e497
Prospectus
SPDR®
DOW JONES INDUSTRIAL
AVERAGEsm
ETF
TRUST
(SPDR DJIA TRUST)
(formerly,
DIAMONDS®
Trust, Series 1)
(A
Unit Investment Trust)
|
|
|
SPDR DJIA Trust is an exchange traded fund designed to generally
correspond to the price and yield performance of the Dow Jones
Industrial Average.
|
|
|
|
SPDR DJIA Trust holds all of the Dow Jones Industrial Average
stocks.
|
|
|
|
Each Trust Unit represents an undivided ownership interest in
the SPDR DJIA Trust.
|
|
|
|
The SPDR DJIA Trust issues and redeems Trust Units only in
multiples of 50,000 Units in exchange for Dow Jones Industrial
Average stocks and cash.
|
|
|
|
Individual Trust Units trade on NYSE Arca, Inc. like any other
equity security.
|
|
|
|
Minimum trading unit: 1 Trust Unit.
|
SPONSOR: PDR SERVICES LLC
(Wholly Owned by NYSE Euronext)
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES NOR PASSED UPON THE ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus Dated February 26, 2010
COPYRIGHT 2010 PDR Services
LLC
SPDR DJIA
TRUST
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
1
|
|
|
|
|
3
|
|
|
|
|
11
|
|
|
|
|
15
|
|
|
|
|
16
|
|
|
|
|
17
|
|
|
|
|
18
|
|
|
|
|
19
|
|
|
|
|
20
|
|
|
|
|
30
|
|
|
|
|
32
|
|
|
|
|
32
|
|
|
|
|
34
|
|
|
|
|
35
|
|
|
|
|
35
|
|
|
|
|
36
|
|
|
|
|
38
|
|
|
|
|
38
|
|
|
|
|
40
|
|
|
|
|
41
|
|
|
|
|
41
|
|
|
|
|
41
|
|
|
|
|
44
|
|
|
|
|
45
|
|
|
|
|
50
|
|
|
|
|
51
|
|
|
|
|
52
|
|
|
|
|
52
|
|
|
|
|
53
|
|
|
|
|
56
|
|
|
|
|
57
|
|
|
|
|
57
|
|
|
|
|
58
|
|
|
|
|
60
|
|
|
|
|
61
|
|
|
|
|
61
|
|
|
|
|
61
|
|
|
|
|
63
|
|
|
|
|
63
|
|
|
|
|
64
|
|
|
|
|
64
|
|
|
|
|
66
|
|
|
|
|
67
|
|
|
|
|
68
|
|
|
|
|
68
|
|
|
|
|
68
|
|
|
|
|
69
|
|
|
|
|
69
|
|
|
|
|
69
|
|
|
|
|
76
|
|
Dow Jones Industrial
Averagesm,
DJIA®,
Dow
Jones®,
The
Dow®
and
DIAMONDS®
are trademarks and service marks of Dow Jones &
Company, Inc. (Dow Jones) and have been licensed for
use for certain purposes by State Street Global Markets, LLC
pursuant to a License Agreement with Dow Jones and
have been sublicensed for use for certain purposes to the Trust,
PDR Services LLC and NYSE Arca, Inc. pursuant to separate
Sublicenses. SPDR DJIA Trust is not sponsored,
endorsed, sold or promoted by Dow Jones and Dow Jones makes no
representation regarding the advisability of investing in the
Trust.
i
SUMMARY
Essential
Information as of October 31, 2009*
|
|
|
Glossary:
|
|
All defined terms used in this Prospectus and page numbers on
which their definitions appear are listed in the Glossary.
|
|
|
|
Total Trust Assets:
|
|
$7,401,407,196
|
|
|
|
Net Trust Assets:
|
|
$7,388,963,445
|
|
|
|
Number of Trust Units:
|
|
76,042,188
|
|
|
|
Fractional Undivided Interest in the Trust Represented by
each Unit:
|
|
1/76,042,188th
|
|
|
|
Dividend Record Dates:
|
|
Monthly, on the second
(2nd )
Business Day after the third
(3rd )
Friday.
|
|
|
|
Dividend Payment Dates:
|
|
Monthly, on the Monday preceding the third
(3rd )
Friday of the next calendar month.
|
|
|
|
Trustees Annual Fee:
|
|
From
6/100
of one percent to
10/100
of one percent, based on the NAV of the Trust, as the same may
be adjusted by certain amounts.
|
|
|
|
Estimated Ordinary Operating Expenses of the Trust:
|
|
18/100
of one percent (0.1800%) (inclusive of Trustees annual
fee).**
|
|
|
|
NAV per Unit (based on the value of the Portfolio Securities,
other net assets of the Trust and number of Units outstanding):
|
|
$97.17
|
|
|
|
Evaluation Time:
|
|
Closing time of the regular trading session on the New York
Stock Exchange, LLC. (ordinarily 4:00 p.m. New York time).
|
|
|
|
Licensor:
|
|
Dow Jones & Company, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Mandatory Termination Date:
|
|
The Trust is scheduled to terminate no later than January 13,
2123, but may terminate earlier under certain circumstances.
|
|
|
|
Discretionary Termination:
|
|
The Trust may be terminated if at any time the value of the
securities held by the Trust is less than $350,000,000, as
adjusted for inflation. The Trust may also be terminated under
other circumstances.
|
|
|
|
Market Symbol:
|
|
Units trade on NYSE Arca, Inc. under the symbol DIA.
|
|
|
|
Fiscal Year End:
|
|
October 31
|
|
|
|
CUSIP:
|
|
78467X109
|
|
|
|
* |
|
The Trust Agreement became effective, the initial deposit
was made and the Trust commenced operation as the DIAMONDS
Trust, Series 1 on January 13, 1998 (Initial
Date of Deposit). |
|
|
|
** |
|
Ordinary operating expenses of the Trust are estimated to be
0.1800%, although ordinary operating expenses of the Trust are
accruing at approximately 0.1702% as of the date of this
Prospectus. As of the fiscal year ended October 31, 2009,
ordinary operating expenses of the Trust were 0.1668%. Future
expense accruals will depend primarily on the level of the
Trusts net assets and the level of Trust expenses. The
amount of the earnings credit will be equal to the then current
Federal Funds Rate, as reported in nationally distributed
publications, multiplied by each days daily cash balance
in the Trusts cash account, if any, reduced by the amount
of reserves, if any, for that account required by the Federal
Reserve Board of Governors. The Sponsor has undertaken that the
ordinary operating expenses of the Trust will not exceed an
amount that is 0.1800% of the daily NAV of the Trust, but this
amount may be changed. Therefore, there is no guarantee that the
Trusts ordinary operating expenses will not exceed 0.1800%
of the Trusts daily NAV. |
2
Highlights
|
|
|
Units are
Ownership Interests in the SPDR DJIA Trust
|
SPDR DJIA Trust (Trust) is a unit investment trust
that issues securities called Trust Units or
Units. The Trust is organized under the laws of the
State of New York and is governed by a trust agreement between
State Street Bank and Trust Company (Trustee)
and PDR Services LLC (Sponsor), dated and executed
as of January 13, 1998, as amended
(Trust Agreement). The Trust is an investment
company registered under the Investment Company Act of 1940.
Trust Units represent an undivided ownership interest in a
portfolio of all of the common stocks of the Dow Jones
Industrial Average (DJIA).
|
|
|
Units
Should Closely Track the Value of the Stocks Included in the
DJIA
|
The Trust intends to provide investment results that, before
expenses, generally correspond to the price and yield
performance of the DJIA. Current information regarding the value
of the DJIA is available from market information services. Dow
Jones obtains information for inclusion in, or for use in the
calculation of, the DJIA from sources Dow Jones considers
reliable. None of Dow Jones, the Sponsor, the Trust, the
Trustee, NYSE Arca, Inc. or its affiliates accepts
responsibility for or guarantees the accuracy
and/or
completeness of the DJIA or any data included in the DJIA.
The Trust holds the Portfolio and cash and is not actively
managed by traditional methods, which typically
involve effecting changes in the Portfolio on the basis of
judgments made relating to economic, financial and market
considerations. To maintain the correspondence between the
composition and weightings of stocks held by the Trust
(Portfolio Securities or, collectively,
Portfolio) and component stocks of the DJIA
(Index Securities), the Trustee adjusts the
Portfolio from time to time to conform to periodic changes in
the identity
and/or
relative weightings of Index Securities. The Trustee generally
makes these adjustments to the Portfolio within three
(3) Business Days (defined below) before or after the day
on which changes in the DJIA are scheduled to take effect. Any
change in the identity or weighting of an Index Security will
result in a corresponding adjustment to the prescribed Portfolio
Deposit effective on any day that the New York Stock Exchange,
LLC (NYSE) is open for business (Business
Day) either prior to, on, or following the day on which
the change to the DJIA takes effect after the close of the
market.
The value of Trust Units fluctuates in relation to changes in
the value of the Portfolio. The market price of each individual
Unit may not be identical to the net asset value
(NAV) of such Unit but, historically, these two
valuations have generally been close.
3
|
|
|
Units are
Listed and Trade on NYSE Arca, Inc.
|
Units are listed for trading on NYSE Arca, Inc.
(Exchange or NYSE Arca), and are bought
and sold in the secondary market like ordinary shares of stock
at any time during the trading day. Units are traded on the
Exchange in 100 Unit round lots, but can be traded in odd lots
of as little as one Unit. The Exchange may halt trading of Units
under certain circumstances as summarized herein (see
Exchange Listing).
|
|
|
Brokerage
Commissions on Units
|
Secondary market purchases and sales of Units are subject to
ordinary brokerage commissions and charges.
|
|
|
The
Trust Issues and Redeems Units in Multiples of 50,000 Units
Called Creation Units
|
The Trust issues and redeems Units only in specified large lots
of 50,000 Units or multiples thereof referred to as
Creation Units. Fractional Creation Units may be
created or redeemed only in limited circumstances.*
Creation Units are issued by the Trust to anyone who, after
placing a creation order with ALPS Distributors, Inc.
(Distributor), deposits with the Trustee a specified
portfolio of Index Securities and a cash payment generally equal
to dividends (net of expenses) accumulated up to the time of
deposit. 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 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 in lieu
thereof. 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 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
Evaluation Time on the date such creation order is deemed
received by the Distributor as part of the Cash Component in
lieu of the inclusion of such Index Securities in the stock
portion of the Portfolio Deposit.
Creation Units are redeemable in kind only and are not
redeemable for cash. Upon receipt of one or more Creation Units,
the Trust delivers to the redeeming holder a portfolio of Index
Securities (based on NAV of the Trust), together with a cash
payment. Each redemption has to be accompanied by a Cash
Redemption Payment that on any given Business Day is an
amount identical to the Cash Component of a Portfolio Deposit.
If the Trustee determines that one or more Index Securities are
likely to be unavailable or available in insufficient quantity
for delivery by the Trust
* See, however, the
discussion of termination of the Trust in this Prospectus for a
description of the circumstances in which Units may be redeemed
in less than a Creation Unit size aggregation of 50,000 Units.
4
upon the redemption of Creation Units, the Trustee may deliver
the cash equivalent value of one or more of these Index
Securities, based on their market value as of the Evaluation
Time on the date the redemption order is deemed received by the
Trustee, as part of the Cash Redemption Payment in lieu
thereof.
|
|
|
Creation
Orders Must be Placed with the Distributor
|
All orders to create Creation Units must be placed with the
Distributor. To be eligible to place these orders, an entity or
person must be an Authorized Participant, which is
either (a) a Participating Party, or (b) a
DTC Participant, and in each case must have executed
an agreement with the Distributor and the Trustee, as may be
amended from time to time (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 The
Depository Trust Company (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, plus or minus the Balancing
Amount. 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, and (ii) accrued fees of the Trustee and other
expenses of the Trust (including legal and auditing expenses)
and other 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 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 with the Distributor must deposit Portfolio
Deposits either (i) through the CNS clearing process of
NSCC, as such processes have been enhanced to effect creations
and redemptions of Creation Units, such processes referred to
herein as the Clearing Process, or (ii) with
the Trustee outside the Clearing Process (i.e., through
the facilities of DTC).
The Distributor acts as underwriter of Trust Units on an agency
basis. The Distributor maintains records of the orders placed
with it and the confirmations of acceptance and furnishes to
those placing such orders confirmations of acceptance of the
orders. The Distributor also is responsible for delivering a
prospectus to persons creating Trust Units. The Distributor also
maintains a record of the delivery instructions in response to
orders and may provide certain other administrative services,
such as those related to state securities law compliance. The
Distributor is a corporation organized under the laws of the
State of Colorado and is located at 1290 Broadway,
Suite 1100, Denver, CO 80203, toll free number:
1-800-843-2639.
5
The Distributor is a registered broker-dealer and a member of
FINRA (the successor organization to the National Association of
Securities Dealers, Inc.). The Sponsor of the Trust pays the
Distributor for its services a flat annual fee. The Sponsor will
not seek reimbursement for such payment from the Trust without
obtaining prior exemptive relief from the SEC.
The expenses of the Trust are accrued daily and reflected in the
NAV of the Trust. The Trust currently is accruing ordinary
operating expenses at an annual rate of 0.1704% (excluding
earnings credits).
|
|
|
|
|
Shareholder Fees:*
|
|
|
None*
|
|
(fees paid directly from your investment)
|
|
|
|
|
|
|
|
|
|
Estimated Trust Annual Ordinary Operating Expenses:
|
|
|
|
|
|
|
|
|
|
Current Trust Annual Ordinary
|
|
As a % of Trust
|
|
Operating Expenses
|
|
Net Assets
|
|
|
Trustees Fee
|
|
|
0.0619
|
%
|
Dow Jones License Fee
|
|
|
0.0412
|
%
|
Registration Fees
|
|
|
0.0000
|
%
|
Marketing
|
|
|
0.0600
|
%
|
Other Operating Expenses
|
|
|
0.0071
|
%
|
Net Expenses**
|
|
|
0.1702
|
%
|
Future expense accruals will depend primarily on the level of
the Trusts net assets and the level of expenses.
|
|
|
*
|
|
Investors do not pay shareholder
fees directly from their investment, but purchases and
redemptions of Creation Units are subject to Transaction Fees
(described below in A Transaction Fee is Payable For Each
Creation and For Each Redemption of Creation Units), and
purchases and sales of Units in the secondary market are subject
to ordinary brokerage commissions and charges (described above
in Brokerage Commissions on Units).
|
|
**
|
|
Until the Sponsor otherwise
determines, the Sponsor has undertaken that the ordinary
operating expenses of the Trust will not be permitted to exceed
0.1800% of the Trusts daily NAV. Gross expenses of the
Trust for the year ending October 31, 2009, without regard
to this undertaking, were 0.1668% 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 Trusts ordinary operating expenses will not exceed
0.1800% of the Trusts daily NAV. Trust expenses were
reduced during the same period by a Trustees earnings
credit of 0.0005% of the Trusts 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 days daily cash balance, if any, in the Trusts
cash account, reduced by the amount of reserves, if any, for
that account required by the Federal Reserve Board of Governors.
|
6
The bar chart below (Bar Chart) and the table on the
next page entitled Average Annual Total Returns (For
Periods Ending December 31, 2009) (Table)
provide some indication of the risks of investing in the Trust
by showing the variability of the Trusts returns based on
net assets and comparing the Trusts performance to the
performance of the DJIA. Past performance (both before and after
tax) is not necessarily an indication of how the Trust will
perform in the future.
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 total returns in the Bar
Chart below, as well as the total and after-tax returns
presented in the Table, do not reflect Transaction Fees payable
by those persons purchasing and redeeming Creation Units, nor
brokerage commissions incurred by those persons purchasing and
selling Units in the secondary market (see footnotes
(2) and (3) to the Table).
This bar chart shows the performance of the Trust for each full
calendar year for the past 10 years ended December 31,
2009. During the period shown above (January 1, 2000
through December 31, 2009), the highest quarterly return
for the Trust was 15.71% for the quarter ended
September 30, 2009, and the lowest was −18.39% for
the quarter ended December 31, 2008.
7
Average
Annual Total Returns* (For Periods Ending December 31,
2009)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Past
|
|
|
Past
|
|
|
Past
|
|
|
|
One Year
|
|
|
Five Years
|
|
|
Ten Years
|
|
|
SPDR DJIA Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
Return Before
Taxes(1)(2)(3)
|
|
|
22.46
|
%
|
|
|
1.80
|
%
|
|
|
1.16
|
%
|
Return After Taxes on
Distributions(1)(2)(3)
|
|
|
21.89
|
%
|
|
|
1.42
|
%
|
|
|
0.67
|
%
|
Return After Taxes on Distributions and Redemption of Creation
Units(1)(2)(3)
|
|
|
15.19
|
%
|
|
|
1.53
|
%
|
|
|
0.80
|
%
|
DJIA(4)
|
|
|
22.68
|
%
|
|
|
1.95
|
%
|
|
|
1.30
|
%
|
|
|
|
*
|
|
Total returns assume that dividends
and capital gain distributions have been reinvested in the Trust
at the net asset value per unit.
|
|
(1)
|
|
Includes all applicable ordinary
operating expenses set forth above in the section of
Highlights entitled Expenses of the
Trust.
|
|
(2)
|
|
Does not include the Transaction
Fee which is payable to the Trustee only by persons purchasing
and redeeming Creation Units as discussed below in the section
of Highlights entitled A Transaction Fee is
Payable For Each Creation and For Each Redemption of Creation
Units. If these amounts were reflected, returns would be
less than those shown.
|
|
(3)
|
|
Does not include brokerage
commissions and charges incurred only by persons who make
purchases and sales of Units in the secondary market as
discussed above in the section of Highlights
entitled Brokerage Commissions on Units. If these
amounts were reflected, returns would be less than those shown.
|
|
(4)
|
|
Does not reflect deductions for
taxes, operating expenses, Transaction Fees, brokerage
commissions, or fees of any kind.
|
SPDR DJIA
TRUST
GROWTH OF
$10,000 INVESTMENT
SINCE
INCEPTION(1)
|
|
|
(1)
|
|
Past performance is not necessarily
an indication of how the Trust will perform in the future.
|
8
|
|
|
A
Transaction Fee is Payable for Each Creation and for Each
Redemption of Creation Units
|
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. This
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 10/100 of one percent (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, an
additional amount not to exceed three (3) times the
Transaction Fee applicable for one Creation Unit is charged per
Creation Unit per day. Under the current schedule, therefore,
the total fee charged in connection with creation or redemption
outside the Clearing Process would be $1,000 (the Transaction
Fee for the creation or redemption of one Creation Unit) plus an
additional amount up to $3,000 (3 times $1,000), for a total not
to exceed $4,000. Creators and redeemers restricted from
engaging in transactions in one or more Index Securities may pay
the Trustee the Transaction Fee and may pay an additional amount
per Creation Unit not to exceed three (3) times the
Transaction Fee applicable for one Creation Unit.
|
|
|
Units are
Held in Book Entry Form Only
|
DTC or its nominee is the record or registered owner of all
outstanding Units. Beneficial ownership of Units is shown on the
records of DTC or its participants. Individual certificates are
not issued for Units. See The TrustSecurities
Depository; Book-Entry-Only System.
|
|
|
SPDR DJIA
Trust Makes Periodic Dividend Payments
|
Unitholders 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.
