 |
|
|
|
40.10 |
|
|
|
38.50 |
|
|
|
4.55 |
|
|
|
3.16 |
|
1934
|
|
|
104.04 |
|
|
|
4.10 |
|
|
|
4.10 |
|
|
|
3.66 |
|
|
|
3.52 |
|
1933
|
|
|
99.90 |
|
|
|
40.00 |
|
|
|
66.70 |
|
|
|
3.40 |
|
|
|
3.40 |
|
1932
|
|
|
59.93 |
|
|
|
-18.00 |
|
|
|
-23.10 |
|
|
|
4.62 |
|
|
|
7.71 |
|
1931
|
|
|
77.90 |
|
|
|
-86.70 |
|
|
|
-52.70 |
|
|
|
8.40 |
|
|
|
10.78 |
|
1930
|
|
|
164.58 |
|
|
|
-83.90 |
|
|
|
-33.80 |
|
|
|
11.13 |
|
|
|
6.76 |
|
1929
|
|
|
248.48 |
|
|
|
-51.50 |
|
|
|
-17.20 |
|
|
|
12.75 |
|
|
|
5.13 |
|
1928
|
|
|
300.00 |
|
|
|
97.60 |
|
|
|
48.20 |
|
|
NA
|
|
|
NA
|
|
1927
|
|
|
202.40 |
|
|
|
45.20 |
|
|
|
28.80 |
|
|
NA
|
|
|
NA
|
|
1926
|
|
|
157.20 |
|
|
|
0.50 |
|
|
|
0.30 |
|
|
NA
|
|
|
NA
|
|
1925
|
|
|
156.66 |
|
|
|
36.20 |
|
|
|
30.00 |
|
|
NA
|
|
|
NA
|
|
1924
|
|
|
120.51 |
|
|
|
25.00 |
|
|
|
26.20 |
|
|
NA
|
|
|
NA
|
|
1923
|
|
|
95.52 |
|
|
|
-3.20 |
|
|
|
-3.30 |
|
|
NA
|
|
|
NA
|
|
1922
|
|
|
98.73 |
|
|
|
17.60 |
|
|
|
21.70 |
|
|
NA
|
|
|
NA
|
|
1921
|
|
|
81.10 |
|
|
|
9.10 |
|
|
|
12.70 |
|
|
NA
|
|
|
NA
|
|
1920
|
|
|
71.95 |
|
|
|
-35.30 |
|
|
|
-32.90 |
|
|
NA
|
|
|
NA
|
|
1919
|
|
|
107.23 |
|
|
|
25.00 |
|
|
|
30.50 |
|
|
NA
|
|
|
NA
|
|
1918
|
|
|
82.20 |
|
|
|
7.80 |
|
|
|
10.50 |
|
|
NA
|
|
|
NA
|
|
1917
|
|
|
74.38 |
|
|
|
-20.60 |
|
|
|
-21.70 |
|
|
NA
|
|
|
NA
|
|
1916
|
|
|
95.00 |
|
|
|
-4.20 |
|
|
|
-4.20 |
|
|
NA
|
|
|
NA
|
|
1915
|
|
|
99.15 |
|
|
|
44.60 |
|
|
|
81.70 |
|
|
NA
|
|
|
NA
|
|
1914
|
|
|
54.58 |
|
|
|
-24.20 |
|
|
|
-30.70 |
|
|
NA
|
|
|
NA
|
|
1913
|
|
|
78.78 |
|
|
|
-9.10 |
|
|
|
-10.30 |
|
|
NA
|
|
|
NA
|
|
1912
|
|
|
87.87 |
|
|
|
6.20 |
|
|
|
7.60 |
|
|
NA
|
|
|
NA
|
|
1911
|
|
|
81.68 |
|
|
|
0.30 |
|
|
|
0.40 |
|
|
NA
|
|
|
NA
|
|
1910
|
|
|
81.36 |
|
|
|
-17.70 |
|
|
|
-17.90 |
|
|
NA
|
|
|
NA
|
|
1909
|
|
|
99.05 |
|
|
|
12.90 |
|
|
|
15.00 |
|
|
NA
|
|
|
NA
|
|
1908
|
|
|
86.15 |
|
|
|
27.40 |
|
|
|
46.60 |
|
|
NA
|
|
|
NA
|
|
1907
|
|
|
58.75 |
|
|
|
-35.60 |
|
|
|
-37.70 |
|
|
NA
|
|
|
NA
|
|
1906
|
|
|
94.35 |
|
|
|
-1.90 |
|
|
|
-1.90 |
|
|
NA
|
|
|
NA
|
|
1905
|
|
|
96.20 |
|
|
|
26.60 |
|
|
|
38.20 |
|
|
NA
|
|
|
NA
|
|
1904
|
|
|
69.61 |
|
|
|
20.50 |
|
|
|
41.70 |
|
|
NA
|
|
|
NA
|
|
1903
|
|
|
49.11 |
|
|
|
-15.20 |
|
|
|
-23.60 |
|
|
NA
|
|
|
NA
|
|
1902
|
|
|
64.29 |
|
|
|
-0.30 |
|
|
|
-0.40 |
|
|
NA
|
|
|
NA
|
|
1901
|
|
|
64.56 |
|
|
|
-6.10 |
|
|
|
-8.70 |
|
|
NA
|
|
|
NA
|
|
1900
|
|
|
70.71 |
|
|
|
4.60 |
|
|
|
7.00 |
|
|
NA
|
|
|
NA
|
|
1899
|
|
|
66.08 |
|
|
|
5.60 |
|
|
|
9.20 |
|
|
NA
|
|
|
NA
|
|
1898
|
|
|
60.52 |
|
|
|
11.10 |
|
|
|
22.50 |
|
|
NA
|
|
|
NA
|
|
1897
|
|
|
49.41 |
|
|
|
9.00 |
|
|
|
22.20 |
|
|
NA
|
|
|
NA
|
|
1896
|
|
|
40.45 |
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
|
NA
|
|
Source: S&P. Reflects no deduction for fees, expenses or taxes.
|
The DJIA is a price-weighted stock index, meaning that the component stocks of the DJIA are accorded relative importance based on their prices. In this regard, the DJIA is unlike many other stock indexes which weight their component stocks by market capitalization (price times shares outstanding). The DJIA is called an “average” because originally it was calculated by adding up the component stock prices and then dividing by the number of stocks. The method remains the same today, but the number of significant digits in the divisor (the number that is divided into the total of the stock prices) has been increased to eight significant digits to minimize distortions due to rounding and has been adjusted over time to insure continuity of the DJIA after component stock changes and corporate actions, as discussed below.
The DJIA divisor is adjusted due to corporate actions that change the price of any of its component shares. The most frequent reason for such an adjustment is a stock split. For example, suppose a company in the DJIA issues one new share for each share outstanding. After this two-for-one “split,” each share of stock is worth half what it was immediately before, other things being equal. But without an adjustment in the divisor, this split would produce a distortion in the DJIA. An adjustment must be made to compensate so that the “average” will remain unchanged. At S&P, this adjustment is handled by changing the divisor.* The formula used to calculate divisor adjustments is:
New Divisor
|
=
|
Current Divisor x Adjusted Sum of Prices
|
|
Unadjusted Sum of Prices
|
Changes in the composition of the DJIA are made entirely by the editors of The Wall Street Journal without consultation with the companies, the respective stock exchange, or any official agency. Additions or deletions of components may be made to achieve better representation of the broad market and of American industry.
In selecting components for the DJIA, the following criteria are used: (a) the company is not a utility or in the transportation business; (b) the company has a premier reputation in its field; (c) the company has a history of successful growth; and (d) there is wide interest among individual and institutional investors. Whenever one component is changed, the others are reviewed. For the sake of historical continuity, composition changes are made rarely.
____________
*
|
Currently, the divisor is adjusted after the close of business on the day prior to the occurrence of the split; the divisor is not adjusted for regular cash dividends
|
DIVIDENDS AND DISTRIBUTIONS
Dividends and Capital Gains
Unitholders (as defined below in “Federal Income Taxes—Taxation of the Trust”) receive each calendar month an amount corresponding to the amount of any cash dividends declared on the Portfolio Securities during the applicable period, net of fees and expenses associated with operation of the Trust, and taxes, if applicable. Because of such fees and expenses, the dividend yield for Units is ordinarily less than that of the DJIA. Investors should consult their tax advisors regarding tax consequences associated with Trust dividends, as well as those associated with Unit sales or redemptions.
Any capital gain income recognized by the Trust in any taxable year that is not distributed during the year ordinarily is distributed at least annually in January of the following taxable year. The Trust may make additional distributions shortly after the end of the year in order to satisfy certain distribution requirements imposed by the Internal Revenue Code of 1986, as amended (the “Code”). Although all income distributions are currently made monthly, under certain limited circumstances the Trustee may vary the times at which distributions are made. Under limited certain circumstances, special dividend payments also may be made to the Beneficial Owners. See “Additional Information Regarding Dividends and Distributions.”
No Dividend Reinvestment Service
No dividend reinvestment service is provided by the Trust. Broker-dealers, at their own discretion, may offer a dividend reinvestment service under which additional Units are purchased in the secondary market at current market prices. Investors should consult their broker-dealer for further information regarding any dividend reinvestment program offered by such broker-dealer.
Distributions in cash that are reinvested in additional Units through a dividend reinvestment service, if offered by an investor’s broker-dealer, will be taxable dividends to the same extent as if such dividends had been received in cash.
