Adoption of New Monthly Allocation Convention
Effective January 1, 2012, USCI adopted a new convention for allocating items of income, gain, loss, deduction and credits. In situations where a partner’s interest in a partnership is sold or otherwise transferred during a taxable year, the Code generally requires that partnership tax items for the year be allocated among the partners using either an interim closing of the books or a daily proration method. USCI uses an interim closing of the books method under which income, gains and losses (both realized and unrealized), deductions and credits are determined on a monthly basis. Prior to January 1, 2012, USCI allocated these tax items among the holders of the shares (including those who dispose of shares during a taxable year) in proportion to the number of shares owned by them on the last trading day of each month. For this purpose, if an investor holds a share as of the close of business of the last trading day of a particular month, such investor is treated as if it owned the share throughout the month and thus is allocated all of the items of income, gain, deduction, loss or credit attributable to that share for such month (the “same-month convention”).
Effective January 1, 2012 for USCI, November 15, 2011 for CPER, April 13, 2012 for USAG and June 19, 2012 for USMI, an allocation convention is applied pursuant to which each Trust Series’ tax items for each month will be allocated among the holders of shares in proportion to the number of shares owned by them as of the close of business of the last trading day of the previous month. If an investor who holds a share as of the close of business on the last trading day of the previous month disposes of a share during the current month, such investor will be treated for purposes of making allocations as if it owned the share throughout the current month (the “next-month convention”). For example, an investor who buys a share on April 10 of a year and sells it on May 20 of the same year will be allocated all of the tax items attributable to May (because he or she is deemed to hold it through the last day of May) but will not be allocated any of the tax items attributable to April. The tax items attributable to that share for April will be allocated to the person who is the actual or deemed holder of the share as of the close of business on the last trading day of March.
For investors in USCI, as a result of the transition from the same-month convention to the next-month convention, an investor who bought a share in December 2011 and sold the share on or after January 1, 2012 will be allocated the tax items attributable to that share for December 2011 as well as the tax items attributable to that share for 2012.
