AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 2003
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
(Exact name of registrant as specified in its limited partnership agreement)
---------------------
<Table>
ILLINOIS 6221 36-4368292
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</Table>
---------------------
1000 HART ROAD, SUITE 210, BARRINGTON, ILLINOIS 60010 (847) 304-0450
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BEELAND MANAGEMENT COMPANY, L.L.C.
GENERAL PARTNER
1000 HART ROAD, SUITE 210, BARRINGTON, ILLINOIS 60010 (847) 304-0450
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
JEFFRY M. HENDERSON, ESQ.
DOUGLAS E. AREND, ESQ.
HENDERSON & LYMAN
175 WEST JACKSON BLVD., SUITE 240
CHICAGO, ILLINOIS 60604
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
---------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
AMOUNT BEING PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES BEING OFFERED REGISTERED(1) OFFERING PRICE PER UNIT(2) AGGREGATE OFFERING PRICE(2)
- -------------------------------------------------------------------------------------------------------------------
Limited Partnership Interests... 2,000,000 Units $122.7026 $245,405,200
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
<Caption>
- --------------------------------- -------------------
- --------------------------------- -------------------
AMOUNT OF
TITLE OF SECURITIES BEING OFFERED REGISTRATION FEE(2)
- --------------------------------- -------------------
Limited Partnership Interests... $22,632
- --------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</Table>
(1) Registrant incorporates 1,933,740 unsold Units registered previously under
Registration No. 333-41780, originally filed by registrant on July 19, 2000,
for which no additional registration fee is payable in accordance with Rule
457(p). Of the $52,800 filing fee paid previously, 96.68%, or $51,050, is
offset against the filing fee currently due.
(2) Offering price and registration fee are based on estimated net asset value
per Unit as of May 31, 2003 in accordance with Rule 457(d).
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell nor the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
PRELIMINARY PROSPECTUS DATED AUGUST 1, 2003 -- SUBJECT TO COMPLETION
PROSPECTUS
2,000,000 UNITS OF LIMITED PARTNERSHIP INTEREST MAXIMUM
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
Rogers International Raw Materials Fund, L.P. will invest and trade in a
portfolio of commodity futures contracts and forward contracts. Beeland
Management Company, L.L.C. is the general partner and commodity pool operator of
the Fund. James Beeland Rogers, Jr., owns 56.83% of the membership interests in
Beeland Management, but is not involved in the daily operations of the firm.
This is a best efforts offering in which the maximum number of units that the
Index Fund may sell is 2,000,000. A minimum investment of $10,000 is required
for first time investors.
The purchase price for units will be the net asset value per unit. Since there
will be a delay between when an investor pays for units and when the unit's net
asset value is determined, an investor will not know the actual purchase price
of the units at the time of subscription. Uhlmann Price Securities will receive
a subscription fee of up to 6% of the gross offering proceeds. Uhlmann Price
Securities and their affiliates may purchase units for investment purposes.
There is no limit on the number of units that may be purchased by Uhlmann Price
Securities or Beeland Management and its affiliates.
THESE ARE SPECULATIVE, HIGH-RISK SECURITIES. BEFORE YOU DECIDE TO INVEST, READ
THIS ENTIRE PROSPECTUS CAREFULLY AND CONSIDER THE "RISK FACTORS" ON PAGE 13. The
risks of this investment include that:
- You could lose a substantial portion or all of your investment in the
Index Fund.
- Commodity trading is speculative and the Rogers International Commodity
Index, upon which the Index Fund's trading will be based, is likely to be
volatile and could suffer from periods of prolonged decline in value.
- The Index Fund is subject to numerous conflicts of interest, including
those arising from the fact that it does not have an independent trading
advisor, that it pays advisory fees to a company affiliated with members
of the general partner, and that the general partner also serves as the
general partner and commodity pool operator for another commodity pool.
- The Index Fund will incur substantial fees and expenses which may not be
offset by trading profits, including a subscription fee of up to 6% (which
includes a 4.5% reallowance to other broker-dealers) and a 2.25% annual
management fee to the Index Fund's general partner.
- At its maximum size of $200,000,000, to break even the Index Fund must
generate estimated trading profits of 7.75% at the end of the first year
of investment to offset estimated partnership expenses.
- The Index Fund will not provide any benefit of diversification of your
overall portfolio unless the returns from the Index Fund are independent
from those of your portfolio.
- There are various conditions and restrictions on your ability to redeem
units, including a 30 day holding period and a 10 day written notice
requirement.
- No public market exists for the units.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY OR
ACCURACY OF THIS DISCLOSURE DOCUMENT.
Selling Group Manager:
UHLMANN PRICE SECURITIES, LLC
141 WEST JACKSON BLVD., SUITE 1320-A
CHICAGO, ILLINOIS 60604
(312) 648-2224
AUGUST 1, 2003
WHO MAY INVEST
An investment in the Index Fund is speculative and involves a high degree
of risk. The Index Fund is not suitable for all investors nor is it a complete
investment program. You should invest only a limited portion of your portfolio
in the Index Fund. At a minimum you must have:
- a net worth of at least $150,000, exclusive of home, home furnishings and
automobiles; or
- a net worth, similarly calculated, of at least $45,000 and an annual
gross income of at least $45,000.
A number of states in which the units are offered impose higher minimum
financial standards on prospective investors. These state suitability standards
are described in "Plan of Distribution--Who May Invest." These standards are, in
each case, only regulatory minimums. Merely because you meet the standards does
not mean the investment is suitable for you. If the investment in the Index Fund
is being made by a fiduciary account, these minimum standards must be met by the
beneficiary, the fiduciary account, or by the donor or grantor who supplies the
funds to purchase the units if the donor or grantor is the fiduciary.
You are required to make representations and warranties in connection with
this investment. You are encouraged to discuss this investment with your
individual financial, legal and tax advisors.
Beeland Management, in its sole discretion, may partially or totally reject
any subscription for units.
COMMODITY FUTURES TRADING COMMISSION
RISK DISCLOSURE STATEMENT
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT FUTURES
TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES
CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF
YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT
YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT,
AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS THAT ARE
SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION
OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE
DESCRIPTION OF EACH EXPENSE TO BE CHARGED BY THIS POOL BEGINNING AT PAGE 25 AND
A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, BEGINNING AT PAGE 31.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY
TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE, BEFORE YOU
DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS
DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF
THIS INVESTMENT, AT PAGES 13-22.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED STATES, INCLUDING
MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS
WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS.
FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE
ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED
STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED.
THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE INDEX
FUND'S REGISTRATION STATEMENT. YOU CAN READ AND COPY THE ENTIRE REGISTRATION
STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC IN
WASHINGTON, D.C.
THE INDEX FUND WILL FILE QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ
AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITY, IN WASHINGTON, D.C.
PLEASE CALL THE SEC AT 1-800-SEC-0300 FOR FURTHER INFORMATION.
PENNSYLVANIA INVESTORS: BECAUSE THE MINIMUM CLOSING AMOUNT IS LESS THAN
1/15 OF THE MAXIMUM OFFERING AMOUNT, YOU ARE CAUTIONED TO CAREFULLY EVALUATE THE
FUND'S ABILITY TO FULLY ACCOMPLISH ITS STATED OBJECTIVES AND TO INQUIRE AS TO
THE CURRENT DOLLAR VOLUME OF FUND SUBSCRIPTIONS.
THE INDEX FUND'S FILINGS WILL BE POSTED AT THE SEC WEBSITE AT
HTTP://WWW.SEC.GOV.
BEELAND MANAGEMENT COMPANY, L.L.C.
GENERAL PARTNER
1000 HART ROAD, SUITE 210
BARRINGTON, ILLINOIS 60010
(847) 304-0450
ii
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
SUMMARY OF THE PROSPECTUS................................... 1
Rogers International Raw Materials Fund, L.P. ............ 1
The Offering.............................................. 5
RISK FACTORS................................................ 13
Risks Relating to Commodity Trading and Markets........... 13
You may lose all of your investment if futures prices,
which are highly unpredictable and volatile, do not
increase.............................................. 13
The Rogers International Commodity Index is likely to
be volatile and could suffer from periods of prolonged
decline in value...................................... 13
Because the Rogers International Commodity Index is
highly concentrated in energy oriented raw materials,
prolonged decline in value in those commodities would
have a negative impact on the Fund's performance...... 13
Investing in units might not provide the desired
diversification of your overall portfolio............. 14
Illiquid markets could make it impossible to realize
profits or limit losses............................... 14
The Fund could have its trading disrupted due to the
failure of exchanges or clearinghouses or could lose
assets deposited with futures commission merchants or
brokers............................................... 15
The Fund will trade on foreign exchanges that are less
regulated than U.S. markets and are subject to risks
that do not always apply to U.S. markets.............. 15
Risks Relating to the Fund's Structure and Organization... 15
Since the general partner of the Fund has a limited
operating history, it is difficult to evaluate its
business and prospects................................ 15
The operating history of the other commodity pool
managed by Beeland Management may not be indicative of
the Fund's performance................................ 15
The trading methodology utilized by the Fund may not be
successful under all or any market conditions......... 16
Substantial fees and expenses are charged regardless of
profitability......................................... 16
Conflicts of interest exist which may diminish the
value of limited partners' investments................ 16
The fees and commissions and other terms applicable to
the general partner's business dealings with the Fund
were not negotiated on an arms-length basis........... 17
You will be limited in your ability to transfer
units................................................. 17
The units will not be a liquid investment.............. 17
Since limited partners will not participate in
management of the Fund's business, they must rely on
Beeland Management to adequately manage the Fund's
affairs............................................... 17
The Fund may terminate early, which could disrupt your
overall investment portfolio plan..................... 18
The purchase of units by Beeland Management or its
members may create conflicts of interest for them..... 18
Since the Fund will only trade in certain markets, an
investment in the Fund, alone, will not diversify an
investor's portfolio.................................. 18
Exchange trading limits may require the Fund to
liquidate positions at undesirable times, resulting in
reduced profitability................................. 18
The offering of units has not been subject to
independent review.................................... 18
Risks Relating to Tax and Other Regulatory Risk........... 18
Regulations governing the futures market may change and
could adversely affect the Fund's operations.......... 18
Since the Fund is not a regulated investment company
you will not have the protections provided by statutes
regulating those companies............................ 19
</Table>
iii
<Table>
<Caption>
PAGE
----
The IRS may determine that the Fund is an association
taxable as a corporation in which event you would be
deprived of the tax benefits associated with investing
in a partnership...................................... 19
Limited partners will owe taxes on the Fund's profits
but will very likely never receive any distributions
from the Fund......................................... 19
You could owe tax on your share of the Fund's ordinary
income despite overall losses......................... 20
If the Fund's and the limited partners' tax returns are
audited, you may be required to pay back taxes,
interests and penalties............................... 20
A change in tax laws could adversely affect the tax
treatment of an investment in the Fund................ 20
CONFLICTS OF INTEREST....................................... 20
Other Pools and Businesses of the General Partner and Its
Members................................................ 20
The Fund Does Not Have an Independent Trading Advisor..... 20
Other Pools and Trading by the Fund's General Partner and
Its Members............................................ 21
Richard L. Chambers, a Managing Member of the Fund's
General Partner is a Principal of an Advisor to the
Fund................................................... 21
Walter Thomas Price III, a managing member of the Fund's
general partner, is the sole shareholder of the
introducing broker for the Fund and a principal
investor in the selling group manager.................. 21
Distribution and Liquidation Decisions by the Fund's
General Partner........................................ 22
POTENTIAL BENEFITS OF INVESTING IN THE FUND................. 22
Trading Based on Index; No Active Trading................. 22
Professional Management................................... 22
Diversification; Non-Correlation with Traditional
Securities Markets..................................... 22
Lower Initial Investment Requirements..................... 23
Limited Liability......................................... 23
Administrative Convenience................................ 23
Lower Time Commitment..................................... 23
FIDUCIARY RESPONSIBILITY OF THE GENERAL PARTNER............. 23
FEES AND EXPENSES OF THE FUND............................... 25
Summary of Fees and Expenses.............................. 25
Management Fee and Profit Distribution to General
Partner................................................ 27
Subscription Fee to General Partner....................... 28
Soliciting Dealer Compensation............................ 28
Trailing Servicing Fee.................................... 28
Futures Commission Merchants; Brokerage Commissions....... 28
Clearing Costs and National Futures Association Fees...... 29
Advisory Fees............................................. 29
Operating Expenses........................................ 29
Third Party Suppliers of Goods and Services............... 29
Other Expenses............................................ 30
Consulting Contracts with Affiliates...................... 30
Reports................................................... 30
BREAK-EVEN ANALYSIS......................................... 30
THE ROGERS INTERNATIONAL COMMODITY INDEX.................... 31
BASIS FOR TRADING........................................... 33
THE GENERAL PARTNER......................................... 35
Background of the General Partner......................... 35
Principals................................................ 35
</Table>
iv
<Table>
<Caption>
PAGE
----
Legal Actions............................................. 37
Investment by the General Partner and Its Members......... 37
Duties of the General Partner............................. 37
PRINCIPAL OWNERS OF UNITS................................... 37
ENFORCING YOUR RIGHTS AS A LIMITED PARTNER.................. 38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 38
PERFORMANCE HISTORY OF THE INDEX FUND....................... 39
OTHER POOLS OPERATED BY THE GENERAL PARTNER................. 39
FUTURES COMMISSION MERCHANT, INTRODUCING BROKER AND
DEALERS................................................... 42
SOLICITING DEALERS.......................................... 43
SUBSCRIPTION AGENT.......................................... 43
USE OF PROCEEDS............................................. 44
TRANSFERABILITY AND REDEMPTION OF UNITS..................... 44
Transfers of Units........................................ 44
Redemption of Units....................................... 45
COMMODITY MARKETS........................................... 46
Commodity Futures......................................... 46
Forward Contracts......................................... 47
Uses of Commodity Markets................................. 47
Regulation................................................ 48
Margins................................................... 49
PLAN OF DISTRIBUTION........................................ 50
The Offering.............................................. 50
How to Invest............................................. 51
Who May Invest............................................ 52
Confirmation or Rejection of Subscriptions................ 53
ERISA CONSIDERATIONS........................................ 53
FEDERAL INCOME TAX ASPECTS.................................. 55
The Fund's Partnership Tax Status......................... 55
Taxation of Limited Partners on Profits and Losses of the
Fund................................................... 56
Allocations of Partnership Items.......................... 56
Basis Limitation on the Use of Losses..................... 57
At-Risk Limitation on the Use of Losses................... 57
Limitations on the Use of Capital Losses.................. 57
Limitations on the Use of Passive Activity Losses......... 57
Limitations on Itemized Deductions of Individuals......... 58
Limitations on the Use of Syndication Expenses............ 58
Interest Limitations...................................... 58
Code Section 183 Limitations.............................. 59
Cash Distributions and Unit Redemptions................... 59
Taxation on a Sale or Other Disposition of Units.......... 59
Taxation of Commodity Transactions........................ 60
Tax on Capital Gains and Losses........................... 60
Interest Income........................................... 60
Application of the Publicly Traded Partnership Rules to
the Fund............................................... 60
IRS Audits of the Fund and Its Limited Partners........... 61
State and Other Taxes..................................... 62
</Table>
v
<Table>
<Caption>
PAGE
----
Broker Reporting and Backup Withholding................... 62
Exempt Organizations...................................... 62
THE LIMITED PARTNERSHIP AGREEMENT........................... 63
Limited Liability of Limited Partners..................... 63
Management of Partnership Affairs......................... 63
Sharing of Profits and Losses............................. 63
Partnership Accounting................................. 63
Federal Tax Allocations................................ 63
Distributions............................................. 64
Additional Partners....................................... 64
Restrictions on Transfer or Assignment.................... 64
Dissolution and Termination of the Fund................... 64
Resignation or Withdrawal of the General Partner.......... 64
Amendments and Meetings................................... 64
Reports to Limited Partners............................... 65
Indemnification........................................... 65
ADDITIONAL INFORMATION...................................... 66
LEGAL MATTERS............................................... 66
EXPERTS..................................................... 66
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENTS...... F-1
APPENDIX A--Limited Partnership Agreement................... A-1
APPENDIX B--Subscription Agreement.......................... B-1
APPENDIX C--Redemption Notice............................... C-1
</Table>
vi
SUMMARY OF THE PROSPECTUS
The following is a summary of this offering and of the Rogers International
Raw Materials Fund, L.P. This summary is materially complete, but this
prospectus contains additional information. You need to read this entire
prospectus for more detailed information about this offering and the Fund and
about any agreement or document discussed in this prospectus.
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
The Fund and its
Business................... Rogers International Raw Materials Fund, L.P. is an
Illinois limited partnership. Its principal offices
are at 1000 Hart Road, Suite 210, Barrington,
Illinois 60010, and its telephone number at that
location is (847) 304-0450.
The Index Fund will invest and trade in a portfolio
of commodity futures and forward contracts. Futures
contracts are contracts made on a commodity exchange
which provide generally for the future delivery of
various commodities at a specified date, time and
place. When traded on an exchange, forward contracts
are the equivalent of a futures contract. When not
traded on an exchange, forward contracts are
contracts for the purchase or sale of a commodity
(such as currencies) for delivery at a future date,
which contain terms and conditions specifically
negotiated by the parties. Although Beeland
Management, the general partner of the Index Fund,
does not intend to do so, the Index Fund may also
purchase forward contracts in the off exchange or
"OTC" marketplace under certain circumstances if, in
the sole discretion of Beeland Management, there is
sufficient liquidity and depth in the relevant off
exchange markets. The Index Fund will invest and
trade exclusively on the "long side" of the market.
This means that the Index Fund will only buy
positions in commodities and will not engage in any
short-selling. The Index Fund intends to close out
all positions by making an offsetting sale and does
not intend to take delivery of the actual
commodities. Funds for its business will be obtained
only by the sale of units and from the retention of
any profits generated from the Fund's trading.
The Index Fund's trading will be designed to
replicate the positions which comprise the Rogers
International Commodity Index. The Index consists of
a compendium, commonly known as a basket, of raw
materials employed within the world economy and
traded in seasoned markets as futures and forward
contracts. There are no "short" positions within the
Index.
The Index was developed by James Beeland Rogers,
Jr., the majority owner-member of Beeland
Management, to be a balanced, representative,
international raw materials index. Beeland
Management acquired a nonexclusive, worldwide
license to use, publish and market the Index from
Mr. Rogers in exchange for his majority ownership
interest in Beeland Management. Beeland Management
believes that the Index includes most of the
publicly traded raw materials used in international
commerce for which futures contracts or forward
contracts are regularly traded in recognized
markets. It is designed to address the needs of
expanding world trade.
1
As the owner of the Index, James Rogers controls the
components of the Index which the fund is designed
to track. The weightings of the Index were selected
by Mr. Rogers based on his perception of the
relative importance of those raw materials. Mr.
Rogers and Beeland Management review the Index
periodically to determine whether it may be
necessary to change the components or relative
weighting of the Index. Any such decision will be
made in the sole discretion of Mr. Rogers and in
accordance with objective, predetermined internal
rules developed by him and Beeland Management
governing adjustments to the Index. There are rarely
any changes in the components of the Index. Only
one, almost de minimis adjustment has been made in
the history of the Index. This adjustment consisted
of the substitution of soybean oil for palm oil in
2002. While there are no legal impediments to
changing the Index, Beeland Management may not
change the investment philosophy of the Index Fund.
Trading will be done for the sole purpose of
attempting to track, to the extent reasonably
possible, the positions and performance of the
Index. Unlike some well-known indices, such as the
Standard and Poors 500 and the Dow Jones Industrial
Average, information regarding the composition and
performance of the Index is not available on a
widespread basis. However, the Index has been
tracked and reported by several futures industry
reporting services, such as Managed Account Reports
("MAR"). A table showing the current composition of
the Index is provided in "The Rogers International
Commodity Index" on page 33 of the prospectus.
Investors desiring additional information about the
Index should contact Beeland Management.
The Index Fund's principal objective is to provide
an alternative investment vehicle for investors with
diversified investment portfolios. The performance
of the Index Fund is not correlated with the
traditional securities markets. In other words, the
performance of the Index Fund is largely independent
from how the traditional equity and debt markets
perform. Accordingly, the Index Fund's returns will
not necessarily increase when that of stocks or
bonds increase and will not necessarily decrease
when that of stocks or bonds decrease. However, the
fact that the Index Fund's performance is
non-correlated with traditional securities markets
does not mean that the Index Fund's performance has
a negative correlation with such markets. In other
words, the Index Fund will not necessarily perform
better when traditional markets decline, or perform
worse when the traditional markets are rising.
Rather, the Index Fund's results may parallel either
stocks or bonds, or both, during significant periods
of time.
The audited statement of financial condition of the
Index Fund as of December 31, 2001 and the audited
statement of financial condition of the Fund as of
December 31, 2002 are included under "Financial
Statements" on page F-1 of the prospectus.
General Partner of the
Fund....................... The general partner and commodity pool operator of
the Index Fund is Beeland Management Company, L.L.C.
The Index Fund
2
does not have a separate trading advisor. Instead,
Beeland Management makes and implements all trading
decisions. Beeland Management does not make trading
decisions in the traditional sense. Unlike most
other traditional commodity pools, commodity futures
will not be bought or sold to take advantage of
anticipated price movement. Rather, trading will be
effected to ensure that the positions in the Index
Fund track, to the extent reasonably possible, the
composition of the Index. Generally, if prices of
commodities rise, then the value of an investment in
the Index Fund should appreciate. Correspondingly,
if commodity prices decline, then the value of an
investment in the Index Fund should go down. The
Index Fund's success depends on the increasing price
of the raw materials represented by the Index.
Investors will receive a positive return on
investment only if the price of raw materials
increases at a rate that exceeds the cost of
inflation and the management fees, subscription fees
and other fees and expenses.
Beyond the possible adjustment in the composition of
the Index and resulting trading by the Index Fund to
correlate, the only limited trading performed by
Beeland Management is for purpose of rolling of
contracts from near delivery month to later delivery
months in order to ensure that the Index Fund will
not take actual delivery of a physical commodity.
The Index Fund generally places spread orders when
rolling contracts. Each such spread involves
simultaneously closing (or selling) the Index Fund's
existing open position in a commodity future and
reestablishing a new long position (or opening) in
the same commodity. The order is priced and executed
at the net cost difference between the long and
short trades. Spread orders are employed by the
Index Fund, as opposed to placing independent orders
to buy the later month and sell the near month
contracts, in order to protect against market risk.
Except for limited trading, as described above, to
adjust the composition of the index or to roll
contracts from near months to far months, Beeland
Management will not engage in other types of
trading.
The principals of Beeland Management Company have
substantial investing and trading experience, as
described in greater detail in "Performance History
of the Index Fund" and "Other Pools Operated By the
General Partner" on page 39 of the prospectus.
Beeland Management is an Illinois limited liability
company formed in 1997. Its main business office is
at 1000 Hart Road, Suite 210, Barrington Illinois
60010, and its telephone number is (847) 304-0450.
Beeland Management manages the Index Fund. As of
January 31, 2003, Beeland Management managed
approximately $6 million in the Index Fund and
approximately $30 million in the Rogers Raw
Materials Fund, L.P., a private commodity pool. As
with the Index Fund, the Rogers Raw Materials Fund's
trading is designed to replicate the positions which
comprise the Index.
3
The Rogers Raw Materials Fund has a lower fee
structure than the Index Fund. Investors in the
Rogers Raw Materials Fund are not required to pay a
subscription fee, whereas investors in the Index
Fund pay up to a 6% subscription fee (which includes
a 4.5% reallowance to other broker-dealers), and up
to 1.0% annual trailing servicing fee. In addition,
the funds have different management fees. Investors
in the Index Fund will pay a management fee of 225
basis points (2.25%) per year. One basis point is
1/100 of one percent. The management fee for Class A
limited partners in the Rogers Raw Materials Fund is
65 basis points (0.65%) and the management fee for
its Class B limited partners, which are subscribers
for the first $10,000,000 received by that fund, is
50 basis points (0.50%). Class A and B limited
partners are allocated their proportionate share of
round turn commissions as well as any regulatory,
clearing house or exchange fees. The amount of these
commissions and fees are similar to that of the
Index Fund. Rogers Raw Materials Fund has also
authorized Class C limited partners which would pay
a management fee of 150 basis points (1.50%), but
would not be allocated or charged any round turn
commissions for the fund's purchase or sale of
futures or forward contracts. However, such partners
would be allocated their share of regulatory,
clearing house and/or exchange fees. Class C limited
partner interests are reserved for certain investors
which are ERISA plans. Unlike the Index Fund, Rogers
Raw Materials Fund does not separately pay an
advisory fee to Hart Capital Management. See "Fees
and Expenses of the Fund" on page 25 of the
prospectus.
Organization............... In addition to operating the Index Fund, as noted
above, Beeland Management also serves as the general
partner and commodity pool operator of Rogers Raw
Materials Fund. Although the Index Fund and the
Rogers Raw Materials Fund have common management and
trading in both funds will attempt to replicate the
Index, there is no other relationship between the
two funds. Since the Rogers Raw Materials Fund has
been trading since August 1998 and had open
contracts prior to the commencement of trading by
the Index Fund, it is possible that the performance
results of the two funds may be different during the
first few years of trading by the Index Fund. The
difference in performance results between the two
funds will also be affected by the lower fee
structure of the Rogers Raw Materials Fund.
4
[ORGANIZATIONAL CHART]
THE OFFERING
The Fund's Offering........ This is a public offering by the Index Fund. The
Index Fund's units are being publicly offered in
various states where properly registered. The units
are being continuously offered by the Index Fund.
The units are offered by this prospectus, which may
be distributed only with written consent from
Beeland Management.
The units are being offered on a best efforts basis
by both Uhlmann Price Securities and certain
broker-dealers. An offering on a best efforts basis
is one in which the securities dealers participating
in the offering are under no obligation to purchase
any of the securities being offered and, therefore,
no specified number of securities are guaranteed to
be sold and no specified amount of money is
guaranteed to be raised from the offering.
Subscription Agent......... Derivatives Portfolio Management, L.L.C., Two Worlds
Fair Drive, P.O. Box 6741, Somerset, New Jersey,
will serve as the Fund's subscription agent, as well
as the Fund's redemption agent. While Derivatives
Portfolio Management will serve in both capacities,
we will refer to Derivatives Portfolio Management in
this prospectus as the subscription agent.
As the subscription agent, Derivatives Portfolio
Management will process new subscriptions, add new
subscribers to the list of limited partners, assign
the appropriate number of units per subscription,
compute the net asset value per unit and process
5
all requests for redemptions. The subscription agent
will also be responsible for both receiving funds
from and disbursing funds to investors.
The subscription agent is not a trustee and has no
management or oversight responsibilities and no
fiduciary duties to the limited partners.
Securities Offered......... The units are being offered for sale at the
applicable net asset value per unit.
The purchase price for units will be the net asset
value per unit as of the close of trading on the
trading day preceding the effective date of the
purchase. The net asset value per unit is determined
by dividing the Index Fund's net assets (total
assets, including the value of its portfolio of
futures positions, minus total liabilities of the
Index Fund) by the aggregate number of units
outstanding as of the time of calculation. Investors
may obtain information concerning the net asset
value per unit from Derivatives Portfolio
Management. Its telephone number is (732) 563-0030.
In addition, each limited partner will be given a
password for access to a web site for the Index Fund
which will report net asset value on a weekly basis.
Any sales of units will be effective only on the
first business day of a month, and the purchase
price for the units will be the net asset value per
unit as of the close of trading on the trading day
preceding the effective date of the purchase.
A maximum of 2,000,000 units are offered by this
prospectus, but the Index Fund may make other
offerings.
Minimum Subscriptions...... The minimum initial investment is $10,000 for first
time investors. Investments above the minimum and
all subsequent investments must be made in full
units. The purchase price for units will be the net
asset value per unit after the initial closing and
the acquisition by the Index Fund of a portfolio of
futures positions. The net asset value per unit will
be calculated as of the close of trading on the
trading day preceding the effective date of the
purchase.
Beeland Management and its affiliates may purchase
units for investment purposes, including purchases
in order to reach the minimum number of units
required for an initial closing.
In order to invest, you must deliver to Derivatives
Portfolio Management a subscription agreement,
appropriately completed, dated and signed, and a
signed counterpart copy of the signature page of the
Fund's limited partnership agreement.
A copy of the limited partnership agreement is
included as Appendix A and a copy of the
subscription agreement is included as Appendix B.
You should carefully review these documents because
you will make various representations and warranties
in those documents.
ERISA Investors............ At no time may all ERISA limited partners
collectively hold more than 24.9% of the total units
held by all limited partners. If,
6
through withdrawals or redemptions, all ERISA
limited partners would collectively hold more than
24.9% of the total units held by all limited
partners, there will be an automatic redemption of
units on a pro rata basis among all ERISA limited
partners in an amount sufficient to reduce the
number of units held by all of them to not more than
24.9%. Under certain circumstances, the ERISA
limitation may not apply. The general partner of the
Index Fund has discretion to waive this condition
under certain circumstances. ERISA limited partners
means those limited partners who are either:
- an "Employee Benefit Plan," as defined in Section
3(3) of ERISA;
- a plan described in Section 4975(e)(1) of the
Internal Revenue Code; or
- a partnership, the general partner of which has
been appointed "investment manager," as defined in
Section 3(38) of ERISA, over the assets used by
one or more Employee Benefit Plans to purchase
limited partnership interests in such partnership.
Suitability Requirements... An investment in the Index Fund is speculative and
involves a high degree of risk. The Index Fund is
not suitable for all investors nor is it a complete
investment program. You should invest only a limited
portion of your portfolio in the Index Fund. At a
minimum you must have:
- a net worth of at least $150,000, exclusive of
home, home furnishings and automobiles; or
- a net worth, similarly calculated, of at least
$45,000 and an annual gross income of at least
$45,000.
A number of states in which the units are offered
impose higher minimum financial standards on
prospective investors. These state suitability
standards are described in "Plan of
Distribution--Who May Invest" on page 52 of the
prospectus. These standards are, in each case, only
regulatory minimums. Merely because you meet the
standards does not mean the investment is suitable
for you. If the investment in the Index Fund is
being made by a fiduciary account, these minimum
standards must be met by the beneficiary, the
fiduciary account, or by the donor or grantor who
supplies the funds to purchase the units if the
donor or grantor is the fiduciary.
Beeland Management may, in its sole discretion,
partially or totally reject any subscription for
units.
How to Invest.............. If you wish to invest, you should follow the
following steps:
- Carefully read this entire prospectus and discuss
how the Index Fund could fit into your portfolio
and overall investment plan with your financial
consultant.
- If you decide to invest, sign the counterpart copy
of the signature page of the Index Fund's limited
partnership agreement, and complete, date and sign
the required subscription
7
agreement, the forms of which are included as
Appendix A and B.
- The Index Fund will accept subscriptions
throughout the continuous offering period. The
offering can be terminated by Beeland Management
at any time. Subject to the minimum initial
investment requirement, you may buy units for the
net asset value per unit as of the close of
trading on the trading date preceding the
effective date of the purchase.
- During the continuous offering, you may submit
your completed, dated and signed subscription
agreement and signed counterpart copy of the
signature page of the Index Fund's limited
partnership agreement at any time. However, during
the continuous offering the effective date of a
purchase will always be the first business day of
the month following the month in which the
subscription was received, but only if the
subscription is received on or before the fifth
day prior to the end of such month. If a
subscription is received after the fifth day prior
to the end of a month but on or prior to the last
day of the month, the effective date of the
subscription will be the first business day of the
second month following the month in which the
subscription was received, unless the subscription
is processed in time to allow for an earlier
effective date. The number of units you receive
will be based on the net asset value of the units
as of the close of trading on the last trading day
of month preceding the effective date of the
purchase.
Distribution of the
Units...................... There is no underwriter for this offering. Uhlmann
Price Securities will act as selling group manager
in the offering and will solicit subscribers, acting
primarily through Clyde Harrison, a member, and to a
much lesser extent, Richard Chambers, a managing
member. In addition, units will also be offered by
soliciting dealers on a best efforts basis. Each of
these soliciting dealers is registered as a
broker-dealer with the SEC and is a member of the
National Association of Securities Dealers, Inc.
Uhlmann Price Securities, LLC acts as the managing
dealer in the Offering.
Beeland Management is required to make and maintain
a minimum investment in the Index Fund in the
minimum amount of $25,000. In addition, members of
Beeland Management may, but are not required to,
purchase additional units, including in order to
reach the minimum number of units required for an
initial closing. Soliciting dealers are not required
to, but may, purchase units, including in order to
reach the minimum number of units required for an
initial closing. As a result, Beeland Management
cannot guarantee that any specified number of units
will be sold or that any specified amount of money
will be raised from the offering.
Break-Even Point........... In order to "break even" at the end of one year of
trading following an investment, each $10,000, which
you invest must earn profits, as shown in the table
below. First year performance following investment
will necessarily be impacted by substantial
8
offering expenses which will not be incurred in
subsequent years except for an annual sales
servicing fee up to 1.0%.
- $775.00, or 7.75% of the purchase price in the
first year if the Index Fund had average annual
net assets of $200,000,000.
- $275.00, or 2.75% of the purchase price in
subsequent years if the Index Fund had average
annual net assets of $200,000,000.
Risks You Should Consider
Before Investing in the
Index Fund............... Investment in the Index Fund is speculative and
involves a high degree of risk. You should be aware
that:
- You could lose a substantial portion or all of
your investment in the Index Fund.
- Commodity trading is speculative and the Rogers
International Commodity Index, upon which the
Index Fund's trading will be based, is likely to
be volatile and could suffer from periods of
prolonged decline in value.
- The Index Fund is subject to numerous conflicts of
interest, including those arising from the fact
that the Index Fund does not have an independent
trading advisor, that the Index Fund pays advisory
fees to a company affiliated with members of the
general partner, and that the general partner also
serves as the general partner and commodity pool
operator for another commodity pool.
- The Index Fund will incur substantial fees and
expenses which may not be offset by trading
profits, including up to a 6% subscription fee
(which includes a 4.5% reallowance to other
broker-dealers) and a 2.25% management fee to the
Index Fund's general partner. At its maximum size
of $200,000,000, the Index Fund must generate
estimated trading profits of 7.75% at the end of
the first year following investment to offset
estimated partnership expenses, to break even.
- The Index Fund will not provide any benefit of
diversification of your overall portfolio unless
it is profitable and it produces returns that are
independent from stock and bond market returns.
- Your ability to redeem units is limited and no
public market will exist for the units. There are
conditions and restrictions on assignments of
units and on redemptions of units by the Index
Fund. You may only redeem your units after a
three-month holding period. With respect to units
purchased during the initial offering period, the
three-month holding period will begin on the
initial closing date. With respect to units
purchased during the continuous offering, the
one-month holding period will begin on the
effective date of the purchase. In addition, you
are required to give at least 10 days prior
written notice to the subscription agent of any
proposed withdrawals. Units can only be redeemed
on the last trading day of any month.
9
- Approximately 35% of the component commodities on
the Rogers International Commodity Index consist
of crude oil. As a result, a prolonged decline in
the value of that raw material could have a
negative impact on the Index Fund's performance.
See "Risk Factors" starting on page 13 for
additional risks you should consider.
Fees and Expenses of the
Fund..................... The Index Fund will pay substantial fees and
expenses. The Index Fund will have to generate
profits from trading in order to avoid depletion of
the Index Fund's assets. These fees and expenses
include:
- Management fees of 0.1875% per month (2.25% per
year) of the average monthly sum of all capital
accounts contributed by limited partners, computed
as of the close of each month. The management fee
is payable monthly to Beeland Management, as the
Fund's general partner.
- Subscription fee of up to 6% of the gross offering
proceeds (which includes a 4.5% reallowance to
other broker-dealers). All or a portion of the
reallowance may be reallowed by Uhlmann Price
Securities to soliciting dealers as selling
commissions for each unit they sell. Subject to
certain conditions and exceptions, investors
purchasing specified minimum numbers of units will
be entitled to a reduction of the reallowance
portion of the subscription fee. Units sold
through financial advisors that do not receive
commissions will not be charged the 5% reallowance
portion of the subscription fee. There is an
additional annual trailing servicing fee up to 1%
payable to Beeland Management, most of which will
be paid to soliciting broker-dealers for ongoing
investor services.
- An advisory fee to Hart Capital Management, an
affiliate of Beeland Management. The fee is 50
basis points per year of the average month end
market value of the net assets of the Fund
invested and being managed by Hart Capital
Management.
- Brokerage commissions and transactions fees
estimated at 1% of net assets per year, payable to
futures commission merchants utilized by the Index
Fund. Futures commission merchants execute trades
of futures contracts for the Index Fund. The above
fees include delivery, insurance, storage and
other charges incidental to trading and exchange
fees. Affiliates of members of Beeland Management
may be engaged to provide trading execution
services for the Index Fund.
Clearinghouse and other similar fees, and National
Futures Association (NFA) fees estimated at between
10 to 15 basis points annually. One basis point is
(1)/(100) of one percent.
Finally, if the amount of management fees paid to
the Index Fund's general partner during a year does
not equal or exceed one percent (1%) of the amount
of the Fund's net profits for that
10
year, the general partner will receive an allocation
of profits in an amount equal to the difference
between one percent of the net profits and the
amount of the management fees paid. For this
purpose, net profits equals the Index Fund's total
profits minus losses and any expenses charged to the
Index Fund, if any, without taking into account the
management fees allocated and paid to the Index
Fund's general partner for that year.
The above includes all compensation, fees, profits
or benefits which the Index Fund's general partner
and its affiliates may earn or receive in connection
with the offering and operation of the Index Fund.
Redemptions................ You should view your investment in the Index Fund as
a long-term commitment. The Index is comprised of 35
different commodities. At any time, the price of any
component commodity may be affected by various
factors, such as the weather or world political or
economic events. Given the highly unpredictable and
volatile nature of futures prices, Beeland
Management believes that the price movements of the
raw materials comprising Index should be viewed over
a longer period of time, or a minimum of two years.
You may redeem your units as of the end of any month
after a three-month initial holding period subject
to certain conditions. For units purchased during
the continuous offering, the three-month holding
period will begin on the effective date of the
purchase.
The redemption price per unit will be the net asset
value per unit as of the close of business on the
withdrawal date. The Index Fund imposes no
redemption fees or charges. However, the Index
Fund's general partner holds back a nominal amount
at the time of certain redemptions, i.e., most
redemptions which are not made at the close of a
fiscal year, in order to ensure that regular
expenses attributable to the withdrawn units will be
funded. The amount held back by the Index Fund's
general partner is equal to the greater of 2% of the
net asset value per unit as of the close of business
on the withdrawal date, or $100. The held back
amount is intended to cover accrued, but unpaid
management fees and other expenses payable by the
Index Fund and chargeable against net assets as of
that date. After the close of the fiscal year in
which the withdrawal was effected, the account of
the limited partner who effected the withdrawal will
be adjusted to reflect his allocated share of
management fees and expenses, which shall be charged
against the amount held back. After such charge, any
positive balance remaining from the held-back amount
will be promptly paid to the withdrawn limited
partner, in the same manner as the balance of the
withdrawal. Net asset value per unit means the net
assets of the Index Fund at that time divided by the
aggregate number of outstanding units at that time.
Net assets means total assets minus total
liabilities, determined in accordance with generally
accepted accounting principles.
11
Distributions.............. Beeland Management does not currently intend to make
any distributions. As a result, investors will have
to redeem their units in order to recoup any of
their investment or to realize a profit.
Federal Income Tax
Aspects.................... A U.S. taxpayer will be taxed each year on interest
income earned and any gains recognized by the Index
Fund whether or not any units are redeemed or
distributions are received. As further discussed
elsewhere, it is unlikely that the Index Fund will
ever make distributions, because the principal
objective of the Index Fund is to increase capital
by assuming positions consistent with the Index, not
to create cash flow.
A limited partnership is not a taxable entity.
Rather, all tax consequences are passed directly
through to the partners. Profits from trading in
regulated futures contracts are treated as 60%
long-term capital gains and 40% short-term capital
gains on all positions, open and closed. These rates
apply regardless of how long an investor holds the
units and as a result, the tax rate may be higher
than those applicable to other investments held by
an investor for comparable periods. The maximum tax
rate for non-corporate taxpayers on adjusted net
long-term capital gains is 20%. Net short-term
capital gains, and net long-term capital gains of
corporate taxpayers are subject to tax at the same
rates as ordinary income. Open positions are, for
these purposes, marked to the market as of the close
of each year. Tax consequences of these positions
are chargeable to the limited partners for that
year.
12
RISK FACTORS
RISKS RELATING TO COMMODITY TRADING AND MARKETS
YOU MAY LOSE ALL OF YOUR INVESTMENT IF FUTURES PRICES, WHICH ARE HIGHLY
UNPREDICTABLE AND VOLATILE, DO NOT INCREASE.
Participation in a volatile market could produce substantial losses for the
Fund. This could result in the possible loss of your entire investment in the
Fund. Price movements of futures contracts are highly volatile and are
influenced by many factors. Some of those factors are:
- changing supply and demand relationships;
- weather and other environmental conditions;
- acts of God;
- agricultural, fiscal, monetary and exchange control programs and policies
of governments;
- national and international political and economic events and policies;
- changes in rates of inflation; and
- the general emotions and psychology of the marketplace, which at times
can be irrational and totally unrelated to other more tangible factors.
None of these factors can be controlled by Beeland Management. Even if current
and correct information as to substantially all factors is known or thought to
be known, prices still will not always react as predicted. The profitability of
the Fund will depend on whether the futures and forward contracts which Beeland
Management purchases for the Fund's portfolio to replicate the Index increase in
price. If these prices increase, the Fund will be profitable if such trading
profits exceed the fees and expenses of the Fund. If these prices do not
increase, the Fund will not be profitable and will incur losses. The volatility
of the futures markets is one reason that an investment in units should be
viewed as a long term investment.
THE ROGERS INTERNATIONAL COMMODITY INDEX IS LIKELY TO BE VOLATILE AND COULD
SUFFER FROM PERIODS OF PROLONGED DECLINE IN VALUE.
The Rogers International Commodity Index, upon which the Fund's trading
will be based, is likely to be volatile and could suffer from periods of
prolonged decline in value. The Index is comprised of 35 different commodities.
At any time, the price of any component commodity of the Index may be affected
by various factors, such as the weather or world political or economic events.
The Fund's success depends on the increasing price of the raw materials
represented by the Index. Investors will receive a positive return on investment
only if the price of raw materials increases at a rate that exceeds the cost of
inflation and the management, subscription and other fees involved. Given the
highly unpredictable and volatile nature of futures prices, the price movements
of the raw materials comprising Index should be viewed over a longer period of
time. Beeland Management believes that investors should view their investments
as at least a two-year commitment.
BECAUSE THE ROGERS INTERNATIONAL COMMODITY INDEX IS HIGHLY CONCENTRATED IN
ENERGY ORIENTED RAW MATERIALS, PROLONGED DECLINE IN VALUE IN THOSE
COMMODITIES WOULD HAVE A NEGATIVE IMPACT ON THE FUND'S PERFORMANCE.
Approximately 44% of the component commodities on the Rogers International
Commodity Index are energy oriented, including 35% in crude oil. Accordingly, a
decline in value in such raw materials would adversely affect the performance of
the Fund. Technological advances or the discovery of new oil reserves could lead
to increases in worldwide production of oil and corresponding decreases in the
price of crude oil. In addition, further development and commercial exploitation
of alternative energy sources, including solar, wind or geothermal energy,
13
could lessen the demand for crude oil products and result in lower prices.
Absent amendment of the Index to lessen or eliminate the concentration of
existing energy contracts in the Index or to broaden the Index to account for
such developments, the price of the Index and the value of the Fund could
decline.
COMMODITY FUTURES HAVE INHERENT LEVERAGE. The low margin deposits normally
required for commodity futures contracts (typically 2% to 15% of the value of
the contract purchase or sold) result in a relatively small price movement in a
contract possibly producing immediate and substantial losses to the investor.
For example, if at the time of purchase 10% of the price of a futures contract
is deposited as margin, a 10% decrease in the price of the contract would, if
the contract is then closed out, result in a total loss of the margin deposit
before any deductions for brokerage commissions. A decrease of more than 10%
would result in a loss of more than the total margin deposit. Thus, like other
leveraged investments, any position may result in losses in excess of the amount
invested.
When the market value of a particular open position changes to a point
where the margin on deposit in the Fund's account doe not satisfy the applicable
maintenance margin requirement imposed by the clearing broker, the Fund will
receive a margin call from the clearing broker. If the Fund does not satisfy the
margin call within a reasonable time (which may be as brief as a few hours) the
clearing broker will close out the position.
INVESTING IN UNITS MIGHT NOT PROVIDE THE DESIRED DIVERSIFICATION OF YOUR
OVERALL PORTFOLIO.
A principal objective of the Fund is to add diversification to a
traditional portfolio of securities. Price performance on the basket of raw
material contracts in the Fund and the Index are non-correlated to the
performance of traditional securities markets. Ordinarily and for most
investors, an investment in the Fund should be made only if an investor's
overall portfolio is diversified into other markets and an investment in the
Fund represents only a small percentage of the investor's overall investment
portfolio.
The performance of the Fund is not correlated with the traditional
securities markets. In other words, the performance of the Fund is largely
independent from how the traditional equity and debt markets perform.
Accordingly, the Fund's returns will not necessarily increase when that of
stocks or bonds increase and will not necessarily decrease when that of stocks
or bonds decrease. However, the fact that the Fund's performance is
non-correlated with traditional securities markets does not mean that the Fund's
performance has a negative correlation with such markets. In other words, the
Fund will not necessarily perform better when traditional markets decline, or
perform worse when the traditional markets are rising. Rather, the Fund's
results may parallel either stocks or bonds, or both, during significant periods
of time.