FEDERAL INCOME TAXES
The following is a description of the material U.S. federal income tax consequences of owning and disposing of Units. The discussion below provides general tax information relating to an investment in Units, but it does not purport to be a comprehensive description of all the U.S. federal income tax considerations that may be relevant to a particular person’s decision to invest in Units. This discussion does not describe all of the tax consequences that may be relevant in light of a beneficial owner’s particular circumstances, including alternative minimum tax consequences, Medicare contribution tax consequences and tax consequences applicable to beneficial owners subject to special rules, such as:
|
•
|
certain financial institutions;
|
|
•
|
regulated investment companies;
|
|
•
|
real estate investment trusts;
|
|
•
|
dealers or traders in securities that use a mark-to-market method of tax accounting;
|
|
•
|
persons holding Units as part of a hedging transaction, straddle, wash sale, conversion transaction or integrated transaction or persons entering into a constructive sale with respect to the Units;
|
|
•
|
U.S. Holders (as defined below) whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
|
|
•
|
entities classified as partnerships or otherwise treated as pass-through entities for U.S. federal income tax purposes;
|
|
•
|
former U.S. citizens and residents and certain expatriated entities;
|
|
•
|
tax-exempt entities, including an “individual retirement account” or “Roth IRA”; or
|
If an entity that is classified as a partnership for U.S. federal income tax purposes holds Units, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding Units and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of holding and disposing of the Units.
The following discussion applies only to an owner of Units that (i) is treated as the beneficial owner of such Units for U.S. federal income tax purposes, (ii) holds such Units as capital assets and (iii) unless otherwise noted, is a U.S. Holder. A “U.S. Holder” is (i) an individual who is a citizen or resident of the United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
This discussion is based on the Code, administrative pronouncements, judicial decisions, and final, temporary and proposed Treasury regulations all as of the date hereof, any of which is subject to change, possibly with retroactive effect.
Prospective purchasers of Units are urged to consult their tax advisors with regard to the application of the U.S. federal income tax laws to their particular situations, as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.
Taxation of the Trust
The Trust believes that it qualified as a regulated investment company under Subchapter M of the Code (a “RIC”) for its taxable year ended October 31, 2012 and intends to qualify as a RIC in the current and future taxable years. Assuming that the Trust so qualifies and that it satisfies the distribution requirements described below, the Trust generally will not be subject to U.S. federal income tax on income distributed in a timely manner to the holders of its Units (“Unitholders”).
To qualify as a RIC for any taxable year, the Trust must, among other things, satisfy both an income test and an asset diversification test for such taxable year. Specifically, (i) at least 90% of the Trust’s gross income for such taxable year must consist of dividends; interest; payments with respect to certain securities loans; gains from the sale or other disposition of stock, securities or foreign currencies; other income (including, but not limited to, gains from options, futures or forward contracts) derived with respect to its business of investing in such stock, securities or currencies; and net income derived from interests in “qualified publicly traded partnerships” (such income, “Qualifying RIC Income”) and (ii) the Trust’s holdings must be diversified so that, at the end of each quarter of such taxable year, (a) at least 50% of the value of the Trust’s total assets is represented by cash and cash items, securities of other RICs, U.S. government securities and other securities, with such other securities limited, in respect of any one issuer, to an amount not greater than 5% of the value of the Trust’s total assets and not greater than 10% of the outstanding voting securities of such issuer and (b) not more than 25% of the value of the Trust’s total assets is invested (x) in securities (other than U.S. government securities or securities of other RICs) of any one issuer or of two or more issuers that the Trust controls and that are engaged in the same, similar or related trades or businesses or (y) in the securities of one or more “qualified publicly traded partnerships.” A “qualified publicly traded partnership” is generally defined as an entity that is treated as a partnership for U.S. federal income tax purposes if (i) interests in such entity are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof and (ii) less than 90% of such entity’s gross income for the relevant taxable year consists of Qualifying RIC Income. The Trust’s share of income derived from a partnership other than a “qualified publicly traded partnership” will be treated as Qualifying RIC Income only to the extent that such income would have constituted Qualifying RIC Income if derived directly by the Trust.
In order to be exempt from U.S. federal income tax on its distributed income, the Trust must distribute to its Unitholders on a timely basis at least 90% of its “investment company taxable income” (determined prior to the deduction for dividends paid by the Trust) and at least 90% of its net tax-exempt interest income for each taxable year. In general, a RIC’s “investment company taxable income” for any taxable year is its taxable income, determined without regard to net capital gain (that is, the excess of net long-term capital gains over net short-term capital losses) and with certain other adjustments. Any taxable income, including any net capital gain, that the Trust does not distribute to its Unitholders in a timely manner will be subject to U.S. federal income tax at regular corporate rates.
A RIC will be subject to a nondeductible 4% excise tax on certain amounts that it fails to distribute during each calendar year. In order to avoid this excise tax, a RIC must distribute during each calendar year an amount at least equal to the sum of (i) 98% of its ordinary taxable income for the calendar year, (ii) 98.2% of its capital gain net income for the one-year period ended on October 31 of the calendar year and (iii) any ordinary income and capital gains for previous years that were not distributed during those years. For purposes of determining whether the Trust has met this distribution requirement, (i) certain ordinary gains and losses that would otherwise be taken into account for the portion of the calendar year after October 31 will be treated as arising on January 1 of the following calendar year and (ii) the Trust will be deemed to have distributed any income or gains on which it has paid U.S. federal income tax.
If the Trust failed to qualify as a RIC or failed to satisfy the 90% distribution requirement in any taxable year, the Trust would be subject to U.S. federal income tax at regular corporate rates on its taxable income, including its net capital gain, even if such income were distributed to its Unitholders, and all distributions out of earnings and profits would be taxable as dividend income. Such distributions generally would be eligible for the dividends-received deduction in the case of corporate U.S. Holders and, prior to January 1, 2013, would have constituted “qualified dividend income” for individual U.S. Holders. See “Federal Income Taxes—Tax Consequences to U.S. Holders—Distributions.” In addition, the Trust could be required to recognize unrealized gains, pay taxes and make distributions (which could be subject to interest charges) before requalifying for taxation as a RIC. If the Trust fails to satisfy the income test or diversification test described above, however, it may be able to avoid losing its status as a RIC by timely curing such failure, paying a tax and/or providing notice of such failure to the U.S. Internal Revenue Service (the “IRS”).
In order to meet the distribution requirements necessary to be exempt from U.S. federal income tax on its distributed income, the Trust may be required to make distributions in excess of the yield performance of the Portfolio Securities and may be required to sell securities in order to do so.
Tax Consequences to U.S. Holders
Distributions. Distributions of the Trust’s ordinary income and net short-term capital gains will generally be taxable to U.S. Holders as ordinary income to the extent such distributions are paid out of the Trust’s current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. Distributions (or deemed distributions, as described below), if any, of net capital gains will be taxable as long-term capital gains, regardless of the length of time the U.S. Holder has owned Units. A distribution of an amount in excess of the Trust’s current and accumulated earnings and profits will be treated as a return of capital that will be applied against and reduce the U.S. Holder’s basis in its Units. To the extent that the amount of any such distribution exceeds the U.S. Holder’s basis in its Units, the excess will be treated as gain from a sale or exchange of the Units.
The ultimate tax characterization of the distributions that the Trust makes during any taxable year cannot be determined until after the end of the taxable year. As a result, it is possible that the Trust will make total distributions during a taxable year in an amount that exceeds its current and accumulated earnings and profits. Return-of-capital distributions may result if, for example, the Trust makes distributions of cash amounts deposited in connection with Portfolio Deposits (as defined below in “Purchases and Redemptions of Creation Units—Purchase (Creation)”). Return-of-capital distributions may be more likely to occur in periods during which the number of outstanding Units fluctuates significantly. Unitholders will be notified annually as to the U.S. federal tax status of distributions.
Distributions of “qualified dividend income” to an individual or other non-corporate U.S. Holder during a taxable year of such U.S. Holder beginning before January 1, 2013 were treated as “qualified dividend income” and were
therefore taxed at rates applicable to long-term capital gains, provided that the U.S. Holder met certain holding period and other requirements with respect to its Units and that the Trust met certain holding period and other requirements with respect to the underlying shares of stock. It is unclear whether any legislation will be enacted that would extend this treatment to taxable years beginning on or after January 1, 2013. “Qualified dividend income” generally includes dividends from domestic corporations and dividends from foreign corporations that meet certain specified criteria.
Dividends distributed by the Trust to a corporate U.S. Holders will qualify for the dividends-received deduction only to the extent that the dividends consist of distributions of qualifying dividends received by the Trust. In addition, any such dividends-received deduction will be disallowed or reduced if the corporate U.S. Holder fails to satisfy certain requirements, including a holding period requirement, with respect to its Units.
The Trust intends to distribute its net capital gains at least annually. If, however, the Trust retains any net capital gains for reinvestment, it may elect to treat such net capital gains as having been distributed to its Unitholders. If the Trust makes such an election, each U.S. Holder will be required to report its share of such undistributed net capital gain as long-term capital gain and will be entitled to claim its share of the U.S. federal income taxes paid by the Trust on such undistributed net capital gain as a credit against its own U.S. federal income tax liability, if any, and to claim a refund on a properly filed U.S. federal income tax return to the extent that the credit exceeds such tax liability. In addition, each U.S. Holder will be entitled to increase the adjusted tax basis of its Units by the difference between its share of such undistributed net capital gain and the related credit. There can be no assurance that the Trust will make this election if it retains all or a portion of its net capital gain for a taxable year.
Because the taxability of a distribution depends upon the Trust’s current and accumulated earnings and profits, a distribution received shortly after an acquisition of Units may be taxable, even though, as an economic matter, the distribution represents a return of the U.S. Holder’s initial investment.
Although dividends generally will be treated as distributed when paid, dividends declared in October, November or December, payable to Unitholders of record on a specified date in one of those months, and paid during the following January, will be treated as having been distributed by the Trust and received by the Unitholders on December 31 of the year in which declared.