Monthly distributions based on the amount of dividends payable
with respect to Portfolio Securities and other income received
by the Trust, net of fees and expenses, and taxes, if
applicable, are made via DTC and its participants to Beneficial
Owners on each Dividend Payment Date. Any capital gain income
recognized by the Trust in any taxable year that is not
previously treated as distributed during the year ordinarily is
to be 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
9
1986, as amended (Code). Although all income
distributions are currently made monthly, under certain limited
circumstances the Trustee may vary the periodicity with which
distributions are made. Those Beneficial Owners interested in
reinvesting their monthly distributions may do so through a
dividend reinvestment service, if one is offered by their
broker-dealer. Under limited certain circumstances, special
dividend payments also may be made to the Beneficial Owners. See
Administration of the Trust Distributions
to Beneficial Owners.
|
|
|
The
Trust Intends to Qualify as a Regulated Investment
Company
|
For the fiscal year ended October 31, 2009, the Trust
believes that it qualified for tax treatment as a
regulated investment company under Subchapter M of
the Code. The Trust intends to continue to so qualify and to
distribute annually its entire investment company taxable income
and net capital gain. Distributions that are taxable as ordinary
income to Beneficial Owners generally are expected to constitute
qualified dividend income eligible (a) for the maximum 15%
tax rate for non-corporate taxpayers through 2010 and
(b) for federal income tax purposes and to be eligible for
the dividends-received deduction available to many corporations
to the extent of qualified dividend income received by the
Trust. The Trusts regular monthly distributions are based
on the dividend performance of the Portfolio during such monthly
distribution period rather than the actual taxable income of the
Trust. As a result, a portion of the distributions of the Trust
may be treated as a return of capital or a capital gain dividend
for federal income tax purposes or the Trust may be required to
make additional distributions to maintain its status as a
regulated investment company or to avoid imposition of income or
excise taxes on undistributed income.
Subchapter M of the Code imposes certain diversification
requirements. The Trustee may adjust the composition of the
Portfolio at any time if, in the Trustees view, such
adjustment is necessary to ensure continued qualification of the
Trust as a regulated investment company for tax
purposes.
|
|
|
Termination
of the Trust
|
The Trust has a specified lifetime term. The Trust is scheduled
to terminate on the first to occur of (a) January 13,
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 shares of the assets of the
Trust, net of certain fees and expenses, distributed to holders
of Units.
|
|
|
Restrictions
on Purchases of Trust Units by Investment Companies
|
Purchases of Trust Units by investment companies are subject to
restrictions set forth in Section 12(d)(1) of the
Investment Company Act of 1940. The Trust has received an SEC
order that permits registered investment companies to invest in
10
Units beyond these limits, subject to certain conditions and
terms. One such condition is that registered investment
companies relying on the order must enter into a written
agreement with the Trust. Registered investment companies
wishing to learn more about the order and the agreement should
telephone 1-800-843-2639.
The Trust itself is also subject to the restrictions of
Section 12(d)(1). This means that (a) the Trust cannot
invest in any registered investment company, to the extent that
the Trust would own more than 3% of that registered investment
companys outstanding share position, (b) the Trust
cannot invest more than 5% of its total assets in the securities
of any one registered investment company, and (c) the Trust
cannot invest more than 10% of its total assets in the
securities of registered investment companies in the aggregate.
Risk
Factors
Investors can lose money by investing in Units. Investors should
carefully consider the risk factors described below together
with all of the other information included in this Prospectus
before deciding to invest in Units.
Investment in the Trust involves the risks inherent in an
investment in any equity security. 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
(particularly those that are heavily weighted in the DJIA), the
value of common stocks generally and other factors. The identity
and weighting of Index Securities and the Portfolio Securities
also change from time to time.
The financial condition of the issuers 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). 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 inferior 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
11
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.
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.
The Trust is not actively managed. The Trust
is not actively managed by traditional methods, and
therefore the adverse financial condition of an issuer will not
result in the elimination of its stocks from the Portfolio
unless the stocks of such issuer are removed from the DJIA.
A liquid trading market for certain Portfolio Securities may
not exist. Although most of the Portfolio
Securities are listed on a national securities exchange, the
principal trading market for some may be in the over-the-counter
market. The existence of a liquid trading market for certain
Portfolio Securities may depend on whether dealers will make a
market in such stocks. There can be no assurance that a market
will be made for any Portfolio Securities, that any market will
be maintained or that any such market will be or remain liquid.
The price at which Portfolio Securities may be sold and the
value of the Portfolio will be adversely affected if trading
markets for Portfolio Securities are limited or absent.
The Trust may not always be able exactly to replicate the
performance of the DJIA. 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 is not able to replicate exactly the
performance of the DJIA because the total return generated by
the Portfolio is reduced by Trust expenses and transaction costs
incurred in adjusting the actual balance of the Portfolio. In
addition, the Trusts 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.
Investment in the Trust may have adverse tax
consequences. Investors in the Trust should also
be aware that there are tax consequences associated with the
ownership of Trust Units resulting from the distribution of
Trust dividends and sales of Units as well as under certain
circumstances the sales of stocks held by the Trust in
connection with redemptions.
NAV may not always correspond to market
price. The NAV of Units in Creation Unit size
aggregations and, proportionately, the NAV per Unit changes as
fluctuations occur in the market value of Portfolio Securities.
Investors should be aware that the aggregate public trading
market price of 50,000 Units may be different from the NAV of a
Creation Unit (i.e., 50,000 Units may trade at a premium
over, or at a discount to, the NAV of a Creation Unit) and
similarly the public trading market price
12
per Unit may be different from the NAV of a Creation Unit on a
per Unit basis. This price difference may be due, in large part,
to the fact that supply and demand forces at work in the
secondary trading market for Units are closely related to, but
not identical to, the same forces influencing the prices of
Index Securities trading individually or in the aggregate at any
point in time. Investors also should note that the size of the
Trust in terms of total assets held may change substantially
over time and from time to time as Creation Units are created
and redeemed.
The Exchange may halt trading in Trust
Units. Units are listed for trading on the
Exchange under the market symbol DIA. Trading in Trust Units may
be halted under certain circumstances as summarized herein (see
Exchange Listing). Also, there can be no assurance
that the requirements of the Exchange necessary to maintain the
listing of Trust Units will continue to be met or will remain
unchanged. The Trust will be terminated if Trust Units are
delisted from the Exchange.
Trust Units are subject to market risks. Units
are subject to the risks other than those inherent in an
investment in equity securities, discussed above, in that the
selection of the stocks included in the Portfolio, the expenses
associated with the Trust, or other factors distinguishing an
ownership interest in a trust from the direct ownership of a
portfolio of stocks may affect trading in Trust Units.
Additionally, Trust Units may perform differently than other
investments in portfolios containing large capitalization stocks
based upon or derived from an index other than the DJIA. For
example, the great majority of component stocks of the DJIA are
drawn from among the largest of the large capitalization
universe, while other indexes may represent a broader sampling
of large capitalization stocks. Also, other indexes may use
different methods for assigning relative weights to the index
components than the price weighted method used by the DJIA. As a
result, DJIA accords relatively more weight to stocks with a
higher price to market capitalization ratio than a similar
market capitalization weighted index.
The regular settlement period for Creation Units may be
reduced. Except as otherwise specifically noted,
the time frames for delivery of stocks, cash, or Trust Units in
connection with creation and redemption activity within the
Clearing Process are based on NSCCs current regular
way settlement period of three (3) days during which
NSCC is open for business (each such day an NSCC Business
Day). NSCC may, in the future, reduce such regular
way settlement period, in which case there may be a
corresponding reduction in settlement periods applicable to
Units creations and redemptions.
Clearing and settlement of Creation Units may be delayed or
fail. The Trustee delivers a portfolio of stocks
for each Creation Unit delivered for redemption substantially
identical in weighting and composition to the stock portion of a
Portfolio Deposit as in effect on the date the request for
redemption is deemed received by the Trustee. If redemption is
processed through the Clearing Process, the stocks that are not
delivered are covered by NSCCs guarantee of the completion
of such delivery. Any stocks not received on settlement date are
marked-to-market until
13
delivery is completed. The Trust, to the extent it has not
already done so, remains obligated to deliver the stocks to
NSCC, and the market risk of any increase in the value of the
stocks until delivery is made by the Trust to NSCC could
adversely affect the NAV of the Trust. Investors should note
that the stocks to be delivered to a redeemer submitting a
redemption request outside of the Clearing Process that are not
delivered to such redeemer are not covered by NSCCs
guarantee of completion of delivery.
Buying or Selling Trust Units Incurs
Costs. Purchases and sales of exchange traded
securities involve both brokerage and spread costs.
Investors buying or selling Trust Units will incur a
commission, fee or other charges imposed by the broker executing
the transaction. In addition, investors will also bear the cost
of the spread, which is the difference between the
bid (the price at which securities professionals
will buy Trust Units) and the ask or
offer (the price at which securities professionals
are willing to sell Trust Units). Therefore, investors
should be aware that frequent trading in Trust Units may
involve brokerage and spread costs that may have a significant
negative effect upon their overall investment results. This may
be especially true for investors who make frequent periodic
investments in small amounts of Trust Units over a lengthy
time period.
14
DIAMONDS
TRUST, SERIES 1
To the
Trustee and Unitholders of DIAMONDS Trust,
Series 1
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 DIAMONDS Trust,
Series 1 (the Trust) at October 31, 2009,
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, 2009 by correspondence with the
custodian, and the application of alternative auditing
procedures where confirmations of securities purchased had not
been received, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 18, 2009
15
DIAMONDS Trust Series 1
October 31, 2009
|
|
|
|
|
|
Assets
|
|
|
|
|
Investments in securities, at value
|
|
$
|
7,377,699,167
|
|
Cash
|
|
|
11,928,018
|
|
Dividends receivable
|
|
|
11,780,011
|
|
|
|
|
|
|
Total Assets
|
|
|
7,401,407,196
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Income distribution payable
|
|
|
6,733,849
|
|
Payable for units of fractional undivided interest
(Units) redeemed in-kind
|
|
|
52,480
|
|
Accrued trustee expense
|
|
|
395,989
|
|
Accrued expenses and other liabilities
|
|
|
5,261,433
|
|
|
|
|
|
|
Total Liabilities
|
|
|
12,443,751
|
|
|
|
|
|
|
Net Assets
|
|
$
|
7,388,963,445
|
|
|
|
|
|
|
|
|
|
|
|
Net Assets Consist of:
|
|
|
|
|
Paid in capital (Note 4)
|
|
$
|
11,353,473,246
|
|
Undistributed net investment income
|
|
|
16,474,053
|
|
Accumulated net realized loss on investments
|
|
|
(1,580,160,129
|
)
|
Net unrealized depreciation on investments
|
|
|
(2,400,823,725
|
)
|
|
|
|
|
|
Net Assets
|
|
$
|
7,388,963,445
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value per Unit
|
|
$
|
97.17
|
|
|
|
|
|
|
Units outstanding, unlimited Units authorized, $0.00 par
value
|
|
|
76,042,188
|
|
|
|
|
|
|
|
|
|
|
|
Cost of investments
|
|
$
|
9,778,522,892
|
|
|
|
|
|
|
See accompanying notes to financial statements.
16
DIAMONDS
Trust Series 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year
|
|
|
For the Year
|
|
|
For the Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
October 31, 2009
|
|
|
October 31, 2008
|
|
|
October 31, 2007
|
|
|
Investment Income
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend income
|
|
$
|
258,082,109
|
|
|
$
|
234,266,377
|
|
|
$
|
172,683,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Trustee expense
|
|
|
4,465,047
|
|
|
|
4,878,701
|
|
|
|
4,232,050
|
|
Marketing expense
|
|
|
4,583,583
|
|
|
|
5,319,946
|
|
|
|
4,437,144
|
|
DJIA license fee
|
|
|
3,155,722
|
|
|
|
4,152,507
|
|
|
|
2,555,000
|
|
Legal and audit services
|
|
|
199,547
|
|
|
|
181,128
|
|
|
|
174,890
|
|
Other expenses
|
|
|
337,558
|
|
|
|
389,842
|
|
|
|
218,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
12,741,457
|
|
|
|
14,922,124
|
|
|
|
11,617,167
|
|
Trustee earnings credits
|
|
|
|
|
|
|
|
|
|
|
(965,742
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Expenses after Trustee earnings credits
|
|
|
12,741,457
|
|
|
|
14,922,124
|
|
|
|
10,651,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
|
245,340,652
|
|
|
|
219,344,253
|
|
|
|
162,032,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized and Unrealized Gain (Loss) on Investments
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain (loss) on investment transactions (Note 5)
|
|
|
(1,286,963,860
|
)
|
|
|
(172,099,218
|
)
|
|
|
854,766,927
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
1,286,025,132
|
|
|
|
(3,238,666,792
|
)
|
|
|
139,514,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain (Loss) on Investments
|
|
|
(938,728
|
)
|
|
|
(3,410,766,010
|
)
|
|
|
994,281,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Net Assets Resulting from
Operations
|
|
$
|
244,401,924
|
|
|
$
|
(3,191,421,757
|
)
|
|
$
|
1,156,314,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
17
DIAMONDS
Trust Series 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year
|
|
|
For the Year
|
|
|
For the Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
October 31, 2009
|
|
|
October 31, 2008
|
|
|
October 31, 2007
|
|
|
Increase (decrease) in net assets resulting from
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
$
|
245,340,652
|
|
|
$
|
219,344,253
|
|
|
$
|
162,032,126
|
|
Net realized gain (loss) on investment transactions
|
|
|
(1,286,963,860
|
)
|
|
|
(172,099,218
|
)
|
|
|
854,766,927
|
|
Net change in unrealized appreciation (depreciation)
|
|
|
1,286,025,132
|
|
|
|
(3,238,666,792
|
)
|
|
|
139,514,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets resulting from
operations
|
|
|
244,401,924
|
|
|
|
(3,191,421,757
|
)
|
|
|
1,156,314,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net equalization credits and charges
|
|
|
(12,761,900
|
)
|
|
|
1,639,517
|
|
|
|
(13,594,558
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to unitholders from net investment income
|
|
|
(231,359,719
|
)
|
|
|
(218,527,182
|
)
|
|
|
(147,731,248
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in net assets from Unit transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from sale of Units
|
|
|
24,458,446,137
|
|
|
|
43,007,862,019
|
|
|
|
37,094,855,531
|
|
Net proceeds from reinvestment of distributions
|
|
|
1,820,420
|
|
|
|
1,388,124
|
|
|
|
1,275,186
|
|
Cost of shares repurchased
|
|
|
(26,198,575,593
|
)
|
|
|
(39,824,961,718
|
)
|
|
|
(35,324,440,592
|
)
|
Net income equalization
|
|
|
12,761,900
|
|
|
|
(1,639,517
|
)
|
|
|
13,594,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets from issuance and
redemption of Units
|
|
|
(1,725,547,136
|
)
|
|
|
3,182,648,908
|
|
|
|
1,785,284,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in net assets during period
|
|
|
(1,725,266,831
|
)
|
|
|
(225,660,514
|
)
|
|
|
2,780,272,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets at beginning of period
|
|
|
9,114,230,276
|
|
|
|
9,339,890,790
|
|
|
|
6,559,617,883
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets end of period*
|
|
$
|
7,388,963,445
|
|
|
$
|
9,114,230,276
|
|
|
$
|
9,339,890,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Units sold
|
|
|
286,350,000
|
|
|
|
366,850,000
|
|
|
|
283,800,000
|
|
Units issued from reinvestment of distributions
|
|
|
21,340
|
|
|
|
11,778
|
|
|
|
9,870
|
|
Units redeemed
|
|
|
(308,100,000
|
)
|
|
|
(336,200,000
|
)
|
|
|
(271,050,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
|
|
|
(21,728,660
|
)
|
|
|
30,661,778
|
|
|
|
12,759,870
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Includes undistributed net investment income
|
|
$
|
16,474,053
|
|
|
$
|
2,493,120
|
|
|
$
|
17,835,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
18
DIAMONDS
Trust Series 1
Selected Data for a DIAMOND Outstanding During the
Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
For the
|
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
October 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Net asset value, beginning of year
|
|
$
|
93.22
|
|
|
$
|
139.17
|
|
|
$
|
120.69
|
|
|
$
|
104.31
|
|
|
$
|
100.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income(1)
|
|
|
2.76
|
|
|
|
2.96
|
|
|
|
2.85
|
|
|
|
2.45
|
|
|
|
2.39
|
(2)
|
Net realized and unrealized gain (loss) on investments
|
|
|
4.01
|
|
|
|
(45.91
|
)
|
|
|
18.57
|
|
|
|
16.37
|
|
|
|
3.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
6.77
|
|
|
|
(42.95
|
)
|
|
|
21.42
|
|
|
|
18.82
|
|
|
|
6.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net equalization credits and charges(1)
|
|
|
(0.14
|
)
|
|
|
0.02
|
|
|
|
(0.24
|
)
|
|
|
(0.03
|
)
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less distributions from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
(2.68
|
)
|
|
|
(3.02
|
)
|
|
|
(2.70
|
)
|
|
|
(2.41
|
)
|
|
|
(2.44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of year
|
|
$
|
97.17
|
|
|
$
|
93.22
|
|
|
$
|
139.17
|
|
|
$
|
120.69
|
|
|
$
|
104.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment return(3)
|
|
|
7.56
|
%
|
|
|
(31.23
|
)%
|
|
|
17.72
|
%
|
|
|
18.23
|
%
|
|
|
6.23
|
%
|
Ratios and supplemental data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio to average net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
3.21
|
%
|
|
|
2.49
|
%
|
|
|
2.19
|
%
|
|
|
2.21
|
%
|
|
|
2.27
|
%
|
Total expenses
|
|
|
0.17
|
%
|
|
|
0.17
|
%
|
|
|
0.16
|
%
|
|
|
0.18
|
%
|
|
|
0.18
|
%
|
Total expenses excluding Trustee earnings credit
|
|
|
0.17
|
%
|
|
|
0.17
|
%
|
|
|
0.14
|
%
|
|
|
0.17
|
%
|
|
|
0.17
|
%
|
Portfolio turnover rate(4)
|
|
|
5.39
|
%
|
|
|
11.27
|
%
|
|
|
1.45
|
%
|
|
|
0.01
|
%
|
|
|
7.69
|
%
|
Net assets, end of year (000s)
|
|
$
|
7,388,963
|
|
|
$
|
9,114,230
|
|
|
$
|
9,339,891
|
|
|
$
|
6,559,618
|
|
|
$
|
7,409,986
|
|
|
|
(1)
|
Per Unit numbers have been calculated using the average shares
method.
|
|
(2)
|
Net investment income per Unit reflects receipt of a one time
dividend from a portfolio holding (Microsoft Corp.). The effect
of this dividend amounted to $0.22 per unit.
|
|
(3)
|
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 on the respective
payment dates of the Trust. Broker commission charges are not
included in the calculation.
|
|
(4)
|
Portfolio turnover ratio excludes securities received or
delivered from processing creations or redemptions of Units.
|
See accompanying notes to financial statements.