An investment in the Fund could increase rather than reduce overall
portfolio losses during periods when the Fund, as well as stocks and bonds,
decline in value. There is no way of predicting whether the Fund will lose more
or less than stocks and bonds in declining markets. You must not consider the
Fund to be a hedge against losses in your stock and bond portfolios. You should
consider whether diversification in itself is worthwhile even if the Fund is
profitable.
ILLIQUID MARKETS COULD MAKE IT IMPOSSIBLE TO REALIZE PROFITS OR LIMIT
LOSSES.
All futures markets will sometimes be illiquid. In illiquid markets, the
Fund may not be able to execute a buy or sell order at the desired price, or to
close out an open position in a timely manner. This would make it impossible for
the Fund to realize profits or limit losses.
Market illiquidity can arise from the various regulations that are
applicable to futures trading, such as the "daily price fluctuation limits" or
"daily limits" regulations. The daily limits are the maximum amount the price of
a futures contract may vary either up or down from the previous day's settlement
price. No trades may be made at a price beyond the daily limits.
14
Market illiquidity also occurs in a "thin" market where the volume of buy
and sell orders in a market is relatively small. Market illiquidity can also
occur because many trading approaches use similar analyses. This can lead to the
bunching of buy and sell orders, which makes it more difficult for a position to
be acquired or liquidated. It is also possible that an exchange or the Commodity
Futures Trading Commission (CFTC) may suspend trading in a particular contract,
order immediate liquidation and settlement of a particular contract, or order
that trading in a particular contract be conducted for liquidation only.
The Fund may even be required in extreme circumstances to make or take
delivery of the interest underlying a particular position if the position cannot
be offset or liquidated prior to its expiration date.
THE FUND COULD HAVE ITS TRADING DISRUPTED DUE TO THE FAILURE OF EXCHANGES
OR CLEARINGHOUSES OR COULD LOSE ASSETS DEPOSITED WITH FUTURES COMMISSION
MERCHANTS OR BROKERS.
Futures contracts are traded on a commodity exchange. The Fund could have
its trading disrupted if the exchanges on which the Fund trades or any of their
clearinghouses were to discontinue operations or to experience disruptions in
trading, due to computer problems, unsettled markets or other factors. Assets of
the Fund are deposited with futures commission merchants who execute futures
contracts, as well as with broker-dealers who execute government contracts and
brokers or dealers who execute forward contracts. The Fund could lose these
assets if, for example, any of the above parties were to become insolvent or
bankrupt. In such event, the Fund would likely be able to recover only part of
the assets held by its futures commission merchant or broker-dealer. None of
these factors or occurrences can be controlled by the Fund or its general
partner.
THE FUND WILL TRADE ON FOREIGN EXCHANGES THAT ARE LESS REGULATED THAN U.S.
MARKETS AND ARE SUBJECT TO RISKS THAT DO NOT ALWAYS APPLY TO U.S. MARKETS.
The Fund will trade on exchanges located outside the United States. The
Fund currently anticipates that approximately 7% of its assets will be traded on
foreign exchanges. The regulations of the CFTC do not apply to trading on
foreign exchanges, and trading on foreign exchanges may involve different and
greater risks than trading on United States exchanges. Certain foreign markets
may be more susceptible to disruption than United States exchanges due to the
lack of a government-regulated clearinghouse system.
Trading on foreign exchanges also involves certain other risks that are not
applicable to trading on United States exchanges. Those risks include:
- varying exchange rates;
- exchange controls;
- expropriation;
- burdensome or confiscatory taxation; and
- moratoriums, and political or diplomatic events.
It will also likely be more costly and difficult for the Fund to enforce
the laws or regulations of a foreign country or exchange, and it is possible
that the foreign country or exchange may not have laws or regulations which
adequately protect the rights and interests of the Fund.
15
RISKS RELATING TO THE FUND'S STRUCTURE AND ORGANIZATION
SINCE THE GENERAL PARTNER OF THE FUND HAS A LIMITED OPERATING HISTORY, IT
IS DIFFICULT TO EVALUATE ITS BUSINESS AND PROSPECTS.
Beeland Management has a limited operating and performance history as of
the date of this prospectus. Beeland Management began operations in August 1998.
For this reason it is difficult to evaluate its business and its prospects.
THE OPERATING HISTORY OF THE OTHER COMMODITY POOL MANAGED BY BEELAND
MANAGEMENT MAY NOT BE INDICATIVE OF THE FUND'S PERFORMANCE.
Beeland Management currently operates one other active commodity pool. As
with the Index Fund, the trading in that commodity pool is also based on the
Index. The operating history of the other pool operated or managed by Beeland
Management is not indicative of how the Index Fund would perform in the future.
This is partly due to the fact that the other commodity pool charges
substantially lower fees than the Index Fund.
THE TRADING METHODOLOGY UTILIZED BY THE FUND MAY NOT BE SUCCESSFUL UNDER
ALL OR ANY MARKET CONDITIONS.
Beeland Management utilizes a series of rules which, in turn, generally
generate trading instructions designed to produce a portfolio of trades in
commodities which should track the Index. Pursuant to these rules, futures
contracts are rolled from near delivery months to later months. However, because
trading in such later months may be more volatile, due to less liquidity, the
rules and Beeland Management's program choose delivery months where there is
greater depth and liquidity. In addition, at any moment in time, some
commodities in the Index Fund will be over-represented while others will be
under-represented when compared to the index. Accordingly, as the total value of
the Fund increases and decreases (typically because of new subscriptions or
withdrawals), trades will be affected in order to better correlate the
composition of the Index Fund with the composition of the Index. Beeland
Management enters trades consistent with those instructions. No assurance can be
given that the rules and trading methodology utilized by Beeland Management will
prove successful under all or any market conditions.
SUBSTANTIAL FEES AND EXPENSES ARE CHARGED REGARDLESS OF PROFITABILITY.
The Fund must pay brokerage fees, management fees, legal, accounting and
reporting expenses and filing fees regardless of whether it realizes profits as
described beginning on page 25. An investment of 100 units would have to
increase 7.75% (assuming 2,000,000 units are sold) in the first year following
investment to equal the original investment upon redemption at the end of that
year. The Index Fund's trading profits and interest income must equal or exceed
its trading losses and fees and expenses to avoid depletion or exhaustion of its
assets.
CONFLICTS OF INTEREST EXIST WHICH MAY DIMINISH THE VALUE OF LIMITED
PARTNERS' INVESTMENTS.
Conflicts of interest exist in the structure and operation of the Index
Fund's business. The Index Fund generally has no procedures in place to resolve
conflicts of interest. The value of limited partners' investments in the Index
Fund may be diminished by actions or omissions which independent third parties
could have prevented or corrected. The Index Fund's conflicts include:
- Arbor Research & Trading, Inc., is a member of Beeland Management. In
addition, three members of Beeland Management (one of whom is a managing
member and officer of Beeland Management) are also principals of Arbor
Research & Trading. Hart Capital Management is a division of Arbor
Research & Trading. Pursuant to an agreement with the Fund, Hart Capital
Management will provide advisory services with respect to the Index
Fund's purchase and sale of United States government securities. This
contract provides that Hart Capital Management will be paid a percentage
of the assets under its
16
management. The fees and commissions and other terms applicable to the
general partner's business dealings with the Fund were not negotiated on
an arms-length basis.
- Beeland Management is also the general partner, commodity pool operator
and trading advisor for another limited partnership, a private commodity
pool. A potential conflict of interest may arise if any situation arises
in which the Index Fund is in competition with that private pool. For
example, if both funds are buying positions at the same time, this may
drive up the price resulting in higher prices for both pool.
- Beeland Management and its members are also involved with other
businesses, some of which include the financial services, securities,
futures and trading businesses. A potential conflict may arise if those
businesses engage in activities which compete with the Fund.
- Beeland Management and its members may trade for their own accounts. This
creates a potential conflict in that they may take competing positions or
positions opposite or ahead of those taken for the Fund.
See "Conflicts of Interest" below.
THE FEES AND COMMISSIONS AND OTHER TERMS APPLICABLE TO THE GENERAL
PARTNER'S BUSINESS DEALINGS WITH THE FUND WERE NOT NEGOTIATED ON AN
ARMS-LENGTH BASIS.
The fees and commissions and other terms applicable to the general
partner's business dealings with the Fund were not negotiated on an arms-length
basis. Accordingly, we cannot assure you that the terms are as favorable to the
Fund as could have been obtained from others.
YOU WILL BE LIMITED IN YOUR ABILITY TO TRANSFER UNITS.
Units are not freely transferable. They can only be assigned or transferred
upon the terms and conditions set forth in the limited partnership agreement.
Those restrictions may at times preclude a transfer of a unit. You may not
transfer your units without giving prior written notice to the Fund's general
partner. A transferee cannot become a limited partner without the approval of
the Fund's general partner. Such consent for the transferee to become a limited
partner may be given or withheld in the sole and absolute discretion of the
Fund's general partner. The transferee must also provide the Fund's general
partner with written acceptance of the Fund's limited partnership agreement and
an opinion of counsel that the transfer will not violate any securities, tax or
other laws or rules and will not affect the tax status or treatment of the Fund.
No public market for the Fund's units exists or is contemplated in the
foreseeable future.
Substantial restrictions and conditions are also imposed upon the
redemption of units. You may only redeem your units as of the end of each month
after an initial holding period of 30 days beginning on the effective date of
the purchase. You will not know the value of your redemption prior to the time
you submit your request to redeem your units.
In addition, the Fund's general partner may require a limited partner to
provide 10 days prior written notice of the limited partner's desire to redeem
units. The redemption price will not be fixed until the effective date of the
redemption. As a result, limited partners are subject to any change in the net
asset value per unit occurring between the date of their request for redemption
and the effective date of the redemption. The net asset value per unit could
change significantly, for better or worse, during that period, given the
volatile nature of futures trading. Redemptions may also be honored only in part
and delayed or suspended in various circumstances.
THE UNITS WILL NOT BE A LIQUID INVESTMENT.
Limited partners will have to depend on their limited and restricted
transfer and redemption rights, as described above, in order to realize a profit
on their investment in the units because it is likely that no distributions will
ever be made to the limited partners.
17
Substantial redemptions of units could require the Fund to liquidate open
positions more rapidly than otherwise desirable in order to raise the cash to
fund the liquidations, while at the same time achieving a market position
appropriately reflecting a smaller equity base. Illiquidity in the market could
also make it difficult to liquidate positions on favorable terms, which could
result in losses to the Fund.
SINCE LIMITED PARTNERS WILL NOT PARTICIPATE IN MANAGEMENT OF THE FUND'S
BUSINESS, THEY MUST RELY ON BEELAND MANAGEMENT TO ADEQUATELY MANAGE THE
FUND'S AFFAIRS.
You may not participate in the management or control of the Fund or the
conduct of its business. You will have limited voting rights with respect to the
Fund's affairs. You must rely upon the fiduciary responsibility and judgment of
Beeland Management to manage the Fund's affairs in the best interests of the
limited partners.
THE FUND MAY TERMINATE EARLY, WHICH COULD DISRUPT YOUR OVERALL INVESTMENT
PORTFOLIO PLAN.
Unforeseen circumstances, including withdrawal of the Fund's general
partner, could cause the Fund to terminate prior to its stated termination date
of December 31, 2020. Early termination of the Fund could disrupt your overall
investment portfolio plan.
THE PURCHASE OF UNITS BY BEELAND MANAGEMENT OR ITS MEMBERS MAY CREATE
CONFLICTS OF INTEREST FOR THEM.
Beeland Management and its members and their affiliates may, but are not
required to, purchase units for their own account. There is no limit on the
number of units that Beeland Management is permitted to purchase. In the event
that Beeland Management purchases any units, it will pay for such units out of
its assets, and will not use any of the offering proceeds to purchase units. Any
purchase of units by Beeland Management or its members or their affiliates
should not be relied upon as an indication of the merits of this offering.
Conflicts of interest will arise if Beeland Management or its members hold
a substantial number of units, because they will then be in a position to
substantially influence matters submitted to a vote of the limited partners. For
example, conflicts of interest could arise regarding the dissolution of the Fund
because the dissolution of the Fund would terminate Beeland Management's
compensation from the Fund. Any investments in the Fund by affiliates of Beeland
Management or its members or members of the families of any such affiliates or
members could increase the risks discussed in this paragraph.
SINCE THE FUND WILL ONLY TRADE IN CERTAIN MARKETS, AN INVESTMENT IN THE
FUND, ALONE, WILL NOT DIVERSIFY AN INVESTOR'S PORTFOLIO.
The Fund's general partner will initially trade futures and forwards
contracts on commodity exchanges. While the Fund is authorized to purchase
commodity forward contracts in the off exchange markets, it does not expect to
do so for the foreseeable future. Since the Fund will engage only in the trading
of commodity futures contracts and forward contracts, an investment in the Fund,
alone, will not add diversification to an investor's portfolio. Ordinarily and
for most investors, an investment in the Fund should be made only if an
investor's overall portfolio is diversified into other markets and an investment
in the Fund represents only a small percentage of the investor's overall
investment portfolio.
EXCHANGE TRADING LIMITS MAY REQUIRE THE FUND TO LIQUIDATE POSITIONS AT
UNDESIRABLE TIMES, RESULTING IN REDUCED PROFITABILITY.
Most exchanges limit the amount of fluctuation in commodity futures
contract prices on a single trading day.
Trading instructions may have to be modified and positions held by the Fund
may have to be liquidated, in order to avoid exceeding these trading limits.
Such modification or liquidation could adversely affect the operations and
profitability of the Fund.
18
THE OFFERING OF UNITS HAS NOT BEEN SUBJECT TO INDEPENDENT REVIEW.
One law firm represents the Fund and Beeland Management in this offering.
That firm does not represent you as a limited partner in connection with the
Fund. Accordingly, you should consult your own legal, tax and financial advisors
regarding the desirability of your investing in the Fund.
RISKS RELATING TO TAX AND OTHER REGULATORY RISKS
REGULATIONS GOVERNING THE FUTURES MARKET MAY CHANGE AND COULD ADVERSELY
AFFECT THE FUND'S OPERATIONS.
Federal agencies including the CFTC, the SEC and the Board of Governors of
the Federal Reserve System regulate certain activities of the Fund and the
Fund's general partner. The CFTC is the governmental agency having
responsibility for regulation of U.S. commodity exchanges and commodity futures
trading. Its function is to implement the objectives of preventing price
manipulation and excessive speculation and promoting orderly and efficient
commodity futures markets. The regulation of the United States and foreign
futures markets has undergone substantial change over the years, and further
changes should be expected. It is impossible to predict, however, what changes
may occur, or the effect of any such changes on the Fund. The effects could be
substantial. The Fund is not aware of any pending or threatened regulatory
developments that might materially affect the Fund. However, regulatory
initiatives could develop suddenly and without notice.
SINCE THE FUND IS NOT A REGULATED INVESTMENT COMPANY YOU WILL NOT HAVE THE
PROTECTIONS PROVIDED BY STATUTES REGULATING THOSE COMPANIES.
The Fund is not a registered securities investment company or "mutual fund"
subject to the Investment Company Act of 1940. Therefore, you do not have the
protections provided by that statute.
THE IRS MAY DETERMINE THAT THE FUND IS AN ASSOCIATION TAXABLE AS A
CORPORATION IN WHICH EVENT YOU WOULD BE DEPRIVED OF THE TAX BENEFITS
ASSOCIATED WITH INVESTING IN A PARTNERSHIP.
The Fund has not applied for or obtained a ruling from the IRS as to
partnership tax status. The IRS may on audit determine that for tax purposes the
Fund is an association taxable as a corporation. In the event that the IRS makes
such a determination, investors would be deprived of the tax benefits associated
with investing in a partnership. For example, partners would not be able to use
losses of the Fund to offset their own income. The general partner has been
advised by its counsel that, in its opinion, the Fund will be classified as a
partnership for federal income tax purposes. A material risk of IRS
classification as an association taxable as a corporation may exist even though
the Fund relies on an opinion of counsel as to partnership tax status as such
opinion is not binding on the IRS. IRS classification of the Fund as an
association taxable as a corporation would deprive investors of the tax benefits
of the offering only if the IRS determination is upheld in court or otherwise
becomes final. Contesting an IRS determination may impose representation
expenses on investors.
LIMITED PARTNERS WILL OWE TAXES ON THE FUND'S PROFITS BUT WILL VERY LIKELY
NEVER RECEIVE ANY DISTRIBUTIONS FROM THE FUND.
The Fund is not required to make any distributions, and it is likely that
no distributions will ever be made because the principal objective of the Fund
is to increase capital by assuming positions consistent with the Index, not to
create cash flow. You will, however, be required to report and pay tax in your
taxable year with or within which the taxable year of the Fund ends, on your
distributive share of all items of partnership profits for such taxable year of
the Fund. Even if distributions are made, the distributions may not equal the
taxes payable by you on your share of the Fund's profits. Such taxes will be
out-of-pocket expenses to you to the extent they
19
exceed any cash distributions. Subject to certain conditions, you may redeem
your units monthly in order to provide funds for the payment of taxes or for any
other purpose.
The Fund might sustain losses offsetting the profits of a prior fiscal
year, so you might never receive a distribution or be able to liquidate your
units for an amount equal to the taxes which have already been paid by you.
Upon a sale or other disposition of the units or upon a sale or other
disposition of the Fund's property, an investor's tax liability may exceed the
cash he receives. To the extent of such excess, the payment of such taxes will
be out-of-pocket expenses. Assuming that the investor has held his units for
more than one year, gain or loss recognized on a sale of the units should be
capital gains.
YOU COULD OWE TAX ON YOUR SHARE OF THE FUND'S ORDINARY INCOME DESPITE
OVERALL LOSSES.
You may be required to pay tax on your allocable share of the Fund's
ordinary income even though the Fund incurs overall losses.
IF THE FUND'S AND THE LIMITED PARTNERS' TAX RETURNS ARE AUDITED, YOU MAY BE
REQUIRED TO PAY BACK TAXES, INTERESTS AND PENALTIES.
There is no assurance that the Fund's tax return will not be audited by the
IRS or that adjustments to the Fund's return will not be required as a result of
an audit. If an audit results in an adjustment, limited partners may be required
to file amended returns (which may themselves also be audited) and to pay back
taxes, plus interest and possibly penalties. An audit of the Fund's tax return
may result in an audit of an investor's own tax return.
A CHANGE IN TAX LAWS COULD ADVERSELY AFFECT THE TAX TREATMENT OF AN
INVESTMENT IN THE FUND.
It is possible that the current federal income tax treatment accorded an
investment in the units will be modified by subsequent legislative,
administrative or judicial action, possibly with retroactive effect. Any such
changes could significantly alter the tax consequences and decrease the
after-tax rate of return on an investment in the units.
CONFLICTS OF INTEREST
Significant conflicts of interest exist in the structure and operation of
the Fund. All material conflicts of interest are described in this section.
Although Beeland Management will attempt to examine these conflicts of interest,
no formal procedures have been established to monitor or resolve any conflicts
of interest and there is no assurance that any conflict of interest will not
result in adverse consequences to the Fund.
OTHER POOLS AND BUSINESSES OF THE GENERAL PARTNER AND ITS MEMBERS
Beeland Management is currently the general partner, commodity pool
operator and trading advisor for one other limited partnership, the Rogers Raw
Materials Fund. Beeland Management may serve as the general partner, commodity
pool operator and trading advisor for other pools in the future. In addition,
Beeland Management may contract to provide advisory services for individual
accounts. Both Beeland Management and its members are also involved with other
businesses, some of which include the financial services, securities, futures
and trading businesses. Neither the Fund's limited partnership agreement nor any
other restriction will prohibit or limit these other business activities, even
to the extent that they engage in the same business and/or trading activities as
those of the Fund.
Beeland Management will not spend its entire time managing the business of
the Fund and Walter Thomas Price III, Richard Chambers and Brian Cornell, the
managing members of Beeland Management and Clyde Harrison, the founding member,
will not spend their full time managing the business and affairs of Beeland
Management. Beeland Management believes,
20
however, that its time available for the management of the Fund's business will
be sufficient for it to fulfill its duties and obligations to the Fund. It also
believes that the managing members' time available for its management will be
adequate to fully perform their duties to Beeland Management. Mr. Harrison
anticipates that he will devote substantially all of his business time to the
business of the Fund. In addition, Mr. Chambers expects to spend no more than
60% and Messrs. Price and Cornell expect to devote no more than 20% of their
respective business time to the business of the Fund. No assurance is given that
the Fund's performance will be better or worse than any other pool managed by
Beeland Management or by any of its members.
THE FUND DOES NOT HAVE AN INDEPENDENT TRADING ADVISOR
Unlike most other funds, the Fund does not have an independent trading
advisor. Beeland Management manages the Fund and makes and implements all
trading decisions for the Fund. Beeland Management may have an interest in
continuing to serve as the sole trading advisor of the Fund.
OTHER POOLS AND TRADING BY THE FUND'S GENERAL PARTNER AND ITS MEMBERS
Beeland Management will enter trades based on trading instructions designed
to produce a portfolio of trades in commodities which should track the Index.
Beeland Management may manage additional pools in the future and Beeland
Management and its members may trade commodity futures and other interests for
their own and others' accounts. The records of any such trading activities and
any written policies related to such trading will not be made available to
limited partners. Beeland Management's trading for its own account may create
conflicts of interest for itself. This creates a potential conflict of interest
because it is possible that positions taken by Beeland Management or its members
for their own or others' accounts may be the same as or may be taken ahead of or
opposite positions taken on behalf of the Fund. Beeland Management and its
members will not, however, knowingly trade for their own or another's account
ahead of the Fund's account.
Purchases and liquidations by both the Fund and Rogers Raw Materials Fund
may occur simultaneously. The effect of both entities' combined purchase or sale
orders may have a greater impact on the price for that commodity in the
then-current market than had only one of the two entities placed orders for a
lesser volume of that commodity. Beeland Management intends to employ an
allocation system that it in good faith believes is equitable and systematic.
Under its allocation system, if there are executions at split prices, both
entities would share in all prices pro rata on the basis of relative size.
However, at times Beeland Management may be required to enter orders
inconsistently between the pools that it manages. Trading between the pools will
not track each other perfectly because each pool has a different investor
composition and at certain times, more investors may be buying or redeeming more
units in one pool than the other. There is no assurance that the Fund's
performance will not be adversely affected by the manner in which orders are
entered or filled by the general partner.
RICHARD L. CHAMBERS, A MANAGING MEMBER OF THE FUND'S GENERAL PARTNER IS A
PRINCIPAL OF AN ADVISOR TO THE FUND
Arbor Research & Trading, Inc. is a member of Beeland Management. Richard
L. Chambers, a Managing Member and the Secretary of Beeland Management is also a
principal of Arbor Research & Trading. In addition, Fred Handler and James
Stevens, two other members of Beeland Management, are also principals of Arbor
Research & Trading. Hart Capital Management is a division of Arbor Research &
Trading. Pursuant to an agreement with the Fund, Hart Capital Management will
provide advisory services with respect to the Fund's purchase and sale of United
States government securities and will be paid for such services a fee equal to a
percentage of the assets under its management. In addition, the Fund's general
partner has the authority to choose the advisors for the Fund. It therefore has
a conflict of interest in determining
21
whether the Fund should continue its relationship with Hart Capital Management.
Mr. Chambers and the mentioned other two principals of Arbor Research & Trading
will abstain from voting on any decisions of the Fund with respect to the
renewal of the Fund's advisory contract with Hart Capital Management.
WALTER THOMAS PRICE III, A MANAGING MEMBER OF THE FUND'S GENERAL PARTNER, IS THE
SOLE SHAREHOLDER OF THE INTRODUCING BROKER FOR THE FUND AND A PRINCIPAL INVESTOR
IN THE SELLING GROUP MANAGER
Price Futures Group, Inc. will introduce the Fund's commodity trading
activity to Man Financial, the Fund's clearing broker. Walter Thomas Price III,
a managing member of Beeland Management, is the sole shareholder of Price
Futures Group. In addition, Mr. Price is a principal investor in Uhlmann Price
Securities, the Fund's selling group manager. Since the general partner is
responsible for selecting the Fund's clearing brokers and placement agents, the
Fund's general partner has a conflict of interest in performing these functions
given Mr. Price's position with each of these firms.
DISTRIBUTION AND LIQUIDATION DECISIONS BY THE FUND'S GENERAL PARTNER
The Fund's general partner will determine whether the Fund will make any
distributions to the limited partners. While the Fund's general partner has the
authority to make distributions, it is very likely that no distributions will
ever be made to the limited partners. Therefore, an investment in the Fund must
only be viewed as a long term investment. The Fund's general partner will be
financially motivated to not declare any distributions because distributions
will lower the net assets of the Fund, which will in turn reduce the amount of
the monthly management fee which is payable by the Fund to its general partner.
The Fund's general partner will also have an incentive to discourage liquidation
of units by any limited partner for the same reason.
Beeland Management is aware of these conflicts of interest and will use its
best efforts to make determinations about distributions and liquidation of units
independent of its personal considerations regarding its compensation. The
general partner owes broad fiduciary duties to the limited partners encompassing
the duties of exercising good faith, honesty, and fairness in its dealings with
them and the funds of the Fund.
POTENTIAL BENEFITS OF INVESTING IN THE FUND
Although an investment in the Fund is highly speculative, involves a high
degree of risk and involves certain conflicts of interest, an investment will
offer the following potential advantages.
TRADING BASED ON INDEX; NO ACTIVE TRADING
Beeland Management will attempt to replicate the composition of the Index
using various commodity futures contracts. This Index consists of the value of a
basket of raw materials employed in the world economy. Since the Fund's
portfolio is based on an Index, there will be no active trading by Beeland
Management. Instead, Beeland Management will generally engage in three types of
trading on behalf of the Fund. The majority of the trading by Beeland Management
will be made for the purpose of rolling positions to later delivery dates
pursuant to predetermined formulas and rules. In addition, trades will be
effected to increase or decrease the number of commodity futures and forward
contracts in the Fund's portfolio as new investment subscriptions are accepted
by Beeland Management and as withdrawal requests are processed. Finally, Beeland
Management will review the Index at least annually to determine whether it may
be necessary or advisable to change the components or relative weighting of the
Index. Any such decision will be made in the sole discretion of Beeland
Management and in accordance with objective, predetermined rules governing
adjustments to the Index. If Beeland Management deems that an adjustment of the
Index is necessary, it may add or subtract futures contracts to the Index and/or
rebalance the portfolio accordingly. While the Index will be reviewed on at
least
22
an annual basis, there is no assurance that any adjustments will be made to the
Index and portfolio as a result.
PROFESSIONAL MANAGEMENT
Even though Beeland Management has a limited operating and performance
history, the members of Beeland Management have substantial experience trading
in and analyzing commodity futures, securities and government securities
markets.
DIVERSIFICATION; NON-CORRELATION WITH TRADITIONAL SECURITIES MARKETS
The purchase of units of the Fund should be considered an alternative
investment to traditional securities, i.e., stocks and bonds. Price performance
on the basket of raw materials contracts in the Fund and the Index are
non-correlated to a traditional portfolio of securities. Allocating a portion of
the risk segment of a portfolio to a managed futures investment, such as the
Fund, can add diversification to a traditional portfolio of securities.
Ordinarily, for most investors an investment in the Fund should be made only if
an investor's overall portfolio is diversified into other markets and an
investment in the Fund represents only a small percentage of the investor's
overall investment portfolio.
There can be no assurance, however, that any managed futures investment
will be successful, avoid substantial losses or generate performance
non-correlated with traditional securities markets. Furthermore, non-correlation
is not negative correlation. Even if the performance of the Fund is
non-correlated with these markets, this does not mean that the Fund's results
will not parallel either stocks or bonds, or both, during significant periods of
time. In any event, unless a managed futures investment is successful, it cannot
add a potentially valuable element of diversification to a portfolio.
LOWER INITIAL INVESTMENT REQUIREMENTS
You can participate in the Index through the Fund with a minimum initial
investment of only $10,000. An investment in the Fund therefore gives you the
ability to participate in a trading program most persons cannot afford to invest
in alone.
LIMITED LIABILITY
Unlike an individual who invests directly in commodity futures or forward
contracts, an investor in the Fund cannot be individually subject to margin
calls and generally cannot lose more than
- the amount of the limited partner's capital contribution,
- the limited partner's share of undistributed profits, if any; and
- under limited circumstances, some amounts received as distributions or
upon liquidation of units.
However, it is possible for an investor to lose the entire amount of his
investment.
ADMINISTRATIVE CONVENIENCE
The Fund is structured to provide you with certain services designed to
alleviate the administrative details involved in engaging directly in futures
trading. Most significantly the Fund's general partner provides you with monthly
and annual financial reports and all tax information about the Fund which is
necessary for you to complete your federal income tax return. Beeland Management
intends to make available on the Internet an estimate of the value of the Index
on a weekly basis.
23
LOWER TIME COMMITMENT
Trading in futures is a complicated process involving a substantial time
commitment and knowledge of the numerous factors affecting the futures markets.
An investment in the Fund gives you the ability to participate in those markets
without such a substantial time commitment.
FIDUCIARY RESPONSIBILITY OF THE GENERAL PARTNER
The Fund's general partner is accountable to the Fund as a fiduciary. Under
Illinois law, the fiduciary duty owed by a general partner to a limited partner
encompasses the duty of exercising good faith, honesty, and fairness in his
dealings with them and the funds of the partnership. The fiduciary relationship
embraces all matters reasonably relating to the partnership. The general
partner's fiduciary duty exists concurrently with the obligations set forth in
the partnership agreement.
If a limited partner believes the Fund's general partner has violated its
fiduciary duties, the limited partner may seek to recover damages from or
require an accounting by the general partner. The Fund's general partner's
performance of its fiduciary duties will also be measured by the terms of the
Fund's limited partnership agreement. Some provisions of the limited partnership
agreement may take away or limit some of the legal remedies that might otherwise
be available to limited partners.
Limited partners may have the right to bring an arbitration, reparations or
other legal proceeding against the Fund's general partner if the general partner
violates any applicable laws or regulations, like the Commodity Exchange Act or
the regulations of the CFTC.
As mentioned above, some provisions of the Fund's limited partnership
agreement may take away or limit some of the legal remedies that might be
available to limited partners. For example, the limited partnership agreement
provides that the Fund's general partner will not be liable for damages to the
Fund or any of the limited partners except for acts or omissions which
constitute misconduct or negligence. The defenses of the Fund's general partner
to any claim that it has breached any fiduciary duty or other responsibility
will therefore include that its act or omission was not negligent and did not
involve any misconduct. The limited partnership agreement also provides that the
Fund's general partner will not be liable for the return or repayment of the
capital contributions or capital accounts of any limited partner. Any return of
capital or profits will be made solely from the assets of the Fund, and not by
its general partner.
The general partner of the Fund may not be liable to the Fund or limited
partners for errors in judgment or other acts or omissions not amounting to
misconduct or negligence, since provision has been made in the Fund's limited
partnership agreement for exculpation of the Fund's general partner. Therefore,
purchasers of the units have a more limited right of action than they would have
absent the limitation in the limited partnership agreement.
The limited partnership agreement also provides that the Fund will
indemnify its general partner against any loss, expense, damage or injury
(including reasonable attorney's fees and other expenses incurred in connection
with the defense of any such action) incurred by the Fund's general partner, so
long as the actions were for a purpose reasonably believed to be in the best
interests of the Fund, and the conduct in question did not constitute
misconduct, negligence or bad faith. See "The Limited Partnership
Agreement--Indemnification."
The Fund's general partner or any of its affiliates will not be indemnified
for any losses, liabilities or expenses arising from or out of an alleged
violation of federal or state securities laws, unless the following conditions
are met:
- There has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the indemnified party,
or
24
- Such claims have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the indemnified party, or
- A court of competent jurisdiction approves a settlement of the claims
against the indemnified party and finds that indemnification of the
settlement and related costs should be made. The court is required to be
advised of the position of the SEC and any state securities regulatory
authority where units were offered or sold as to indemnification for
violations of securities laws. However, the court need only be advised
and consider the positions of the securities regulatory authorities of
those states which are specifically set forth in the partnership
agreement and in which plaintiffs claim they were offered or sold units.
The Fund has been advised that in the opinion of the SEC, any
indemnification of the Fund's general partner or its affiliates for any
liabilities arising under the Securities Act of 1933 is contrary to public
policy as expressed in that Act and, therefore, is unenforceable.
The advancement from the Fund to a general partner or its affiliates of
funds for legal expenses and other costs incurred as a result of any legal
action is permissible if:
- The legal action relates to acts of omissions with respect to the
performance of duties or services on behalf of the Fund;
- The legal action is initiated by a third party who is not a limited
partner, or the legal action is initiated by a limited partner and a
court of competent jurisdiction specifically approves such advancement;
and
- The general partner or its affiliates undertake to repay the advanced
funds to the Fund, together with the applicable legal rate of interest,
in cases in which such person is not entitled to indemnification.
The provisions of the limited partnership agreement discussed in this
section are also applicable to and benefit any affiliate of the Fund's general
partner when the affiliate is performing services on behalf of the Fund.
The payment by the Fund of any indemnity to its general partner or any of
that general partner's affiliates will affect the limited partners because the
payment would reduce the net assets of the Fund.
The Fund will not have any liability insurance covering its indemnification
obligations.
FEES AND EXPENSES OF THE FUND
The Fund will be subject to the following fees and expenses, which are
described in more detail below. The following includes all compensation, fees,
profits or other benefits (including reimbursement of out-of-pocket expenses)
which the Fund's general partner, soliciting agents, futures commission
merchants and the affiliates of these parties may earn or receive in connection
with the offering and operation of the Fund.
SUMMARY OF FEES AND EXPENSES
<Table>
<Caption>
Entity to Whom Paid Form of Compensation Amount of Compensation
- ----------------------------- ----------------------------- -----------------------------
General Partner.............. Management Fees 0.1875% per month (2.25% per
year) of the average monthly
sum of all capital accounts
contributed by the limited
partners, computed as of the
close of each month, payable
monthly.
</Table>
25
<Table>
<Caption>
Entity to Whom Paid Form of Compensation Amount of Compensation
- ----------------------------- ----------------------------- -----------------------------
General Partner.............. Profit Distribution If the amount of management
fees paid to the Fund's
general partner during a year
does not equal or exceed one
percent (1%) of the amount of
the Fund's net profits for
that year, the general
partner will receive an
allocation of profits in an
amount equal to the
difference between one
percent of the net profits
and the amount of the
management fees paid. For
this purpose, net profits
equals the Fund's total
profits minus losses and any
expenses charged to the Fund,
if any, without taking into
account the management fees
allocated and paid to the
general partner for that
year.
Subscription fee (a portion Up to 6% of the gross
of which may be reallowed to offering proceeds (which
soliciting dealers as selling includes a 4.5% reallowance
commissions). to other broker-dealers).
Subject to certain conditions
and exceptions, investors
purchasing specified minimum
numbers of units will be
entitled to a reduction of
the subscription fee.
General Partner.............. Trailing Servicing Fee Up to a 1.0% per year for
ongoing investor services,
most of which Beeland
Management anticipates will
be paid to soliciting broker-
dealers.
</Table>
26
<Table>
<Caption>
Entity to Whom Paid Form of Compensation Amount of Compensation
- ----------------------------- ----------------------------- -----------------------------
Futures Commission Brokerage commissions and The Index Fund has negotiated
Merchants.................. transactions fees, including brokerage commissions at
delivery, insurance, storage rates that vary by commodity
and other charges incidental and exchange. These rates
to trading and exchange fees. currently range from
approximately $11.00 to
$20.00 per round-turn.
Brokerage commissions and
transactions fees are
estimated at 1% of net assets
per year. See "Futures
Commission Merchants;
Brokerage Commissions" below
in this section for an
explanation of "round-turn"
commissions.
Exchanges, Clearinghouses and Exchange, clearing costs and Varies dependent upon the
NFA Fees................... NFA fees. trades made, but estimated at
between 10 to 15 basis points
of the net assets of the
Index Fund per year. One
basis point 1/100 of one
percent.
Hart Capital Management...... Advisory fee 50 basis points per year of
the average month end market
value of the net assets of
the Index Fund invested and
being managed by Hart Capital
Management, computed
quarterly in arrears for the
three months comprising such
calendar quarter.
Operating Expenses........... Payment of ordinary legal and Actual expense estimated at
accounting fees, between $55,000 and $150,000
administrative and accounting per year.
charges and other operating
expenses.
Various Third Party Suppliers Office supplies expenses, Actual expenses estimated at
of Goods and Services...... meeting expenses and other between $25,000 and $40,000
expenses necessary or per year.
appropriate for the operation
of the Fund.
Others....................... Possible unanticipated and Unable to estimate.
extraordinary expenses.
</Table>
MANAGEMENT FEE AND PROFIT DISTRIBUTION TO GENERAL PARTNER
The general partner of the Index Fund receives a monthly management fee of
0.1875% of the Index Fund's average monthly sum of all capital accounts
contributed by the limited partners, computed as of the close of business each
month. The management fee is payable by the Index Fund within 10 business days
of the close of each month.
27
If the amount of management fees paid to the Index Fund's general partner
during a year does not equal or exceed one percent (1%) of the amount of the
Index Fund's net profits for that year, the general partner will receive an
allocation of profits in an amount equal to the difference between one percent
of the net profits and the amount of the management fees paid. For this purpose,
net profits equals the Index Fund's total profits minus losses and any expenses
charged to the Index Fund, if any, without taking into account the management
fees allocated and paid to its general partner for that year.
The Index Fund will reimburse its general partner for Index Fund expenses
which are paid by the general partner (such as delivery charges, copying costs,
telephone charges and postage).
The general partner of the Index Fund will not receive any portion of the
brokerage commissions which are paid by the Index Fund to futures commission
merchants.
SUBSCRIPTION FEE TO GENERAL PARTNER
Uhlmann Price Securities through Beeland Management will receive a
subscription fee of up to 6% (which includes a 4.5% reallowance to other
broker-dealers) of the gross offering proceeds. All or a portion of the
reallowance may be reallowed by Uhlmann Price Securities to soliciting dealers
as selling commissions for units they sell.
Subject to certain conditions and exceptions explained below, investors
making an initial purchase of at least $25,000 worth of units (250 units)
through the same soliciting dealer will be entitled to a reduction of the
reallowance portion of the subscription fee in accordance with the following
schedule:
<Table>
<Caption>
Amount of Purchaser's Investment
- -------------------------------- Maximum Amount of
From To Reallowance Volume Discount
- ------------ ----------------- ----------- ---------------
$ 25,000 $249,999 3.5% 1.0%
$250,000 $250,000 over 2.5% 2.0%
</Table>
SOLICITING DEALER COMPENSATION
Under the form of contract between the Fund and the soliciting dealer, the
soliciting dealer will receive a reallowance of a portion of the subscription
fee received by Uhlmann Price Securities, as compensation for their services in
soliciting and obtaining subscribers for the purchase of units. No selling fee
reallowance will be charged on units sold through "fee-based only" financial
planners that do not receive commissions.
TRAILING SERVICING FEE
A trailing servicing fee of up to 1.0% will be paid to Beeland Management
annually. Beeland Management anticipates that the most of this fee will be paid
to soliciting broker-dealers for ongoing investor services.
FUTURES COMMISSION MERCHANTS; BROKERAGE COMMISSIONS
The Index Fund may not limit itself to any one futures commission merchant.
However, the Index Fund may employ one futures commission merchant if, in the
opinion of the Index Fund's general partner, it is advisable to do so. The Fund
has designated Man Financial Inc. as its current futures commission merchant.
The futures commission merchants will receive brokerage commissions in return
for their services. The brokerage commissions payable by the Index Fund are
subject to change.
The general partner will not effect any transactions in commodity contracts
with any futures commission merchant affiliated directly or indirectly with the
general partner, unless such transactions are effected at competitive rates. In
no event will the Index Fund be allowed to enter into any exclusive brokerage
contract.
28
The Index Fund has negotiated brokerage commissions at rates that vary by
commodity and by exchange currently between $11.00 and $20.00. These rates
currently average approximately $14 per round-turn. Beeland Management estimates
that the annual brokerage commissions payable by the Index Fund will not exceed
1.0%. The Index Fund cannot guarantee that annual brokerage commissions will not
exceed this amount.
The Index Fund will also pay or reimburse its futures commission merchants
for any delivery, insurance, storage and other charges incidental to trading and
exchange fees. Those types of charges are not included in the basis points set
forth in the preceding paragraph. Beeland Management does not anticipate
significant charges of this nature.
Brokerage commissions and transactions fees are estimated at 1% of net
assets per year. In any event, brokerage commissions to be charged will not
exceed applicable guidelines of the North American Securities Administrators
Association.
CLEARING COSTS AND NATIONAL FUTURES ASSOCIATION FEES
The Index Fund will pay fees to clearinghouses and to the NFA. Clearing
costs vary depending on the trades made, but are estimated at between 10 to 15
basis points of the net assets of the Fund annually.
ADVISORY FEES
The Index Fund will pay advisory fees to Hart Capital Management for its
management of the Fund's purchases and sales of U.S. government securities.
These fees are estimated at 50 basis points annually of the average month end
market value of the Index Fund's portfolio of government securities actually
invested and being managed by Hart Capital Management. Such advisory fees will
be computed quarterly in arrears for the three months comprising such calendar
quarter.
The Fund will not pay any separate fees to Beeland Management for trading
advisory services. The Fund compensates Beeland Management for all services,
including any trading advisory services, provided to the Fund through the
payment of a management fee. Beeland Management makes and implements all trading
decisions for the Fund. However, Beeland Management does not make trading
decisions on behalf of the Fund in the traditional sense. Unlike most other
commodity pools, commodity futures will not be bought or sold to take advantage
of hoped for price movement. Rather, trading will be effected to ensure that the
positions in the Fund track, to the extent reasonably possible, the composition
of the Index. Beyond the possible adjustment in the composition of the Index and
resulting trading by the Fund to correlate, the only limited trading performed
by Beeland Management is for purpose of rolling of contracts from near month to
later months in order to ensure that the Fund will not take actual delivery of a
physical commodity. To the extent possible, these rolling trades are placed and
affected as spread transactions to insure against the risks associated with
selling positions in near months and buying corresponding positions in far
months, including the risks of price or interest rate fluctuations.
OPERATING EXPENSES
The Fund will pay ongoing expenses including legal and accounting,
administrative and accounting charges, and other general operating expenses.
THIRD PARTY SUPPLIERS OF GOODS AND SERVICES
The Fund will incur expenses for office supplies, meetings and other goods
and services necessary or appropriate for the day-to-day operation of the Fund.
These expenses are estimated to range from $25,000 to $40,000 per year.
29
OTHER EXPENSES
The Fund will also be responsible for all other expenses incurred by the
Fund. These expenses may include extraordinary expenses such as the cost of
litigation in which the Fund may be engaged. By their nature, the dollar amount
of extraordinary expenses cannot be estimated with any reasonable certainty, but
they could be substantial.
The actual expenses incurred by the Fund will be set forth in reports to
the limited partners.
The general partner of the Fund will be reimbursed by the Fund for Fund
expenses paid by the general partner. This includes expenses, such as delivery
charges, copying costs, telephone charges and postage.
CONSULTING CONTRACTS WITH AFFILIATES
Hart Capital Management, a division of Arbor Trading & Research, and
Cornell Investment Advisory, L.L.C. have entered into consulting contracts with
the Fund and Beeland Management, respectively, to provide their services. The
contract relating to services performed by Cornell Investment is between Cornell
Investment and Beeland Management. Accordingly, fees due to Cornell Investment
pursuant to this contract are not payable by the Fund. The contract relating to
services performed by Hart Capital Management is between Hart Capital Management
and the Fund itself, and requires the Fund to pay an annual advisory fee
amounting to 50 basis points multiplied by the average month end market value of
the assets of the Fund actually invested in U.S. government securities and under
Hart Capital Management's management. Beeland Management pays the fee to Cornell
Investment and the Fund is not liable or responsible for such compensation.
REPORTS
Limited partners will receive a monthly statement. The statement will
include, in general, a description of the performance of the Fund and will set
forth the aggregate fees, brokerage commissions, and other expenses incurred or
accrued by the Fund during the month. The Fund will also provide the limited
partners with an audited annual statement.
BREAK-EVEN ANALYSIS
In order to "break even" at the end of one year of trading, each $10,000
(the minimum investment), which you invest must earn $775.00 in profits or
7.75%, as shown in the table below.
The following table and explanatory notes set forth the basis for and
calculation of the above figures. The table is based on the fees as described
above.
<Table>
<Caption>
Subsequent
Net Assets First Year Years
- ---------- ----------- -----------
Purchase Price Per Unit(1).................................. $ 100 $ 100
General Partner's Management Fee(2)......................... $ 4,500,000 $ 4,500,000
Subscription and Wholesaling Fees(3)........................ $12,000,000 $ 2,000,000
Brokerage Commissions, Exchange, NFA and Other Trading
Fee(4).................................................... $ 2,003,000 $ 2,003,000
Hart Capital Management Advisory Fee(5)..................... $ 1,000,000 $ 1,000,000
Less Interest Income(6)..................................... $(4,000,000) $(4,000,000)
Amount of Trading Income Required for the Fund's Net Asset
Value Per Unit (Redemption Value) at the End of One Year
to Equal the Purchase Price Per Unit...................... $15,503,100 $ 5,503,100
7.75% 2.75%
</Table>
30
- ------------------------------
Explanatory Notes:
(1) Units may be purchased at a price per unit equal to the net asset value per
unit as of the close of trading on the last trading day of a month. The
minimum initial investment is $10,000.
(2) The general partner of the Fund receives a monthly management fee of 0.1875%
(which equals 2.25% annually) of the Fund's average monthly sum of all
capital accounts contributed by the limited partners, computed as of the
close of business each month.
(3) Investors will be required to pay a subscription fee of up to 6% (which
includes a 4.5% reallowance to other broker-dealers) of the subscription
amount. A portion of this fee may be reallowed to soliciting dealers as
selling commission. Subject to certain conditions and exceptions, investors
purchasing specified minimum numbers of units will be entitled to a
reduction of the subscription fee. This table assumes that no sales are
entitled to a volume discount, and, therefore, that no reductions in the
subscription fee are given.