Sales and Redemptions of Units. In general, upon the sale or other disposition of Units, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference, if any, between the amount realized on the sale or other disposition and the U.S. Holder’s adjusted tax basis in the relevant Units. Such gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the relevant Units was more than one year on the date of the sale or other disposition. Under current law, net capital gain (that is, the excess of net long-term capital gains over net short-term capital losses) recognized by non-corporate U.S. Holders are generally subject to U.S. federal income tax at lower rates than the rates applicable to ordinary income.
Losses recognized by a U.S. Holder on the sale or other disposition of Units held for six months or less will be treated as long-term capital losses to the extent of any distribution of long-term capital gain received (or deemed received, as discussed above) with respect to such Units. In addition, no loss will be allowed on a sale or other disposition of Units if the U.S. Holder acquires, or enters into a contract or option to acquire, Units within 30 days before or after such sale or other disposition. In such a case, the basis of the Units acquired will be adjusted to reflect the disallowed loss.
If a U.S. Holder receives an in-kind distribution in redemption of Units (which must constitute a Creation Unit; see “Purchases and Redemptions of Creation Units—Redemption”), the U.S. Holder will recognize gain or loss in an amount equal to the difference between the sum of the aggregate fair market value as of the redemption date of the stocks and cash received in the redemption and the U.S. Holder’s adjusted tax basis in the relevant Units. The U.S. Holder will generally have an initial tax basis in the distributed stocks equal to their respective fair market values on the redemption date. The IRS may assert that any resulting loss may not be deducted on the ground that there has been no material change in the U.S. Holder’s economic position. The Trust will not recognize gain or loss for U.S. federal income tax purposes on an in-kind distribution in redemption of Units.
Under U.S. Treasury regulations, if a U.S. Holder recognizes losses with respect to Units of $2 million or more for an individual U.S. Holder or $10 million or more for a corporate U.S. Holder, the U.S. Holder must file with the IRS
a disclosure statement on IRS Form 8886. Direct shareholders of portfolio securities are in many cases exempted from this reporting requirement, but under current guidance, shareholders of a RIC are not exempted. The fact that a loss is reportable under these regulations does not affect the legal determination of whether the U.S. Holder’s treatment of the loss is proper. Certain states may have similar disclosure requirements.
Portfolio Deposits. Upon the transfer of a Portfolio Deposit (as defined below in “Purchases and Redemptions of Creation Units—Purchase (Creation)”) to the Trust, a U.S. Holder will generally recognize gain or loss with respect to each stock included in the Portfolio Deposit in an amount equal to the difference, if any, between the amount realized with respect to such stock and the U.S. Holder’s basis in the stock. The amount realized with respect to each stock included in a Portfolio Deposit is determined by allocating among all of the stocks included in the Portfolio Deposit an amount equal to the fair market value of the Creation Units received (determined as of the date of transfer of the Portfolio Deposit) plus the amount of any cash received from the Trust, reduced by the amount of any cash that the U.S. Holder pays to the Trust. This allocation is made among such stocks in accordance with their relative fair market values as of the date of transfer of the Portfolio Deposit. The IRS may assert that any loss resulting from the transfer of a Portfolio Deposit to the Trust may not be deducted on the ground that there has been no material change in the economic position of the U.S. Holder. The Trust will not recognize gain or loss for U.S. federal income tax purposes on the issuance of Creation Units in exchange for Portfolio Deposits.
Backup Withholding and Information Returns. Payments on the Units and proceeds from a sale or other disposition of Units will be subject to information reporting, unless the U.S. Holder is an exempt recipient. A U.S. Holder will be subject to backup withholding on all such amounts unless (i) the U.S. Holder is an exempt recipient or (ii) the U.S. Holder provides its correct taxpayer identification number (generally, on IRS Form W-9) and certifies that it is not subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld pursuant to the backup withholding rules will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is furnished to the IRS on a timely basis.
Tax Consequences to Non-U.S. Holders
A “Non-U.S. Holder” is a person that, for U.S. federal income tax purposes, is a beneficial owner of Units and is a nonresident alien individual, a foreign corporation, a foreign trust or a foreign estate. The discussion below does not apply to a Non-U.S. Holder who is a nonresident alien individual and is present in the United States for 183 days or more during any taxable year. Such Non-U.S. Holders should consult their tax advisors with respect to the particular tax consequences to them of an investment in the Trust. The U.S. federal income taxation of a Non-U.S. Holder depends on whether the income that the Non-U.S. Holder derives from the Trust is “effectively connected” with a trade or business that the Non-U.S. Holder conducts in the United States.
If the income that a Non-U.S. Holder derives from the Trust is not “effectively connected” with a U.S. trade or business conducted by such Non-U.S. Holder, distributions of “investment company taxable income” to such Non-U.S. Holder will generally be subject to U.S. federal withholding tax at a rate of 30% (or lower rate under an applicable tax treaty). Provided that certain requirements were satisfied, this withholding tax was not imposed on dividends paid by the Trust in its taxable years beginning before January 1, 2012 to the extent that the underlying income out of which the dividends were paid consisted of U.S.-source interest income or short-term capital gains that would not have been subject to U.S. withholding tax if received directly by the Non-U.S. Holder (“interest-related dividends” and “short-term capital gain dividends,” respectively). It is unclear whether any legislation will be enacted that would extend this exemption from withholding to the Trust’s taxable years beginning on or after January 1, 2012.
A Non-U.S. Holder whose income from the Trust is not “effectively connected” with a U.S. trade or business will generally be exempt from U.S. federal income tax on capital gain dividends and any amounts retained by the Trust that are designated as undistributed capital gains. In addition, such a Non-U.S. Holder will generally be exempt from U.S. federal income tax on any gains realized upon the sale or exchange of Units.
If the income from the Trust is “effectively connected” with a U.S. trade or business carried on by a Non-U.S. Holder (and, if required by an applicable tax treaty, is attributable to a U.S. permanent establishment maintained by the Non-U.S. Holder), any distributions of “investment company taxable income,” any capital gain dividends, any amounts retained by the Trust that are designated as undistributed capital gains and any gains realized upon the sale
or exchange of Units will be subject to U.S. federal income tax, on a net income basis, at the rates applicable to U.S. Holders. A Non-U.S. Holder that is a corporation may also be subject to the U.S. branch profits tax.
Information returns will be filed with the IRS in connection with certain payments on the Units and may be filed in connection with payments of the proceeds from a sale or other disposition of Units. A Non-U.S. Holder may be subject to backup withholding on net capital gain distributions that are otherwise exempt from withholding tax if such Non-U.S. Holder does not certify its non-U.S. status under penalties of perjury or otherwise establish an exemption. Backup withholding is not an additional tax. Any amounts withheld pursuant to the backup withholding rules will be allowed as a credit against the Non-U.S. Holder’s U.S. federal income tax liability, if any, and may entitle the Non-U.S. Holder to a refund, provided that the required information is furnished to the IRS on a timely basis.
In order to qualify for an exemption from U.S. backup withholding and to qualify for a reduced rate of U.S. withholding tax on Trust distributions pursuant to an income tax treaty, a Non-U.S. Holder must generally deliver to the withholding agent a properly executed IRS form (generally, Form W-8BEN). In order to claim a refund of any Trust-level taxes imposed on undistributed net capital gains, any withholding taxes or any backup withholding, a Non-U.S. Holder must obtain a U.S. taxpayer identification number and file a U.S. federal income tax return, even if the Non-U.S. Holder would not otherwise be required to obtain a U.S. taxpayer identification number or file a U.S. income tax return.
Sections 1471 through 1474 of the Code (“FATCA”) generally impose withholding at a rate of 30% on payments to certain foreign entities (including financial intermediaries) of dividends on, and gross proceeds from the sale or other disposition of, U.S. common stock, unless various U.S. information reporting and due diligence requirements (generally relating to ownership by U.S. persons of interests in or accounts with those entities) have been satisfied. Under current guidance, withholding taxes under FATCA will be imposed on dividends beginning on January 1, 2014, and on gross proceeds from dispositions beginning on January 1, 2017 . Non-U.S. Holders should consult their tax advisors regarding the possible implications of FATCA on their investment in Units.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
[To the Trustee and Unitholders of SPDR Dow Jones Industrial Average ETF Trust:]
[In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of SPDR Dow Jones Industrial Average ETF Trust (the “Trust”) at [October 31, 2012], and the results of its operations, the changes in its net assets and the financial highlights for the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Trustee. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at [October 31, 2012] by correspondence with the custodian, provide a reasonable basis for our opinion.]
[_________________]
[Boston, Massachusetts]
[________, 2012]
SPDR Dow Jones Industrial Average ETF Trust
Statement of Assets and Liabilities
[Assets]
|
|
[Investments in securities, at value]
|
$[__________]
|
[Cash]
|
[__________]
|
[Receivable for units of fractional undivided interest (“Units”) issued in-kind]
|
[__________]
|
[Dividends receivable]
|
[__________]
|
[Total Assets]
|
[__________]
|
[Liabilities]
|
|
[Income distribution payable]
|
[__________]
|
[Accrued Trustee expense]
|
[__________]
|
[Accrued expenses and other liabilities]
|
[__________]
|
[Total Liabilities]
|
[__________]
|
[Net Assets]
|
$[__________]
|
[Net Assets Consist of:]
|
|
[Paid in capital (Note [4])]
|
$[__________]
|
[Undistributed net investment income]
|
[__________]
|
[Accumulated net realized loss on investments]
|
[__________]
|
[Net unrealized depreciation on investments]
|
[__________]
|
[Net Assets]
|
$[__________]
|
[Net asset value per Unit]
|
$[__________]
|
[Units outstanding, unlimited Units authorized, $0.00 par value]
|
[__________]
|
[Cost of investments]
|
$[__________]
|
See accompanying notes to financial statements.
