# Invesco DB Commodity Index Tracking Fund: Form 10-K for the period ended Dec 31, 2012 - Company: [Invesco DB Commodity Index Tracking Fund](/companies/dbc.md) (CIK 1328237) - Form: 10-K - Filed: 2013-02-22 - Accepted by EDGAR: Feb 22, 2013, 22:29 ET - Period: 2012-12-31 - Accession: 0001193125-13-071759 - Inline XBRL: yes - Main document: https://www.sec.gov/Archives/edgar/data/1328237/000119312513071759/d445279d10k.htm - All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1328237/000119312513071759/ ## Figures reported in this filing Standardized XBRL line items for the period ended 2012-12-31. | Line item | Period | Value | XBRL concept | | --- | --- | ---: | --- | | Net income | 12 months, 2012-01-01 to 2012-12-31 | $142.1m | us-gaap:NetIncomeLoss | | Operating cash flow | 12 months, 2012-01-01 to 2012-12-31 | −$935.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities | | Share repurchases | 12 months, 2012-01-01 to 2012-12-31 | $750.8m | us-gaap:PaymentsForRepurchaseOfCommonStock | | Cash and equivalents | at 2012-12-31 | $615.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue | | Total assets | at 2012-12-31 | $6.61bn | us-gaap:Assets | | Total liabilities | at 2012-12-31 | $7.3m | us-gaap:Liabilities | | Shareholders' equity | at 2012-12-31 | $6.61bn | us-gaap:StockholdersEquity | ## Business As filed, 49,279 characters. ### Statements of Financial Condition ### December 31, 2012 and 2011 | Assets Equity in broker trading accounts: | 2012 | 2011 | | --- | ---: | ---: | | United States Treasury Obligations, at fair value (cost $5,925,280,784 and $5,311,724,492 respectively) | $5,925,630,311 | $5,311,719,979 | | Cash held by broker | 615,720,406 | 542,289,641 | | Net unrealized appreciation (depreciation) on futures contracts | 73,453,658 | (376,223,544) | | Deposits with broker | 6,614,804,375 | 5,477,786,076 | | Receivable for shares issued | — | 10,730,876 | | Total assets | $6,614,804,375 | $5,488,516,952 | | **Liabilities** | | | | Payable for LME contracts | $2,559,519 | $17,231,831 | | Management fee payable | 4,705,227 | 3,900,692 | | Brokerage fee payable | 205 | 1,860 | | Total liabilities | 7,264,951 | 21,134,383 | | Commitments and Contingencies (Note 9) | | | | **Equity** | | | | Shareholders’ equity - General Shares | 1,109 | 1,073 | | Shareholders’ equity - Shares | 6,607,538,315 | 5,467,381,496 | | Total shareholders’ equity | 6,607,539,424 | 5,467,382,569 | | Total liabilities and equity | $6,614,804,375 | $5,488,516,952 | | General Shares outstanding | 40 | 40 | | Shares outstanding | 238,400,000 | 203,800,000 | | Net asset value per share | | | | General shares | $27.73 | $26.83 | | Shares | $27.72 | $26.83 | #### See accompanying notes to financial statements. ### Schedule of Investments ### December 31, 2012 | Description United States Treasury Obligations | Percentage of Net Assets | Fair Value | Face Value | | --- | ---: | ---: | ---: | | U.S. Treasury Bills, 0.06% due January 3, 2013 | 22.01% | $1,454,000,000 | $1,454,000,000 | | U.S. Treasury Bills, 0.05% due January 10, 2013 | 2.35 | 155,499,067 | 155,500,000 | | U.S. Treasury Bills, 0.015% due January 17, 2013 | 4.62 | 304,997,865 | 305,000,000 | | U.S. Treasury Bills, 0.045% due January 24, 2013 | 12.63 | 834,290,823 | 834,300,000 | | U.S. Treasury Bills, 0.075% due January 31, 2013 | 8.67 | 572,988,540 | 573,000,000 | | U.S. Treasury Bills, 0.105% due February 7, 2013 | 1.66 | 109,996,920 | 110,000,000 | | U.S. Treasury Bills, 0.105% due February 14, 2013 | 1.70 | 111,996,304 | 112,000,000 | | U.S. Treasury Bills, 0.09% due February 21, 2013 | 5.10 | 336,987,194 | 337,000,000 | | U.S. Treasury Bills, 0.1% due February 28, 2013 | 4.10 | 270,989,160 | 271,000,000 | | U.S. Treasury Bills, 0.09% due March 7, 2013 | 7.26 | 479,974,560 | 480,000,000 | | U.S. Treasury Bills, 0.09% due March 14, 2013 | 8.64 | 570,963,456 | 571,000,000 | | U.S. Treasury Bills, 0.04% due March 21, 2013 | 4.52 | 298,979,070 | 299,000,000 | | U.S. Treasury Bills, 0.085% due March 28, 2013 | 6.42 | 423,967,352 | 424,000,000 | | Total United States Treasury Obligations (cost $5,925,280,784) | 89.68% | $5,925,630,311 | | | A portion of the above United States Treasury Obligations are held as initial margin against open futures contracts, as described in Note 4(e). | | | | | **Description** | **Percentage of Net Assets** | **Fair Value** | | | Unrealized Appreciation/(Depreciation) on Futures Contracts | | | | | Aluminum (5,584 contracts, settlement date October 14, 2013) | 0.06% | $4,274,457 | | | Brent Crude (7,827 contracts, settlement date January 16, 2013) | 0.47 | 31,308,870 | | | Copper (1,458 contracts, settlement date March 18, 2013) | (0.27) | (17,985,288) | | | Corn (11,807 contracts, settlement date December 13, 2013) | (0.33) | (22,059,150) | | | Gold (3,080 contracts, settlement date August 28, 2013) | (0.14) | (9,315,570) | | | Heating Oil (6,706 contracts, settlement date March 28, 2013) | (0.16) | (10,740,551) | | | Natural Gas (9,458 contracts, settlement date September 26, 2013) | 0.04 | 2,828,670 | | | RBOB Gasoline (7,897 contracts, settlement date October 31, 2013) | 0.27 | 18,136,285 | | | RBOB Gasoline (55 contracts, settlement date November 29, 2013) | (0.00) | 104,614 | | | Silver (823 contracts, settlement date December 27, 2013) | (0.09) | (6,092,775) | | | Soybeans (5,616 contracts, settlement date November 14, 2013) | (0.11) | (7,524,525) | | | Sugar (17,623 contracts, settlement date June 28, 2013) | (0.19) | (12,437,813) | | | Wheat (8,389 contracts, settlement date July 12, 2013) | 0.36 | 24,084,450 | | | WTI Crude ICE (786 contracts, settlement date June 19, 2013) | 0.06 | 3,744,270 | | | WTI Crude NYMEX (8,546 contracts, settlement date June 20, 2013) | 0.82 | 54,023,470 | | | Zinc (5,522 contracts, settlement date December 16, 2013) | 0.32 | 21,104,244 | | | Net Unrealized Appreciation on Futures Contracts | 1.11% | $73,453,658 | | *Net unrealized appreciation is comprised of unrealized gains of $181,952,772 and unrealized losses of $108,499,114 .* #### See accompanying notes to financial statements. ### Schedule of Investments ### December 31, 2011 | Description United States Treasury Obligations | Percentage of Net Assets | Fair Value | Face Value | | --- | ---: | ---: | ---: | | U.S. Treasury Bills, 0.015% due January 5, 2012 | 24.91% | $1,361,998,638 | $1,362,000,000 | | U.S. Treasury Bills, 0.01% due January 12, 2012 | 2.68 | 146,499,560 | 146,500,000 | | U.S. Treasury Bills, 0.025% due January 19, 2012 | 4.75 | 259,998,700 | 260,000,000 | | U.S. Treasury Bills, 0.015% due January 26, 2012 | 15.81 | 864,293,950 | 864,300,000 | | U.S. Treasury Bills, 0.01% due February 2, 2012 | 9.79 | 534,995,185 | 535,000,000 | | U.S. Treasury Bills, 0.01% due February 16, 2012 | 3.95 | 215,997,408 | 216,000,000 | | U.S. Treasury Bills, 0.015% due February 23, 2012 | 4.94 | 269,995,140 | 270,000,000 | | U.S. Treasury Bills, 0.03% due March 1, 2012 | 5.21 | 284,992,875 | 285,000,000 | | U.S. Treasury Bills, 0.005% due March 8, 2012 | 3.18 | 173,994,432 | 174,000,000 | | U.S. Treasury Bills, 0.01% due March 15, 2012 | 6.80 | 371,986,980 | 372,000,000 | | U.S. Treasury Bills, 0.005% due March 22, 2012 | 3.75 | 204,993,235 | 205,000,000 | | U.S. Treasury Bills, 0.025% due March 29, 2012 | 11.38 | 621,973,876 | 622,000,000 | | Total United States Treasury Obligations (cost $5,311,724,492) | 97.15% | $5,311,719,979 | | | A portion of the above United States Treasury Obligations are held as initial margin against open futures contracts, as described in Note 4(e). | | | | | **Description** | **Percentage of Net Assets** | **Fair Value** | | | Unrealized Appreciation/(Depreciation) on Futures Contracts | | | | | Aluminum (4,467 contracts, settlement date September 17, 2012) | (0.76)% | $(41,458,506) | | | Brent Crude (6,473 contracts, settlement date February 14, 2012) | 0.24 | 12,808,900 | | | Copper (1,256 contracts, settlement date March 19, 2012) | (1.02) | (55,719,025) | | | Corn (3,323 contracts, settlement date March 14, 2012) | 0.06 | 3,252,000 | | | Corn (7,105 contracts, settlement date December 14, 2012) | (0.14) | (7,618,388) | | | Gold (2,611 contracts, settlement date February 27, 2012) | (0.54) | (29,505,740) | | | Heating Oil (5,738 contracts, settlement date May 31, 2012) | (0.67) | (36,513,943) | | | Natural Gas (8,045 contracts, settlement date September 26, 2012) | (1.48) | (80,821,700) | | | RBOB Gasoline (6,652 contracts, settlement date November 30, 2012) | (0.17) | (9,328,532) | | | Red Wheat (3,574 contracts, settlement date July 13, 2012) | (0.12) | (6,821,963) | | | Red Wheat (399 contracts, settlement date December 14, 2012) | 0.00 | 78,725 | | | Silver (666 contracts, settlement date December 27, 2012) | (0.38) | (21,023,215) | | | Soybeans (3,420 contracts, settlement date November 14, 2012) | 0.07 | 3,854,150 | | | Soybeans (1,967 contracts, settlement date January 14, 2013) | 0.08 | 4,554,088 | | | Sugar (11,967 contracts, settlement date June 29, 2012) | (0.23) | (12,498,528) | | | Wheat (3,448 contracts, settlement date July 13, 2012) | (0.63) | (34,172,237) | | | Wheat (1,034 contracts, settlement date December 14, 2012) | (0.02) | (1,342,712) | | | WTI Crude (7,568 contracts, settlement date June 20, 2012) | (0.38) | (20,883,030) | | | Zinc (4,819 contracts, settlement date July 16, 2012) | (0.79) | (43,063,888) | | | Net Unrealized Depreciation on Futures Contracts | (6.88)% | $(376,223,544) | | *Net unrealized depreciation is comprised of unrealized losses of $417,574,520 and unrealized gains of $41,350,976.* #### See accompanying notes to financial statements. ### Statements of Income and Expenses ### For the Years Ended December 31, 2012, 2011 and 2010 | Income | 2012 | 2011 | 2010 | | --- | ---: | ---: | ---: | | Interest Income | $4,070,308 | $3,659,156 | $5,081,450 | | **Expenses** | | | | | Management Fee | 52,794,819 | 49,989,842 | 38,197,079 | | Brokerage Commissions and Fees | 1,471,822 | 1,129,062 | 1,268,413 | | Total Expenses | 54,266,641 | 51,118,904 | 39,465,492 | | Net investment income (loss) | (50,196,333) | (47,459,748) | (34,384,042) | | **Net Realized and Net Change in Unrealized Gain (Loss) on United States Treasury Obligations and Futures** | | | | | **Net Realized Gain (Loss) on** | | | | | United States Treasury Obligations | 20,919 | 69,300 | (982) | | Futures | (257,726,563) | 754,035,253 | 199,582,317 | | Foreign Currency Translation | — | — | (19,555) | | **Net realized gain (loss)** | (257,705,644) | 754,104,553 | 199,561,780 | | **Net Change in Unrealized Gain (Loss) on** | | | | | United States Treasury Obligations | 354,040 | (189,883) | 109,485 | | Futures | 449,677,202 | (939,551,548) | 342,001,260 | | **Net change in unrealized gain (loss)** | 450,031,242 | (939,741,431) | 342,110,745 | | Net realized and net change in unrealized gain (loss) on United States Treasury Obligations and Futures | 192,325,598 | (185,636,878) | 541,672,525 | | **Net Income (Loss)** | $142,129,265 | $(233,096,626) | $507,288,483 | | Less: net income attributed to the non-controlling interest in subsidiary—related party | — | — | (117) | | **Net Income (Loss) Attributable to PowerShares DB Commodity Index Tracking Fund** | $142,129,265 | $(233,096,626) | $507,288,366 | #### See accompanying notes to financial statements. ### Statement of Changes in Shareholders’ Equity ### For the Year Ended December 31, 2012 | | General Shares Shares | Total Equity | Shares Shares | Total Equity | Total Shareholders’ Equity | | --- | ---: | ---: | ---: | ---: | ---: | | **Balance at January 1, 2012** | 40 | $1,073 | 203,800,000 | $5,467,381,496 | $5,467,382,569 | | Sale of Shares | | | 62,600,000 | 1,748,800,266 | 1,748,800,266 | | Redemption of Shares | | | (28,000,000) | (750,772,676) | (750,772,676) | | Net Income (Loss) | | | | | | | Net investment income (loss) | | (13) | | (50,196,320) | (50,196,333) | | Net realized gain (loss) on United States Treasury Obligations and Futures | | (65) | | (257,705,579) | (257,705,644) | | Net change in unrealized gain (loss) on United States Treasury Obligations and Futures | | 114 | | 450,031,128 | 450,031,242 | | Net Income (Loss) | | 36 | | 142,129,229 | 142,129,265 | | **Balance at December 31, 2012** | 40 | $1,109 | 238,400,000 | $6,607,538,315 | $6,607,539,424 | #### See accompanying notes to financial statements. ### Statement of Changes in Shareholders’ Equity ### For the Year Ended December 31, 2011 | | General Shares Shares | Total Equity | Shares Shares | Total Equity | Total Shareholders’ Equity | | --- | ---: | ---: | ---: | ---: | ---: | | **Balance at January 1, 2011** | 40 | $1,103 | 185,200,000 | $5,106,774,824 | $5,106,775,927 | | Sale of Shares | | | 58,800,000 | 1,714,838,522 | 1,714,838,522 | | Redemption of Shares | | | (40,200,000) | (1,121,135,254) | (1,121,135,254) | | Net Income (Loss) | | | | | | | Net investment income (loss) | | (6) | | (47,459,742) | (47,459,748) | | Net realized gain (loss) on United States Treasury Obligations and Futures | | 97 | | 754,104,456 | 754,104,553 | | Net change in unrealized gain (loss)on United States Treasury Obligations and Futures | | (121) | | (939,741,310) | (939,741,431) | | Net Income (Loss) | | (30) | | (233,096,596) | (233,096,626) | | **Balance at December 31, 2011** | 40 | $1,073 | 203,800,000 | $5,467,381,496 | $5,467,382,569 | #### See accompanying notes to financial statements. ### Statement of Changes in Shareholders’ Equity ### For the Year Ended December 31, 2010 | | General Shares Shares | Total Equity | Shares Shares | Total Equity | Total Shareholders’ Equity | Non- controlling Interest | Total Equity | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | **Balance at January 1, 2010** | 40 | $986 | 178,000,000 | $4,387,952,473 | $4,387,953,459 | $986 | $4,387,954,445 | | Sale of Shares | | | 45,600,000 | 1,086,574,324 | 1,086,574,324 | | 1,086,574,324 | | Redemption of Shares | | | (38,400,000) | (875,040,222) | (875,040,222) | | (875,040,222) | | Net Income (Loss) | | | | | | | | | Net investment income (loss) | | (8) | | (34,384,026) | (34,384,034) | (8) | (34,384,042) | | Net realized loss on United States Treasury Obligations, Futures and Foreign Currency Transactions | | 46 | | 199,561,688 | 199,561,734 | 46 | 199,561,780 | | Net change in unrealized gain (loss) on United States Treasury Obligations and Futures | | 79 | | 342,110,587 | 342,110,666 | 79 | 342,110,745 | | Net Income (Loss) | | 117 | | 507,288,249 | 507,288,366 | 117 | 507,288,483 | | Redemption of non-controlling interest | | — | | — | — | (1,103) | (1,103) | | **Balance at December 31, 2010** | 40 | $1,103 | 185,200,000 | $5,106,774,824 | $5,106,775,927 | $— | $5,106,775,927 | #### See accompanying notes to financial statements. ### Statements of Cash Flows ### For the Years Ended December 31, 2012, 2011 and 2010 | Cash flows from operating activities: | 2012 | 2011 | 2010 | | --- | ---: | ---: | ---: | | Net Income (Loss) | $142,129,265 | $(233,096,626) | $507,288,483 | | Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | | | | | Cost of securities purchased | (23,652,604,317) | (23,183,942,035) | (16,965,659,067) | | Proceeds from securities sold and matured | 23,043,161,408 | 22,365,188,660 | 16,390,107,464 | | Net accretion of discount on United States Treasury Obligations | (4,092,464) | (3,696,794) | (5,110,637) | | Net realized (gain) loss on United States Treasury Obligations | (20,919) | (69,300) | 982 | | Net change in unrealized (gain) loss on United States Treasury Obligations and futures | (450,031,242) | 939,741,431 | (342,110,745) | | Change in operating receivables and liabilities: | | | | | Receivable for LME contracts | — | 5,640,739 | 11,552,012 | | Payable for LME contracts | (14,672,312) | 17,231,831 | — | | Payable to broker | — | — | (298,202) | | Management fee payable | 804,535 | 393,509 | 821,590 | | Other assets | — | 1,000 | — | | Brokerage fee payable | (1,655) | (7,159) | (6,981) | | Net cash provided by (used for) operating activities | (935,327,701) | (92,614,744) | (403,415,101) | | Cash flows from financing activities: | | | | | Proceeds from sale of Shares | 1,759,531,142 | 1,704,107,646 | 1,086,574,324 | | Payments for redemption of Shares | (750,772,676) | (1,121,135,254) | (875,040,222) | | Redemption of non-controlling interest | — | — | (1,103) | | Net cash provided by (used for) financing activities | 1,008,758,466 | 582,972,392 | 211,532,999 | | Net change in cash held by broker | 73,430,765 | 490,357,648 | (191,882,102) | | Cash held by broker at beginning of period | 542,289,641 | 51,931,993 | 243,814,095 | | Cash held by broker at end of period | $615,720,406 | $542,289,641 | $51,931,993 | #### See accompanying notes to financial statements. ### Notes to Financial Statements ### December 31, 2012 ### (1) Organization PowerShares DB Commodity Index Tracking Fund (the “Fund) was formed as a Delaware statutory trust on May 23, 2005. DB Commodity Services LLC, a Delaware Limited Liability Company (“DBCS” or the “Managing Owner”), seeded the Fund with a capital contribution of $1,000 in exchange for 40 General Shares of the Fund. The Fund was originally named “DB Commodity