AUSPICE commodity index ETFs are structured for capital gains treatment to unitholders

The proposed AUSPICE Canadian Crude Oil Index ETF and Canadian Natural Gas Index ETF will each track its designated (Canadian crude or Canadian natural gas) "Underlying Index" by entering into forward agreements with NBC, and pledging cash raised from its Unit offerings to secure its obligations thereunder.  Although the forwards will have terms of five years, they will be extended annually with the consent of the parties – which presumably will occur in order that no income in excess of expenses (to be funded with partial settlements) will be realized.  Accordingly, unitholders likely will anticipate capital gains treatment on their units, so that the introduction of the derivative forward agreement rules (requiring income account treatment on the forwards) has not had a significant impact.

Neal Armstrong.  Summary of Preliminary Prospectus for Units of AUSPICE Canadian Crude Oil Index ETF and Canadian Natural Gas Index ETF under Offerings – Forward Sales/TRS Funds.