19
DIAMONDS
Trust Series 1
October 31, 2009
DIAMONDS Trust, Series 1 (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 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 out of the performance of their duties to
the Trust. Additionally, in the normal course of business, the
Trust enters into contracts with service providers that contain
general indemnification clauses. The Trusts 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.
The Sponsor and Trustee have approved an amendment dated as of
December 22, 2009 to the Trust Agreement to change the
name of the Trust to SPDR Dow Jones Industrial Average ETF
Trust and to make related conforming changes, effective on
or around February 26, 2010. The investment objective and
policies of the Trust will remain the same.
|
|
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 those estimates.
20
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
Security
Valuation
The value of the Trusts 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 securitys 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 State Street Bank and
Trust Company, in its capacity as Trustee, believes will
better reflect fair value in accordance with the Trusts
valuation policies and procedures. The Trustee has delegated the
process of valuing securities for which market quotations are
not readily available or do not otherwise accurately reflect the
fair value of the security to the Pricing and Investment
Committee (the Committee). 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 Trusts 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.
Effective November 1, 2008, the first day of the
Trusts fiscal year 2009, the Trust adopted 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 Trusts 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.,
21
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
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
Trusts net assets are computed and that may materially
affect the value of the Trusts investments). Examples of
events that may be significant events are government
actions, natural disasters, armed conflicts, acts of terrorism,
and significant market fluctuations.
Fair value pricing could result in a difference between the
prices used to calculate a Trusts net asset value and the
prices used by the DJIA, which, in turn, could result in a
difference between the Trusts 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 level inputs
used to value each security is identified in the Schedule of
Investments Industry Breakdown.
The following table summarizes the inputs used in valuing the
Trusts investments, as of October 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 2 -
|
|
Level 3 -
|
|
|
|
|
Other Significant
|
|
Significant
|
|
|
Level 1 -
|
|
Observable
|
|
Unobservable
|
|
|
Quoted Prices
|
|
Inputs
|
|
Inputs
|
|
Total
|
|
$
|
7,377,699,167
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
7,377,699,167
|
|
Subsequent
Events
Management has evaluated the possibility of subsequent events
existing in the Trusts financial statements through
December 18, 2009. Management has determined that there are
no material events that would require disclosure in the
Trusts financial statements through this date.
Investment
Risk
The Trust invests in various investments which 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.
22
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
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 Units 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. Further, the Trust would not sell an equity
security because the securitys issuer was in financial
trouble unless that security is removed from the DJIA. The Trust
may be more susceptible to single issuer risk than a more
diversified fund.
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 Unitholders monthly. The Trust declares and
distributes net realized capital gains, if any, at least
annually.
Effective October 30, 2009, the Trusts Dividend
Reinvestment Service is no longer available. 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 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 Trusts 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 Trusts Units.
Federal
Income Tax
The Trust has qualified and intends to continue to qualify as a
regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as
23
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
amended. By so qualifying and electing, the Trust will not be
subject to federal income taxes to the extent it distributes its
taxable income, including any net realized capital gains, for
each fiscal year. In addition, by distributing during each
calendar year substantially all of its net investment income and
capital gains, if any, the Trust will not be subject to federal
excise tax. Income and capital gain distributions are determined
in accordance with income tax regulations which may differ from
those determined in accordance with U.S. generally accepted
accounting principles. These differences are primarily due to
differing treatments for income equalization, in-kind
transactions and losses deferred due to wash sales. Net
investment income per Unit calculations in the financial
highlights for all years presented exclude these differences.
The Trust has reviewed the tax positions for the open tax years
as of October 31, 2009 and has determined that no provision
for income tax is required in the Trusts Financial
Statements. The Trusts federal tax returns for the prior
three fiscal years remain subject to examination by the Internal
Revenue Service.
During 2009, the Trust reclassified $507,478,185 of non-taxable
security losses realized from the in-kind redemption of
Creation Units (Note 4) as a decrease to paid
in capital in the Statement of Assets and Liabilities. At
October 31, 2009, the cost of investments for federal tax
purposes was $9,780,100,159, accordingly, gross unrealized
appreciation was $30,678,425 and gross unrealized depreciation
was $2,433,079,417, resulting in net unrealized depreciation of
$2,402,400,992.
At October 31, 2009, the Trust had the following capital
loss carryforwards which may be used to offset any net realized
gains, expiring October 31:
|
|
|
|
2010
|
|
$
|
2,065,467
|
2011
|
|
|
68,716,435
|
2012
|
|
|
221,460,584
|
2014
|
|
|
52,316
|
2016
|
|
|
506,750,845
|
2017
|
|
|
779,537,215
|
During the tax year ended October 31, 2009, no capital loss
carryforwards were utilized or expired.
The tax character of distributions paid during the years ended
October 31, 2009, 2008, 2007 were as follows:
|
|
|
|
|
|
|
Distributions paid from :
|
|
2009
|
|
2008
|
|
2007
|
Ordinary Income
|
|
$231,359,719
|
|
$218,527,182
|
|
$147,731,248
|
24
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
As of October 31, 2009, the components of distributable
earnings (excluding unrealized appreciation/(depreciation)) on
the tax basis were undistributed ordinary income of $23,207,902
and undistributed long term capital gain of $0.
|
|
NOTE 3
|
TRANSACTIONS
WITH THE TRUSTEE AND SPONSOR
|
In accordance with the Trust Agreement, the Trustee
maintains the Trusts 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 (see Note 4), and
for adjusting the composition of the Trusts 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, 2009:
|
|
|
|
|
Fee as a percentage of
|
Net asset value of the Trust
|
|
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,
2009, the Adjustment Amount reduced the Trustees fee by
$718,535. The Adjustment Amount included an excess of net
transaction fees from processing orders of $683,504 and a
Trustee earning credit of $35,031. Prior to 2008, the Trustee
earnings credits were presented separately on the Statements of
Operations as a reduction of the Trusts expenses in
accordance with the agreement in effect at the time.
Effective November 1, 2006, the Trustee changed the method
of computing the Adjustment Amount to the Trustee Fee such that
all income earned with respect to cash held for the benefit of
the Trust is credited against the Trustees Fee. In
addition, during the period from December 1, 2006 through
December 31, 2006, the Trustee applied incremental cash
balance credits of $374,030 which is included in the Trustee
earnings credit of $965,742.
25
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
PDR Services LLC (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, 2009,
October 31, 2008, and October 31, 2007.
Dow Jones & Company, Inc. (Dow Jones), and
State Street Global Markets, LLC (SSGM) have entered
into a License Agreement. The License Agreement grants SSGM, an
affiliate of the Trustee, a license to use the DJIA as a basis
for determining the composition of the Portfolio and to use
certain trade names and trademarks of Dow Jones in connection
with 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
interest 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 Dow
Jones 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 SSGM (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
|
SHAREHOLDER
TRANSACTIONS
|
With the exception of the Trusts Dividend Reinvestment
Service in effect during this fiscal year (see Note 2),
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
26
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009
participating party per day, regardless of the number of
Creation Units created or redeemed. In the case of creations and
redemptions outside the clearing process, an additional amount
not to exceed three (3) times the Transaction Fee
applicable for one Creation Unit is charged per Creation Unit
per day. Under the current schedule, therefore, the total fee
charged in connection with creation or redemption outside of the
clearing process would be $1,000 (the Transaction Fee for the
creation or redemption of one Creation Unit) plus an additional
amount up to $3,000 (3 times $1,000), for a total not to exceed
$4,000. Transaction fees are received by the Trustee and used to
defray the expense of processing orders.
|
|
NOTE 5
|
INVESTMENT
TRANSACTIONS
|
For the fiscal year ended October 31, 2009, the Trust had
in-kind contributions, in-kind redemptions, purchases and sales
of investment securities of $13,502,469,737, $15,230,779,573,
$418,420,295 and $412,645,637 respectively. Net realized gain
(loss) on investment transactions in the Statement of Operations
includes losses resulting from in-kind transactions of
$507,478,185.
27
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009 (unaudited)
Tax
Information
For Federal income tax purposes, the percentage of Trust
distributions which qualify for the corporate dividends paid
deduction for the fiscal year ended October 31, 2009 is
100.00%.
For the fiscal year ended October 31, 2009 certain
dividends paid by the Trust may be designated as qualified
dividend income and subject to a maximum tax rate of 15%, as
provided for the Jobs and Growth Tax Relief Reconciliation Act
of 2003. Complete information will be reported in conjunction
with your 2009
Form 1099-DIV.
FREQUENCY
DISTRIBUTION OF DISCOUNTS AND PREMIUMS
Bid/Ask Price(1) vs. Net Asset Value
As of October 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bid/Ask Price
|
|
Bid/Ask Price
|
|
|
Above NAV
|
|
Below NAV
|
|
|
50-99
|
|
100-199
|
|
>200
|
|
50-99
|
|
100-199
|
|
>200
|
|
|
BASIS
|
|
BASIS
|
|
BASIS
|
|
BASIS
|
|
BASIS
|
|
BASIS
|
|
|
POINTS
|
|
POINTS
|
|
POINTS
|
|
POINTS
|
|
POINTS
|
|
POINTS
|
|
2009
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
2008
|
|
3
|
|
2
|
|
2
|
|
2
|
|
0
|
|
0
|
2007
|
|
1
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
2006
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
2005
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
Comparison
of Total Returns Based on NAV and Bid/Ask Price(1)
The table below is provided to compare the Trusts 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
5 Year
|
|
|
10 Year
|
|
|
DIAMONDS Trust, Series 1
|
|
|
|
|
|
|
|
|
|
|
|
|
Return Based on NAV
|
|
|
7.56
|
%
|
|
|
9.37
|
%
|
|
|
11.76
|
%
|
Return Based on Bid/Ask Price
|
|
|
7.73
|
%
|
|
|
9.35
|
%
|
|
|
11.36
|
%
|
DJIA
|
|
|
7.71
|
%
|
|
|
10.15
|
%
|
|
|
13.26
|
%
|
28
DIAMONDS
Trust Series 1
Notes to Financial Statements
October 31, 2009 (unaudited)
Average
Annual Total Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
5 Year
|
|
|
10 Year
|
|
|
DIAMONDS Trust, Series 1
|
|
|
|
|
|
|
|
|
|
|
|
|
Return Based on NAV
|
|
|
7.56
|
%
|
|
|
1.81
|
%
|
|
|
1.12
|
%
|
Return Based on Bid/Ask Price
|
|
|
7.73
|
%
|
|
|
1.80
|
%
|
|
|
1.08
|
%
|
DJIA
|
|
|
7.71
|
%
|
|
|
1.95
|
%
|
|
|
1.25
|
%
|
|
|
(1) |
The Bid/Ask Price is the midpoint of the Consolidated Bid/Ask
price at the time the Trusts NAV is calculated. From
April 3, 2001 to November 6, 2008, the Bid/Ask Price
was the Bid/Ask price on NYSE Amex (formerly the American Stock
Exchange) at the close of trading, ordinarily 4:00 p.m.
Prior to April 3, 2001, the Bid/Ask Price was the Bid/Ask
price at the close of trading on the American Stock Exchange,
ordinarily 4:15 p.m.
|
29
DIAMONDS
Trust Series 1
October 31, 2009
|
|
|
|
|
|
|
|
|
Common Stocks
|
|
Shares
|
|
|
Value
|
|
|
3M Co.
|
|
|
5,740,596
|
|
|
$
|
422,335,648
|
|
Alcoa, Inc.
|
|
|
5,740,596
|
|
|
|
71,298,202
|
|
American Express Co.
|
|
|
5,740,596
|
|
|
|
200,002,365
|
|
AT&T, Inc.
|
|
|
5,740,596
|
|
|
|
147,361,099
|
|
Bank of America Corp.
|
|
|
5,740,596
|
|
|
|
83,697,890
|
|
Boeing Co.
|
|
|
5,740,596
|
|
|
|
274,400,489
|
|
Caterpillar, Inc.
|
|
|
5,740,596
|
|
|
|
316,077,216
|
|
Chevron Corp.
|
|
|
5,740,596
|
|
|
|
439,385,218
|
|
Cisco Systems, Inc.*
|
|
|
5,740,596
|
|
|
|
131,172,619
|
|
Coca-Cola
Co.
|
|
|
5,740,596
|
|
|
|
306,031,173
|
|
Du Pont (E.I.) de Nemours & Co.
|
|
|
5,740,596
|
|
|
|
182,665,765
|
|
Exxon Mobil Corp.
|
|
|
5,740,596
|
|
|
|
411,428,515
|
|
General Electric Co.
|
|
|
5,740,596
|
|
|
|
81,860,899
|
|
Hewlett-Packard Co.
|
|
|
5,740,596
|
|
|
|
272,448,686
|
|
Home Depot, Inc.
|
|
|
5,740,596
|
|
|
|
144,031,554
|
|
Intel Corp.
|
|
|
5,740,596
|
|
|
|
109,702,789
|
|
International Business Machines Corp.
|
|
|
5,740,596
|
|
|
|
692,373,283
|
|
Johnson & Johnson
|
|
|
5,740,596
|
|
|
|
338,982,194
|
|
JPMorgan Chase & Co.
|
|
|
5,740,596
|
|
|
|
239,784,695
|
|
Kraft Foods, Inc. (Class A)
|
|
|
5,740,596
|
|
|
|
157,981,202
|
|
McDonalds Corp.
|
|
|
5,740,596
|
|
|
|
336,456,331
|
|
Merck & Co., Inc.
|
|
|
5,740,596
|
|
|
|
177,556,634
|
|
Microsoft Corp.
|
|
|
5,740,596
|
|
|
|
159,186,727
|
|
Pfizer, Inc.
|
|
|
5,740,596
|
|
|
|
97,762,350
|
|
Procter & Gamble Co.
|
|
|
5,740,596
|
|
|
|
332,954,568
|
|
The Travelers Cos., Inc.
|
|
|
5,740,596
|
|
|
|
285,824,275
|
|
The Walt Disney Co.
|
|
|
5,740,596
|
|
|
|
157,120,112
|
|
United Technologies Corp.
|
|
|
5,740,596
|
|
|
|
352,759,624
|
|
Verizon Communications, Inc.
|
|
|
5,740,596
|
|
|
|
169,864,236
|
|
Wal-Mart Stores, Inc.
|
|
|
5,740,596
|
|
|
|
285,192,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Common Stocks (Cost $9,778,522,892)
|
|
|
|
|
|
$
|
7,377,699,167
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Non-income producing security.
|
See accompanying notes to financial statements.
30
DIAMONDS
Trust Series 1
Schedule of Investments (continued)
October 31, 2009
INDUSTRY BREAKDOWN AS OF OCTOBER
31, 2009*
|
|
|
|
|
Industry**
|
|
Value
|
|
|
|
|
Computers and Peripherals
|
|
$
|
964,821,969
|
|
Oil, Gas and Consumable Fuels
|
|
|
850,813,733
|
|
Aerospace and Defense
|
|
|
627,160,113
|
|
Pharmaceuticals
|
|
|
614,301,178
|
|
Industrial Conglomerates
|
|
|
504,196,547
|
|
Hotels, Restaurants & Leisure
|
|
|
336,456,331
|
|
Household Products
|
|
|
332,954,568
|
|
Diversified Financial Services
|
|
|
323,482,585
|
|
Diversified Telecommunication Services
|
|
|
317,225,335
|
|
Machinery
|
|
|
316,077,216
|
|
Beverages
|
|
|
306,031,173
|
|
Insurance
|
|
|
285,824,275
|
|
Food & Staples Retailing
|
|
|
285,192,809
|
|
Consumer Finance
|
|
|
200,002,365
|
|
Chemicals
|
|
|
182,665,765
|
|
Software
|
|
|
159,186,727
|
|
Food Products
|
|
|
157,981,202
|
|
Media
|
|
|
157,120,112
|
|
Specialty Retail
|
|
|
144,031,554
|
|
Communications Equipment
|
|
|
131,172,619
|
|
Semiconductors & Semiconductor Equipment
|
|
|
109,702,789
|
|
Metals and Mining
|
|
|
71,298,202
|
|
|
|
|
|
|
Total
|
|
$
|
7,377,699,167
|
|
|
|
|
|
|
|
|
*
|
The Trusts industry breakdown is expressed as market value
by industry and may change over time.
|
|
**
|
Each security value is based on Level 1 inputs.
|
See accompanying notes to financial statements.
31
THE
TRUST
The Trust, an exchange traded fund or ETF, is a
registered investment company which both (a) continuously
issues and redeems in-kind its shares, known as
Trust Units or Units, only in large lot
sizes called Creation Units at their once-daily NAV and
(b) lists Units individually for trading on the Exchange at
prices established throughout the trading day, like any other
listed equity security trading in the secondary market on the
Exchange.
Creation
of Creation Units
Before trading on the Exchange in the secondary market,
Trust Units are created at NAV in Creation Units. This
occurs when Portfolio Deposits are made either through the
Clearing Process or outside the Clearing Process, but only by a
person who executed a Participant Agreement with the Distributor
and the Trustee. The Distributor shall 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 Distributor 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 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,
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
Index by making a corresponding adjustment to the Portfolio
Deposit on the day prior to the day on which the change to the
DJIA takes effect.
* Such increase is subject to the 10 Basis Point
Limit.
32
The Trustee makes available to NSCC** before the commencement of
trading on each 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 shall 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, 2009, is set
forth in the above Schedule of Investments. The Sponsor makes
available (a) on each Business Day, the Dividend Equivalent
Payment effective through and including the previous Business
Day, per outstanding Unit, and (b) every 15 seconds
throughout the 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 may occasionally
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 in itself result in a halt
in the trading of Units on the Exchange.
Upon receipt of one or more Portfolio Deposits, following
placement with the Distributor of an order to create Units, the
Trustee (a) delivers one or more Creation Units to DTC,
(b) removes the Unit position from its account at DTC and
allocates it to the account of the DTC Participant acting on
behalf of the investor creating Creation Unit(s),
(c) increases the aggregate value of the Portfolio, and
(d) decreases the fractional undivided interest in the
Trust represented by each Unit.