Index Tracking Fund”. The Fund changed its name to “PowerShares DB Commodity Index Tracking Fund” effective August 10, 2006. The fiscal year end of the Fund is December 31st. The term of the Fund is perpetual (unless terminated earlier in certain circumstances) as provided in the Fourth Amended and Restated Declaration of Trust and Trust Agreement of the Fund (the “Trust Agreement”). The Fund was originally formed as a master-feeder structure. Prior to the close of business on December 31, 2010, the master-feeder structure was collapsed. As a result of the collapse of the master-feeder structure, on December 31, 2010, the Managing Owner’s and the Fund’s interests in the DB Commodity Master Fund (the “Master Fund”) were redeemed for all assets and liabilities held by the Master Fund. Hereafter, all references to the Fund either represent the structure in place as of December 31, 2010 or the structure in place prior to such date whereby the financial statements reflect the consolidation of the Fund and the Master Fund. The collapse of the master-feeder structure had no impact on a Shareholder’s net asset value or the results of operations for the Fund. The Fund offers common units of beneficial interest (the “Shares”) only to certain eligible financial institutions (the “Authorized Participants”) in one or more blocks of 200,000 Shares, called a Basket. The Fund commenced investment operations on January 31, 2006. The Fund commenced trading on the American Stock Exchange (now known as the NYSE Alternext US LLC (the “NYSE Alternext”)) on February 3, 2006 and, as of November 25, 2008, is listed on the NYSE Arca, Inc. (the “NYSE Arca”). This Report covers the years ended December 31, 2012, 2011 and 2010 (herein referred to, as the “Year Ended December 31, 2012”, the “Year Ended December 31, 2011” and the “Year Ended December 31, 2010”, respectively). ### (2) Fund Investment Overview The Fund invests with a view to tracking the changes, whether positive or negative, in the level of the DBIQ Diversified Commodity Index Excess ReturnTM (the “Index”) over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. The Index is intended to reflect the change in market value of the commodity sector. The commodities comprising the Index are Light Sweet Crude Oil, Heating Oil, Aluminum, Gold, Corn, Wheat, Brent Crude, Copper Grade A, Natural Gas, RBOB Gasoline, Silver, Soybeans, Sugar and Zinc (the “Index Commodities”). From October 19, 2009 to December 31, 2010, the Fund invested with a view to tracking changes, whether positive or negative, in the level of the Deutsche Bank Liquid Commodity Index-Optimum Yield Diversified Excess Return™ (the “Interim Index”) over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. After December 31, 2010, the Fund commenced tracking DBIQ Optimum Yield Diversified Commodity Index Excess Return™ (the “Index”). The Fund’s Interim Index is identical to the Index except with respect to the following non-substantive changes: (i) name of Index, and (ii) inception date of Index for Commodity Futures Trading Commission (the “CFTC”) purposes. Except as provided in the immediately preceding sentence, all prior underlying formulae, data (e.g., closing levels, measure of volatility, all other numerical statistics and measures) and all other characteristics (e.g., Base Date, Index Sponsor, rolling, etc.) with respect to the Interim Index is identical to the Index. The Fund also holds United States Treasury Obligations and other high credit quality short-term fixed income securities for deposit with the Fund’s commodity broker as margin. The CFTC and/or commodity exchanges, as applicable, impose position limits on market participants trading in certain commodities included in the Index. The Index is comprised of futures contracts on the Index Commodities that expire in a specific month and trade on a specific exchange (the “Index Contracts”). As disclosed in the Fund’s Prospectus, if the Managing Owner determines in its commercially reasonable judgment that it has become impracticable or inefficient for any reason for the Fund to gain full or partial exposure to any Index Commodity by investing in a specific Index Contract, the Fund may invest in a futures contract referencing the particular Index Commodity other than the Index Contract or, in the alternative, invest in other futures contracts not based on the particular Index Commodity if, in the commercially reasonable judgment of the Managing Owner, such futures contracts tend to exhibit trading prices that correlate with such Index Commodity. Because the Fund is approaching or has reached position limits with respect to certain futures contracts comprising the Index, the Fund has commenced investing in other futures contracts based on commodities that comprise the Fund’s Index and in futures contracts based on commodities other than commodities that comprise the Fund’s Index. The Fund does not employ leverage. As of December 31, 2012 and 2011, the Fund had $6,614,804,375 (or 100.00%) and $5,477,786,076 (or 99.80%), respectively, of its holdings of cash, United States Treasury Obligations and unrealized appreciation/depreciation of futures contracts on deposit with its Commodity Broker. Of this, $381,122,419 (or 5.76%) and $425,657,099 (or 7.77%) of the Fund’s holdings of cash and United States Treasury Obligations are required to be deposited as margin in support of the Fund’s long futures positions as of December 31, 2012 and 2011, respectively. For additional information, please see the audited Schedule of Investments as of December 31, 2012 and 2011 for details of the Fund’s portfolio holdings. DBIQ™, DBLCI™ and Deutsche Bank Liquid Commodity Index™ are trademarks of Deutsche Bank AG London (the “Index Sponsor”). Trademark applications in the United States are pending with respect to the Fund and aspects of the Index. The Fund and the Managing Owner have been licensed by the Index Sponsor to use the above noted trademarks. Deutsche Bank AG London is an affiliate of the Fund and the Managing Owner. ### (3) Service Providers and Related Party Agreements ### The Trustee Under the Trust Agreement, Wilmington Trust Company, the trustee of the Fund (the “Trustee”), has delegated to the Managing Owner the exclusive management and control of all aspects of the business of the Fund. The Trustee will have no duty or liability to supervise or monitor the performance of the Managing Owner, nor will the Trustee have any liability for the acts or omissions of the Managing Owner. ### The Managing Owner The Managing Owner serves the Fund as commodity pool operator, commodity trading advisor, and managing owner, and is an indirect wholly-owned subsidiary of Deutsche Bank AG. During the Year Ended December 31, 2012, the Fund incurred Management Fees of $52,794,819, of which $4,705,227 was payable at December 31, 2012. During the Year Ended December 31, 2011, the Fund incurred Management Fees of $49,989,842, of which $3,900,692 was payable at December 31, 2011. During the Year Ended December 31, 2010, the Fund incurred Management Fees of $38,197,079. ### The Commodity Broker Deutsche Bank Securities Inc., a Delaware corporation, serves as the Fund’s clearing broker (the “Commodity Broker”). The Commodity Broker is an indirect wholly-owned subsidiary of Deutsche Bank AG and is an affiliate of the Managing Owner. In its capacity as clearing broker, the Commodity Broker executes and clears each of the Fund’s futures transactions and performs certain administrative and custodial services for the Fund. As custodian of the Fund’s assets, the Commodity Broker is responsible, among other things, for providing periodic accountings of all dealings and actions taken by the Fund during the reporting period, together with an accounting of all securities, cash or other indebtedness or obligations held by it or its nominees for or on behalf of the Fund. During the Year Ended December 31, 2012, the Fund incurred brokerage fees of $1,471,822, of which $205 was payable at December 31, 2012. During the Year Ended December 31, 2011, the Fund incurred brokerage fees of $1,129,062, of which $1,860 was payable at December 31, 2011. During the Year Ended December 31, 2010, the Fund incurred brokerage fees of $1,268,413. ### The Administrator, Custodian and Transfer Agent The Bank of New York Mellon (the “Administrator”) has been appointed by the Managing Owner as the administrator, custodian and transfer agent of the Fund, and has entered into separate administrative, custodian, transfer agency and service agreements (collectively referred to as the “Administration Agreement”). Pursuant to the Administration Agreement, the Administrator performs or supervises the performance of services necessary for the operation and administration of the Fund (other than making investment decisions), including receiving and processing orders from Authorized Participants to create and redeem Baskets, net asset value calculations, accounting and other fund administrative services. The Administrator retains certain financial books and records, including: Basket creation and redemption books and records, fund accounting records, ledgers with respect to assets, liabilities, capital, income and expenses, the registrar, transfer journals and related details, and trading and related documents received from futures commission merchants. ### The Distributor ALPS Distributors, Inc. (the “Distributor”) provides certain distribution services to the Fund. Pursuant to the Distribution Services Agreement among the Managing Owner in its capacity as managing owner of the Fund and the Distributor, the Distributor assists the Managing Owner and the Administrator with certain functions and duties relating to distribution and marketing services to the Fund including reviewing and approving marketing materials. ### Invesco PowerShares Capital Management LLC Under the License Agreement among Invesco PowerShares Capital Management LLC (the “Licensor”), and the Managing Owner in its own capacity and in its capacity as managing owner of the Fund (the Fund and the Managing Owner, collectively, the “Licensees”), the Licensor granted to each Licensee a non-exclusive license to use the “PowerShares” trademark (the “Trademark”) anywhere in the world, solely in connection with the marketing and promotion of the Fund and to use or refer to the Trademark in connection with the issuance and trading of the Fund as necessary. ### Invesco Distributors, Inc. Through a marketing agreement between the Managing Owner and Invesco Distributors, Inc. (“Invesco Distributors”), an affiliate of Invesco PowerShares Capital Management LLC (“Invesco PowerShares”), the Managing Owner, on behalf of the Fund, has appointed Invesco Distributors as a marketing agent. Invesco Distributors assists the Managing Owner and the Administrator with certain functions and duties such as providing various educational and marketing activities regarding the Fund, primarily in the secondary trading market, which activities include, but are not limited to, communicating the Fund’s name, characteristics, uses, benefits, and risks, consistent with the prospectus. Invesco Distributors will not open or maintain customer accounts or handle orders for the Fund. Invesco Distributors engages in public seminars, road shows, conferences, media interviews, and distributes sales literature and other communications (including electronic media) regarding the Fund. ### (4) Summary of Significant Accounting Policies ### (a) Basis of Presentation The financial statements of the Fund have been prepared using U.S. generally accepted accounting principles and include the financial statements of the Fund and the Master Fund when applicable. As described in note 1, the Fund was originally formed as a master-feeder structure and such structure was collapsed on December 31, 2010. Upon the initial offering of the Shares on January 31, 2006, the capital raised by the Fund was used to purchase 100% of the common units of beneficial interest of the Master Fund (the “Master Fund Limited Units”) (excluding common units of beneficial interest of the Master Fund held by the Managing Owner (the “Master Fund General Units”)). The Master Fund Limited Units owned by the Fund provided the Fund and its investors certain controlling rights and abilities over the Master Fund. Consequently, the financial statement balances of the Master Fund were consolidated with the Fund’s financial statement balances for the period previously described and all significant inter-company balances and transactions were eliminated. The presentation of Shareholders’ Equity in prior years has been updated to conform to the December 31, 2012 presentation. Total Shareholders’ Equity was not affected by these changes. ### (b) Use of Estimates The preparation of the financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosure of contingent assets and liabilities during the reporting period of the financial statements and accompanying notes. Actual results could differ from those estimates. ### (c) Financial Instruments and Fair Value United States Treasury Obligations and commodity futures contracts are recorded in the statements of financial condition on a trade date basis at fair value with changes in fair value recognized in earnings in each period. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). Financial Accounting Standards Board (FASB) fair value measurement and disclosure guidance requires a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: #### Basis of Fair Value Measurement Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; Level 3: Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. In determining fair value of United States Treasury Obligations and commodity futures contracts, the Fund uses unadjusted quoted market prices in active markets. United States Treasury Obligations and commodity futures contracts are classified within Level 1 of the fair value hierarchy. The Fund does not adjust the quoted prices for United States Treasury Obligations and commodity futures contracts. ### (d) Deposits with Broker The Fund deposits cash and United States Treasury Obligations with its Commodity Broker subject to CFTC regulations and various exchange and broker requirements. The combination of the Fund’s deposits with its Commodity Broker of cash and United States Treasury Obligations and the unrealized profit or loss on open futures contracts (variation margin) represents the Fund’s overall equity in its broker trading account. To meet the Fund’s initial margin requirements, the Fund holds United States Treasury Obligations. The Fund uses its cash held by the Commodity Broker to satisfy variation margin requirements. The Fund earns interest on its cash deposited with the Commodity Broker. ### (e) United States Treasury Obligations The Fund records purchases and sales of United States Treasury Obligations on a trade date basis. These holdings are marked to market based on quoted market closing prices. The Fund holds United States Treasury Obligations for deposit with the Fund’s Commodity Broker to meet margin requirements and for trading purposes. Interest income is recognized on an accrual basis when earned. Premiums and discounts are amortized or accreted over the life of the United States Treasury Obligations. Included in the United States Treasury Obligations as of December 31, 2012 and 2011 were holdings of $381,122,419 and $425,657,099, respectively, which were restricted and held as initial margin of the open futures contracts. ### (f) Cash Held by Broker The Fund’s arrangement with the Commodity Broker requires the Fund to meet its variation margin requirement related to the price movements, both positive and negative, on futures contracts held by the Fund by keeping cash on deposit with the Commodity Broker. The Fund defines cash and cash equivalents held by the Commodity Broker to be highly liquid investments with original maturities of three months or less, when purchased. As of December 31, 2012, the Fund had $615,720,406 of cash held with the Commodity Broker, As of December 31, 2011, the Fund had cash held with the Commodity Broker of $542,289,641, of which $376,223,544 was on deposit to satisfy the Fund’s negative variation margin on open futures contracts. There were no cash equivalents held by the Fund as of December 31, 2012 and 2011. ### (g) Receivable/ (Payable) for LME Contracts The Fund trades aluminum, copper and zinc commodity future contracts on the London Metals Exchange (“LME”). For settlement of futures contracts traded on the LME, cash is not transferred until the settled futures contracts expire. As of December 31, 2012, the Fund had a payable to the LME of $2,559,519 related to net realized losses on LME contracts. As of December 31, 2011, the Fund had a payable to the LME of $17,231,831 related to net realized losses on LME contracts. Certain amounts reported in prior years have been reclassified to conform to the December 31, 2012 presentation. Net income and shareholders’ equity were not affected by these reclassifications. ### (h) Income Taxes The Fund is classified as a partnership for