(4) Brokerage commissions, exchange, clearinghouses and NFA fees and other
trading fees are estimated at 1.0015% of net assets of the Fund annually.
(5) The annual advisory fee to Hart Capital Management is estimated at 50 basis
points ( 1/2%) of the assets of the Fund actually invested in U.S.
government securities.
(6) The Fund will earn interest on U.S. government securities held in its
account. Based on interest rates in effect as of the date of this
prospectus, interest income has been estimated at 2.0% of net assets.
THE ROGERS INTERNATIONAL COMMODITY INDEX
The Index consists of the value of a compendium, commonly known as a
basket, of raw materials employed in the world economy, ranging from
agricultural products (such as wheat, corn and cotton) and energy products
(including oil, gasoline and natural gas) to metals and minerals (including
gold, silver, aluminum and lead). As of July 31, 2001, there were 35 different
futures contracts represented in this index. The value of each component is
based on monthly closing prices of the corresponding futures and forward
contracts, each of which is valued as part of the fixed-weight portfolio. Near
month contracts, but typically not the front months, on international commodity
markets are employed to the extent possible. "Commodity Markets" below provides
further description of near month contracts. The selection and weighting of the
portfolio is reviewed annually, and weights are assigned in the December
preceding the start of each new year. If a commodity is traded on more than one
exchange, the Index will generally employ the market which is the most liquid,
in terms of volume and open interest.
The Index was developed by James Beeland Rogers, Jr., the majority
owner-member of Beeland Management, to create a balanced, representative,
international raw materials index. Mr. Rogers, in connection with the
subscription for his majority ownership interest in Beeland Management, granted
to Beeland Management a nonexclusive, worldwide license to use, publish and
market the Index until December 31, 2020. Beeland Management believes that the
Index includes most of the publicly traded raw materials used in international
commerce for which futures contracts or forward contracts are regularly traded
in recognized markets. It is designed to address the needs of expanding world
trade. The Fund's general partner is aware of one other public fund, the Goldman
Sachs Commodity Index that has a basic investment mission or policy similar to
that of the Rogers International Commodity Index. In addition, there are a
number of registered investment portfolios whose investments include commodity
futures. Many of these competitors or potential competitors have longer
operating histories, greater name recognition, larger customer bases, and
greater resources than the Fund. The Fund's success will depend on its ability
to market the concept of an alternative asset class that is noncorrelated with
and can add diversification to a traditional portfolio of securities.
31
As the owner of the Index, James Rogers controls the components of the
Index which the fund is designed to track. The weightings of the Index were
selected by Mr. Rogers based on his perception of the relative importance of
those raw materials. The Index incorporates a number of raw materials
represented among North American, European, Asian and Australian commodity
contracts. By limiting positions in the component commodities to the long side
of the market, the prices of the component commodities and the index as a whole
will typically, but not always, increase or decrease to the extent that global
prices for these commodities increase or decrease.
Mr. Rogers and Beeland Management review the Index periodically to
determine whether it may be necessary to change the components or relative
weighting of the Index. Any such decision will be made in the sole discretion of
Mr. Rogers and in accordance with objective, predetermined internal rules
developed by Mr. Rogers and Beeland Management governing adjustments to the
Index. To date, there has been only one, almost de minimis adjustment in the
history of the Index. This adjustment was made in order to substitute soybean
oil for palm oil during the prior year. While there are no legal impediments to
adjusting the Index, Beeland Management may not change the investment philosophy
of the Fund.
The Fund's success depends on the increasing price of the raw materials
represented by the Index. Investors will receive a positive return on investment
only if the price of raw materials increases at a rate that exceeds the cost of
inflation and the management fees, subscription fees and other fees and
expenses.
Unlike some well-known indices, such as the Standard and Poors 500 and the
Dow Jones Industrial Average, information regarding the composition and
performance of the Index is not available on a widespread basis. However, the
Index has been tracked and reported by several futures industry reporting
services, such as Managed Account Reports ("MAR").
Following is a chart listing each of the commodities which currently
comprise the Index.
32
ROGERS INTERNATIONAL COMMODITY INDEX
LIST OF COMPONENT COMMODITIES
AS OF JUNE 30, 2003
<Table>
<Caption>
Commodity, (%) Principal Exchange
- -------------- ------------------
Crude Oil, (35%)................................ NYMEX (New York Mercantile Exchange)
Heating Oil, (3%)............................... NYMEX (New York Mercantile Exchange)
Unleaded Gasoline, (3%)......................... NYMEX (New York Mercantile Exchange)
Natural Gas, (3%)............................... NYMEX (New York Mercantile Exchange)
Palladium, (0.30%).............................. NYMEX (New York Mercantile Exchange)
Wheat, (7%)..................................... CBOT (Chicago Board of Trade)
Corn, (4%)...................................... CBOT (Chicago Board of Trade)
Soybeans, (3%).................................. CBOT (Chicago Board of Trade)
Rice, (2%)...................................... CBOT (Chicago Board of Trade)
Oats, (0.50%)................................... CBOT (Chicago Board of Trade)
Aluminum, (4%).................................. LME (London Metals Exchange)
Zinc, (2%)...................................... LME (London Metals Exchange)
Nickel, (1%).................................... LME (London Metals Exchange)
Tin, (1%)....................................... LME (London Metals Exchange)
Lead, (2%)...................................... LME (London Metals Exchange)
Copper, (4%).................................... COMEX (Commodity Exchange--NY)
Gold, (3%)...................................... COMEX (Commodity Exchange--NY)
Silver, (2%).................................... COMEX (Commodity Exchange--NY)
Platinum, (1.8%)................................ COMEX (Commodity Exchange--NY)
Live Cattle, (2%)............................... CME (Chicago Mercantile Exchange)
Live Hogs, (1%)................................. CME (Chicago Mercantile Exchange)
Lumber, (1%).................................... CME (Chicago Mercantile Exchange)
Coffee, (2%).................................... CSCE (Coffee, Sugar and Cocoa Exchange)
Sugar, (1%)..................................... CSCE (Coffee, Sugar and Cocoa Exchange)
Cocoa, (1%)..................................... CSCE (Coffee, Sugar and Cocoa Exchange)
Cotton, (3%).................................... NYCE (New York Cotton Exchange)
Orange Juice, (0.66%)........................... NYCE (New York Cotton Exchange)
Barley, (0.77%)................................. WCE (Winnipeg Commodity Exchange)
Canola, (0.67%)................................. WCE (Winnipeg Commodity Exchange)
Flaxseed, (0.15%)............................... WCE (Winnipeg Commodity Exchange)
Soybean/Palm Oil, (2%).......................... CBOT (Chicago Board of Trade)
Azuki Beans, (1%)............................... TGE (Tokyo Commodity Exchange)
Wool, (1%)...................................... SFE (Sydney Futures Exchange)
Rubber, (1%).................................... TOCOM (Tokyo Commodity Exchange)
Raw Silk, (0.15%)............................... YRSE (Yokohama Raw Silk Exchange)
</Table>
BASIS FOR TRADING
There are numerous trading methods, systems and strategies utilized in
futures trading. The following discussion only addresses those methods, systems
and strategies utilized in Beeland Management's trading program, and you will
therefore not be able to compare them with trading methods, systems and
strategies that are utilized by other trading advisors or trading managers. The
following description of Beeland Management's trading program is not intended to
be exhaustive.
The Fund will invest its funds in a portfolio of futures and forward
contracts traded on recognized exchanges. The Fund may also purchase commodity
forward contracts in the off-exchange or over-the-counter markets, under certain
circumstances if, in the sole discretion of Beeland Management, there is
sufficient liquidity and depth in the relevant off-exchange markets.
33
Beeland Management does not anticipate that the Fund will trade on such
over-the-counter markets in the immediate future. Many of the commodity
contracts listed above are traded on multiple markets. In placing orders for
these commodities, the Fund intends to employ the available market which
provides the most advantageous market, in terms of depth and/or liquidity, at
the time that trading decisions are made.
Beeland Management will attempt to replicate the composition of the Index
by purchasing commodity futures contracts in the same types and quantities as
the Index. This Index consists of the value of a basket of raw materials
employed in the world economy. This Index is described in greater detail above
in "Rogers International Commodity Index" above. Beeland Management utilizes a
series of rules which, in turn, generally generates trading instructions
designed to produce a portfolio of trades and positions in commodities which
should track the Index. Beeland Management will enter trades consistent with
those instructions. Beeland Management believes that the Fund's management
activities will produce a return which is correlated plus or minus 5% with that
of the Index. Beeland Management will select futures commission merchants to
execute trades for the Fund, generally in its discretion, on the basis of
various factors, including quality of executions, commission rates and any
additional ancillary services provided. Affiliates of members of Beeland
Management may be engaged to provide trade execution services for the Fund. Cash
not needed as margin for futures or cash forward contracts will be invested in a
portfolio of United States government securities.
Since the Fund's portfolio is based on the Index, there will be no active
trading by Beeland Management in the traditional sense. Unlike most other
commodity pools, commodity futures will not be bought or sold to take advantage
of hoped for price movement. Instead, Beeland Management will engage in only two
types of trading on behalf of the Fund. Almost all of the trading by Beeland
Management will be made for the purpose of rolling positions from near delivery
dates to later delivery dates in order to ensure that the Fund will not take
actual delivery of a physical commodity. These rolling trades, made pursuant to
a predetermined formula and rules, are placed and effected, to the extent
possible, as spread transactions, in which the Fund simultaneously buys and
sells futures contracts corresponding to the same commodity, but for delivery in
different months. In a spread trade, a loss on one side will usually be
neutralized, at least in part, by a gain on the opposite position. Placing and
effecting these rolling trades as spread transaction have several advantages
over first selling a position in a near month and then subsequently buying a
corresponding position in a far month. In the latter case, there is a risk that
during the period between the sale and the purchase, there may be sudden,
adverse movements in the price of the commodity. Therefore, by effecting the
rolling trades as spread transactions, the Fund seeks to minimize the risks of
price fluctuation. In addition, Beeland Management will review the Index at
least annually to determine whether it may be necessary to change the components
or relative weighting of the Index. Any such decisions will be made in the sole
discretion of Beeland Management and in accordance with objective, predetermined
internal rules developed by Beeland Management governing adjustments to the
Index. If Beeland Management deems that an adjustment of the Index is necessary,
Beeland Management may add or subtract futures or forward contracts to the Index
and rebalance the portfolio accordingly. While the Index will be reviewed on a
least an annual basis, there is no assurance that any adjustments will be made
to the Index and portfolio as a result.
Generally, if prices of commodities rise, then the value of an investment
in the Fund should appreciate. Correspondingly, if commodity prices decline,
then the value of an investment in the Fund should go down. The Fund's success
depends on the increasing price of the raw materials represented by the Index.
Investors will receive a positive return on investment only if the price of raw
materials increases at a rate that exceeds the cost of inflation and the
management fees, subscription fees and other fees and expenses.
34
THE GENERAL PARTNER
BACKGROUND OF THE GENERAL PARTNER
BEELAND MANAGEMENT COMPANY, L.L.C. is the sole general partner of the Fund.
It is an Illinois limited liability company whose majority owner-member is James
Beeland Rogers, Jr. Mr. Rogers previously granted to Beeland Management a
nonexclusive, worldwide license to use, publish and market the Index in exchange
for majority ownership of Beeland Management.
Beeland Management will manage the business of the Fund. It may retain
third parties to provide services to the Fund, and other parties will be
retained to provide accounting, auditing, legal and other professional services.
Unlike most other funds which have an independent trading advisor, the Fund
does not have a separate trading advisor. Instead, Beeland Management will
essentially serve as the Fund's commodity trading advisor. Beeland Management is
registered as a commodity pool operator and commodity trading advisor with the
CFTC and is also a member of the NFA.
The Fund's general partner may trade commodities futures and other
interests for its own account. The records of any such trading activities and
any written policies related to such trading will not be made available to
limited partners. The trading by the Fund's general partner for its own account
may create conflicts of interest for the general partner.
Beeland Management was organized in 1998 for the purpose of serving as the
general partner of the Rogers Raw Materials Fund, an Illinois limited
partnership, formed to operate as a private commodity pool. Beeland Management
may also serve as the commodity pool operator for other new or existing pools in
the future. No offering of any units of limited partnership interest in the
Rogers Raw Materials Fund is being made pursuant to this prospectus.
The net worth of Beeland Management as of December 31, 2002 is $96,489.
The principal offices of Beeland Management are located at 1000 Hart Road,
Suite 210, Barrington, Illinois 60010. The telephone number at that location is
(847) 304-0450.
PRINCIPALS
The following is summary biographical information concerning the members of
Beeland Management who participate in its management.
JAMES BEELAND ROGERS, JR., age 60, has been the majority owner and a member
of Beeland Management since inception in 1998. Mr. Rogers, a co-founder of the
Quantum Fund in the 1970s, is the author of Adventure Capitalist (Random House,
2003) and Investment Biker; On the Road with Jim Rogers (Random House, 1994). He
developed, compiled and owns the Index. Although Mr. Rogers' career spans over
30 years, during the last five years he has been semi-retired and travelling
extensively around the world. However, during that period, he has been a regular
commentator and columnist in various media dealing with economy and finance
matters and is an occasional Visiting Professor at Columbia University. Mr.
Rogers is an investor who has been chronicled in John Train's THE NEW MONEY
MASTERS and Jack Schwager's Market Wizards, as well as in Barons, Forbes,
Fortune, The Financial Times and The Wall Street Journal.
WALTER THOMAS PRICE III, age 62, is a Managing Member of Beeland Management
and is the co-chairman, president, director and sole shareholder of Price Asset
Management, Inc. He has been the President and CEO of The Price Futures Group
since June 1995 and is an investor in Uhlmann Price Securities. Mr. Price has
been involved in the securities, cash commodities and commodity futures markets
for more than 40 years as both a trader for his own account and as a broker. He
is president, a registered principal, and associated person of Price Capital
Markets Inc., with which he has been affiliated since February 1997. At Price
Capital Markets, Mr. Price is ultimately responsible for overseeing all trading
decisions. He is a graduate of the University of Texas and is also a licensed
NASD principal and NFA principal.
35
CLYDE C. HARRISON, age 59, is the Founding Member of Beeland Management and
has been a member since its inception in 1998. Mr. Harrison has agreed to
provide administrative services to the Fund under a contract which contains
standard noncompete provisions. Since mid-1997, Mr. Harrison has devoted most of
his business time to the administration of the Index and the Rogers Raw
Materials Fund. For the immediately prior two years, Mr. Harrison had been an
official, first with Nutmeg Securities, Inc., where he served as a pension fund
consultant and in the institutional stock execution business and later, in a
similar capacity with a division of a New York-based broker-dealer. Since March
1998, Mr. Harrison has been a registered representative of Oakbrook Investment
Brokers, Inc., a registered broker-dealer and he is also currently a registered
representative with Uhlmann Price Securities, the selling group manager for the
Fund. Mr. Harrison has been a Member of the Managed Futures Committee of the
Chicago Mercantile Exchange. In the course of his over 35 year career, Mr.
Harrison has served as a Special Consultant to the Chairman of the Chicago Board
Options Exchange, Inc., particularly on the institutional investment community,
and as general partner of a number of private investment and trading funds.
BRIAN CORNELL, age 44, has been a Managing Member of Beeland Management
since 1998. His duties primarily involve the rules and procedures whereby the
Fund will effect trades corresponding to the Index, including but not limited to
(1) periodic adjustments to the Index and the Fund, (2) contract market
selection for contracts comprising the Index, (3) procedures to correlate
trading in the Fund with the composition of the Index and regular, periodic
valuation of the Fund and the Index. Through a wholly owned company, Cornell
Investment Advisory, L.L.C., he also has provided the Rogers Raw Materials Fund
and will provide the Fund with a portfolio monitoring facility. The fees due to
Cornell Investment pursuant to its contract with Beeland Management are payable
by Beeland Management and not by the Fund. He has traded, managed and provided
brokerage services for futures portfolios since 1982, most recently as a senior
official at two well known futures commission merchants and commodity trading
advisors. In addition, he has authored numerous articles on risk management and
has been featured in The New York Times, The Wall Street Journal and in
Institutional Investor.
RICHARD L. CHAMBERS AND ARBOR RESEARCH & TRADING, INC. Richard L.
Chambers, age 59, has been a Managing Member of Beeland Management since 1998.
Mr. Chambers serves as Treasurer of Beeland Management. He is responsible for
investment of funds not required for margin and is also responsible for
administrative activity. Mr. Chambers is also the managing principal of Hart
Capital Management, a registered investment adviser and a division of Arbor
Research & Trading, Inc. Mr. Chambers has over 30 years experience in the fixed
income securities business as both a dealer and a portfolio manager.
Arbor Research & Trading is a broker-dealer and investment advisor based in
Barrington, Illinois. Pursuant to a separate advisory agreement, Hart Capital
Management will advise Beeland Management in connection with the Fund's
purchases and sales of U.S. government securities. The Fund will pay Hart
Capital Management an annual advisory fee of 50 basis points, computed quarterly
in arrears, on the basis of the average month-end market value of the Fund's
portfolio of government securities actually invested and under Hart Capital
Management's management for the quarter. Hart Capital Management also advises
Beeland Management in its capacity as general partner, commodity pool operator
and trading advisor of Rogers Raw Material Fund in connection with that pool's
purchases and sales of U.S. government securities. Arbor Research & Trading,
Hart Capital Management and/or Mr. Chambers currently and in the future may
invest in commodity pools that are advised by Arbor Research & Trading and/or
Hart Capital Management.
Arbor Research & Trading's objective is to achieve appreciation of its
clients' assets through the purchase and sale of U.S. government securities,
including but not limited to U.S. Treasury securities. The specific government
securities to be traded will be selected from time to time by Arbor Research &
Trading and will be limited to government securities, as defined under the
36
Investment Company Act of 1940, as amended. Specific issue selection will be
based on relative attractiveness to the U.S. Treasury yield curve and other
comparable treasury or agency securities.
Although the Fund will pay Hart Capital Management the annual advisory fee
explained above, none of the foregoing individuals are paid any compensation
directly by the Fund.
LEGAL ACTIONS
There have been no material administrative, civil or criminal actions
pending, on appeal or concluded against Beeland Management or any of its
individual principals, Arbor Research & Trading, Inc. or Hart Capital Management
within the past five years that are material to an evaluation of their ability
or integrity.
INVESTMENT BY THE GENERAL PARTNER AND ITS MEMBERS
To the extent of any capital contribution it made to the Fund, Beeland
Management will be treated as though it were a limited partner. Members of
Beeland Management and persons associated with the members may subscribe for
limited partnership interests as well. Any such subscribers will not be limited
by the minimum subscription amounts required above.
The founding member of the general partner has made a $25,000 capital
contribution to the Fund. The purchase of units by Beeland Management or its
members may create conflicts of interest. See "Conflicts of Interest" above.
DUTIES OF THE GENERAL PARTNER
The general partner of the Fund manages all business of the Fund. The
Fund's general partner may delegate its responsibility for the investment of the
Fund's assets to one or more qualified trading advisors. If it elects to direct
trading for the Fund itself, the general partner of the Fund may still render
advisory services to other clients or accounts and use the same trading
strategies utilized in managing the Fund's investments.
The general partner of the Fund may retain various third parties, including
affiliates of the general partner and its members, to perform various services
for the Fund. However, the Fund's general partner may not enter into any
agreement or arrangement with affiliates on terms less favorable to the Fund
than those customarily charged by an unrelated party for similar services.
The maximum period covered by any contract between the Fund and the general
partner may not exceed one year and the agreement will be terminable without
penalty upon 60 days' written notice by the Fund.
The Fund's general partner is accountable to the Fund as a fiduciary. Under
Illinois law, the fiduciary duty owed by a general partner to a limited partner
encompasses the duty of exercising good faith, honesty, and fairness in his
dealings with them and the funds of the partnership. The fiduciary relationship
embraces all matters reasonably relating to the partnership. The general
partner's fiduciary duty exists concurrently with the obligations set forth in
the partnership agreement. The limited partners may not contract away this
fiduciary obligation.
PRINCIPAL OWNERS OF UNITS
As of the date of this prospectus, the general partner of the Fund does not
beneficially own any units.
37
ENFORCING YOUR RIGHTS AS A LIMITED PARTNER
You should consult your legal counsel with questions concerning the
responsibilities of the Fund's general partner. Reference is made to "Fiduciary
Responsibility of the General Partner" for a discussion of these
responsibilities. In the event that you believe the general partner of the Fund
has violated its fiduciary responsibility, you may seek legal relief for
yourself or on behalf of the Fund (or in a class action on behalf of all limited
partners), if:
- the general partner of the Fund has refused to bring the action, or
- an effort to cause the general partner of the Fund to bring the action is
not likely to succeed.
There can be no assurance, however, that adequate remedies will be
available.
In addition, you may institute legal proceedings against the general
partner of the Fund if it or an advisor engages in excessive trading. You should
be aware that it would be difficult to establish that commodity trading has been
excessive due to the broad trading authority given to the Fund's general
partner, the limited number of cases defining excessive trading, and the
provisions in the limited partnership agreement discussed under "The Limited
Partnership Agreement--Indemnification."
You may be afforded rights to reparations under the Commodity Exchange Act.
In addition, the NFA has adopted arbitration rules which, in appropriate
circumstances, might provide additional rights.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The offering of the Fund's units of limited partnership interest commenced
in January , 2001 and the initial offering terminated in October 2002 with
proceeds of approximately $5,013,000. The continuing offering commenced
immediately after termination of the initial offering; additional subscriptions
totaling approximately $1,460,000 have been accepted during the continuing
offering period through May 2002. Redemptions over the same period total
approximately $50,000. The Fund has not accepted new subscriptions since May
2002. The Fund commenced operations in November, 2001.
CAPITAL RESOURCES
The Fund will raise additional capital only through the sale of units
offered pursuant to the continuing offering and does not intend to raise any
capital through borrowing. Due to the nature of the Fund's business, it
anticipates making no capital expenditures and will have no capital assets which
are not operating capital or assets.
RESULTS OF OPERATIONS
The returns for calendar year ended December 31, 2002 and year to date
through June 30, 2003 were 24.15% and 7.09%, respectively.
Because the Fund is designed to replicate an index, performance of the Fund
is not dependent on trading decisions made by the general partner apart from
balancing positions to track the Index.
Throughout 2002, the Fund profited from general economic conditions and
social factors which contributed to an increase in commodity prices in certain
markets included in the Index.
38
PERFORMANCE HISTORY OF THE INDEX FUND
<Table>
Name of Pool: Rogers International Raw Materials Fund, L.P.
Type of Pool: Publicly offered
Inception of Trading: November 2001
Aggregate Subscriptions: $6,586,149
Net Asset Value due as of 06/30/03: $6,624,074
Worst Monthly Percentage Draw-down: 8.27% (March 2003)
Worst Peak-to-Valley Draw-down: 13.18% (February 2003-April 2003)
</Table>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
RATE OF RETURN
<Table>
<Caption>
MONTH 2003 2002 2001
----- ----- ----- -----
January........................ 7.47% (5.13%)
February....................... 5.20% 4.11%
March.......................... (8.27%) 10.92%
April.......................... (4.91%) (0.29%)
May............................ 7.80% (0.70%)
June........................... 0.74% 3.67%
July........................... 0.19%
August......................... 4.58%
September...................... 1.98%
October........................ (2.48%)
November....................... 0.22% (3.51%)
December....................... 5.27% (4.36%)
----- ----- -----
YEAR........................... 7.09% 24.15% (7.71%)
===== ===== =====
</Table>
OTHER POOLS OPERATED BY THE GENERAL PARTNER
As of the date of this prospectus, Beeland Management was also serving as
the pool operator of Rogers Raw Materials Fund, a private commodity pool.
Rogers Raw Materials Fund is an Illinois limited partnership formed in
August 1997. It commenced operations in July 1998 and began trading in August
1998.
Beeland Management serves as the general partner and trading advisor for
the Rogers Raw Materials Fund and utilizes the same trading methods to be
utilized in the Index Fund's proposed trading program. As with the Index Fund,
Rogers Raw Materials Fund's trading is designed to replicate the positions which
comprise the Index from time to time. Beeland Management will attempt to
replicate the composition of the Index by purchasing commodity futures contracts
in the same types and quantities as the Index. This Index consists of a basket
of raw materials employed within the world economy and traded in seasoned
markets, as futures and forward contracts. There are no "short" positions within
the Index.
The Rogers Raw Materials Fund has a lower and different fee structure than
that of the Index Fund. The Rogers Raw Materials Fund is structured for large,
institutional investors, with minimum subscriptions typically in the range of
$500,000. As a result, the performance information for the Rogers Raw Materials
Fund should not be relied upon as any indication of the Index Fund's potential
performance.
Investors in the Rogers Raw Materials Fund are not required to pay a
subscription fee, whereas investors in the Index Fund pay up to a 6%
subscription fee (which includes a 4.5% reallowance to other broker-dealers).
Investors in the Index Fund also pay up to a 1% annual trailing servicing fee.
In addition, the funds have different management fees. Investors in the Fund
39
will pay a management fee of 225 basis points (2.25%) per year. One basis point
is 1/100 of one percent. By comparison, the management fee for Class A limited
partners in the Rogers Raw Materials Fund is 65 basis points (0.65%) and the
management fee for its Class B limited partners, which are subscribers for the
first $10,000,000 received by that fund, is 50 basis points (0.50%). Class A and
B limited partners are allocated their proportionate share of round turn
commissions as well as any regulatory, clearing house or exchange fees. The
amount of these commissions and fees are similar to that of the Fund. Rogers Raw
Materials Fund has also authorized Class C limited partners which would pay a
management fee of 150 basis points (1.50%), but would not be allocated or
charged any round turn commissions for the fund's purchase or sale of futures or
forward contracts. However, they would be allocated their share of regulatory,
clearing house and/or exchange fees. Currently, there are no Class C limited
partners, although there was one Class C limited partner from August 1998 to
July 2001. Unlike the Fund, Rogers Raw Materials Fund does not separately pay an
advisory fee to Hart Capital Management. See "Fees and Expenses of the Fund" on
page 25 of the prospectus.
Beeland Management performs similar administrative duties for Rogers Raw
Materials Fund as it performs for the Fund. Beeland Management is registered as
a commodity pool operator and commodity trading advisor and has the ability and
the right to manage individual customer accounts.
The following capsule shows the annual past performance of Rogers Raw
Materials Fund since its inception of trading (in August 1998) and year-to-date
(through June 2003) and other relevant information.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
CAPSULE PERFORMANCE OF OTHER POOLS CURRENTLY OPERATED OR
MANAGED BY BEELAND MANAGEMENT COMPANY, L.L.C.
FOR THE PERIOD AUGUST 1998 (INCEPTION OF TRADING)
THROUGH JUNE 30, 2003
Rogers Raw Materials Fund is a single fund. However, there are three
different types of units within the Fund. The units differ in their management
fees and in whether brokerage commissions are paid independently or included
within the management fees (i.e., a wrap fee).
NAME OF POOL: ROGERS RAW MATERIALS FUND, L.P. (FUND AS A WHOLE)
Type of Pool: Privately offered
Date of Inception of Trading: August 1998
Total Contributions: $28,600,000 (net of withdrawals)
Current Net Asset Value(1): $43,067,000
Largest Peak-to-Valley Drawdown in last five years(2)(3): 18.12% (September
1998--February 1999)
Largest Monthly Drawdown in last five years(4): 10.46% (November 1998)
Annualized Rate of Return(5): 12.11%
Current Year's Rate of Return (through June 30, 2003): 8.39%
40
(PAGE INTENTIONALLY LEFT BLANK)
41
- ------------------------------
NOTES TO TABLES
(1) "Net Asset Value" is defined by applicable CFTC regulations to mean total
assets minus total liabilities, determined on an accrual basis of accounting
in accordance with generally accepted accounting principles, with each
position in a commodity interest accounted for at fair market value.
(2) "Drawdown" is defined by applicable CFTC regulations to mean losses
experienced by a pool over a specified period of time.
(3) "Largest Peak-to-Valley Drawdown" is the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool,
account or trading program during any period in which the initial month-end
net asset value is not equaled or exceeded by a subsequent month-end net
asset value.
(4) "Largest Monthly Drawdown" is the largest monthly loss experienced by the
pool in any calendar month expressed as a percentage of the total equity in
the pool and includes the month and year of such draw-down.
(5) Rate of return is computed by dividing the net performance by the sum of the
beginning net asset value and net additions, capital withdrawals and
redemptions.
As of June 30, 2003, Rogers Raw Materials Fund has received total
contributions of approximately $ from investors. The following table
shows the monthly and yearly performance of the Rogers Raw Materials Fund, as a
whole, since its inception of trading in August 1998 through June 30, 2003.
<Table>
<Caption>
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YEAR
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------ ----- ------
2003................. 7.07 5.12 (7.58) (4.45) 7.96 1.01 8.39
2002................. (1.18) 4.38 10.13 0.02 (0.56) 3.98 0.61 4.67 2.37 (2.14) 0.45 5.17 30.93
2001................. 1.97 (1.32) (4.15) 4.38 (2.10) (5.86) 1.83 0.52 (8.56) (4.25) (2.24) (0.78) (19.61)
2000................. 6.56 4.57 (1.17) (2.25) 7.35 5.25 (5.99) 10.44 (1.47) (0.59) 5.26 (5.00) 25.16
1999................. 0.75 (4.26) 16.98 5.26 (5.66) 7.44 1.94 5.14 4.56 (3.93) 4.42 3.06 39.48
1998................. (3.81) 8.05 (4.19) (10.46) (1.05) (11.77)
</Table>
FUTURES COMMISSION MERCHANT, INTRODUCING BROKER AND DEALERS
Beeland Management has selected the Price Futures Group, Inc. as the Fund's
introducing broker and Man Financial Inc. as the Fund's clearing broker. The
Price Futures Group, an Illinois corporation, will introduce the Fund's futures
transactions to the clearing broker in return for a portion of the clearing
broker's commission. It will also monitor the futures positions that the
clearing broker reports in the Fund's trading accounts for any errors in trade
or valuation prices.
The Price Futures Group is a registered introducing broker registered with
the CFTC, and is a member of the NFA. The offices of the introducing broker are
located at 141 West Jackson Boulevard, Suite 1340A, Chicago, Illinois 60604, and
the telephone number is (312) 648-2883.
Man Financial, a member of the Man Group of Companies, acts as the clearing
broker for the Fund and, as such, receives commissions for clearing and
executing trades on behalf of the Fund. Man Financial will hold funds as
segregated customer funds, and all payments, including margin payments, to and
from the futures exchanges resulting from the Fund's trades will flow through
Man Financial.
Man Financial is registered under the Commodity Exchange Act, as amended,
as a futures commission merchant and a commodity pool operator, and is a member
of the National Futures Association in such capacities. In addition, Man
Financial is registered with the National Association of Securities Dealers,
Inc. as a broker-dealer. Man Financial, which is part of the Man Group of
Companies, is a member of all major U.S. futures and securities exchanges. Man
Financial's main office is located at One Financial Place, 440 South LaSalle
Street, 20th Floor, Chicago, Illinois 60604. Man Financial's telephone number at
such location is (312) 663-7500.
42
Man Financial acts only as clearing broker for the Fund and as such is paid
commissions for executing and clearing trades on behalf of the Fund. Man
Financial has not passed upon the adequacy or accuracy of this prospectus. Man
Financial neither will act in any supervisory capacity with respect to the
general partner nor participate in the management of the general partner of the
Fund. Therefore, prospective investors should not rely on Man Financial in
deciding whether or not to participate in the Fund.
Beeland Management estimates that the round-turn commissions payable by the
Fund for trades cleared by its futures commission merchants will not exceed 1%.
The brokerage commissions payable by the Fund are subject to change at any time.
Beeland Management, in conjunction with Hart Capital Management, will
select the broker-dealers who will execute trades in government securities,
generally in their discretion.
SOLICITING DEALERS
Members of Beeland Management will assist and provide additional
information and documents to prospective investors that are interested in an
investment in the Fund. Such members may be compensated for their marketing
efforts by broker/dealers with which they are registered and which enter into
selling agent agreements with Uhlmann Price Securities.
There is no underwriter or syndicate group for the offering. However,
Uhlmann Price Securities may enter into agreements with a number of firms which
are registered as broker/ dealers, are members of the NASD and are properly
registered or qualified in the appropriate states to introduce the Fund to
certain of their customers.
Beeland Management will receive a subscription fee of up to 6% of the gross
offering proceeds to cover offering, administrative and marketing expenses and
trailing servicing fee of up to 1.0%. A portion of the subscription fee may be
reallowed to soliciting dealers as selling commissions for each unit they sell.
Subject to certain conditions and exceptions (described below under "Plan of
Distribution"), investors purchasing specified minimum numbers of units will be
entitled to a reduction of the 4.5% reallowance portion of the subscription fee,
and the amount of the reallowance to be reallowed to soliciting dealers, will be
according to the following schedule:
<Table>
<Caption>
Amount of
Purchaser's Investment Amount of
- ------------------------ Maximum Volume
From To Reallowance Discount
- -------- ------------- ----------- ---------
$ 25,000 $249,999 3.5% 1.0%
$250,000 $250,000 over 2.5% 2.0%
</Table>
SUBSCRIPTION AGENT
RESPONSIBILITIES
Derivatives Portfolio Management, LLC, Two Worlds Fair Drive, P.O. Box
6741, Somerset, New Jersey, will serve as the Fund's subscription agent, as well
as the Fund's redemption agent. While Derivatives Portfolio Management will
serve in both capacities, we will refer to Derivatives Portfolio Management in
this prospectus as the subscription agent.
As subscription agent, Derivatives Portfolio Management's responsibilities
will include:
- processing new subscriptions,
- adding new subscribers to the list of limited partners,
- assigning the appropriate units per subscription,
- receiving and disbursing funds to and from investors,
43
- computing the Fund's net asset value per unit, and
- processing redemptions.
The subscription agent is not a trustee and has no management or oversight
responsibilities and no fiduciary duties to the limited partners.
FEES
As compensation for its services, the subscription agent receives a monthly
fee equal to 22.5 basis points of the value of the Fund's net assets as of the
first day of each month, divided by twelve. For example, if net assets equal
$25,000,000, the monthly fee would equal $4,687.50 ($25,000,000 multiplied by
0.00225, then divided by 12). The minimum subscription agent fee per month is
$4,000. In addition to the above fee, the Fund pays the subscription agent $20
per partner per year for expenses associated with mailing and handling ($17.00
per partner for partners that are processed through the Fund's escrow agent
during the initial escrow period).
USE OF PROCEEDS
The net proceeds of the offering, after deducting the subscription fee,
will be used to acquire a portfolio of futures positions consistent with the
Fund's trading policies as well as government securities with the excess.
Generally, not more than 25% of the Fund's assets will be maintained in the
Fund's trading account with its futures commission merchant. Those funds will be
available to acquire a portfolio of futures positions consistent with the Fund's
trading policies. Consistent with the Commodity Exchange Act, all of the assets
of the Fund will be maintained in cash and segregated as customer funds, except
assets, if any, committed as margin on some non-U.S. futures and options
transactions.
The Fund's trading account funds which are not committed as margin may be
invested in U.S. government securities. The Fund will always maintain sufficient
cash in U.S. government securities to close out open positions.
All interest and other earnings earned on the Fund's funds will be paid to
the Fund and not to the broker or other custodian having custody of the funds.
The Fund will not have significant assets or properties other than the
Fund's trading account with its futures commission merchants and the other types
of accounts described in this section. The Fund's account with its futures
commission merchants and some of the other accounts in which the Fund's funds
will be deposited and held are not federally insured or guaranteed.
The Fund will make no loans nor will it borrow money. The assets of the
Fund will not be commingled with the assets of any other entity, nor used as
margin for any other account. Deposit of assets with a commodity broker or swap
dealer as margin shall not constitute borrowing or commingling.
TRANSFERABILITY AND REDEMPTION OF UNITS
The following is a summary of the conditions that must be met in order to
transfer units and to redeem units. You should read the limited partnership
agreement for complete details of the conditions. See, in particular, Article
XIV and Section 8.5 of the limited partnership agreement, a copy of which is
included as Appendix A.
TRANSFERS OF UNITS
Units cannot be assigned or transferred and the assignee cannot become a
substituted limited partner of the Fund until the assignor of the units and the
assignee have delivered an assignment agreement to the Fund's general partner,
and the Fund's general partner gives its written consent to the assignment.
Consent may be given or withheld in the sole and absolute discretion of the
Fund's general partner. The assignee must also provide the Fund's general
partner with written acceptance of the limited partnership agreement and an
opinion of counsel
44
that the transfer will not violate any securities, tax or other laws or rules
and will not affect the tax status or treatment of the Fund. The assignee of the
units is required to pay all expenses incurred in connection with the
assignment. Any assignment of a unit not made in compliance with the limited
partnership agreement is invalid.
REDEMPTION OF UNITS
Units can generally be redeemed on the last trading day of any month after
an initial holding period of three months. With respect to units purchased
during the initial offering period, the three-month holding period will begin on
the initial closing date. With respect to units purchased during the continuous
offering, the three-month holding period will begin on effective date of the
purchase. In order to redeem its units, however, a limited partner must give
prior written notice. The Fund's general partner may require that the redemption
notice be received by the subscription agent 60 days in advance of the desired
redemption date.
The redemption price per unit will be the net asset value per unit as of
the close of business on the withdrawal date. The Fund imposes no redemption
fees or charges. However, the Fund's general partner holds back a nominal amount
at the time of certain redemptions (i.e., most redemptions which are not made at
the close of a fiscal year in order to ensure that regular expenses attributable
to the withdrawn units will be funded. The amount held back by the Fund's
general partner is equal to the greater of 2% of the net asset value per unit as
of the close of business on the withdrawal date, or $100. The held back amount
is intended to cover accrued, but unpaid management fees and other expenses
payable by the Fund and chargeable against net assets as of that date. After the
close of the fiscal year in which the withdrawal was effected, the account of
the limited partner who effected the withdrawal will be adjusted to reflect his
allocated share of management fees and expenses, which shall be charged against
the amount held back. After such charge, any positive balance remaining from the
held-back amount will be promptly paid to the withdrawn limited partner, in the
same manner as the balance of the withdrawal. Net asset value per unit means the
net assets of the Fund at that time divided by the aggregate number of
outstanding units at that time. Net assets means total assets minus total
liabilities, determined in accordance with generally accepted accounting
principles.
The redemption price will not be fixed until the effective date of the
redemption. In other words, limited partners are subject to any change in the
net asset value per unit occurring between the date of their request for
redemption and the effective date of the redemption. That delay may be a period
of up to 60 days. The net asset value per unit could change significantly, for
better or worse, during that period, given the volatile nature of futures
trading.
Beeland Management does not intend to assess any fees or charges for
liquidations. However, it may change this policy in the future.
Derivatives Portfolio Management, the subscription agent of the Fund, will
also process all requests for redemptions. Derivatives Portfolio Management is
not a trustee and has no management or oversight responsibilities and no
fiduciary obligations to the limited partners.
The limited partnership agreement authorizes the general partner of the
Fund to refuse to redeem units if the number of requested redemptions may be
detrimental to the tax status or treatment of the Fund. As further described in
"Federal Income Tax Aspects--Application of the Publicly Traded Partnership
Rules to the Fund" on page 59 of the Prospectus, the Fund relies on a safe
harbor to avoid the adverse tax consequences of being treated as a publicly
traded partnership for passive loss. Under this safe harbor, partnerships will
not be publicly traded for a taxable year if:
- any redemption or repurchase agreements require written notification at
least 60 days before the redemption of the partner's intent to redeem;
45
- the repurchase price is not established until at least 60 days after the
receipt of such notification by the partnership, or alternatively, the
repurchase price is established not more than four times during the
partnership's tax year; and
- the sum of the percentage interests in the partnership that are sold or
otherwise disposed of (including redemptions) during the tax year will
not exceed 10% of the total interests in the partnership capital or
profits.
The limited partnership agreement also authorizes the Fund's general
partner to temporarily suspend all redemptions and to delay payment for
redemptions if during the ten day period preceding the effective date of
withdrawal, futures and forward contracts representing 10% or more of the Fund's
portfolio of futures positions cannot be traded as a result of trading limits in
applicable exchanges.
All units will remain at risk in the business of the Fund in any of these
circumstances. A limited partner therefore may not always be able to redeem his
or her units.
Requests for redemption should be transmitted to Beeland Management at the
principal offices of the Fund set forth on page 1 of this prospectus.
The limited partnership agreement limits the total equity owned by benefit
plan investors by permitting the partnership to automatically redeem units held
by benefit plan investors. Any subscriber which is an entity subject to ERISA
must agree that, if at the closing of any month, the total number of units held
by all ERISA limited partners exceed 24.9% of the aggregate total of units held
by all limited partners, then all ERISA limited partners will be deemed to have
withdrawn, on a pro rata basis, that number of units sufficient to reduce the
number of units held by the ERISA limited partners to not more than 24.9% of the
total units held by all limited partners.
COMMODITY MARKETS
This section is intended to give you an overview of the commodities markets
and futures trading in general. It is not a complete discussion of the futures
markets or futures trading.
COMMODITY FUTURES
Commodity futures contracts are contracts made on a commodity exchange
which provide for the future delivery of various agricultural commodities,
industrial commodities, foreign currencies or financial instruments at a
specified date, time and place. The contractual obligations may be satisfied
either by taking or making physical delivery of an approved grade of the
commodity (or cash settlement in the case of certain futures contracts) or by
entering into an offsetting contract to purchase or sell the same commodity on
the same exchange prior to the designated date of delivery. As an example of an
offsetting transaction in which the physical commodity is not delivered, the
contractual obligations arising from one contract to sell December 2000 wheat on
a commodity exchange may be fulfilled at any time before delivery of the
commodity is required by entering into one contract to purchase December 2000
wheat on the same exchange. In such instance the difference between the price at
which the futures contract to sell was entered into and the price paid for the
offsetting contract, after allowance for the brokerage commission or fees and
exchange and clearing costs, represents the profit or loss to the trader.
The month and year which are part of each commodity contract represent a
delivery month. For example, a contract for December 2000 wheat would be for a
deliverable grade of wheat to certain delivery terminals by a specific date in
December 2000. Each futures contract trades in several delivery months. The term
"near-month" refers to the delivery month that will occur the soonest and "far
month" refers to the delivery month that is farthest out in the future.
Generally, the farthest delivery month is one year in the future. As an example,
in January 2000, the latest delivery month would be January 2001.
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Futures contracts are uniform for each commodity and vary only with respect
to price and delivery time. A commodity futures contract to accept delivery
(buy) is referred to as a "long" contract; conversely a contract to make
delivery (sell) is referred to as a "short" contract. Until a commodity futures
contract is satisfied by delivery or offset it is said to be an "open" position.
Futures exchanges have expanded throughout the world in response to the
globalization of the world's economy. This gives investors the opportunity to
participate in global markets and economic trends.
FORWARD CONTRACTS
Currencies may be purchased or sold for future delivery through banks or
dealers pursuant to what are commonly referred to as "forward contracts." In
such instances, the bank or dealer generally acts as principal in the
transaction and includes its anticipated profit and costs of the transaction in
the prices it quotes. Mark-ups and/or commissions may also be charged on such
transactions. The forward markets are substantially unregulated. However,
certain exchange-traded contracts, such as those on the London Metals Exchange
are actually forward contracts. Unlike futures contracts, over-the-counter
forward contracts are not of any standard size. Rather, they are the subject of
individual negotiation between the parties involved. Moreover, because there is
no clearinghouse system applicable to forward contracts, forward contracts are
not fungible, and there is no direct means of "offsetting" a forward contract by
purchase of an offsetting position on the same (or a linked) exchange as one can
a futures contract. The forward markets provide what has typically been a highly
liquid market for currency trading, and in certain cases the prices quoted for
forward contracts may be more favorable than those quoted for comparable futures
positions on the International Monetary Market of the Chicago Mercantile
Exchange. Unlike futures contracts traded on United States exchanges, no daily
settlements of unrealized profit or loss are made in the case of open forward
contract positions.
Commodity futures and forward prices are highly volatile and are influenced
by, among other things, changing supply and demand relationships, government
agricultural, commercial and trade programs and policies, national and
international political and economic events, weather and climate conditions,
insects and plant disease, purchases and sales by foreign countries and changing
interest rates.
USES OF COMMODITY MARKETS
Two broad classifications of persons who trade in commodity futures and
forwards are "hedgers" and "speculators." Commercial interests, including
farmers, which market or process commodities use the commodities markets
primarily for hedging. Hedging is a protective procedure designed to minimize
losses that may occur because of price fluctuations. For example, a merchandiser
or processor may hedge against price fluctuations between the time it makes a
contract to sell a raw or processed commodity and the time it must perform the
contract as follows: at the time the merchandiser or processor contracts to sell
the commodity at a future date, it simultaneously enters into futures contracts
to buy the necessary equivalent quantity of the commodity and, at the time for
performance of the contract, either accepts delivery under its futures contracts
or buys the actual commodity and closes out the futures position by entering
into an offsetting contract to sell the commodity. Similarly, a processor may
need to purchase raw materials abroad in foreign currencies in order to fulfill
a contract for forward delivery of a commodity or byproduct in the United
States. Such a processor may hedge against the price fluctuation of foreign
currency by entering into a futures (or forward) contract for the foreign
currency. Thus the commodity markets enable the hedger to shift the risk of
price fluctuations to the speculator. The usual objective of the hedger is to
protect the profit that the hedger expects to earn from farming, merchandising
or processing operations, rather than to profit from commodity trading.
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The speculator, unlike the hedger, generally expects neither to deliver nor
receive the physical commodity. Instead, the speculator risks his capital with
the hope of profiting from price fluctuations in commodity futures contracts.