Under certain circumstances, (a) a portion of the stock
portion of a Portfolio Deposit may consist of contracts to
purchase certain Index Securities or (b) a portion of the
Cash Component may consist of cash in an amount required to
enable the Trustee to purchase such Index Securities. If there
is a failure to deliver Index Securities that are the subject of
such contracts to purchase, the Trustee will acquire such Index
Securities in a timely manner. To the extent the price of any
such Index Security increases or decreases between the time of
creation and the time of its purchase and delivery, Units will
represent fewer or more shares of such Index Security.
Therefore, price fluctuations during the period from the time
the cash is received by the Trustee to the time the requisite
Index Securities are purchased and delivered will affect the
value of all Units.
** As of December 31, 2009, the Depository Trust
and Clearing Corporation (DTCC) owned 100% of the
issued and outstanding shares of common stock of NSCC. Also, as
of such date, NYSE Euronext, the parent company of the Sponsor,
and its affiliates collectively owned less than 0.30% of
the issued and outstanding shares of common stock of DTCC
(DTCC Shares), and the Trustee owned 6.17% of DTCC
Shares.
33
Procedures
for Creation of Creation Units
All creation orders must be placed in Creation Units and must be
received by the Distributor by no later than the closing time of
the regular trading session on the NYSE (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 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.
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 has 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.
The order is deemed received on the Business Day on which the
order is placed if the order is placed in proper form before the
Closing Time, on such date and federal funds in the appropriate
amount are deposited with the Trustee by 11:00 a.m. New
York time 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 investor 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 missing
Index Securities are not received by 1:00 p.m. New York
time on the third 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 Business Day following
notification by the Distributor that such a payment is required,
the Trustee may use the Additional Cash Deposit to purchase the
missing Index Securities of the Portfolio Deposit. The Trustee
will return any unused portion of the Additional Cash Deposit
once all of the missing Index Securities 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 under the heading
Highlights A Transaction Fee is Payable for
Each Creation and for Each Redemption of Creation Units.
The delivery of Creation Units so created will occur no later
than the third (3rd) Business Day
34
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 the 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.
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 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 shall incur any liability
for the failure to give any such notification.
Placement
of Creation Orders Using the 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 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 the 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. New York time on the next Business Day
immediately following the Transmittal Date. If the Trustee does
not receive both the
35
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.
Securities
Depository; Book-Entry-Only System
DTC acts as securities depository for 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.
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 provisions of
Section 17A of the Securities Exchange Act of 1934. DTC*
was created to hold securities of its participants referred to
herein as DTC Participants and to facilitate the clearance and
settlement of securities transactions among the DTC Participants
through electronic book-entry changes in their accounts, thereby
eliminating the need for physical movement of securities
certificates. DTC Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and
certain other organizations. Access to the DTC system also is
available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial
relationship with a DTC Participant, either directly or
indirectly (Indirect Participants).
Upon the settlement date of any creation, transfer or redemption
of Units, DTC credits or debits, on its book-entry registration
and transfer system, the amount of Units so created, transferred
or redeemed to the accounts of the appropriate DTC Participants.
The accounts to be credited and charged are designated by the
Trustee to NSCC, in the case of a creation or redemption through
the Clearing Process, or by the Trustee and the DTC Participant,
in the case of a creation or redemption outside of the Clearing
Process. Beneficial ownership of Units is limited to DTC
Participants, Indirect Participants and persons holding
interests through DTC Participants and Indirect Participants.
Ownership of beneficial interests in Units (owners of such
beneficial interests are referred to herein as Beneficial
Owners) is shown on, and the transfer of ownership is
effected only through, records maintained by DTC (with respect
to DTC Participants) and on the records of DTC Participants
(with respect to Indirect Participants and Beneficial Owners
that are not DTC Participants). Beneficial Owners are expected
to receive from or through the DTC Participant a written
confirmation relating to their purchase of Units. The laws of
some jurisdictions may require that certain purchasers of
securities take physical delivery of such securities in
definitive form. Such laws may impair the ability of certain
investors to acquire beneficial interests in Units.
* As of December 31, 2009, DTCC owned 100%
of the issued and outstanding shares of the common stock of DTC.
36
As long as Cede & Co., as nominee of DTC, is the
registered owner of Units, references to the registered or
record owner of Units shall mean Cede & Co. and shall
not mean the Beneficial Owners of Units. Beneficial Owners of
Units are not entitled to have Units registered in their names,
will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered the
record or registered holders thereof under the
Trust Agreement. Accordingly, each Beneficial Owner must
rely on the procedures of DTC, the DTC Participant and any
Indirect Participant through which such Beneficial Owner holds
its interests, to exercise any rights under the
Trust Agreement.
The Trustee recognizes DTC or its nominee as the owner of all
Units for all purposes except as expressly set forth in the
Trust Agreement. Pursuant to the agreement between the
Trustee and DTC (Depository Agreement), DTC is
required to make available to the Trustee upon request and for a
fee to be charged to the Trust a listing of the Units holdings
of each DTC Participant. The Trustee inquires of each such DTC
Participant as to the number of Beneficial Owners holding Units,
directly or indirectly, through the DTC Participant. The Trustee
provides each such DTC Participant with copies of such notice,
statement or other communication, in the form, number and at the
place as the DTC Participant may reasonably request, in order
that the notice, statement or communication may be transmitted
by the DTC Participant, directly or indirectly, to the
Beneficial Owners. In addition, the Trust pays to each such DTC
Participant a fair and reasonable amount as reimbursement for
the expense attendant to such transmittal, all subject to
applicable statutory and regulatory requirements. The foregoing
interaction between the Trustee and DTC Participants may be
direct or indirect (i.e., through a third party.)
Distributions are made to DTC or its nominee, Cede &
Co. DTC or Cede & Co., upon receipt of any payment of
distributions in respect of Units, is required immediately to
credit DTC Participants accounts with payments in amounts
proportionate to their respective beneficial interests in Units,
as shown on the records of DTC or its nominee. Payments by DTC
Participants to Indirect Participants and Beneficial Owners of
Units held through such DTC Participants will be governed by
standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in
bearer form or registered in a street name, and will
be the responsibility of such DTC Participants. Neither the
Trustee nor the Sponsor has or will have any responsibility or
liability for any aspects of the records relating to or notices
to Beneficial Owners, or payments made on account of beneficial
ownership interests in Units, or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests or for any other aspect of the relationship between
DTC and the DTC Participants or the relationship between such
DTC Participants and the Indirect Participants and Beneficial
Owners owning through such DTC Participants.
DTC may discontinue providing its service with respect to Units
at any time by giving notice to the Trustee and the Sponsor and
discharging its responsibilities with respect thereto under
applicable law. Under such circumstances, the Trustee and the
37
Sponsor shall take action either to find a replacement for DTC
to perform its functions at a comparable cost or, if such a
replacement is unavailable, to terminate the Trust.
REDEMPTION OF
TRUST UNITS
Trust Units are redeemable only in Creation Units. Creation
Units are redeemable in kind only and are not redeemable for
cash except as described under
SummaryHighlightsTermination of the
Trust.
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 of the Units to be redeemed and
any Excess Cash Amounts (as defined below) by the Trustee 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 the 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 to the
Trustee and 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 stocks 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
38
liabilities for such period including, without limitation,
(i) taxes or other governmental charges against the Trust
not previously deducted if any, and (ii) accrued fees of
the Trustee and other expenses of the Trust, 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 redemption, the Trustee may elect 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 is deemed received by the Trustee as a part of the
Cash Redemption Payment in lieu thereof.
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 investor 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 investor, 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 Trusts correspondence
to the composition and weighting of the DJIA Index.
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 The
PortfolioPortfolio Securities Conform to the DJIA.
All redemption orders must be transmitted to the Trustee by
telephone, through the Internet or by other transmission method
acceptable to the Trustee so as to be received by the Trustee
not later than the Closing Time on the Transmittal Date,
pursuant to procedures set forth in the Participant Agreement
and/or described in this
39
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. 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 Valuation 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 on such Transmittal Date, then
the value of the stocks and the Cash Redemption Payment to
be delivered to the Beneficial Owner is 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 is 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,
(c) or 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 the Clearing
Process
A redemption order made through the Clearing Process is deemed
received on the Transmittal Date if (a) such 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
40
Transmittal Date. The Participant Agreement authorizes the
Trustee to transmit to NSCC on behalf of the Participating Party
such trade instructions as are necessary to effect the
Participating Partys redemption order. Pursuant to such
trade instructions from the Trustee to NSCC, the Trustee
transfers 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 the Cash Redemption Payment.
Placement
of Redemption Orders Outside the 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 is 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 Business Days and the Cash
Redemption Payment to the redeeming Beneficial Owner by the
third Business Day following the Transmittal Date.
THE
PORTFOLIO
Because the objective of the Trust is to provide investment
results that, before expenses, generally correspond to the price
and yield performance of the DJIA, the Portfolio at any time
will consist of as many of Index Securities as is practicable.
It is anticipated that cash or cash items (other than dividends
held for distribution) normally would not be a substantial part
of the Trusts net assets. Although the Trust may at any
time fail to own certain of Index Securities, the Trust will be
substantially invested in Index Securities and the Sponsor
believes that such investment should result in a close
correspondence between the investment performance of the DJIA
and that derived from ownership of Units.
Portfolio
Securities Conform to the DJIA
The DJIA is a price-weighted index of 30 component common
stocks, the components of which are determined by the editors of
The Wall Street Journal, without any consultation with
the companies, the respective stock exchange or any official
agency.
41
The Trust is not managed and therefore the adverse financial
condition of an issuer does not require the sale of stocks from
the Portfolio. The Trustee on a non-discretionary basis adjusts
the composition of the Portfolio to conform to changes in the
composition
and/or
weighting structure of Index Securities. To the extent that the
method of determining the DJIA is changed by Dow Jones in a
manner that would affect the adjustments provided for herein,
the Trustee and the Sponsor have the right to amend the
Trust Agreement, without the consent of DTC or Beneficial
Owners, to conform the adjustments to such changes and to
maintain the objective of tracking the DJIA.
The Trustee aggregates certain of these adjustments and makes
conforming changes to the Portfolio at least monthly. The
Trustee directs its stock transactions only to brokers or
dealers, which may include affiliates of the Trustee, from whom
it expects to obtain the most favorable prices or execution of
orders. Adjustments are made more frequently in the case of
significant changes to the DJIA. Specifically, the Trustee is
required to adjust the composition of the Portfolio whenever
there is a change in the identity of any Index Security
(i.e., a substitution of one security for another) within
three (3) Business Days before or after the day on which
the change is scheduled to take effect. While other DJIA changes
may lead to adjustments in the Portfolio, the most common
changes are likely to occur as a result of changes in the Index
Securities included in the DJIA and as a result of stock splits.
The Trust Agreement sets forth the method of adjustments
which may occur thereunder as a result of corporate actions to
the DJIA, such as stock splits or changes in the identity of the
component stocks.
For example, in the event of an Index Security change (in which
the common stock of one issuer held in the DJIA is replaced by
the common stock of another), the Trustee may sell all shares of
the Portfolio Security corresponding to the old Index Security
and use the proceeds of such sale to purchase the replacement
Portfolio Security corresponding to the new Index Security. If
the share price of the removed Portfolio Security was higher
than the price of its replacement, the Trustee will calculate
how to allocate the proceeds of the sale of the removed
Portfolio Security between the purchase of its replacement and
purchases of additional shares of other Portfolio Securities so
that the number of shares of each Portfolio Security after the
transactions would be as nearly equal as practicable. If the
share price of the removed Portfolio Security was lower than the
price of its replacement, the Trustee will calculate the number
of shares of each of the other Portfolio Securities that must be
sold in order to purchase enough shares of the replacement
Portfolio Security so that the number of shares of each
Portfolio Security after the transactions would be as nearly
equal as practicable.
In the event of a stock split, the price weighting of the stock
which is split will drop. The Trustee may make the corresponding
adjustment by selling the additional shares of the Portfolio
Security received from the stock split. The Trustee may then use
the proceeds of the sale to buy an equal number of shares of
each Portfolio Security-including the Portfolio Security which
had just experienced a stock split. In practice, of course, not
all the shares received in the split would be sold: enough of
those shares
42
would be retained to make an increase in the number of split
shares equal to the increase in the number of shares in each of
the other Portfolio Securities purchased with the proceeds of
the sale of the remaining shares resulting from such split.
As a result of the purchase and sale of stock in accordance with
these requirements, or the creation of Creation Units, the Trust
may hold some amount of residual cash (other than cash held
temporarily due to timing differences between the sale and
purchase of stock or cash delivered in lieu of Index Securities
or undistributed income or undistributed capital gains). This
amount may not exceed for more than two (2) consecutive
Business Days 5/10th of 1 percent of the value of the
Portfolio. If the Trustee has made all required adjustments and
is left with cash in excess of 5/10th of 1 percent of
the value of the Portfolio, the Trustee will use such cash to
purchase additional Index Securities.
All portfolio adjustments are made as described herein unless
such adjustments would cause the Trust to lose its status as a
regulated investment company under Subchapter M of
the Code. Additionally, the Trustee is required to adjust the
composition of the Portfolio at any time to insure the continued
qualification of the Trust as a regulated investment company.
The Trustee relies on Dow Jones for information as to the
composition and weightings of Index Securities. If the Trustee
becomes incapable of obtaining or processing such information or
NSCC is unable to receive such information from the Trustee on
any Business Day, the Trustee shall use the composition and
weightings of Index Securities for the most recently effective
Portfolio Deposit for the purposes of all adjustments and
determinations (including, without limitation, determination of
the stock portion of the Portfolio Deposit) until the earlier of
(a) such time as current information with respect to Index
Securities is available or (b) three (3) consecutive
Business Days have elapsed. If such current information is not
available and three (3) consecutive Business Days have
elapsed, the composition and weightings of Portfolio Securities
(as opposed to Index Securities) shall be used for the purposes
of all adjustments and determinations (including, without
limitation, determination of the stock portion of the Portfolio
Deposit) until current information with respect to Index
Securities is available.
If the Trust is terminated, the Trustee shall use the
composition and weightings of Portfolio Securities as of such
notice date for the purpose and determination of all redemptions
or other required uses of the basket.
From time to time Dow Jones may adjust the composition of the
DJIA because of a merger or acquisition involving one or more
Index Securities. In such cases, the Trust, as shareholder of an
issuer that is the object of such merger or acquisition
activity, may receive various offers from would-be acquirors of
the issuer. The Trustee is not permitted to accept any such
offers until such time as it has been determined that the stocks
of the issuer will be removed from the DJIA. As stocks of an
issuer are often removed from the DJIA only after the
consummation of a merger or acquisition of such issuer, in
selling the securities of such issuer the Trust may
43
receive, to the extent that market prices do not provide a more
attractive alternative, whatever consideration is being offered
to the shareholders of such issuer that have not tendered their
shares prior to such time. Any cash received in such
transactions is reinvested in Index Securities in accordance
with the criteria set forth above.
Any stocks received as a part of the consideration that are not
Index Securities are sold as soon as practicable and the cash
proceeds of such sale are reinvested in accordance with the
criteria set forth above.
Adjustments
to the Portfolio Deposit
On each Business Day (each such day an Adjustment
Day), the number of shares and identity of each Index
Security in a Portfolio Deposit are adjusted in accordance with
the following procedure. At the close of the market the Trustee
calculates the NAV of the Trust. The NAV is divided by the
number of outstanding Units multiplied by 50,000 Units in one
Creation Unit, resulting in a NAV per Creation Unit (NAV
Amount). The Trustee then calculates the number of shares
(without rounding) of each of the component stocks of the DJIA
in a Portfolio Deposit for the following Business Day
(Request Day), so that (a) the market value at
the close of the market on the Adjustment Day of the stocks to
be included in the Portfolio Deposit on Request Day, together
with the Dividend Equivalent Payment effective for requests to
create or redeem on the Adjustment Day, equals the NAV Amount
and (b) the identity and weighting of each of the stocks in
a Portfolio Deposit mirrors proportionately the identity and
weightings of the stocks in the DJIA, each as in effect on
Request Day. For each stock, the number resulting from such
calculation is rounded down to the nearest whole share. The
identities and weightings of the stocks so calculated constitute
the stock portion of the Portfolio Deposit effective on Request
Day and thereafter until the next subsequent Adjustment Day, as
well as Portfolio Securities to be delivered by the Trustee in
the event of request for redemption on the Request Day and
thereafter until the following Adjustment Day.
In addition to the foregoing adjustments, if a corporate action
such as a stock split, stock dividend or reverse split occurs
with respect to any Index Security that results in an adjustment
to the DJIA divisor, the Portfolio Deposit shall be adjusted to
take into account the corporate action in each case rounded to
the nearest whole share. 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 Index by making a
corresponding adjustment to the Portfolio Deposit on the day
prior to the day on which the change to the DJIA takes effect.
On the Request Day and on each day that a request for the
creation or redemption is deemed received, the Trustee
calculates the market value of the stock portion of the
Portfolio Deposit as in effect on the Request Day as of the
close of the market and adds to that amount the Dividend
Equivalent Payment effective for requests to create or redeem on
Request Day (such market value and Dividend Equivalent Payment
are collectively referred to herein as Portfolio Deposit
44
Amount). The Trustee then calculates the NAV Amount, based
on the close of the market on the Request Day. The difference
between the NAV Amount so calculated and the Portfolio Deposit
Amount is the Balancing Amount. The Balancing Amount
serves the function of compensating for any differences between
the value of the Portfolio Deposit Amount and the NAV Amount at
the close of trading on Request Day due to, for example,
(a) differences in the market value of the securities in
the Portfolio Deposit and the market value of the Securities on
Request Day and (b) any variances from the proper
composition of the Portfolio Deposit.
The Dividend Equivalent Payment and the Balancing Amount in
effect at the close of business on the Request Date are
collectively referred to as the Cash Component or the Cash
Redemption Payment. If the Balancing Amount is a positive
number (i.e., if the NAV Amount exceeds the Portfolio
Deposit Amount) then, with respect to creation, the Balancing
Amount increases the Cash Component of the then effective
Portfolio Deposit transferred to the Trustee by the creator.
With respect to redemptions, the Balancing Amount is added to
the cash transferred to the redeemer by the Trustee. If the
Balancing Amount is a negative number (i.e., if the NAV
Amount is less than the Portfolio Deposit Amount) then, with
respect to creation, this amount decreases the Cash Component of
the then effective Portfolio Deposit to be transferred to the
Trustee by the creator or, if such cash portion is less than the
Balancing Amount, the difference must be paid by the Trustee to
the creator. With respect to redemptions, the Balancing Amount
is deducted from the cash transferred to the redeemer or, if
such cash is less than the Balancing Amount, the difference must
be paid by the redeemer to the Trustee.