SPDR Dow Jones Industrial Average ETF Trust
Statements of Operations
|
For the Year
Ended
October 31, 2012
|
|
For the Year
Ended
October 31, 2011
|
|
For the Year
Ended
October 31, 2010
|
[Investment Income]
|
|
|
|
|
|
[Dividend income]
|
$ [________]
|
|
$ [________]
|
|
$ [________]
|
[Expenses]
|
|
|
|
|
|
[Trustee expense]
|
[________]
|
|
[________]
|
|
[________]
|
[Marketing expense]
|
[________]
|
|
[________]
|
|
[________]
|
[DJIA license fee]
|
[________]
|
|
[________]
|
|
[________]
|
[Legal and audit services]
|
[________]
|
|
[________]
|
|
[________]
|
[Other expenses]
|
[________]
|
|
[________]
|
|
[________]
|
[Total Expenses]
|
[________]
|
|
[________]
|
|
[________]
|
[Net Investment Income]
|
[________]
|
|
[________]
|
|
[________]
|
[Realized and Unrealized Gain (Loss) on Investments]
|
|
|
|
|
|
[Net realized gain (loss) on investment transactions]
|
[________]
|
|
[________]
|
|
[________]
|
[Net change in unrealized appreciation (depreciation)]
|
[________]
|
|
[________]
|
|
[________]
|
[Net Realized and Unrealized Gain (Loss) on Investments]
|
[________]
|
|
[________]
|
|
[________]
|
[Net Increase in Net Assets From Operations]
|
$ [________]
|
|
$ [________]
|
|
$ [________]
|
[See accompanying notes to financial statements.]
SPDR Dow Jones Industrial Average ETF Trust
Statements of Changes in Net Assets
|
For the Year
Ended
October 31, 2012
|
|
For the Year
Ended
October 31, 2011
|
|
For the Year
Ended
October 31, 2010
|
[Increase (decrease) in net assets resulting from operations:]
|
|
|
|
|
|
[Net investment income]
|
$[__________]
|
|
$[__________]
|
|
$[__________]
|
[Net realized gain (loss) on investment transactions]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net change in unrealized appreciation (depreciation)]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net increase in net assets resulting from operations:]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net equalization credits and charges]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Distributions to Unitholders from net investment income]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Increase (decrease) in net assets from Unit transactions:]
|
|
|
|
|
|
[Net proceeds from sale of Units]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net proceeds from reinvestment of distributions]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Cost of Units repurchased]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net income equalization]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net increase (decrease) in net assets from issuance and redemption of Units]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net increase (decrease) in net assets during period]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net assets at beginning of period]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net assets at end of period*]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Unit transactions:]
|
|
|
|
|
|
[Units sold]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Units issued from reinvestment of distributions]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Units redeemed]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[Net increase (decrease)]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[* Includes undistributed (distribution in excess of) net investment income]
|
[__________]
|
|
[__________]
|
|
[__________]
|
[See accompanying notes to financial statements.]
SPDR Dow Jones Industrial Average ETF Trust
Financial Highlights
Selected Data for a Unit Outstanding Throughout Each Year
|
For the
Year Ended
October 31,
2012
|
|
For the
Year Ended
October 31,
2011
|
|
For the
Year Ended
October 31,
2010
|
|
For the
Year Ended
October 31,
2009
|
|
For the
Year Ended
October 31,
2008
|
[Net asset value, beginning of year]
|
$[____]
|
|
$[____]
|
|
$[____]
|
|
$[____]
|
|
$[____]
|
[Investment operations:]
|
|
|
|
|
|
|
|
|
|
[Net investment income([1])]
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
[Net realized and unrealized gain (loss)]
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
[Total from investment operations]
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
[Net equalization credits and charges([1])]
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
[Less distributions from:]
|
|
|
|
|
|
|
|
|
|
[Net investment income]
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
[Net asset value, end of year]
|
$[____]
|
|
$[____]
|
|
$[____]
|
|
$[____]
|
|
$[____]
|
[Total investment return([2])]
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
|
[____]
|
[Ratios and supplemental data]
|
|
|
|
|
|
|
|
|
|
[Ratio to average net assets:]
|
|
|
|
|
|
|
|
|
|
[Net investment income]
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
[Total expenses]
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
[Total expenses excluding Trustee earnings credit]
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
[Portfolio turnover rate([3])]
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
|
[____]%
|
[Net assets, end of year (000’s)]
|
$[________]
|
|
$[________]
|
|
$[________]
|
|
$[________]
|
|
$[________]
|
____________
[(1)
|
Per Unit numbers have been calculated using the average shares method, which more appropriately presents per Unit data for the year.]
|
|
|
[(2)
|
Total return is calculated assuming a purchase of Units at net asset value per Unit on the first day and a sale at net asset value per Unit on the last day of each period reported. Distributions are assumed, for the purposes of this calculation, to be reinvested at the net asset value per Unit on the respective payment dates of the Trust. Broker commission charges are not included in this calculation.]
|
|
|
[(3)
|
Portfolio turnover rate does not include securities received or delivered from processing creations or redemptions of Units.]
|
[See accompanying notes to financial statements.]
SPDR Dow Jones Industrial Average ETF Trust
Notes to Financial Statements
[October 31, 2012]
[SPDR Dow Jones Industrial Average ETF Trust (the “Trust”) is a unit investment trust created under the laws of the State of New York and registered under the Investment Company Act of 1940, as amended. The Trust was created to provide investors with the opportunity to purchase a security representing a proportionate undivided interest in a portfolio of securities consisting of substantially all of the component common stocks, in substantially the same weighting, which comprise the Dow Jones Industrial Average (the “DJIA”). Each unit of fractional undivided interest in the Trust is referred to as a “Unit”. The Trust commenced operations on January 14, 1998 upon the initial issuance of 500,000 Units (equivalent to ten “Creation Units” — see Note 4) in exchange for a portfolio of securities assembled to reflect the intended portfolio composition of the Trust.]
[Under the Amended and Restated Standard Terms and Conditions of the Trust, as amended (“Trust Agreement”), PDR Services, LLC, as Sponsor of the Trust (“Sponsor”), and State Street Bank and Trust Company, as Trustee of the Trust (“Trustee”), are indemnified against certain liabilities arising from the performance of their duties to the Trust. Additionally, in the normal course of business, the Trust enters into contracts that contain general indemnification clauses. The Trust’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Trust that have not yet occurred. However, based on experience, the Trust expects the risk of material loss to be remote.]
[On February 15, 2011, NYSE Euronext (the parent of the Sponsor) and Deutsche Börse AG announced that they have entered into a business combination agreement which was subsequently approved by their shareholders. This transaction is subject to approval by the relevant regulatory authorities in the U.S. and Europe, and other closing conditions.]
[NOTE 2—SIGNIFICANT ACCOUNTING POLICIES]
[The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements:]
[The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates. These financial statements are presented in United States dollars.]
[Security Valuation]
[The value of the Trust’s portfolio securities is based on the market price of the securities, which generally means a valuation obtained from an exchange or other market (or based on a price quotation or other equivalent indication of value supplied by an exchange or other market) or a valuation obtained from an independent pricing service. If a security’s market price is not readily available or does not otherwise accurately reflect the fair value of the security, the security will be valued by another method that the Trustee believes will better reflect fair value in accordance with the Trust’s valuation policies and procedures. The Trustee has established a Pricing and Investment Committee (the “Committee”) for purposes of valuing securities for which market quotations are not readily available or do not otherwise accurately reflect the fair value of the security. The Committee, subject to oversight by the Trustee, may use fair value pricing in a variety of circumstances, including but not limited to, situations when trading in a security has been suspended or halted. Accordingly, the Trust’s net asset value may reflect certain portfolio securities’ fair values rather than their market prices. Fair value pricing involves subjective judgments and it is possible that the fair value determination for a security is materially different than the value that could be received on the sale of the security.]
[The Trust continues to follow the authoritative guidance for fair value measurements and the fair value option for financial assets and financial liabilities. The guidance for the fair value option for financial assets and financial liabilities provides the Trust the irrevocable option to measure many financial assets and liabilities at fair value with changes in fair value recognized in earnings. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The guidance establishes three levels of inputs that may be used to measure fair value:]
•
|
[Level 1—quoted prices in active markets for identical investments]
|
•
|
[Level 2—other significant observable inputs (including, but not limited to, quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)]
|
•
|
[Level 3—significant unobservable inputs (including the Trust’s own assumptions in determining the fair value of investments)]
|
[Investments that use Level 2 or Level 3 inputs may include, but are not limited to: (i) an unlisted security related to corporate actions; (ii) a restricted security (e.g., one that may not be publicly sold without registration under the Securities Act of 1933, as amended); (iii) a security whose trading has been suspended or which has been de-listed from its primary trading exchange; (iv) a security that is thinly traded; (v) a security in default or bankruptcy proceedings for which there is no current market quotation; (vi) a security affected by currency controls or restrictions; and (vii) a security affected by a significant event (e.g., an event that occurs after the close of the markets on which the security is traded but before the time as of which the Trust’s net assets are computed and that may materially affect the value of the Trust’s investments). Examples of events that may be “significant events” are government actions, natural disasters, armed conflict, acts of terrorism, and significant market fluctuations.]
[Fair value pricing could result in a difference between the prices used to calculate the Trust’s net asset value and the prices used by the DJIA, which, in turn, could result in a difference between the Trust’s performance and the performance of the DJIA. The inputs or methodology used for valuation are not necessarily an indication of the risk associated with investing in those investments. The type of inputs used to value each security is identified in the Schedule of Investments, which also includes a breakdown of the Trust’s investments by industry.]
[Subsequent Events]
[Events or transactions occurring after the year end through the date the financial statements were issued have been evaluated by management in the preparation of the financial statements and no items were noted requiring additional disclosure or adjustment.]