The speculator is, in effect, the risk bearer who assumes the risks that the
hedger seeks to avoid. Speculators rarely take delivery of the physical
commodity but usually close out their futures positions by entering into
offsetting contracts. Because the speculator may take either long or short
positions in the commodity market, it is possible for him to make profits or
incur losses regardless of the direction of price trends.
REGULATION
Commodity exchanges provide centralized market facilities for trading in
futures contracts relating to specified commodities. Among the principal
exchanges in the United States are the Chicago Board of Trade, the Chicago
Mercantile Exchange (including the International Monetary Market) and the New
York Mercantile Exchange, Inc.
Commodity exchanges in the United States are subject to regulation under
the Commodity Exchange Act (the "CEA") by the CFTC. The CFTC is the governmental
agency having responsibility for regulation of U.S. commodity exchanges and
commodity futures trading. The function of the CFTC is to implement the
objectives of the CEA of preventing price manipulation and excessive speculation
and promoting orderly and efficient commodity futures markets. Such regulation,
among other things, provides that futures trading in commodities must be upon
exchanges designated as "contract markets", and that all trading on such
exchanges must be done by or through exchange members. Futures trading in all
commodities traded on domestic exchanges is regulated pursuant to the CEA. The
CFTC adopted rules in 1981 regulating trading of commodity options that had
previously been banned by the CFTC. However, trading in spot commodities and
forward contracts may not be within the jurisdiction of the CFTC and may
therefore be effectively unregulated. Investors should note that various
government agencies have investigated practices engaged in on the floors of the
Chicago Board of Trade, the Chicago Mercantile Exchange and certain New York
exchanges and in this connection a number of floor brokers on the Chicago
Mercantile Exchange were indicted and some were convicted for certain trading
practices.
The CFTC also has exclusive jurisdiction to regulate the activities of
"commodity pool operators" and "commodity trading advisors". Beeland Management
is registered as a commodity pool operator and a commodity trading advisor.
Registration as a commodity pool operator or as a commodity trading advisor
requires annual filings setting forth the organization and identity of the
management and controlling persons of the commodity pool operator or commodity
trading advisor. In addition, the CFTC has authority under the CEA to require
and review books and records of, and review documents prepared by, a commodity
pool operator or a commodity trading advisor. The CFTC imposes certain
disclosure, reporting and record-keeping requirements on commodity pool
operators and commodity trading advisors. The CFTC is authorized to suspend a
person's registration as a commodity pool operator or commodity trading advisor
if the CFTC finds that such person's trading practices tend to disrupt orderly
market conditions, that any controlling person thereof is subject to an order of
the CFTC denying such person trading privileges on any exchange, and in certain
other circumstances.
Futures commission merchants are also subject to regulation by and
registration with the CFTC. With respect to domestic futures and options
trading, the CEA requires all futures commission merchants to meet and maintain
specified fitness and financial requirements, account separately for all
customers' funds, property and positions, and maintain specified books and
records on customer transactions open to inspection by the staff of the CFTC.
The CEA authorizes the CFTC to regulate trading by commodity brokerage firms and
their employees, permits the CFTC to require exchange action in the event of
market emergencies, and establishes an administrative procedure under which
commodity traders may institute complaints
48
for damages arising from alleged violations of the CEA. Under such procedures,
limited partners may be afforded certain rights for reparations under the CEA.
Many exchanges (but currently not the foreign currency futures markets
other than during the first fifteen minutes of a trading day or the foreign
currency forward market) normally have regulations that limit the amount of
fluctuation in commodity futures contract prices during a single trading day.
These regulations specify what are referred to as "daily price fluctuation
limits" or, more commonly, "daily limits". The daily limits establish the
maximum amount the price of a futures contract may vary from the previous day's
settlement price at the end of the trading session. Once the daily limit has
been reached in a particular commodity, no trades may be made at a price beyond
the limit. Positions in the commodity could then be taken or liquidated only if
traders are willing to effect trades at or within the limit during the period
for trading on such day. The "daily limit" rule does not limit losses that might
be suffered by a trader because it may prevent the liquidation of unfavorable
positions. Also, commodity futures prices have moved the daily limit for several
consecutive trading days in the past, thus preventing prompt liquidation of
futures positions and subjecting the commodity futures trader to substantial
losses.
The CFTC and U.S. exchanges have established limits, referred to as
"position limits", on the maximum net long or net short position that any
person, or group of persons acting together, may hold or control in particular
commodities. U.S. exchanges have established speculative position limits for all
commodity contracts for which no such limits have been established. The CFTC has
adopted a statement of policy with respect to the treatment of positions held by
a commodity pool, such as the Fund, under its rules relating to the aggregation
of futures positions for purposes of determining compliance with speculative
position limits. In connection therewith, futures positions of the Fund are
allocated only to the person or entity controlling trading decisions for the
Fund and not to the limited partners. Depending upon the total amount of assets
being managed in both the Fund's account and other accounts controlled directly
or indirectly by the advisors, such position limits may affect the ability of
the advisor to establish particular positions in certain commodities for the
Fund or may require the liquidation of positions.
In addition, pursuant to authority in the CEA, the NFA has been formed and
registered with the CFTC as a self-regulatory body in order to relieve the CFTC
of the burden of direct regulation of commodity professionals. The NFA is
required to establish and enforce for its members training standards and
proficiency tests, minimum financial requirements and standards of fair
practice. Pursuant to permission granted in the CEA, the CFTC has delegated some
of its registration functions to the NFA. Beeland Management is a member of the
NFA.
The above-described regulatory structure may be modified by rules and
regulations promulgated by the CFTC or by legislative changes enacted by
Congress. Furthermore, the fact of CFTC registration of Beeland Management does
not imply that the CFTC has passed upon or approved this offering or their
qualifications to act as described in this prospectus.
MARGINS
Commodity futures contracts are customarily bought and sold on margin
deposits that range upward from as little as less than one percent of the
purchase price of the contract being traded. Because of these low margins, price
fluctuations occurring in commodity futures markets may create profits and
losses that are greater than are customary in other forms of investment or
speculation. Margin is the minimum amount of funds that must be deposited by the
commodity futures trader with the commodity broker in order to initiate futures
trading or to maintain open positions in futures contracts. A margin deposit is
not a partial payment, as it is in connection with the trading of securities,
but is like a cash performance bond; it helps assure the trader's performance of
the commodity futures contract. Because the margin deposit is not a partial
payment of the purchase price, the trader does not pay interest to his broker on
a remaining balance. The minimum amount of margin required with respect to a
particular futures contract is
49
set from time to time by the exchange upon which such commodity futures contract
is traded and may be modified from time to time by the exchange during the term
of the contract. Brokerage firms carrying accounts for traders in commodity
futures contracts may increase the amount of margin required as a matter of
policy in order to afford further protection for themselves.
When the market value of a particular open commodity futures position
changes to a point where the margin on deposit does not satisfy the maintenance
margin requirements, a margin call will be made by the trader's broker. If the
margin call is not met within a reasonable time, the broker is required to close
out the trader's position. Margin requirements are computed each day by the
trader's commodity broker. With respect to the Fund's trading, the Fund, and not
the limited partners personally, will be subject to the margin calls.
PLAN OF DISTRIBUTION
THE OFFERING
There is no underwriter for this offering. Uhlmann Price Securities will
act as selling group manager in the offering and will solicit subscribers,
acting primarily through Beeland Management. In addition, units will also be
offered by soliciting dealers on a best efforts basis. Each of these soliciting
dealers is registered as a broker-dealer with the SEC and is a member of the
National Association of Securities Dealers, Inc. Uhlmann Price Securities, LLC
acts as the managing dealer in the Offering.
Uhlmann Price Securities through Beeland Management will receive a
subscription fee of up to 6% of the gross offering proceeds. A portion of the
subscription fee may be reallowed by Uhlmann Price Securities to soliciting
dealers as selling commissions for each unit they sell. Subject to certain
conditions and exceptions, investors purchasing specified minimum numbers of
units will be entitled to a reduction of the reallowance portion of the
subscription fee. See "Soliciting Dealers" above for the amount of the
subscription fee that may be reallowed to soliciting dealers.
Subject to certain conditions and exceptions explained below, investors
making an initial purchase of at least $25,000 worth of units (250 units)
through the same soliciting dealer will be entitled to a reduction of the 4.5%
reallowance portion of the subscription fee in accordance with the following
schedule:
<Table>
<Caption>
Amount of
Purchaser's Investment
- ------------------------ Maximum Amount of
From To Subscription Fee Volume Discount
- -------- ------------- ---------------- ---------------
$ 25,000 $249,000 3.5% 1.5%
$250,000 $250,000 over 2.5% 2.5%
</Table>
The Fund will accept subscriptions throughout the continuous offering
period, which can be terminated by Beeland Management at any time.
After the initial closing and the acquisition by the Fund of a portfolio of
futures positions, the purchase price for units will be the net asset value per
unit as of the close of trading on the trading day preceding the effective date
of the purchase.
Any sales of units will be effective on the first business day of a month,
and the purchase price for the units will be the net asset value per unit as of
the close of trading on the trading day preceding the effective date of the
purchase.
You must submit your subscription at least five (5) days prior to the end
of a month. You will become a limited partner on the first day of the month
after your subscription is processed and accepted and payments are received and
cleared. During the continuous offering, you will receive units based on the net
asset value on the purchase date. Because net asset value
50
fluctuates daily, you will not know the purchase price of your units at the time
you subscribe during the continuous offering.
The minimum subscription is $10,000 for first time investors. Subsequent
investments by existing limited partners may be in any amount as Beeland
Management may accept. Investments above the minimum and all subsequent
investments must be made in full units. The purchase price for units will be the
net asset value per unit.
The total purchase price for the units must be paid at the time of
executing the subscription agreement. The purchase price must be paid in cash or
its equivalent.
All subscriptions are irrevocable, except only as may be provided by the
securities laws of your state. Beeland Management has the right, however, to
totally or partially reject any subscription for units. Beeland Management may
require you to provide additional information and documentation.
All units will be issued subject to the collection of good funds, and any
units issued to a subscriber who has not provided collectible funds (whether in
the form of a bad check or draft, or otherwise) will be canceled.
HOW TO INVEST
In order to purchase units, you must complete and sign a copy of the form
of subscription agreement that is included with this prospectus as Appendix B
and a copy of the counterpart signature page of the limited partnership
agreement and deliver and/or mail them and the full purchase price for the units
subscribed for to the subscription agent. Subscription proceeds accepted by
Beeland Management for units sold will be immediately available for use by the
Fund.
Alternatively, subscribers may fax the completed subscription agreement and
counterpart signature page to the subscription agent, while the appropriate
subscription proceeds are transferred by bank wire transfer to Mellon Bank.
Manually signed copies of the subscription agreement and counterpart signature
page should then be mailed to the subscription agent.
The subscription agreement contains various representations, warranties,
agreements and acknowledgments, and you should therefore carefully read the
subscription agreement. By executing and returning the Subscription Agreement,
you represent and warrant, among other things, that you:
- have received a copy of the prospectus as supplemented at least 5
business days prior to the signing of the subscription agreement;
- either: (i) have a net worth (excluding home, home furnishings and
automobiles) of at least $45,000 and estimate that (without regard to
investment in the fund) you have gross income due in the current year of
at least $45,000; or (ii) have a net worth (excluding home, home
furnishings and automobiles) of at least $150,000 or such higher
suitability as may be required by certain states and described in "Who
May Invest" below;
- are purchasing units for your own account;
- acknowledge that the investment is not liquid except for limited
redemption rights;
- if acting on behalf of an employee benefit plan subject to ERISA, have
considered the investment in light of the related risks and has
determined that the investment is consistent with the plan fiduciary's
responsibilities under ERISA; and
- are aware that various types of institutions, including pension plans and
trusts, are governed by laws and regulations relating to the various
types of investments such institutions are allowed to make.
51
Each of the representations and warranties are primarily intended to assure
and confirm that you understand the Fund's structure and operation prior to
making your investment. In addition, they enable the Fund, its general partner
and the soliciting dealer to comply with certain requirements under the CEA and
various state securities laws. The Fund and the general partner will assert the
representations and warranties, if necessary to demonstrate compliance with the
CEA and such state securities laws.
The general partner and soliciting dealers selling units on behalf of the
Fund are responsible for making every reasonable effort to determine that the
purchase of units is a suitable and appropriate investment for each limited
partner, based on the information provided by the subscriber regarding his or
her financial situation and investment objectives. For a period of at least six
years, the general partner or the soliciting dealers will maintain records of
the information used to determine that an investment in units is suitable and
appropriate for each limited partner.
BY EXECUTING THE SUBSCRIPTION AGREEMENT, YOU DO NOT WAIVE ANY RIGHTS YOU
HAVE UNDER THE SECURITIES ACT OF 1933.
WHO MAY INVEST
You must represent and warrant in the Subscription Agreement that you meet
the minimum financial standards for investing.
The following table describes those minimum suitability requirements:
<Table>
<Caption>
State Income Requirements Net Worth Requirements
- ----- ------------------- ----------------------
All States Minimum annual gross income Minimum of $150,000* or
of $45,000 if net worth is Minimum of $45,000* (with
less than $150,000 and at minimum annual gross income
least $45,000 of $45,000)
The following additional
requirements are applicable
if you are a resident of the
following states:
Arizona, California, Indiana, Minimum annual gross income Minimum of $225,000* or
Massachusetts, Michigan, of $60,000 if net worth is Minimum of $60,000* (with
Oregon, South Carolina and less than $225,000 minimum annual gross income
Washington of $60,000)
Iowa, North Carolina and Minimum annual taxable income Minimum of $225,000* or
Texas of $60,000 if net worth is Minimum of $60,000* (with
less than $225,000 minimum taxable income of
$60,000)
Ohio, Pennsylvania and None Investment may not exceed 10%
Washington of the investor's liquid net
worth
</Table>
- ------------------------------
* Excluding home, home furnishings and automobiles.
These standards are, in each case, only regulatory minimums. Merely because
you meet the standards does not mean the investment is suitable for you. If the
investment in the Fund is being made by a fiduciary account, these minimum
standards must be met by the beneficiary, the fiduciary account, or by the donor
or grantor who supplies the funds to purchase the units if the donor or grantor
is the fiduciary.
52
None of the states have a minimum purchase requirement except for Iowa
which has a minimum purchase requirement of $3,000 for IRA and Roth IRA.
However, the Fund requires a minimum purchase of $10,000 for first time
investors.
CONFIRMATION OR REJECTION OF SUBSCRIPTIONS
Subscribers whose subscriptions are accepted will be sent a confirmation of
his or her purchase within 10 days after the first day of the month after their
subscription is processed and accepted and payments are received and cleared.
Beeland Management may reject any subscription for any reason.
ERISA CONSIDERATIONS
An investment in the Fund might or might not be suitable for an employee
benefit plan. If you are a person with investment discretion on behalf of an
employee benefit plan, before investing in the Fund you should determine whether
such an investment is permitted under the governing instruments of the plan. You
should also determine if such an investment is appropriate for the particular
plan in view of its overall investment policy, the composition and
diversification of its portfolio, and the other considerations discussed below.
As used in this section, the term "employee benefit plans" refers to plans
and accounts of various types, including their related trusts that provide for
the accumulation of a portion of an individual's earnings or compensation, as
well as investment income, typically free from federal income tax until funds
are distributed from the plan. These plans include corporate pension and
profit-sharing plans, such as so-called "401(k)" plans, "simplified employee
pension plans," so-called "Keogh" plans for self-employed individuals (including
partners), and, for purposes of this discussion, individual retirement accounts
(IRAs), as described in Section 408 of the Internal Revenue Code of 1986, as
amended.
The DOL has adopted so-called plan asset regulations under ERISA. Under
these regulations, if an employee benefit plan acquires an equity interest in an
entity such as the partnership which is not a "publicly offered security," the
plan's assets will generally be considered to include both the equity interest
in the entity and an individual interest in each of the entity's underlying
assets. This will not be the case if (a) the equity participation in the entity
by employee benefit plans is not "significant" (defined as 25% or more of any
class of the entity's equity interests) or (b) the entity qualifies for another
exception under the plan asset regulations.
If the underlying assets of the partnership were considered plan assets,
those persons who have discretion in the management of the partnership and the
partnership's assets would become fiduciaries of the plan. In addition,
financial transactions involving the partnership's assets would be subject to
ERISA reporting and disclosure requirements that the partnership generally could
not comply with.
Beeland Management expects that Units will be "publicly offered securities"
for purposes of the DOL plan asset regulations, with the result that the
regulations should not apply. The DOL defines a "publicly offered security" as a
security that is (a) freely transferable (determined on the basis of all
relevant facts and circumstances), (b) either registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, or sold as part of a public
offering under an effective registration statement under the Securities Act of
1933 and then timely registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, and (c) part of a class of securities that is "widely
held."
A class of securities is "widely held" only if it is owned by 100 or more
investors independent of the issuer and of one another. Once a class of
securities is widely held, it will not lose that status if the number of
independent investors later falls below 100 as a result of events beyond the
control of the issuer (for example, redemptions of Units).
53
Units should be freely transferable within the meaning of the DOL plan
asset regulations, and Units will be registered under securities laws and
regulations as described above. Beeland Management expects that there will be in
excess of 100 investors over time, given the number of Units being offered and
the relatively small minimum purchase requirement. However, there may be a time
following the initial offering of Units when the Fund does not have 100 or more
investors, and it is possible that Units will never be acquired by 100 or more
investors.
In any case where Units are not "widely held" and therefore not considered
"publicly offered securities," the Fund intends to limit investment by employee
benefit plans to less than 25% of the Units. To comply with this limitation,
Beeland Management reserves the right to:
- determine that Units may not be acquired by an employee benefit plan
investor;
- require an employee benefit plan investor to redeem some or all of its
Units; and
- limit the transfer of Units by investors to employee benefit plans to
ensure that investment by employee benefit plans is less than 25% of the
Units at any time that the Units are not "publicly offered securities."
Beeland Management believes, based upon the advice of its legal counsel,
that income earned by the Fund will not constitute "unrelated business taxable
income" under Section 512 of the Internal Revenue Code of 1986 to employee
benefit plans and other tax-exempt entities. Although the Internal Revenue
Service has issued favorable private letter rulings to taxpayers in somewhat
similar circumstances, other taxpayers may not use or cite these rulings as
precedent. If you have investment discretion on behalf of an employee benefit
plan, you should consult a professional tax advisor regarding the application of
the foregoing matters to the purchase of Units.
Units may not be purchased with the assets of an employee benefit plan if
Beeland Management, Uhlmann Price Securities, any selling agent or any of their
affiliates either:
- has investment discretion with respect to the investment of these plan
assets;
- has authority or responsibility to give or regularly gives investment
advice with respect to these plan assets for a fee and under an agreement
or understanding that this advice will serve as a primary basis for
investment decisions with respect to the plan assets and that this advice
will be based on the particular investment needs of the plan; or
- is deemed to be an employer maintaining or contributing to the plan.
Subscribing for Units does not create an IRA or other employee benefit
plan. If you are considering the purchase of Units on behalf of an IRA or other
employee benefit plan, you must first ensure that the plan has been properly
established in accordance with the Internal Revenue Code and applicable
regulations and administrative rulings, and that the plan has been adequately
funded. Then, after taking into account all of the considerations discussed
above, the trustee or custodian of a plan who decides to or who is instructed to
do so may subscribe for Units, subject to the applicable minimum subscription
requirement.
Acceptance of subscriptions on behalf of IRAs or other employee benefit
plans is in no respect a representation by Beeland Management, Uhlmann Price
Securities any selling agent or the Fund that the investment meets all relevant
legal requirements with respect to investments by plans generally or any
particular plan, or that the investment is appropriate for plans generally or
any particular plan.
FEDERAL INCOME TAX ASPECTS
The general partner of the Fund has been advised by its counsel, Henderson
& Lyman that, in its opinion, the Fund will be classified as a partnership for
federal income tax purposes. In addition, the general partner of the Fund has
been advised by its counsel that, in its opinion, the
54
following summary fairly and accurately describes the material federal income
tax consequences to United States taxpayers that are individuals that invest in
the Fund. This summary discusses the following topics:
- Taxation of limited partners on profits and losses,
- Allocation of partnership items,
- Limitations on the use of capital losses, passive activity losses, losses
of "at-risk" limited partners and syndication expenses,
- Limitations relating to itemized deductions of individuals, interest and
Code Section 183,
- Cash distributions and unit redemptions, and
- Taxation on a sale or other disposition of units, on capital gains and
losses, on commodity transactions, and on interest income.
In each instance where Beeland Management expresses a belief or an
expectation in the following summary of "Federal Income Tax Aspects" concerning
the tax consequences of an aspect of an investment in the Fund, that belief or
expectation is based upon the advice and opinion of its counsel.
The opinion of Counsel has been filed as an exhibit to the registration
statement of which this prospectus is a part and is based and conditioned on
various assumptions and representations as to certain factual matters made by
the Fund's general partner. Henderson & Lyman has not independently verified the
general partner's representations. Their opinion of Henderson & Lyman is based
on the Code and the regulations thereunder currently in effect and on
administrative and judicial interpretations thereof, all of which are subject to
change at any time, possibly with retroactive effect. A complete discussion of
all federal, state and local tax aspects of an investment in the Fund is beyond
the scope of the following summary, and prospective investors should consult
their own tax advisers particularly as respects the effect of their own
individual tax characteristics. Legislation is from time to time pending in
Congress. No attempt has been made to describe pending legislation in this
document and its final form cannot be predicted at this time. An opinion of
counsel represents counsel's legal judgment, is not binding on the IRS or a
court, and does not constitute a guarantee. The Fund has not asked for a ruling
from the IRS with respect to any matter, and there can be no assurance that the
IRS or a court would not take a position contrary to that set forth herein.
THE FUND'S PARTNERSHIP TAX STATUS
Current regulations permit the Fund to elect to be treated as a partnership
for federal income tax purposes. Even if the Fund does not affirmatively elect
to be treated as a partnership, current regulations provide that the Fund will
be classified as a partnership for federal income tax purposes so long as it has
two or more partners.
Pursuant to Code Section 7704, "publicly traded partnerships" are taxed as
corporations. If the Fund were treated as a corporation for federal income tax
purposes, the income of the Fund would be taxed to the Fund at corporate rates,
no losses of the Fund could be used by partners to offset their own income and
all or a portion of any distribution by the Fund to the partners would be taxed
to them as dividends to the extent of the current and accumulated earnings and
profits of the Fund. Based on the expected income of the Fund and other
restrictions, including the restrictions on transfers of units and the
provisions requiring advance written notice of withdrawals, the Fund will not be
treated or taxed as a "publicly traded partnership." See "Federal Income Tax
Aspects--Application of the Publicly Traded Partnership Rules to the Fund"
below.
The discussion which follows assumes that the Fund will be treated as a
partnership for federal income tax purposes.
55
TAXATION OF LIMITED PARTNERS ON PROFITS AND LOSSES OF THE FUND
The Fund will not pay federal income tax. Rather, each partner must report
and pay his distributive share of the Fund's income, gains, loss, deductions,
credits and other items (collectively, "Partnership Items") for the Fund's
taxable year ending with or within the partner's taxable year. A partner must
report and pay taxes on his distributive share of Partnership Items for a
particular taxable year whether or not any cash is actually distributed to him
in that year.
ALLOCATIONS OF PARTNERSHIP ITEMS
A limited partner's distributive share of Partnership Items will be
determined under the limited partnership agreement so long as the allocations in
the limited partnership agreement have substantial economic effect. Were the
allocation provisions in the limited partnership agreement found to lack
substantial economic effect, each partner's distributive share of Partnership
Items would be determined by the IRS on the basis of the partner's interest in
the Fund, based on all the facts and circumstances.
The IRS has issued final regulations which contain extensive rules
interpreting the substantial economic effect standard. In general, in order for
allocations to have substantial economic effect, the allocations must be charged
or credited to the partners' capital accounts (which are different than the
capital accounts provided for in the limited partnership agreement) and the
capital accounts must control distribution of assets upon liquidation. Beeland
Management believes that the allocations in the limited partnership agreement
will be respected for federal income tax purposes either under the "substantial
economic effect" or will satisfy a substitute "alternative test" or "economic
effect equivalence test." The limited partnership agreement does not meet a
third requirement for substantial economic effect, which is that a partner must
make a contribution to the Fund equal to any deficit in his capital account.
Accordingly, under the regulations and the limited partnership agreement, losses
will not be allocable to a partner in excess of the partner's capital
contributions plus properly allocated profits less any prior distributions.
Unexpected violations of this rule are cured under the limited partnership
agreement by allocating items of income and gain to partners with a deficit
capital account balance.
Items of ordinary income, as well as any items of expense and deduction,
will be allocated pro rata among the partners based on their respective capital
accounts as of the end of each accounting period in which the items of ordinary
income and expense and deduction accrue, after taking into account the
allocation of management fees attributable to such partner.
Capital gain or loss from the Fund's trading activities will be allocated
as follows. There shall be established a tax basis account with respect to each
outstanding partnership interest. The initial balance of each tax basis account
shall be the amount paid to the Fund for each partner's partnership interest. As
of the end of each fiscal year, each tax basis account shall be increased to
reflect the income allocated to a partner during the accounting period for
financial accounting purposes, and shall be reduced to reflect items of expense
and deduction allocated during the year for financial accounting purposes and
the amount of any distributions made during the accounting period. When a
partnership interest is redeemed, the tax basis account attributable to such
partnership interest or redeemed portion of such partnership interest shall be
eliminated.
Capital gain will be allocated first to each partner who has redeemed a
partnership interest during an accounting period up to any excess of the amount
received upon redemption of the partnership interest over the tax basis account
maintained for the redeemed partnership interest. Any remaining capital gain
shall be allocated among the partners whose capital accounts are in excess of
their tax basis accounts (after the adjustments described in the preceding
paragraph are made for such accounting period) in the ratio that each such
partner's excess bears to all such partners' excesses. If the gain to be so
allocated is greater than the excess of all such
56
partners' capital accounts over all such tax basis accounts, the excess shall be
allocated among all partners in the ratio that each partner's capital account
bears to all partners' capital accounts.
Capital loss will be allocated first to each partner who has redeemed a
partnership interest during a fiscal year up to any excess of the tax basis
account maintained for the redeemed partnership interest over the amount
received upon redemption of the partnership interest. Any remaining capital loss
shall be allocated among all partners whose tax basis accounts are in excess of
their capital accounts (after all adjustments to the partner's tax basis
accounts are made for such accounting period) in the ratio that each such
partner's excess bears to all such partners' excesses. If the capital loss to be
so allocated is greater than the excess of all tax basis accounts over all
partners' capital accounts, the excess loss shall be allocated among all
partners in the ratio that each partner's capital account bears to all partner's
capital accounts.
For purposes of these allocations, any gain or loss required to be taken
into account in accordance with the "mark-to-market" rules of Section 1256(a)(1)
of the Code shall be considered a recognized gain or loss.
BASIS LIMITATION ON THE USE OF LOSSES
A limited partner may deduct Fund losses only to the extent of the limited
partner's tax basis in its units. Generally, a limited partner's tax basis is
the amount paid for the units reduced (but not below zero) by the limited
partner's share of any Fund distributions, losses and expenses, and increased by
the limited partner's share of the Fund's income and gains. Losses disallowed
under this limitation are suspended and may be carried forward and deducted in
subsequent taxable years, subject to this and all other applicable limitations.
AT-RISK LIMITATION ON THE USE OF LOSSES
A limited partner subject to "at-risk" limitations (generally,
non-corporate taxpayers and closely-held corporations) can only deduct losses to
the extent the limited partner is "at-risk." The "at-risk" amount is equal to
the total of all the money the limited partner contributed to the Fund (except
to the extent that the money contributed was borrowed by the limited partner
either without recourse to the limited partner or from a person with an interest
in the partnership or a person related to such a person), reduced (but not below
zero) by the limited partner's share of any Fund distributions, losses and
expenses and increased by the limited partner's share of the Fund's income and
gains. Losses denied under this limitation are suspended and may be carried
forward and deducted in subsequent taxable years, subject to this and other
applicable limitations.
LIMITATIONS ON THE USE OF CAPITAL LOSSES
Capital losses may be used to offset short-term or long-term capital gains
allocated to a partner, plus (for limited partners other than corporations) up
to $3,000 ($1,500 in the case of a married individual filing a separate return)
of ordinary income each year. Generally, noncorporate taxpayers may carry
forward, but may not carry back, unused net capital losses. However, an
individual (but not an estate, trust or corporation) may carry unused net
capital losses from trading in Section 1256 Contracts back to each of the three
preceding years to the extent of the capital gain net income for such preceding
year from trading in Section 1256 Contracts (or of overall net capital gain
income for the year, if less). See "Federal Income Tax Aspects--Taxation on
Commodity Transactions" below for an explanation of Section 1256 Contracts.
LIMITATIONS ON THE USE OF PASSIVE ACTIVITY LOSSES
The Code limits the deductibility of losses from business activities in
which a taxpayer (limited to individuals, certain estates and trusts, personal
service corporations or closely-held corporations) does not materially
participate ("Passive Losses"). Passive Losses generally are deductible only to
the extent of income from other passive activities. Passive activities include
any activity that the taxpayer carries on as a limited partner, but do not
include rental real estate
57
activities under certain circumstances. Passive Losses in any year cannot be
used to offset earned income, active business income or portfolio income (such
as dividends, interest, royalties and nonbusiness capital gains), including
portfolio income passed through to a taxpayer from a passive activity, but can
only be used to offset income from other passive activities. Passive Losses
which are not deductible in any year may be carried over to succeeding years
indefinitely and used to offset income from passive activities in such
succeeding years and may be deducted upon the taxpayer's disposition of its
entire interest in the passive activity. Partners which are closely held
corporations may use their share of Passive Losses from the Fund to offset net
active income, but not portfolio income. Interest expense incurred in connection
with a passive activity or to acquire or carry an interest in a passive activity
is included in calculating Passive Loss and thus would be subject to any
limitations on the deductibility of Passive Losses.
Under the regulations, the trading of personal property, such as
commodities contracts and futures and options thereon, will not be treated as a
passive activity. Accordingly, a partner's distributive share of items of
income, gain, deduction or loss from the Fund will not be treated as passive
income or loss and Fund gains allocable to partners will not be available to
offset Passive Losses from sources outside the Fund. Fund gains allocable to
partners will, however, be available to offset losses with respect to portfolio
investments, such as stocks and bonds. Moreover, any Fund losses allocable to
partners will be available to offset other income, regardless of the source of
the income.
LIMITATIONS ON ITEMIZED DEDUCTIONS OF INDIVIDUALS
If the Fund is treated as engaged in an investment activity (and not in a
trade or business), a limited partner taxed as an individual would be allowed a
deduction for the limited partner's share of general partnership expenses only
to the extent that the total of the limited partner's investment and other
miscellaneous expenses exceeds 2% of the limited partner's adjusted gross
income. In addition, for regular tax purposes (but not for alternative minimum
tax purposes), the amount of itemized deductions that non-corporate partners
(other than estates and trusts) having adjusted gross income in excess of a
threshold amount will be allowed to deduct is reduced by the lesser of (i) 3% of
adjusted gross income over the threshold amount, or (ii) 80% of the amount of
itemized deductions otherwise allowable for such taxable year. For 2003, the
threshold amount is $139,500 ($69,750 for married taxpayers filing separately).
Certain deductions, including the deduction for investment interest, are not
affected by either of these limitations. Because of the limited nature of the
trading activities of the Fund, Beeland Management believes that the Fund will
be treated as engaging in an investment activity rather than the trade or
business of trading commodities.
However, because of the absence of IRS rules or substantial precedent
involving investment vehicles whose activities and operations are similar to
that of the Fund, Wildman, Harrold, Allen & Dixon's opinion on this particular
matter is limited to a "more likely than not" standard, rather than the higher
standard of certainty otherwise expressed in the opinion.
LIMITATION ON THE USE OF SYNDICATION EXPENSES
Neither the Fund nor any partner will be entitled to any deduction for
syndication expenses, that is, amounts paid or incurred in connection with
issuing and marketing the units. In addition, there is a risk that some portion
of any brokerage fees would be treated as a nondeductible payment by the Fund of
syndication expenses.
INTEREST LIMITATIONS
A non-corporate partner may deduct the total of the limited partner's
interest expense incurred or continued to purchase or carry "property held for
investment" only to the extent of the limited partner's net "investment income"
from all such property the limited partner holds. A unit in the Fund should be
considered "property held for investment", and the interest expense incurred by
a limited partner to purchase or carry a unit and such limited partner's
distributive
58
share of Fund investment interest expense should generally be subject to this
limitation. Deductions limited under this rule may be carried forward
indefinitely, subject to this and other applicable limitations. A limited
partner's net investment income will not include that portion of investment
income derived from long-term capital gains unless the partner elects to treat
such gains as short-term gains.
CODE SECTION 183 LIMITATIONS
Section 183 of the Code sets forth the general rule that no deduction is
allowable to an individual for an activity not engaged in for profit. If the
gross income derived from an activity for three or more of the taxable years in
the period of five consecutive taxable years exceeds the deductions attributable
to such activity, the activity is rebuttably presumed to be engaged in for
profit. Although Beeland Management intends for the business venture to be
profitable, because of the risks of loss involved in this type of business,
there is a possibility that income from the activity will not exceed the
deductions attributable to such activity for three or more years out of the five
years, with the result being that the rebuttable presumption that the activity
is engaged in for profit will not be available. However, Beeland Management
believes that all of the Fund's activities will be undertaken with a profit
motive.
CASH DISTRIBUTIONS AND UNIT REDEMPTIONS
To the extent of the limited partner's tax basis in its units, cash
distributed to a limited partner by the Fund upon redemption of units will
constitute a return of capital that will not be reportable as taxable income,
but will reduce the limited partner's tax basis in its units. To the extent that
cash distributions exceed a limited partner's tax basis in its units, such
distributions will be taxable to the limited partner as gain from the sale or
exchange of the units. The cash distributed to the limited partner is deemed to
include any liabilities of the Fund allocated to such partner for federal income
tax purposes. For federal income tax purposes only, the recourse and nonrecourse
liabilities of the Fund are allocated among the partners in the manner specified
in the regulations. Liabilities allocated to a partner increase that partner's
tax basis and reallocation of a liability to another partner decreases a
partner's tax basis. See "Federal Income Tax Aspects--Basis Limitation on the
Use of Losses" above for information on the calculation of tax basis.
Accordingly, the cash distributed to the limited partner is deemed to include
the amount of any liabilities allocated to the limited partner. Upon complete
redemption of all of a limited partner's units, the limited partner may
recognize loss to the extent of any unrecovered basis in the redeemed units. If
the limited partner is not a "dealer" with respect to the units and has held its
units for more than one year, any gain or loss on their redemption generally
should be long-term capital gain or loss.
TAXATION ON A SALE OR OTHER DISPOSITION OF UNITS
A partner will recognize gain or loss on the sale or exchange of the
partner's unit equal to the difference between the amount realized on the sale
and the partner's tax basis in the unit. The amount realized includes any
liabilities of the Fund allocated to such partner for federal income tax
purposes. For federal income tax purposes only, the recourse and nonrecourse
liabilities of the Fund are allocated among the partners in the manner specified
in the regulations. Liabilities allocated to a partner increase that partner's
tax basis and reallocation of a liability to another partner decreases a
partner's tax basis. See "Federal Income Tax Aspects--Basis Limitation on the
Use of Losses" above for information on the calculation of tax basis. The amount
realized by a partner on the sale of the partner's interest includes the
liabilities allocated to such partner. As a result, the tax imposed on the sale
of a unit may exceed the cash and other consideration received by the seller. In
such cases the tax will have to be paid by the seller with funds from other
sources. If the partner is not a "dealer" with respect to the units and has held
the units for more than one year, any gain or loss on their redemption generally
should be long-term capital gain or loss.
59
TAXATION OF COMMODITY TRANSACTIONS
"Section 1256 Contracts" are futures and most options traded on U.S.
exchanges and certain foreign currency contracts. For tax purposes, Section 1256
Contracts that remain open at year-end are treated as if the position were
closed at year-end and the resulting gain or loss is then deemed taxable (I.E.,
the "marked-to-market rules"). The gain or loss on all Section 1256 Contracts is
characterized as 60% long-term capital gain or loss and 40% short-term capital
gain or loss regardless of how long the position was open.
Section 1256 Contracts do not include property held for sale to customers
in the ordinary course of a trade or business. The activities of the Fund would
result in ordinary income if the Fund were considered to hold property for sale
to customers in the ordinary course of a trade or business. The Fund does not
expect to hold its commodity interests for sale to customers in the ordinary
course of a trade or business.
The "short sale" rules may apply to positions held by the Fund so that what
might otherwise be characterized as long-term capital gain would be
characterized as short-term capital gain or potential short-term capital loss as
long-term capital loss. Furthermore, "wash sale" rules, which prevent the
recognition of a loss from the sale of a security where a substantially
identical security is (or has been) acquired within a prescribed time period,
also apply where certain offsetting positions (other than identified straddle
positions) are entered into within the prescribed period.
It is unclear to what extent the capitalization and wash sale rules would
apply to straddles consisting of Fund transactions and transactions by a partner
in his individual capacity. Each prospective limited partner should review the
application of these rules to the limited partner's own particular tax
situation, with special regard to the potential interaction between Fund
operations and commodities transactions entered into by the prospective limited
partner in an individual capacity.
TAX ON CAPITAL GAINS AND LOSSES
Long-term capital gains--net gain on capital assets held more than one year
and 60% of the gain on Section 1256 Contracts--are taxed at a maximum rate of
20% for individuals. Short-term capital gains--net gain on capital assets held
less than one year and 40% of the gain on Section 1256 Contracts--are subject to
tax at the same rates as ordinary income, with a maximum rate of 39.6% for
individuals.
INTEREST INCOME
Interest received by the Fund is taxed as ordinary income.
APPLICATION OF THE PUBLICLY TRADED PARTNERSHIP RULES TO THE FUND
Under Code Section 7704, certain publicly traded partnerships are treated
as corporations for federal income tax purposes. Publicly traded partnerships,
as defined in Code Section 7704(b), are partnerships whose equity interests are
traded on an established securities market or are readily tradable on a
secondary market (or the substantial equivalent thereof). Even if a partnership
is considered to be publicly traded, Code Section 7704(c) provides that such a
partnership will not be treated as a corporation for federal income tax purposes
if, as to each taxable year of its existence, (i) with certain exceptions to be
prescribed by forthcoming regulations, the partnership is not required to
register under the federal Investment Company Act of 1940 Act, and (ii) at least
90% of its gross income is "qualifying income," such as interest, dividends,
gains from the disposition of stock or securities, and, in the case of a
partnership that has as a principal activity the buying and selling of
commodities and commodity instruments, income and gains from such commodities
transactions.
60
Based on the Fund's objectives and trading policies as described in this
prospectus, at least 90% of the annual gross income of the Fund will consist of
qualifying income, as defined above. Accordingly, Beeland Management believes
that the Fund could be expected to satisfy the gross income requirement in each
of its taxable years, beginning with the current taxable year. Further, so long
as the partnership is engaged primarily in commodity trading, it will not be
required to register under the Investment Company Act of 1940. Therefore, the
Fund does not expect to be taxed as a corporation under Code Section 7704 even
if it were to be viewed as publicly traded.
However, reliance on the gross income exception described above subjects
partners who are subject to the passive activity loss rules to certain adverse
tax consequences. See "Federal Income Tax Aspects--Limitations on the Use of
Passive Activity Losses" above. The Fund may avoid the adverse tax consequences
of being treated as a publicly traded partnership for passive loss purposes if
it meets certain safe harbors prescribed by the IRS regulations. The regulations
provide that interests in a partnership will not be treated as readily tradable
on a secondary market or the substantial equivalent thereof under certain
circumstances described in the regulations (essentially consisting of five safe
harbors and a transition rule). However, the failure of a partnership to satisfy
any of the safe harbors will not establish or give rise to a presumption that
the interests in the partnership will be treated as readily tradable on the
substantial equivalent of a secondary market. In general, the safe harbors
relate to (a) private placements, (b) transfers not involving trading, (c) other
circumstances involving no actual trading, (d) redemptions or repurchases (the
"Redemption or Repurchase Safe Harbor"), and (e) matching services. Under the
Fund's limited partnership agreement and the facts and circumstances which
Beeland Management expects will exist after the offering, the only safe harbor
expected to apply to the Fund is the Redemption or Repurchase Safe Harbor.
However, its applicability to the Fund will depend upon the facts and
circumstances present in each taxable year and no assurance can be given that
the Fund will meet this safe harbor. The regulations provide that partnerships
will not be publicly traded for a taxable year if (i) any redemption or
repurchase agreements require written notification at least 60 days before the
redemption of the partner's intent to redeem; (ii) the repurchase price is not
established until at least 60 days after the receipt of such notification by the
partnership, or alternatively, the repurchase price is established not more than
four times during the partnership's tax year; and (iii) the sum of the
percentage interests in the partnership that are sold or otherwise disposed of
(including redemptions) during the tax year will not exceed 10% of the total
interests in the partnership capital or profits. The limited partnership
agreement contains provisions which satisfy both conditions (i) and (ii) of the
Redemption or Repurchase Safe Harbor, but the limited partnership agreement does
grant the general partner of the Fund some flexibility with respect to those
issues. There can be no assurance, however, that the Fund will not permit
transfers of interests in the Fund to exceed 10% of the total interest in the
Fund in any tax year, and since the last condition of this safe harbor must be
determined on an annual basis, no assurance can be given that the Fund will be
able to satisfy this safe harbor in any year. Therefore, it is possible that the
safe harbor might not be satisfied and in such case, the IRS could contend that
the Fund was a publicly traded partnership for purposes of the passive loss
rules.
The Fund cannot assure you that the Fund's classification as a partnership
for federal income tax purposes will not be changed at any time. The IRS may
take the position that the Fund should be treated as an association taxable as a
corporation for federal income tax purposes in the event any of the
aforementioned facts, assumptions and representations fail to be accurate for
any reason. The continued treatment of the Fund as a partnership also is
dependent upon existing Code provisions, regulations promulgated thereunder and
administrative interpretations thereof, all of which are subject to change.
IRS AUDITS OF THE FUND AND ITS LIMITED PARTNERS
The Fund's federal income tax information return may be audited. While
partners have certain rights to participate in a partnership audit, some of
these rights are not available to
61
partners owning less than a 1% profit interest in a partnership with more than
100 partners. Accordingly, a limited partner may not be able to participate in
an audit of the Fund's information return, but could nevertheless be bound by a
settlement reached in that audit unless the limited partner has filed a timely
pre-settlement notice with the IRS stating that the limited partner will not be
bound by the settlement. An audit of the Fund's returns may result in an audit
of a limited partner's tax return and lead to adjustments of income and loss
unrelated to an investment in the Fund. If an audit results in an adjustment,
limited partners may be required to file amended returns (which may also be
audited), and to pay back taxes, plus interest and possibly penalties.
STATE AND OTHER TAXES
In addition to the federal income tax consequences described above, the
Fund and the limited partners may be subject to various state and other taxes. A
discussion of state and local taxes is beyond the scope of this summary.
BROKER REPORTING AND BACKUP WITHHOLDING
The subscription documents require each prospective investor in the Fund to
furnish the investor's "taxpayer identification number." If the number furnished
is not correct, the investor may be subject to penalties imposed by the IRS and
payments to the investor in redemption of units (and, possibly, other Fund
distributions) may become subject to 31% backup withholding. The Fund is not
required to treat either its commodities transactions or redemptions of units as
requiring separate reporting to investors under Code Section 6045, since the
information required to be furnished by that section is identical to that
furnished to each investor on Schedule K-1 of Form 1065. The same information
will be furnished to the IRS on Form 1065. Accordingly, investors will not
receive separate Forms 1099-B with respect to such transactions.
EXEMPT ORGANIZATIONS
The following is a brief summary of the federal income tax consequences to
entities otherwise exempt from such tax, such as employee benefit plans,
individual retirement plans, individual retirement accounts and charitable
organizations, which are collectively referred to as "Exempt Organizations".
In general, an investment in the Fund is not expected to result in
"unrelated business income." If, however, any portion of an Exempt
Organization's allocable share of Fund income is treated as "unrelated business
taxable income", the Exempt Organization will be liable for a tax on that amount
(plus all other unrelated business taxable income for the taxable year in excess
of $1,000), minus applicable modifications and deductions, at the rates
applicable to corporations.
Unrelated business income includes certain income derived from
"debt-financed property." Such "debt-financed property" generally will include
securities purchased on margin. However, the IRS has stated in private rulings
(which are binding only as to the specifically identified taxpayer to whom it is
addressed) that margin accounts maintained with respect to certain commodities
trading do not create indebtedness and therefore such commodities traded on
margin do not constitute "debt-financed property." However, there is no IRS
published authority for this view that can be relied upon by taxpayers in
general and private rulings have no value as precedent. Since the Fund will not
seek a ruling from the IRS on this issue, there is a risk that the Fund's income
could be viewed as generated from debt-financed property and would therefore
constitute unrelated business income. If the Fund were to purchase physical
commodities with borrowed funds (whether upon delivery under a futures or
forward contract or otherwise) and to sell those commodities at a gain, such
gain would likely constitute unrelated business income. The Fund is not entitled
to engage in such leveraged purchases of physical commodities.
62
Prospective investors are urged to consult their tax advisers before
deciding whether to invest in the Fund.
THE LIMITED PARTNERSHIP AGREEMENT
The following is a summary of the significant terms and provisions of the
Fund's limited partnership agreement that are not described elsewhere in this
prospectus. A copy of the limited partnership agreement is included with this
prospectus as Appendix A. YOU SHOULD CAREFULLY READ THE ENTIRE LIMITED
PARTNERSHIP AGREEMENT FOR COMPLETE DETAILS OF ITS TERMS AND CONDITIONS.