If the Trustee has included the cash equivalent value of one or
more Index Securities in the Portfolio Deposit because the
Trustee has determined that such Index Securities are likely to
be unavailable or available in insufficient quantity for
delivery, or if a creator or redeemer is restricted from
investing or engaging in transactions in one or more of such
Index Securities, the Portfolio Deposit so constituted shall
determine the Index Securities to be delivered in connection
with the creation of Units in Creation Unit size aggregations
and upon the redemption of Units until the time the stock
portion of the Portfolio Deposit is subsequently adjusted.
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
45
and institutional investors. These stocks represent more than
one-quarter of the $14.4 trillion market value of all US common
stocks.
Dow Jones is not responsible for and shall not participate in
the creation or sale of Units or in the determination of the
timing of, prices at, or quantities and proportions in which
purchases or sales of Index Securities or Securities shall be
made. The information in this Prospectus concerning Dow Jones
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 2009. Stock prices fluctuated widely
during this period and were higher at the end than at the
beginning. The results shown should not be considered as a
representation of the income yield or capital gain or loss that
may be generated by the DJIA in the future, nor should the
results be considered as a representation of the performance of
the Trust.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
DJIA
|
|
|
Point
|
|
|
Year %
|
|
|
|
|
|
%
|
|
Ended
|
|
Close
|
|
|
Change
|
|
|
Change
|
|
|
Divs
|
|
|
Yield
|
|
|
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
|
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
DJIA
|
|
|
Point
|
|
|
Year %
|
|
|
|
|
|
%
|
|
Ended
|
|
Close
|
|
|
Change
|
|
|
Change
|
|
|
Divs
|
|
|
Yield
|
|
|
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
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
DJIA
|
|
|
Point
|
|
|
Year %
|
|
|
|
|
|
%
|
|
Ended
|
|
Close
|
|
|
Change
|
|
|
Change
|
|
|
Divs
|
|
|
Yield
|
|
|
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: Dow Jones Indexes. Year-end index values reflect neither
reinvestment of dividends nor costs associated with investing,
such as brokerage commissions. Yields are calculated by dividing
the sum of the most recent four quarterly per-share dividend
payments of all components by the sum of the component prices.
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
48
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 Dow Jones,
this adjustment is handled by changing the divisor.* The formula
used to calculate divisor adjustments is:
|
|
|
|
|
|
|
|
|
|
|
Current Divisor x Adjusted Sum of Prices
|
|
|
New Divisor
|
|
=
|
|
|
|
|
|
|
|
|
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.
The most recent change in the components of the DJIA was made
effective with trading on June 8, 2009.
Companies removed:
Companies added:
|
|
|
|
|
Cisco Systems, Inc.
|
|
|
|
The Travelers Companies, Inc.
|
* 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.
49
LICENSE
AGREEMENT
The License Agreement grants State Street Global Markets, LLC
(SSGM), an affiliate of the Trustee, a license to
use the DJIA as a basis for determining the composition of the
Portfolio and to use certain trade names and trademarks of
Dow Jones in connection with the Portfolio. The Trustee on
behalf of the Trust, the Sponsor and the Exchange have each
received a sublicense from SSGM for the use of the DJIA and
certain 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
Beneficial Owners of Trust 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
Beneficial Owners of Trust Units.
None of the Trust, the Trustee, the Exchange, the Sponsor, SSGM,
the Distributor, DTC, NSCC, any Authorized Participant, any
Beneficial Owner of Trust Units or any other person is entitled
to any rights whatsoever under the foregoing licensing
arrangements or to use the trademarks and service marks
Dow Jones, The Dow, DJIA or
Dow Jones Industrial Average or to use the DJIA
except as specifically described in the License Agreement or
sublicenses or as may be specified in the Trust Agreement.
The Trust is not sponsored, endorsed, sold or promoted by Dow
Jones and Dow Jones makes no representation or warranty, express
or implied, to the Beneficial Owners of Trust Units or any
member of the public regarding the advisability of investing in
securities generally or in the Trust particularly. Dow
Jones only relationship to the Trust is the licensing of
certain trademarks, trade names and service marks of Dow Jones
and of the DJIA which is determined, comprised and calculated by
Dow Jones without regard to the Trust or the Beneficial Owners
of Trust Units. Dow Jones has no obligation to take the needs of
the Sponsor, the Exchange, the Trust or the Beneficial Owners of
Trust Units into consideration in determining, comprising or
calculating the DJIA. Dow Jones is not responsible for and has
not participated in any determination or calculation made with
respect to issuance or redemption of Trust Units. Dow Jones has
no obligation or liability in connection with the
administration, marketing or trading of Trust Units.
DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE DJIA OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR
INTERRUPTIONS THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE SPONSOR, THE
EXCHANGE, THE TRUST, BENEFICIAL OWNERS OF TRUST UNITS OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE DJIA OR ANY DATA
INCLUDED THEREIN. DOW JONES MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, WITH
RESPECT TO THE DJIA OR ANY DATA INCLUDED THEREIN.
50
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW
JONES HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT,
PUNITIVE SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR
ARRANGEMENTS BETWEEN DOW JONES, THE SPONSOR AND THE
EXCHANGE.
EXCHANGE
LISTING
On October 1, 2008, NYSE Euronext acquired the American
Stock Exchange LLC. Following the acquisition, the listing and
trading of all exchange traded funds on NYSE Euronext
US markets was consolidated on a single trading venue, NYSE
Arca. The Sponsor and the Trustee therefore decided to move the
listing for the Trust to NYSE Arca and Trust Units have been
listed on NYSE Arca as of November 7, 2008. The Trust was
not required to pay an initial listing fee to the Exchange.
Transactions involving Trust Units in the public trading market
are subject to customary brokerage charges and Commissions.
Trust Units also are listed and traded on the Singapore Exchange
Securities Trading Limited. In the future, Trust Units may be
listed and traded on other non-U.S. exchanges pursuant to
similar arrangements.
There can be no assurance that Units will always be listed on
the Exchange. The Trust will be terminated if Trust Units are
delisted. Trading in Units may be halted under certain
circumstances as set forth in the Exchange rules and procedures.
The Exchange will consider the suspension of trading in or
removal from listing of Units if: (a) the Trust has more
than 60 days remaining until termination and there are
fewer than 50 record
and/or
beneficial holders of Units for 30 or more consecutive trading
days; (b) the value of the DJIA is no longer calculated or
available; or (c) such other event occurs or condition
exists which, in the opinion of the Exchange, makes further
dealings on the Exchange inadvisable. In addition, trading is
subject to trading halts caused by extraordinary market
volatility pursuant to Exchange circuit breaker
rules that require trading to be halted for a specified period
based on a specified market decline. The Exchange also must halt
trading if required intraday valuation information is not
disseminated for longer than one Business Day.
The Sponsors aim in designing the Trust was to provide
investors with a security whose initial market value would
approximate one-hundredth (1/100th) the value of the DJIA. Of
course, the market value of a Unit is affected by a variety of
factors, including capital gains distributions made, and
expenses incurred, by the Trust, and therefore, over time, a
Unit may no longer approximate
(1/100th) the
value of the DJIA. The market price of a Unit should reflect its
share of the dividends accumulated on Portfolio Securities and
may be affected by supply and demand, market volatility,
sentiment and other factors.
51
FEDERAL
INCOME TAXES
The following is a summary of the material U.S. federal
income tax considerations applicable to an investment in Units.
The summary is based on the laws in effect on the date of this
Prospectus and existing judicial and administrative
interpretations thereof, all of which are subject to change,
possibly with retroactive effect. In addition, this summary
assumes that Beneficial Owners hold Units as capital assets
within the meaning of the U.S. Internal Revenue Code of
1986, as amended (the Code), and do not hold Units
in connection with a trade or business. This summary does not
address all potential U.S. federal income tax
considerations possibly applicable to an investment in Units or
to any Beneficial Owner who or that is (a) treated as a
partnership (or other pass-through entity) for U.S. federal
income tax purposes, (b) holding Units through a
partnership (or other pass-through entity), or
(c) otherwise subject to special tax rules, such as dealers
in securities or foreign currency, tax-exempt entities,
financial institutions, regulated investment companies, real
estate investment trusts, insurance companies, persons that hold
Units as part of a straddle, a hedge or
a conversion transaction, investors that have a
functional currency other than the U.S. dollar,
persons liable for alternative minimum tax, traders in
securities that elect to use a mark-to-market method of
accounting for their securities holdings, controlled
foreign corporations, passive foreign investment
companies or, United States expatriates. Prospective
Beneficial Owners are urged to consult their own tax advisors
with respect to the specific tax consequences of investing in
Units.
Tax
Treatment of the Trust
For the fiscal year ended October 31, 2009, the Trust
believes that it qualified for tax treatment as a
regulated investment company under the Code. The
Trust intends to continue to so qualify. To qualify as a
regulated investment company, the Trust must, among other
things, (a) derive in each taxable year at least ninety
percent (90%) of its gross income from dividends, interest,
gains from the sale or other disposition of stock, securities or
foreign currencies, or certain other sources, (b) meet
certain asset diversification tests, and (c) distribute in
each year at least ninety percent (90%) of its investment
company taxable income. If the Trust qualifies as a regulated
investment company, the Trust will not be subject, in general,
to federal income tax if and to the extent the Trust distributes
its income in a timely manner. Any undistributed income may be
subject to tax, including a four percent (4%) excise tax on
certain undistributed income in the event that the Trust does
not distribute to the Beneficial Owners in a timely manner at
least ninety-eight percent (98%) of its taxable income
(including capital gains).
If the Trust fails to qualify as a regulated investment company
for any year, the Trust will be subject to corporate-level
income tax in that year on all of its taxable income, regardless
of whether the Trust makes any distributions to the Beneficial
Owners. In addition, any distributions from a non-qualifying
Trust will be taxable to a Beneficial Owner generally as
ordinary dividends to the extent of the Trusts current
52
and accumulated earnings and profits, possibly eligible for
(a) in the case of a non-corporate Beneficial Owner
(i.e., an individual, trust or estate), treatment as a
qualifying dividend (as discussed below) subject to tax at
preferential capital gains rates or (b) in the case of a
corporate Beneficial Owner, a dividends-received deduction. To
meet the distribution requirements necessary to qualify as a
regulated investment company (as outlined above), the Trust may
be required to make distributions in excess of the yield
performance of the Portfolio Securities.
Tax
Treatment of the Beneficial Owners
Considerations for a Beneficial Owner that is a
U.S. Person. The following are certain
U.S. federal income tax considerations for Beneficial
Owners that are U.S. persons. A Beneficial Owner will be a
U.S. person if the Beneficial Owners is, for
U.S. federal income tax purposes: (a) a citizen or
individual resident of the United States; (b) a
corporation, or other entity taxable as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws or the United States or of any political
subdivision thereof; (c) an estate, the income of which is
subject to United States federal income taxation regardless of
its source; or (d) a trust if (i) a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons
have the authority to control all substantial decisions of the
trust, or (ii) the trust was in existence on
August 20, 1996 and has a valid election in effect under
applicable United States Treasury regulations to continue to be
treated as a U.S. person.
Distributions. Distributions of the
Trusts net investment income (other than, as discussed
below, qualifying dividend income) and net short-term capital
gains are taxable as ordinary income to the extent of the
Trusts current or accumulated earnings and profits.
Distributions of the Trusts net long-term capital gains in
excess of net short-term capital losses are taxable as long-term
capital gain to the extent of the Trusts current or
accumulated earnings and profits, regardless of a Beneficial
Owners holding period in the Trusts shares.
Distributions of qualifying dividend income are taxable as
long-term capital gain to the extent of the Trusts current
or accumulated earnings and profits, provided that the
Beneficial Owner meets certain holding period and other
requirements with respect to the Trusts shares and the
Trust meets certain holding period and other requirements with
respect to its dividend-paying stocks.
Distributions in excess of the Trusts current or
accumulated earnings and profits are treated as a return of
capital, which reduce a Beneficial Owners tax basis in
Units. Return-of-capital distributions may result if, for
example, Trust distributions are derived from cash amounts
deposited in connection with Portfolio Deposits, rather than
dividends actually received by the Trust on the Portfolio
Securities. Return-of-capital distributions may be more likely
to occur in periods during which the number of outstanding Units
fluctuates significantly.
53
Because the taxability of a distribution depends upon the
Trusts 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 a Beneficial Owners initial
investment.
The Trust intends to distribute its long-term capital gains at
least annually. However, by providing written notice to
Beneficial Owners no later than sixty (60) days after its
year-end, the Trust may elect to retain some or all of its
long-term capital gains and designate the retained amount as a
deemed distribution. In that event, the Trust pays
income tax on the retained long-term capital gain, and each
Beneficial Owner recognizes a proportionate share of the
Trusts undistributed long-term capital gain. In addition,
each Beneficial Owner can claim a refundable tax credit for the
Beneficial Owners proportionate share of the Trusts
income taxes paid on the undistributed long-term capital gain
and increase the tax basis of the Units by an amount equal to
sixty-five percent (65%) of the Beneficial Owners
proportionate share of the Trusts undistributed long-term
capital gains.
Long-term capital gains of non-corporate Beneficial Owners are
taxed at a maximum rate of fifteen percent (15%) for taxable
years beginning on or before December 31, 2010. In
addition, for those taxable years, Trust distributions of
qualifying dividend income to non-corporate Beneficial Owners
qualify for taxation at long-term capital gain rates. Under
current law, the taxation of qualifying dividend income at
long-term capital gain rates will no longer apply for taxable
years beginning after December 31, 2010.
Sales and Redemptions. In general, any capital
gain or loss realized upon a sale of a Unit is treated generally
as a long-term gain or loss if the Unit has been held for more
than one year. Any capital gain or loss realized upon a sale of
a Unit held for one year or less is generally treated as a
short-term gain or loss, except that any capital loss on the
sale of a Unit held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends
were paid with respect to the Unit.
An in-kind redemption of a Unit does not result in the
recognition of taxable gain or loss by the Trust. Upon an
in-kind redemption of a Unit, a Beneficial Owner recognizes gain
or loss, in an amount equal to the difference between the sum of
the aggregate fair market value (as determined on the redemption
date) of the stocks and cash received as a result of the Unit
redemption and the Beneficial Owners basis in the redeemed
Unit. Stocks received upon a Unit redemption (which will be
comprised of the stock portion of the Portfolio Deposit in
effect on the date of redemption) generally have an initial tax
basis equal to their respective market values on the date of
redemption. The Internal Revenue Service (IRS) may
assert that any resulting loss may not be deducted by a
Beneficial Owner on the basis that there has been no material
change in such Beneficial Owners economic position or that
the transaction has no significant economic or business utility
apart from the anticipated tax consequences.
54
Portfolio Deposits. In general, the Trust
recognizes no gain or loss on the issue of Creation Units in
exchange for Portfolio Deposits. However, the person
transferring the Portfolio Deposit to the Trust generally
recognizes gain or loss with respect to the stocks included in
the Portfolio Deposit, in an amount equal to the difference
between the amount realized in respect of the stock and such
persons basis in the stock. The particular amount realized
with respect to each stock included in a Portfolio Deposit is
determined by allocating the total fair market value (as
determined on the transfer date of the Portfolio Deposit) of the
Units received, less any cash paid to the Trust or plus any cash
received from the Trust, in connection with the Portfolio
Deposit, among all of the stocks included in the Portfolio
Deposit based on their relative fair market values (as
determined on the transfer date of the Portfolio Deposit). The
IRS may assert that a person transferring a Portfolio Deposit
may not be able to deduct a resulting loss on the grounds that
there has been no material change in such persons economic
position or that the transaction has no significant economic or
business utility or purpose apart from the anticipated tax
consequences.
Special Considerations for Foreign Beneficial
Owners. If a Beneficial Owner is not a
U.S. person as described above (a Foreign Beneficial
Owner), the Trusts ordinary income dividends
(including distributions of net short-term capital gains and
other amounts that would not be subject to U.S. withholding
tax if paid directly to the Foreign Beneficial Owner) will be
subject, in general, to withholding tax at a rate of thirty
percent (30%) or at a lower rate established under an applicable
tax treaty. However, for Trust tax years that began on or before
December 31, 2009, interest related dividends and
short-term capital gain dividends generally will not be subject
to withholding tax; provided that the Foreign Beneficial Owner
furnishes the Trust with a completed IRS
Form W-8BEN
(or acceptable substitute documentation) establishing the
Foreign Beneficial Owners status as foreign and that the
Trust does not have actual knowledge or reason to know that the
Foreign Beneficial Owner would be subject to withholding tax if
the Foreign Beneficial Owner were to receive the related amounts
directly rather than as dividends from the Trust. There has been
proposed legislation to extend this until December 31,
2010, however, at this time it is unclear whether it will be
extended, and if it is, the terms of the extension.
In general, gain on a sale of a Trust Unit will be exempt from
federal income tax (including withholding at the source) unless,
in the case of an individual Foreign Beneficial Owner, such
individual Foreign Beneficial Owner is physically present in the
United States for one hundred eighty three (183) days or
more during the taxable year and meets certain other
requirements.
To claim a credit or refund for any Trust-level taxes on any
undistributed long-term capital gains (as discussed above) or
any taxes collected through
back-up
withholding, a foreign Beneficial Owner must obtain a
U.S. taxpayer identification number and file a federal
income tax return even if the Foreign Beneficial Owner would not
otherwise be required to obtain a U.S. taxpayer
identification number or file a U.S. income tax return.
55
Back-Up
Withholding. The Trust may be required to report
certain information on a Beneficial Owner to the IRS and
withhold federal income tax (known as backup
withholding) at a twenty-eight percent (28%) rate from all
taxable distributions and redemption proceeds payable to the
Beneficial Owner if the Beneficial Owner fails to provide the
Trust with a correct taxpayer identification or a completed
exemption certificate (e.g., in the case of a Foreign
Beneficial Owner (as defined below), an IRS
Form W-8BEN)
or if the IRS notifies the Trust that a Beneficial Owner is
subject to backup withholding. Backup withholding is not an
additional tax and any amount withheld may be credited against a
Beneficial Owners federal income tax liability. The amount
of any backup withholding from a payment to a Beneficial Owner
is allowed as a credit against the Beneficial Owners
U.S. federal income tax liability and may entitle the
Beneficial Owner to a refund of tax upon prompt filing of a
valid refund claim.
