UNG ETF BE CAREFUL

    Posted by signal46 on 29th of Jul 2009 at 03:29 pm

    Excerpts from the 8K filed by the US Natural Gas Fund, LP  (UNG)...

    UNG is endeavoring to reduce its positions to comply with new limits placed by ICE on holdings in the LD1 Contract, the anticipated position and accountability limits to be placed on this contract by ICE, and, to the extent required, the position and accountability limits currently imposed by the New York Mercantile Exchange, Inc. ("NYMEX") on its natural gas futures contract, UNG's benchmark futures contract, and other related NYMEX natural gas futures contracts. The NYMEX futures contracts and the LD1 Contract, the economic equivalent of UNG's benchmark futures contract, have to date provided the best means for UNG to meet its investment objective of tracking percentage changes in the price of the benchmark futures contract. However, UNG has been forced to consider other investment alternatives in order to avoid violating these new limits and to avoid regulatory action.

    UNG may use alternative investments to meet its investment objective, including total return over the counter swaps that are intended to provide the economic equivalent of the return from ownership of the benchmark futures contract. However, to the extent it is unable to invest in the benchmark futures contract or other investments that mimic the return on ownership of this contract, as disclosed in its prospectus, UNG may invest in other investments that provide a return that differs from that of owning the benchmark futures contract and this may adversely affect UNG's ability to meet its investment objective. In addition, limitations on UNG's ability to purchase investments that best meet its investment objectives may be exacerbated by the issuance of additional units, if the level of its investments has caused it to become subject to position or other limits, requiring it to purchase other investments that are less likely to meet the fund's investment objectives.

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