LIMITED LIABILITY OF LIMITED PARTNERS
In general, a limited partner's liability is limited to the amount of his
capital contribution and his share of any assets and undistributed net profits.
The general partner of the Fund will be liable for all obligations of the
Fund which the Fund is not able to pay or satisfy. The general partner of the
Fund will not, however, be liable for the return or repayment of all or any
portion of the capital or profits of any limited partner.
MANAGEMENT OF PARTNERSHIP AFFAIRS
The limited partnership agreement gives Beeland Management, as general
partner, complete responsibility for management of the Fund and gives no
management role to the limited partners. The limited partners will not take part
in the management or operation of the business or property of the Fund and will
have no voice in the operations of the Fund. Any participation by the limited
partners in the management of the Fund will jeopardize their limited liability.
SHARING OF PROFITS AND LOSSES
Partnership Accounting
Each limited partner and the general partner of the Fund will have a
capital account. It will be credited with the amount of the limited partner's
capital contributions, and the limited partner's proportionate share of the
Fund's income or gains. The capital account will be debited with the limited
partner's proportionate share of the Fund's deductions or losses, and the amount
of any distributions made to and liquidations made by the limited partner.
Initially, each partner's balance will be the amount of his net
subscription after deducting applicable subscription fees. Any partner's balance
will be proportionately adjusted monthly to reflect the partner's portion of the
Fund's gain or loss. Profits and losses for each fiscal year will be allocated
among the limited partners pro rata based upon the number of units held by the
limited partners.
Federal Tax Allocations
At the end of each fiscal year, the Fund will determine the total taxable
income or loss for the year. Subject to the special allocation of net capital
gain or loss to redeeming limited partners, the taxable gain or loss will be
allocated to each limited partner in the proportion that the limited partner's
capital account bears to the total capital accounts of all limited partners.
Each limited partner will be responsible for his, her or its share of federal
income taxes due.
Gains and losses will be allocated among those who are partners when
positions are closed and the gains or losses are realized. Therefore, if a
partner's proportionate interest increases as a result of redemption by others
between the time an unrealized gain occurs and the time the gain is realized,
the partner's share of taxable gain for the year may exceed the partner's
economic gain.
Each limited partner's tax basis in the partner's units is increased by the
taxable income allocated to the limited partner and reduced by any distributions
received and losses allocated to the limited partner.
63
DISTRIBUTIONS
The Fund is not required to make any distributions, and distributions will
be made only as determined by the general partner of the Fund, in its sole
discretion. It is not anticipated that any distributions will ever be made. If
distributions occur, they will be made pro rata based upon the number of units
held by the limited partners.
Upon liquidation of the Fund, the remaining assets of the Fund will be
distributed to the limited partners in the proportion that the capital account
of each limited partner bears to the total capital accounts of all limited
partners. If those distributions are not enough to return the full amount of a
limited partner's capital contribution, the limited partner will not have
recourse against any other limited partner.
ADDITIONAL PARTNERS
The Fund's general partner may, in its discretion, offer additional units
or admit additional limited partners. There is no limit on the number of
outstanding units. All units offered after trading begins must be sold at the
Fund's then current net asset value per unit.
RESTRICTIONS ON TRANSFER OR ASSIGNMENT
A description of a limited partner's ability to transfer units and
liquidate units is set forth under "Transferability and Redemption of Units"
above.
DISSOLUTION AND TERMINATION OF THE FUND
The Fund will be terminated and dissolved on December 31, 2020. The Fund
may also be terminated before that time if any of the following events occur:
- the bankruptcy or withdrawal from the Fund of its general partner;
- the disposition of all or substantially all of the Fund's assets;
- the decision by the Fund's general partner to dissolve the Fund; or
- the agreement by limited partners holding more than 50% of the then
outstanding partnership interests owned by limited partners to dissolve
the fund.
RESIGNATION OR WITHDRAWAL OF THE GENERAL PARTNER
The general partner of the Fund may not withdraw as general partner prior
to January 1, 2005. After that date, the general partner may resign by giving at
least 120 days prior written notice to the limited partners.
AMENDMENTS AND MEETINGS
The limited partnership agreement may be amended if the Fund's general
partner and limited partners owning more than 50% of the outstanding units
agree. The general partner of the Fund may amend the limited partnership
agreement without the approval of the limited partners in order to clarify
inaccuracies or ambiguities, make changes required by regulators or by law or
make any other changes the general partner of the Fund deems advisable so long
as they are not adverse to limited partners.
Any limited partner may request in writing a list of the names and
addresses of all limited partners and the number of units held by each. Limited
partners owning at least 10% of the outstanding units can require the general
partner of the Fund to call a meeting of the Fund. At the meeting, the limited
partners owning a majority of the outstanding units may vote to:
- amend the limited partnership agreement without the consent of the Fund's
general partner;
- dissolve the Fund;
64
- remove and replace Beeland Management as general partner;
- admit a new general partner prior to the withdrawal of Beeland
Management;
- terminate contracts with the Fund's general partner, any of its
affiliates or any trading advisor; and
- approve the sale of all of the Fund's assets.
REPORTS TO LIMITED PARTNERS
The Fund's books and records, including a list of the names and addresses
of all units owned by all limited partners, will be maintained at the Fund's
principal place of business at 1000 Hart Road, Suite 210, Barrington, Illinois
60010 and at such other location or locations, if any, as designated by the
general partner. The limited partners or their designated agents may inspect the
Fund's books and records during reasonable business hours. Upon request, the
general partner will mail within 10 days of the request, to any limited partner
or his representative a copy of the list of the names and addresses of the
limited partners upon payment, in advance of the reasonable cost of reproduction
and mailing. The general partner will maintain and preserve these records for a
period of at least five years.
The general partner of the Fund will provide these reports and statements
to the limited partners:
- a monthly statement, reporting net assets and net asset value per unit as
of the end of such month, as well as information relating to the advisory
and brokerage fees and other expenses incurred by the Fund during that
month;
- a quarterly statement, including unaudited financial statements; and
- an annual report, including audited financial statements and the average
round turn rate for the fiscal year; and
- tax information necessary for the preparation of the limited partners'
annual federal income tax returns.
In addition, notice will be mailed to each limited partner within seven
business days of any of the following events:
- a decrease in the net asset value of a unit to 50% or less of the net
asset value most recently reported;
- any change in advisors, commodity brokers or the general partner of the
Fund; and
- any material change in the Fund's trading policies or any material change
in an advisor's trading strategies.
INDEMNIFICATION
The Fund agrees to indemnify the Fund's general partner or any of its
affiliates for actions taken on behalf of the Fund, against any loss, expense,
damage or injury (including reasonable attorney's fees and other expenses
incurred in connection with the defense of any such action) incurred by the
general partner, so long as the actions were for a purpose reasonably believed
to be in the best interests of the Fund, and the conduct in question did not
constitute misconduct, negligence or bad faith. The limited partners are not
liable for such indemnification, which is payable only out of the assets of the
Fund.
65
The general partner or any of its affiliates will not be indemnified for
any losses, liabilities or expenses arising from or out of an alleged violation
of federal or state securities laws, unless the following conditions are met:
- There has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the indemnified party,
or
- Such claims have been dismissed with prejudice on the merits by a court
of competent jurisdiction as to the indemnified party, or
- A court of competent jurisdiction approves a settlement of the claims
against the indemnified party and finds that indemnification of the
settlement and related costs should be made. The court is required to be
advised of the position of the SEC and any state securities regulatory
authority where units were offered or sold as to indemnification for
violations of securities laws. However, the court need only be advised
and consider the positions of the securities regulatory authorities of
those states which are specifically set forth in the partnership
agreement and in which plaintiffs claim they were offered or sold units.
The Fund has been advised that in the opinion of the SEC, any
indemnification of the Fund's general partner or its affiliates for any
liabilities arising under the Securities Act of 1933 is contrary to public
policy as expressed in that Act and, therefore, is unenforceable.
ADDITIONAL INFORMATION
This prospectus does not include all of the information or exhibits in the
Fund's registration statement. You can read and copy the entire registration
statement at the public reference facilities maintained by Securities and
Exchange Commission in Washington D.C.
The Fund will file quarterly and annual reports with the SEC. You can read
and copy these reports at the SEC public reference facility in Chicago. You may
call the SEC at 1-800-SEC-0330 for further information.
The Fund's filings are posted at the SEC website at http://www.sec.gov.
LEGAL MATTERS
Henderson & Lyman, Chicago, Illinois, has advised the Fund and its general
partner on the offering of the units. The statements under "Federal Income Tax
Aspects" have been reviewed by Henderson & Lyman. As Henderson & Lyman does not
represent limited partners or potential investors, subscribers to units should
consult their own legal counsel.
EXPERTS
The statements of financial condition of the Fund as of December 31, 2002
and December 31, 2001 included in this prospectus have been audited by Vorisek &
Company, LLC, independent accountants, as set forth in their report. The
statements of financial condition of Rogers Raw Materials Fund, L.P., at
December 31, 2002 and December 31, 2001 and the related statements of operations
and changes in partners' equity for the years ended December 31, 2002 and 2001,
have been audited by Vorisek & Company, LLC, independent accountants, as set
forth in their report. The financial statements of Beeland Management as of
December 31, 2002 and 2001 and for the years then ended, included in this
prospectus have been audited by Nykiel, Carlin & Co., Ltd., independent
accountants, as set forth in their report. Those financial statements are
included in reliance upon those reports, given upon their authority as experts
in accounting and auditing.
66
INDEX TO FINANCIAL STATEMENTS
<Table>
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.:
Independent Auditor's Report................................ F-2
Statement of Financial Condition at December 31, 2002 and
December 31, 2001......................................... F-3
Statement of Operations..................................... F-4
Statement of Changes in Partner's Equity.................... F-5
Notes to Audited Financial Statements....................... F-6
Statement of Financial Condition at March 31, 2003 and
December 31, 2002......................................... F-10
Statement of Operations..................................... F-11
Statement of Changes in Partner's Equity.................... F-12
Notes to Audited Financial Statements....................... F-13
BEELAND MANAGEMENT COMPANY, L.L.C.:
Independent Auditors' Report................................ F-17
Balance Sheet at December 31, 2002 and 2001................. F-18
Statement of Income and Changes in Members' Capital for the
Years Ended
December 31, 2002 and 2001................................ F-19
Statements of Cash Flows for the Years Ended December 31,
2002 and 2001............................................. F-20
Notes to Financial Statements............................... F-21
Independent Auditors' Report................................ F-24
Balance Sheet at March 31, 2003............................. F-25
Statement of Income and Changes in Members' Capital for the
Three Months Ended
March 31, 2003............................................ F-26
Statements of Cash Flows for the Three Months Ended March
31, 2003.................................................. F-27
Notes to Financial Statements............................... F-28
ROGER RAW MATERIALS FUND, L.P.:
Statement of Financial Condition at December 31, 2002 and
2001...................................................... F-31
Statements of Operations.................................... F-32
Statements of Changes to Partner's Equity................... F-33
Notes to Financial Statements............................... F-34
Statement of Financial Condition at March 31, 2003.......... F-39
Statements of Operations.................................... F-40
Statements of Changes to Partner's Equity................... F-41
Notes to Financial Statements............................... F-42
</Table>
F-1
INDEPENDENT AUDITOR'S REPORT
To the General Partner of Rogers International Raw Materials Fund, L.P.:
(A Limited Partnership)
We have audited the accompanying statement of financial condition of Rogers
International Raw Materials Fund, L.P. as of December 31, 2002 and 2001 and the
related statements of operations, and changes in partners' equity for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audits 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Rogers International Raw
Materials Fund, L.P. as of December 31, 2002 and 2001 and the results of its
operations for the years then ended in conformity with generally accepted
accounting principles.
/s/ Vorisek & Company, LLC
Vorisek & Company, LLC
Certified Public Accountants
McHenry, IL
February 18, 2003
F-2
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
---------- ----------
ASSETS
Cash at bank................................................ $ 182,497 $ 144,853
Cash at broker.............................................. 1,010,459 727,344
Investment in US Treasury securities........................ 5,998,810 4,132,500
Unrealized net trading gain................................. 332,325 29,255
Interest receivable......................................... 239 --
Subscriptions receivable.................................... -- 35,000
Organizational costs (net of accumulated amortization)...... -- 139,265
---------- ----------
Total Assets.............................................. $7,524,330 $5,208,217
========== ==========
LIABILITIES
Commissions payable......................................... $ 2,839 $ 6,141
Accrued management fees..................................... 13,014 19,187
Administrative fees payable................................. 41,161 17,000
Organizational costs payable................................ 167,699 263,186
Redemptions payable......................................... 21,361 --
---------- ----------
Total Liabilities......................................... 246,074 305,514
---------- ----------
PARTNERSHIP EQUITY
Limited Partners Equity..................................... 7,278,256 4,902,703
---------- ----------
Total Liabilities and Partnership Equity.................... $7,524,330 $5,208,217
========== ==========
</Table>
See accompanying notes to financial statements.
F-3
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
---------- ---------
REVENUE
Realized net trading gain (loss)............................ $1,315,061 $ (42,290)
Realized loss on securities................................. (16,750)
Change in unrealized net trading gain....................... 303,070 29,255
Change in unrealized gain (loss) on securities.............. 67,148 (17,075)
Foreign exchange gain (loss)................................ 3,529 (645)
Interest income--US Treasury securities..................... 114,891 24,000
Interest income............................................. 16,212 3,091
---------- ---------
Total Revenue............................................. 1,803,161 (3,664)
---------- ---------
EXPENSE
Commissions................................................. 46,665 7,518
Management fees............................................. 144,394 16,417
Administrative fees......................................... 145,282 24,889
Amortization expense........................................ 139,265 343,132
---------- ---------
Total Expense............................................. 475,606 391,956
---------- ---------
Net Income (Loss)........................................... $1,327,555 $(395,620)
========== =========
</Table>
See accompanying notes to financial statements.
F-4
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
STATEMENT OF CHANGES IN PARTNER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
LIMITED GENERAL
PARTNERS PARTNER TOTAL
---------- ------- ----------
12/31/2000 Equity....................................... -- $ 5,000 $ 5,000
Additions............................................... $5,298,323 -- $5,298,323
Net loss................................................ (395,620) -- (395,620)
Withdrawals............................................. -- $(5,000) (5,000)
---------- ------- ----------
12/31/2001 Equity....................................... $4,902,703 -- $4,902,703
Additions............................................... 1,318,457 -- 1,318,457
Net income.............................................. 1,327,555 -- 1,327,555
Withdrawals............................................. (270,459) -- (270,459)
---------- ------- ----------
12/31/2002 Equity....................................... $7,278,256 -- $7,278,256
========== ======= ==========
</Table>
<Table>
<Caption>
12/31/2001
PER UNIT DATA
-------------
Net asset value......................................... $ 92.29
==========
Units outstanding....................................... 53,124
==========
</Table>
<Table>
<Caption>
12/31/2002
PER UNIT DATA
-------------
Net asset value......................................... $ 114.56
==========
Units outstanding....................................... 63,531
==========
</Table>
See accompanying notes to financial statements.
F-5
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business and Organization
Rogers International Raw Materials Fund, L.P. (the "Partnership") is an
Illinois Limited Partnership established in May 2000 under the laws of the State
of Illinois relating to limited partnerships. The Partnership trades a portfolio
of commodity futures contracts and forward contracts, exclusively on the long
side of the market; that is the Partnership will not sell short any commodity
futures contracts or forward contracts. The Partnership commenced trading during
November 2001. The Partnership will terminate December 31, 2020 or earlier upon
certain circumstances as defined in the Limited Partnership Agreement.
Net Assets
The valuation of net assets includes unliquidated commodity futures and
forward contracts owned by the Partnership, if any, at the end of the period.
The unrealized gain or loss on these contracts if any, has been calculated based
on closing prices on the last business day of the year. Foreign currency is
translated into US dollars at the exchange rate prevailing on the last business
day of the year. Net asset value is determined by subtracting liabilities from
assets, which also equals Partnership equity.
Profit and Loss Allocation
Limited Partners share in the profits and losses in the Partnership in the
proportion in which each partner's capital account bears to all partner's
capital accounts.
Income Taxes
No provision for income taxes has been made since the Partnership is not
subject to taxes on income. Each partner is individually liable for the tax on
its share of income or loss. The Partnership prepares a calendar year
information tax return. However, the Fund is subject to a 1.5% Illinois State
replacement tax on its net earnings.
Revenue Recognition
Commodity futures contracts are recorded on the trade date, and open
positions are reflected in the accompanying statement of financial condition as
the difference between the original contract value and the market value on the
last business day of the reporting period. The market value of the commodity
futures and options contracts is based upon the most recent available settlement
price on the appropriate commodity exchanges. US Treasury Securities are
reported at cost plus accrued interest, net of unrealized gains or (losses),
which approximates market. Changes in unrealized gains or (losses) represent the
total increases (decreases) in unrealized gains or (increases) decreases in
unrealized losses on open positions during the period.
Interest Income Recognition
The Partnership records interest income in the period it is earned.
Statement of Cash Flows
The Partnership has elected not to provide a statement of cash flows as
permitted by Statement of Accounting Standards 102 "Statement of Cash Flows".
F-6
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. AGREEMENTS AND RELATED PARTY TRANSACTIONS:
The Agreement of Limited Partnership vests all responsibility and powers
for the management of the business and affairs of the Partnership with the
General Partner, Beeland Management Company, LLC. The General Partner is the
commodity pool operator for the Partnership and is responsible for the trading
decisions of the Partnership.
Included in organizational costs payable at December 31, 2002 is $167,699
owed to the General Partner for regulatory filing fees, legal fees and expenses
initially advanced for the formation of the Partnership.
The Partnership pays a Subscription fee to the General Partner of up to 5%
of the gross offering proceeds, a portion of which will be reallowed to
soliciting dealers as selling commissions.
The Partnership pays a monthly management fee to the General Partner of
0.1875% of the average monthly sum of all Capital Accounts contributed by
Limited Partners at the close of each month.
If the amount of management fees paid to the Partnership's general partner
during a year does not equal or exceed one percent (1%) of the amount of the
Partnership's net profits for that year, the general partner will receive an
allocation of profits in an amount equal to the difference between one percent
of the net profits and the amount of the management fees paid.
Hart Capital Management, Inc. ("Hart") is the investment manager for the
Partnership. Hart is a division of Arbor Research & Trading, Inc. ("Arbor"),
which is a member of the General Partner. Three members of the General Partner
are also principals of Arbor. Hart provides certain investment management,
advisory and research services with respect to the investing and trading
activities of the Partnership. Hart will be paid an annual advisory fee of 0.5%
of the average month end market value of the Portfolio under management.
NOTE 3. PARTNERSHIP CAPITAL AND REDEMPTION'S:
Limited Partners may withdraw capital, with no less than 60 days prior
written notice to the General Partner, after a three-month initial holding
period.
Until the initial closing, the purchase price of a unit was $100.
Thereafter, the purchase price of a unit is the net asset value per unit as of
the end of each calendar month. Net asset value per unit is calculated as the
net asset value at month end divided by the number of outstanding units at month
end.
The General Partner and its principals are required to make a minimum
investment of $25,000 in the Partnership. This requirement was exceeded at
December 31, 2002.
NOTE 4. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT AND MARKET RISK:
Included in the definition of financial instruments are forward contracts
and futures. The Partnership invests in various commodity-related futures and
forward contracts. These contracts are marked to market daily, with variations
in the value settled on a daily basis with the exchange upon which they are
traded. For these contracts the unrealized gain or loss rather than the notional
amounts, represents the approximate future cash requirements.
At December 31, 2002 and 2001 the Partnership owned open positions that
would have earned approximately $332,325 and $29,255, respectively, if settled.
The average fair value of open positions at December 31, 2002 and 2001 was
$126,673 and $27,098, respectively.
F-7
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Theoretically, the Partnership is exposed to a market risk (loss) equal to
the notional value of financial instruments purchased. Generally financial
instruments can be closed out at the discretion of the General Partner. However,
if the market is not liquid, it could prevent the timely closeout of any
unfavorable positions or require the Partnership to hold these positions and
possibly all positions until maturity, regardless of the changes in their value
or the General Partner's investment strategies.
The Partnership's trading is designed to replicate the positions and
trading which comprise the Rogers International Commodity Index (the "Index").
This Index consists of a basket of commodities employed within the world economy
and traded in seasoned markets, as futures and forward contracts. The broad
based representation of commodities contracts is intended to provide two
important characteristics: The large number of contracts and underlying raw
materials represents "diversification" and the global coverage of these
contracts reflects the current state of international trade and commerce. In
order to minimize market and credit risks, the General Partner monitors the
positions held by the Partnership on a daily basis and no trading discretion is
utilized other than the replication of the Index. Contracts are purchased or
liquidated according to the replication of the index.
Credit risk represents the accounting loss that would be recognized if
counterparties failed completely to perform as contracted. Concentrations of
credit risk (whether on or off balance sheet) that arise from financial
instruments exist for groups of counterparties when they have similar economic
characteristics that would cause their ability to meet contractual obligations
to be similarly affected by changes in economic or other conditions. Futures
contracts have little credit risk because futures exchanges are the
counterparties.
NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS:
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or any
combination. Changes in the underlying asset indirectly affect the value of the
derivative.
All trading instruments are subject to market risk, the risk that future
changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those changes
directly affect reported income.
Futures and forward contracts used for trading purposes are recorded in the
statement of financial condition at fair value at the reporting date. Per
Financial Accounting Standards Board Interpretation No. 39, the fair value of
open contracts in a loss position is offset against the fair value of open
contracts in a gain position. The Partnership applies this industry accepted
accounting practice in the financial statements. Realized and unrealized changes
in fair values are recognized in the period in which the changes occur.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the amounts
exchanged by the parties to derivatives and do not measure the Partnership's
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives. At December 31, 2002 and
2001 the Partnership owned open positions with an approximate notional value of
$7,118,000 and $6,155,000, respectively.
The Partnership invests in financial instruments, which includes futures
and forward contracts. All contracts are of the same class of derivative
instrument, commodity-related
F-8
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
derivatives. Futures contracts are commitments to either purchase or sell
designated financial instruments at a future date for a specified price and may
be settled in cash or through delivery.
The Partnership has funds at the Clearing Broker in accounts, which are
used to meet minimum margin requirements for all of the Partnership's open
positions. These requirements are adjusted, as needed, due to daily fluctuations
in the values of the underlying assets.
Non-Regulated futures contracts have foreign exchange risk since the
contracts are traded in currency denominations other than US dollars. Foreign
currency trading gains or losses are reported under realized and unrealized
trading gains in the statement of operations. Foreign currency gains or losses
are the result of the conversion of the foreign currency denomination to US
dollars. Foreign currency gains (losses) for the years ended December 31, 2002
and 2001 were $3,529 and ($645), respectively.
The Partnership had realized gains (losses) from trading for the years
ended December 31, 2002 and 2001 of $1,315,061 and ($42,290), respectively, as
reported in the statement of operations. These realized gains (losses) included
gains (losses) from non-regulated contracts of $118,826 and ($6,121) for the
same periods.
The Partnership had income from the change in unrealized gains for the
years ended December 31, 2002 and 2001 of approximately $303,070 and $29,255,
respectively, as reported in the statement of operations. This included
unrealized gains (losses) from non-regulated contracts of ($64,990) and $44,502
for the same periods.
NOTE 6. PRIOR PERIOD RESTATEMENT:
An error was discovered in the Partnership's previously issued statement of
financial condition at December 31, 2001. The organizational fees incurred and
owed to the general partner, Beeland Management Company, LLC, were understated
by $117,699. All affected balances presented within these current financial
statements have been restated.
UNREALIZED HOLDINGS AT 12/31/02
<Table>
<Caption>
REGULATED FUTURES NON-REGULATED FUTURES
--------------------- ---------------------
FAIR NOTIONAL FAIR NOTIONAL
VALUE VALUE VALUE VALUE
FUTURES CONTRACT VALUES -------- ---------- -------- ----------
Purchase Contracts
Assets.................................... $537,418 $3,885,000 $ 6,631 $ 244,000
Liabilities............................... (184,605) 1,953,000 (28,207) 990,000
Sell Contracts
Assets.................................... -- -- 1,088 46,000
Liabilities............................... -- -- -- --
-------- ---------- -------- ----------
Total....................................... $352,813 $5,838,000 $(20,488) $1,280,000
======== ========== ======== ==========
</Table>
<Table>
<Caption>
FAIR NOTIONAL FAIR NOTIONAL
VALUE VALUE VALUE VALUE
CONTRACT MATURITY DATES -------- ---------- -------- ----------
February 2003............................... $490,762 $3,689,000 $(13,264) $1,169,000
March 2003.................................. (140,999) 2,004,000 (7,224) 111,000
April 2003.................................. 3,050 145,000 -- --
-------- ---------- -------- ----------
Total....................................... $352,813 $5,838,000 $(20,488) $1,280,000
======== ========== ======== ==========
</Table>
F-9
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
STATEMENT OF FINANCIAL CONDITION
MARCH 31, 2003 AND DECEMBER 31, 2002
(UNAUDITED)
<Table>
<Caption>
3/31/2003 12/31/2002
---------- ----------
ASSETS
Cash at bank................................................ $ 45,052 $ 182,497
Cash at broker.............................................. 919,774 1,010,459
Investment in securities.................................... 6,094,688 5,998,810
Unrealized net trading gain/(loss).......................... (546,429) 332,325
Interest receivable......................................... 49,019 239
---------- ----------
Total Assets.............................................. $6,562,104 $7,524,330
========== ==========
LIABILITIES
Commissions payable......................................... $ 2,665 $ 2,839
Accrued management fees..................................... 12,803 13,014
Administrative fees payable................................. 20,384 41,161
Organizational costs payable................................ -- 167,699
Redemptions payable......................................... -- 21,361
---------- ----------
Total Liabilities......................................... 35,852 246,074
---------- ----------
PARTNERSHIP EQUITY
Limited Partners Equity..................................... 6,526,252 7,278,256
---------- ----------
Total Liabilities and Partnership Equity.................... $6,562,104 $7,524,330
========== ==========
</Table>
See accompanying notes and accountants report.
F-10
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
<Table>
<Caption>
3 m/e 3 m/e
3/31/2003 3/31/2002
---------- ---------
REVENUE
Realized net trading gain................................... $1,227,238 $321,118
Realized gain/(loss) on securities.......................... 49,935 (11,550)
Change in unrealized net trading gain/(loss)................ (878,755) 408,054
Change in unrealized (loss) on securities................... (66,948) (28,997)
Foreign exchange gain....................................... 6,322 353
Interest income -- securities............................... 46,775 47,750
Interest income............................................. 2,864 3,545
---------- --------
Total Revenue............................................. 387,431 740,273
---------- --------
EXPENSE
Commissions................................................. 11,608 8,084
Management fees............................................. 40,058 28,370
Administrative fees......................................... 27,016 22,193
Amortization expense........................................ -- 21,566
---------- --------
Total Expense............................................. 78,682 80,213
---------- --------
Net Income.................................................. $ 308,749 $660,060
========== ========
</Table>
See accompanying notes and accountants report.
F-11
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
STATEMENT OF CHANGES IN PARTNER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(UNAUDITED)
<Table>
<Caption>
3 m/e 3 m/e
3/31/2003 3/31/2002
----------- ----------
Beginning of Quarter Equity................................. $ 7,278,256 $4,902,703
Additions................................................... -- 340,707
Net income.................................................. 308,749 660,060
Withdrawals................................................. (1,060,753) (181,873)
----------- ----------
End of Quarter Equity....................................... $ 6,526,252 $5,721,597
=========== ==========
</Table>
<Table>
<Caption>
PER UNIT DATA 3/31/2003 3/31/2002
- ------------- --------- ---------
Net asset value............................................. $118.81 $104.17
======= =======
Units outstanding........................................... 54,929 54,928
======= =======
</Table>
See accompanying notes and accountants report.
F-12
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
(UNAUDITED)
NOTE 1.SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business and Organization
Rogers International Raw Materials Fund, L.P. (the "Partnership") is an
Illinois Limited Partnership established in May 2000 under the laws of the State
of Illinois relating to limited partnerships. The Partnership trades a portfolio
of commodity futures contracts and forward contracts, exclusively on the long
side of the market; that is the Partnership will not sell short any commodity
futures contracts or forward contracts. The Partnership commenced trading during
November 2001. The Partnership will terminate December 31, 2020 or earlier upon
certain circumstances as defined in the Limited Partnership Agreement.
Net Assets
The valuation of net assets includes unliquidated commodity futures and
forward contracts owned by the Partnership, if any, at the end of the period.
The unrealized gain or loss on these contracts if any, has been calculated based
on closing prices on the last business day of the year. Foreign currency is
translated into US dollars at the exchange rate prevailing on the last business
day of the year. Net asset value is determined by subtracting liabilities from
assets, which also equals Partnership equity.
Profit and Loss Allocation
Limited Partners share in the profits and losses in the Partnership in the
proportion in which each partner's capital account bears to all partner's
capital accounts.
Income Taxes
No provision for income taxes has been made since the Partnership is not
subject to taxes on income. Each partner is individually liable for the tax on
its share of income or loss. The Partnership prepares a calendar year
information tax return. However, the Fund is subject to a 1.5% Illinois State
replacement tax on its net earnings.
Revenue Recognition
Commodity futures contracts are recorded on the trade date, and open
positions are reflected in the accompanying statement of financial condition as
the difference between the original contract value and the market value on the
last business day of the reporting period. The market value of the commodity
futures and options contracts is based upon the most recent available settlement
price on the appropriate commodity exchanges. US Treasury Securities are
reported at cost plus accrued interest, net of unrealized gains or (losses),
which approximates market. Changes in unrealized gains or (losses) represent the
total increases (decreases) in unrealized gains or (increases) decreases in
unrealized losses on open positions during the period.
F-13
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interest Income Recognition
The Partnership records interest income in the period it is earned.
Statement of Cash Flows
The Partnership has elected not to provide a statement of cash flows as
permitted by Statement of Accounting Standards 102 "Statement of Cash Flows".
NOTE 2.AGREEMENTS AND RELATED PARTY TRANSACTIONS:
The Agreement of Limited Partnership vests all responsibility and powers
for the management of the business and affairs of the Partnership with the
General Partner, Beeland Management Company, LLC. The General Partner is the
commodity pool operator for the Partnership and is responsible for the trading
decisions of the Partnership.
Included in organizational costs payable at December 31, 2002 is $167,699
owed to the General Partner for regulatory filing fees, legal fees and expenses
initially advanced for the formation of the Partnership.
The Partnership pays a Subscription fee to the General Partner of up to 5%
of the gross offering proceeds, a portion of which will be reallowed to
soliciting dealers as selling commissions.
The Partnership pays a monthly management fee to the General Partner of
0.1875% of the average monthly sum of all Capital Accounts contributed by
Limited Partners at the close of each month.
If the amount of management fees paid to the Partnership's general partner
during a year does not equal or exceed one percent (1%) of the amount of the
Partnership's net profits for that year, the general partner will receive an
allocation of profits in an amount equal to the difference between one percent
of the net profits and the amount of the management fees paid.
Hart Capital Management, Inc. (Hart") is the investment manager for the
Partnership. Hart is a division of Arbor Research & Trading, Inc. ("Arbor"),
which is a member of the General Partner. Three members of the General Partner
are also principals of Arbor. Hart provides certain investment management,
advisory and research services with respect to the investing and trading
activities of the Partnership. Hart will be paid an annual advisory fee of 0.5%
of the average month end market value of the Portfolio under management.
NOTE 3.PARTNERSHIP CAPITAL AND REDEMPTION'S:
Limited Partners may withdraw capital, with no less than 60 days prior
written notice to the General Partner, after a three-month initial holding
period.
Until the initial closing, the purchase price of a unit was $100.
Thereafter, the purchase price of a unit is the net asset value per unit as of
the end of each calendar month. Net asset value per unit is calculated as the
net asset value at month end divided by the number of outstanding units at month
end.
The General Partner and its principals are required to make a minimum
investment of $25,000 in the Partnership. This requirement was exceeded at March
31, 2003.
F-14
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4.FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT AND MARKET RISK:
Included in the definition of financial instruments are forward contracts
and futures. The Partnership invests in various commodity-related futures and
forward contracts. These contracts are marked to market daily, with variations
in the value settled on a daily basis with the exchange upon which they are
traded. For these contracts the unrealized gain or loss rather than the notional
amounts, represents the approximate future cash requirements.
Theoretically, the Partnership is exposed to a market risk (loss) equal to
the notional value of financial instruments purchased. Generally financial
instruments can be closed out at the discretion of the General Partner. However,
if the market is not liquid, it could prevent the timely closeout of any
unfavorable positions or require the Partnership to hold these positions and
possibly all positions until maturity, regardless of the changes in their value
or the General Partner's investment strategies.
The Partnership's trading is designed to replicate the positions and
trading which comprise the Rogers International Commodity Index (the "Index").
This Index consists of a basket of commodities employed within the world economy
and traded in seasoned markets, as futures and forward contracts. The broad
based representation of commodities contracts is intended to provide two
important characteristics: The large number of contracts and underlying raw
materials represents "diversification" and the global coverage of these
contracts reflects the current state of international trade and commerce. In
order to minimize market and credit risks, the General Partner monitors the
positions held by the Partnership on a daily basis and no trading discretion is
utilized other than the replication of the Index. Contracts are purchased or
liquidated according to the replication of the index.
Credit risk represents the accounting loss that would be recognized if
counterparties failed completely to perform as contracted. Concentrations of
credit risk (whether on or off balance sheet) that arise from financial
instruments exist for groups of counterparties when they have similar economic
characteristics that would cause their ability to meet contractual obligations
to be similarly affected by changes in economic or other conditions. Futures
contracts have little credit risk because futures exchanges are the
counterparties.
NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS:
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or any
combination. Changes in the underlying asset indirectly affect the value of the
derivative.
All trading instruments are subject to market risk, the risk that future
changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those changes
directly affect reported income.
Futures and forward contracts used for trading purposes are recorded in the
statement of financial condition at fair value at the reporting date. Per
Financial Accounting Standards Board Interpretation No. 39, the fair value of
open contracts in a loss position is offset against the fair value of open
contracts in a gain position. The Partnership applies this industry accepted
accounting practice in the financial statements. Realized and unrealized changes
in fair values are recognized in the period in which the changes occur.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the amounts
exchanged by the parties to
F-15
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
derivatives and do not measure the Partnership's exposure to credit or market
risks. The amounts exchanged are based on the notional amounts and other terms
of the derivatives.
The Partnership invests in financial instruments, which includes futures
and forward contracts. All contracts are of the same class of derivative
instrument, commodity-related derivatives. Futures contracts are commitments to
either purchase or sell designated financial instruments at a future date for a
specified price and may be settled in cash or through delivery.
The Partnership has funds at the Clearing Broker in accounts, which are
used to meet minimum margin requirements for all of the Partnership's open
positions. These requirements are adjusted, as needed, due to daily fluctuations
in the values of the underlying assets.
Non-Regulated futures contracts have foreign exchange risk since the
contracts are traded in currency denominations other than US dollars. Foreign
currency trading gains or losses are reported under realized and unrealized
trading gains in the statement of operations. Foreign currency gains or losses
are the result of the conversion of the foreign currency denomination to US
dollars.
F-16
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
BEELAND MANAGEMENT COMPANY, L.L.C.:
We have audited the accompanying balance sheets of BEELAND MANAGEMENT COMPANY,
L.L.C. (an Illinois Limited Liability Company) as of December 31, 2002 and 2001,
and the related statements of income and changes in members' capital, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BEELAND MANAGEMENT COMPANY,
L.L.C. as of December 31, 2002 and 2001, and the results of its operations and
its cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/ NYKIEL, CARLIN & CO., LTD.
NYKIEL, CARLIN & CO., LTD.
Schaumburg, Illinois
February 28, 2003
F-17
Purchasers of units in Rogers International Raw Materials Fund, L.P. will
not receive any interest in Beeland Management Company, L.L.C.
BEELAND MANAGEMENT COMPANY, L.L.C.
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
-------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $ 60,735 $ 52,318
Management fees receivable................................ 63,098 39,964
Prepaid expenses.......................................... 25,000 414
-------- --------
Total Current Assets................................... 148,833 92,696
-------- --------
PROPERTY AND EQUIPMENT, AT COST
Computer equipment and software........................... 6,035 5,385
Less accumulated depreciation............................. 5,353 4,941
-------- --------
Total Property and Equipment, Net...................... 682 444
-------- --------
OTHER ASSETS
Advances to Rogers Raw Materials Fund, L.P................ 119,332 95,712
Advances to Rogers International Raw Materials Fund,
L.P.................................................... 167,699 217,699
-------- --------
Total Other Assets..................................... 287,031 313,411
-------- --------
$436,546 $406,551
======== ========
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES
Accounts payable.......................................... $229,253 $148,554
Accrued interest payable.................................. 795 --
Redemption payable........................................ 35,000 --
Advances from member...................................... 25,000 --
-------- --------
Total Current Liabilities.............................. 290,048 148,554
NOTE PAYABLE -- MEMBER...................................... 50,000 --
MEMBERS' CAPITAL............................................ 96,498 257,997
-------- --------
$436,546 $406,551
======== ========
</Table>
The accompanying notes to financial statements are an integral part of these
balance sheets.
F-18
Purchasers of units in Rogers International Raw Materials Fund, L.P. will
not receive any interest in Beeland Management Company, L.L.C.
BEELAND MANAGEMENT COMPANY, L.L.C.
STATEMENTS OF INCOME AND CHANGES IN MEMBERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
--------- --------
REVENUE
Management fees........................................... $ 280,383 $136,633
Subscription fees......................................... 14,350 110,405
Interest income........................................... 887 1,635
--------- --------
Total Revenue.......................................... 295,620 248,673
--------- --------
OPERATING EXPENSES
Management services....................................... 120,306 98,690
Marketing services........................................ 95,873 112,383
General and administrative................................ 190,145 96,198
--------- --------
Total Operating Expenses............................... 406,324 307,271
--------- --------
LOSS FROM OPERATIONS........................................ (110,704) (58,598)
INTEREST EXPENSE............................................ 795 --
--------- --------
NET LOSS.................................................... $(111,499) $(58,598)
========= ========
CHANGES IN MEMBERS' CAPITAL
BALANCE, BEGINNING OF YEAR.................................. $ 257,997 $221,595
Add: Capital contributions................................ -- 95,000
Less: Capital distributions............................... (50,000) --
Net Loss........................................... (111,499) (58,598)
--------- --------
BALANCE, END OF YEAR........................................ $ 96,498 $257,997
========= ========
</Table>
The accompanying notes to financial statements are an integral part of these
statements.
F-19
Purchasers of units in Rogers International Raw Materials Fund, L.P. will
not receive any interest in Beeland Management Company, L.L.C.
BEELAND MANAGEMENT COMPANY, L.L.C.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
--------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $(111,499) $(58,598)
--------- --------
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Noncash items included in net loss -- Depreciation..... 412 540
Changes in assets and liabilities:
(Increase) decrease in assets --
Management fees receivable........................ (23,134) 480
Prepaid expenses.................................. 414 (413)
Increase (decrease) in liabilities --
Accounts payable.................................. 80,699 64,204
Accrued interest payable.......................... 795 --
--------- --------
Total Adjustments...................................... 59,186 64,811
--------- --------
Net Cash Provided By (Used In) Operating Activities......... (52,313) 6,213
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of computer software............................. (650) --
Net advances to Rogers Raw Materials Fund, L.P............ (23,620) (39,359)
Net repayments from (advances to) Rogers International Raw
Materials Fund, L.P.................................... 50,000 (55,027)
--------- --------
Net Cash Provided By (Used In) Investing Activities......... 25,730 (94,386)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of note payable -- member.......... 50,000 --
Redemption payable........................................ 35,000 --
Capital contributions..................................... -- 95,000
Capital distributions..................................... (50,000) --
--------- --------
Net Cash Provided By Financing Activities................. 35,000 95,000
--------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 8,417 6,827
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 52,318 45,491
--------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 60,735 $ 52,318
========= ========
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Legal retainer advanced by member......................... $ 25,000 $ --
========= ========
</Table>
The accompanying notes to financial statements are an integral part of these
statements.
F-20
BEELAND MANAGEMENT COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
1. ORGANIZATION AND NATURE OF OPERATIONS
Beeland Management Company, L.L.C. (the "Company") was formed on June 6,
1997 to provide all necessary management, trading and marketing services and
support for commodity pools. The term of the Company shall continue until
December 31, 2097.
The Company is the manager and general partner of the Rogers Raw Materials
Fund, L.P. and Rogers International Raw Materials Fund, L.P. (the "Funds").
These Funds trade portfolios of cash forward commodity contracts and commodity
futures contracts. At December 31, 2002, the Company had not invested in the
Funds.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of thirty days or less
to be cash equivalents.
Computer equipment and software
Computer equipment and software are stated at cost. These items are
depreciated using straight-line and accelerated methods for both income tax and
financial reporting purposes over their estimated useful lives of three to five
years. Depreciation expense was $412 and $540 for the years ended December 31,
2002 and 2001, respectively.
Income taxes
The Company is organized as a Limited Liability Company (L.L.C.). In lieu
of corporation income taxes, the members of an L.L.C. are taxed on their
proportionate share of the L.L.C.'s taxable income. Therefore, no provision or
liability for Federal income taxes has been included in these financial
statements.
Revenue recognition
The Company recognizes management fee revenue as earned. Subscription fees
earned on investments in the Funds are recognized upon deposit of the investor's
funds into the commodity pool.
Concentration of credit risk
At certain times during the period cash balances at one bank exceeded the
amount Federally insured ($100,000).
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. AGREEMENTS AND RELATED PARTY TRANSACTIONS
The Funds pay the Company a management fee computed as the greater of 1% of
cumulative net profits of the fund less cumulative prior management fees paid or
a percentage of
F-21
BEELAND MANAGEMENT COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2002 AND 2001
the average sum of partner capital in the fund. The Company recognized $118,962
and $120,216 in management fees from the Rogers Raw Materials Fund, L.P. for the
years ended December 31, 2002 and 2001, respectively. Of these fees, $36,423 and
$23,547 remained unpaid at December 31, 2002 and 2001, respectively, and are
reflected as management fees receivable on the accompanying balance sheets. The
Company recognized $144,394 and $16,417 in management fees from the Rogers
International Raw Materials Fund, L.P. for the years ended December 31, 2002 and
2001, respectively. Of these fees, $13,014 and $16,417 remained unpaid at
December 31, 2002 and 2001, respectively, and are reflected as management fees
receivable on the accompanying balance sheets.
The Company is responsible to pay for brokerage commissions that would
otherwise be allocated to Class C Limited Partners of the Rogers Raw Materials
Fund, L.P. The Company recognizes these expenses as they are incurred by the
Fund. During 2002 and 2001, the brokerage commissions paid on behalf of the
Class C Limited Partners were insignificant.
Advances to the Funds consisted of regulatory filing fees, legal fees, and
expenses paid by the Company on behalf of the Fund. There is no formal repayment
policy between the parties. The Funds are liable for the advances at the current
time. The Company is not entitled to any additional reimbursement from the Funds
in the event the Fund terminates prior to the reimbursement of these advances.
An allowance for impairment related to the advances is established through a
provision for impairment when management believes that the collectibility of the
advance is unlikely. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing advances that may become
uncollectible, based on evaluations of the collectibility of advances and prior
loss experience. The Company performs ongoing credit evaluations of the Funds
which take into account such factors as changes in liquidity and market value of
the Fund's assets as well as current economic conditions. Management estimates
that all advances made to the Funds will be fully recovered. Since it has not
been the practice of the Funds to repay the advances on a periodic basis, the
advances have been classified as non-current assets on the accompanying balance
sheet.
The Company retained a member to provide legal services to the Company. The
Company incurred $10,296 and $2,284 in legal expenses during 2002 and 2001,
respectively. These fees are reflected as a general and administrative expense
on the accompanying statements. The Company owed $2,993 and $2,284 in legal fees
to the member at December 31, 2002 and 2001, respectively. These fees are
included in accounts payable on the accompanying balance sheet.
In April 2002, the Company and the member providing legal services
negotiated a settlement of legal fees outstanding which related to the offering
and organization of the Rogers International Raw Materials Fund, L.P. The
settlement called for two payments of $50,000 each. Upon each payment, the
member will relinquish half of its member interest in the Company. These costs
are classified as an advance to the Rogers International Raw Materials Fund,
L.P. upon payment. The agreement also calls for potential additional payments
based on the capital investment levels of the Rogers International Raw Materials
Fund, L.P. at April 30, 2003 and 2004. At December 31, 2002, these additional
amounts cannot be reasonably estimated, therefore, no provision has been made
for them in the accompanying statements.
The Company has agreements with a member to act as its investment manager.
For these services, the Company pays the member an advisory fee equal to 15
basis points per annum on the first $500 million under management in the Rogers
Raw Materials Fund, L.P., plus 10 basis points per annum on the excess over $500
million in the fund. The Company incurred $60,306
F-22
BEELAND MANAGEMENT COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2002 AND 2001
and $38,690 in advisory fees for the years ended December 31, 2002 and 2001,
respectively. These fees are reflected as a management expense in the
accompanying statements. At December 31, 2002 and 2001, The Company owed the
member $75,820 and $42,514, respectively, which is included in accounts payable
on the accompanying balance sheets. Termination of this agreement can be
affected upon 30 days written notice by either party.
In 1998, the Company entered into a consulting agreement with a managing
member to provide trading-related advice. The fee for these services is $5,000
per month. The Company incurred $60,000 in consulting fees for each year ended
December 31, 2002 and 2001. These fees are reflected as a management expense in
the accompanying statements. The Company owed the member $115,500 and $94,500 at
December 31, 2002 and 2001, respectively, which is included in accounts payable
on the accompanying balance sheets. The term of this agreement shall continue
until December 31, 2010, however, it may be terminated at any time upon 90 days
written notice by either party.