ERISA
Considerations
In considering the advisability of an investment in Units,
fiduciaries of pension, profit sharing or other tax-qualified
retirement plans and funded welfare plans (collectively,
Plans) subject to the fiduciary responsibility
requirements of the Employee Retirement Income Security Act of
1974, as amended (ERISA), should consider whether an
investment in Units (a) is permitted by the documents and
instruments governing the Plan, (b) is made solely in the
interest of participants and beneficiaries of the Plans,
(c) is consistent with the prudence and diversification
requirements of ERISA, and that the acquisition and holding of
Units does not result in a non-exempt prohibited
transaction under Section 406 of ERISA or
Section 4975 of the Code. Individual retirement account
(IRA) investors and certain other investors not
subject to ERISA, such as Keogh Plans, should consider that such
arrangements may make only such investments as are authorized by
the governing instruments and that IRAs, Keogh Plans and certain
other types of arrangements are subject to the prohibited
transaction rules of Section 4975 of the Code.
As described in the preceding paragraph, ERISA imposes certain
duties on Plan fiduciaries, and ERISA
and/or
Section 4975 of the Code prohibit certain transactions
involving plan assets between Plans or IRAs and
persons who have certain specified relationships to the Plan or
IRA (that is, parties in interest as defined in
ERISA or disqualified persons as defined in the
Code). The fiduciary standards and prohibited transaction rules
that apply to an investment in Units by a Plan will not apply to
transactions involving the Trusts assets because the Trust
is an investment company registered under the Investment Company
Act of 1940. As such, the Trusts assets are not deemed to
be plan assets under ERISA and U.S. Department
of Labor regulations by virtue of Plan
and/or IRA
investments in Units.
Employee benefit plans that are government plans (as defined in
Section 3(32) of ERISA), certain church plans (as defined
in Section 3(33) of ERISA) and foreign plans (as described
in Section 4(b)(4) of ERISA) are not subject to the
requirements of ERISA or Section 4975 of the Code. The
fiduciaries of governmental plans should,
56
however, consider the impact of their respective state pension
codes or other applicable law on investments in Units and the
considerations discussed above, to the extent such
considerations apply.
CONTINUOUS
OFFERING OF UNITS
Creation Units are offered continuously to the public by the
Trust through the Distributor. Persons making Portfolio Deposits
and creating Creation Units receive no fees, commissions or
other form of compensation or inducement of any kind from the
Sponsor or the Distributor, and no such person has any
obligation or responsibility to the Sponsor or Distributor to
effect any sale or resale of Units.
Because new Units can be created and issued on an ongoing basis,
at any point during the life of the Trust, a
distribution, as such term is used in the Securities
Act of 1933 (1933 Act), may be occurring.
Broker-dealers and other persons are cautioned that some of
their activities may result in their being deemed participants
in a distribution in a manner which could render them statutory
underwriters and subject them to the prospectus-delivery and
liability provisions of the 1933 Act. For example, a
broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Units after placing a creation
order with the Distributor, breaks them down into the
constituent Units and sells the Units directly to its customers;
or if it chooses to couple the creation of a supply of new Units
with an active selling effort involving solicitation of
secondary market demand for Units. A determination of whether
one is an underwriter must take into account all the facts and
circumstances pertaining to the activities of the broker-dealer
or its client in the particular case, and the examples mentioned
above should not be considered a complete description of all the
activities that could lead to categorization as an underwriter.
Dealers who are not underwriters but are
participating in a distribution (as contrasted to ordinary
secondary trading transactions), and thus dealing with Units
that are part of an unsold allotment within the
meaning of Section 4(3)(C) of the 1933 Act, would be
unable to take advantage of the prospectus-delivery exemption
provided by Section 4(3) of the 1933 Act.
The Sponsor intends to qualify Units in states selected by the
Sponsor and through broker-dealers who are members of FINRA.
Investors intending to create or redeem Creation Units in
transactions not involving a broker-dealer registered in such
investors state of domicile or residence should consult
their legal advisor regarding applicable broker-dealer or
securities regulatory requirements under the state securities
laws prior to such creation or redemption.
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
57
their broker dealer for further information regarding any
dividend reinvestment service offered by such broker dealer.
Distributions in cash that are reinvested in additional Units
through of a dividend reinvestment service, if offered by an
investors broker-dealer, will nevertheless be taxable
dividends to the same extent as if such dividends had been
received in cash.
EXPENSES
OF THE TRUST
Ordinary operating expenses of the Trust are currently being
accrued at an annual rate of less than 0.1800%. Future accruals
will depend primarily on the level of the Trusts net
assets and the level of Trust expenses. There is no guarantee
that the Trusts ordinary operating expenses will not
exceed 0.1800% of the Trusts daily net asset value and
such rate may be changed without notice.
Until further notice, the Sponsor has undertaken that it will
not permit the ordinary operating expenses of the Trust, as
calculated by the Trustee, to exceed an amount that is 18/100 of
1% (0.1800%) per annum of the daily NAV of the Trust after
taking into account any expense offset credits. To the extent
the ordinary operating expenses of the Trust do exceed such
0.1800% amount, the Sponsor will reimburse the Trust for, or
assume, the excess. The Sponsor retains the ability to be repaid
by the Trust for expenses so reimbursed or assumed to the extent
that subsequently during the fiscal year expenses fall below the
0.1800% per annum level on any given day. For purposes of this
undertaking, ordinary operating expenses of the Trust do not
include taxes, brokerage commissions and any extraordinary
non-recurring expenses, including the cost of any litigation to
which the Trust or the Trustee may be a party. The Sponsor may
discontinue this undertaking or renew it for a specified period
of time, or may choose to reimburse or assume certain Trust
expenses in later periods to keep Trust expenses at a level it
believes to be attractive to investors. In any event, on any day
and during any period over the life of the Trust, total fees and
expenses of the Trust may exceed 0.1800% per annum.
Subject to any applicable cap, the Sponsor may charge the Trust
a special fee for certain services the Sponsor may provide to
the Trust which would otherwise be provided by the Trustee in an
amount not to exceed the actual cost of providing such services.
The Sponsor or the Trustee from time to time may voluntarily
assume some expenses or reimburse the Trust so that total
expenses of the Trust are reduced. Neither the Sponsor nor the
Trustee is obligated to do so and either one or both parties may
discontinue such voluntary assumption of expenses or
reimbursement at any time without notice.
The following charges are or may be accrued and paid by the
Trust: (a) the Trustees fee; (b) fees payable to
transfer agents for the provision of transfer agency services;
(c) fees of the Trustee for extraordinary services
performed under the Trust Agreement; (d) various
governmental charges; (e) any taxes, fees and charges
58
payable by the Trustee with respect to Units (whether in
Creation Units or otherwise); (f) expenses and costs of any
action taken by the Trustee or the Sponsor to protect the Trust
and the rights and interests of Beneficial Owners of Units
(whether in Creation Units or otherwise);
(g) indemnification of the Trustee or the Sponsor for any
losses, liabilities or expenses incurred by it in the
administration of the Trust; (h) expenses incurred in
contacting Beneficial Owners of Units during the life of the
Trust and upon termination of the Trust; and (i) other
out-of- pocket expenses of the Trust incurred pursuant to
actions permitted or required under the Trust Agreement.
In addition, the following expenses are or may be charged to the
Trust: (a) reimbursement to the Sponsor of amounts paid by
it to Dow Jones in respect of annual licensing fees pursuant to
the License Agreement; (b) federal and state annual
registration fees for the issuance of Units; and
(c) expenses of the Sponsor relating to the printing and
distribution of marketing materials describing Units and the
Trust (including, but not limited to, associated legal,
consulting, advertising, and marketing costs and other
out-of-pocket expenses such as printing). Pursuant to the
provisions of an exemptive order, the expenses set forth in this
paragraph may be charged to the Trust by the Trustee in an
amount equal to the actual costs incurred, but in no case shall
such charges exceed 20/100 of 1% (0.20%) per annum of the daily
NAV of the Trust.
With respect to the marketing expenses described in item (c)
above, the Sponsor has entered into an agreement with State
Street Global Markets, LLC, an affiliate of the Trustee
(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.
If the income received by the Trust in the form of dividends and
other distributions on Portfolio Securities is insufficient to
cover Trust expenses, the Trustee may make advances to the Trust
to cover such expenses. Otherwise, the Trustee may sell
Portfolio Securities in an amount sufficient to pay such
expenses. The Trustee may reimburse itself in the amount of any
such advance, together with interest thereon at a percentage
rate equal to the then current overnight federal funds rate, by
deducting such amounts from (a) dividend payments or other
income of the Trust when such payments or other income is
received, (b) the amounts earned or benefits derived by the
Trustee on cash held by the Trustee for the benefit of the
Trust, and (c) the sale of Portfolio Securities.
Notwithstanding the foregoing, if any advance remains
outstanding for more than forty-five (45) Business Days,
the Trustee may sell Portfolio Securities to reimburse itself
for such advance and any accrued interest thereon. These
advances will be secured by a lien on the assets of the Trust in
favor of the Trustee. The expenses of the Trust are reflected in
the NAV of the Trust.
For services performed under the Trust Agreement, the
Trustee is paid a fee at an annual rate of 6/100 of 1% to 10/100
of 1% of the NAV of the Trust, as shown below, such percentage
amount to vary depending on the NAV of the Trust, plus or minus
the Adjustment Amount. The compensation is computed on each
Business Day based on
59
the NAV of the Trust on such day, and the amount thereof is
accrued daily and paid quarterly. To the extent that the amount
of the Trustees compensation, before any adjustment in
respect of the Adjustment Amount, is less than specified
amounts, the Sponsor has agreed to pay the amount of any such
shortfall. Notwithstanding the fee schedule set forth in the
table below, in the fourth year of the Trusts operation
and in subsequent years, the Trustee shall be paid a minimum fee
of $400,000 per annum as adjusted by the CPI-U to take effect at
the beginning of the fourth year and each year thereafter. To
the extent that the amount of the Trustees compensation,
prior to any adjustment in respect of the Adjustment Amount, is
less than specified amounts, the Sponsor has agreed to pay the
amount of any such shortfall. The Trustee also may waive all or
a portion of such fee.
Trustee
Fee Scale
|
|
|
|
|
Fee as a Percentage of
|
Net Asset Value of the Trust
|
|
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 fee indicated applies to that portion of the net asset value
of the Trust which falls in the size category indicated. |
As of October 31, 2009, and as of December 31, 2009,
the NAV of the Trust was $7,338,963,445 and $9,071,504,867,
respectively. No representation is made as to the actual NAV of
the Trust on any future date as it is subject to change at any
time due to fluctuations in the market value of the Portfolio
Securities or to creations or redemptions made in the future.
The Adjustment Amount is calculated at the end of each quarter
and applied against the Trustees fee for the following
quarter. Adjustment Amount is an amount which is
intended, depending upon the circumstances, either to
(a) reduce the Trustees fee by the amount that the
Transaction Fees paid on creation and redemption exceed the
costs of those activities, and by the amount of excess earnings
on cash held for the benefit of the Trust* or (b) increase
the Trustees fee by the amount that the Transaction Fee
(plus additional amounts paid in connection with creations or
redemptions outside the Clearing Process), paid on creations or
redemptions, falls short of the actual costs of these
activities. If in any quarter the Adjustment Amount exceeds the
fee payable to the Trustee as set forth above, the Trustee uses
such excess amount to reduce other Trust expenses, subject to
certain federal tax limitations. To the extent that the amount
of such excess exceeds the Trusts expenses for such
quarter, any remaining excess is retained by the Trustee as part
of its compensation. If in any quarter the costs of processing
creations and redemptions exceed the amounts
* The excess earnings on cash amount is currently
calculated, and applied, on a monthly basis.
60
charged as a Transaction Fee (plus the additional amounts paid
in connection with creations or redemptions outside the Clearing
Process) net of the excess earnings, if any, on cash held for
the benefit of the Trust, the Trustee will augment the
Trustees fee by the resulting Adjustment Amount. The
net Adjustment Amount is usually a credit to the Trust. The
amount of the earnings credit will be equal to the then current
Federal Funds Rate, as reported in nationally distributed
publications, multiplied by each days daily cash balance
in the Trusts cash account, reduced by the amount of
reserves for that account required by the Federal Reserve Board
of Governors.
VALUATION
The NAV of the Trust is computed as of the Evaluation Time shown
under SummaryEssential Information on each
Business Day. The NAV of the Trust on a per Unit basis is
determined by subtracting all liabilities (including accrued
expenses and dividends payable) from the total value of the
Portfolio and other assets and dividing the result by the total
number of outstanding Units. For the most recent NAV
information, please go to www.spdrs.com.
The value of the Portfolio is determined by the Trustee in good
faith in the following manner. If Portfolio Securities are
listed on one or more national securities exchanges, such
evaluation is generally based on the closing sale price on that
day (unless the Trustee deems such price inappropriate as a
basis for evaluation) on the exchange which is deemed to be the
principal market thereof or, if there is no such appropriate
closing price on such exchange at the last sale price (unless
the Trustee deems such price inappropriate as a basis for
evaluation). If the stocks are not so listed or, if so listed
and the principal market therefor is other than on such exchange
or there is no such closing sale price available, such
evaluation shall generally be made by the Trustee in good faith
based on the closing price on the over-the-counter market
(unless the Trustee deems such price inappropriate as a basis
for evaluation) or if there is no such appropriate closing
price, (a) on current bid prices, (b) if bid prices
are not available, on the basis of current bid prices for
comparable stocks, (c) by the Trustees appraising the
value of the stocks in good faith on the bid side of the market,
or (d) by any combination thereof.
ADMINISTRATION
OF THE TRUST
Distributions
to Beneficial Owners
The regular monthly ex-dividend date for Units is the third
Friday in each calendar month, unless such day is not a Business
Day, in which case the ex-dividend date is the immediately
preceding Business Day (Ex-Dividend Date).
Beneficial Owners reflected on the records of DTC and the DTC
Participants on the second Business Day following the
Ex-Dividend Date (Record Date) are entitled to
receive an amount representing dividends accumulated on
Portfolio Securities through the monthly dividend period which
ends on the Business Day preceding such Ex-Dividend Date
(including stocks with ex-dividend dates falling within such
monthly dividend period), net of fees and expenses, accrued
daily for such period.
61
For the purposes of all dividend distributions, dividends per
Unit are calculated at least to the nearest
1/1000th of
$0.01. The payment of dividends is made on the Monday preceding
the third (3rd) Friday of the next calendar month or the next
subsequent Business Day if such Monday is not a Business Day
(Dividend Payment Date). Dividend payments are made
through DTC and the DTC Participants to Beneficial Owners then
of record with funds received from the Trustee.
Dividends payable to the Trust in respect of Portfolio
Securities are credited by the Trustee to a non-interest bearing
account as of the date on which the Trust receives such
dividends. Other moneys received by the Trustee in respect of
the Portfolio, including but not limited to the Cash Component,
the Cash Redemption Payment, all moneys realized by the
Trustee from the sale of options, warrants or other similar
rights received or distributed in respect of Portfolio
Securities as dividends or distributions and capital gains
resulting from the sale of Portfolio Securities are credited by
the Trustee to a non-interest bearing account. All funds
collected or received are held by the Trustee without interest
until distributed in accordance with the provisions of the
Trust Agreement. To the extent the amounts credited to the
account generate interest income or an equivalent benefit to the
Trustee, such interest income or benefit is used to reduce the
Trustees annual fee.
Any additional distributions the Trust may need to make so as to
continue to qualify as a regulated investment
company would consist of (a) an increase in the
distribution scheduled for January to include any amount by
which estimated Trust investment company taxable income and net
capital gains for a year exceeds the amount of Trust taxable
income previously distributed with respect to such year or, if
greater, the minimum amount required to avoid imposition of such
excise tax, and (b) a distribution soon after actual annual
investment company taxable income and net capital gains of the
Trust have been computed, of the amount, if any, by which such
actual income exceeds the distributions already made. The NAV of
the Trust is reduced in direct proportion to the amount of such
additional distributions. The magnitude of the additional
distributions, if any, depends upon a number of factors,
including the level of redemption activity experienced by the
Trust. Because substantially all proceeds from the sale of
stocks in connection with adjustments to the Portfolio are used
to purchase shares of Index Securities, the Trust may have no
cash or insufficient cash with which to pay such additional
distributions. In that case, the Trustee typically has to sell
an approximately equal number of shares of each of the Portfolio
Securities sufficient to produce the cash required to make such
additional distributions.
The Trustee may declare special dividends if such action is
necessary or advisable to preserve the status of the Trust as a
regulated investment company or to avoid imposition of income or
excise taxes on undistributed income, and to vary the frequency
with which periodic distributions are made (e.g., from
monthly to quarterly) if it is determined by the Sponsor and the
Trustee that such a variance would be advisable to facilitate
compliance with the rules and regulations applicable to
regulated investment companies or would otherwise be
advantageous to the Trust.
62
In addition, the Trustee may change the regular ex-dividend date
for Units to another date within the month or the quarter if it
is determined by the Sponsor and the Trustee that such a change
would be advantageous to the Trust. Notice of any such variance
or change shall be provided to Beneficial Owners via DTC and the
DTC Participants.
As soon as practicable after notice of termination of the Trust,
the Trustee will distribute via DTC and the DTC Participants to
each Beneficial Owner redeeming Creation Units before the
termination date specified in such notice a portion of Portfolio
Securities and cash as described above. Otherwise, the Trustee
will distribute to each Beneficial Owner (whether in Creation
Unit size aggregations or otherwise), as soon as practicable
after termination of the Trust, such Beneficial Owners pro
rata share of the NAV of the Trust.
All distributions are made by the Trustee through DTC and the
DTC Participants to Beneficial Owners as recorded on the book
entry system of DTC and the DTC Participants.
The settlement date for the creation of Units or the purchase of
Units in the secondary market must occur on or before the Record
Date in order for such creator or purchaser to receive a
distribution on the next Dividend Payment Date. If the
settlement date for such creation or a secondary market purchase
occurs after the Record Date, the distribution will be made to
the prior securityholder or Beneficial Owner as of such Record
Date.
Statements
to Beneficial Owners; Annual Reports
With each distribution, the Trustee furnishes for distribution
to Beneficial Owners a statement setting forth the amount being
distributed, expressed as a dollar amount per Unit.
Promptly after the end of each fiscal year, the Trustee
furnishes to the DTC Participants for distribution to each
person who was a Beneficial Owner of Units at the end of such
fiscal year, an annual report of the Trust containing financial
statements audited by independent accountants of nationally
recognized standing and such other information as may be
required by applicable laws, rules and regulations.
Rights of
Beneficial Owners
Beneficial Owners may sell Units in the secondary market, but
must accumulate enough Units to constitute a full Creation Unit
in order to redeem through the Trust. The death or incapacity of
any Beneficial Owner does not operate to terminate the Trust nor
entitle such Beneficial Owners legal representatives or
heirs to claim an accounting or to take any action or proceeding
in any court for a partition or winding up of the Trust.