[Investment Risk]
[The Trust’s investments are exposed to risks, such as market risk. Due to the level of risk associated with certain investments it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the financial statements.]
[An investment in the Trust involves risks similar to those of investing in any fund of equity securities, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock prices. The value of a Unit will decline, more or less, in correlation with any decline in value of the DJIA. The values of equity securities could decline generally or could underperform other investments. The Trust would not sell an equity security because the security’s issuer was in financial trouble unless that security were removed from the DJIA.]
[Investment Transactions]
[Investment transactions are recorded on the trade date. Realized gains and losses from the sale or disposition of securities are recorded on the identified cost basis. Dividend income is recorded on the ex-dividend date.]
[Distributions to Unitholders]
[The Trust declares and distributes dividends from net investment income to its holders of Units (“Unitholders”) monthly. The Trust declares and distributes net realized capital gains, if any, at least annually.]
[Broker-dealers, at their own discretion, may offer a dividend reinvestment service under which additional Units may be purchased in the secondary market at current market prices. Investors should consult their broker-dealer for further information regarding any dividend reinvestment service offered by such broker-dealer.]
[Equalization]
[The Trust follows the accounting practice known as “Equalization” by which a portion of the proceeds from sales and costs of reacquiring the Trust’s Units, equivalent on a per Unit basis to the amount of distributable net investment income on the date of the transaction, is credited or charged to undistributed net investment income. As a result, undistributed net investment income per Unit is unaffected by sales or reacquisitions of the Trust’s Units.]
[U.S. Federal Income Tax and Certain Other Tax Matters]
[For U.S. federal income tax purposes, the Trust has qualified as a “regulated investment company” under Subchapter M of the Internal Revenue Code of 1986, as amended (a “RIC”) and intends to continue to qualify as a RIC. As a RIC, the Trust will generally not be subject to U.S. federal income tax for any taxable year on income, including net capital gains, that it distributes to its Unitholders, provided that it distributes on a timely basis at least 90% of its “investment company taxable income” (generally, its taxable income other than net capital gain) for such taxable year. In addition, provided that the Trust distributes during each calendar year substantially all of its ordinary income and capital gains, the Trust will not be subject to U.S. federal excise tax.]
[The Trust has reviewed the tax positions for the open tax years as of October 31, 2012 and has determined that no provision for income tax is required in the Trust’s financial statements. The Trust’s U.S. federal tax returns for the prior three fiscal years remain subject to examination by the Trust’s major tax jurisdictions, which include the United States of America and the State of New York. The Trust would recognize interest and penalties, if any, related to tax liabilities as income tax expense in the Statements of Operations. There were no such expenses for the year ending October 31, 2012.]
[Under rules in effect for taxable years beginning before December 22, 2010, the capital loss carryforward period of a RIC was limited to eight years. Capital loss carryforwards of RICs for subsequent taxable years may be carried forward indefinitely, but capital loss carryforwards generated in taxable years subject to the prior rules must be fully used before those generated in subsequent taxable years. Therefore, under certain circumstances, capital loss carryforwards available as of the report date, as described below, may expire unused.]
[At [October 31, 2012], the Trust had the following capital loss carryforwards that may be used to offset any net realized gains, expiring October 31:]
[2012]
|
$[221,460,584]
|
[2014]
|
[52,316]
|
[2016]
|
[506,750,845]
|
[2017]
|
[779,537,215]
|
[2018]
|
[4,715,695]
|
[2019]
|
[3,393,588]
|
[During the tax year ended October 31, 2012, $[_________] of capital loss carryforwards expired.]
[During the year ended October 31, 2012, the Trust reclassified $[_________] of non-taxable security gains realized in the in-kind redemption of Creation Units (Note 4) as an increase to paid in capital in the Statement of Assets and Liabilities. At October 31, 2012, the cost of investments for U.S. federal income tax purposes was $[_________]. Accordingly, gross unrealized appreciation was $[_________] and gross unrealized depreciation was $[_________], resulting in net unrealized depreciation of $[_________].]
[The tax character of distributions paid during the years ended October 31, 2012, 2011 and 2010 were as follows:]
Distributions paid from:
|
2012
|
2011
|
2010
|
Ordinary Income
|
$ [______]
|
$ [______]
|
$ [______]
|
[As of October 31, 2012, the components of distributable earnings (excluding unrealized appreciation/depreciation) were undistributed ordinary income of $1[_________], undistributed long-term capital gain of $[_________] and unrealized depreciation of $[_________].]
[NOTE 3—TRANSACTIONS WITH THE TRUSTEE AND SPONSOR]
[In accordance with the Trust Agreement, the Trustee maintains the Trust’s accounting records, acts as custodian and transfer agent to the Trust, and provides administrative services, including filing of certain regulatory reports. The Trustee is also responsible for determining the composition of the portfolio of securities which must be delivered and/or received in exchange for the issuance and/or redemption of Creation Units of the Trust, and for adjusting the composition of the Trust’s portfolio from time to time to conform to changes in the composition and/or weighting structure of the DJIA. For these services, the Trustee received a fee at the following annual rates for the year ended October 31, 2012:]
[Net asset value of the Trust]
|
|
[Fee as a percentage of
net asset value of the Trust]
|
[$0 – $499,999,999]
|
|
[10/100 of 1% per annum plus or minus the Adjustment Amount]
|
[$500,000,000 – $2,499,999,999]
|
|
[8/100 of 1% per annum plus or minus the Adjustment Amount]
|
[$2,500,000,000 – and above]
|
|
[6/100 of 1% per annum plus or minus the Adjustment Amount]
|
[The Adjustment Amount is the sum of (a) the excess or deficiency of transaction fees received by the Trustee, less the expenses incurred in processing orders for creation and redemption of Units and (b) the amounts earned by the Trustee with respect to the cash held by the Trustee for the benefit of the Trust. During the year ended October 31, 2012, the Adjustment Amount reduced the Trustee’s fee by $[_________]. The Adjustment Amount included an excess of net transaction fees from processing orders of $[_________] and a Trustee earning credit of $[_________].]
[The Sponsor, a wholly-owned subsidiary of NYSE Euronext, agreed to reimburse the Trust for, or assume, the ordinary operating expenses of the Trust which exceeded [18.00/100 of 1%] per annum of the daily net asset value of the Trust. There were no such reimbursements by the Sponsor for the fiscal years ended October 31, 2012, October 31, 2011 and October 31, 2010.]
[S&P Dow Jones Indices LLC (“S&P”) and State Street Global Markets, LLC (“SSGM or the “Marketing Agent”) have entered into a License Agreement. The License Agreement grants SSGM, an affiliate of the Trustee, a license to use the DJIA and to use certain trade names and trademarks of S&P in connection with the Trust. The DJIA also serves as a basis for determining the composition of the Portfolio. The Trustee on behalf of the Trust, the Sponsor and NYSE Arca, Inc. have each received a sublicense from SSGM for the use of the DJIA and such trade names and trademarks in connection with their rights and duties with respect to the Trust. The License Agreement may be amended without the consent of any of the owners of beneficial interest of Units. Currently, the License Agreement is scheduled to terminate on December 31, 2017, but its term may be extended without the consent of any of the owners of beneficial interests of Units. Pursuant to such arrangements and in accordance with the Trust Agreement, the Trust reimburses the Sponsor for payment of fees under the License Agreement to S&P equal to 0.05% on the first $1 billion of the then rolling average asset balance, and 0.04% on any excess rolling average asset balance over and above $1 billion. The minimum annual fee for the Trust is $1 million.]
[The Sponsor has entered into an agreement with the Marketing Agent pursuant to which the Marketing Agent has agreed to market and promote the Trust. The Marketing Agent is reimbursed by the Sponsor for the expenses it incurs for providing such services out of amounts that the Trust reimburses the Sponsor. Expenses incurred by the Marketing Agent include but are not limited to: printing and distribution of marketing materials describing the Trust, associated legal, consulting, advertising and marketing costs and other out-of-pocket expenses.]
[NOTE 4—UNITHOLDER TRANSACTIONS]
[Units are issued and redeemed by the Trust only in Creation Unit size aggregations of 50,000 Units. Such transactions are only permitted on an in-kind basis, with a separate cash payment which is equivalent to the undistributed net investment income per Unit (income equalization) and a balancing cash component to equate the transaction to the net asset value per Unit of the Trust on the transaction date. A transaction fee of $1,000 is charged in connection with each creation or redemption of Creation Units through the clearing process per participating party per day, regardless of the number of Creation Units created or redeemed. In the case of creations and redemptions outside of the clearing process, the transaction fee plus an additional amount not to exceed three (3) times the transaction fee applicable for one Creation Unit per Creation Unit redeemed, and such amount is deducted from the amount delivered to the redeemer. Transaction fees are received by the Trustee and used to defray the expense of processing orders.
[NOTE 5—INVESTMENT TRANSACTIONS]
[For the year ended October 31, 2012, the Trust had net in-kind contributions, net in-kind redemptions, purchases and sales of investment securities of $[_________], $[_________], $[_________] and $[_________], respectively. Net realized gain (loss) on investment transactions in the Statement of Operations includes net gains resulting from in-kind transactions of $[_________].]
[NOTE 6—EVENT (UNAUDITED) SUBSEQUENT TO THE DATE OF THE INDEPENDENT AUDITOR’S REPORT]
[As indicated in Note 1 to the Financial Statements, on February 15, 2011, NYSE Euronext (the parent of the Sponsor) and Deutsche Börse AG announced that they had entered into a business combination agreement, which was subsequently approved by their shareholders. The transaction was subject to approval by the relevant regulatory authorities in the U.S. and Europe, and other closing conditions. On February 1, 2012, the EU Competition Commission issued a formal decision disapproving the proposed business combination. In light of the EU Commission’s decision, on February 2, 2012, NYSE Euronext and Deutsche Börse announced that they mutually agreed to terminate the business combination agreement.]