The Company paid a managing member $67,500 and $75,084 for marketing
services during 2002 and 2001, respectively. These payments are reflected as a
marketing expense on the accompanying income statements.
As the general partner of the Rogers International Raw Materials Fund,
L.P., the Company is obligated, under the partnership agreement, to contribute
$25,000 in capital to the Fund. The Company expects to make this investment in
2003.
In August 2002, a member loaned the Company $50,000. The loan matures in
August 2005 and requires interest payments semi-annually beginning February 2003
at a rate of 4% per annum. According to the agreement, the loan must be repaid
before any general distributions are made to equity holders of the Company.
Interest expense related to this loan totaled $795 for the year ended December
31, 2002.
The member also advanced $25,000 in August 2002 on behalf of the Company to
fund initial discovery costs related to legal action the Company is
contemplating against a former member who provided legal services to the Company
and Funds. If the Company secures a judgment against the former member, the
Company is obligated to pay the first $25,000 of the proceeds to the advancing
member.
4. REDEMPTION PAYABLE
During 2002, a potential investor transferred $50,000 to the Company with
the intent of acquiring a capital interest in the Company. This investor
subsequently requested the return of these funds. As of December 31, 2002, the
Company has returned $15,000 of the funds. The remaining $35,000 is reflected as
a redemption payable on the accompanying balance sheet. The Company intends to
return these funds during 2003.
5. MEMBERS' AGREEMENT
The Company's operating agreement restricts the transfer of member
interests. The agreement also requires annual distributions to be made to the
members in amounts necessary to pay any income tax resulting from Company
profits or to settle any complaint of a regulatory agency related to the
Company. The Company's members are not committed to fund the Company's cash flow
deficits or to provide any other direct or indirect financial assistance to the
Company.
F-23
BEELAND MANAGEMENT COMPANY, L.L.C.
BALANCE SHEET
MARCH 31, 2003
(UNAUDITED)
<Table>
ASSETS
CURRENT ASSETS
Cash and cash equivalents................................. $160,483
Management fees receivable................................ 63,721
Commission advances....................................... 11,250
--------
Total Current Assets................................... $235,454
PROPERTY AND EQUIPMENT, AT COST
Computer equipment and software........................... 6,035
Less accumulated depreciation............................. 5,429
--------
Total Property and Equipment, Net...................... 606
OTHER ASSETS
Advances to Rogers Raw Materials Fund, L.P................ 131,899
Advances to Rogers International Raw Materials Fund,
L.P.................................................... 8,929
--------
Total Other Assets..................................... 140,828
--------
$376,888
========
LIABILITIES AND MEMBERS' CAPITAL
CURRENT LIABILITIES
Accounts payable.......................................... $268,253
Accrued interest payable.................................. 795
Advances from member...................................... 25,000
--------
Total Current Liabilities.............................. $294,048
MEMBERS' CAPITAL............................................ 82,840
--------
$376,888
========
</Table>
See accompanying notes and accountants' report.
F-24
BEELAND MANAGEMENT COMPANY, L.L.C.
STATEMENTS OF INCOME AND CHANGES IN MEMBERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
<Table>
REVENUE
Management fees........................................... $101,027
Interest income........................................... 108
--------
Total Revenue.......................................... $101,135
OPERATING EXPENSES
Management services....................................... 31,823
Marketing services........................................ 5,276
General and administrative................................ 77,694
--------
Total Operating Expenses............................... 114,793
--------
NET LOSS.................................................... $(13,658)
========
CHANGES IN MEMBERS' CAPITAL
BALANCE, DECEMBER 31, 2002.................................. $ 96,498
Less: Net Loss............................................ (13,658)
--------
BALANCE, MARCH 31, 2003..................................... $ 82,840
========
</Table>
See accompanying notes and accountants' report.
F-25
BEELAND MANAGEMENT COMPANY, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
<Table>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $(13,658)
Adjustments to reconcile net loss to net cash used in
operating activities:
Noncash items included in net loss -- Depreciation..... $ 76
Changes in assets and liabilities:
(Increase) decrease in assets --
Management fees receivable........................ (623)
Commission advances............................... (11,250)
Prepaid expenses.................................. 25,000
Increase (decrease) in liabilities --
Accounts payable.................................. 39,000
--------
Total Adjustments........................................... 52,203
--------
Net Cash Provided By Operating Activities................... 38,545
CASH FLOWS FROM INVESTING ACTIVITIES
Advances to Rogers Raw Materials Fund, L.P................ (88,753)
Repayment from Rogers Raw Materials Fund, L.P............. 76,186
Advances to Rogers International Raw Materials Fund,
L.P.................................................... (33,929)
Repayment from Rogers International Raw Materials Fund,
L.P.................................................... 192,699
--------
Net Cash Provided By Investing Activities.............. 146,203
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of redemption payable............................. (35,000)
Repayment of note payable -- member....................... (50,000)
--------
Net Cash Used In Financing Activities.................. (85,000)
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 99,748
CASH AND CASH EQUIVALENTS, DECEMBER 31, 2002................ 60,735
--------
CASH AND CASH EQUIVALENTS, MARCH 31, 2003................... $160,483
========
</Table>
See accompanying notes and accountants' report.
F-26
BEELAND MANAGEMENT COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
1. ORGANIZATION AND NATURE OF OPERATIONS
Beeland Management Company, L.L.C. (the "Company") was formed on June 6,
1997 to provide all necessary management, trading and marketing services and
support for commodity pools. The term of the Company shall continue until
December 31, 2097.
The Company is the manager and general partner of the Rogers Raw Materials
Fund, L.P. and Rogers International Raw Materials Fund, L.P. (the "Funds").
These Funds trade portfolios of cash forward commodity contracts and commodity
futures contracts. March 31, 2003, the Company had not invested in the Funds.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of thirty days or less
to be cash equivalents.
Computer equipment and software
Computer equipment and software are stated at cost. These items are
depreciated using straight-line and accelerated methods for both income tax and
financial reporting purposes over their estimated useful lives of three to five
years. Depreciation expense was $76 for the three months ended March 31, 2003.
Income taxes
The Company is organized as a Limited Liability Company (L.L.C.). In lieu
of corporation income taxes, the members of an L.L.C. are taxed on their
proportionate share of the L.L.C.'s taxable income. Therefore, no provision or
liability for Federal income taxes has been included in these financial
statements.
Revenue recognition
The Company recognizes management fee revenue as earned. Subscription fees
earned on investments in the Funds are recognized upon deposit of the investor's
funds into the commodity pool.
Concentration of credit risk
At certain times during the period cash balances at one bank exceeded the
amount Federally insured ($100,000).
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
3. AGREEMENTS AND RELATED PARTY TRANSACTIONS
The Funds pay the Company a management fee computed as the greater of 1% of
cumulative net profits of the fund less cumulative prior management fees paid or
a percentage of
F-27
BEELAND MANAGEMENT COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2003
the average sum of partner capital in the fund. The Company recognized $50,258
in management fees from the Rogers Raw Materials Fund, L.P. for the three months
ended March 31, 2003. Of these fees, $36,650 remained unpaid at March 31, 2003,
and are reflected as management fees receivable on the accompanying balance
sheets. The Company recognized $40,058 in management fees from the Rogers
International Raw Materials Fund, L.P. for the three months ended March 31,
2003. Of these fees, $12,803 remained unpaid at March 31, 2003, and are
reflected as management fees receivable on the accompanying balance sheets.
The Company is responsible to pay for brokerage commissions that would
otherwise be allocated to Class C Limited Partners of the Rogers Raw Materials
Fund, L.P. The Company recognizes these expenses as they are incurred by the
Fund. During the three months ended March 31, 2003, the brokerage commissions
paid on behalf of the Class C Limited Partners were insignificant.
Advances to the Funds consisted of regulatory filing fees, legal fees, and
expenses paid by the Company on behalf of the Fund. There is no formal repayment
policy between the parties. The Funds are liable for the advances at the current
time. The Company is not entitled to any additional reimbursement from the Funds
in the event the Fund terminates prior to the reimbursement of these advances.
An allowance for impairment related to the advances is established through a
provision for impairment when management believes that the collectibility of the
advance is unlikely. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing advances that may become
uncollectible, based on evaluations of the collectibility of advances and prior
loss experience. The Company performs ongoing credit evaluations of the Funds
which take into account such factors as changes in liquidity and market value of
the Fund's assets as well as current economic conditions. Management estimates
that all advances made to the Funds will be fully recovered. Since it has not
been the practice of the Funds to repay the advances on a periodic basis, the
advances have been classified as non-current assets on the accompanying balance
sheet.
The Company retained a member to provide legal services to the Company. The
Company owed $2,993 to the member at March 31, 2003 for legal services
attributable to the Company. These fees are included in accounts payable on the
accompanying balance sheet.
In April 2002, the Company and the member providing legal services
negotiated a settlement of legal fees outstanding which related to the offering
and organization of the Rogers International Raw Materials Fund, L.P. The
settlement called for two payments of $50,000 each. Upon each payment, the
member will relinquish half of its member interest in the Company. These costs
are classified as an advance to the Rogers International Raw Materials Fund,
L.P. upon payment. The agreement also calls for potential additional payments
based on the capital investment levels of the Rogers International Raw Materials
Fund, L.P. at April 30, 2003 and 2004. At March 31, 2003, these additional
amounts cannot be reasonably estimated, therefore, no provision has been made
for them in the accompanying statements.
The Company has agreements with a member to act as its investment manager.
For these services, the Company pays the member an advisory fee equal to 15
basis points per annum on the first $500 million under management in the Rogers
Raw Materials Fund, L.P., plus 10 basis points per annum on the excess over $500
million in the fund. The Company incurred $16,823 in advisory fees for the three
months ended March 31, 2003. These fees are reflected as a management expense in
the accompanying statements. At March 31, 2003, the Company owed the member
$81,643, which is included in accounts payable on the accompanying balance
F-28
BEELAND MANAGEMENT COMPANY, L.L.C.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 2003
sheets. Termination of this agreement can be affected upon 30 days written
notice by either party.
In 1998, the Company entered into a consulting agreement with a managing
member to provide trading-related advice. The fee for these services is $5,000
per month. The Company incurred $15,000 in consulting fees for the three months
ended March 31, 2003. These fees are reflected as a management expense in the
accompanying statements. The Company owed the member $119,500 at March 31, 2003,
which is included in accounts payable on the accompanying balance sheets. The
term of this agreement shall continue until December 31, 2010, however, it may
be terminated at any time upon 90 days written notice by either party.
The Company advanced a managing member $11,250 for commissions during the
three months ended March 31, 2003. These commissions are expected to be earned
by the member during 2003. Therefore, these advances are classified as current
assets on the accompanying balance sheet.
As the general partner of the Rogers International Raw Materials Fund,
L.P., the Company is obligated, under the partnership agreement, to contribute
$25,000 in capital to the Fund. The Company expects to make this investment in
2003.
In August 2002, a member loaned the Company $50,000. The loan matures in
August 2005 and requires interest payments semi-annually beginning February 2003
at a rate of 4% per annum. The principal portion of this loan was repaid in
early 2003.
The member also advanced $25,000 in August 2002 on behalf of the Company to
fund initial discovery costs related to legal action the Company is
contemplating against a former member who provided legal services to the Company
and Funds. If the Company secures a judgment against the former member, the
Company is obligated to pay the first $25,000 of the proceeds to the advancing
member.
4. MEMBERS' AGREEMENT
The Company's operating agreement restricts the transfer of member
interests. The agreement also requires annual distributions to be made to the
members in amounts necessary to pay any income tax resulting from Company
profits or to settle any complaint of a regulatory agency related to the
Company. The Company's members are not committed to fund the Company's cash flow
deficits or to provide any other direct or indirect financial assistance to the
Company.
F-29
INDEPENDENT AUDITOR'S REPORT
To the General Partner of Rogers Raw Materials Fund, L.P.:
We have audited the accompanying statement of financial condition of Rogers
Raw Materials Fund, L.P. at December 31, 2002 and 2001 and the related
statements of operations, and changes in partners' equity for the years then
ended. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rogers Raw Materials Fund,
L.P. at December 31, 2002 and 2001 and the results of its operations for the
years then ended in conformity with generally accepted accounting principles.
Vorisek & Company, LLC
Certified Public Accountants
McHenry, IL
February 27, 2003
F-30
Purchasers of units in Rogers International Raw Materials Fund, L.P. will
not receive any interest in Rogers Raw Materials Fund, L.P.
ROGERS RAW MATERIALS FUND, L.P.
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
----------- -----------
ASSETS
Cash at Bank................................................ $ 256,461 $ 63,148
Cash at Broker.............................................. 195,211 522,195
US Treasury Securities...................................... 20,296,440 14,861,442
Unrealized net trading gain................................. 1,174,703 181,906
Partner Receivable.......................................... 8,409 --
Redemptions Pending......................................... 5,196,102 --
----------- -----------
Total Assets.............................................. $27,127,326 $15,628,691
=========== ===========
LIABILITIES
Replacement tax payable..................................... $ 85,382 --
Accrued management fees..................................... 60,423 $ 23,547
Accrued professional fees................................... 119,332 95,712
----------- -----------
Total Liabilities......................................... 265,137 119,259
PARTNERSHIP EQUITY
Limited Partners............................................ 26,862,189 15,509,432
----------- -----------
Total Liabilities and Partnership Equity.................... $27,127,326 $15,628,691
=========== ===========
</Table>
See accompanying notes to financial statements.
F-31
Purchasers of units in Rogers International Raw Materials Fund, L.P. will
not receive any interest in Rogers Raw Materials Fund, L.P.
ROGERS RAW MATERIALS FUND, L.P.
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
2002 2001
---------- -----------
REVENUE
Realized net trading gain (loss)............................ $4,335,314 $(7,680,880)
Change in unrealized net trading gain....................... 992,797 1,661,649
Foreign exchange gain (loss)................................ 11,536 (16,388)
Interest income............................................. 24,123 23,026
US Treasury interest income................................. 774,324 1,483,601
---------- -----------
Total Revenue............................................. 6,138,094 (4,528,992)
---------- -----------
EXPENSE
Commissions................................................. 153,037 98,693
NFA & exchange fees......................................... 24,897 10,966
Management fees............................................. 118,962 123,663
Administrative fees......................................... 28,720 3,036
Professional fees........................................... 23,620 95,712
Replacement tax............................................. 85,382 (12,298)
---------- -----------
Total Expense............................................. 434,618 319,772
---------- -----------
Net Income (Loss)........................................... $5,703,476 $(4,848,764)
========== ===========
</Table>
See accompanying notes to financial statements.
F-32
Purchasers of units in Rogers International Raw Materials Fund, L.P. will
not receive any interest in Rogers Raw Materials Fund, L.P.
ROGERS RAW MATERIALS FUND, L.P.
STATEMENT OF CHANGES IN PARTNER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
<Table>
<Caption>
CLASS A CLASS B CLASS C
LIMITED LIMITED LIMITED
PARTNERS PARTNERS PARTNERS TOTAL
----------- ----------- ----------- -----------
12/31/00 Equity..................... $ 1,834,858 $17,949,424 $ 1,521,188 $21,305,470
Additions........................... 5,500,000 -- -- 5,500,000
Net Loss............................ (1,470,956) (3,295,099) (82,709) (4,848,764)
Withdrawals......................... (246,343) (4,762,452) $(1,438,479) (6,447,274)
----------- ----------- ----------- -----------
12/31/01 Equity..................... $ 5,617,559 $ 9,891,873 -- $15,509,432
Additions........................... 2,021,373 3,740,338 -- 5,761,711
Net Income.......................... 1,967,713 3,735,763 -- 5,703,476
Withdrawals......................... (112,432) -- -- (112,432)
----------- ----------- ----------- -----------
12/31/02 Equity..................... $ 9,494,213 $17,367,974 -- $26,862,187
=========== =========== =========== ===========
</Table>
<Table>
<Caption>
CLASS A CLASS B
12/31/01 LIMITED LIMITED
PER UNIT DATA PARTNERS PARTNERS TOTAL
- ------------- -------- -------- -----
Net asset value............................................. $123,192 $123,494
======== ========
Units outstanding........................................... 45.6 80.1 125.7
======== ======== =====
12/31/01
PER UNIT DATA
Net asset value............................................. $161,466 $162,173
======== ========
Units outstanding........................................... 58.8 107.1 165.9
======== ======== =====
</Table>
See accompanying notes to financial statements.
F-33
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Nature Of Business And Organization
Rogers Raw Materials Fund, L.P. (the "Partnership") is an Illinois Limited
Partnership established in August 1997 under the laws of the Sate of Illinois
relating to Limited Partnerships. The Partnership was amended on June 18, 1998.
The Partnership trades a portfolio of cash forward commodity contracts and
commodity futures contracts, exclusively on the long side of the market; that is
the Partnership will not sell short any commodity cash forward or futures
contracts. The Partnership commenced trading During August 1998. The Partnership
will terminate December 31, 2097 or earlier upon certain circumstances as
defined in the Limited Partnership Agreement.
Net Assets
The valuation of net assets includes unliquidated commodity futures and
forward contracts owned by the Partnership, if any, at the end of the period.
The unrealized gain or loss on these contracts if any, has been calculated based
on closing prices on the last business day of the year. Foreign currency is
translated into US dollars at the exchange rate prevailing on the last business
day of the year. Net asset value is determined by subtracting liabilities from
assets, which also equals Partnership equity.
Profit and Loss Allocation
Limited Partners share in the profits and losses in the Partnership in the
proportion in which each partner's capital account bears to all partner's
capital accounts.
Income Taxes
No provision for income taxes has been made since the Partnership is not
subject to taxes on income. Each partner is individually liable for the tax on
its share of income or loss. The Partnership prepares a calendar year
information tax return. However, the Fund is subject to a 1.5% Illinois State
replacement tax on its net earnings.
Revenue Recognition
Commodity futures contracts are recorded on the trade date, and open
positions are reflected in the accompanying statement of financial condition as
the difference between the original contract value and the market value on the
last business day of the reporting period. The market value of the commodity
futures and options contracts is based upon the most recent available settlement
price on the appropriate commodity exchanges. US Treasury Securities are
reported at cost plus accrued interest, net of unrealized gains or (losses),
which approximates market. Changes in unrealized gains or (losses) represent the
total increases (decreases) in unrealized gains or (increases) decreases in
unrealized losses on open positions during the period.
F-34
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interest Income Recognition
The Partnership records interest income in the period it is earned.
Statement of Cash Flows
The Partnership has elected not to provide a statement of cash flows as
permitted by Statement of Accounting Standards 102 "Statement of Cash Flows".
NOTE 2. AGREEMENTS AND RELATED PARTY TRANSACTIONS:
The Agreement of Limited Partnership vests all responsibility and powers
for the management of the business and affairs of the Partnership with the
General Partner, Beeland Management Company, LLC. The General Partner is
responsible for the trading decisions of the Partnership.
The Partnership pays the General Partner an annual management fee
determined by multiplying the average sum of Partner capital in each Class by
the following: Class A -- 65 basis points, Class B -- 50 basis points.
If the amount of management fees paid to the Partnership's general partner
during a year does not equal or exceed one percent (1%) of the amount of the
Partnership's net profits for that year, the general partner will receive an
allocation of profits in an amount equal to the difference between one percent
of the net profits and the amount of the management fees paid.
The Partnership pays commissions to the clearing broker for brokerage
services. Administrative and trading expenses are also borne by the Partnership.
The General Partner is the Sponsor of Rogers Raw Materials Index Fund, Ltd.
a Cayman Islands Company (the "Company"), a limited partner of the Partnership.
The Sponsor is issued Sponsor Shares, which carry the right to vote at general
meetings of the Company, but do not participate in the profits or assets of the
Company.
NOTE 3. PARTNERSHIP EQUITY AND REDEMPTION'S:
Limited Partners may contribute additional funds, with 30 days prior
written notice to the General Partner, at month end. Limited Partners may
withdraw capital, with 20 days prior written notice to the General Partner, at
month end, beginning six months after their initial investment in the
Partnership.
There are two "classes" of Limited Partner, A and B. Class C shares were
discontinued during 2001. The sole difference in the terms and conditions
attendant to each of the three classes will be in the Management Fee and the
brokerage commissions. See Note 2 above.
New Partners are admitted and redemptions are made at net asset value per
unit, by class, as of the end of each calendar month. Net asset value per unit,
by class, is calculated as the net asset value, by class, at month end divided
by the number of outstanding units, by class, at month end.
Funds were transferred to a limited partner on December 27, 2002, in the
amount of $5,196,102. However, due to terms of the partnership agreement, the
redemption was not completed until January 2003. Therefore, this withdrawal is
reported in the statement of financial condition as an asset, Pending
Redemptions, rather than a reduction of equity at December 31, 2002.
F-35
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT AND MARKET RISK:
Included in the definition of financial instruments are forward contracts
and futures. The Partnership invests in various commodity-related futures and
forward contracts. These contracts are marked to market daily, with variations
in the value settled on a daily basis with the exchange upon which they are
traded. For these contracts the unrealized gain or loss rather than the notional
amounts, represents the approximate future cash requirements.
At December 31, 2002 and 2001 the Partnership owned open positions that
would have earned approximately $1,174,100 and $181,900, respectively, if
settled. The average fair value of open positions at December 31, 2002 and 2001
was $246,802 and $(690,017), respectively.
Theoretically, the Partnership is exposed to a market risk (loss) equal to
the notional value of financial instruments purchased. Generally financial
instruments can be closed out at the discretion of the General Partner. However,
if the market is not liquid, it could prevent the timely closeout of any
unfavorable positions or require the Partnership to hold these positions and
possibly all positions until maturity, regardless of the changes in their value
or the General Partner's investment strategies.
The Partnership's trading is designed to replicate the positions and
trading which comprise the Rogers International Commodity Index (the "Index").
This Index consists of a basket of commodities employed within the world economy
and traded in seasoned markets, as futures and forward contracts. The broad
based representation of commodities contracts is intended to provide two
important characteristics: The large number of contracts and underlying raw
materials represents "diversification" and the global coverage of these
contracts reflects the current state of international trade and commerce. In
order to minimize market and credit risks, the General Partner monitors the
positions held by the Partnership on a daily basis and no trading discretion is
utilized other than the replication of the Index. Contracts are purchased or
liquidated according to the replication of the index.
Futures contracts have little credit risk because futures exchanges are the
counterparties.
NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS:
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or any
combination. Changes in the underlying asset indirectly affect the value of the
derivative. All trading instruments are subject to market risk, the risk that
future changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those changes
directly affect reported income.
Futures and forward contracts used for trading purposes are recorded in the
statement of financial condition at fair value at the reporting date. Per
Financial Accounting Standards Board Interpretation No. 39, the fair value of
open contracts in a loss position is offset against the fair value of open
contracts in a gain position. The Partnership applies this industry accepted
accounting practice in the financial statements. Realized and unrealized changes
in fair values are recognized in the period in which the changes occur.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the amounts
exchanged by the parties to derivatives and do not measure the Partnership's
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives. At
F-36
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
December 31, 2002 and 2001 the Partnership owned open positions with an
approximate notional value of $26,807,000 and $23,889,000, respectively.
The Partnership invests in financial instruments, which includes futures
and forward contracts. All contracts are of the same class of derivative
instrument, commodity-related derivatives. Futures contracts are commitments to
either purchase or sell designated financial instruments at a future date for a
specified price and may be settled in cash or through delivery.
The Partnership has funds at the Clearing Broker in accounts, which are
used to meet minimum margin requirements for all of the Partnership's open
positions. These requirements are adjusted, as needed, due to daily fluctuations
in the values of the underlying assets.
Non-Regulated futures contracts have foreign exchange risk since the
contracts are traded in currency denominations other than US dollars. Foreign
currency trading gains or losses are reported under realized and unrealized
trading gains in the statement of operations. Foreign currency gains or losses
are the result of the conversion of the foreign currency denomination to US
dollars.
Foreign currency gains/(losses) for the years ended December 31, 2002 and
2001 were $11,536 and $(16,388), respectively.
The Partnership had realized gains(losses) from trading for the years ended
December 31, 2002 and 2001 of $4,335,314 and $(7,680,880), respectively, as
reported in the statement of operations. These realized gains(losses) included
gains/(losses) from non-regulated contracts of $176,354 and $(709,486) for the
same periods.
The Partnership had income from the change in unrealized gains for the
years ended December 31, 2002 and 2001 of approximately $992,797 and $1,661,600,
as reported in the statement of operations.
NOTE 6. PRIOR PERIOD RESTATEMENT:
An error was discovered in the Partnership's previously issued statement of
financial condition at December 31, 2001 and the related statements of
operations, and changes in partners' equity for the year then ended. The
professional fees incurred and owed to the general partner, Beeland Management
Company, LLC, were understated by $95,712. All affected balances presented
within these current financial statements have been restated.
UNREALIZED HOLDINGS AT 12/31/02
<Table>
<Caption>
REGULATED FUTURES NON-REGULATED FUTURES
--------------------------- ---------------------------
FUTURES CONTRACT VALUES FAIR VALUE NOTIONAL VALUE FAIR VALUE NOTIONAL VALUE
- ----------------------- ---------- -------------- ---------- --------------
Purchase Contracts
Assets............................... $1,896,863 $15,365,000 $ 23,543 $ 866,000
Liabilities.......................... (647,680) 6,858,000 (103,898) 3,563,000
Sell Contracts
Assets............................... -- -- 5,875 155,000
---------- ----------- --------- ----------
Total................................ $1,249,183 $22,223,000 $ (74,480) $4,584,000
========== =========== ========= ==========
</Table>
F-37
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<Table>
<Caption>
CONTRACT MATURITY DATES FAIR VALUE NOTIONAL VALUE FAIR VALUE NOTIONAL VALUE
- ----------------------- ---------- -------------- ---------- --------------
February 2003........................... $1,736,215 $13,038,000 $(48,339) $4,185,000
March 2003.............................. (496,952) 8,719,000 (26,141) 399,000
April 2003.............................. 9,920 466,000 -- --
---------- ----------- -------- ----------
Total................................... $1,249,183 $22,223,000 $(74,480) $4,584,000
========== =========== ======== ==========
</Table>
F-38
ROGERS RAW MATERIALS FUND, L.P.
STATEMENT OF FINANCIAL CONDITION
MARCH 31, 2003
(UNAUDITED)
<Table>
<Caption>
3/31/2003
-----------
ASSETS
Cash at bank................................................ $ 431,217
Cash at broker.............................................. 4,649,282
US Treasury Securities...................................... 38,104,597
Unrealized net trading (loss)............................... (3,175,558)
Partner receivable.......................................... 8,409
Redemptions pending......................................... --
-----------
Total Assets.............................................. $40,017,947
===========
LIABILITIES
Replacement taxes payable................................... $ 24,309
Accrued management fees..................................... 66,651
Redemptions payable......................................... 1,432
Accrued professional fees................................... 131,899
-----------
Total Liabilities......................................... 224,291
-----------
PARTNERSHIP EQUITY
Limited Partners Equity..................................... 39,793,656
-----------
Total Liabilities and Partnership Equity.................... $40,017,947
===========
</Table>
See accompanying notes and accountants report.
F-39
ROGERS RAW MATERIALS FUND, L.P.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
<Table>
<Caption>
3 M/E
3/31/2003
-----------
REVENUE
Realized net trading gain................................... $ 5,220,316
Change in unrealized net trading (loss)..................... (4,350,260)
Foreign exchange gain....................................... 19,511
Interest income............................................. 23,775
US Treasury interest income................................. 159,805
-----------
Total Revenue............................................. 1,073,147
-----------
EXPENSE
Commissions................................................. 54,912
NFA & exchange fees......................................... 9,699
Management fees............................................. 50,258
Administrative fees......................................... 7,568
Professional fees........................................... 12,567
Replacement tax............................................. 15,113
-----------
Total Expense............................................. 150,117
-----------
Net Income.................................................. $ 923,030
===========
</Table>
See accompanying notes and accountants report.
F-40
ROGERS RAW MATERIALS FUND, L.P.
STATEMENT OF CHANGES IN PARTNER'S EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(UNAUDITED)
<Table>
<Caption>
CLASS A CLASS B
LIMITED LIMITED
PARTNERS PARTNERS TOTAL
----------- ----------- -----------
Beginning of Quarter Equity....................... $ 9,494,213 $17,367,974 $26,862,187
Additions......................................... 4,314,899 12,900,000 17,214,899
Net income........................................ 179,786 743,244 923,030
Withdrawals....................................... (5,206,460) -- (5,206,460)
----------- ----------- -----------
End of Quarter Equity............................. $ 8,782,438 $31,011,218 $39,793,656
=========== =========== ===========
</Table>
<Table>
<Caption>
CLASS A CLASS B
3/31/2003 LIMITED LIMITED
PER UNIT DATA PARTNERS PARTNERS TOTAL
- ------------- -------- -------- ------
Net asset value............................................. $168,182 $169,072
======== ========
Units outstanding........................................... 52.22 183.42 235.64
======== ======== ======
</Table>
See accompanying notes and accountants report.
F-41
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
(UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES:
Nature of Business and Organization
Rogers Raw Materials Fund, L.P. (the "Partnership") is an Illinois Limited
Partnership established in August 1997 under the laws of the Sate of Illinois
relating to Limited Partnerships. The Partnership was amended on June 18, 1998.
The Partnership trades a portfolio of cash forward commodity contracts and
commodity futures contracts, exclusively on the long side of the market; that is
the Partnership will not sell short any commodity cash forward or futures
contracts. The Partnership commenced trading During August 1998. The Partnership
will terminate December 31, 2097 or earlier upon certain circumstances as
defined in the Limited Partnership Agreement.
Net Assets
The valuation of net assets includes unliquidated commodity futures and
forward contracts owned by the Partnership, if any, at the end of the period.
The unrealized gain or loss on these contracts if any, has been calculated based
on closing prices on the last business day of the year. Foreign currency is
translated into US dollars at the exchange rate prevailing on the last business
day of the year. Net asset value is determined by subtracting liabilities from
assets, which also equals Partnership equity.
Profit and Loss Allocation
Limited Partners share in the profits and losses in the Partnership in the
proportion in which each partner's capital account bears to all partner's
capital accounts.
Income Taxes
No provision for income taxes has been made since the Partnership is not
subject to taxes on income. Each partner is individually liable for the tax on
its share of income or loss. The Partnership prepares a calendar year
information tax return. However, the Fund is subject to a 1.5% Illinois State
replacement tax on its net earnings.
Revenue Recognition
Commodity futures contracts are recorded on the trade date, and open
positions are reflected in the accompanying statement of financial condition as
the difference between the original contract value and the market value on the
last business day of the reporting period. The market value of the commodity
futures and options contracts is based upon the most recent available settlement
price on the appropriate commodity exchanges. US Treasury Securities are
reported at cost plus accrued interest, net of unrealized gains or (losses),
which approximates market. Changes in unrealized gains or (losses) represent the
total increases (decreases) in unrealized gains or (increases) decreases in
unrealized losses on open positions during the period.
F-42
ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interest Income Recognition
The Partnership records interest income in the period it is earned.
Statement of Cash Flows
The Partnership has elected not to provide a statement of cash flows as
permitted by Statement of Accounting Standards 102 "Statement of Cash Flows".
NOTE 2.AGREEMENTS AND RELATED PARTY TRANSACTIONS:
The Agreement of Limited Partnership vests all responsibility and powers
for the management of the business and affairs of the Partnership with the
General Partner, Beeland Management Company, LLC. The General Partner is
responsible for the trading decisions of the Partnership.
The Partnership pays the General Partner an annual management fee
determined by multiplying the average sum of Partner capital in each Class by
the following: Class A -- 65 basis points, Class B -- 50 basis points.
If the amount of management fees paid to the Partnership's general partner
during a year does not equal or exceed one percent (1%) of the amount of the
Partnership's net profits for that year, the general partner will receive an
allocation of profits in an amount equal to the difference between one percent
of the net profits and the amount of the management fees paid.
The Partnership pays commissions to the clearing broker for brokerage
services. Administrative and trading expenses are also borne by the Partnership.
The General Partner is the Sponsor of Rogers Raw Materials Index Fund, Ltd.
a Cayman Islands Company (the "Company"), a limited partner of the Partnership.
The Sponsor is issued Sponsor Shares, which carry the right to vote at general
meetings of the Company, but do not participate in the profits or assets of the
Company.
NOTE 3.PARTNERSHIP EQUITY AND REDEMPTION'S:
Limited Partners may contribute additional funds, with 30 days prior
written notice to the General Partner, at month end. Limited Partners may
withdraw capital, with 20 days prior written notice to the General Partner, at
month end, beginning six months after their initial investment in the
Partnership.
There are two "classes" of Limited Partner, A and B. Class C shares were
discontinued during 2001. The sole difference in the terms and conditions
attendant to each of the three classes will be in the Management Fee and the
brokerage commissions. See Note 2 above.
New Partners are admitted and redemptions are made at net asset value per
unit, by class, as of the end of each calendar month. Net asset value per unit,
by class, is calculated as the net asset value, by class, at month end divided
by the number of outstanding units, by class, at month end.
NOTE 4.FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET CREDIT AND MARKET RISK:
Included in the definition of financial instruments are forward contracts
and futures. The Partnership invests in various commodity-related futures and
forward contracts. These contracts are marked to market daily, with variations
in the value settled on a daily basis with the exchange
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ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
upon which they are traded. For these contracts the unrealized gain or loss
rather than the notional amounts, represents the approximate future cash
requirements.
Theoretically, the Partnership is exposed to a market risk (loss) equal to
the notional value of financial instruments purchased. Generally financial
instruments can be closed out at the discretion of the General Partner. However,
if the market is not liquid, it could prevent the timely closeout of any
unfavorable positions or require the Partnership to hold these positions and
possibly all positions until maturity, regardless of the changes in their value
or the General Partner's investment strategies.
The Partnership's trading is designed to replicate the positions and
trading which comprise the Rogers International Commodity Index (the "Index").
This Index consists of a basket of commodities employed within the world economy
and traded in seasoned markets, as futures and forward contracts. The broad
based representation of commodities contracts is intended to provide two
important characteristics: The large number of contracts and underlying raw
materials represents "diversification" and the global coverage of these
contracts reflects the current state of international trade and commerce. In
order to minimize market and credit risks, the General Partner monitors the
positions held by the Partnership on a daily basis and no trading discretion is
utilized other than the replication of the Index. Contracts are purchased or
liquidated according to the replication of the index.
Futures contracts have little credit risk because futures exchanges are the
counterparties.
NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL
INSTRUMENTS:
A derivative financial instrument is a financial agreement whose value is
linked to, or derived from, the performance of an underlying asset. The
underlying asset can be currencies, commodities, interest rates, stocks, or any
combination. Changes in the underlying asset indirectly affect the value of the
derivative. All trading instruments are subject to market risk, the risk that
future changes in market conditions may make an instrument less valuable or more
onerous. As the instruments are recognized at fair market value, those changes
directly affect reported income.
Futures and forward contracts used for trading purposes are recorded in the
statement of financial condition at fair value at the reporting date. Per
Financial Accounting Standards Board Interpretation No. 39, the fair value of
open contracts in a loss position is offset against the fair value of open
contracts in a gain position. The Partnership applies this industry accepted
accounting practice in the financial statements. Realized and unrealized changes
in fair values are recognized in the period in which the changes occur.
Notional amounts are equivalent to the aggregate face value of the
derivative financial instruments. Notional amounts do not represent the amounts
exchanged by the parties to derivatives and do not measure the Partnership's
exposure to credit or market risks. The amounts exchanged are based on the
notional amounts and other terms of the derivatives.
The Partnership invests in financial instruments, which includes futures
and forward contracts. All contracts are of the same class of derivative
instrument, commodity-related derivatives. Futures contracts are commitments to
either purchase or sell designated financial instruments at a future date for a
specified price and may be settled in cash or through delivery.
The Partnership has funds at the Clearing Broker in accounts, which are
used to meet minimum margin requirements for all of the Partnership's open
positions. These requirements are adjusted, as needed, due to daily fluctuations
in the values of the underlying assets.
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ROGERS RAW MATERIALS FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Non-Regulated futures contracts have foreign exchange risk since the
contracts are traded in currency denominations other than US dollars. Foreign
currency trading gains or losses are reported under realized and unrealized
trading gains in the statement of operations. Foreign currency gains or losses
are the result of the conversion of the foreign currency denomination to US
dollars.
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APPENDIX A
LIMITED PARTNERSHIP AGREEMENT
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
This Second Amended and Restated Agreement of Limited Partnership is made
as of this 15th day of August, 2001 by and between Beeland Management Company,
L.L.C., an Illinois limited liability company, as General Partner, and Clyde C.
Harrison, an individual, as Original Limited Partner, and those other parties
who now or hereafter, from time to time, execute this Agreement or counterparts
hereof, as Limited Partners.
WITNESSETH:
WHEREAS, the parties hereto formed a limited partnership (the
"Partnership") pursuant to the provisions of the Revised Uniform Limited
Partnership Act of the State of Illinois (the "Act") under the name Rogers
International Raw Materials Fund, L.P.;
WHEREAS, the parties desire to incorporate certain amendments to their
Agreement of Limited Partnership; and
WHEREAS, the parties hereto intend to hereby document the terms and
conditions pursuant to which the Partnership will operate.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, the parties hereto, intending to be legally bound, hereby
adopt the following terms and conditions as their Agreement of Limited
Partnership.
ARTICLE I
FORMATION OF LIMITED PARTNERSHIP
The Partnership was formed, created and established as a limited
partnership under the Act by and between the parties hereto. The rights and
liabilities of the Partners shall be as set forth in the Act, except as herein
otherwise expressly provided. The General Partner caused to be filed the
Partnership's Certificate of Limited Partnership on May 8, 2000 and shall cause
an Amendment to that Certificate to be filed at such time(s) as such a filing is
required by the Act. The above recitals are hereby incorporated by this
reference, as an integral part of this Agreement, and not as mere introductory
material.
ARTICLE II
NAME
The business of the Partnership shall be conducted under the name of Rogers
International Raw Materials Fund, L.P. or such other name as the General Partner
shall from time to time hereafter designate in writing to the Limited Partners.
ARTICLE III
DEFINITIONS
When used in this Agreement, and not otherwise specifically defined, the
following terms shall have the meanings set forth below.
(a) "Accounting Period" means (i) any fiscal year of the Partnership or
(ii) any shorter period ending as of the last day of a calendar month prior to
the month in which the Partnership Interest of any Partner shall change, whether
by withdrawal(s), the admission of new Partners, the contribution of additional
capital, or otherwise. Any Accounting Period which begins on a date other than
the first day of a fiscal year shall close not later than December 31 of that
fiscal year.
(b) "Act" means the Revised Uniform Limited Partnership Act of the State of
Illinois.
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(c) "Additional Limited Partner" means a Limited Partner (other than a
Substituted Limited Partner) admitted to the Partnership after the close of the
offering of interests in the Partnership described in Section 8.3.
(d) "Affiliate" of the General Partner shall mean (i) any person directly
or indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of the General Partner; (ii) any person 10% or
more of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by the General Partner; (c) any person,
directly or indirectly, controlling, controlled by, or under common control of
the General Partner; (d) any officer, director, partner or member of the General
Partner; or (e) if the General Partner is an officer, director, or partner, any
person for which the General Partner acts in any such capacity.
(e) "Agreement" means this Agreement of Limited Partnership, as it may be
amended, modified or supplemented from time to time.
(f) "Allocable Share of Net Profits or Net Losses" of a Partner means, for
any Accounting Period, that part of Net Profits or Net Losses for such
Accounting Period allocable to the Partner pursuant to Article IX of this
Agreement.
(g) "Capital Account" means a separate account maintained for each Partner.
A Partner's Capital Account shall be credited with: (1) In the case of a Limited
Partner, its Capital Contribution and its Allocable Share of Net Profits, and
(2) in the case of the General Partner, its Capital Contribution, its Allocable
Share of Net Profits, if any, which it elects to contribute to the capital of
the Partnership as a Capital Contribution pursuant to Section 8.1 and any
Allocable Share of Net Profits thereon (as a Limited Partner). A Partner's
Capital Account shall be reduced by: (1) its Allocable Share of Net Losses and
(2) cash and the fair market value of other property distributed to the Partner.
The term "Capital Account" shall have reference not only to the Capital Account
as such, but also to the balance in the Capital Account of a Partner at any
specified time.
(h) "Capital Contribution" means all contributions to the Partnership
capital by a General or Limited Partner pursuant to Sections 8.1, 8.2 and 8.6,
less any Distributions to the Partner which are treated as a return of capital
pursuant to Section 8.5.
(i) "Code" means the Internal Revenue Code of 1986, as amended, and
successor laws of similar effect.
(j) "Distribution" means a transfer of property or payment of cash to a
Partner by the Partnership. "Distribution" does not include repayment or
reimbursement of any loans or advances made by the General Partner to the
Partnership.
(k) "ERISA" means the Employee Retirement Income Security Act of 1974, and
any amendments or modifications thereof.
(l) "ERISA Limited Partner" means a Limited Partner who is (i) an "Employee
Benefit Plan," as defined in Section 3(3) of ERISA; (ii) a plan described in
Section 4975(e)(1) of the Code; or (iii) a partnership, the general partner of
which has been appointed "investment manager," as defined in Section 3(38) of
ERISA, over the assets used by one or more Employee Benefit Plans to purchase
limited partnership interests in such partnership.
(m) "General Partner" means Beeland Management Company, L.L.C., or any
successor or successors thereto acting in the capacity of the General Partner of
the Partnership through its Managing Member or any other duly authorized agent.
(n) "Government Security" and "Government Securities" shall have the
meanings assigned to such terms under the Investment Company Act of 1940, as
amended (the "1940 Act").
(o) "Index" means the Rogers International Commodity Index.
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(p) "Initial Closing" shall have the meaning set forth in Section 8.3(a).
(q) "Limited Partners" means the parties who execute this Agreement or a
counterpart hereof as limited partners (including the Original Limited Partner
and all Additional Limited Partners), and the General Partner, if it makes a
Capital Contribution, to the extent of such contribution (and Distributions
thereon). Reference to a "Limited Partner" shall mean any one of the Limited
Partners.
(r) "Net Assets" shall have the meaning set forth in Section 8.3(c).
(s) "Net Asset Value Per Unit" shall have the meaning set forth in Section
8.3(c).
(t) "Net Profits" or "Net Losses" shall mean all net profits earned by or
net losses incurred by the Partnership in any Accounting Period or other fiscal
period, including all of the Partnership's open positions in securities,
commodities, including futures, forward and option contracts and any and all
interests therein ("Positions"), minus the amount of any Management Fee, as
provided in Section 11.1, determined on an accrual basis in accordance with
generally accepted accounting principles; provided, however, that all of the
Partnership's Positions shall be valued at their fair market value as of the end
of each Accounting Period. On all Positions which were open at the beginning of
an Accounting Period and subsequently closed during the Accounting Period, gain
or loss shall be determined on the basis of the fair market values used at the
close of the immediately preceding Accounting Period. All questions relating to
valuation arising in determining Net Profits or Net Losses shall be resolved by
the Partnership's regularly employed certified public accountants, whose good
faith decision shall, absent manifest error or fraud, be final.
(u) "Original Limited Partner" means Clyde C. Harrison.
(v) "Partners" means the General Partner and all Limited Partners where no
distinction is required by the context in which the term is used herein.
(w) "Partnership" means Rogers International Raw Materials Fund, L.P., a
limited partnership formed pursuant to the provisions of the Act.
(x) "Partnership Interest" means, with respect to a Limited Partner, such
Limited Partner's ownership interest in the Partnership at any particular time,
including the right to the benefits to which a Limited Partner may be entitled
to under this Agreement and his obligation to comply with the terms and
obligations of this Agreement. Limited Partners shall own only full Units (as
defined in Section 8.2(a)). Thus, each Limited Partner's Partnership Interest
shall, for all purposes, be the ratio that the number of Units owned by that
Limited Partner bears to the aggregate total of all Units held by all Limited
Partners (including the General Partner, to the extent of any Units owned by the
General Partner). Reference to Limited Partners holding a majority or a
specified percentage in Partnership Interest shall mean any Limited Partner or
group of Limited Partners who own over 50% or at least such specified
percentage, as the case may be, of the aggregate total of all Units held by all
Limited Partners (including the General Partner, to the extent of any Units
owned by the General Partner).
(y) "Section" means a Section of this Agreement if no reference is made to
a statute, law or other document.
(z) "Subscription Agreement" means the Agreement for subscription for the
purchase of Units of the Partnership in such form as is approved by the General
Partner.
ARTICLE IV
PURPOSE
The purpose of the Partnership is to invest its funds in a portfolio of
commodity futures and cash forward contracts traded on both recognized exchanges
and in the off-exchange or
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"over-the-counter" markets throughout the world, as the General Partner shall,
in its sole discretion, determine. The purpose of such investing and trading
shall be to replicate, to the extent deemed reasonably possible by the General
Partner, the component commodity positions which comprise the Index. The
Partnership shall also invest its funds in Government Securities.
The Partnership may engage in any and all activities, including the
borrowing and lending of money, related or incidental to the activities
described above. However, the Partnership shall not operate in a manner which
would cause it to become an investment company required to register under the
1940 Act.
ARTICLE V
NAMES AND ADDRESS OF PARTNERS
The names and addresses of the Partners are as set forth in Schedule A
attached hereto and incorporated herein by reference, as amended, modified or
supplemented from time to time.
ARTICLE VI
TERM
The term of the Partnership shall begin upon the filing of its Certificate
of Limited Partnership and continue until the close of business on December 31,
2020, unless sooner terminated as hereinafter provided.
ARTICLE VII
PRINCIPAL PLACE OF BUSINESS
The principal place of business of the Partnership shall be at 1000 Hart
Road, Barrington, Illinois, 60010. The General Partner may, from time to time,
change the principal place of business or establish additional places of
business whether within or without the State of Illinois. In such event, the
General Partner shall notify the Limited Partners of such change.