U.S. federal income tax purposes. Accordingly, the Fund will not incur U.S. federal income taxes. No provision for federal, state, and local income taxes has been made in the accompanying financial statements, as investors are individually liable for income taxes, if any, on their allocable share of the Fund’s income, gain, loss, deductions and other items. The major tax jurisdiction for the Fund and the earliest tax year subject to examination: United States 2009. ### (i) Futures Contracts All commodity futures contracts are held and used for trading purposes. The commodity futures are recorded on a trade date basis and open contracts are recorded in the statement of financial condition at fair value on the last business day of the period, which represents market value for those commodity futures for which market quotes are readily available. However, when market closing prices are not available, the Managing Owner may value an asset of the Fund pursuant to policies the Managing Owner has adopted, which are consistent with normal industry standards. Realized gains (losses) and changes in unrealized appreciation (depreciation) on open positions are determined on a specific identification basis and recognized in the statement of income and expenses in the period in which the contract is closed or the changes occur, respectively. As of December 31, 2012 and 2011, the futures contracts held by the Fund were in a net unrealized appreciation position of $73,453,658 and a net unrealized depreciation position of $376,223,544, respectively. ### (j) Management Fee The Fund pays the Managing Owner a management fee (the “Management Fee”), monthly in arrears, in an amount equal to 0.85% per annum of the daily net asset value of the Fund. The Management Fee is paid in consideration of the Managing Owner’s commodity futures trading advisory services. The Management Fee payable by the Fund was increased to 0.85% from 0.75% per annum of the daily net asset value of the Fund, effective January 4, 2010. ### (k) Brokerage Commissions and Fees The Fund incurs all brokerage commissions, including applicable exchange fees, National Futures Association (“NFA”) fees, give-up fees, pit brokerage fees and other transaction related fees and expenses charged in connection with trading activities by the Commodity Broker. These costs are recorded as brokerage commissions and fees in the statement of income and expenses as incurred. The Commodity Broker’s brokerage commissions and trading fees are determined on a contract-by-contract basis. On average, total charges paid to the Commodity Broker were less than $10.00 per round-turn trade for the Years Ended December 31, 2012, 2011 and 2010. ### (l) Routine Operational, Administrative and Other Ordinary Expenses The Managing Owner assumes all routine operational, administrative and other ordinary expenses of the Fund, including, but not limited to, computer services, the fees and expenses of the Trustee, legal and accounting fees and expenses, tax preparation expenses, filing fees and printing, mailing and duplication costs. Accordingly, all such expenses are not reflected in the statement of income and expenses of the Fund. ### (m) Organizational and Offering Costs All organizational and offering expenses of the Fund are incurred and assumed by the Managing Owner. The Fund is not responsible to the Managing Owner for the reimbursement of organizational and offering costs. Expenses incurred in connection with the continuous offering of Shares also will be paid by the Managing Owner. ### (n) Non-Recurring and Unusual Fees and Expenses The Fund pays all fees and expenses which are non-recurring and unusual in nature. Such expenses include legal claims and liabilities, litigation costs or indemnification or other unanticipated expenses. Such fees and expenses, by their nature, are unpredictable in terms of timing and amount. For the Years Ended December 31, 2012, 2011 and 2010, the Fund did not incur such expenses. ### (5) Fair Value Measurements The Fund’s assets and liabilities recorded at fair value have been categorized based upon the fair value hierarchy discussed in Note 4(c). Assets and Liabilities Measured at Fair Value were as follows: | | December 31, 2012 | December 31, 2011 | | --- | ---: | ---: | | United States Treasury Obligations (Level 1) | $5,925,630,311 | $5,311,719,979 | | Commodity Futures Contracts (Level 1) | $73,453,658 | $(376,223,544) | There were no Level 2 or Level 3 holdings during the years ended December 31, 2012 and 2011. ### (6) Financial Instrument Risk In the normal course of its business, the Fund is a party to financial instruments with off-balance sheet risk. The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in a future obligation or loss. The financial instruments used by the Fund are commodity futures, whose values are based upon an underlying asset and generally represent future commitments that have a reasonable possibility of being settled in cash or through physical delivery. The financial instruments are traded on an exchange and are standardized contracts. Market risk is the potential for changes in the value of the financial instruments traded by the Fund due to market changes, including fluctuations in commodity prices. In entering into these futures contracts, there exists a market risk that such futures contracts may be significantly influenced by adverse market conditions, resulting in such futures contracts being less valuable. If the markets should move against all of the futures contracts at the same time, the Fund could experience substantial losses. Credit risk is the possibility that a loss may occur due to the failure of an exchange clearinghouse to perform according to the terms of a futures contract. Credit risk with respect to exchange-traded instruments is reduced to the extent that an exchange or clearing organization acts as a counterparty to the transactions. The Fund’s risk of loss in the event of counterparty default is typically limited to the amounts recognized in the statement of financial condition and not represented by the futures contract or notional amounts of the instruments. The Fund has not utilized, nor does it expect to utilize in the future, special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind, other than agreements entered into in the normal course of business noted above. ### (7) Share Purchases and Redemptions ### (a) Purchases Shares may be purchased from the Fund only by Authorized Participants in one or more blocks of 200,000 Shares, called a Basket. The Fund issues Shares in Baskets only to Authorized Participants continuously as of noon, Eastern Standard Time, on the business day immediately following the date on which a valid order to create a Basket is accepted by the Fund, at the net asset value of 200,000 Shares as of the closing time of the NYSE Arca or the last to close of the exchanges on which the Fund’s assets are traded, whichever is later, on the date that a valid order to create a Basket is accepted by the Fund. ### (b) Redemptions On any business day, an Authorized Participant may place an order with the Managing Owner to redeem one or more Baskets. Redemption orders must be placed by 10:00 a.m., Eastern Standard Time. The day on which the Managing Owner receives a valid redemption order is the redemption order date. Redemption orders are irrevocable. The redemption procedures allow Authorized Participants to redeem Baskets. Individual shareholders may not redeem directly from the Fund. By placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through The Depository Trust Company’s (the “DTC”) book-entry system to the Fund not later than noon, Eastern Standard Time, on the business day immediately following the redemption order date. By placing a redemption order, and prior to receipt of the redemption proceeds, an Authorized Participant’s DTC account is charged the non-refundable transaction fee due for the redemption order. The redemption proceeds from the Fund consist of the cash redemption amount. The cash redemption amount is equal to the net asset value of the number of Basket(s) requested in the Authorized Participant’s redemption order as of the closing time of the NYSE Arca or the last to close of the exchanges on which the Fund’s assets are traded, whichever is later, on the redemption order date. The Fund will distribute the cash redemption amount at noon, Eastern Standard Time, on the business day immediately following the redemption order date through DTC to the account of the Authorized Participant as recorded on DTC’s book-entry system. The redemption proceeds due from the Fund are delivered to the Authorized Participant at noon, Eastern Standard Time, on the business day immediately following the redemption order date if, by such time on such business day immediately following the redemption order date, the Fund’s DTC account has been credited with the Baskets to be redeemed. If the Fund’s DTC account has not been credited with all of the Baskets to be redeemed by such time, the redemption proceeds are delivered to the extent of whole Baskets received. Any remainder of the redemption proceeds are delivered on the next business day to the extent of remaining whole Baskets received if the Managing Owner receives the fee applicable to the extension of the redemption distribution date which the Managing Owner may, from time-to-time, determine and the remaining Baskets to be redeemed are credited to the Fund’s DTC account by noon, Eastern Standard Time, on such next business day. Any further outstanding amount of the redemption order will be canceled. The Managing Owner is also authorized to deliver the redemption proceeds notwithstanding that the Baskets to be redeemed are not credited to the Fund’s DTC account by noon, Eastern Standard Time, on the business day immediately following the redemption order date if the Authorized Participant has collateralized its obligation to deliver the Baskets through DTC’s book-entry system on such terms as the Managing Owner may from time-to-time agree upon. ### (c) Share Transactions | December 31, 2012 | Shares Year Ended | Shareholders’ Equity Year Ended December 31, 2012 | Shares Year Ended December 31, 2011 | Shareholders’ Equity Year Ended December 31, 2011 | Shares Year Ended December 31, 2010 | Shareholders’ Equity Year Ended December 31, 2010 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | | Shares Sold | 62,600,000 | $1,748,800,266 | 58,800,000 | $1,714,838,522 | 45,600,000 | $1,086,574,324 | | Shares Redeemed | (28,000,000) | (750,772,676) | (40,200,000) | (1,121,135,254) | (38,400,000) | (875,040,222) | | Net Increase | 34,600,000 | $998,027,590 | 18,600,000 | $593,703,268 | 7,200,000 | $211,534,102 | ### (8) Profit and Loss Allocations and Distributions Pursuant to the Trust Agreement, income and expenses are allocated *pro rata* to the Managing Owner as holder of the General Shares and to the Shareholders monthly based on their respective percentage interests as of the close of the last trading day of the preceding month. Any losses allocated to the Managing Owner (as the owner of the General Shares) which are in excess of the Managing Owner’s capital balance are allocated to the Shareholders in accordance with their respective interest in the Fund as a percentage of total shareholders’ equity. Distributions (other than redemption of units) may be made at the sole discretion of the Managing Owner on a *pro rata* basis in accordance with the respective capital balances of the shareholders. No distributions were paid for the Years Ended December 31, 2012, 2011 or 2010. ### (9) Commitments and Contingencies The Managing Owner, either in its own capacity or in its capacity as the Managing Owner and on behalf of the Fund, has entered into various service agreements that contain a variety of representations, or provide indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Fund. As of December 31, 2012 and 2011 no claims had been received by the Fund and it was therefore not possible to estimate the Fund’s potential future exposure under such indemnification provisions. ### (10) Net Asset Value and Financial Highlights The Fund is presenting the following net asset value and financial highlights related to investment performance for a Share outstanding for the Years Ended December 31, 2012, 2011 and 2010. The net investment income and total expense ratios are calculated using average net asset value. The net asset value presentation is calculated using daily Shares outstanding. The total return is based on the change in net asset value of the Shares during the period. An individual investor’s return and ratios may vary based on the timing of capital transactions. Net asset value per Share is the net asset value of the Fund divided by the number of outstanding Shares. | Net Asset Value | Year Ended December 31, 2012 | December 31, 2011 | December 31, 2010 | | --- | ---: | ---: | ---: | | Net asset value per share, beginning of period | $26.83 | $27.57 | $24.65 | | Net realized and change in unrealized gain (loss) on United States Treasury Obligations and Futures | 1.11 | (0.51) | 3.10 | | Net investment income (loss) | (0.22) | (0.23) | (0.18) | | Net increase (decrease) | 0.89 | (0.74) | 2.92 | | Net asset value per Share, end of period | $27.72 | $26.83 | $27.57 | | Market value per Share, beginning of period | $26.84 | $27.55 | $24.62 | | Market value per Share, end of period | $27.78 | $26.84 | $27.55 | 55 | Ratio to average Net Assets | | | | | --- | ---: | ---: | ---: | | Net investment income (loss) | (0.81)% | (0.81)% | (0.76)% | | Total expenses | 0.87% | 0.87% | 0.88% | | Total Return, at net asset value | 3.32% | (2.68)% | 11.85% | | Total Return, at market value | 3.50% | (2.58)% | 11.90% | ### (11) Subsequent Events The Fund evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments. ## Risk factors As filed, 46,126 characters. *An investment in the securities of the Fund involves a high degree of risk. Investors should consider carefully all of the risks described below, together with the other information contained in this report and the Prospectus, before making a decision to invest in the securities of the Fund. If any of the following risks occur, the business, financial condition and results of operations of the Fund may be adversely affected.* ### Investment and Trading Related Risks ***The Value of the Shares Relates Directly to the Value of the Commodity Futures Contracts and Other Assets Held by the Fund and Fluctuations in the Price of These Assets Could Materially Adversely Affect an Investment in the Shares.*** The Shares are designed to reflect as closely as possible the changes, positive or negative, in the level of the Index, over time, through the Fund’s portfolio of exchange-traded futures contracts on the Index Commodities. The value of the Shares relates directly to the value of the portfolio, less the liabilities (including estimated accrued but unpaid expenses) of the Fund. The price of the Index Commodities may fluctuate widely. Several factors may affect the prices of the Index Commodities, including, but not limited to: - Global supply and demand of each of the Index Commodities, which may be influenced by such factors as forward selling by the various commodities producers, purchases made by the commodities’ producers to unwind their hedge positions and production and cost levels in the major markets of each of the Index Commodities; - Domestic and foreign interest rates and investors’ expectations concerning interest rates; - Domestic and foreign inflation rates and investors’ expectations concerning inflation rates; - Investment and trading activities of mutual funds, hedge funds and commodity funds; and - Global or regional political, economic or financial events and situations. ***Net Asset Value May Not Always Correspond to Market Price and, as a Result, Baskets May be Created or Redeemed at a Value that Differs from the Market Price of the Shares.