S-1/A 1 c76560a2sv1za.txt AMENDMENT TO REGISTRATION STATEMENT 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) --------------------- ILLINOIS 6221 36-4368292 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
--------------------- 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
------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- 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 ------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------- --------------------------------- ------------------- --------------------------------- ------------------- AMOUNT OF TITLE OF SECURITIES BEING OFFERED REGISTRATION FEE(2) --------------------------------- ------------------- Limited Partnership Interests... $22,632 -------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------
(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
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
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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
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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
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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
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
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.
25
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.
26
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.
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:
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%
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.
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%
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
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)
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 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)
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS RATE OF RETURN
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%) ===== ===== =====
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.
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)
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:
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%
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. 46 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. 47 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:
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%
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:
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
------------------------------ * 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 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
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
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 ========== ==========
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
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) ========== =========
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
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 ========== ======= ==========
12/31/2001 PER UNIT DATA ------------- Net asset value......................................... $ 92.29 ========== Units outstanding....................................... 53,124 ==========
12/31/2002 PER UNIT DATA ------------- Net asset value......................................... $ 114.56 ========== Units outstanding....................................... 63,531 ==========
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
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 ======== ========== ======== ==========
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 ======== ========== ======== ==========
F-9 ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P. STATEMENT OF FINANCIAL CONDITION MARCH 31, 2003 AND DECEMBER 31, 2002 (UNAUDITED)
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 ========== ==========
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)
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 ========== ========
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)
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 =========== ==========
PER UNIT DATA 3/31/2003 3/31/2002 ------------- --------- --------- Net asset value............................................. $118.81 $104.17 ======= ======= Units outstanding........................................... 54,929 54,928 ======= =======
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
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 ======== ========
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
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 ========= ========
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
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 $ -- ========= ========
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) 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 ========
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) 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 ========
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) 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 ========
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
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 =========== ===========
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
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) ========== ===========
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
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 =========== =========== =========== ===========
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 ======== ======== =====
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
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 ========== =========== ========= ==========
F-37 ROGERS RAW MATERIALS FUND, L.P. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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 ========== =========== ======== ==========
F-38 ROGERS RAW MATERIALS FUND, L.P. STATEMENT OF FINANCIAL CONDITION MARCH 31, 2003 (UNAUDITED)
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 ===========
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)
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 ===========
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)
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 =========== =========== ===========
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 ======== ======== ======
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 F-43 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. F-44 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. F-45 APPENDIX A LIMITED PARTNERSHIP AGREEMENT A-1 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. A-2 (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. A-3 (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 A-4 "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. A-5 (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 A-6 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 A-7 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 A-8 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. A-9 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. A-10 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 A-11 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 A-12 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; A-13 (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 A-14 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. A-15 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. A-16 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 A-17 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. A-18 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. A-21 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. 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
Counterpart Signature Page to Amended and Restated Agreement of Limited Partnership of Rogers International Raw Materials Fund, L.P. for the following Limited Partners: Address: ------------------------------------------------ ---------------------------------------------- Name
A-26 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. ---------------------------------------------------------------------- (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 ------------------------------------------------------------------------
B-5 ---------------------------------------------------------------------- (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." ----------------------------------------------------------------------
B-6 ---------------------------------------------------------------------- --------- (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 ----------------------------------------------------------------------
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. 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 ========
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
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**
--------------- * 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.
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.
II-3 EXHIBIT INDEX
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**
--------------- ** Previously filed