ARTICLE VIII
CAPITAL AND CONTRIBUTIONS
SECTION 8.1. GENERAL PARTNER
(a) The General Partner shall make a Capital Contribution to the
Partnership immediately prior to the time the Partnership commences trading, in
an amount in its sole discretion, provided, however, that said Capital
Contribution shall be in an amount greater than $25,000 and shall be made in an
increment of full Units.
(b) A Capital Account shall be established and maintained for the General
Partner, which shall be credited and debited as provided in paragraph (g) of
Article III.
(c) The General Partner shall be deemed to be a Limited Partner to the
extent of the General Partner's Capital Contribution, for all purposes under
this Agreement. All Capital Contributions of the General Partner shall be
evidenced by Units (as defined in Section 8.2(a)).
SECTION 8.2. LIMITED PARTNERS
(a) Each Limited Partner shall make an initial Capital Contribution to the
Partnership in the amount called for by his Subscription Agreement. Each Limited
Partner's Capital Contribution is due upon subscription. The Capital
Contributions to be made to the Partnership by the Limited Partners shall be
divided into and evidenced by units of Partnership Interests (the "Units") with
a purchase price per Unit specified in Section 8.3(a). Each Limited Partner,
other than the Original Limited Partner, must agree to make an initial Capital
Contribution of at least one hundred (100) Units.
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(b) A Capital Account shall be established for each Limited Partner, which
shall be credited and debited as provided in paragraph (g) of Article III.
(c) The Original Limited Partner executed this Agreement and contributed a
total of $5,000 to the Partnership, constituting five Units and shall have no
obligation to make any further Capital Contribution.
The Original Limited Partner may, but shall not be obligated to, withdraw from
the Partnership upon the admission of any additional Limited Partner(s).
SECTION 8.3. SALE OF UNITS OF LIMITED PARTNERSHIP INTEREST
(a) The General Partner shall solicit subscriptions for the purchase of
Units in an offering (the "Offering"), the terms of which shall be as set forth
in a prospectus (the "Prospectus") included in a registration statement (the
"Registration Statement") to be filed with the Securities and Exchange
Commission (the "SEC"). The purchase price per Unit prior to the commencement of
trading activities by the Partnership shall be One Hundred Dollars ($100) per
Unit. The purchase price per Unit after the Partnership has commenced trading
shall be the Net Asset Value per Unit (as that term is defined in Section
8.3(c)) as of the close of business on the day preceding the effective date of
the purchase.
Each Limited Partner, other than the Original Limited Partner, must agree
to make a Capital Contribution of at least one hundred (100) Units. The General
Partner and affiliates of the General Partner may subscribe for Units on the
same terms and conditions as any other subscriber. During the Offering, the
General Partner may admit as a Limited Partner, within its sole and unrestricted
discretion, those persons and entities who deliver to the Partnership an
executed Subscription Agreement in accordance with the terms thereof, including
payment of the subscription called for therein. Each subscriber whose
Subscription Agreement is accepted by the Partnership as a Limited Partner,
shall make its Capital Contribution to the Partnership by delivering the full
amount of the purchase price for the Units subscribed for in cash or by check.
Initially, all Cash Contributions received by the Partnership in satisfaction of
subscription obligations shall be deposited and held in trust in an escrow
account maintained at a bank or trust company selected by the General Partner.
The Partnership shall not commence trading unless and until the General
Partner has accepted subscriptions for at least Fifty Thousand (50,000) Units
(the "Minimum Units") by December 15, 2001. The Partnership may commence trading
at any time after the proceeds from the Minimum Units have been released from
escrow (the "Initial Closing"), at which time subscribers shall first be
admitted to the Partnership as Limited Partners. If, for any reason whatsoever,
the General Partner has not received and accepted Subscription Agreements for
the Minimum Units by December 15, 2001, the Offering shall terminate and all
amounts paid by subscribers for Units shall be returned in the manner and
subject to the terms provided in the Subscription Agreements. Assuming the
Initial Closing is held, the Offering shall continue for such period as the
Registration Statement shall remain effective.
The General Partner may, in its sole discretion, employ registered
broker-dealers ("Soliciting Dealers") to assist in the offer and sale of the
Units. All Soliciting Dealers employed by the General Partner shall be required
to execute a soliciting dealer agreement in a form approved by the General
Partner. The General Partner shall be authorized to pay Soliciting Dealers the
compensation described in such soliciting dealer agreement.
The number of Units purchased by each subscribing Limited Partner, the
amount of the Capital Contribution each Limited Partner has made and the
Partnership Interest of each Limited Partner shall be recorded on Schedule A
opposite each Limited Partner's name and address. No certificate or other
evidence of ownership shall be issued in respect of the Units or Partnership
Interests other than this Agreement, or a counterpart thereof (including
Schedule A) which, when executed and delivered by the General Partner, shall
solely represent and evidence the
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Units and Partnership Interests purchased by each Limited Partner. However, the
Partnership may retain a Subscription Agent whose duties may include providing
notification to Limited Partners with respect to their ownership of Units.
(b) After the termination of the Offering, the General Partner may, in its
discretion, accept additional subscriptions for Units, and may, at times
subsequent to the Offering, make additional offerings of Units on the following
terms and conditions:
(1) Each subsequent Unit sold ("New Units") shall require the Capital
Contribution specified by Section 8.3(a);
(2) New Units sold during any month shall be accepted or rejected as
of the close of business on the last trading day of such month;
(3) Each Additional Limited Partner shall execute and acknowledge such
instruments as the General Partner may deem necessary or desirable to
effectuate such admission and to confirm that the Additional Limited
Partner has agreed to be bound by all the covenants, terms and conditions
of this Agreement;
(4) The General Partner may register Units and/or make additional
public or private offerings of Units, in its sole discretion. The General
Partner does not, however, have any obligation or duty to register any
Units with any authority. No Limited Partner shall have any preemptive or
other rights with respect to the issuance or sale of any additional Units.
The General Partner may, in its sole discretion, terminate any offering of
Units.
(c) "Net Assets" of the Partnership for purposes of this Agreement shall
mean the Partnership's total assets minus the Partnership's total liabilities,
determined in accordance with generally accepted accounting principles, with all
open positions marked to market. The term "Net Asset Value Per Unit" for
purposes of this Agreement means the Net Assets of the Partnership at the time
of calculation divided by the aggregate number of Units outstanding at that
time.
SECTION 8.4. STATUS OF CAPITAL ACCOUNT OF LIMITED PARTNER
Except as otherwise specifically set forth in this Agreement, no Limited
Partner shall have the right to withdraw all or any part of the credit balance
in his Capital Account, to receive any Distribution from the Partnership or to
demand or receive property other than cash in withdrawal of the credit balance
of his Capital Account or as Distributions of income. No Limited Partner shall
have priority over another Limited Partner in connection with the return of his
Capital Contributions or Distribution of the credit balance in his Capital
Account, or as to any other Distributions by the Partnership. Capital
contributed to the Partnership and the credit balance in a Partner's Capital
Account shall not bear interest.
SECTION 8.5. WITHDRAWAL OF INTERESTS
(a) Upon the terms and conditions set forth in this Section 8.5, a Limited
Partner may reduce or redeem all of its Partnership Interest in the Partnership,
and have part or all of the credit balance in its Capital Account returned to
it, by withdrawing funds from its Capital Account.
(b) A Limited Partner who desires to have all or a portion of the credit
balance in its Capital Account returned to it shall give the General Partner
written notice (a "Notice of Withdrawal") not less than sixty (60) prior to the
date as of which the Limited Partner desires to effect such partial or complete
withdrawal. The General Partner may, but shall not be required to, employ a
Subscription Agent as its agent to receive and process any such Notice of
Withdrawal. The Notice of Withdrawal shall state the date upon which the
withdrawal is desired, which date must be the last trading day of any month (the
"Withdrawal Date"). In the case of a partial withdrawal, such notice shall also
specify either the percentage of the credit balance in his Capital Account that
he wishes to withdraw at the Withdrawal Date, or the dollar amount of
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capital which he wishes to have returned to him, subject to the requirement that
any such withdrawals may only be in increments of the Net Asset Value of a Unit
and to the additional terms and conditions set forth in this Section 8.5.
However, except as permitted under subsection (e) of this Section 8.5, no
Limited Partner may withdraw any part of its Capital Account until three (3)
months have elapsed from the later of the following dates: (i) the date on which
the proceeds for the Limited Partner's subscription are invested in the market;
and (ii) the Initial Closing date. Any withdrawal request approved by the
General Partner or its agent shall be effective as of the close of business on
the Withdrawal Date specified in the Notice of Withdrawal.
(c) In the event a Limited Partner has delivered an appropriate Notice of
Withdrawal to the Partnership, the General Partner shall distribute to the
withdrawing Limited Partner, per Unit withdrawn, an amount equal to the Net
Asset Value Per Unit as of the effective time of the withdrawal on the
Withdrawal Date, less an amount (the "Holdback") equal to the greater of (i) two
percent (2%) of the Net Asset Value Per Unit, or (ii) $100, to cover accrued,
but unpaid, management fees and other expenses payable by the Partnership and
chargeable against Net Assets as of such date. Any such Limited Partner's
Capital Account shall be reduced by the amount so paid and its Partnership
Interest shall be adjusted accordingly as of the Withdrawal Date. Payment for
the withdrawn Units shall be made within 30 days after the Withdrawal Date. From
the time of the General Partner's receipt of a Notice of Withdrawal to the
effective time of the withdrawal on the Withdrawal Date, the Units will remain
at risk in the business of the Partnership and the withdrawing Limited Partner
shall have all the rights of a Limited Partner under this Agreement but shall
not share in Net Profits or Net Losses. After the close of the fiscal year in
which the withdrawal was effected, the account of the Limited Partner who
effected the withdrawal shall be adjusted to reflect his allocated share of
management fees and expenses, which shall be charged against the Holdback. After
such charge, any positive balance remaining from the Holdback shall be promptly
paid to the withdrawn Limited Partner, in the same manner as the balance of the
withdrawal.
(d) No Limited Partner may withdraw less than all of the credit balance of
its Capital Account in accordance with the above provisions if, as of the
Withdrawal Date, such withdrawal would reduce the credit balance of its Capital
Account to less than the ten full Units (after subtracting the amount such
Limited Partner wishes to withdraw).
(e) Notwithstanding the provisions of Section 8.5(d), if the General
Partner determines it is in the best interests of the Partnership, it may permit
a Limited Partner, including the Original Limited Partner, to withdraw part or
all of the credit balance in his Capital Account at any time.
(f) A Limited Partner shall have no personal liability for the debts,
liabilities and other obligations of the Partnership from and after the
effective date of a complete return of the credit balance in such Limited
Partner's Capital Account as provided in this Section 8.5, except to the extent
provided under Illinois law for Partnership debts and liabilities incurred prior
to such effective date, and then only for amounts withdrawn by or distributed to
such Limited Partner.
(g) Subject to subsection (a) and (b) of this Section 8.5 and to the
following, the General Partner, acting alone or, at its election, in conjunction
with the Subscription Agent, shall honor all Notices of Withdrawal in the order
they are received (on the basis of postmark or delivery, with the General
Partner selecting Units for withdrawal by lot with respect to Notices of
Withdrawal received on the same date). If, however, the number of withdrawals
requested for any month or over any other given period of time, in the opinion
of the General Partner, (i) threatens the termination of the Partnership or the
Partnership's tax year; or (ii) is otherwise detrimental to the tax status of
the Partnership, the General Partner may (but is not required to) select by lot
only so many withdrawals as will, in its judgment, not result in such
consequences. The General Partner shall notify the Limited Partners in writing
within 10 days after the effective date of the withdrawal whether or not their
Units have been withdrawn. Any Units not withdrawn in this event
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shall remain at risk in the business of the Partnership and shall not be
withdrawn absent another separate Notice of Withdrawal given in the manner
provided in this Section 8.5. In addition, if during the ten day period
preceding the effective date of withdrawal, futures and forward contracts
representing 10% or more of the Partnership's portfolio of futures positions
cannot be traded as a result of trading limits in applicable exchanges, then the
Partnership may (but is not required to) suspend all withdrawals for a period of
up to 10 days after the trading limit is no longer applicable. In the event of a
suspension of withdrawals, all Units will remain at risk in the business of the
Partnership and shall not be withdrawn absent a Notice of Withdrawal given
following the lifting of the suspension by the General Partner and in the manner
otherwise provided in this Section 8.5.
(h) A Limited Partner which is also the General Partner may withdraw any
part or all of the credit balance in its Capital Account at the close of any
Accounting Period, upon not less than ten days prior written notice to the
Partnership, notwithstanding the time limitations and other restrictions set
forth above.
SECTION 8.6. ADDITIONAL CAPITAL CONTRIBUTIONS
Any Limited Partner may make additional Contributions of Capital, but only
in the manner set forth in Section 8.3.
SECTION 8.7. REMOVAL OF LIMITED PARTNERS; REDUCTION OF INTERESTS
(a) If any application by or business activity of the Partnership or any
person or entity affiliated with the Partnership for membership or participation
in any commodities, options or securities exchange, clearing agency, or other
self-regulatory organization is denied, limited, conditioned or otherwise
adversely affected by reason of any Limited Partner's interest in the
Partnership, and such Limited Partner does not, within thirty (30) days
following receipt of written notice thereof, cure any defect or other cause of
such adverse action, to the sole and absolute satisfaction of the General
Partner, such Limited Partner shall be deemed to have elected to have withdrawn
his Capital Account in the manner provided for in Section 8.5; provided,
however, that such withdrawal shall be effective as of the close of the month in
which said thirty (30) day period ends; and further provided that the time
limitations and further notice provisions contained in Section 8.5(b) shall not
apply. For purposes of determining the balance in the Limited Partner's Capital
Account as of the close of such month, the General Partner shall close the
Partnership's books and allocate Net Profits and Net Losses as of such date.
Upon such redemption, such Limited Partner shall have only such rights and be
obligated to only such liabilities as may otherwise be provided in this
Agreement.
(b) If, at the close of any month during the term of the Partnership, the
aggregate total of Units held by all ERISA Limited Partners would represent more
than 24.9 percent of the aggregate total of Units held by all Limited Partners
(regardless of the reason for such overage), the number of Units held by each
ERISA Limited Partner shall be reduced and redeemed in sufficient amounts so
that the sum of all Units held by all ERISA Limited Partners does not exceed
24.9 percent of the aggregate total of Units held by all Limited Partners. The
amount of any such reduction shall be paid, within 5 business days of such
reduction, to the appropriate Limited Partners as though the amount had been
withdrawn pursuant to Section 8.5. The Units held by all ERISA Limited Partners
shall be reduced and redeemed by the same percentage in order to fund the
reduction provided for by this Section. Operation of this Section 8.7(b) and the
reductions and redemptions contemplated hereby are expressly consented to by
each ERISA Limited Partner.
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ARTICLE IX
ALLOCATIONS AND DISTRIBUTIONS
SECTION 9.1. ALLOCATION OF NET PROFITS AND NET LOSSES
(a) Allocations Between Limited Partners and General Partner. Net Profits
and Net Losses of the Partnership shall be allocated among the Partners during
each Accounting Period as follows: First, if the closing date of any Accounting
Period is also the end of a fiscal year, the amount of the General Partner
Profit Allocation (as defined in Section 11.2), if any, shall be allocated to
the General Partner. After the allocation, if any, as provided for in the
immediately preceding sentence, and subject to the allocation described in
paragraph (1) of Section 9.1(b) and to the adjustment described in paragraph (2)
of Section 9.1(b), 100% of all Net Profits and Net Losses of the Partnership
shall be allocated to the Limited Partners.
(b) Allocation Among Limited Partners. Any Net Profits or Net Losses which
are allocated to the Limited Partners pursuant to Section 9.1(a) shall, except
as provided in paragraph (1) of this Section 9.1(b), be allocated among them in
the proportion which the number of Units held by each such Limited Partner on
the first day of the relevant Accounting Period bears to the total of all Units
held by all Limited Partners on such date.
(1) Notwithstanding the provisions of Section 9.1(a), any withdrawing
Limited Partner who has been allocated Net Losses ("Unrecovered Losses") in
one or more prior Accounting Periods shall be allocated 100% of all later
generated Net Profits to the extent of such Unrecovered Losses. Once Net
Profits are allocated with respect to any Unrecovered Losses, a further
allocation of Net Profits shall not be made. Any allocation of Net Profits
to withdrawing Limited Partners having Unrecovered Losses pursuant to this
paragraph (1) shall be made pro-rata among such Limited Partners in
accordance with their respective share of such Unrecovered Losses.
(2) If Net Profits or Net Losses are to be allocated in any Accounting
Period other than a fiscal year, the provisions of Section 9.1(a) shall be
modified as follows: The total Capital Contributions of all Limited
Partners as at the beginning of that Accounting Period shall be first
divided by twelve, and the remainder shall then be multiplied by the number
of months in the applicable Accounting Period.
SECTION 9.2. DISTRIBUTIONS
(a) Subject to the limitations set forth in Section 9.2(b), the Partnership
may distribute such portion of the Net Profits during each Accounting Period as
the General Partner, in its sole and absolute discretion, shall determine from
time to time. However, the General Partner's and Partnership's general policy
shall be to not make any Distributions. Except to the extent provided in Section
11.2, the amount of all Distributions to Limited Partners shall be computed and
paid to each of the Limited Partners in the proportion which the number of Units
held by each such Limited Partner on the first day of the relevant Accounting
Period bears to the total of all Units held by all Limited Partners on such
date.
(b) Before making any Distribution, the Partnership must have available to
it unencumbered funds sufficient for such Distribution after taking into account
the amounts necessary to provide a reasonable reserve for the continuing conduct
of the business of the Partnership and to provide the Partnership with normal
working capital. The amount of such reserve shall be determined by the General
Partner in its sole and absolute discretion and shall include such funds as the
General Partner deems reasonably necessary or appropriate in order to meet the
foreseeable requirements of the Partnership for the Accounting Period in which
the Distribution is to be made.
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SECTION 9.3. FEDERAL INCOME TAX ALLOCATIONS
(a) The Partnership's income and expense and capital gain or loss from its
investment and trading operations shall be allocated among the Partners pursuant
to the following subparagraphs for federal income tax purposes. Allocations
shall be pro rata from (i) short-term gain or loss and (ii) long-term capital
gain or loss and (iii) operating income or loss realized and recognized by the
Partnership.
(1) Subject to Section 9.3(a)(3), items of ordinary income and items
of expense shall be allocated pro rata among the Partners based on their
respective Capital Accounts as of the end of each Accounting Period in
which the items of ordinary income and expense accrue, after taking into
account the allocation of Management Fees attributable to such Partner.
(2) Capital gain or loss from the Partnership's trading activities
shall be allocated as follows:
(i) There shall be established a tax basis account with respect to
each outstanding Partnership Interest. The initial balance of each tax
basis account shall be the amount paid to the Partnership for each
Partner's Partnership Interest. As of the end of each fiscal year:
(A) Each tax basis account shall be increased by the amount of
income allocated to the Partners pursuant to subparagraphs (a)(1) and
(a)(4) of this Section 9.3.
(B) Each tax basis account shall be decreased by the amount of
expense or loss allocated to the Partner or his assignee pursuant to
subparagraphs (a)(1) and (a)(6) of this Section 9.3 and by the amount
of any distribution received by the Partner or his assignee with
respect to the Partnership Interest, other than on redemption of the
Partnership Interest.
(C) When a Partnership Interest is redeemed, the tax basis
account attributable to such Partnership Interest or redeemed portion
of such Partnership Interest shall be eliminated.
(3) Capital gain shall be allocated first to each Partner who has
redeemed a Partnership Interest during the fiscal year up to any excess of
the amount received upon redemption of the Partnership Interest over the
tax basis account maintained for the redeemed Partnership Interest.
(4) Capital gain remaining after the allocation in subparagraph (a)(3)
shall be allocated among the Partners whose Capital Accounts are in excess
of their tax basis accounts after the adjustments in subparagraph (a)(3) in
the ratio that each such Partner's excess bears to all such Partners'
excesses. If the gain to be so allocated is greater than the excess of all
such Partners' Capital Accounts over all such tax basis accounts, the
excess shall be allocated among all Partners in the ratio that each
Partner's Capital Account bears to all Partners' Capital Accounts.
(5) Capital loss (if the capital loss so allocated is insufficient)
shall be allocated first to each Partner who has redeemed a Partnership
Interest during a fiscal year up to any excess of the tax basis account
maintained for the redeemed Partnership Interest over the amount received
upon redemption of the Partnership Interest.
(6) Capital loss remaining after the allocation in subparagraph (a)(5)
shall be allocated among all Partners whose tax basis accounts are in
excess of their Capital Accounts after the adjustments in subparagraph
(a)(5) in the ratio that each such Partner's excess bears to all such
Partners' excesses. If the loss to be so allocated is greater than the
excess of all
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tax basis accounts over all Partners' Capital Accounts, the excess loss
shall be allocated among all Partners in the ratio that each Partner's
Capital Account bears to all Partner's Capital Accounts.
(7) Any gain or loss required to be taken into account in accordance
with Section 1256 of the Code shall be considered a realized gain or loss
for purposes of this Section 9.3.
(b) In the event that a Partnership Interest has been assigned, the
allocations prescribed by this Section 9.3 shall be made with respect to such
Partnership Interest without regard to the assignment, except that in the year
of assignment the allocations prescribed by this Section 9.3 shall be divided
between the assignor and the assignee based on the number of months each held
the assigned Partnership Interest.
(c) The allocations set forth in this Section 9.3 are intended to allocate
taxable profit and loss among Partners generally in the ratio and to the extent
that Net Profit and Net Loss are allocated under Section 9.1 so as to eliminate,
to the extent possible, any disparity between a Partner's Capital Account and
his tax basis account with respect to each Unit then outstanding, consistent
with the principles set forth in Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder.
(d) Notwithstanding anything herein to the contrary, in the event that at
the end of any Partnership taxable year, any Limited Partner's tax basis is
adjusted for, or such Limited Partner is allocated, or there is distributed to
such Limited Partner, any item described in Treasury Regulation Section
1.704-(b)(2)(ii)(d)(4), (5) or (6) in an amount not reasonably expected at the
end of such year, and such treatment creates a deficit balance in such Limited
Partner's tax basis, then such Limited Partner shall be allocated all items of
income and gain of the Partnership for such year and for all subsequent taxable
years of the Partnership until such deficit balance has been eliminated. In the
event that any such unexpected adjustments, allocations or distributions create
a deficit balance in the tax basis accounts of more than one Limited Partner in
any Partnership taxable year, all items of income and gain of the Partnership
for such taxable year and all subsequent taxable years shall be allocated among
all such Limited Partners in proportion to their respective deficit balances
until such deficit balances have been eliminated. Upon the dissolution and
termination of the Partnership, the General Partner must contribute to the
Partnership an amount equal to any deficit balance in its tax basis account.
This paragraph is intended to constitute a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted in a manner consistent therewith. Under no circumstances shall any
Limited Partner be obligated to the Partnership to restore any deficit balance
in his tax basis account.
SECTION 9.4. SECTION 754 ELECTION
The General Partner may, in its sole and absolute discretion, make an
election on behalf of the Partnership under Section 754 of the Code to adjust
the tax basis of its assets.
SECTION 9.5. FISCAL YEAR
Except as otherwise required by the Code, the fiscal year of the
Partnership shall be the calendar year.
ARTICLE X
MANAGEMENT OF THE PARTNERSHIP
SECTION 10.1. POWERS OF THE GENERAL PARTNER
(a) The General Partner shall have exclusive authority to manage the
operations and affairs of the Partnership and to make all decisions regarding
the business of the Partnership. Pursuant to the foregoing, it is understood and
agreed that the General Partner shall have all of the rights and powers of a
general partner as provided in the Act and as otherwise provided by law and
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any action taken by the General Partner shall constitute the act of and serve to
bind the Partnership. In dealing with the General Partner acting on behalf of
the Partnership, no person shall be required to inquire into the authority of
the General Partner to bind the Partnership. Persons dealing with the
Partnership are entitled to rely conclusively on the power and authority of the
General Partner as set forth in this Agreement. The General Partner is hereby
granted the right, power and authority to execute and deliver on behalf of the
Partnership such documents or instruments relating to Partnership affairs as may
be appropriate to the conduct of Partnership business including, without
limitation, the Agreement, applications or reports to or with the Commodity
Futures Trading Commission (the "CFTC"), the SEC, state securities commissions
and with any boards of trade and other national securities or commodity
exchanges and contract markets, consulting agreements, and any amendments
thereto, and to execute all other agreements, documents, or instruments
necessary for proper conduct of the affairs of the Partnership. Further, the
General Partner in its sole and absolute discretion shall have the power on
behalf of the Partnership:
(1) To engage in all transactions involving Partnership activities on
or off securities or commodity exchanges or contract markets on which the
Partnership shall be authorized to be so engaged;
(2) To acquire or invest and reinvest funds in government securities
(as that term is defined in the 1940 Act), foreign exchange, Eurodollar
deposits, certificates of deposit, futures contracts, currencies, precious
metals, commodities, commodity instruments, cash forward transactions and
options traded on commodity exchanges (collectively, "Instruments");
(3) To borrow and to raise monies and, from time to time, to issue,
accept, endorse, and execute promissory notes, drafts, bills of exchange,
bonds, debentures and other negotiable or nonnegotiable instruments or
evidences of indebtedness in the name of the Partnership, and to secure the
payment of any other instrument of lien, conveyance or assignment in trust
upon the whole or any part of the property of the Partnership, whether at
that time owned or thereafter acquired, with the provision that no creditor
making a loan may have or acquire, at any time, as a result of making the
loan, any direct or indirect interest in the profits, capital or property
of the Partnership other than as a secured creditor;
(4) To make such arrangements with respect to bank accounts and to
authorize signatures for checks, notes and other instruments of the
Partnership as it shall deem appropriate;
(5) To employ, on behalf of the Partnership, a Subscription Agent,
selling brokers, floor brokers and traders, agents, consultants, advisers,
employees, accountants, lawyers, brokers, clerical help, and to obtain such
other assistance and services as may seem proper and to pay such
remuneration as the General Partner may deem reasonable and appropriate but
not in excess of any other limitations set forth in this Agreement, whether
or not such assistance or services are rendered by an Affiliate;
(6) To enter into such agreements with futures commission merchants,
introducing brokers, government securities dealers, broker-dealers and
dealers (collectively "brokers") upon such terms and conditions as may be
necessary or desirable;
(7) To deposit with any such futures commission merchants and brokers,
Instruments and cash on behalf of the Partnership; and to borrow money or
execute margin agreements in connection with the purchase or sale of any of
the instruments or contracts described in Article IV;
(8) To possess, transfer, mortgage, pledge or otherwise deal in, and
to exercise all rights, powers, privileges and other incidents of ownership
or possession with respect to, Instruments;
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(9) To sue, and be sued, complain and defend, compromise and settle
claims in the name of, or on behalf of, the Partnership;
(10) To have and maintain one or more offices within or without the
State of Illinois and to rent or acquire office space, engage personnel and
do such other acts and things as may be necessary or desirable in the
maintenance of such office or offices;
(11) To enter into, make and perform contracts, agreements, and other
undertakings to the extent necessary or desirable in the accomplishment of
Partnership purposes;
(12) To make representations and disclosures of information concerning
the Partnership and the Partners; to pay required fees and dues and to
perform all such additional undertakings to the extent necessary or
desirable in connection with such applications;
(13) In connection with any offering of Units, to: (i) cause to be
filed one or more offering statements or registration statements and
related documentation, and all amendments thereto, with the SEC, the
National Association of Securities Dealers, Inc. ("NASD") and/or any other
domestic or foreign authorities for the registration and offering of Units
in the United States or elsewhere and one or more offering circulars or
prospectuses and amendments and supplements thereto with the CFTC and the
National Futures Association (the "NFA"); (ii) register or otherwise
qualify Units for offering and sale under the "blue sky" and/or securities
laws of any states of the United States and other domestic or foreign
jurisdictions; (iii) make all arrangements for the offering and sale of
Units, including, without limitation, the execution on behalf of the
Partnership of a soliciting dealer agreement with one or more soliciting
dealers for the offer and sale of the Units; and (iv) take all such action
with respect to the matters described in the preceding clauses (i) through
(iii) as the General Partner deems appropriate;
(14) To take all such action as the General Partner deems appropriate
to avoid the requirement that the Partnership register as an investment
company under the 1940 Act; and
(15) To do all such other things and engage in all other transactions,
including the borrowing and lending of money and other property, as the
General Partner shall deem necessary or appropriate to the exercise of the
foregoing powers or to carry out the purpose of the Partnership, though not
expressly enumerated herein. No rule of law for construction of contracts
shall limit the powers of the General Partner to the powers specifically
enumerated herein.
SECTION 10.2. ADDITIONAL LIMITED PARTNERS
The General Partner shall have the authority and right to admit Additional
Limited Partners and Substituted Limited Partners in accordance with the
procedures provided for in Section 8.3, in its sole and absolute discretion. By
executing or otherwise adopting this Agreement, each Limited Partner shall be
deemed to have consented to the admission of all Additional Limited Partners
admitted to the Partnership by the General Partner.
SECTION 10.3. DUTIES
The General Partner shall manage and control the Partnership, its business
and affairs, to the best of its ability and shall use its best efforts to carry
out the business of the Partnership as set forth in Article IV. The General
Partner shall devote such time to the Partnership business as it, in its sole
and absolute discretion, shall deem to be necessary to manage and supervise the
Partnership business and affairs in an efficient manner; provided, however, that
nothing in this Agreement shall preclude the employment, of any agent or third
party to manage or provide other services to the Partnership.
The General Partner may delegate its responsibility, in whole or in part,
for the investment of the Partnership's assets to one or more qualified trading
advisors and may delegate trading
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discretion to such persons. If the General Partner elects to direct trading for
the Partnership itself, the General Partner may nonetheless render advisory
services to other clients or accounts and may employ and use the same trading
strategies which are utilized in managing the Partnership's investments.
However, the General Partner agrees and represents that any such other services
will not affect its capacity to continue to render services to the Partnership
of the quality and nature contemplated by this Agreement. If the General Partner
determines to delegate its responsibility for trading decisions to one or more
trading advisors, it may negotiate and enter into one or more management
agreements with the advisor(s) on behalf of the Partnership, including a
management agreement under which the General Partner is one of the advisors.
SECTION 10.4. INDEPENDENT ACTIVITIES OF THE GENERAL PARTNER
The General Partner shall not be required to manage the Partnership as its
sole and exclusive function and the General Partner as well as any one or more
of the Affiliates of the General Partner may have other business interests and
may engage in other activities in addition to those relating to the Partnership,
including the rendering of advice or services of any kind to other investors and
the making or management of other investments and/or trading vehicles, including
those similar to those of the Partnership. Neither the Partnership nor any
Partner shall have any interest or right by virtue of this Agreement or the
partnership relationship created hereby in or to such other ventures or
activities or to the income or proceeds derived therefrom; and the pursuit of
such ventures, even if competitive with the business of the Partnership, shall
not be deemed wrongful or improper.
The parties hereto further expressly acknowledge that the engagement of any
Partners in such other activities shall not be considered a breach of any
fiduciary or other duty such Partner may have to the Partnership or to the other
Partners. The General Partner, on behalf of the Partnership, may employ from
time to time an Affiliate to provide services for or to the Partnership, or may
enter into other agreements or arrangements with any such person, provided that
the General Partner shall not enter into any agreement or arrangement with the
General Partner or one or more Affiliates on terms less favorable to the
Partnership than those customarily charged by an unrelated party for similar
services. The validity of any transaction, agreement or payment involving the
Partnership and an Affiliate otherwise permitted by the terms of this Agreement
shall not be affected by reason of the relationship between a General Partner
and such Affiliate.
SECTION 10.5. TAX MATTERS PARTNER
The General Partner shall, initially, be the Partnership's Tax Matters
Partner, and shall have complete authority and discretion with respect to all
federal and state tax matters, including, without limitation, conducting all
audits and other proceedings with the Internal Revenue Service, settlement of
all tax controversies, selection of the forum for any contest relating thereto
and employment of all auditors and attorneys. The Tax Matters Partner will keep
the Partners advised of the status thereof. The General Partner may appoint
successor or substituted Tax Matters Partner(s) in its sole discretion.
SECTION 10.6. LIMITED PARTNER INTEREST OF GENERAL PARTNER
The General Partner and any Affiliates of the General Partner shall have
the right to become Limited Partners of the Partnership by making appropriate
Capital Contributions and purchasing Units, as provided in Article VIII.
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ARTICLE XI
COMPENSATION OF GENERAL PARTNER
SECTION 11.1. MANAGEMENT FEE
(a) In consideration for all of its management and trading services, the
General Partner will receive a monthly "Management Fee" of 0.1875% of the
average monthly sum of all Capital Accounts contributed by Limited Partners,
computed at the close of each month. The Management Fee shall be paid by the
Partnership within ten (10) business days of the close of each month.
(b) Except to the extent provided for in Section 11.3, the General Partner
will satisfy ordinary overhead expenses of the Partnership from the Management
Fee.
(c) For federal income tax purposes, the above compensation shall be
treated as ordinary and necessary expenses of the Partnership paid to the
General Partner (not acting in its capacities as Partner) in accordance with
Section 707(a) of the Code.
SECTION 11.2. GENERAL PARTNER PROFIT DISTRIBUTION
For each fiscal year of the Partnership, the General Partner shall receive
the General Partner Profit Distribution. The General Partner Profit Distribution
shall be an amount equal to the excess, if any, of (i) one percent (1%) of the
Cumulative Net Profits of the Partnership, over (ii) the sum of (A) the
Management Fee for such fiscal year, and (B) any prior General Partner Profit
Distributions made pursuant to this Section 11.2. For this purpose, the
Cumulative Net Profits of the Partnership shall be equal to the excess, if any,
of (iii) the Net Profits, if any, of the Partnership for the current fiscal year
and each prior fiscal year or other fiscal period of the Partnership; over (iv)
the sum of (A) the Net Losses, if any, of the Partnership for the current fiscal
year and each prior fiscal year or other fiscal period of the Partnership, and
(B) the sum total of all of the Management Fees paid or payable with respect to
the current fiscal year and each prior fiscal year or other fiscal period of the
Partnership. The General Partner Profit Distribution shall be treated as an
allocation and distribution of Partnership profits to the General Partner in its
capacity as a Partner in the Partnership.
SECTION 11.3. PARTNERSHIP EXPENSES
Notwithstanding Section 11.1, the Partnership (and not the General Partner)
shall pay (i) any expenses reasonably incurred in connection with the transfer,
withdrawal, purchase or sale of Units, which shall include, without limitation,
professional legal, accounting and/or transfer agent fees in connection with the
disposition of Units; and (ii) any and all brokerage commissions, clearing house
charges, exchange or regulatory fees and similar charges attendant to the
execution of futures or forwards trades (but not with respect to the execution
of trades in United States Government Securities) by the Partnership.
In any event, the Management Fee, any advisory fees and all other fees,
except for incentive fees and commodity brokerage commissions, when added to the
customary and routine administrative expenses of the Partnership shall not
exceed 1/2 of 1% of Net Assets per month (not to exceed 6% annually). For the
purpose of this limitation, customary and routine administrative expenses shall
include all expenses of the Partnership other than commodity brokerage
commissions, incentive fees, the actual cost of legal and audit services and
extraordinary expenses. The General Partner shall not receive a Net Asset fee if
it receives, directly or indirectly, any portion of the brokerage commissions.
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ARTICLE XII
EXCULPATION AND INDEMNIFICATION
SECTION 12.1. LIABILITY TO PARTNERSHIP OR LIMITED PARTNERS
(a) None of the Partners shall be liable, responsible or accountable in
damages or otherwise to the Partnership or any other Partner for any action
taken or failure to act on behalf of the Partnership within the scope of the
authority conferred on the Partners by this Agreement or by law unless such act
or omission constituted misconduct or was performed or omitted fraudulently or
in bad faith or constituted negligence.
(b) None of the Partners shall be liable for the return or repayment of all
or any portion of the capital or profits, including a Partner's Capital
Contribution and Capital Account, of any Partner (or transferee), it being
expressly agreed that any such return of capital or payment of profits made
pursuant to this Agreement shall be made solely from the assets (which shall not
include any right of contribution from the General Partner) of the Partnership.
SECTION 12.2. INDEMNIFICATION
(a) The Partnership shall indemnify and hold harmless each Partner (as well
as each Member, manager, agent, officer or employee of the General Partner and
each Partner, Trustee, Officer or Director of a Member of the General Partner,
when acting on behalf of the Partnership or in connection with, Partnership
business) from and against any loss, expense, damage or injury suffered or
sustained by them by reason of any acts, omissions or alleged acts or omissions
arising out of their activities on behalf of the Partnership or in furtherance
of the interests of the Partnership, or the issuance and sale of Units including
but not limited to any judgment, award, settlement, attorney's fee and other
cost or expense incurred in connection with the defense of any actual or
threatened action, proceeding or claim; if the acts, omissions or alleged acts
or omissions upon which such actual or threatened action, proceeding or claim is
based were for a purpose reasonably believed to be in the best interests of the
Partnership and did not constitute misconduct or were not performed or omitted
fraudulently or in bad faith or as a result of negligence by the Partners. Any
such indemnification shall be only from the assets of the Partnership.
(b) The Partnership shall indemnify and hold harmless each Limited Partner
from and against any expense, including reasonable attorney's fees, incurred in
connection with the defense of any actual or threatened action, proceeding or
claim arising from the personal liability of any Limited Partners to creditors
of the Partnership, except to the extent provided in Section 8.5(f) for debts,
liabilities and other obligations of the Partnership.
(c) Notwithstanding anything to the contrary contained in this Section
12.2, the General Partner and any person acting as a broker-dealer shall not be
indemnified for any losses, liabilities or expenses arising from or out of an
alleged violation of federal or state securities laws unless the following
conditions are met:
(1) There has been a successful adjudication on the merits of each
count involving alleged securities law violations as to the particular
indemnitee, or
(2) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction as to the particular indemnitee, or
(3) a court of competent jurisdiction approves a settlement of the
claims against a particular indemnitee and finds that indemnification of
the settlement and related costs should be made, and
(4) in the case of subsection (c)(3), a court of law considering the
request for indemnification has been advised of the position of the
Securities and Exchange Commission and the position of any state securities
regulatory authority where Units were offered or sold
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as to indemnification for violations of securities laws; provided that the
court need only be advised and consider the positions of the securities
regulatory authorities of those states (i) which are specifically set forth
in this Agreement and (ii) in which plaintiffs claim they were offered or
sold Units.
(d) The Partnership may not incur the cost of that portion of liability
insurance which insures the General Partner for any liability as to which the
General Partner is prohibited from being indemnified under this section.
(e) The provision of advancement from Partnership funds to a General
Partner or its Affiliates for legal expenses and other costs incurred as a
result of any legal action is permissible if the following conditions are
satisfied:
(1) the legal action relates to acts or omissions with respect to the
performance of duties or services on behalf of the Partnership;
(2) the legal action is initiated by a third party who is not a
Partner, or the legal action is initiated by a Partner and a court of
competent jurisdiction specifically approves such advancement; and
(3) the General Partner or its Affiliates undertake to repay the
advanced funds to the Partnership, together with the applicable legal rate
of interest thereon, in cases in which such person is not entitled to
indemnification under this section.
ARTICLE XIII
LIMITED PARTNERS
SECTION 13.1. NO ROLE IN MANAGEMENT
The Limited Partners shall not participate in the management or control of
the Partnership's business nor shall they transact any business for the
Partnership, nor shall they have the power to act for or bind the Partnership,
such powers being vested solely and exclusively in the General Partner.
SECTION 13.2. BANKRUPTCY, DEATH OR INCOMPETENCY
The termination, dissolution, bankruptcy (as defined in Section 16.2),
death or incompetency (as defined in Section 14.3) of a Limited Partner shall
not cause a dissolution of the Partnership, but the right of such Limited
Partner to share in the Net Profits and Net Losses of the Partnership shall, on
the happening of such an event, devolve on its legal representatives, heirs,
administrators, executors or successors, subject to the terms and conditions of
this Agreement, and the Partnership shall continue as a limited partnership. The
legal representatives, heirs, administrators, executors or successors of such
Limited Partner shall be liable for all the obligations of such Limited Partner
under this Agreement. However, in no event shall such representatives, heirs,
administrators, executors or successors become a Limited Partner without the
consent of the General Partner.
SECTION 13.3. LIMITED LIABILITY OF LIMITED PARTNERS
Upon acceptance of a Limited Partner's Subscription Agreement by the
General Partner and receipt by the General Partner of the entire Capital
Contribution of that Limited Partner, the interest in the Partnership owned by
that Limited Partner shall be fully paid and nonassessable. Except as provided
under the Act, no Limited Partner shall be liable for Partnership obligations in
excess of the capital contributed by him, plus his share of undistributed Net
Profits credited to his Capital Account.
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ARTICLE XIV
TRANSFER OF INTERESTS BY LIMITED PARTNERS
SECTION 14.1. RESTRICTION ON TRANSFERS
A Limited Partner may not sell, transfer, assign, donate or otherwise
convey the whole or any part of his Partnership Interest except as provided in
this Article XIV.
SECTION 14.2. BANKRUPTCY, DEATH OR INCOMPETENCY
Upon the termination, dissolution, bankruptcy (as defined in Section 16.2),
death or incompetency (as defined in Section 14.3) of a Limited Partner, the
legal representatives, heirs, administrators, executors or successors
(hereinafter "Representative") shall succeed to the right of the Limited Partner
to share in the Net Profits and Losses of the Partnership, subject to the terms
and conditions of this Agreement. At the end of the Accounting Period in which
the termination, dissolution, bankruptcy, death or incompetency occurs, the
interest of the referenced Limited Partner shall be redeemed completely in the
manner provided in Section 8.5.
SECTION 14.3. DEFINITION OF INCOMPETENCY
For purposes of this Agreement, a Partner shall be considered "incompetent"
upon the appointment by a court of a guardian, committee, conservator, curator
or similar personal representative to manage his property, business and affairs.
SECTION 14.4. ADMISSION OF SUBSTITUTED LIMITED PARTNERS
(a) Anything in this Agreement to the contrary notwithstanding, no assignee
of the whole or any portion of a Limited Partner's interest in the Partnership
shall have the right to become a Substituted Limited Partner in place of his
assignor unless the assigning Limited Partner shall designate his intention in a
written instrument of assignment and unless the written consent of the General
Partner to such substitution shall be obtained (which consent shall be within
the sole and absolute discretion of the General Partner to grant or deny).
(b) Notwithstanding the granting of the aforementioned consent by the
General Partner, the admission of an assignee as a Substituted Limited Partner
shall be further conditioned upon:
(1) The assignment instrument being in form and substance reasonably
satisfactory to the General Partner;
(2) The assignor and assignee named therein executing and
acknowledging such other instrument or instruments as the General Partner
may deem necessary or desirable to effectuate such admission;
(3) The assignee's written acceptance and adoption of all of the terms
and provisions of this Agreement as the same may have been amended;
(4) The assignee's execution of a Power of Attorney in the form
described in Article XXI;
(5) Such assignee paying or obligating himself to pay all reasonable
expenses connected with such admission (the amount of such expenses to be
determined by the General Partner); and
(6) The submission to the General Partner of an opinion of counsel, in
form and substance satisfactory to the General Partner, that the transfer
of the interest in the Partnership and the admission of the Substituted
Limited Partner, will not cause a violation of any applicable securities
laws, cause a termination of the Partnership pursuant to the Code or cause
the Partnership to be classified as an association taxable as a
corporation.
A-19
(c) In no event shall an interest in the Partnership be assigned or
transferred to a minor or incompetent. Any such transfer shall be void and
ineffectual and shall not bind the Partnership.
(d) No transfers may be made where, after the transfer, either the
transferee or transferor would hold less than the minimum number of Units
equivalent to an initial minimum purchase, except for transfers by gift,
inheritance, intrafamily transfers, family dissolutions, and transfers to
Affiliates.
(e) Upon advice of counsel, the General Partner shall eliminate or modify
any restrictions on substitutions or assignment at such time as the restriction
is no longer necessary.
ARTICLE XV
WITHDRAWAL OR SUBSTITUTION OF GENERAL PARTNER
SECTION 15.1. WITHDRAWAL OF A GENERAL PARTNER
(a) The General Partner may not withdraw as General Partner prior to
January 1, 2005. Thereafter, no withdrawal shall be effective unless and until
the withdrawing General Partner tenders at least one hundred twenty (120) days'
prior written notice of withdrawal to all the then Partners. If the General
Partner withdraws as General Partner and the Limited Partners elect to continue
the Partnership, the withdrawing General Partner shall pay all expenses incurred
as a result of its withdrawal. In the event of removal or withdrawal of the
General Partner, the General Partner is entitled to a redemption of its interest
in the Partnership at its Net Asset Value on the next date as of which the Net
Assets of the Partnership are determined following the date of the General
Partner's removal or withdrawal.
(b) If the General Partner should, at any time, be an individual, such
General Partner may, at any time, substitute for himself as a General Partner,
any entity in which he has not less than a 75% beneficial ownership interest in
the substituted entity and any General Partner which is an entity may, at any
time, substitute for itself any individual who has at least a 75% beneficial
interest in such entity.
(c) In any substitution provided for in paragraph (b) of this Section 15.1,
the substituting Partner must agree in writing to (i) continue to fully perform,
as the designated representative of such entity, his or its duties and
responsibilities and (ii) maintain such ownership interest as long as such
individual or entity is a Partner.
ARTICLE XVI
DISSOLUTION OF THE PARTNERSHIP
SECTION 16.1. DISSOLUTION EVENTS
The happening of any one of the following events shall work an immediate
dissolution of the Partnership:
(1) The bankruptcy (as defined in Section 16.2) or withdrawal from the
Partnership of the General Partner;
(2) The disposition of all or substantially all of the Partnership's
assets;
(3) The decision by the General Partner to dissolve the Partnership;
(4) The agreement by Limited Partners holding more than fifty percent
(50%) of the then outstanding Partnership Interests owned by Limited
Partners to dissolve the Partnership (subject to the provisions of Section
22.1); or
(5) The expiration of the term of the Partnership as provided in
Article VI.