*** The net asset value per Share will change as fluctuations occur in the market value of the Fund’s portfolio. Investors should be aware that the public trading price of a Basket may be different from the net asset value of a Basket (i.e., 200,000 Shares may trade at a premium over, or a discount to, net asset value of a Basket) and similarly the public trading price per Share may be different from the net asset value per Share. Consequently, an Authorized Participant may be able to create or redeem a Basket at a discount or a premium to the public trading price per Share. This price difference may be due, in large part, to the fact that supply and demand forces at work in the secondary trading market for Shares are closely related, but not identical to, the same forces influencing the prices of the Index Commodities trading individually or in the aggregate at any point in time. Investors also should note that the size of the Fund in terms of total assets held may change substantially over time and from time-to-time as Baskets are created and redeemed. Authorized Participants or their clients or customers may have an opportunity to realize a riskless profit if they can purchase a Basket at a discount to the public trading price of the Shares or can redeem a Basket at a premium over the public trading price of the Shares. The Managing Owner expects that the exploitation of such arbitrage opportunities by Authorized Participants and their clients and customers will tend to cause the public trading price to track net asset value per Share closely over time. The value of a Share may be influenced by non-concurrent trading hours between the NYSE Arca and the various futures exchanges on which the Index Commodities are traded. While the Shares trade on the NYSE Arca from 9:30 a.m. to 4:00 p.m. Eastern Standard Time, the below table lists the trading hours for each of the Index Commodities which trade on the futures exchange set forth in the table: | Index Commodity | Exchange1 | Trading Hours2 | | --- | --- | --- | | Corn Soybeans Wheat | CBOT | 10:30 am – 2:00 pm | | Sugar #11 | ICE US | 2:30 am – 2:00 pm | | Aluminum | LME | 6:55 am – 7:00 am 7:55 am – 8:00 am 8:20 am – 9:45 am 10:15 am – 10:20 am 10:55 am – 11:00 am 11:15 am – 12:00 pm | | Copper – Grade A | LME | 7:00 am – 7:05 am 7:30 am – 7:35 am 8:20 am – 9:45 am 10:10 am – 10:15 am 10:50 am – 10:55 am 11:15 am – 11:55 am | | Zinc | LME | 7:10 am – 7:15 am 7:50 am – 7:55 am 8:20 am – 9:45 am 10:05 am – 10:10 am 10:45 am – 10:50 am 11:15 am – 11:50 am | | Light Sweet Crude Oil (WTI) Heating Oil Natural Gas RBOB | NYMEX | 9:00 am – 2:30 pm | | Brent Crude Oil | ICE EUR | 8:00 pm – 6:00 pm3 | | Silver | COMEX | 8:25 am – 1:25 pm | | Gold | COMEX | 8:20 am – 1:30 pm | Legend: 1 “CBOT” means the Board of Trade of the City of Chicago Inc., or its successor. “ICE US” means ICE Futures U.S., Inc. or its successor (formerly traded on NYBOT, or Board of Trade of the City of New York, Inc. or its successor.) “LME” means The London Metal Exchange Limited or its successor. “NYMEX” means the New York Mercantile Exchange or its successor. “ICE EUR” means ICE Futures Europe, or its successor. “COMEX” means the Commodity Exchange Inc., New York or its successor. 2\. All trading hours are as of Eastern Standard Time. All trading occurs on Monday – Friday, unless otherwise specified. 3\. Trading occurs on Sunday – Friday and ends on the next day. For example, while the Shares trade on the NYSE Arca until 4:00 p.m. Eastern Standard Time, liquidity in the global gold market will be reduced after the close of the COMEX division of the New York Mercantile Exchange at 1:30 p.m. Eastern Standard Time. As a result, during periods when the NYSE Arca is open and the futures exchanges on which the Index Commodities are traded are closed, trading spreads and the resulting premium or discount on the Shares may widen and, therefore, increase the difference between the price of the Shares and the net asset value of the Shares. ***Regulatory and Exchange Position Limits and Other Rules May Restrict the Creation of Baskets and the Operation of the Fund.*** CFTC and commodity exchange rules impose speculative position limits on market participants, including the Fund, trading in certain commodities. These position limits prohibit any person from holding a position of more than a specific number of such futures contracts. In the aggregate, the Index is composed of 14 Index Commodities, of which 10 Index Commodities are subject to speculative position limits imposed by either the CFTC or the rules of the futures exchanges on which the futures contracts for the applicable Index Commodities are traded. The purposes of speculative position limits are to diminish, eliminate or prevent sudden or unreasonable fluctuations or unwarranted changes in the prices of futures contracts. Currently, speculative position limits (i) for corn, oats, wheat, soybean, soybean oil and cotton are determined by the CFTC and (ii) for all other commodities are determined by the futures exchanges. Pursuant to the statutory mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, which was signed into law on July 21, 2010, the CFTC adopted final regulations on October 18, 2011, or the Regulations, which, in pertinent part, impose new federal position limits on futures and options on a subset of energy, metal, and agricultural commodities, or the Referenced Contracts, and economically equivalent swaps. The Regulations were to go into effect 60 days after the term “swap” is further defined pursuant to Section 721 of the Dodd-Frank Act. However, on September 28, 2012, a federal court issued an order vacating the Regulations. At this time, it is not certain whether the CFTC will appeal the federal court’s order or propose new position limits rules identical to the Regulations but in conformity with procedural guidelines set forth in the federal court’s order. Generally, speculative position limits in the physical delivery markets are set at a stricter level during the spot month, the month when the futures contract matures and becomes deliverable, versus the limits set for all other months. If the Managing Owner determines that the Fund’s trading may be approaching any of these speculative position limits, the Fund may reduce its trading in that commodity or trade in other commodities or instruments that the Index Sponsor determines comply with the rules and goals of the Index. Below is a chart that sets forth certain relevant information, including current speculative position limits for each Affected Index Commodity that any person may hold, separately or in combination, net long or net short, for the purchase or sale of any commodity futures contract or, on a futures-equivalent basis, options thereon. Speculative position limit levels remain subject to change by the CFTC or the relevant exchanges. Exchanges may also establish accountability levels applicable to futures contracts. An exchange may order a person who holds or controls aggregate positions in excess of specified position accountability levels not to further increase the positions, to comply with any prospective limit which exceeds the size of the position owned or controlled, or to reduce any open position which exceeds position accountability levels if the exchange determines that such action is necessary to maintain an orderly market.Under current regulations, subject to any relevant exemptions, traders, such as the Fund, may not exceed speculative position limits, either individually or in the aggregate with other persons with whom they are under common control or ownership. Under the vacated Regulations, the CFTC would have required certain persons to aggregate exchange listed futures and economically equivalent swap positions owned or controlled by such persons. | Affected Index Commodity | Exchange (Symbol)1 | Exchange Position Limits2 | | --- | --- | --- | | Corn | CBOT (C) | 600 – Spot Month 33,000 – Single Month 33,000 – All Months Combined | | Soybeans | CBOT (S) | 600 – Spot Month 15,000 – Single Month 15,000 – All Months Combined | | Wheat | CBOT (W) | 600 – Spot Month 12,000 – Single Month 12,000 – All Months Combined | | Sugar #11 | ICE US (SB) | 5,000 – Spot Month | | Light Sweet Crude Oil | NYMEX (CL) | 3, 000 – Spot Month 10,000 – Single Month 20,000 – All Months Combined | | Heating Oil | NYMEX (HO) | 1,000 – Spot Month 5,000 – Single Month 7,000 – All Months Combined | | Natural Gas | NYMEX (NG) | 1,000 – Spot Month 6,000 – Single Month 12,000 – All Months Combined | | Silver | COMEX (SI) | 1,500 – Spot Month 6,000 – Single Month 6,000 – All Months Combined | | Gold | COMEX (GC) | 3,000 – Spot Month 6,000 – Single Month 6,000 – All Months Combined | | RBOB Gasoline | NYMEX (CL) | 1,000 – Spot Month 5,000 – Single Month 7,000 – All Months Combined | 9 Legend: 1 “CBOT” means the Board of Trade of the City of Chicago Inc., or its successor. “ICE US” means ICE Futures U.S., Inc. or its successor. “NYMEX” means the New York Mercantile Exchange or its successor. “COMEX” means the Commodity Exchange Inc., New York or its successor. 2 Subject to any additional limitations on an exchange-by-exchange basis, as applicable. Because the Fund may be subject to position limits and, consequently, the Fund’s ability to issue new Baskets, or the Fund’s ability to reinvest income in additional futures contracts corresponding to the Affected Index Commodities, may be limited to the extent these activities would cause the Fund to exceed its applicable position limits. Limiting the size of the Fund may affect the correlation between the price of the Shares, as traded on the NYSE Arca, and the net asset value of the Shares. That is, the inability to create additional Baskets could result in Shares trading at a premium or discount to net asset value of the Shares. Under the vacated Regulations, the CFTC among other things, established speculative position limits on exchange listed futures and options on physical commodities (including certain energy, metals and agricultural products) and economically equivalent over-the-counter derivatives. Under the vacated Regulations, the CFTC also established aggregate position limits for certain other contracts based on the same underlying commodity, including certain contracts traded on non-U.S. exchanges. Depending on the outcome of any future CFTC or futures exchange rulemaking, as applicable, the rules concerning position limits may be amended in a manner that is detrimental to the Fund. For example, if the amended rules are detrimental to the Fund, its ability to issue new Baskets, or reinvest income in additional futures contracts corresponding to the Affected Index Commodities, may be limited to the extent these activities would cause the Fund to exceed the applicable position limits. Limiting the size of the Fund may affect the correlation between the price of the Shares, as traded on the NYSE Arca, and the net asset value of the Shares. That is, the inability to create additional Baskets could result in Shares in the Fund trading at a premium or discount to net asset value of the Shares. ***The Fund’s Performance May Not Always Replicate Exactly the Changes in the Levels of its Index.*** It is possible that the Fund’s performance may not fully replicate the changes in levels of the Index due to disruptions in the markets for the relevant Index Commodities, the imposition of speculative position limits (as discussed in the above risk factor “Regulatory and Exchange Position Limits and Other Rules May Restrict the Creation of Baskets and the Operation of the Fund”), or due to other extraordinary circumstances. As the Fund approaches or reaches position limits with respect to certain futures contracts comprising the Index, the Fund may commence investing in other futures contracts based on commodities that comprise the Index and in futures contracts based on commodities other than commodities that comprise the Index that, in the commercially reasonable judgment of the Managing Owner, tend to exhibit trading prices that correlate with a futures contract that comprises the Index. In addition, the Fund is not able to replicate exactly the changes in levels of the Index because the total return generated by the Fund is reduced by expenses and transaction costs, including those incurred in connection with the Fund’s trading activities, and increased by interest income from the Fund’s holdings of short-term high credit quality fixed income securities. Tracking the Index requires trading of the Fund’s portfolio with a view to tracking the Index over time and is dependent upon the skills of the Managing Owner and its trading principals, among other factors. ***The Fund Is Not Actively Managed and Tracks the Index During Periods in Which the Index Is Flat or Declining as Well*** **as** ***When the Index Is Rising.*** The Fund is not actively managed by traditional methods. Therefore, if positions in any one or more of the Index Commodities are declining in value, the Fund will not close out such positions, except in connection with a change in the composition or weighting of the Index. The Managing Owner seeks to cause the net asset value to track the Index during periods in which the Index is flat or declining as well as when the Index is rising. ***The NYSE Arca May Halt Trading in the Shares Which Would Adversely Impact Your Ability to Sell Shares.*** The Shares are listed for trading on the NYSE Arca under the market symbol “DBC”. Trading in Shares may be halted due to market conditions or, in light of NYSE Arca rules and procedures, for reasons that, in the view of the NYSE Arca, make trading in Shares inadvisable. In addition, trading is subject to trading halts caused by extraordinary market volatility pursuant to “circuit breaker” rules that require trading to be halted for a specified period based on a specified market decline. There can be no assurance that the requirements necessary to maintain the listing of the Shares will continue to be met or will remain unchanged. The Fund will be terminated if the Shares are delisted. ***The Lack of An Active Trading Market for the Shares May Result in Losses on Your Investment at the Time of Disposition of Your Shares.*** Although the Shares are listed and traded on the NYSE Arca, there can be no guarantee that an active trading market for the Shares will be maintained. If you need to sell your Shares at a time when no active market for them exists, the price you receive for your Shares, assuming that you are able to sell them, likely will be lower than the price you would receive if an active market did exist. ***The Shares Are a Relatively New Securities Product and Their Value Could Decrease if Unanticipated Operational or Trading Problems Arise.*** The mechanisms and procedures governing the creation, redemption and offering of the Shares have been developed specifically for this securities product. Consequently, there may be unanticipated problems or issues with respect to the mechanics of the operations of the Fund and the trading of the Shares that could have a material adverse effect on an investment in the Shares. In addition, although the Fund is not actively “managed” by traditional methods, to the extent that unanticipated operational or trading problems or issues arise, the Managing Owner’s past experience and qualifications may not be suitable for solving these problems or issues. ***As the Managing Owner and its Principals have Been Operating Investment Vehicles like the Fund Since January 2006, their Experience May be Inadequate or Unsuitable to Manage the Fund.*** The Managing Owner was formed to be the managing owner of investment vehicles such as the Fund and has been managing such investment vehicles since January 2006. The past performances of the Managing Owner’s management of other commodity pools are no indication of its ability to manage an investment vehicle such as the Fund. If the experience of the Managing Owner and its principals is not adequate or suitable to manage an investment vehicle such as the Fund, the operations of the Fund may be adversely affected. ***You May Not Rely on Past Performance or Index Results in Deciding Whether to Buy Shares.*** Although past performance is not necessarily indicative of future results, the Fund’s performance history might (or might not) provide you with more information on which to evaluate an investment in the Fund. Likewise, the Index has a history which might (or might not) be indicative of the future Index results, or of the future performance of the Fund. Therefore, you will have to make your decision to invest in the Fund without relying on the Fund’s past performance history or the Index’s closing level history. ### Fewer Representative Commodities May Result In Greater Index Volatility. The Index Commodities are Light Sweet Crude Oil (WTI), Heating Oil, RBOB Gasoline, Natural Gas, Brent Crude, Gold, Silver, Aluminum, Zinc, Copper Grade A, Corn, Wheat, Soybeans, and Sugar. Accordingly, the Index is concentrated in terms of the number of commodities represented. You should be aware that other commodities indexes are more diversified in terms of both the number and variety of commodities included. Concentration in fewer commodities may result in a greater degree of volatility in the Index and the net asset value of the Fund which track the Index under specific market conditions and over time. ### Price Volatility May Possibly Cause the Total Loss of Your Investment. Futures contracts have a high degree of price variability and are subject to occasional rapid and substantial changes. Consequently, you could lose all or substantially all of your investment in the Fund. The following table\* reflects various measures of volatility\*\* of the Index as calculated on an excess return basis: | Volatility Type | Volatility | | --- | ---: | | Daily volatility over full history | 16.04% | | Average rolling 3 month daily volatility | 15.26% | | Monthly return volatility | 18.98% | | Average annual volatility | 15.20% | 11 The following table reflects the daily volatility on an annual basis of the Index: | Year\*\*\* | Daily Volatility | | --- | ---: | | 1997 | 8.07% | | 1998 | 11.88% | | 1999 | 12.78% | | 2000 | 14.74% | | 2001 | 13.40% | | 2002 | 12.37% | | 2003 | 13.74% | | 2004 | 15.93% | | 2005 | 14.71% | | 2006 | 16.30% | | 2007 | 13.96% | | 2008 | 28.39% | | 2009 | 22.08% | | 2010 | 15.50% | | 2011 | 17.04% | | 2012 | 12.28% | \* As of December 31, 2012. Past Index levels are not necessarily indicative of future changes, positive or negative, in the Index level. \*\* Volatility, for these purposes, means the following: Daily Volatility: The relative rate at which the price of the Index moves up and down, found by calculating the annualized standard deviation of the daily change in price. Monthly Return Volatility: The relative rate at which the price of the Index moves up and down, found by calculating the annualized standard deviation of the monthly change in price. Average Annual Volatility: The average of yearly volatilities for a given sample period. The yearly volatility is the relative rate at which the price of the Index moves up and down, found by calculating the annualized standard deviation of the daily change in price for each business day in the given year. \*\*\* As of December 31, except 1997 which is as of September 3. Past Index results are not necessarily indicative of future changes, positive or negative, in the Index levels. ***Fees and Commissions are Charged Regardless of Profitability and May Result in Depletion of Assets.