SPDR Dow Jones Industrial Average ETF Trust
Other Information
[October 31, 2012 (Unaudited)]
Tax Information
[For U.S. federal income tax purposes, the percentage of Trust distributions that qualify for the corporate dividends paid deduction for the fiscal year ended October 31, 2012 is [____]%.]
[For the fiscal year ended October 31, 2012, certain dividends paid by the Trust may be designated as qualified dividend income for U.S. federal income tax purposes and subject to a maximum U.S. federal income tax rate of 15%. Complete information will be reported in conjunction with your 2012 Form 1099-DIV.]
[FREQUENCY DISTRIBUTION OF DISCOUNTS AND PREMIUMS]
[Bid/Ask Price(1) vs. Net Asset Value]
[As of October 31, 2012]
|
Bid/Ask Price
Above NAV
|
Bid/Ask Price
Below NAV
|
|
50-99
BASIS
POINTS
|
100-199
BASIS
POINTS
|
>200
BASIS
POINTS
|
50-99
BASIS
POINTS
|
100-199
BASIS
POINTS
|
>200
BASIS
POINTS
|
2012
|
[_]
|
[_]
|
[_]
|
[_]
|
[_]
|
[_]
|
2011
|
[0]
|
[0]
|
[0]
|
[0]
|
[0]
|
[0]
|
2010
|
[0]
|
[0]
|
[0]
|
[0]
|
[0]
|
[0]
|
2009
|
[0]
|
[0]
|
[0]
|
[0]
|
[0]
|
[0]
|
2008
|
[3]
|
[2]
|
[2]
|
[2]
|
[0]
|
[0]
|
[Comparison of Total Returns Based on NAV and Bid/Ask Price(1)]
[The table below is provided to compare the Trust’s total pre-tax returns at NAV with the total pre-tax returns based on bid/ask price and the performance of the DJIA. Past performance is not necessarily an indication of how the Trust will perform in the future.]
[Cumulative Total Return]
[Trust]
|
|
|
|
[Return Based on NAV]
|
[___]%
|
[___]%
|
[___]%
|
[Return Based on Bid/Ask Price]
|
[___]%
|
[___]%
|
[___]%
|
[DJIA]
|
[___]%
|
[___]%
|
[___]%
|
Average Annual Total Return
[Trust]
|
|
|
|
[Return Based on NAV]
|
[___]%
|
[___]%
|
[___]%
|
[Return Based on Bid/Ask Price]]
|
[___]%
|
[___]%
|
[___]%
|
[DJIA]
|
[___]%
|
[___]%
|
[___]%
|
____________
[(1)
|
Currently, the bid/ask price is the midpoint of the best bid and best offer prices on NYSE Arca at the time the Trust’s NAV is calculated, ordinarily 4:00 p.m. Through November 28, 2008, the bid/ask price was the midpoint of the best bid and best offer prices on NYSE Alternext US (formerly the American Stock Exchange and now NYSE MKT) at the close of trading, ordinarily 4:00 p.m.]
|
SPDR Dow Jones Industrial Average ETF Trust
Schedule of Investments
[October 31, 2012]
[Common Stocks]
|
[Shares]
|
|
[Value]
|
[_________________]
|
[_______]
|
|
$[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[_________________]
|
[_______]
|
|
[_________]
|
[Total Common Stocks(a) (Cost $[__________])]
|
|
|
$[_________]
|
____________
[(a)
|
The values of the securities of the Trust are determined based on Level 1 inputs. (Note [2])]
|
[See accompanying notes to financial statements.]
[INDUSTRY BREAKDOWN AS OF OCTOBER 31, 2012*]
[Industry**]
|
[Value]
|
|
[________________________]
|
[___]
|
% |
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[___]
|
|
[________________________]
|
[100.00]
|
% |
____________
[*
|
The Trust’s industry breakdown is expressed as a percentage of Total Net Assets and may change over time.]
|
|
|
[**
|
Each security is valued based on Level 1 inputs. (Note [2])]
|
[See accompanying notes to financial statements.]
ORGANIZATION OF THE TRUST
The Trust is a unit investment trust that issues Units. The Trust is organized under New York law and is governed by a trust agreement between the Trustee and the Sponsor, dated as of January 1, 1998 and effective as of January 13, 1998, as amended (the “Trust Agreement”). The Trust is an investment company registered under the Investment Company Act of 1940. Units represent an undivided ownership interest in Portfolio Securities of the Trust.
The Trust has a specified lifetime term. The Trust is scheduled to terminate on the first to occur of (a) January 14, 2123 or (b) the date 20 years after the death of the last survivor of fifteen persons named in the Trust Agreement, the oldest of whom was born in 1994 and the youngest of whom was born in 1997. Upon termination, the Trust may be liquidated and pro rata Units of the assets of the Trust, net of certain fees and expenses, distributed to holders of Units.
PURCHASES AND REDEMPTIONS OF CREATION UNITS
The Trust, a registered investment company, is an exchange traded fund or “ETF.” The Trust continuously issues and redeems “in-kind” its Units only in specified large lots of 50,000 Units or multiples thereof, which are referred to as “Creation Units,” at their once-daily NAV. Fractional Creation Units may be created or redeemed only in limited circumstances described herein. Units are listed individually for trading on the Exchange at prices established throughout the trading day, like any other listed equity security trading on the Exchange in the secondary market.
ALPS Distributors, Inc., the distributor of the Trust (the “Distributor”), acts as underwriter of Units on an agency basis. The Distributor maintains records of the orders placed with it and the confirmations of acceptance and furnishes confirmations of acceptance of the orders to those placing such orders. The Distributor also is responsible for delivering a prospectus to persons creating Units. The Distributor also maintains a record of the delivery instructions in response to orders and may provide certain other administrative services.
Purchase (Creation)
Before trading on the Exchange in the secondary market, Units are created at NAV in Creation Units. All orders for Creation Units must be placed with the Distributor as facilitated through the Trustee. To be eligible to place these orders, an entity or person must be an “Authorized Participant,” which is (a) either a “Participating Party” or a “DTC Participant” and (b) in each case must have executed an agreement with the Distributor and the Trustee (“Participant Agreement”). The term “Participating Party” means a broker-dealer or other participant in the Clearing Process (as defined below) through the Continuous Net Settlement (“CNS”) System of the National Securities Clearing Corporation (“NSCC”), a clearing agency registered with the Securities and Exchange Commission (“SEC”), and the term “DTC Participant” means a participant in DTC. Payment for orders is made by deposits with the Trustee of a portfolio of securities, substantially similar in composition and weighting to Index Securities, and a cash payment in an amount equal to the Dividend Equivalent Payment (as defined below), plus or minus the Balancing Amount (as defined below in “Portfolio Adjustments—Adjustments to the Portfolio Deposit”). “Dividend Equivalent Payment” is an amount equal, on a per Creation Unit basis, to the dividends on the Portfolio (with ex-dividend dates within the accumulation period), net of expenses and accrued liabilities for such period (including, without limitation, (i) taxes or other governmental charges against the Trust not previously deducted, if any, (ii) accrued fees of the Trustee and (iii) other expenses of the Trust (including legal and auditing expenses) not previously deducted), calculated as if all of the Portfolio Securities had been held for the entire accumulation period for such distribution. The Dividend Equivalent Payment and the Balancing Amount collectively are referred to as the “Cash Component” and the deposit of a portfolio of securities and the Cash Component collectively are referred to as a “Portfolio Deposit.” Persons placing creation orders must deposit Portfolio Deposits either (i) through the CNS clearing process of NSCC (the “Clearing Process”) or (ii) with the Trustee outside the Clearing Process (i.e., through the facilities of DTC).
The Distributor will reject any order that is not submitted in proper form. A creation order is deemed received by the Distributor on the date on which it is placed (“Transmittal Date”) if (a) such order is received by the Trustee not later than the Closing Time (as defined below) on such Transmittal Date and (b) all other procedures set forth in the Participant Agreement are properly followed. The Transaction Fee (as defined below) is charged at the time of creation of a Creation Unit, and an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged for creations outside the Clearing Process, in part due to the increased expense
associated with settlement.
The Trustee, at the direction of the Sponsor, may increase, reduce or waive the Transaction Fee (and/or the additional amounts charged in connection with creations and/or redemptions outside the Clearing Process) for certain lot-size creations and/or redemptions of Creation Units. The Sponsor has the right to vary the lot-size of Creation Units subject to such an increase, a reduction or waiver. The existence of any such variation shall be disclosed in the then current prospectus.
The DJIA is a price-weighted stock index; that is, the component stocks of the DJIA are represented in exactly equal share amounts and therefore are accorded relative importance in the DJIA based on their prices. The shares of common stock of the stock portion of a Portfolio Deposit on any date of deposit will reflect the composition of the component stocks of the DJIA on such day. The portfolio of Index Securities that is the basis for a Portfolio Deposit varies as changes are made in the composition of the Index Securities. Further, the Trustee is permitted to take account of changes to the identity or weighting of any Index Security resulting from a change to the DJIA by making a corresponding adjustment to the Portfolio Deposit within one (1) Business Day before or after the day on which the change to the DJIA takes effect.