Beneficial Owners shall not (a) have the right to vote
concerning the Trust, except with respect to termination and as
otherwise expressly set forth in the
63
Trust Agreement, (b) in any manner control the
operation and management of the Trust, or (c) be liable to
any other person by reason of any action taken by the Sponsor or
the Trustee. The Trustee has the right to vote all of the voting
stocks in the Trust. The Trustee votes the voting stocks of each
issuer in the same proportionate relationship as all other
shares of each such issuer are voted to the extent permissible
and, if not permitted, abstains from voting. The Trustee shall
not be liable to any person for any action or failure to take
any action with respect to such voting matters.
Amendments
to the Trust Agreement
The Trust Agreement may be amended from time to time by the
Trustee and the Sponsor without the consent of any Beneficial
Owners (a) to cure any ambiguity or to correct or
supplement any provision that may be defective or inconsistent
or to make such other provisions as will not adversely affect
the interests of Beneficial Owners; (b) to change any
provision as may be required by the SEC; (c) to add or
change any provision as may be necessary or advisable for the
continuing qualification of the Trust as a regulated
investment company under the Code; (d) to add or
change any provision as may be necessary or advisable if NSCC or
DTC is unable or unwilling to continue to perform its functions;
and (e) to add or change any provision to conform the
adjustments to the Portfolio and the Portfolio Deposit to
changes, if any, made by Dow Jones in its method of determining
the DJIA. The Trust Agreement may also be amended by the
Sponsor and the Trustee with the consent of the Beneficial
Owners of 51% of the outstanding Units to add provisions to, or
change or eliminate any of the provisions of, the
Trust Agreement or to modify the rights of Beneficial
Owners; although, the Trust Agreement may not be amended
without the consent of the Beneficial Owners of all outstanding
Units if such amendment would (a) permit the acquisition of
any securities other than those acquired in accordance with the
terms and conditions of the Trust Agreement;
(b) reduce the interest of any Beneficial Owner in the
Trust; or (c) reduce the percentage of Beneficial Owners
required to consent to any such amendment.
Promptly after the execution of an amendment, the Trustee
receives from DTC, pursuant to the terms of the Depository
Agreement, a list of all DTC Participants holding Units. The
Trustee inquires of each such DTC Participant as to the number
of Beneficial Owners for whom such DTC Participant holds Units,
and provides each such DTC Participant with sufficient copies of
a written notice of the substance of such amendment for
transmittal by each such DTC Participant to Beneficial Owners.
The Trust Agreement provides that the Sponsor has the
discretionary right to direct the Trustee to terminate the Trust
if at any time the NAV of the Trust is less than $350,000,000,
as such dollar amount shall be adjusted for inflation in
accordance with the CPI-U. This adjustment is to take effect at
the end of the fourth year following the Initial Date of Deposit
and at the end of each year thereafter and to be made so as to
reflect the percentage increase in consumer prices as set forth
in the
64
CPI-U for the twelve month period ending in the last month of
the preceding fiscal year.
The Trust may be terminated (a) by the agreement of the
Beneficial Owners of
662/3%
of outstanding Trust Units; (b) if DTC is unable or
unwilling to continue to perform its functions as set forth
under the Trust Agreement and a comparable replacement is
unavailable; (c) if NSCC no longer provides clearance
services with respect to Trust Units, or if the Trustee is no
longer a participant in NSCC; (d) if Dow Jones ceases
publishing the DJIA; (e) if the License Agreement is
terminated; or (f) if Trust Units are delisted from the
Exchange. The Trust will also terminate by its terms on the
Termination Date.
The Trust will terminate if either the Sponsor or the Trustee
resigns or is removed and a successor is not appointed. The
dissolution of the Sponsor or its ceasing to exist as a legal
entity for any cause whatsoever, however, will not cause the
termination of the Trust Agreement or the Trust unless the
Trustee deems termination to be in the best interests of
Beneficial Owners.
Prior written notice of the termination of the Trust must be
given at least twenty (20) days before termination of the
Trust to all Beneficial Owners. The notice must set forth the
date on which the Trust will be terminated, the period during
which the assets of the Trust will be liquidated, the date on
which Beneficial Owners of Trust Units (whether in Creation Unit
size aggregations or otherwise) will receive in cash the NAV of
the Units held, and the date upon which the books of the Trust
shall be closed. The notice shall further state that, as of the
date thereof and thereafter, neither requests to create
additional Creation Units nor Portfolio Deposits will be
accepted, and that, as of the date thereof and thereafter, the
portfolio of stocks delivered upon redemption shall be identical
in composition and weighting to Portfolio Securities as of such
date rather than the stock portion of the Portfolio Deposit as
in effect on the date request for redemption is deemed received.
Beneficial Owners of Creation Units may, in advance of the
Termination Date, redeem in kind directly from the Trust.
Within a reasonable period after the Termination Date, the
Trustee shall, subject to any applicable provisions of law, use
its best efforts to sell all of the Portfolio Securities not
already distributed to redeeming Beneficial Owners of Creation
Units. The Trustee shall not be liable for or responsible in any
way for depreciation or loss incurred because of any such sale.
The Trustee may suspend such sales upon the occurrence of
unusual or unforeseen circumstances, including but not limited
to a suspension in trading of a stock, the closing or
restriction of trading on a stock exchange, the outbreak of
hostilities, or the collapse of the economy. The Trustee shall
deduct from the proceeds of sale its fees and all other expenses
and transmit the remaining amount to DTC for distribution,
together with a final statement setting forth the computation of
the gross amount distributed.
65
Trust Units not redeemed before termination of the Trust will be
redeemed in cash at NAV based on the proceeds of the sale of
Portfolio Securities, with no minimum aggregation of Trust Units
required.
The Sponsor is a Delaware limited liability company incorporated
on April 6, 1998 with offices
c/o NYSE
Euronext, 11 Wall Street, New York, New York 10005. The
Sponsors Internal Revenue Service Employer Identification
Number is
26-4126158.
On October 1, 2008, the Sponsor became an indirect
wholly-owned subsidiary of NYSE Euronext following the
acquisition by NYSE Euronext of the American Stock Exchange LLC
(which was renamed NYSE Alternext US LLC and later,
NYSE Amex LLC) and all of its subsidiaries. NYSE
Euronext is a control person of the Sponsor as such
term is defined in the Securities Act of 1933.
The Sponsor, at its own expense, may from time to time provide
additional promotional incentives to brokers who sell Units to
the public. In certain instances, these incentives may be
provided only to those brokers who meet certain threshold
requirements for participation in a given incentive program,
such as selling a significant number of Units within a specified
period.
If at any time the Sponsor fails to undertake or perform or
becomes incapable of undertaking or performing any of the duties
required under the Trust Agreement, or resigns, or becomes
bankrupt or its affairs are taken over by public authorities,
the Trustee may appoint a successor Sponsor, agree to act as
Sponsor itself, or may terminate the Trust Agreement and
liquidate the Trust. Notice of the resignation or removal of the
Sponsor and the appointment of a successor shall be mailed by
the Trustee to DTC and the DTC Participants for distribution to
Beneficial Owners. Upon a successor Sponsors execution of
a written acceptance of appointment as Sponsor of the Trust, the
successor Sponsor becomes vested with all of the rights, powers,
duties and obligations of the original Sponsor. Any successor
Sponsor may be compensated at rates deemed by the Trustee to be
reasonable.
The Sponsor may resign by executing and delivering to the
Trustee an instrument of resignation. Such resignation shall
become effective upon the appointment of a successor Sponsor and
the acceptance of appointment by the successor Sponsor, unless
the Trustee either agrees to act as Sponsor or terminates the
Trust Agreement and liquidates the Trust. The dissolution
of the Sponsor or its ceasing to exist as a legal entity for any
cause whatsoever will not cause the termination of the
Trust Agreement or the Trust unless the Trustee deems
termination to be in the best interests of the Beneficial Owners
of Units.
The Trust Agreement provides that the Sponsor is not liable
to the Trustee, the Trust or to the Beneficial Owners of Units
for taking any action, or for refraining from taking any action,
made in good faith or for errors in judgment, but is liable only
for its own gross negligence, bad faith, willful misconduct or
willful malfeasance in the performance of its duties or its
reckless disregard of its obligations and duties under
66
the Trust Agreement. The Sponsor is not liable or
responsible in any way for depreciation or loss incurred by the
Trust because of the sale of any Portfolio Securities. The
Trust Agreement further provides that the Sponsor and its
directors, subsidiaries, shareholders, officers, employees, and
affiliates under common control with the Sponsor shall be
indemnified from the assets of the Trust and held harmless
against any loss, liability or expense incurred without gross
negligence, bad faith, willful misconduct or willful malfeasance
on the part of any such party in the performance of its duties
or reckless disregard of its obligations and duties under the
Trust Agreement, including the payment of the costs and
expenses of defending against any claim or liability.
The Trustee is a bank and trust company organized under the laws
of the Commonwealth of Massachusetts with its principal place of
business at One Lincoln Street, Boston, Massachusetts 02111. The
Trustees Internal Revenue Service Employer Identification
Number is
04-1867445.
The Trustee is subject to supervision and examination by the
Massachusetts Division of Banks and the Federal Reserve Bank of
Boston.
Information regarding Cash Redemption Payment amounts,
number of outstanding Trust Units and Transaction Fees may be
obtained from the Trustee at the toll-free number:
1-800-545-4189.
Complete copies of the Trust Agreement and a list of the
parties that have executed a Participant Agreement may be
obtained from the Trustees principal office.
The Trustee may resign and be discharged of the Trust created by
the Trust Agreement by executing a notice of resignation in
writing and filing such notice with the Sponsor and mailing a
copy of the notice of resignation to all DTC Participants
reflected on the records of DTC as owning Units for distribution
to Beneficial Owners as provided above not less than sixty
(60) days before the date such resignation is to take
effect. Such resignation becomes effective upon the appointment
of and the acceptance of the Trust by a successor Trustee. The
Sponsor, upon receiving notice of such resignation, is obligated
to use its best efforts to appoint a successor Trustee promptly.
If no successor is appointed within sixty (60) days after
the date such notice of resignation is given, the Trust shall
terminate.
If the Trustee becomes incapable of acting as such or is
adjudged bankrupt or is taken over by any public authority, the
Sponsor may discharge the Trustee and appoint a successor
Trustee as provided in the Trust Agreement. The Sponsor
shall mail notice of such discharge and appointment via the DTC
Participants to Beneficial Owners. Upon a successor
Trustees execution of a written acceptance of an
appointment as Trustee for the Trust, the successor Trustee
becomes vested with all the rights, powers, duties and
obligations of the original Trustee. A successor Trustee must be
(a) a trust company, corporation or national banking
association organized, doing business under the laws of the
United States or any state thereof;
67
(b) authorized under such laws to exercise corporate trust
powers; and (c) at all times have an aggregate capital,
surplus and undivided profit of not less than $50,000,000.
Beneficial Owners of 51% of the then outstanding Units may at
any time remove the Trustee by written instrument(s) delivered
to the Trustee and the Sponsor. The Sponsor shall thereupon use
its best efforts to appoint a successor Trustee as described
above.
The Trust Agreement limits the Trustees liabilities.
It provides, among other things, that the Trustee is not liable
for (a) any action taken in reasonable reliance on properly
executed documents or for the disposition of monies or stocks or
for the evaluations required to be made thereunder, except by
reason of its own gross negligence, bad faith, willful
malfeasance, willful misconduct, or reckless disregard of its
duties and obligations; (b) depreciation or loss incurred
by reason of the sale by the Trustee of any Portfolio
Securities; (c) any action the Trustee takes where the
Sponsor fails to act; and (d) any taxes or other
governmental charges imposed upon or in respect of Portfolio
Securities or upon the interest thereon or upon it as Trustee or
upon or in respect of the Trust which the Trustee may be
required to pay under any present or future law of the United
States of America or of any other taxing authority having
jurisdiction.
The Trustee and its directors, subsidiaries, shareholders,
officers, employees, and affiliates under common control with
the Trustee will be indemnified from the assets of the Trust and
held harmless against any loss, liability or expense incurred
without gross negligence, bad faith, willful misconduct, willful
malfeasance on the part of such party or reckless disregard of
its duties and obligations, arising out of, or in connection
with its acceptance or administration of the Trust, including
the costs and expenses (including counsel fees) of defending
against any claim or liability.
DTC is a limited purpose trust company and member of the Federal
Reserve System.
The legality of the Trust Units offered hereby has been passed
upon by Katten Muchin Rosenman LLP, New York, New York, as
counsel for the Sponsor.
The financial statements as of October 31, 2009 included in
this Prospectus have been so included in reliance upon the
report of PricewaterhouseCoopers LLP, independent registered
public accounting firm, 125 High Street, Boston, Massachusetts,
given on the authority of said firm as experts in auditing and
accounting.
68
The Trust and the Sponsor have adopted a code of ethics
regarding personal securities transactions by employees. Subject
to certain conditions and standards, the code permits employees
to invest in Units for their own accounts. The code is designed
to prevent fraud, deception and misconduct against the Trust and
to provide reasonable standards of conduct. The code is on file
with the SEC and you may obtain a copy by visiting the SEC at
the address listed on the back cover of this prospectus. The
code is also available on the SECs Internet site at
http:/www.sec.gov.
A copy may be obtained, after paying a duplicating fee, by
electronic request at publicinfo@sec.gov, or by writing the SEC
at the address listed on the back cover of this prospectus.
The Sponsor makes available daily a list of the names and the
required number of shares of each of the securities in the
current Portfolio Deposit. The Sponsor also intends to make
available (a) on a daily basis, the Dividend Equivalent
Payment effective through and including the previous Business
Day, per outstanding Unit, and (b) 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 may
include a cash in lieu amount to compensate for the omission of
a particular Index Security from such Portfolio Deposit).
Intra-day
information will be available with respect to trades and quotes
and underlying trading values will be published every 15 seconds
throughout the trading day. Information with respect to net
asset value, net accumulated dividend, final dividend amount to
be paid, shares outstanding, estimated cash amount and total
cash amount per Creation Unit will be available daily prior to
the opening of trading on the Exchange.
INFORMATION
AND COMPARISONS RELATING TO TRUST,
SECONDARY MARKET TRADING, NET ASSET SIZE, PERFORMANCE AND TAX
TREATMENT
Information regarding various aspects of the Trust, including
the net asset size thereof, as well as the secondary market
trading, the performance and the tax treatment of Trust Units,
may be included from time to time in advertisements, sales
literature and other communications and in reports to current or
prospective Beneficial Owners. Any such performance-related
information will reflect only past performance of Trust Units,
and no guarantees can be made of future results.
Specifically, information may be provided to investors regarding
the ability to engage in short sales of Trust Units. Selling
short refers to the sale of securities which the seller does not
own, but which the seller arranges to borrow before effecting
the
69
sale. Institutional investors may be advised that lending their
Trust Units to short sellers may generate stock loan credits
that may supplement the return they can earn from an investment
in Trust Units. These stock loan credits may provide a useful
source of additional income for certain institutional investors
who can arrange to lend Trust Units. Potential short sellers may
be advised that a short rebate (functionally equivalent to
partial use of proceeds of the short sale) may reduce their cost
of selling short.
In addition, information may be provided to prospective or
current investors comparing and contrasting the tax efficiencies
of conventional mutual funds with Trust Units. Both conventional
mutual funds and the Trust may be required to recognize capital
gains incurred as a result of adjustments to the composition of
the DJIA and therefore to their respective portfolios. From a
tax perspective, however, a significant difference between a
conventional mutual fund and the Trust is the process by which
their shares are redeemed. In cases where a conventional mutual
fund experiences redemptions in excess of subscriptions
(net redemptions) and has insufficient cash
available to fund such net redemptions, such fund may have to
sell stocks held in its portfolio to raise and pay cash to
redeeming shareholders. A mutual fund will generally experience
a taxable gain or loss when it sells such portfolio stocks in
order to pay cash to redeeming fund shareholders. In contrast,
the redemption mechanism for Trust Units typically does not
involve selling the portfolio stocks. Instead, the Trust
delivers the actual portfolio of stocks in an in-kind exchange
to any person redeeming Trust Units in Creation Unit size
aggregations. While this in-kind exchange is a taxable
transaction to the redeeming entity (usually a broker/dealer)
making the exchange, it generally does not constitute a taxable
transaction at the Trust level and, consequently, there is no
realization of taxable gain or loss by the Trust with respect to
such in-kind exchanges. In a period of market appreciation of
the DJIA and, consequently, appreciation of the portfolio stocks
held in the Trust, this in-kind redemption mechanism has the
effect of eliminating the recognition and distribution of those
net unrealized gains at the Trust level. Although the same
result would obtain for conventional mutual funds utilizing an
in-kind redemption mechanism, the opportunities to redeem fund
shares by delivering portfolio stocks in-kind are limited in
most mutual funds.
Investors may be informed that, while no unequivocal statement
can be made as to the net tax impact on a conventional mutual
fund resulting from the purchases and sales of its portfolio
stocks over a period of time, conventional funds that have
accumulated substantial unrealized capital gains, if they
experience net redemptions and do not have sufficient available
cash, may be required to make taxable capital gains
distributions that are generated by changes in such funds
portfolio. In contrast, the in-kind redemption mechanism of
Trust Units may make them more tax efficient investments under
most circumstances than comparable conventional mutual fund
shares. As discussed above, this in-kind redemption feature
tends to lower the amount of annual net capital gains
distributions to Unitholders as compared to their conventional
mutual fund counterparts. Since shareholders are generally
required to pay
70
income tax on capital gains distributions, the smaller the
amount of such distributions, the less taxes that are payable
currently. To the extent that the Trust is not required to
recognize capital gains, the Unitholder is able, in effect, to
defer tax on such gains until he sells or otherwise disposes of
his shares, or the Trust terminates. If such holder retains his
shares until his death, under current law the tax basis of such
shares would be adjusted to their then fair market value.
One important difference between Trust Units and conventional
mutual fund shares is that Trust Units are available for
purchase or sale on an intraday basis on the Exchange. An
investor who buys shares in a conventional mutual fund will buy
or sell shares at a price at or related to the closing NAV per
share, as determined by the fund. In contrast, Trust Units are
not offered for purchase or redeemed for cash at a fixed
relationship to closing NAV. The tables below illustrate the
distribution relationship of Trust Units closing prices to NAV
for the period
1/20/98 (the
first trading date of the Trust) through
12/31/09,
the distribution relationships of high, low and closing prices
over the same period, and distribution of bid/ask spreads for
2009. These tables should help investors evaluate some of the
advantages and disadvantages of Trust Units relative to funds
sold and redeemed at prices related to closing NAV.
Specifically, the tables illustrate in an approximate way the
risks of buying or selling Trust Units at prices less favorable
than closing NAV and, correspondingly, the opportunities to buy
or sell at prices more favorable than closing NAV.