*** The Fund is directly subject to the fees and expenses described herein which are payable irrespective of profitability. Such fees and expenses include asset-based fees of 0.85% per annum. Additional charges include brokerage fees of approximately 0.08% per annum in the aggregate and selling commissions. The Fund is expected to earn interest income at an annual rate of 0.07% per annum, based upon the yield on 3-month U.S. Treasury bills as of January 31, 2013. Because the Fund’s current interest income does not exceed its fees and expenses (other than selling commissions), the Fund will need to have a positive performance that exceeds the difference between the Fund’s interest income and its fees and expenses (other than selling commissions) in order to break even. If the aggregate of the Fund’s performance and interest income do not exceed the Fund’s fees and expenses described herein, then, the expenses of the Fund could, over time, result in losses to your investment therein. You may never achieve profits, significant or otherwise. ***You Cannot Be Assured of the Managing Owner’s Continued Services, Which Discontinuance May Be Detrimental to the Fund.*** You cannot be assured that the Managing Owner will be willing or able to continue to service the Fund for any length of time. If the Managing Owner discontinues its activities on behalf of the Fund, the Fund may be adversely affected. ### Possible Illiquid Markets May Exacerbate Losses. Futures positions cannot always be liquidated at the desired price. It is difficult to execute a trade at a specific price when there is a relatively small volume of buy and sell orders in a market. A market disruption, such as when foreign governments may take or be subject to political actions which disrupt the markets in their currency or major exports, can also make it difficult to liquidate a position. There can be no assurance that market illiquidity will not cause losses for the Fund. The large size of the positions which the Fund may acquire increases the risk of illiquidity by both making its positions more difficult to liquidate and increasing the losses incurred while trying to do so. ***You May Be Adversely Affected by Redemption Orders that Are Subject To Postponement, Suspension or Rejection Under Certain Circumstances.*** The Fund may, in its discretion, suspend the right of redemption or postpone the redemption settlement date, (1) for any period during which an emergency exists as a result of which the redemption distribution is not reasonably practicable, or (2) for such other period as the Managing Owner determines to be necessary for the protection of the Shareholders. In addition, the Fund will reject a redemption order if the order is not in proper form as described in the participant agreement among the Authorized Participant, the Managing Owner and the Managing Owner in its capacity as managing owner of the Fund or if the fulfillment of the order, in the opinion of its counsel, might be unlawful. Any such postponement, suspension or rejection could adversely affect a redeeming Authorized Participant. For example, the resulting delay may adversely affect the value of the Authorized Participant’s redemption proceeds if the net asset value of the Fund declines during the period of delay. The Fund disclaims any liability for any loss or damage that may result from any such suspension or postponement. ***Because the Futures Contracts Have No Intrinsic Value, the Positive Performance of Your Investment Is Wholly Dependent Upon an Equal and Offsetting Loss.*** Futures trading is a risk transfer economic activity. For every gain there is an equal and offsetting loss rather than an opportunity to participate over time in general economic growth. Unlike most alternative investments, an investment in Shares does not involve acquiring any asset with intrinsic value. Overall stock and bond prices could rise significantly and the economy as a whole prosper while Shares trade unprofitably. ***Failure of Commodity Futures Markets to Exhibit Low to Negative Correlation to General Financial Markets Will Reduce Benefits of Diversification and May Exacerbate Losses to Your Portfolio.*** Historically, commodity futures’ returns have tended to exhibit low to negative correlation with the returns of other assets such as stocks and bonds. Although commodity futures trading can provide a diversification benefit to investor portfolios because of its low to negative correlation with other financial assets, the fact that the Index is not 100% negatively correlated with financial assets such as stocks and bonds means the Fund cannot be expected to be automatically profitable during unfavorable periods for the stock or bond market, or vice versa. If the Shares perform in a manner that correlates with the general financial markets or do not perform successfully, you will obtain no diversification benefits by investing in the Shares and the Shares may produce no gains to offset your losses from other investments. ***Shareholders Do Not Have the Protections Associated With Ownership of Shares in an Investment Company Registered Under the Investment Company Act of 1940.*** The Fund is not registered as an investment company under the Investment Company Act of 1940 and is not required to register under such Act. Consequently, Shareholders do not have the regulatory protections provided to investors in registered and regulated investment companies. ***Trading on Commodity Exchanges Outside the United States is Not Subject to U.S. Regulation.*** Some of the Fund’s trading is expected to be conducted on commodity exchanges outside the United States. Trading on such exchanges is not regulated by any United States governmental agency and may involve certain risks not applicable to trading on United States exchanges, including different or diminished investor protections. In trading contracts denominated in currencies other than U.S. dollars, Shares are subject to the risk of adverse exchange-rate movements between the dollar and the functional currencies of such contracts. Investors could incur substantial losses from trading on foreign exchanges which such Investors would not have otherwise been subject had the Fund’s trading been limited to U.S. markets. Aluminum, Zinc, Copper Grade A and Brent Crude are the only Index Commodities that are currently traded on foreign exchanges and such contracts are denominated in USD. The Managing Owner estimates that approximately 25% of the Fund’s assets will be allocated for investment in Aluminum, Zinc, Copper Grade A and Brent Crude. The above range is only an approximation. The actual percentage may be either lesser or greater than above-listed. ***Various Actual and Potential Conflicts of Interest May Be Detrimental to Shareholders.*** The Fund is subject to actual and potential conflicts of interest involving the Managing Owner, various commodity futures brokers and Authorized Participants. The Managing Owner and its principals, all of whom are engaged in other investment activities, are not required to devote substantially all of their time to the business of the Fund, which also presents the potential for numerous conflicts of interest with the Fund. As a result of these and other relationships, parties involved with the Fund have a financial incentive to act in a manner other than in the best interests of the Fund and the Shareholders. The Managing Owner has not established any formal procedure to resolve conflicts of interest. Consequently, investors are dependent on the good faith of the respective parties subject to such conflicts to resolve them equitably. Although the Managing Owner attempts to monitor these conflicts, it is extremely difficult, if not impossible, for the Managing Owner to ensure that these conflicts do not, in fact, result in adverse consequences to the Shareholders. The Fund may be subject to certain conflicts with respect to the Commodity Broker, including, but not limited to, conflicts that result from receiving greater amounts of compensation from other clients, or purchasing opposite or competing positions on behalf of third party accounts traded through the Commodity Broker. ### Tax Related Risks ***Shareholders Will Be Subject to Taxation on Their Allocable Share of the Fund’s Taxable Income, Whether or Not They Receive Cash Distributions.*** Shareholders will be subject to U.S. federal income taxation and, in some cases, state, local, or foreign income taxation on their allocable share of the Fund’s taxable income, whether or not they receive cash distributions from the Fund. Shareholders may not receive cash distributions equal to their share of the Fund’s taxable income or even the tax liability that results from such income. ***Items of Income, Gain, Loss and Deduction With Respect to Shares could be Reallocated if the IRS does not Accept the Assumptions or Conventions Used by the Fund in Allocating Such Items.*** U.S. federal income tax rules applicable to partnerships are complex and often difficult to apply to publicly traded partnerships. The Fund will apply certain assumptions and conventions in an attempt to comply with applicable rules and to report items of income, gain, loss and deduction to Shareholders in a manner that reflects the Shareholders’ beneficial interest in such tax items, but these assumptions and conventions may not be in compliance with all aspects of the applicable tax requirements. It is possible that the IRS will successfully assert that the conventions and assumptions used by the Fund do not satisfy the technical requirements of the Code and/or Treasury Regulations and could require that items of income, gain, loss and deduction be adjusted or reallocated in a manner that adversely affects one or more Shareholders. ***The Current Treatment of Long-Term Capital Gains Under Current U.S. Federal Income Tax Law May Be Adversely Affected, Changed or Repealed in the Future.*** Under current law, long-term capital gains are taxed to non-corporate investors at reduced U.S. federal income tax rates. This tax treatment may be adversely affected, changed or repealed by future changes in, or the expiration of, tax laws at any time. **PROSPECTIVE INVESTORS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISERS AND COUNSEL WITH RESPECT TO THE POSSIBLE TAX CONSEQUENCES TO THEM OF AN INVESTMENT IN THE SHARES; SUCH TAX CONSEQUENCES MAY DIFFER WITH RESPECT TO DIFFERENT INVESTORS.** ### Other Risks ***Failure of Futures Commission Merchants or Commodity Brokers to Segregate Assets May Increase Losses; Despite Segregation of Assets, the Fund Remains at Risk of Significant Losses Because the Fund May Only Receive a Pro-Rata Share of the Assets, or No Assets at All.*** The CEAct requires a clearing broker to segregate all funds received from customers from such broker’s proprietary assets. If the Commodity Broker fails to do so, the assets of the Fund might not be fully protected in the event of the Commodity Broker’s bankruptcy. Furthermore, in the event of the Commodity Broker’s bankruptcy, the Shares could be limited to recovering either a pro rata share of all available funds segregated on behalf of the Commodity Broker’s combined customer accounts or the Shares may not recover any assets at all, even though certain property specifically traceable to the Fund was held by the Commodity Broker. The Commodity Broker may, from time-to-time, have been the subject of certain regulatory and private causes of action. In the event of a bankruptcy or insolvency of any exchange or a clearing house, the Fund could experience a loss of the funds deposited through its Commodity Broker as margin with the exchange or clearing house, a loss of any unrealized profits on its open positions on the exchange, and the loss of profits on its closed positions on the exchange. ***The Effect of Market Disruptions and Government Intervention Are Unpredictable and May Have an Adverse Effect on the Value of Your Shares.*** The global financial markets have in the past few years gone through pervasive and fundamental disruptions that have led to extensive and unprecedented governmental intervention. Such intervention has in certain cases been implemented on an “emergency” basis, suddenly and substantially eliminating market participants’ ability to continue to implement certain strategies or manage the risk of their outstanding positions. In addition—as one would expect given the complexities of the financial markets and the limited time frame within which governments have felt compelled to take action—these interventions have typically been unclear in scope and application, resulting in confusion and uncertainty which in itself has been materially detrimental to the efficient functioning of the markets as well as previously successful investment strategies. The Fund may incur major losses in the event of disrupted markets and other extraordinary events in which historical pricing relationships become materially distorted. The risk of loss from pricing distortions is compounded by the fact that in disrupted markets many positions become illiquid, making it difficult or impossible to close out positions against which the markets are moving. The financing available to market participants from their banks, dealers and other counterparties is typically reduced in disrupted markets. Such a reduction may result in substantial losses to the affected market participants. Market disruptions may from time to time cause dramatic losses, and such events can result in otherwise historically low-risk strategies performing with unprecedented volatility and risk. ***Regulatory Changes or Actions, Including the Implementation of the Dodd-Frank Act, May Alter the Operations and Profitability of the Fund.*** The regulation of commodity interest transactions in the United States is a rapidly changing area of law and is subject to ongoing modification by governmental and judicial action. Considerable regulatory attention has been focused on non-traditional investment pools that are publicly distributed in the United States. The Dodd-Frank Act seeks to regulate markets, market participants and financial instruments that previously have been unregulated and substantially alters the regulation of many other markets, market participants and financial instruments. Because many provisions of the Dodd-Frank Act require rulemaking by the applicable regulators before becoming fully effective and the Dodd-Frank Act mandates multiple agency reports and studies (which could result in additional legislative or regulatory action), it is difficult to predict the impact of the Dodd-Frank Act on the Fund, the Managing Owner, and the markets in which the Fund may invest, the Net Asset Value of the Fund or the market price of the Shares. The Dodd-Frank Act could result in the Fund’s investment strategy becoming non-viable or non-economic to implement. Therefore, the Dodd-Frank Act and regulations adopted pursuant to the Dodd-Frank Act could have a material adverse impact on the profit potential of the Fund and in turn the value of your Shares. ### Lack of Independent Advisers Representing Investors. The Managing Owner has consulted with counsel, accountants and other advisers regarding the formation and operation of the Fund. No counsel has been appointed to represent you in connection with the offering of the Shares. Accordingly, you should consult your own legal, tax and financial advisers regarding the desirability of an investment in the Shares. ### Possibility of Termination of the Fund May Adversely Affect Your Portfolio. The Managing Owner may withdraw from the Fund upon 120 days’ notice, which would cause the Fund to terminate unless a substitute managing owner were obtained. Owners of 50% of the Shares have the power to terminate the Fund. If it is so exercised, investors who may wish to continue to invest in the Index through the vehicle of the Fund will have to find another vehicle, and may not be able to find another vehicle that offers the same features as the Fund. Such detrimental developments could cause you to liquidate your investments and upset the overall maturity and timing of your investment portfolio. If the registrations with the CFTC or memberships in the NFA of the Managing Owner or the Commodity Broker were revoked or suspended, such entity would no longer be able to provide services to the Fund. ***Shareholders Do Not Have the Rights Enjoyed by Investors in Certain Other Vehicles.