The Trustee makes available to NSCC before the commencement of trading on each day that the New York Stock Exchange LLC (the “NYSE”) is open for business (“Business Day”) a list of the names and required number of shares of each of the Index Securities in the current Portfolio Deposit as well as the amount of the Dividend Equivalent Payment for the previous Business Day. Under certain extraordinary circumstances which may make it impossible for the Trustee to provide such information to NSCC on a given Business Day, NSCC will use the information regarding the identity of the Index Securities of the Portfolio Deposit on the previous Business Day. The identity of each Index Security required for a Portfolio Deposit, as in effect on October 31, 2012, is set forth in the above Schedule of Investments. The Sponsor makes available every 15 seconds throughout the trading day at the Exchange a number representing, on a per Unit basis, the sum of the Dividend Equivalent Payment effective through and including the previous Business Day, plus the current value of the securities portion of a Portfolio Deposit as in effect on such day (which value occasionally may include a cash-in-lieu amount to compensate for the omission of a particular Index Security from such Portfolio Deposit). Such information is calculated based upon the best information available to the Sponsor and may be calculated by other persons designated to do so by the Sponsor. The inability of the Sponsor to provide such information will not by itself result in a halt in the trading of Units on the Exchange.
If the Trustee determines that one or more Index Securities are likely to be unavailable, or available in insufficient quantity, for delivery upon creation of Creation Units, the Trustee may permit, in lieu thereof, the cash equivalent value of one or more of these Index Securities to be included in the Portfolio Deposit as a part of the Cash Component. If a creator is restricted by regulation or otherwise from investing or engaging in a transaction in one or more Index Securities, the Trustee may permit, in lieu of the inclusion of such Index Securities in the stock portion of the Portfolio Deposit, the cash equivalent value of such Index Securities to be included in the Portfolio Deposit based on the market value of such Index Securities as of the closing time of the regular trading session on the NYSE (“Closing Time”) (ordinarily 4:00 p.m. New York time) (the “Evaluation Time”) on the date such creation order is deemed received by the Distributor as part of the Cash Component.
Procedures for Purchase of Creation Units. All creation orders must be placed in Creation Units and must be received by the Trustee by no later than the Closing Time (ordinarily 4:00 p.m. New York time) in each case on the date such order is placed, in order for creation to be effected based on the NAV of the Trust as determined on such date. Orders must be transmitted by telephone, through the Internet or by other transmission method(s) acceptable to the Distributor and the Trustee, pursuant to procedures set forth in the Participant Agreement and/or described in this prospectus. In addition, orders submitted through the Internet must also comply with the terms and provisions of the State Street Fund Connect Buy-Side User Agreement and other applicable agreements and documents, including but not limited to the applicable Fund Connect User Guide or successor documents. State Street Global Markets, LLC (“SSGM”) may assist Authorized Participants in assembling shares to purchase Creation Units (or upon redemption), for which it may receive commissions or other fees from such Authorized Participants. Severe economic or market disruptions or changes, or telephone or other communication failure, may impede the ability to reach the Distributor, the Trustee, a Participating Party or a DTC Participant.
Units may be created in advance of receipt by the Trustee of all or a portion of the Portfolio Deposit. In these
circumstances, the initial deposit will have a value greater than the NAV of the Units on the date the order is placed in proper form, because in addition to available Index Securities, cash collateral must be deposited with the Trustee in an amount equal to the sum of (a) the Cash Component, plus (b) 115% of the market value of the undelivered Index Securities (“Additional Cash Deposit”). The Trustee holds such Additional Cash Deposit as collateral in an account separate and apart from the Trust. An order will be deemed received on the Business Day on which it is placed so long as (a) the order is placed in proper form before the Closing Time on such Business Day and (b) federal funds in the appropriate amount are deposited with the Trustee by 11:00 a.m. New York time on the next Business Day.
If the order is not placed in proper form by the Closing Time or federal funds in the appropriate amount are not received by 11:00 a.m. New York time on the next Business Day, the order may be deemed to be rejected and the Authorized Participant shall be liable to the Trust for any losses resulting therefrom. An additional amount of cash must be deposited with the Trustee, pending delivery of the missing Index Securities, to the extent necessary to maintain the Additional Cash Deposit with the Trustee in an amount at least equal to 115% of the daily mark-to-market value of the missing Index Securities. If the missing Index Securities are not received by 1:00 p.m. New York time on the third (3rd) Business Day following the day on which the purchase order is deemed received and if a mark-to-market payment is not made within one (1) Business Day following notification by the Distributor that such payment is required, the Trustee may use the Additional Cash Deposit to purchase the missing Index Securities. The Trustee will return any unused portion of the Additional Cash Deposit only once all of the missing Index Securities of the Portfolio Deposit have been properly received or purchased by the Trustee and deposited into the Trust. In addition, a Transaction Fee will be imposed in an amount not to exceed that charged for creations outside the Clearing Process as disclosed below. The delivery of Creation Units created as described above will occur no later than the third (3rd) Business Day following the day on which the purchase order is deemed received. The Participant Agreement for any Participating Party intending to follow these procedures contains terms and conditions permitting the Trustee to buy the missing portion(s) of a Portfolio Deposit at any time and will subject the Participating Party to liability for any shortfall between the cost to the Trust of purchasing such stocks and the value of such collateral. The Participating Party is liable to the Trust for the costs incurred by the Trust in connection with any such purchases. The Trust will have no liability for any such shortfall.
Acceptance of Orders of Creation Units. All questions as to the number of shares of each Index Security, the amount of the Cash Component and the validity, form, eligibility (including time of receipt) and acceptance for deposit of any Index Securities to be delivered are resolved by the Trustee. The Trustee may reject a creation order if (a) the depositor or a group of depositors, upon obtaining the Units ordered, would own 80% or more of the current outstanding Units; (b) the Portfolio Deposit is not in proper form; (c) acceptance of the Portfolio Deposit would have certain adverse tax consequences; (d) the acceptance of the Portfolio Deposit would, in the opinion of counsel, be unlawful; (e) the acceptance of the Portfolio Deposit would otherwise have an adverse effect on the Trust or the rights of Beneficial Owners; or (f) circumstances outside the control of the Trustee make it for all practical purposes impossible to process creations of Units. The Trustee and the Sponsor are under no duty to give notification of any defects or irregularities in the delivery of Portfolio Deposits or any component thereof and neither of them will incur any liability for the failure to give any such notification.
Creation Transaction Fee. The transaction fee payable to the Trustee in connection with each creation and redemption of Creation Units made through the Clearing Process (“Transaction Fee”) is non-refundable, regardless of the NAV of the Trust. The Transaction Fee is $1,000 per Participating Party per day, regardless of the number of Creation Units created or redeemed on such day. The $1,000 charge is subject to a limit not to exceed 0.10% (10 basis points) of the value of one Creation Unit at the time of creation (“10 Basis Point Limit”).
For creations and redemptions outside the Clearing Process, including orders from a Participating Party restricted from engaging in transactions in one or more Index Securities, an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged per Creation Unit per day.
Placement of Creation Orders Using Clearing Process. Creation Units created through the Clearing Process must be delivered through a Participating Party that has executed a Participant Agreement. The Participant Agreement authorizes the Trustee to transmit to the Participating Party such trade instructions as are necessary to effect the creation order. Pursuant to the trade instructions from the Trustee to NSCC, the Participating Party agrees to transfer
the requisite Index Securities (or contracts to purchase such Index Securities that are expected to be delivered through the Clearing Process in a “regular way” manner by the third day during which NSCC is open for business (each such day, an “NSCC Business Day”)) and the Cash Component to the Trustee, together with such additional information as may be required by the Trustee.
Placement of Creation Orders Outside Clearing Process. Creation Units created outside the Clearing Process must be delivered through a DTC Participant that has executed a Participant Agreement and has stated in its order that it is not using the Clearing Process and that creation will instead be effected through a transfer of stocks and cash. The requisite number of Index Securities must be delivered through DTC to the account of the Trustee by no later than 11:00 a.m. of the next Business Day immediately following the Transmittal Date. The Trustee, through the Federal Reserve Bank wire transfer system, must receive the Cash Component no later than 2:00 p.m. on the next Business Day immediately following the Transmittal Date. If the Trustee does not receive both the requisite Index Securities and the Cash Component in a timely fashion, the order will be cancelled. Upon written notice to the Distributor, the cancelled order may be resubmitted the following Business Day using a Portfolio Deposit as newly constituted to reflect the current NAV of the Trust. The delivery of Units so created will occur no later than the third (3rd) Business Day following the day on which the creation order is deemed received by the Distributor.
Redemption
Units may be redeemed in-kind only in Creation Units at their NAV determined after receipt of a redemption request in proper form by the Trustee through the Depository and relevant DTC Participant and only on a Business Day. Units are not redeemable for cash. EXCEPT UPON LIQUIDATION OF THE TRUST, THE TRUST WILL NOT REDEEM UNITS IN AMOUNTS LESS THAN CREATION UNITS. Investors must accumulate enough Units in the secondary market to constitute a Creation Unit in order to have such Units redeemed by the Trust, and Units may be redeemed only by or through an Authorized Participant. There can be no assurance, however, that there will be sufficient liquidity in the public trading market at any time to permit assembly of a Creation Unit. Investors should expect to incur brokerage and other costs in connection with assembling a sufficient number of Units to constitute a redeemable Creation Unit.
With respect to the Trust, the Trustee, through NSCC, makes available immediately prior to the commencement of trading on the NYSE (currently 9:30 a.m., Eastern time) on each Business Day, a list of the names and required number of shares of each of the Index Securities and the amount of the Dividend Equivalent Payment for the previous Business Day that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as discussed below) on that day. Index Securities received on redemption may not be identical to the stock portion of the Portfolio Deposit which is applicable to purchases of Creation Units.
Redemption Transaction Fee. The Transaction Fee is non-refundable, regardless of the NAV of the Trust. The Transaction Fee is the lesser of $1,000 or the 10 Basis Point Limit per Participating Party per day, regardless of the number of Creation Units created or redeemed on such day.
For creations and redemptions outside the Clearing Process, including orders from a Participating Party restricted from engaging in transactions in one or more Index Securities, an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit is charged per Creation Unit per day.