A-20
SECTION 16.2. DEFINITION OF BANKRUPTCY
For purposes of this Agreement, the "bankruptcy" of a Partner shall be
deemed to have occurred upon the happening of any of the following: (i) the
filing of an application by the Partner for, or a consent to, the appointment of
a trustee of his assets, (ii) the filing by the Partner of a voluntary petition
in bankruptcy or the filing of a pleading in any court of record admitting in
writing his inability to pay his debts as they come due, (iii) the making by the
Partner of a general assignment for the benefit of creditors, (iv) the filing by
the Partner of an answer admitting the material allegations of, or his
consenting to, or defaulting in answering, a bankruptcy petition filed against
him in any bankruptcy proceeding, or (v) the entry of an order, judgment or
decree by any court of competent jurisdiction adjudicating the Partner a
bankrupt or appointing a trustee for his assets.
ARTICLE XVII
ADDITIONAL PROVISIONS CONCERNING DISSOLUTION OF THE PARTNERSHIP
SECTION 17.1. LIQUIDATION OF PARTNERSHIP PROPERTY
(a) In the event of the dissolution of the Partnership, the General Partner
shall commence to wind up the affairs of the Partnership and to liquidate the
Partnership's property. The Partners shall continue to share Net Profits and Net
Losses during the period of liquidation in the same proportion as before the
dissolution. The General Partner shall have full right and unlimited discretion
to determine the time, manner and terms of any sale or sales of Partnership
property, including securities positions, in a prompt, reasonable and orderly
manner, having due regard to the activity and condition of the relevant market
and general financial and economic conditions. The proceeds of the liquidation
and of any other funds of the Partnership shall be distributed and allocated
among all Partners in proportion to the credit balances in their respective
Capital Accounts, after all allocations of Net Profits and Net Losses earned and
incurred in the course of liquidation, pursuant to Article IX. The General
Partner shall set up such cash reserves as it may deem reasonably necessary for
any contingent or unforeseen liabilities or obligations of the Partnership. Any
such cash reserves shall be held and applied by the General Partner until the
General Partner in its sole and absolute discretion shall determine that such
reserves may be terminated, at which time the balance shall be allocated among
all Partners in proportion to the credit balances in their respective Capital
Accounts.
(b) If, at the appropriate time, there is no General Partner, a majority of
the Limited Partners, voting by Units, may elect a liquidating trustee who shall
have all of the powers of a General Partner in liquidating the Partnership. For
purposes of this Article 17 only, the term "General Partner" shall also include
any such liquidating trustee.
SECTION 17.2. FINAL ACCOUNTING
Within a reasonable time following the completion of the liquidation of the
Partnership's Property, the General Partner shall supply to each of the Partners
a statement, audited by the Partnership's regular independent public
accountants, which shall set forth the assets and the liabilities of the
Partnership as of the date of complete liquidation and each Partner's pro rata
portion of Distributions pursuant to Section 17.1.
SECTION 17.3. RIGHTS OF PARTNERS ON LIQUIDATION
Each Partner shall look solely to the assets of the Partnership for all
distributions with respect to the Partnership and his Capital Contribution
thereto and share of Net Profits or Losses thereof, and shall have no recourse
therefore (upon dissolution or otherwise) against the General Partner or any
Limited Partner. No Partner shall have any right to demand or receive property
other than cash upon dissolution and termination of the Partnership, except as
otherwise determined by the General Partner.
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SECTION 17.4. FILING FINAL DOCUMENTS
Upon the completion of the liquidation of the Partnership and the
distribution of all Partnership funds, the Partnership shall terminate and the
General Partner, shall have the authority to execute and record a Certificate of
Cancellation of the Partnership, as well as any and all other documents required
to effectuate the dissolution and termination of the Partnership.
ARTICLE XVIII
NOTICES
All notices and demands required or permitted under this Agreement shall be
in writing and may (except in the event of a strike involving the U.S. Postal
Service) be sent by certified or registered mail, postage prepaid, to the
Partners at their addresses as shown from time to time on the records of the
Partnership. Any Partner may specify a different address by notifying the
General Partner in writing of such different address.
ARTICLE XIX
BOOKS OF ACCOUNT, ACCOUNTING AND REPORTS
SECTION 19.1. BOOKS OF ACCOUNT AND MONTHLY REPORT
The General Partner shall keep proper and complete records and books of
account of the Partnership in which shall be entered fully and accurately all
transactions and other matters relative to the Partnership's business as are
usually entered into records and books of account maintained by persons engaged
in businesses of a like character. The records and books of account shall be
kept at the principal place of business of the Partnership and each Limited
Partner and his authorized representatives shall have at all times, during
reasonable business hours, free access to and the right to inspect such books of
account; provided that such inspection is made in good faith and without any
intent to damage the Partnership or any of the Partners. A copy of the list of
names and addresses of, and Partnership Interests held by, all Partners, shall
be mailed to any Limited Partner or his representative requesting, in writing,
such a list, within ten days of the request. The cost of reproduction and
mailing of such is to be borne by the requesting Limited Partner and paid in
advance. In addition, the General Partner shall furnish to the Limited Partners
monthly account statements reporting the activities of the Partnership during
such month. The general partner shall maintain and preserve the above records
for a period of at least five years.
SECTION 19.2. ANNUAL REPORT AND OTHER REPORTS
The Partnership books and records shall be audited annually by independent
accountants. The Partnership will cause each Partner to receive (i) within 90
days after the close of each fiscal year, audited financial statements including
a balance sheet and statements of income and partners' equity for the fiscal
year then ended and the average round turn rate for the fiscal year, and (ii)
within 75 days after the close of each fiscal year, such tax information as is
necessary for each Partner to complete his or her federal income tax return.
Within 45 days after each fiscal quarter, the Partnership shall cause each
Partner to receive unaudited financial statements including a balance sheet and
statements of income and Partner's equity for the fiscal quarter then ended. In
addition, within 30 days after the end of each month the Partnership will
provide each Limited Partner with reports showing Net Assets and Net Asset Value
per Unit of Partnership Interest as of the end of such month, as well as
information relating to the advisory and brokerage fees and other expenses
incurred by the Partnership during such month. Both annual and monthly reports
shall include such additional information as the CFTC may require under the
Commodity Exchange Act to be given to participants in commodity pools such as
the Partnership. The General Partner shall calculate the Net Asset Value per
Unit of Partnership Interest daily and shall make such information available
upon the request of a Limited Partner for a purpose reasonably related to such
Limited Partner's interest as a limited partner in the
A-22
Partnership. The General Partner will submit to state securities law
administrators any information which such administrators require to be filed,
including, but not limited to, copies of the annual and monthly reports to be
provided to Limited Partners.
In addition, if any of the following events occur, notice of such event
shall be mailed to each Limited Partner within seven business days of the
occurrence of the event: (i) a decrease in the Net Asset Value of a Unit of
Partnership Interest to 50% or less of the Net Asset Value most recently
reported; (ii) any material change in contracts with advisors including any
change in advisors or any modification in connection with the method of
calculating the General Partner Profit Distribution; (iii) any change in futures
commission merchants of the Fund or any change in payment of brokerage
commissions on a round turn basis; (iv) any change in the General Partner; (v)
any material change in the Partnership's trading policies; or (vi) any other
material change affecting the compensation of any party. Any notice sent
pursuant to this paragraph will include a description of the Limited Partners'
voting rights and/or redemption rights under this Agreement.
SECTION 19.3. TAX RETURNS AND ELECTIONS
The General Partner shall cause income tax returns for the Partnership to
be prepared and filed with the appropriate governmental authorities. Within
seventy-five (75) days after the close of each fiscal year of the Partnership,
the General Partner shall send to each person who was a Partner at any time
during the fiscal year then ended such information as will be sufficient to
prepare documents which may be required to be filed under Federal income tax
laws and other Federal laws. The General Partner shall, in its sole and absolute
discretion, make all elections under applicable provisions of the Code as shall
be necessary or, when optional, in the interest of the Partnership, and shall
timely file all such elections as made.
SECTION 19.4. PARTNERSHIP FUNDS
The General Partner shall have fiduciary responsibility for the safekeeping
and use of all funds and assets of the Partnership, whether or not in its
immediate possession or control, and shall not employ, or permit another to
employ such funds or assets in any manner except for the exclusive benefit of
the Partnership.
The funds of the Partnership shall be deposited in such bank account or
accounts in the name of the Partnership, or invested in such interest-bearing or
non-interest-bearing investments, as shall be designated by the General Partner.
Amounts deposited in the Partnership accounts shall be used solely for the
business of the Partnership. All withdrawals from any such bank accounts and all
liquidations of such investments shall be made by the duly authorized agent or
agents of the General Partner. Partnership funds shall be separately identified
from those of any other person.
The Partnership shall make no loans. Assets of the Partnership shall not be
commingled with assets of any other entity. Deposit of assets with a futures
commission merchant, broker-dealer or government securities dealer shall not
constitute commingling. Except as provided herein, no person may receive,
directly or indirectly, any fee for investment advice or management who shares
or participates in any brokerage commissions or fees from transactions for the
Partnership; no broker (including the General Partner and its affiliates) may
pay, directly or indirectly, rebates or "give ups" to any trading advisor; and
such prohibitions shall not be circumvented by any reciprocal business
arrangements.
No loans shall be made available to the Partnership by the General Partner
or any of its affiliates.
A-23
ARTICLE XX
AMENDMENT OF LIMITED PARTNERSHIP AGREEMENT; MEETINGS
SECTION 20.1. AMENDMENT WITH CONSENT OF THE GENERAL PARTNER
If at any time during the term of the Partnership the General Partner shall
deem it necessary or desirable to amend this Agreement (including the
Partnership's basic investment policies set forth in Article IV hereof), such
amendment shall be effective only if approved in writing by the General Partner
and by Limited Partners owning more than 50% of the Units of Partnership
Interest then outstanding and if made in accordance with the Act. Any such
supplemental or amendatory agreement shall be adhered to and have the same
effect from and after its effective date as if the same had originally been
embodied in and formed a part of this Agreement. The General Partner may amend
this Agreement without the consent of the Limited Partners in order to (i)
clarify any clerical inaccuracy or ambiguity or reconcile any inconsistency
(including any inconsistency between this Agreement and the Prospectus); (ii)
delete or add any provision of or to the Agreement required to be deleted or
added by the staff of any federal or state agency (including, without
limitation, the SEC or CFTC); or (iii) make any amendment to the Agreement which
the General Partner deems advisable (including but not limited to amendments
necessary to effect the allocations proposed herein or to change the name of the
Partnership), provided that such amendment is not adverse to the Limited
Partners or is required by law.
SECTION 20.2. MEETINGS
Upon receipt of a written request signed by Limited Partners owning at
least 10% of the Units of Partnership Interest then outstanding, delivered in
person or by certified mail, that a meeting of the Partnership be called to vote
upon any matter which the Limited Partners may vote upon pursuant to this
Agreement, the General Partner shall, by written notice, either in person or by
certified mail, to each Limited Partner of record mailed within fifteen days
after receipt of such request, call a meeting of the Partnership. Such meeting
shall be held at least thirty but not more than sixty days after the mailing of
such notice, and such notice shall specify the date, a reasonable place and
time, and the purpose of such meeting.
SECTION 20.3. AMENDMENTS AND ACTIONS WITHOUT CONSENT OF THE GENERAL
PARTNER
At any meeting called pursuant to Section 20.2, upon the approval by an
affirmative vote (which may be in person or by proxy) of Limited Partners owning
more than 50% of the outstanding Units of Partnership Interest, the following
actions may be taken: (i) this Agreement may be amended in accordance with the
Act; (ii) the Partnership may be dissolved; (iii) the General Partner may be
removed and a new General Partner may be admitted immediately prior to the
removal of the General Partner provided that the new General Partner of the
Partnership shall continue the business of the Partnership without dissolution;
(iv) if the General Partner elects to withdraw from the Partnership a new
General Partner or General Partners may be admitted immediately prior to
withdrawal of the General Partner provided that the new General Partner of the
Partnership shall continue the business of the Partnership without dissolution;
(v) any contracts with the General Partner, any of its affiliates or any
commodity trading advisor to the Partnership may be terminated on sixty days'
notice without penalty; and (vi) the sale of all the assets of the Partnership
may be approved.
SECTION 20.4. CONTINUATION
Upon the assignment by the General Partner of all of its interest in the
Partnership, or the withdrawal, removal, bankruptcy or any other event that
causes the General Partner to cease to be a general partner under the Act, the
Partnership is not dissolved and is not required to be wound up by reason of
such event if, within 90 days after such event, all remaining Partners agree in
writing to continue the business of the Partnership and to the appointment,
effective as of the date of such event, of a successor General Partner. In the
event of the withdrawal by the
A-24
General Partner and the continuation of the Partnership pursuant to this
paragraph, the General Partner shall pay all expenses incurred as a result of
its withdrawal.
SECTION 20.5. AMENDMENT OF CERTIFICATE OF LIMITED PARTNERSHIP
In the event this Agreement shall be amended pursuant to this Article XX,
the General Partner shall amend the Certificate of Limited Partnership to
reflect the change if it deems such amendment of the Certificate to be necessary
or appropriate.
ARTICLE XXI
POWER OF ATTORNEY
Each of the Limited Partners irrevocably constitutes and appoints the
General Partner, as its true and lawful attorney, in its name, place and stead,
to make, execute, acknowledge and file:
(1) A Certificate of Limited Partnership under the laws of the State of
Illinois;
(2) Any certificate or other instrument which may be required to be filed
by the Partnership, including an Application for an Assumed Name Certificate
under the laws of the State of Illinois (or any other state for which the
General Partner shall deem it advisable to file, upon advice of counsel); and
(3) Any and all amendments or modifications of the instruments described
above; it being expressly intended by each of the Limited Partners that the
foregoing power of attorney is coupled with an interest. The foregoing power of
attorney shall survive the delivery of an assignment by any of the Limited
Partners of the whole or any portion of his Partnership Interest except that
where an assignee of such Partnership Interest has been approved by the General
Partner as a Substituted Limited Partner, then the foregoing power of attorney
shall survive the delivery of such assignment for the sole purpose of enabling
the General Partner to execute, acknowledge and file any and all instruments
necessary to effectuate such substitution. A similar power of attorney shall be
one of the instruments which the General Partner shall require an assignee of a
Limited Partner to execute as a condition of his admission as a Substituted
Limited Partner.
ARTICLE XXII
MISCELLANEOUS
SECTION 22.1. LIMITATION OF LIMITED PARTNERS' VOTING RIGHTS
Notwithstanding any other provisions of this Agreement, the rights to vote
provided to the Limited Partners under this Agreement shall be null and void and
of no effect or existence and shall not be exercisable if the Partnership shall
have received an opinion of counsel (obtained by the General Partner or any
Limited Partner), other than counsel for the General Partner (unless such
counsel shall have been approved by Limited Partners holding more than half of
the then outstanding Partnership Interests owned by Limited Partners), to the
effect that the exercise of such rights will adversely affect the status of such
holders as Limited Partners, including their limited liability. If the General
Partner does not intend to obtain such opinion, it will so indicate by written
notice to the Limited Partners. If no such opinion has been obtained by a
Limited Partner within 15 days of such notice, the Limited Partners shall
proceed with a vote on the particular contemplated action; provided, however,
that the approval of an opinion of counsel by the Limited Partners with respect
to a particular contemplated Partnership action shall not affect their rights to
vote on other future actions as provided in this Agreement.
SECTION 22.2. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement among the parties. It
supersedes any prior agreement or understandings among them, and it may not be
modified or amended in any manner other than as set forth herein.
A-25
SECTION 22.3. GOVERNING LAW
This Agreement and the rights of the parties hereunder shall be governed by
and interpreted in accordance with the laws of the State of Illinois, without
regard to conflicts of law issues.
SECTION 22.4. BINDING ON SUCCESSORS AND ASSIGNS
Except as herein otherwise specifically provided, this Agreement shall be
binding upon and inure to the benefit of the parties and their legal
representatives, heirs, administrators, executors, successors and assigns.
SECTION 22.5. SINGULAR AND PLURAL, MASCULINE AND FEMININE
Wherever from the context it appears appropriate, each term stated in
either the singular or the plural shall include the singular and the plural, and
pronouns stated in either the masculine, the feminine or the neuter gender shall
include the masculine, feminine and neuter.
SECTION 22.6. CAPTIONS
Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope or intent of this
Agreement or any provision hereof.
SECTION 22.7. SEVERABILITY
If any provision of this Agreement, or the application of such provision to
any person or circumstance, shall be held invalid, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected thereby.
SECTION 22.8. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
instrument. In addition, each Limited Partner may become a signatory to this
Agreement by executing a Subscription Agreement. By such execution, each Limited
Partner shall be deemed to have adopted, and to have agreed to be bound by, all
of the provisions of this Agreement. The original of this Agreement executed by
the General Partner and the Original Limited Partner, and the duly executed
Subscription Agreements, taken together, shall constitute a single instrument.
SECTION 22.9. FURTHER ASSURANCES
Each of the Limited Partners agrees hereafter to execute, acknowledge,
deliver, file, record and publish such further certificates, instruments,
agreements and other documents and to take all such further action as may be
required by law or deemed by the General Partner to be necessary or useful in
furtherance of the Partnership's purposes and the objectives and intentions
underlying this Agreement and not inconsistent with the terms of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first above written.
<Table>
Beeland Management Company, L.L.C
By: /s/ Richard L. Chambers By: /s/ Clyde C. Harrison
----------------------------------------- -----------------------------------------
Richard L. Chambers Clyde C. Harrison, as Original Limited Partner
Managing Member, As General Partner
</Table>
Counterpart Signature Page to Amended and Restated Agreement of Limited
Partnership of Rogers International Raw Materials Fund, L.P. for the following
Limited Partners:
<Table>
Address:
- ------------------------------------------------ ----------------------------------------------
Name
</Table>
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SCHEDULE A
GENERAL PARTNER
Beeland Management Company, LLC
1000 Hart Road
Barrington, IL 60010
ORIGINAL LIMITED PARTNER
Clyde C. Harrison
510 Diamond Lane
Cary, IL 60013
APPENDIX B
SUBSCRIPTION AGREEMENT
B-1
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
PLEASE MAIL THE SUBSCRIPTION AGREEMENT/SIGNATURE PAGE, THE COUNTERPART
SIGNATURE PAGE TO THE AGREEMENT OF LIMITED PARTNERSHIP, AND YOUR CHECK MADE
PAYABLE TO "Rogers International Raw Materials Fund, L.P." TO: Rogers
International Raw Materials Fund, L.P., c/o DPM, LLC, P.O. Box 6741, Somerset,
New Jersey 08875-6741, Attention: Subscription Department. DPM will serve as the
Fund's subscription agent in this offering. Subscription proceeds accepted prior
to the initial closing will be deposited by DPM in an escrow account maintained
at Mellon Bank. Following the initial closing, the account will be placed in the
name of DPM, as subscription agent for the Fund. Subscription proceeds received
for units sold after that time will be immediately available for use by the
Fund.
ALTERNATIVELY, YOU MAY TRANSMIT THE SUBSCRIPTION AGREEMENT/SIGNATURE PAGE
AND THE COUNTERPART SIGNATURE PAGE TO THE AGREEMENT OF LIMITED PARTNERSHIP VIA
FACSIMILE TO DPM (fax number 732-563-1193), and transmit the appropriate
subscription proceeds by bank wire transfer to Mellon Bank, Pittsburgh, PA, ABA
No. 043000261, for credit to the Rogers International Raw Materials Fund, L.P.
Account; No. 043-9355. Manually signed copies of the Subscription
Agreement/Signature Page and the Counterpart Signature Page should then be
mailed to DPM.
Please use ballpoint pen or type the information.
- --------------------------------------------------------------------------------
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P., INSTRUCTIONS TO PURCHASERS
- --------------------------------------------------------------------------------
INSTRUCTIONS Any person desiring to subscribe for units should
carefully read and review the prospectus and, if
he/she desires to subscribe for units, complete
the Subscription Agreement/Signature Page which
follows these instructions. Follow the
appropriate instruction listed below for the
items indicated. Please print in ink or type the
information.
- --------------------------------------------------------------------------------
INVESTMENT
A Item 1--Enter the number of units to be purchased
and the dollars and cents amount of the purchase.
Minimum purchase is 100 units ($10,000). The
purchase price will be $100 per unit until the
initial closing occurs and the net asset value
per unit thereafter.
Check the box to indicate whether this is an
initial or an additional investment.
- --------------------------------------------------------------------------------
REGISTRATION INFORMATION
B Item 2--Enter the exact name in which the units
are to be held. For co-owners, enter the names of
all owners. For investments by qualified plans,
include the exact name of the plan. For
investments by qualified plans, enter the name of
the custodian or trustee on the first line and
FBO and the name of the beneficiary on the second
line. IF THIS IS AN ADDITIONAL PURCHASE BY A
QUALIFIED PLAN, PLEASE USE THE SAME EXACT PLAN
NAME AS PREVIOUSLY USED.
Item 3--Enter the mailing address, state of
residence and telephone number of the owner. For
qualified plan investments, please enter the
mailing address of the custodian or trustee.
B-2
Item 4--Enter the birth date(s) if the
subscriber(s) is an individual or date of
formation if the subscriber is an entity.
Item 5--Check the appropriate box. If the owner
is a non-resident alien, he/she must apply to the
United States Internal Revenue Service for an
identification number, using Form SS-4 for an
individual or SS-5 for a corporation, and supply
the number to the general partner as soon as it
is available.
Item 6--Check this box if the owner is an
employee of Rogers International Raw Materials
Fund, L.P. or an individual who has been
continuously affiliated with the Fund as an
independent contractor.
Item 7--Enter the social security number or
taxpayer I.D. number. The owner is certifying
that this number is correct. For qualified plan
investments, please enter both the beneficiary's
social security number (for identification
purposes) and the custodian or trustee's taxpayer
I.D. number (for tax purposes).
- --------------------------------------------------------------------------------
C Item 8--Enter the residence address if different
than the mailing address. For qualified plan
investments, please enter the residence address
of the beneficiary.
- --------------------------------------------------------------------------------
D Item 9--Check the appropriate box to indicate the
type of ownership or entity which is subscribing.
If this is an additional purchase, this should be
completed exactly the same as the previous
investment. If the subscriber is a pension or
profit sharing plan, indicate whether it is
taxable or exempt from taxation under Section
501A of the Internal Revenue Code.
- --------------------------------------------------------------------------------
SIGNATURE Item 10--The Subscription Agreement/Signature
Page MUST BE EXECUTED by the owner(s), and if
applicable, the trustee or custodian.
- --------------------------------------------------------------------------------
BROKER/DEALER AND
REGISTERED
REPRESENTATIVE
E Item 11--Enter the name of the broker/dealer and
the name of the registered representative, along
with the street address, city, state, zip code,
telephone number, fax and e-mail of the
registered representative. By executing the
Subscription Agreement/Signature Page, the
registered representative agrees that the
subscription is pursuant to a valid soliciting
dealer agreement between such soliciting dealer
and the general partner of the Fund. By executing
the Subscription Agreement/Signature Page, the
registered representative also substantiates
compliance with the conduct rules of the NASD, by
certifying that the registered representative has
reasonable grounds to believe, based on
information obtained from the investor concerning
his, her or its investment objectives, other
investments, financial situation and needs and
any other information known by such registered
representative, that investment in the Fund is
suitable for such investor in light of
B-3
his, her or its financial position, net worth and
other suitability characteristics and that the
registered representative has informed the
investor of all pertinent facts relating to the
liability, liquidity and marketability of an
investment in the Fund during its term. The
registered representative (authorized signature)
should sign where provided.
- --------------------------------------------------------------------------------
SUBMISSION OF
SUBSCRIPTION The properly completed and executed copies of the
Subscription Agreement/Signature Page and
Counterpart Signature Page to the Agreement of
Limited Partnership together with a CHECK MADE
PAYABLE TO "Rogers International Raw Materials
Fund, L.P." should be returned to the owner's
registered representative or to Rogers
International Raw Materials Fund, L.P., c/o DPM,
LLC, P.O. Box 6741, Somerset, New Jersey 08875-
6741, Attention: Subscription Department.
Alternatively, you may transmit the Subscription
Agreement/ Signature Page and the Counterpart
Signature Page to the Agreement of Limited
Partnership via facsimile to DPM (fax number
732-563-1193), and transmit the appropriate
subscription proceeds by bank wire transfer to
Mellon Bank, Pittsburgh, PA, ABA No. 043000261,
for credit to the Rogers International Raw
Materials Fund, L.P. Account; No. 043-9355.
Manually signed copies of the Subscription
Agreement/Signature Page and the Counterpart
Signature Page should then be mailed to DPM.
NOTE: If a person other than the person in whose name the units will be
held is reporting the income received from the Fund, you must notify the general
partner in writing of that person's name, address and social security number.
ALL INVESTORS AND THEIR REGISTERED REPRESENTATIVES MUST SIGN THE SUBSCRIPTION
AGREEMENT/SIGNATURE PAGE PRIOR TO TENDERING ANY FUNDS FOR INVESTMENT IN UNITS.
Any subscriber seeking to purchase Units pursuant to a discount offered by
the Fund must submit such request in writing and set forth the basis for the
request. Any such request will be subject to verification by the general
partner. Subscribers may not, for purposes of qualifying for a volume discount,
combine units purchased hereunder with units purchased pursuant to any other
subscription agreement.
B-4
ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.
SUBSCRIPTION AGREEMENT/SIGNATURE PAGE
Please read this Subscription Agreement/Signature Page and the Terms and
Conditions before signing.
Subscriber must read the Subscription Instructions.
<Table>
----------------------------------------------------------------------
(1) Investment MAKE CHECK PAYABLE TO "ROGERS INTERNATIONAL RAW
MATERIALS FUND, L.P."
A This subscription is in the amount of $ for the
purchase of units of Rogers International Raw
Materials Fund, L.P. at $100 per unit until the initial
closing occurs and the net asset value per unit thereafter.
Minimum initial investment of 100 units.
This is an [ ] INITIAL INVESTMENT [ ] ADDITIONAL INVESTMENT
----------------------------------------------------------------------
----------------------------------------------------------------------
(2) Registered Owner
B [ ] Mr. [ ] Mrs. [ ] Ms.
---------------------------------
Co-Owner
[ ] Mr. [ ] Mrs. [ ] Ms.
---------------------------------
Mailing Address
(3) --------------------------------------------
City, State & Zip Code
-------------------------------------
State of Residence
-----------------------------------------
(Area Code) Home Telephone
---------------------------------
(Area Code) Business Telephone
-----------------------------
(4) Birth Date
-------------------------------------------
Month Day Year Month Day Year
(5) Please Indicate Citizenship Status: [ ] U.S. Citizen
[ ] Resident Alien [ ] Non-Resident Alien
[ ] Employee or Affiliate
(6) Social Security # - -
---------- ---------- ---------
(7) Co-Owner Social Security # - -
---------- ---------- ---------
Corporate or Custodial Tax Identification
Number -
-------------- --------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(8) RESIDENCE ADDRESS IF DIFFERENT FROM ABOVE OR FOR BENEFICIARY
OF A QUALIFIED PLAN
C
------------------------------------------------------------
Street City State Zip Code
----------------------------------------------------------------------
----------------------------------------------------------------------
(9) Check One
[ ] Individual Ownership
D
[ ] Joint Tenants with Right of Survivorship
[ ] Community Property
[ ] Tenants in Common
[ ] Tenants by the Entirety
[ ] Corporate Ownership
[ ] Partnership Ownership
[ ] IRA
[ ] Qualified Plan (Keogh)
[ ] Simplified Employee Pension/Trust (S.E.P.)
[ ] Uniform Gifts to Minors Act, State of
------------------, a custodian for -----------------------
[ ] Pension or Profit Sharing Plan [ ] Taxable
[ ] Exempt under sec.501A
[ ] Trust/Date Trust Established -----------------------------
[ ] Name of Trustee or other
Administrator
--------------------------------------------
[ ] Taxable [ ] Grantor A or B
[ ] Estate
[ ] Other (specify)
-------------------------------------------
[ ] Taxable [ ] Non-Taxable
------------------------------------------------------------------------
</Table>
B-5
<Table>
----------------------------------------------------------------------
(10) The undersigned certifies, under penalties of perjury (i)
that the taxpayer identification number shown on the
Subscription Agreement/Signature Page is true, correct and
complete, and (ii) that I am (we are) not subject to backup
withholding either because I (we) have not been notified
that I am (we are) subject to backup withholding as a result
of a failure to report all interest or distributions, or the
Internal Revenue Service has notified me that I am (we are)
no longer subject to backup withholding.
The undersigned further acknowledges and/or represents (or
in the case of fiduciary accounts, the person authorized to
sign on such investor's behalf) the following:--(PLEASE
SEPARATELY INITIAL EACH ITEM TO INDICATE YOUR
ACKNOWLEDGEMENT OR REPRESENTATION):
---------
(a) acknowledges receipt, not less than five (5) business
days prior to the signing of this Subscription Agreement, of
the prospectus of the Fund relating to the units, wherein
the terms and conditions of the offering of the units are
described, including among other things, the restrictions on
ownership and transfer of units, which require, under
certain circumstances, that a holder of units shall give
written notice and provide certain information to the
general partner.
---------
(b) represents that I (we) either: (i) have a net worth
(excluding home, home furnishings and automobiles) of at
least $45,000 and estimate that (without regard to
investment in the fund) I (we) have gross income due in the
current year of at least $45,000; or (ii) have a net worth
(excluding home, home furnishings and automobiles) of at
least $150,000 or such higher suitability as may be required
by certain states and set forth on the last page hereof; in
the case of sales to fiduciary accounts, the suitability
standards must be met by the beneficiary, the fiduciary
account or by the donor or grantor who directly or
indirectly supplies the funds for the purchase of the units.
---------
(c) represents that I am (we are) purchasing the units for
my (our) own account, and if I am (we are) purchasing units
on behalf of a trust or other entity of which I am (we are)
trustee(s) or authorized agent(s), I (we) have due authority
to execute the Subscription Agreement/ Signature Page and do
hereby legally bind the trust or such other entity.
---------
(d) acknowledges that the units are not liquid except for
limited redemption provisions.
---------
(e) if I am acting on behalf of an "employee benefit plan,"
as defined in and subject to ERISA, or any "plan" as defined
in Code Section 4975 (a "Plan"), then, in addition to the
other representations and warranties set forth herein, I
further represent and warrant as, or on behalf of, the
fiduciary of the Plan responsible for investing (the "Plan
Fiduciary") that the Plan Fiduciary has considered an
investment in light of the risk relating thereto; the Plan
Fiduciary has determined that, in view of such
considerations, the investment is consistent with the Plan
Fiduciary's responsibilities under ERISA; the Plan's
investment in the Fund does not violate and is not otherwise
inconsistent with the terms of any legal document
constituting the Plan or any trust agreement thereunder; and
the Plan Fiduciary: (i) is responsible for the decision to
invest, including the determination that the investment is
consistent with the requirement of ERISA Section 404 that
Plan investments be diversified, (ii) is independent of the
general partner, any selling agent and their respective
affiliates, (iii) is qualified to make the investment
decision, and (iv) in making the decision the Plan Fiduciary
has not relied primarily on any advice or recommendation of
the general partner, any selling agent, any of their
respective affiliates or any of their respective employees,
Subscriber will furnish the general partner with such
information as the general partner may reasonably require to
establish that the investment by the Plan does not violate
any provision of ERISA or the Code, including those
provisions relating to "prohibitions" by "interested
parties" or "disqualified persons."
----------------------------------------------------------------------
</Table>
B-6
<Table>
----------------------------------------------------------------------
---------
(f) represents that I am (we are) aware that there are
various types of institutions, including pension plans and
trusts, which are governed by discrete and/or unique laws
and/or regulations relating to the various types of
investments which such institutions are authorized to make.
I (we) understand that the general partner, on behalf of the
partnership, is not in the position to review those
limitations and/or restrictions that may apply to each
specific subscriber's investment in the partnership.
Accordingly, by signing the subscription agreement, I (we) f
will be representing and warranting that I am (we are)
familiar with the statutory and regulatory basis on which
you operate, including any investment guidelines and
limitations placed on subscriptions to entities similar in
form and purpose to the Fund, and that, if such subscription
is accepted, it will be in compliance with all applicable
governmental, industry, and/or similar laws and regulations
which relate to your investment in the Fund; and will not be
in violation of any such laws or regulations.
BY EXECUTING THIS SUBSCRIPTION AGREEMENT, I (WE) APPLY TO
BECOME A LIMITED PARTNER AS OF THE DATE THE SALE OF MY UNITS
BECOMES EFFECTIVE, AND I (WE) AGREE TO EACH AND EVERY TERM
OF THE FUND'S LIMITED PARTNERSHIP AGREEMENT AS IF MY
SIGNATURE WERE SUBSCRIBED THERETO.
BY EXECUTING THIS SUBSCRIPTION AGREEMENT, I AM (WE ARE) NOT
WAIVING ANY RIGHTS UNDER THE FEDERAL OR STATE SECURITIES
LAWS.
MINNESOTA INVESTORS: THE REPRESENTATIONS AND/OR
ACKNOWLEDGMENTS SET FORTH IN (A) AND (D) ABOVE SHALL NOT
APPLY TO MINNESOTA INVESTORS. MINNESOTA INVESTORS SHALL HAVE
FIVE BUSINESS DAYS TO RESCIND THEIR PURCHASE.
Agreement Dated ,
------------ ---------- ----------------------------
Signature--Registered Owner
---------------------------
Signature--Co-Owner
----------------------------------------------------------------------
----------------------------------------------------------------------
(12) Broker/Dealer data-completed by selling registered
representative (Please use Rep's
E Address-not home office)
Name of Registered Representative
---------------------------
[ ] Mr. [ ] Mrs. [ ] Ms.
----------------------------------
Mailing Address
---------------------------------------------
City, State & Zip Code
--------------------------------------
Telephone ( ___ ) ____________ ; Fax # ( ___ ) ____________;
e-mail _______________
Broker/Dealer Name
------------------------------------------
Mailing Address
---------------------------------------------
City, State & Zip Code
--------------------------------------
--------------------------------------
Signature--Registered Representative
----------------------------------------------------------------------
</Table>
CERTAIN STATES HAVE IMPOSED SPECIAL FINANCIAL SUITABILITY STANDARDS FOR
INVESTORS WHO PURCHASE UNITS.
IF THE INVESTOR IS A RESIDENT OF ARIZONA, CALIFORNIA, INDIANA,
MASSACHUSETTS, MICHIGAN, OREGON, SOUTH CAROLINA OR WASHINGTON, THE INVESTOR MUST
HAVE EITHER: (I) A MINIMUM NET WORTH (EXCLUDING HOME, HOME FURNISHINGS AND
AUTOMOBILES) OF $225,000; OR (II) A MINIMUM ANNUAL GROSS INCOME OF $60,000 AND A
MINIMUM NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES) OF
$60,000.
IF THE INVESTOR IS A RESIDENT OF IOWA, NORTH CAROLINA OR TEXAS, THE
INVESTOR MUST HAVE EITHER: (I) A MINIMUM NET WORTH (EXCLUDING HOME, HOME
FURNISHINGS AND AUTOMOBILES) OF $225,000; OR (II) A MINIMUM ANNUAL TAXABLE
INCOME OF $60,000 AND A MINIMUM NET WORTH (EXCLUSIVE OF HOME, HOME FURNISHINGS
AND AUTOMOBILES) OF $60,000.
IF THE INVESTOR IS A RESIDENT OF OHIO, PENNSYLVANIA OR WASHINGTON, THE
INVESTMENT MAY NOT EXCEED 10% OF THE INVESTOR'S LIQUID NET WORTH.
B-7
APPENDIX C
REDEMPTION NOTICE
C-1
NOTICE OF WITHDRAWAL
The undersigned, a limited partner of Rogers International Raw Materials
Fund, L.P. (the "PARTNERSHIP"), hereby provides notice to Derivatives Portfolio
Management, LLC, Two Worlds Fair Drive, P.O. Box 6741, Somerset, New Jersey
08875-6741 (the "Redemption Agent"), and to Beeland Management Company, L.L.C.,
1000 Hart Road, Suite 210, Barrington, IL 60010 (the "GENERAL PARTNER") of its
desire to withdraw or redeem all or a portion of the credit balance from its
capital account.
1. Type of Withdrawal (check one):
[ ] Complete Withdrawal
[ ] Partial Withdrawal
If a Partial Withdrawal, specified below is either the percentage of the
credit balance in the Capital Account that the limited partner wishes to
withdraw or the dollar amount of capital which the limited partner wishes
to have returned to him. (Any such withdrawals may only be in increments
of a units's Net Asset Value, as defined in the Partnership's Agreement
of Limited Partnership, as amended):
___ % OR $ _______
THE REDEMPTION PRICE PER UNIT WILL BE THE NET ASSET VALUE PER UNIT AS OF THE
CLOSE OF BUSINESS ON THE WITHDRAWAL DATE, MINUS AN AMOUNT (THE "HOLDBACK")
EQUAL TO THE GREATER OF (1) 2% OF THE NET ASSET VALUE PER UNIT, OR (2) $100,
TO COVER ACCRUED, BUT UNPAID MANAGEMENT FEES AND OTHER EXPENSES PAYABLE BY
THE PARTNERSHIP AND CHARGEABLE AGAINST NET ASSETS AS OF THAT DATE. AFTER THE
CLOSE OF THE FISCAL YEAR IN WHICH THE WITHDRAWAL WAS EFFECTED, THE ACCOUNT
OF THE LIMITED PARTNER WHO EFFECTED THE WITHDRAWAL SHALL BE ADJUSTED TO
REFLECT HIS ALLOCATED SHARE OF MANAGEMENT FEES AND EXPENSES, WHICH SHALL BE
CHARGED AGAINST THE HOLDBACK. AFTER SUCH CHARGE, ANY POSITIVE BALANCE
REMAINING FROM THE HOLDBACK SHALL BE PROMPTLY PAID TO THE WITHDRAWN LIMITED
PARTNER, IN THE SAME MANNER AS THE BALANCE OF THE WITHDRAWAL.
2. Desired Withdrawal Date: _____________
(Note: The withdrawal date must be the last trading day of a month and at
least 60 days following the date hereof. Withdrawals may be made only after
an initial holding period of three months.)
3. The undersigned requests that the withdrawn amounts be delivered to:
_____________ at the following address:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ANY WITHDRAWAL REQUEST APPROVED BY THE GENERAL PARTNER OR ITS AGENT SHALL BE
EFFECTIVE AS OF THE CLOSE OF BUSINESS ON THE WITHDRAWAL DATE SPECIFIED
ABOVE.
--------------------------------------
Name of Limited Partner
--------------------------------------
Signature of Limited Partner
C-2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
commissions payable by the registrant in connection with the sale of the
securities being registered. All amounts are estimates except for the SEC
registration fee.
<Table>
SEC registration fee........................................ $ 607
NASD........................................................ 20,500
Printing.................................................... 35,000
Legal fees and expenses..................................... 45,000
Accounting fees and expenses................................ 20,000
Blue sky fees and expenses.................................. 35,000
--------
Total..................................................... $156,107
========
</Table>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Fund's limited partnership agreement provides that the Fund shall
indemnify and hold harmless each partner (as well as each member, manager,
agent, officer or employee of the general partner and each partner, trustee,
officer or director of a member of the general partner, when acting on behalf of
the Fund or in connection with, Fund business) from and against any loss,
expense, damage or injury suffered or sustained by them by reason of any acts,
omissions or alleged acts or omissions arising out of their activities on behalf
of the Fund or in furtherance of the interests of the Fund, or the issuance and
sale of units including but not limited to any judgment, award, settlement,
attorney's fee and other cost or expense incurred in connection with the defense
of any actual or threatened action, proceeding or claim; if the acts, omissions
or alleged acts or omissions upon which such actual or threatened action,
proceeding or claim is based were for a purpose reasonably believed to be in the
best interests of the Fund and did not constitute misconduct or were not
performed or omitted fraudulently or in bad faith or as a result of negligence
by the partners. Any such indemnification shall be only from the assets of the
Fund.
The Fund's limited partnership agreement also provides that the Fund shall
indemnify and hold harmless each limited partner from and against any expense,
including reasonable attorney's fees, incurred in connection with the defense of
any actual or threatened action, proceeding or claim arising from the personal
liability of any limited partners to creditors of the Fund, except to the extent
provided in Section 8.5(f) of the limited partnership agreement for debts,
liabilities and other obligations of the Fund. Section 8.5(f) of the limited
partnership agreement provides that a limited partner will have no personal
liability for the debts, liabilities and other obligations of the Fund from and
after the effective date of a complete return of the credit balance in his or
her capital account except to the extent provided under Illinois law for debts
and liabilities of the Fund incurred prior to such effective date, and then only
for amounts withdrawn by and distributed to that limited partner.
ITEM 15. SALES OF UNREGISTERED SECURITIES.
The Fund sold 50 units to Clyde C. Harrison on May 8, 2000, for $5,000 in
order to create an original limited partner, thereby allowing the Fund to be
formed.
No sales commissions or other consideration were paid in connection with
this sale. The Fund claims an exemption from registration based on Section 4(2)
of the Securities Act of 1933 as a sale not involving a public offering.
II-1
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as part of this registration
statement:
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
1.1 Form of Soliciting Dealer Agreement.**
2.1 Second Amended and Restated Limited Partnership Agreement of
Registrant, dated as of August 15, 2001 (included as
Appendix A to the Prospectus).
5.1 Opinion of Henderson & Lyman regarding legality of the
securities being registered.
8.1 Opinion of Henderson & Lyman regarding certain federal
income taxation matters.
10.1 Form of Subscription Agreement (included as Appendix B to
the Prospectus).
10.2 Service Agreement between Registrant and Derivatives
Portfolio Management LLC, dated as of June 21, 2000.**
10.3 Investment Management Agreement between Registrant and Hart
Capital Management, dated as of May 8, 2000.**
10.4 Second Amended and Restated Subscription Agreement between
general partner and James Beeland Rogers, Jr., dated as of
April 10, 2003.
10.5 Amended and Restated Subscription Agreement between general
partner and Clyde C. Harrison, dated as of May 23, 2000.**
10.6 Amended and Restated Consulting Agreement between general
partner and Cornell Investment Advisory, L.L.C., dated as of
April 1, 2000**
10.7 Third Revised Amended and Restated Operating Agreement of
Beeland Management Company, L.L.C., effective as of July 31,
2003.
10.8 Form of Escrow Agreement**
10.9 Form of Amended and Restated Escrow Agreement.**
23.1 Consent of Independent Accountants, for Beeland Management
Company, LLC.
23.2 Consent of Independent Accountants, for the Registrant.
23.3 Consent of Henderson & Lyman (included in Exhibit 5.1)
23.4 Consent of Independent Accountants, for Rogers Raw Materials
Fund, L.P.
24.1 Power of Attorney (included on signature page).**
27.1 Financial Data Schedule**
</Table>
- ---------------
* To be filed by separate amendment
** Previously filed
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on August 1, 2003.
ROGERS INTERNATIONAL RAW MATERIALS
FUND, L.P.
By: BEELAND MANAGEMENT COMPANY, L.L.C.
----------------------------------
Its General Partner
By: /s/ WALTER T. PRICE III
---------------------------------
Managing Member
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on August 1, 2003.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
BEELAND MANAGEMENT COMPANY, L.L.C. General Partner
- ----------------------------------------------------
By: /s/ CLYDE C. HARRISON Founding Member
------------------------------------------------
Clyde C. Harrison
/s/ WALTER T. PRICE III Managing Member
- ----------------------------------------------------
Walter T. Price III
/s/ RICHARD L. CHAMBERS Managing Member
- ----------------------------------------------------
Richard L. Chambers
/s/ BRIAN CORNELL Managing Member
- ----------------------------------------------------
Brian Cornell
/s/ JAMES BEELAND ROGERS, JR. Member
- ----------------------------------------------------
James Beeland Rogers, Jr.
</Table>
II-3
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1.1 Form of Soliciting Dealer Agreement.**
2.1 Second Amended and Restated Limited Partnership Agreement of
Registrant, dated as of August 15, 2001 (included as
Appendix A to the Prospectus).
5.1 Opinion of Henderson & Lyman regarding legality of the
securities being registered.
8.1 Opinion of Henderson & Lyman regarding certain federal
income taxation matters.
10.1 Form of Subscription Agreement (included as Appendix B to
the Prospectus).
10.2 Service Agreement between Registrant and Derivatives
Portfolio Management LLC, dated as of June 21, 2000.**
10.3 Investment Management Agreement between Registrant and Hart
Capital Management, dated as of May 8, 2000.**
10.4 Second Amended and Restated Subscription Agreement between
general partner and James Beeland Rogers, Jr., dated as of
April 10, 2003.**
10.5 Amended and Restated Subscription Agreement between general
partner and Clyde C. Harrison, dated as of May 23, 2000.**
10.6 Amended and Restated Consulting Agreement between general
partner and Cornell Investment Advisory, L.L.C., dated as of
April 1, 2000**
10.7 Third Revised Amended and Restated Operating Agreement of
Beeland Management Company, L.L.C., effective as of March
31, 2003.
10.8 Form of Escrow Agreement**
10.9 Form of Amended and Restated Escrow Agreement.**
23.1 Consent of Independent Accountants, for Beeland Management
Company, LLC.
23.2 Consent of Independent Accountants, for the Registrant.
23.3 Consent of Henderson & Lyman (included in Exhibit 5.1)**
23.4 Consent of Independent Accountants, for Rogers Raw Materials
Fund, L.P.
24.1 Power of Attorney (included on signature page).**
27.1 Financial Data Schedule**
</Table>
- ---------------
** Previously filed