*** As interests in an investment trust, the Shares have none of the statutory rights normally associated with the ownership of shares of a corporation (including, for example, the right to bring “oppression” or “derivative” actions). In addition, the Shares have limited voting and distribution rights (for example, Shareholders do not have the right to elect directors and the Fund is not required to pay regular distributions, although the Fund may pay distributions in the discretion of the Managing Owner). ***An Investment in the Shares May Be Adversely Affected by Competition From Other Methods of Investing in Commodities.*** The Fund is a relatively new type of investment vehicle. They compete with other financial vehicles, including other commodity pools, hedge funds, traditional debt and equity securities issued by companies in the commodities industry, other securities backed by or linked to such commodities, and direct investments in the underlying commodities or commodity futures contracts. Market and financial conditions, and other conditions beyond the Managing Owner’s control, may make it more attractive to invest in other financial vehicles or to invest in such commodities directly, which could limit the market for the Shares and reduce the liquidity of the Shares. ***Competing Claims Over Ownership of Intellectual Property Rights Related to the Fund Could Adversely Affect the Fund and an Investment in the Shares.*** While the Managing Owner believes that all intellectual property rights needed to operate the Fund are either owned by or licensed to the Managing Owner or have been obtained, third parties may allege or assert ownership of intellectual property rights which may be related to the design, structure and operations of the Fund. To the extent any claims of such ownership are brought or any proceedings are instituted to assert such claims, the negotiation, litigation or settlement of such claims, or the ultimate disposition of such claims in a court of law if a suit is brought, may adversely affect the Fund and an investment in the Shares, for example, resulting in expenses or damages or the termination of the Fund. ***“Backwardation” or “Contango” in the Market Prices of the Index Commodities Will Affect the Value of Your Shares.*** As the futures contracts that underlie the Index near expiration, they are replaced by contracts that have a later expiration. Thus, for example, a contract purchased and held in August 2013 may specify an October 2013 expiration. As that contract nears expiration, it may be replaced by selling the October 2013 contract and purchasing the contract expiring in December 2013. This process is referred to as “rolling.” Historically, the prices of Light Sweet Crude Oil and Heating Oil have frequently been higher for contracts with shorter-term expirations than for contracts with longer-term expirations, which is referred to as “backwardation.” In these circumstances, absent other factors, the sale of the October 2013 contract would take place at a price that is higher than the price at which the December 2013 contract is purchased, thereby creating a gain in connection with rolling. While Light Sweet Crude Oil and Heating Oil have historically exhibited consistent periods of backwardation, backwardation will likely not exist in these markets at all times. The absence of backwardation in Light Sweet Crude Oil and Heating Oil will adversely affect the value of the Index and, accordingly, decrease the value of your Shares. Conversely, certain of the Index Commodities historically exhibit “contango” markets rather than backwardation. Contango markets are those in which the prices of contracts are higher in the distant delivery months than in the nearer delivery months due to the costs of long-term storage of a physical commodity prior to delivery or other factors. Although certain of the Index Commodities may have historically exhibited consistent periods of contango, contango will likely not exist in these markets at all times. Contango in certain of the Index Commodities will adversely affect the value of the Index and, accordingly, decrease the value of the Shares. Although the roll method of the Index may minimize the roll losses due to contango and may maximize the roll benefits due to backwardation, there can be no assurance that this outcome will occur. ***The Value of the Shares Will be Adversely Affected if the Fund is Required to Indemnify the Trustee or the Managing Owner.*** Under the Trust Agreement, the Trustee and the Managing Owner have the right to be indemnified for any liability or expense either incurs without negligence or misconduct. That means the Managing Owner may require the assets of the Fund to be sold in order to cover losses or liability suffered by it or by the Trustee. Any sale of that kind would reduce the net asset value of the Fund and the value of the Shares. ***The Net Asset Value Calculation of the Fund May Be Overstated or Understated Due to the Valuation Method Employed When a Settlement Price is not Available on the Date of Net Asset Value Calculation.*** Calculating the net asset value of the Fund includes, in part, any unrealized profits or losses on open commodity futures contracts. Under normal circumstances, the net asset value of the Fund reflects the settlement price of open commodity futures contracts on the date when the net asset value is being calculated. However, if a commodity futures contract traded on an exchange (both U.S. and non-U.S. exchanges) could not be liquidated on such day (due to the operation of daily limits or other rules of the exchange upon which that position is traded or otherwise), the Managing Owner may value such futures contract pursuant to policies the Managing Owner has adopted, which are consistent with normal industry standards. In such a situation, there is a risk that the calculation of the net asset value of the Fund on such day will not accurately reflect the realizable market value of such commodity futures contract. For example, daily limits are generally triggered in the event of a significant change in market price of a commodity futures contract. Therefore, as a result of the daily limit, the current settlement price is unavailable. Because the Managing Owner may value such futures contract pursuant to policies the Managing Owner has adopted, which are consistent with normal industry standards, there is a risk that the resulting calculation of the net asset value of the Fund could be under or overstated, perhaps to a significant degree. ***Although the Shares are Limited Liability Investments, Certain Circumstances such as Bankruptcy of the Fund or Indemnification of the Fund by the Shareholders will Increase a Shareholder’s Liability.*** The Shares are limited liability investments; investors may not lose more than the amount that they invest plus any profits recognized on their investment. However, Shareholders could be required, as a matter of bankruptcy law, to return to the estate of the Fund any distribution they received at a time when the Fund was in fact insolvent or in violation of its Trust Agreement. In addition, although the Managing Owner is not aware of this provision ever having been invoked in the case of any public futures fund, Shareholders agree in the Trust Agreement that they will indemnify the Fund for any harm suffered by it as a result of - Shareholders’ actions unrelated to the business of the Fund, or - taxes imposed on the Shares by the states or municipalities in which such investors reside. ## Properties As filed, 334 characters. The Fund does not own or use physical properties in the conduct of its business. Its assets consist of futures contracts, cash, United States Treasury Obligations and may consist of other high credit quality short-term fixed income securities. The Managing Owner’s headquarters are located at 60 Wall Street, New York, New York 10005. ## Management's discussion and analysis As filed, 49,850 characters. *This information should be read in conjunction with the financial statements and notes included in Item 8 of Part II of this Annual Report (the “Report”). The discussion and analysis which follows may contain trend analysis and other forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 which reflect our current views with respect to future events and financial results. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “outlook” and “estimate,” as well as similar words and phrases, signify forward-looking statements. PowerShares DB Commodity Index Tracking Fund’s (the“Fund”) forward-looking statements are not guarantees of future results and conditions and important factors, risks and uncertainties may cause our actual results to differ materially from those expressed in our forward-looking statements.* *You should not place undue reliance on any forward-looking statements. Except as expressly required by the Federal securities laws, DB Commodity Services LLC (the “Managing Owner”), undertakes no obligation to publicly update or revise any forward-looking statements or the risks, uncertainties or other factors described in this Report, as a result of new information, future events or changed circumstances or for any other reason after the date of this Report.* #### Overview/Introduction Prior to the close of business on December 31, 2010, the Fund invested substantially all of its assets in the DB Commodity Index Tracking Master Fund (the “Master Fund”). After the determination of the net asset value of the Master Fund on December 31, 2010, the Master Fund transferred and distributed all of its assets and liabilities to the Fund and terminated. Effective January 1, 2011, the reorganized Fund has performed all of the necessary functions in order to continue normal Fund operations. The collapse of the master-feeder structure had no effect on the operations or processes of the Fund. All reference to historical results of the Fund include results of the Master Fund where the context requires. The Fund seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Diversified Commodity Index Excess ReturnTM (the “Index”) over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. The Index is intended to reflect the change in market value of certain commodities. The commodities comprising the Index are Light Sweet Crude Oil, Heating Oil, Aluminum, Gold, Corn, Wheat, Brent Crude, Copper Grade A, Natural Gas, RBOB Gasoline, Silver, Soybeans, Sugar and Zinc (the “Index Commodities”). From October 19, 2009 to December 31, 2010, the Fund invested with a view to tracking the changes, whether positive or negative, in the level of the Deutsche Bank Liquid Commodity Index-Optimum Yield Diversified Excess Return™ (the “Interim Index”) over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. After December 31, 2010, the Fund commenced tracking the Index. The Fund’s Interim Index is identical to the Index except with respect to the following non-substantive changes: (i) name of Index, and (ii) inception date of Index for Commodity Futures Trading Commission (the “CFTC”) purposes. Except as provided in the immediately preceding sentence, all prior underlying formulae, data (e.g., closing levels, measure of volatility, all other numerical statistics and measures) and all other characteristics (e.g., Base Date, Index Sponsor, rolling, etc.) with respect to the Interim Index is identical to the Index. The Index is intended to reflect the change in market value of certain commodities. The Fund pursues its investment objective by investing in a portfolio of exchange-traded futures contracts in the Index Commodities. The notional amounts of each Index Commodity included in the Index are broadly in proportion to historic levels of the world’s production and stocks of the Index Commodities. The Fund holds United States Treasury Obligations and other high credit quality short-term fixed income securities for deposit with the Fund’s Commodity Broker as margin. The CFTC and/or commodity exchanges, as applicable, impose position limits on market participants trading in certain commodities included in the Index. As disclosed in the Fund’s Prospectus, if the Managing Owner determines in its commercially reasonable judgment that it has become impracticable or inefficient for any reason for the Fund to gain full or partial exposure to any Index Commodity by investing in a specific Index Contract that is a part of the Index, the Fund may invest in a futures contract referencing the particular Index Commodity other than the Index Contract or, in the alternative, invest in other futures contracts not based on the particular Index Commodity if, in the commercially reasonable judgment of the Managing Owner, such futures contracts tend to exhibit trading prices that correlate with such Index Commodity. Because the Fund is approaching or has reached position limits with respect to certain futures contracts comprising the Index, the Fund has commenced investing in other futures contracts based on commodities that comprise the Fund’s Index and in futures contracts based on commodities other than commodities that comprise the Fund’s Index. Please see http://www.dbxus.com with respect to the most recently available weighted composition of the Fund and the composition of the Index on the Base Date. DBIQ™, DBLCI™ and Deutsche Bank Liquid Commodity Index™ are trademarks of Deutsche Bank AG London (the “Index Sponsor”). Trademark applications in the United States are pending with respect to both the Fund and the Index. The Fund and the Managing Owner have been licensed by the Index Sponsor to use the above noted trademarks. The Index Sponsor is an affiliate of the Fund and the Managing Owner. Under the Fourth Amended and Restated Declaration of Trust and Trust Agreement of the Fund (the “Trust Agreement”), Wilmington Trust Company, the Trustee of the Fund, has delegated to the Managing Owner the exclusive management and control of all aspects of the business of the Fund. The Trustee will have no duty or liability to supervise or monitor the performance of the Managing Owner, nor will the Trustee have any liability for the acts or omissions of the Managing Owner. The Index Sponsor obtains information for inclusion in, or for use in the calculation of, the Index from sources the Index Sponsor considers reliable. None of the Index Sponsor, the Managing Owner, the Fund or any of their respective affiliates accepts responsibility for or guarantees the accuracy and/or completeness of the Index or any data included in the Index. The Shares are intended to provide investment results that generally correspond to the changes, positive or negative, in the levels of the Index over time. The value of the Shares is expected to fluctuate in relation to changes in the value of the Fund’s portfolio. The market price of the Shares may not be identical to the net asset value per Share, but these two valuations are expected to be very close. #### Margin Calls Like other futures and derivatives traders, the Fund will be subject to margin calls from time-to-time. The term “margin” has a different meaning in the context of futures contracts and other derivatives than it does in the context of securities. In particular, “margin” on a futures position does not constitute a borrowing of money or the collateralization of a loan. The Fund does not borrow money. To establish a position in an exchange-traded futures contract, the Fund makes a deposit of “initial margin.” The amount of initial margin required to be deposited in order to establish a position in an exchange-traded futures contract varies from instrument to instrument depending, generally, on the historical volatility of the futures contract in question. Determination of the amount of the required initial margin deposit in respect of a particular contract is made by the exchange on which the contract is listed. To establish a long position in an over-the-counter instrument, the counterparty may require an analogous deposit of collateral, depending upon the anticipated volatility of the instrument and the creditworthiness of the person seeking to establish the position. The deposit of initial margin provides assurance to futures commission merchants and clearing brokers involved in the settlement process that sufficient resources are likely to be on deposit to enable a client’s position to be closed by recourse to the initial margin deposit should the client fail to meet a demand for variation margin, even if changes in the value of the