The investor may wish to evaluate the opportunity to buy or sell
on an intraday basis versus the assurance of a transaction at or
related to closing NAV. To assist investors in making this
comparison, the table immediately below illustrates the
distribution of percentage ranges between the high and the low
price each day and between each extreme daily value and the
closing NAV for all trading days from
1/20/98
through
12/31/09.
The investor may wish to compare these ranges with the average
bid/ask
spread on Trust Units and add any commissions charged by a
broker. The trading ranges for this period will not necessarily
be typical of trading ranges in future years and the bid/ask
spread on Trust Units may vary materially over time and may be
significantly greater at times in the future. There is some
evidence, for example, that the bid/ask spread will widen in
markets that are more volatile and narrow when markets are less
volatile. Consequently, the investor should expect wider bid/ask
spreads to be associated with wider daily spread ranges.
71
Daily
Percentage Price Ranges: Average and Frequency Distribution
for
Dow Jones Industrial Average and SPDR DJIA Trust:
Highs and Lows vs. Close*
(From Inception of Trading through
12/31/2009)
Dow Jones
Industrial Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intraday High Value
|
|
|
Intraday Low Value
|
|
|
|
Daily % Price Range
|
|
|
Above Closing Value
|
|
|
Below Closing Value
|
|
Range
|
|
Frequency
|
|
|
% of Total
|
|
|
Frequency
|
|
|
% of Total
|
|
|
Frequency
|
|
|
% of Total
|
|
|
0 0.25%
|
|
|
1
|
|
|
|
0.03
|
%
|
|
|
962
|
|
|
|
31.98
|
%
|
|
|
776
|
|
|
|
25.80
|
%
|
0.25 0.5%
|
|
|
122
|
|
|
|
4.06
|
%
|
|
|
592
|
|
|
|
19.68
|
%
|
|
|
632
|
|
|
|
21.01
|
%
|
0.5 1.0%
|
|
|
865
|
|
|
|
28.76
|
%
|
|
|
713
|
|
|
|
23.70
|
%
|
|
|
790
|
|
|
|
26.26
|
%
|
1.0 1.5%
|
|
|
867
|
|
|
|
28.82
|
%
|
|
|
329
|
|
|
|
10.94
|
%
|
|
|
398
|
|
|
|
13.23
|
%
|
1.5 2.0%
|
|
|
529
|
|
|
|
17.59
|
%
|
|
|
194
|
|
|
|
6.45
|
%
|
|
|
189
|
|
|
|
6.28
|
%
|
2.0 2.5%
|
|
|
267
|
|
|
|
8.88
|
%
|
|
|
98
|
|
|
|
3.26
|
%
|
|
|
106
|
|
|
|
3.52
|
%
|
2.5 3.0%
|
|
|
154
|
|
|
|
5.12
|
%
|
|
|
47
|
|
|
|
1.56
|
%
|
|
|
44
|
|
|
|
1.46
|
%
|
3.0 3.5%
|
|
|
74
|
|
|
|
2.46
|
%
|
|
|
27
|
|
|
|
0.90
|
%
|
|
|
29
|
|
|
|
0.96
|
%
|
> 3.5%
|
|
|
129
|
|
|
|
4.29
|
%
|
|
|
46
|
|
|
|
1.53
|
%
|
|
|
44
|
|
|
|
1.46
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,008
|
|
|
|
100.00
|
%
|
|
|
3,008
|
|
|
|
100.00
|
%
|
|
|
3,008
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Daily Range: 1.5341%
SPDR DJIA
Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intraday High Value
|
|
|
Intraday Low Value
|
|
|
|
Daily % Price Range
|
|
|
Above Closing Value
|
|
|
Below Closing Value
|
|
Range
|
|
Frequency
|
|
|
% of Total
|
|
|
Frequency
|
|
|
% of Total
|
|
|
Frequency
|
|
|
% of Total
|
|
|
0 0.25%
|
|
|
4
|
|
|
|
0.13
|
%
|
|
|
945
|
|
|
|
31.42
|
%
|
|
|
737
|
|
|
|
24.50
|
%
|
0.25 0.5%
|
|
|
148
|
|
|
|
4.92
|
%
|
|
|
636
|
|
|
|
21.14
|
%
|
|
|
661
|
|
|
|
21.97
|
%
|
0.5 1.0%
|
|
|
886
|
|
|
|
29.45
|
%
|
|
|
708
|
|
|
|
23.54
|
%
|
|
|
848
|
|
|
|
28.19
|
%
|
1.0 1.5%
|
|
|
874
|
|
|
|
29.06
|
%
|
|
|
337
|
|
|
|
11.20
|
%
|
|
|
390
|
|
|
|
12.97
|
%
|
1.5 2.0%
|
|
|
488
|
|
|
|
16.22
|
%
|
|
|
181
|
|
|
|
6.02
|
%
|
|
|
177
|
|
|
|
5.88
|
%
|
2.0 2.5%
|
|
|
271
|
|
|
|
9.01
|
%
|
|
|
92
|
|
|
|
3.06
|
%
|
|
|
72
|
|
|
|
2.39
|
%
|
2.5 3.0%
|
|
|
145
|
|
|
|
4.82
|
%
|
|
|
43
|
|
|
|
1.43
|
%
|
|
|
61
|
|
|
|
2.03
|
%
|
3.0 3.5%
|
|
|
74
|
|
|
|
2.46
|
%
|
|
|
25
|
|
|
|
0.83
|
%
|
|
|
19
|
|
|
|
0.63
|
%
|
> 3.5%
|
|
|
118
|
|
|
|
3.92
|
%
|
|
|
41
|
|
|
|
1.36
|
%
|
|
|
43
|
|
|
|
1.43
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,008
|
|
|
|
100.00
|
%
|
|
|
3,008
|
|
|
|
100.00
|
%
|
|
|
3,008
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Daily Range: 1.5009%
72
Frequency
Distribution of Discounts and Premiums For the SPDR DJIA Trust:
Closing Price vs. Net Asset Value (NAV) as of
12/31/09(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calendar
|
|
|
Calendar
|
|
|
Calendar
|
|
|
Calendar
|
|
|
|
|
|
From
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Calendar
|
|
|
1/20/1998
|
|
|
|
|
|
|
Ending
|
|
|
Ending
|
|
|
Ending
|
|
|
Ending
|
|
|
Year
|
|
|
Through
|
Range
|
|
|
3/31/2009
|
|
|
6/30/2009
|
|
|
9/30/2009
|
|
|
12/31/2009
|
|
|
2009
|
|
|
12/31/2009(2)
|
> 200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150 200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 150
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 100
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 50
|
|
|
Days
|
|
|
0
|
|
|
1
|
|
|
1
|
|
|
0
|
|
|
2
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
1.6%
|
|
|
1.6%
|
|
|
0.0%
|
|
|
0.8%
|
|
|
5.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 25
|
|
|
Days
|
|
|
19
|
|
|
29
|
|
|
24
|
|
|
31
|
|
|
103
|
|
|
1327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
31.1%
|
|
|
46.0%
|
|
|
37.5%
|
|
|
48.4%
|
|
|
40.9%
|
|
|
44.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Days
|
|
|
Days
|
|
|
19
|
|
|
30
|
|
|
25
|
|
|
31
|
|
|
105
|
|
|
1515
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at Premium
|
|
|
%
|
|
|
31.1%
|
|
|
47.6%
|
|
|
39.1%
|
|
|
48.4%
|
|
|
41.7%
|
|
|
50.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Price
|
|
|
Days
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equal to NAV
|
|
|
%
|
|
|
1.6%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.4%
|
|
|
2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Days
|
|
|
Days
|
|
|
41
|
|
|
33
|
|
|
39
|
|
|
33
|
|
|
146
|
|
|
1433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at Discount
|
|
|
%
|
|
|
67.2%
|
|
|
52.4%
|
|
|
60.9%
|
|
|
51.6%
|
|
|
57.9%
|
|
|
47.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 −25
|
|
|
Days
|
|
|
40
|
|
|
33
|
|
|
39
|
|
|
33
|
|
|
145
|
|
|
1245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
65.6%
|
|
|
52.4%
|
|
|
60.9%
|
|
|
51.6%
|
|
|
57.5%
|
|
|
41.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−25 −50
|
|
|
Days
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
1.6%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.4%
|
|
|
5.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−50 −100
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−100 −150
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−150 −200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< −200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Close was within 0.25% of NAV better than 88% of the time from
1/20/98
(the first day of trading on the Amex) through 12/31/09.
|
|
|
(1) |
|
Source: NYSE Euronext |
|
(2) |
|
From 1/1/08 to 11/6/08 the closing price is the last price on
NYSE Alternext US and from 11/7/08 the closing price is the last
price on NYSE Arca. |
73
Frequency
Distribution of Discounts and Premiums for the SPDR DJIA
Trust:
Bid/Ask Price vs. Net Asset Value (NAV) as of
12/31/2009(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calendar
|
|
|
Calendar
|
|
|
Calendar
|
|
|
Calendar
|
|
|
|
|
|
From
|
|
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Calendar
|
|
|
1/20/1998
|
|
|
|
|
|
|
Ending
|
|
|
Ending
|
|
|
Ending
|
|
|
Ending
|
|
|
Year
|
|
|
through
|
Range
|
|
|
3/31/2009
|
|
|
6/30/2009
|
|
|
9/30/2009
|
|
|
12/31/2009
|
|
|
2009
|
|
|
12/31/2009(2)
|
> 200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150 200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 150
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 100
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 50
|
|
|
Days
|
|
|
0
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
1.6%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.4%
|
|
|
3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 25
|
|
|
Days
|
|
|
22
|
|
|
28
|
|
|
27
|
|
|
29
|
|
|
106
|
|
|
1358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
36.1%
|
|
|
44.4%
|
|
|
42.2%
|
|
|
45.3%
|
|
|
42.1%
|
|
|
45.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Days
|
|
|
Days
|
|
|
22
|
|
|
29
|
|
|
27
|
|
|
29
|
|
|
107
|
|
|
1490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at Premium
|
|
|
%
|
|
|
36.1%
|
|
|
46.0%
|
|
|
42.2%
|
|
|
45.3%
|
|
|
42.5%
|
|
|
49.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closing Price
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equal to NAV
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
2.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Days
|
|
|
Days
|
|
|
39
|
|
|
34
|
|
|
37
|
|
|
35
|
|
|
145
|
|
|
1446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
at Discount
|
|
|
%
|
|
|
63.9%
|
|
|
54.0%
|
|
|
57.8%
|
|
|
54.7%
|
|
|
57.5%
|
|
|
48.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0 −25
|
|
|
Days
|
|
|
38
|
|
|
34
|
|
|
37
|
|
|
35
|
|
|
144
|
|
|
1329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
62.3%
|
|
|
54.0%
|
|
|
57.8%
|
|
|
54.7%
|
|
|
57.1%
|
|
|
44.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−25 −50
|
|
|
Days
|
|
|
1
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
1
|
|
|
98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
1.6%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.4%
|
|
|
3.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−50 −100
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−100 −150
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
−150 −200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
< −200
|
|
|
Days
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basis Points
|
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Close was within 0.25% of NAV better than 91% of the time from
1/20/98 (the
first day of trading on the Amex) through
12/31/2009.
|
|
|
(1) |
|
Source: NYSE Euronext |
|
(2) |
|
From 1/1/08 to 11/6/08 the Bid/Ask price is the NYSE Alternext
US Bid/Ask price and from 11/7/08 the Bid/Ask price is the NYSE
Arca Bid/Ask price. |
74
Comparison
of Total Returns Based on NAV and Bid/Ask
Price(1)
as of
12/31/09*
The table below is provided to compare the Trusts total
pre-tax returns at NAV with the total pre-tax returns based on
bid/ask price and the performance of the Dow Jones Industrial
Average. Past performance is not necessarily an indication of
how the Trust will perform in the future.
Cumulative
Total Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
5 Year
|
|
|
10 Year
|
|
|
SPDR DJIA Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
Return Based on
NAV(2)(3)(4)
|
|
|
22.46
|
%
|
|
|
9.32
|
%
|
|
|
12.22
|
%
|
Return Based on Bid/Ask
Price(2)(3)(4)
|
|
|
22.49
|
%
|
|
|
9.18
|
%
|
|
|
11.97
|
%
|
Dow Jones Industrial Average
|
|
|
22.68
|
%
|
|
|
10.11
|
%
|
|
|
13.76
|
%
|
Average
Annual Total Return
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Year
|
|
|
5 Year
|
|
|
10 Year
|
|
|
SPDR DJIA Trust
|
|
|
|
|
|
|
|
|
|
|
|
|
Return Based on
NAV(2)(3)(4)(5)
|
|
|
22.46
|
%
|
|
|
1.80
|
%
|
|
|
1.16
|
%
|
Return Based on Bid/Ask
Price(2)(3)(4)(5)
|
|
|
22.49
|
%
|
|
|
1.77
|
%
|
|
|
1.14
|
%
|
Dow Jones Industrial Average
|
|
|
22.68
|
%
|
|
|
1.95
|
%
|
|
|
1.30
|
%
|
|
|
|
(1)
|
|
Currently, the Bid/Ask Price is
calculated based on the best bid and best offer on NYSE Arca at
4:00 p.m. From November 6, 2008 to April 3,
2001, the Bid/Ask Price was calculated based on the best bid and
the best offer on NYSE Alternext US (formerly the American Stock
Exchange) at 4 pm. However, prior to April 3, 2001,
the calculation of the Bid/Ask Price was based on the midpoint
of the best bid and best offer at the close of trading on the
American Stock Exchange, ordinarily 4:15 p.m.
|
|
(2)
|
|
Total return figures have been
calculated in the manner described above under the section of
Highlights entitled Bar Chart and Table.
|
|
(3)
|
|
Includes all applicable ordinary
operating expenses set forth in Expenses of the
Trust.
|
|
(4)
|
|
Does not include the Transaction
Fee which is payable to the Trustee only by persons purchasing
and redeeming Creation Units as discussed above in the section
of Highlights entitled A Transaction Fee is
Payable For Each Creation and For Each Redemption of Creation
Units. If these amounts were reflected, returns would be
less than those shown.
|
|
(5)
|
|
Does not include brokerage
commissions and charges incurred only by persons who make
purchases and sales of Units in the secondary market as
discussed above in the section of Highlights
entitled Brokerage Commissions on Units. If these
amounts were reflected, returns would be less than those shown.
|
|
|
|
* |
|
Source: NYSE Euronext and State Street Bank & Trust Company |
75
GLOSSARY
|
|
|
|
|
|
|
Page
|
|
1933 Act
|
|
|
57
|
|
10 Basis Point Limit
|
|
|
9
|
|
Additional Cash Deposit
|
|
|
34
|
|
Adjustment Amount
|
|
|
60
|
|
Adjustment Day
|
|
|
44
|
|
Authorized Participant
|
|
|
5
|
|
Balancing Amount
|
|
|
45
|
|
Beneficial Owners
|
|
|
36
|
|
Business Day
|
|
|
3
|
|
Cash Component
|
|
|
5
|
|
Cash Redemption Payment
|
|
|
38
|
|
Clearing Process
|
|
|
5
|
|
Closing Time
|
|
|
34
|
|
CNS
|
|
|
5
|
|
Code
|
|
|
10
|
|
Creation Units
|
|
|
4
|
|
Depository Agreement
|
|
|
37
|
|
Distributor
|
|
|
4
|
|
Dividend Equivalent Payment
|
|
|
5
|
|
Dividend Payment Date
|
|
|
62
|
|
DJIA
|
|
|
3
|
|
Dow Jones
|
|
|
i
|
|
DTC
|
|
|
5
|
|
DTCC
|
|
|
33
|
|
DTCC Shares
|
|
|
33
|
|
DTC Cut-Off Time
|
|
|
41
|
|
DTC Participant
|
|
|
5
|
|
ERISA
|
|
|
56
|
|
ETF
|
|
|
32
|
|
Evaluation Time
|
|
|
1
|
|
Excess Cash Amounts
|
|
|
39
|
|
Ex-Dividend Date
|
|
|
61
|
|
Exchange
|
|
|
4
|
|
Foreign Beneficial Owner
|
|
|
55
|
|
Index Securities
|
|
|
3
|
|
Indirect Participants
|
|
|
36
|
|
Initial Date of Deposit
|
|
|
2
|
|
IRA
|
|
|
56
|
|
IRS
|
|
|
54
|
|
License Agreement
|
|
|
i
|
|
Marketing Agent
|
|
|
59
|
|
NAV
|
|
|
3
|
|
NAV Amount
|
|
|
44
|
|
NSCC
|
|
|
5
|
|
NSCC Business Day
|
|
|
13
|
|
NYSE
|
|
|
3
|
|
NYSE Alternext US
|
|
|
66
|
|
NYSE Arca
|
|
|
4
|
|
Participant Agreement
|
|
|
5
|
|
Participating Party
|
|
|
5
|
|
Plans
|
|
|
56
|
|
Portfolio
|
|
|
3
|
|
Portfolio Deposit
|
|
|
5
|
|
Portfolio Deposit Amount
|
|
|
44
|
|
Portfolio Securities
|
|
|
3
|
|
Record Date
|
|
|
61
|
|
Request Day
|
|
|
44
|
|
SEC
|
|
|
5
|
|
Sponsor
|
|
|
3
|
|
SSGM
|
|
|
50
|
|
Transaction Fee
|
|
|
9
|
|
Transmittal Date
|
|
|
32
|
|
Trust
|
|
|
3
|
|
Trust Agreement
|
|
|
3
|
|
Trustee
|
|
|
3
|
|
Trust Units
|
|
|
3
|
|
Units
|
|
|
3
|
|
76
SPDR DOW
JONES INDUSTRIAL
AVERAGE ETF TRUST
(SPDR DJIA TRUST)
SPONSOR:
PDR SERVICES LLC
This Prospectus does not include all of the information with
respect to the SPDR DJIA Trust set forth in its
Registration Statement filed with the SEC in
Washington, D.C. under the:
|
|
|
|
|
Securities Act of 1933 (File
No. 333-31247) and
|
|
|
|
Investment Company Act of 1940 (File
No. 811-9170).
|
To obtain
copies from the SEC at prescribed rates
WRITE: Public Reference Section of the SEC
100 F Street N.E., Washington, D.C. 20549
CALL:
1-800-SEC-0330
VISIT:
http://www.sec.gov
No person is authorized to give any information or make any
representation about the SPDR DJIA Trust not contained in this
Prospectus, and you should not rely on any other information.
Read and keep this Prospectus for future reference.
PDR Services LLC has filed a registration statement on
Form S-6
and
Form N-8B-2
with the SEC covering SPDR DJIA Trust. While this prospectus is
a part of the registration statement on
Form S-6,
it does not contain all the exhibits filed as part of the
registration statement on
Form S-6.
You should consider reviewing the full text of those exhibits.
Prospectus
dated February 26, 2010