Procedures for Redemption of Creation Units. Redemption orders must be placed with a Participating Party (for redemptions through the Clearing Process) or DTC Participant (for redemptions outside the Clearing Process), as applicable, in the form required by such Participating Party or DTC Participant. A particular broker may not have executed a Participant Agreement, and redemption orders may have to be placed by the broker through a Participating Party or a DTC Participant who has executed a Participant Agreement. At any given time, there may be only a limited number of broker-dealers that have executed a Participant Agreement. Redeemers should afford sufficient time to permit (a) proper submission of the order by a Participating Party or DTC Participant to the Trustee and (b) the receipt by the Trustee of the Units to be redeemed and any Excess Cash Amounts (as defined below) in a timely manner. Orders for redemption effected outside the Clearing Process are likely to require transmittal by the DTC Participant earlier on the Transmittal Date than orders effected using the Clearing Process. These deadlines vary by institution. Persons redeeming outside the Clearing Process are required to transfer Units through DTC and Excess Cash Amounts, if any, through the Federal Reserve Bank wire transfer system in a timely manner.
Requests for redemption may be made on any Business Day directly to the Trustee (not to the Distributor). In the case of redemptions made through the Clearing Process, the Transaction Fee is deducted from the amount delivered to the redeemer. In the case of redemptions outside the Clearing Process, the Transaction Fee plus an additional amount not to exceed three (3) times the Transaction Fee applicable for one Creation Unit per Creation Unit redeemed, and such amount is deducted from the amount delivered to the redeemer.
The Trustee transfers to the redeeming Beneficial Owner via DTC and the relevant DTC Participant(s) a portfolio of Index Securities (based on NAV of the Trust) for each Creation Unit delivered, generally identical in weighting and composition to the stock portion of a Portfolio Deposit as in effect (a) on the date a request for redemption is deemed received by the Trustee or (b) in the case of the termination of the Trust, on the date that notice of the termination of the Trust is given. The Trustee also transfers via the relevant DTC Participant(s) to the redeeming Beneficial Owner a “Cash Redemption Payment,” which on any given Business Day is an amount identical to the amount of the Cash Component and is equal to a proportional amount of the following: dividends on the Portfolio Securities for the period through the date of redemption, net of expenses and liabilities for such period including, without limitation, (i) taxes or other governmental charges against the Trust not previously deducted, if any, (ii) accrued fees of the Trustee and (iii) other expenses of the Trust (including legal and auditing expenses) not previously deducted, as if the Portfolio Securities had been held for the entire accumulation period for such distribution, plus or minus the Balancing Amount. The redeeming Beneficial Owner must deliver to the Trustee any amount by which the amount payable to the Trust by such Beneficial Owner exceeds the amount of the Cash Redemption Payment (“Excess Cash Amounts”). For redemptions through the Clearing Process, the Trustee effects a transfer of the Cash Redemption Payment and stocks to the redeeming Beneficial Owner by the third (3rd) NSCC Business Day following the date on which request for redemption is deemed received. For redemptions outside the Clearing Process, the Trustee transfers the Cash Redemption Payment and the stocks to the redeeming Beneficial Owner by the third (3rd) Business Day following the date on which the request for redemption is deemed received. The Trustee will cancel all Units delivered upon redemption.
If the Trustee determines that an Index Security is likely to be unavailable or available in insufficient quantity for delivery by the Trust upon the redemption of Creation Units, the Trustee may elect, in lieu thereof, to deliver the cash equivalent value of any such Index Securities, based on its market value as of the Evaluation Time on the date such redemption order is deemed received by the Trustee, as a part of the Cash Redemption Payment.
If a redeemer is restricted by regulation or otherwise from investing or engaging in a transaction in one or more Index Securities, the Trustee may elect to deliver the cash equivalent value based on the market value of any such Index Securities as of the Evaluation Time on the date of the redemption as a part of the Cash Redemption Payment in lieu thereof. In such case, the Authorized Participant will pay the Trustee the standard Transaction Fee, and may pay an additional amount equal to the actual amounts incurred in connection with such transaction(s) but in any case not to exceed three (3) times the Transaction Fee applicable for one Creation Unit.
The Trustee, upon the request of a redeeming Authorized Participant, may elect to redeem Creation Units in whole or in part by providing such redeemer with a portfolio of stocks differing in exact composition from Index Securities but not differing in NAV from the then-current Portfolio Deposit. Such a redemption is likely to be made only if it were determined that it would be appropriate in order to maintain the Trust’s correspondence to the composition and weighting of the DJIA.
The Trustee may sell Portfolio Securities to obtain sufficient cash proceeds to deliver to the redeeming Beneficial Owner. To the extent cash proceeds are received by the Trustee in excess of the required amount, such cash proceeds shall be held by the Trustee and applied in accordance with the guidelines applicable to residual cash set forth under “Portfolio Adjustments.”
All redemption orders must be transmitted to the Trustee by telephone, through the Internet or by other transmission methods acceptable to the Trustee, pursuant to procedures set forth in the Participant Agreement and/or described in this prospectus, so as to be received by the Trustee not later than the Closing Time on the Transmittal Date. In addition, orders submitted through the Internet must also comply with the terms and provisions of the State Street Fund Connect Buy-Side User Agreement and other applicable agreements and documents, including but not limited to the applicable Fund Connect User Guide or successor documents. Severe economic or market disruption or
changes, or telephone or other communication failure, may impede the ability to reach the Trustee, a Participating Party, or a DTC Participant.
The calculation of the value of the stocks and the Cash Redemption Payment to be delivered to the redeeming Beneficial Owner is made by the Trustee according to the procedures set forth under “Purchases and Redemptions of Creation Units—Redemption—Procedures for Redemption of Creation Units,” “Portfolio Adjustments—Adjustments to the Portfolio Deposit” and “Determination of NAV” and is computed as of the Evaluation Time on the Business Day on which a redemption order is deemed received by the Trustee. Therefore, if a redemption order in proper form is submitted to the Trustee by a DTC Participant not later than the Closing Time on the Transmittal Date, and the requisite Units are delivered to the Trustee prior to DTC Cut-Off Time (as defined below in “Purchases and Redemptions of Creation Units—Redemption—Placement of Redemption Orders Outside Clearing Process”) on such Transmittal Date, then the value of the stocks and the Cash Redemption Payment to be delivered to the Beneficial Owner will be determined by the Trustee as of the Evaluation Time on such Transmittal Date. If, however, a redemption order is submitted not later than the Closing Time on a Transmittal Date but either (a) the requisite Units are not delivered by DTC Cut-Off Time on the next Business Day immediately following such Transmittal Date or (b) the redemption order is not submitted in proper form, then the redemption order is not deemed received as of such Transmittal Date. In such case, the value of the stocks and the Cash Redemption Payment to be delivered to the Beneficial Owner will be computed as of the Evaluation Time on the Business Day that such order is deemed received by the Trustee (i.e., the Business Day on which the Units are delivered through DTC to the Trustee by DTC Cut-Off Time on such Business Day pursuant to a properly submitted redemption order).
The Trustee may suspend the right of redemption, or postpone the date of payment of the NAV for more than five (5) Business Days following the date on which the request for redemption is deemed received by the Trustee, (a) for any period during which the NYSE is closed, (b) for any period during which an emergency exists as a result of which disposal or evaluation of the Portfolio Securities is not reasonably practicable, or (c) for such other period as the SEC may by order permit for the protection of Beneficial Owners. Neither the Sponsor nor the Trustee is liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.
Placement of Redemption Orders Using Clearing Process. A redemption order made through the Clearing Process will be deemed received on the Transmittal Date so long as (a) the order is received by the Trustee not later than the Closing Time on such Transmittal Date and (b) all other procedures set forth in the Participant Agreement are properly followed. The order is effected based on the NAV of the Trust as determined as of the Evaluation Time on the Transmittal Date. A redemption order made through the Clearing Process and received by the Trustee after the Closing Time will be deemed received on the next Business Day immediately following the Transmittal Date. The Participant Agreement authorizes the Trustee to transmit to NSCC on behalf of a Participating Party such trade instructions as are necessary to effect the Participating Party’s redemption order. Pursuant to such trade instructions from the Trustee to NSCC, the Trustee will transfer (a) the requisite stocks (or contracts to purchase such stocks which are expected to be delivered in a “regular way” manner) by the third (3rd) NSCC Business Day following the date on which the request for redemption is deemed received, and (b) the Cash Redemption Payment.
Placement of Redemption Orders Outside Clearing Process. A DTC Participant who wishes to place an order for redemption of Units to be effected outside the Clearing Process need not be a Participating Party, but its order must state that the DTC Participant is not using the Clearing Process and that redemption will instead be effected through transfer of Units directly through DTC. An order will be deemed received by the Trustee on the Transmittal Date if (a) such order is received by the Trustee not later than the Closing Time on such Transmittal Date, (b) such order is preceded or accompanied by the requisite number of Units specified in such order, which delivery must be made through DTC to the Trustee no later than 11:00 a.m. on the next Business Day immediately following such Transmittal Date (“DTC Cut-Off Time”) and (c) all other procedures set forth in the Participant Agreement are properly followed. Any Excess Cash Amounts owed by the Beneficial Owner must be delivered no later than 2:00 p.m. on the next Business Day immediately following the Transmittal Date.
The Trustee initiates procedures to transfer the requisite stocks (or contracts to purchase such stocks) that are expected to be delivered within three (3) Business Days and the Cash Redemption Payment to the redeeming Beneficial Owner by the third (3rd) Business Day following the Transmittal Date.
BOOK-ENTRY-ONLY SYSTEM
DTC acts as securities depository for the Trust Units. Units are represented by one or more global securities, registered in the name of Cede & Co., as nominee for DTC and deposited with, or on behalf of, DTC. Beneficial ownership of Units is shown on the records of DTC or the DTC Participants (owners of such beneficial interests are referred to herein as “Beneficial Owners”).
DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provision