contract in question, which are marked to market from day to day, continue to reflect the contract’s historical volatility. Collateral deposited in support of an over-the-counter instrument serves a similar purpose. Once a position has been established on a futures exchange, “variation margin” generally is credited or assessed at least daily to reflect changes in the value of the position. In contrast to “initial margin,” “variation margin” represents a system of marking to market the futures contract’s value. Thus, traders in exchange-traded futures contracts are assessed daily in an amount equal to that day’s accumulated losses in respect of any open position (or are credited daily with accumulated gains in respect of such position). Collateral may move between the parties to an over-the-counter instrument in a similar manner as gains or losses accumulate in the instrument. As with initial margin, variation margin serves to secure the obligations of the investor under the contract and to protect those involved in the settlement process against the possibility that a client will have insufficient resources to meet its contractual obligations. Collateral deposited in support of an over-the-counter instrument serves a similar purpose. Like initial margin (or an equivalent deposit of collateral), variation margin (or an equivalent deposit of collateral) does not constitute a borrowing of money, is not considered to be part of the contract purchase price and is returned upon the contract’s termination unless it is used to cover a loss in the contract position. United States Treasury Obligations are used routinely to collateralize OTC derivative positions, and are deposited routinely as margin to collateralize futures positions. The Fund may liquidate United States Treasury Obligations to meet an initial or variation margin requirement. #### Performance Summary This Report covers the three months ended December 31, 2012, 2011 and 2010 ((herein referred to as the “Three Months Ended December 31, 2012”, the “Three Months Ended December 31, 2011” and the “Three Months Ended December 31, 2010”, respectively), and the years ended December 31, 2012, 2011 and 2010 (herein referred to as the “Year Ended December 31, 2012”, the “Year Ended December 31, 2011” and the “Year Ended December 31, 2010”, respectively). Performance of the Fund and the exchange traded Shares are detailed below in “Results of Operations”. Past performance of the Fund is not necessarily indicative of future performance. The Index is intended to reflect the change in market value of the Index Commodities. In turn, the notional amounts of each Index Commodity are broadly in proportion to historic levels of the world’s production and stocks of such Index Commodities. The DBIQ Optimum Yield Diversified Commodity Index Total Return ™, (the “DBIQ-OY Diversified TR™”) and the Deutsche Bank Liquid Commodity Index Optimum Yield Diversified Total Return™ (the “DBLCI-OY TR™”) consists of the Index plus 3-month United States Treasury Obligations returns. Past Index results are not necessarily indicative of future changes, positive or negative, in the Index closing levels. The DBLCI–OY Diversified TR™ consists of the Index plus 3-month United States Treasury Obligations returns. Past Index results are not necessarily indicative of future changes, positive or negative, in the Index closing levels. The section “Summary of the DBIQ–OY TR™ and Underlying Index Commodity Returns for the Three Months Ended December 31, 2012 and 2011 and the Years Ended December 31, 2012 and 2011, and Summary of the DBLCI-OY TR™ and Underlying Index Commodity Returns for the Three Months Ended December 31, 2010 and the Year Ended December 31, 2010” below provides an overview of the changes in the closing levels of DBIQ–OY Diversified TR™ by disclosing the change in market value of each underlying component Index Commodity through a “surrogate” (and analogous) index plus 3-month United States Treasury Obligations returns. Please note also that the Fund’s objective is to track the Index (not the DBIQ-OY Diversified TR™ or the DBLCI-OY TR™), and the Fund does not attempt to outperform or underperform the Index. **Summary of the DBIQ-OY Diversified TR™ and Underlying Index Commodity Returns for the Three Months Ended December 31, 2012 and 2011 and the Years Ended December 31, 2012 and 2011, and Summary of the DBLCI-OY TR™ and Underlying Index Commodity Returns for the Three Months Ended December 31, 2010 and the Year Ended December 31, 2010** | Underlying Index Three Months Ended December 31, 2012 | AGGREGATE RETURNS Three Months Ended December 31, 2011 | Three Months Ended December 31, 2010 | | | --- | ---: | ---: | ---: | | DB Crude Oil Indices | -0.34% | 22.94% | 11.10% | | DB Heating Oil Indices | -1.68% | 7.01% | 10.37% | | DB Aluminum Indices | -2.63% | -6.51% | 4.23% | | DB Gold Indices | -5.61% | -3.53% | 8.45% | | DB Corn Indices | -7.75% | 5.82% | 20.10% | | DB Wheat Indices | -8.43% | 1.41% | 16.77% | | RBOB Gasoline Indices | -3.16% | 3.50% | 12.34% | | Natural Gas Indices | -6.42% | -22.33% | 2.73% | | Brent Crude Indices | 1.20% | 8.40% | 14.41% | | Silver Indices | -12.59% | -7.07% | 41.59% | | Zinc Indices | -3.36% | -1.82% | 10.63% | | Copper Grade A Indices | -3.38% | 8.01% | 20.02% | | Soybeans Indices | -5.50% | 0.57% | 19.19% | | Sugar Indices | -3.64% | -5.25% | 31.44% | | **AGGREGATE RETURNS** | -3.19% | 3.75% | 14.25% | | Underlying Index Year Ended December 31, 2012 | AGGREGATE RETURNS Year Ended December 31, 2011 | Year Ended December 31, 2010 | | | --- | ---: | ---: | ---: | | DB Crude Oil Indices | -8.09% | 2.02% | 3.34% | | DB Heating Oil Indices | 4.61% | 10.06% | 8.13% | | DB Aluminum Indices | -2.60% | -20.09% | 6.20% | | DB Gold Indices | 6.10% | 9.48% | 28.92% | | DB Corn Indices | 19.08% | 11.61% | 35.22% | | DB Wheat Indices | 1.66% | -31.47% | 16.01% | | RBOB Gasoline Indices | 9.03% | 9.96% | 9.92% | 22 | | | | | | --- | ---: | ---: | ---: | | Natural Gas Indices | -12.70% | -37.60% | (35.37)% | | Brent Crude Indices | 10.24% | 10.59% | 13.98% | | Silver Indices | 7.77% | -10.24% | 82.53% | | Zinc Indices | 7.37% | -26.87% | (7.41)% | | Copper Grade A Indices | 3.96% | -19.51% | 29.82% | | Soybeans Indices | 25.71% | -9.34% | 30.19% | | Sugar Indices | -18.06% | -10.47% | 1.29% | | **AGGREGATE RETURNS** | 4.16% | -2.39% | 11.93% | *If the Fund’s interest income from its holdings of fixed income securities were to exceed the Fund’s fees and expenses, the aggregate return on an investment in the Fund is expected to outperform the DBIQ–OY Diversified ER™ and underperform the DBIQ–OY Diversified TR™. The only difference between (i) the Index (the “Excess Return Index”) and (ii) the DBIQ-OY Diversified TR™ (the “Total Return Index”) is that the Excess Return Index does not include interest income from a hypothetical basket of fixed income securities while the Total Return Index does include such a component. Thus, the difference between the Excess Return Index and the Total Return Index is attributable entirely to the hypothetical interest income from this hypothetical basket of fixed income securities. If the Fund’s interest income from its holdings of fixed-income securities exceeds the Fund’s fees and expenses, then the amount of such excess is expected to be distributed periodically. The market price of the Shares is expected to closely track the Index. The aggregate return on an investment in the Fund over any period is the sum of the capital appreciation or depreciation of the Shares over the period, plus the amount of any distributions during the period. Consequently, the Fund’s aggregate return is expected to outperform the Excess Return Index by the amount of the excess, if any, of its interest income over its fees and expenses but, as a result of the Fund’s fees and expenses, the aggregate return on the Fund is expected to underperform the Total Return Index. If the Fund’s fees and expenses were to exceed the Fund’s interest income from its holdings of fixed income securities, the aggregate return on an investment in the Fund is expected to underperform the Excess Return Index.* #### Net Asset Value Net asset value means the total assets of the Fund, including, but not limited to, all futures, cash and investments less total liabilities of the Fund, each determined on the basis of U.S. generally accepted accounting principles, consistently applied under the accrual method of accounting. In particular, net asset value includes any unrealized appreciation or depreciation on open commodity futures contracts, and any other credit or debit accruing to the Fund but unpaid or not received by the Fund. All open commodity futures contracts will be calculated at their then current market value, which will be based upon the settlement price for that particular commodity futures contract traded on the applicable exchange on the date with respect to which net asset value is being determined; provided, that if a commodity futures contract could not be liquidated on such day, due to the operation of daily limits or other rules of the exchange upon which that position is traded or otherwise, the Managing Owner may value such futures contract pursuant to policies the Managing Owner has adopted, which are consistent with normal industry standards. The Managing Owner may in its discretion (and under circumstances, including, but not limited to, periods during which a settlement price of a futures contract is not available due to exchange limit orders or force majeure type events such as systems failure, natural or man-made disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance) value any asset of the Fund pursuant to such other principles as the Managing Owner deems fair and equitable so long as such principles are consistent with normal industry standards. Interest earned on the Fund’s brokerage account is accrued monthly. The amount of any distribution is a liability of the Fund from the day when the distribution is declared until it is paid. #### Critical Accounting Policies The Fund’s critical accounting policies are as follows: Preparation of the financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the application of appropriate accounting rules and guidance, as well as the use of estimates, and requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expense and related disclosure of contingent assets and liabilities during the reporting period of the financial statements and accompanying notes. The Fund’s application of these policies involves judgments and actual results may differ from the estimates used. The Fund holds a significant portion of its assets in futures contracts and United States Treasury Obligations, both of which are recorded on a trade date basis and at fair value in the financial statements, with changes in fair value reported in the statement of income and expenses. The use of fair value to measure financial instruments, with related unrealized gains or losses recognized in earnings in each period is fundamental to the Fund’s financial statements. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (the exit price). In determining fair value of United States Treasury Obligations and commodity futures contracts, the Fund uses unadjusted quoted market prices in active markets. Financial Accounting Standards Board (“FASB”) fair value measurement and disclosure guidance requires a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The objective of a fair value measurement is to determine the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy gives the highest priority to unadjusted quoted prices for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. See Note 4(c) within the financial statements in Item 8 for further information. When market closing prices are not available, the Managing Owner may value an asset of the Fund pursuant to policies the Managing Owner has adopted, which are consistent with normal industry standards. Realized gains (losses) and changes in unrealized gain (loss) on open positions are determined on a specific identification basis and recognized in the statement of income and expenses in the period in which the contract is closed or the changes occur, respectively. Interest income on United States Treasury Obligations is recognized on an accrual basis when earned. Premiums and discounts are amortized or accreted over the life of the United States Treasury Obligations. #### Market Risk Trading in futures contracts involves the Fund entering into contractual commitments to purchase a particular commodity at a specified date and price. The market risk associated with the Fund’s commitments to purchase commodities is limited to the gross or face amount of the contracts held. The Fund’s exposure to market risk is also influenced by a number of factors including the volatility of interest rates and foreign currency exchange rates, the liquidity of the markets in which the contracts are traded and the relationships among the contracts held. The inherent uncertainty of the Fund’s trading as well as the development of drastic market occurrences could ultimately lead to a loss of all or substantially all of the investors’ capital. #### Credit Risk When the Fund enters into futures contracts, the Fund is exposed to credit risk that the counterparty to the contract will not meet its obligations. The counterparty for futures contracts traded on United States and on most foreign futures exchanges is the clearing house associated with the particular exchange. In general, clearing houses are backed by their corporate members who may be required to share in the financial burden resulting from the nonperformance by one of their members and, as such, should significantly reduce this credit risk. In cases where the clearing house is not backed by the clearing members (i.e., some foreign exchanges), it may be backed by a consortium of banks or other financial institutions. There can be no assurance that any counterparty, clearing member or clearinghouse will meet its obligations to the Fund. The Commodity Broker, when acting as the Fund’s futures commission merchant in accepting orders for the purchase or sale of domestic futures contracts, is required by CFTC regulations to separately account for and segregate as belonging to the Fund all assets of the Fund relating to domestic futures trading and the Commodity Broker is not allowed to commingle such assets with other assets of the Commodity Broker. In addition, CFTC regulations also require the Commodity Broker to hold in a secure account assets of the Fund related to foreign futures trading. Also see Item 1A.