1443075--3/30/2010--ISHARES_DIVERSIFIED_ALTERNATIVES

related topics

{interest, director, officer}

{tax, income, asset}

{stock, price, share}

{operation, international, foreign}

{gas, price, oil}

{investment, property, distribution}

{provision, law, control}

{loan, real, estate}

{competitive, industry, competition}

Changes to the regulatory regime applicable to futures contracts may have an adverse effect on the ability of the Trust to pursue its strategies and, therefore, result in a decreasing value of the Shares. Regulatory and exchange position limits may restrict the creation of Baskets and the operation of the Trust. Changes in the margin requirements set by the relevant futures exchanges and over-the-counter market participants may limit the Trust s ability to meet its investment objectives. The price of the Shares fluctuates as a result of fluctuations in the prices of any commodities underlying the futures contracts owned by the Trust. Commodity prices may be volatile, thereby creating the potential for losses regardless of the length of time you intend to hold your Shares. A significant increase in hedging activity by producers of the underlying commodities. A significant change in the attitude of speculators and investors toward the underlying commodities. Large purchases or sales of physical commodities by the official sector. Significant increases or decreases in the available supply of a physical commodity due to natural or technological factors. Significant increases or decreases in the demand for a physical commodity due to natural or technological factors. Historical performance of specific commodities or commodity indices is not a guide to their future performance or to the performance of the Shares. Commodity futures trading may be illiquid. In addition, suspensions or disruptions of market trading in the commodities markets and related derivatives markets may adversely affect the value of your Shares. During a period when commodity prices are fairly stationary, backwardation or contango in the prices of the commodity-linked futures contracts held by the Trust may cause the price of your Shares to decrease. The price of the Shares fluctuates as a result of fluctuations in the exchange rates of currencies underlying any currency-linked futures or forward contracts owned by the Trust. Exchange rates may be volatile, thereby creating the potential for losses regardless of the length of time you intend to hold your Shares. Substantial transactions in a currency by any official sector market participant could adversely affect an investment in the Shares. A country s decision to abandon its current currency and adopt a new one could have adverse consequences for the value of any positions related to the old currency that the Trust may hold at the time. Investing in debt obligations of the U.S. government creates exposure to credit and interest rate risk. Investing in futures and/or forward contracts linked to sovereign debt instruments creates exposure to the direct or indirect consequences of political, social or economic changes in the countries in which the issuers are located and the creditworthiness of the sovereign. Investing in futures and/or forward contracts linked to non-U.S. sovereign debt instruments creates exposure to non-U.S. interest rate fluctuations. Investing in interest rate futures contracts creates exposure to interest rate fluctuations in one country as well as relative interest rate movements between countries. Investing in security index futures contracts creates exposure to the performance of the underlying index. The Trust s use of leverage and/or short positions involves certain risks, including potentially high volatility and magnified losses in the underlying assets, and should be considered to be speculative. The Trust is subject to credit risks and other risks associated with U.S. exchange-traded futures contracts. Trading on futures exchanges outside the United States is not subject to U.S. regulation. When entering into foreign currency forward contracts, the Trust assumes the risk that its counterparties may become unable or unwilling to pay any amounts owed to the Trust. The Advisor, on behalf of the Trust, trades in forward contracts that are not traded on regulated exchanges and, therefore, offer different or lower levels of protections to investors. Failure of the Clearing FCM to segregate assets or the insolvency of the Trust s prime broker may increase losses. The lack of experience of the Advisor and its principals in actively managing an entity like the Trust and applying quantitative investment strategies similar to those that are used in the selection of investments for the Trust may result in substantial trading losses for the Trust and, as a result, you could lose some or all of the value of your Shares. The Advisor makes decisions regarding investments for the Trust relying on quantitative models that may be defective or not adequate to analyze market conditions at the time the investment decisions are made; as a result, the returns expected from those investments may not materialize. The strategies used by the Advisor to identify investment opportunities for the Trust may fail to deliver the desired returns. Relative value strategies used by the Advisor to identify investment opportunities for the Trust are subject to certain risks. Various actual and potential conflicts of interest involving the Advisor may be detrimental to Shareholders. The Trust is subject to the risks associated with being newly organized. The lack of an active trading market for the Shares may result in losses on your investment at the time of disposition of your Shares. The Shares of the Trust are new securities products and their value could decrease if unanticipated operational or trading problems arise. You may not rely on past performance in deciding whether to buy the Shares. The Trust is subject to the costs and risks associated with being actively managed. These costs and risks may cause your investment in the Shares to result in losses that you might have avoided if you had invested in products not exposed to those costs and risks. The price you receive upon the sale of your Shares may be less than their NAV. The NAV may not always correspond to the market price of the Shares and, as a result, Baskets may be created or redeemed at a value that differs from the market price of the Shares. None of the Sponsor, the Advisor or the Trustee can assure you that it will continue in its respective role. If any of them was no longer to act in those roles, the Trust and the value of the Shares may suffer. The Trust may incur additional transactional costs because the Portfolio is actively managed, and actively managed portfolios may have higher turnover rates. Fees and expenses payable by the Trust are charged regardless of profitability and may result in a depletion of its assets. It is not expected that the Trust will make any periodic distributions or dividend payments to its Shareholders. The Trust could be liquidated at a time when the disposition of its interests will result in losses to investors in the Shares. The Sponsor has broad discretion to liquidate the Trust at any time. The Shares may not provide anticipated benefits of diversification from other asset classes. The liquidity of the Shares may be affected by the withdrawal from participation of Authorized Participants or by the suspension of issuance, transfers or redemptions of Shares by the Trust. Creation and redemption of Baskets may be delayed when one or more of the exchanges where the Trust may need to trade, either to establish new positions or to liquidate existing ones, are scheduled to be closed, and may be subject to postponement, suspension or rejection under certain circumstances, all of which may reduce the liquidity of the Shares. Competition from other commodities- and currencies-related investments could limit the market for, and reduce the liquidity of, the Shares. As a Shareholder, you will not have the rights normally associated with ownership of common shares. As a Shareholder, you will not have the protections normally associated with the ownership of shares in an investment company registered under the Investment Company Act. Competing claims over ownership of relevant intellectual property rights could adversely affect the Trust or an investment in the Shares. The value of the Shares will be adversely affected if the Trust is required to indemnify the Sponsor or the Advisor or if the Sponsor is required to indemnify the Trustee. NYSE Arca may halt trading in the Shares, which would adversely impact your ability to sell your Shares. The Trust s classification as a publicly traded partnership not taxable as a corporation is not free from doubt, and if the Trust were to fail to qualify as a partnership for U.S. federal income tax purposes, the Trust s income and items of deduction would not pass through to the Shareholders, the Trust would be required to pay tax at corporate rates on any portion of the Trust s net income that does not constitute tax-exempt income, and distributions by the Trust to the Trust s Shareholders would be taxable dividends to the extent of the Trust s earnings and profits. Shareholders tax liability could exceed cash distributions on the Shares. The IRS could adjust or reallocate items of income, gain, deduction, loss and credit with respect to the Shares if the IRS does not accept the assumptions or conventions utilized by the Trust.

Full 10-K form ▸

1443075--3/30/2010--ISHARES_DIVERSIFIED_ALTERNATIVES_TRUST