—Risk Factors—“Failure of Futures Commission Merchants or Commodity Brokers to Segregate Assets May Increase Losses; Despite Segregation of Assets, The Fund Remains at Risk of Significant Losses Because The Fund May Only Receive a Pro-Rata Share of the Assets, or No Assets at All.” #### Liquidity All of the Fund’s source of capital is derived from the Fund’s offering of Shares to Authorized Participants. The Fund in turn allocates its net assets to commodities trading. A significant portion of the net asset value is held in United States Treasury Obligations and cash, which are used as margin for the Fund’s trading in commodities. The percentage that United States Treasury Obligations bear to the total net assets will vary from period to period as the market values of the Fund’s commodity interests change. The balance of the net assets is held in the Fund’s commodity trading account. Interest earned on the Fund’s interest-bearing funds is paid to the Fund. The Fund’s commodity contracts may be subject to periods of illiquidity because of market conditions, regulatory considerations or for other reasons. For example, commodity exchanges generally have the ability to limit fluctuations in certain commodity futures contract prices during a single day by regulations referred to as “daily limits.” During a single day, no trades may be executed at prices beyond the daily limit. Once the price of a particular futures contract for a particular commodity has increased or decreased by an amount equal to the daily limit, positions in the commodity futures contract can neither be taken nor liquidated unless the traders are willing to effect trades at or within the limit. Commodity futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Such market conditions could prevent the Fund from promptly liquidating its commodity futures positions. Because the Fund trades futures contracts, its capital is at risk due to changes in the value of futures contracts (market risk) or the inability of counterparties (including exchange clearinghouses) to perform under the terms of the contracts (credit risk). Authorized Participants may also redeem Baskets of Shares. On any business day, an Authorized Participant may place an order with the Managing Owner to redeem one or more Baskets. Redemption orders must be placed by 10:00 a.m., New York time. The day on which the Managing Owner receives a valid redemption order is the redemption order date. Redemption orders are irrevocable. The redemption procedures allow only Authorized Participants to redeem Baskets. Individual Shareholders may not redeem directly from the Fund. By placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through DTC’s book-entry system to the Fund not later than noon, Eastern Standard Time, on the business day immediately following the redemption order date. By placing a redemption order, and prior to receipt of the redemption proceeds, an Authorized Participant’s DTC account is charged the non-refundable transaction fee due for the redemption order. #### Cash Flows The primary cash flow activity of the Fund is to raise capital from Authorized Participants through the issuance of Shares. This cash is used to invest in United States Treasury Obligations and to meet margin requirements as a result of the positions taken in futures contracts to match the fluctuations of the Index the Fund is tracking. #### Operating Activities Net cash flow provided by and (used for) operating activities was $(935.3) million, $(92.6) million, and $(403.4) million during the Years Ended December 31, 2012, 2011, and 2010, respectively. These amounts primarily include net purchases and sales of United States Treasury Obligations which are held at fair value on the statement of financial condition. During the Year Ended December 31, 2012, $23,652.6 million was paid to purchase United States Treasury Obligations and $23,043.2 million was received from sales and maturing contracts. During the Year Ended December 31, 2011, $23,184.0 million was paid to purchase United States Treasury Obligations and $22,365.2 million was received from sales and maturing contracts. During the Year Ended December 31, 2010, $16,965.7 million was paid to purchase United States Treasury Obligations and $16,390.1 million was received from sales and maturing contracts. Unrealized appreciation on United States Treasury Obligations and futures increased by $450.0 million, decreased by $939.7 million, and increased by $342.1 million during the Years Ended December 31, 2012, 2011, and 2010, respectively. #### Financing Activities The Fund’s net cash flow provided by and (used for) financing activities was $1,008.8 million, $583.0 million, and $211.5 million during the Years Ended December 31, 2012, 2011, and 2010, respectively. This included $1,759.5 million, $1,704.1 million, and $1,086.6 million from the sale of Shares to Authorized Participants during the Years Ended December 31, 2012, 2011, and 2010, respectively. ### Results of Operations ### FOR THE THREE MONTHS ENDED DECEMBER 31, 2012, 2011 AND 2010 AND FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 The Fund was launched on January 31, 2006 at $25.00 per Share. The Shares of the Fund traded on the NYSE Alternext from February 3, 2006 to November 25, 2008 and have been trading on the NYSE Arca since November 25, 2008. The Fund seeks to track changes in the closing levels of the DBIQ Optimum Yield Diversified Commodity Index Excess Return™ (the “Index”), over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. The following graphs illustrate changes in (i) the price of the Shares (as reflected by the graph “DBC”), (ii) the Fund’s NAV (as reflected by the graph “DBCNAV”), and (iii) the closing levels of the Index (as reflected by the graph “DBLCIX”). Whenever the interest income earned by the Fund exceeds Fund expenses, the price of the Shares generally has exceeded the levels of the Index primarily because the Share price reflects interest income from the Fund’s collateral holdings whereas the Index does not consider such interest income. There can be no assurances that the price of the Shares will exceed the Index levels. The Index is a set of rules applied to a body of data and does not represent the results of actual investment or trading. The Index is frictionless, in that it does not take into account fees or expenses associated with investing in the Fund. Also, because it does not represent actual futures positions, the Index is not subject to, and does not take into account the impact of, speculative position limits or certain other similar limitations on the ability of the Fund to trade the Index Commodities. The “TR” version of the Index includes an assumed amount of interest income based on prevailing rates that is adjusted from time to time. The Fund, by contrast, invests actual money and trades actual futures contracts. As a result, the performance of the Fund involves friction, in that fees and expenses impose a drag on performance. The Fund may be subject to speculative position limits and certain other limitations on its ability to trade the Index Commodities, which may compel the Fund to trade futures or other instruments that are not Index Commodities as proxies for the Index Commodities. The interest rate actually earned by the Fund over any period may differ from the assumed amount of interest income factored into the “TR” version of the Index over the same period. All of these factors can contribute to discrepancies between changes in net asset value per Share and changes in the level of the Index over any period of time. Fees and expenses always will tend to cause changes in the net asset value per Share to underperform changes in the value of the Index over any given period, all other things being equal. Actual interest income could be higher or lower than the assumed interest income factored into the “TR” version of the Index, and therefore could cause changes in the net asset value per Share to outperform or underperform changes in the value of the “TR” version Index over any given period, all other things being equal. Similarly, trading futures or other instruments that are not the Index Commodities as proxies for the Index Commodities could cause changes in the net asset value per Share to outperform or underperform changes in the value of the Index over any given period, all other things being equal. ### COMPARISON OF DBC, DBCNAV AND DBLCIX FOR THE YEARS ENDED ### DECEMBER 31, 2012, 2011, AND 2010, AND ### FOR THE THREE MONTHS ENDED DECEMBER 31, 2012, 2011, AND 2010, ### NEITHER THE PAST PERFORMANCE OF THE FUND NOR THE PRIOR INDEX LEVELS AND CHANGES, ***POSITIVE OR NEGATIVE, SHOULD BE TAKEN AS AN INDICATION OF THE FUND’S FUTURE PERFORMANCE.*** ### See Additional Legends Below ### See Additional Legends Below ### See Additional Legends Below #### Additional Legends The Fund seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Diversified Commodity Index Excess ReturnTM (the “Index”) over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. The Index is intended to reflect the change in market value of certain commodities. The commodities comprising the Index are Light Sweet Crude Oil, Heating Oil, Aluminum, Gold, Corn, Wheat, Brent Crude, Copper Grade A, Natural Gas, RBOB Gasoline, Silver, Soybeans, Sugar and Zinc (the “Index Commodities”). From October 19, 2009 to December 31, 2010, the Fund invested with a view to tracking the changes, whether positive or negative, in the level of the Deutsche Bank Liquid Commodity Index-Optimum Yield Diversified Excess Return™ (the “Interim Index”) over time, plus the excess, if any, of the Fund’s interest income from its holdings of United States Treasury Obligations and other high credit quality short-term fixed income securities over the expenses of the Fund. After December 31, 2010, the Fund commenced tracking DBIQ Optimum Yield Diversified Commodity Index Excess Return™ (the “Index”). The Fund’s Interim Index is identical to the Index except with respect to the name of Index. The inception date of January 2007 remains identical. Except as provided in the immediately preceding sentence, all prior underlying formulae, data (e.g., closing levels, measure of volatility, all other numerical statistics and measures) and all other characteristics (e.g., Base Date, Index Sponsor, inception date, rolling, etc.) with respect to the Interim Index is identical to the Index. Therefore, with respect to the above graphs For the Years Ended December 31, 2011 and December 31, 2010, DBLCIX reflects DBIQ-OY Diversified Commodity Index Excess Return™. DBIQ Optimum Yield Diversified Commodity Index Excess Return™ is an index and does not reflect (i) actual trading and (ii) any fees or expenses. WHILE THE FUND’S OBJECTIVE IS NOT TO GENERATE PROFIT THROUGH ACTIVE PORTFOLIO MANAGEMENT, BUT IS TO TRACK THE INDEX, BECAUSE THE INDEX WAS ESTABLISHED IN JANUARY 2007 (RENAMED IN OCTOBER 2010), CERTAIN INFORMATION RELATING TO THE INDEX CLOSING LEVELS MAY BE CONSIDERED TO BE “HYPOTHETICAL.” HYPOTHETICAL INFORMATION MAY HAVE CERTAIN INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. WITH RESPECT TO INDEX DATA, NO REPRESENTATION IS BEING MADE THAT THE INDEX WILL OR IS LIKELY TO ACHIEVE ANNUAL OR CUMULATIVE CLOSING LEVELS CONSISTENT WITH OR SIMILAR TO THOSE SET FORTH HEREIN. SIMILARLY, NO REPRESENTATION IS BEING MADE THAT THE FUND WILL GENERATE PROFITS OR LOSSES SIMILAR TO THE FUND’S PAST PERFORMANCE OR THE HISTORICAL ANNUAL OR CUMULATIVE CHANGES IN THE INDEX CLOSING LEVELS. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY INVESTMENT METHODOLOGIES, WHETHER ACTIVE OR PASSIVE. WITH RESPECT TO INDEX DATA, ONE OF THE LIMITATIONS OF HYPOTHETICAL INFORMATION IS THAT IT IS GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. TO THE EXTENT THAT INFORMATION PRESENTED HEREIN RELATES TO THE PERIOD SEPTEMBER 1997 THROUGH DECEMBER 2006, THE INDEX CLOSING LEVELS REFLECT THE APPLICATION OF THE INDEX METHODOLOGY, AND SELECTION OF INDEX COMMODITIES, IN HINDSIGHT. NO HYPOTHETICAL RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THERE ARE NUMEROUS FACTORS, INCLUDING THOSE DESCRIBED UNDER ITEM 1A: “RISK FACTORS” SET FORTH HEREIN, RELATED TO THE COMMODITIES MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF THE FUND’S EFFORTS TO TRACK THE INDEX OVER TIME WHICH CANNOT BE, AND HAVE NOT BEEN, ACCOUNTED FOR IN THE PREPARATION OF THE INDEX INFORMATION SET FORTH ON THE FOLLOWING PAGES, ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL PERFORMANCE RESULTS FOR THE FUND. FURTHERMORE, THE INDEX INFORMATION DOES NOT INVOLVE FINANCIAL RISK OR ACCOUNT FOR THE IMPACT OF FEES AND COSTS ASSOCIATED WITH THE FUND. THE MANAGING OWNER, AN INDIRECT WHOLLY OWNED SUBSIDIARY OF DEUTSCHE BANK AG, COMMENCED OPERATIONS IN JANUARY 2006. AS MANAGING OWNER, THE MANAGING OWNER AND ITS TRADING PRINCIPALS HAVE BEEN MANAGING THE DAY-TO-DAY OPERATIONS FOR THE FUND AND RELATED PRODUCTS AND MANAGING FUTURES ACCOUNTS. BECAUSE THERE ARE LIMITED ACTUAL TRADING RESULTS TO COMPARE TO THE INDEX CLOSING LEVELS SET FORTH HEREIN, PROSPECTIVE INVESTORS SHOULD BE PARTICULARLY WARY OF PLACING UNDUE RELIANCE ON THE ANNUAL OR CUMULATIVE INDEX RESULTS. ### FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010 #### Fund Share Price Performance For the Year Ended December 31, 2012, the NYSE Arca market value of each Share increased 3.50% from $26.84 per Share to $27.78 per Share. The Share price high and low for the Year Ended December 31, 2012 and related change from the Share price from December 31, 2011 was as follows: Shares traded from a low of $24.15 per Share (-10.02%) on June 21, 2012 to a high of $29.78 per Share (+10.95%) on March 1, 2012. No distributions were paid to Shareholders during the Year Ended December 31, 2012. Therefore, the total return for the Fund, on a market value basis, was 3.50%. For the Year Ended December 31, 2011, the NYSE Arca market value of each Share decreased 2.58% from $27.55 per Share to $26.84 per Share. The Share price high and low for the Year Ended December 31, 2011 and related change from the Share price from December 31, 2010 was as follows: Shares traded from a high of $31.92 per Share (+15.86%) on April 8, 2011 to a low of $25.57 per Share (-7.19%) on October 4, 2011. No distributions were paid to Shareholders during the Year Ended December 31, 2011. Therefore, the total return for the Fund, on a market value basis, was -2.58%. For the Year Ended December 31, 2010, the NYSE Arca market value of each Share increased 11.90% from $24.62 per Share to $27.55 per Share. The Share price low and high for the Year Ended December 31, 2010 and related change from the Share price from December 31, 2009 was as follows: Shares traded from a low of $21.20 per Share (-13.89%) on July 2, 2010 to a high of $27.55 per Share (+11.90%) on December 31, 2010. No distributions were paid to Shareholders during the Year Ended December 31, 2010. Therefore, the total return for the Fund, on a market value basis, was 11.90%. #### Fund Share Net Asset Performance For the Year Ended December 31, 2012, the net asset value of each Share increased 3.32% from $26.83 per Share to $27.72 per Share. Appreciation in futures contracts prices for Heating Oil, Corn, Gold, Copper, Soybean, Silver, Wheat, RBOB Gasoline, Brent Crude, and Zinc during the Year Ended December 31, 2012 more than offset depreciation for Crude Oil, Aluminum, Sugar and Natural Gas during that same period, contributing to an overall 4.16% increase in the level of the DBIQ–OY Diversified TR™. No distributions were paid to Shareholders during the Year Ended December 31, 2012. Therefore, the total return for the Fund on a net asset value basis was 3.32%. Net income for the Year Ended December 31, 2012 was $142.1 million, resulting from $4.1 million of interest income, net realized losses of $257.7 million, net change in unrealized gains of $450.0 million and operating expenses of $54.3 million. For the Year Ended December 31, 2011, the net asset value of each Share decreased 2.68% from $27.57 per Share to $26.83 per Share. Falling prices in futures contracts prices for Copper, Sugar, Soybean, Aluminum, Silver, Wheat, Natural Gas and Zinc during the Year Ended December 31, 2011 more than offset appreciation for RBOB Gasoline, Crude Oil, Brent Crude, Gold, Heating Oil and Corn during that same period, contributing to an overall 2.39% decrease in the level of the DBIQ–OY Diversified TR™. No distributions were paid to Shareholders during the Year Ended December 31, 2011. Therefore, the total return for the Fund on a net asset value basis was -2.68%. Net loss for the Year Ended December 31, 2011 was $233.0 million, resulting from $3.7 million of interest income, net realized gains of $754.1 million, net change in unrealized losses of $939.7 million and operating expenses of $51.1 million. For the Year Ended December 31, 2010, the net asset value of each Share increased 11.85% from $24.65 per Share to $27.57 per Share. Appreciation in futures contracts prices for Copper, Sugar, RBOB Gasoline, Silver, Crude Oil, Brent Crude, Aluminum, Gold, Heating Oil, Wheat and Corn during the Year Ended December 31, 2010 more than offset falling prices for Natural Gas and Zinc during that same period, contributing to an overall 11.93% increase in the level of the DBLCI–OY Diversified TR™.3 No distributions were paid to Shareholders during the Year Ended December 31, 2010. Therefore, the total return for the Fund on a net asset value basis was 11.85%. Net income for the Year Ended December 31, 2010 was $507.3 million, resulting from $5.1 million of interest income, net realized gains of $199.6 million, net change in unrealized gains of $342.1 million and operating expenses of $39.5 million. ### FOR THE THREE MONTHS ENDED DECEMBER 31, 2012, 2011 AND 2010 #### Fund Share Price Performance 3 From October 19, 2009 to December 31, 2010, the Fund invested with a view to tracking changes, whether positive or negative, in the level of the Deutsche Bank Liquid Commodity Index—Optimum Yield Diversified Excess Return™. For the Three Months Ended December 31, 2012, the NYSE Arca market value of each Share decreased 3.14% from $28.68 per Share to $27.78 per Share. The Share price low and high for the Three Months Ended December 31, 2012 and related change from the Share price on September 30, 2012 was as follows: Shares traded from a high of $28.95 per Share (+0.94%) on October 11, 2012 to a low of $27.14 per Share (-5.37%) on November 2, 2012. No distributions were paid to Shareholders during the Year Ended December 31, 2012. Therefore, the total return for the Fund, on a market value basis, was -3.14%. For the Three Months Ended December 31, 2011, the NYSE Arca market value of each Share increased 4.23% from $25.75 per Share to $26.84 per Share. The Share price low and high for the Three Months Ended December 31, 2011 and related change from the Share price on September 30, 2011 was as follows: Shares traded from a low of $25.57 per Share (-0.70%) on October 4, 2011 to a high of $28.54 per Share (+10.83%) on November 8, 2011. No distributions were paid to Shareholders during the Year Ended December 31, 2011. Therefore, the total return for the Fund, on a market value basis, was 4.23%. For the Three Months Ended December 31, 2010, the NYSE Arca market value of each Share increased 14.27% from $24.11 per Share to $27.55 per Share. The Share price low and high for the Three Months Ended December 31, 2010 and related change from the Share price on September 30, 2010 was as follows: Shares traded from a low of $24.08 per Share (-0.12%) on October 4, 2010 to a high of $27.55 per Share (+14.27%) on December 31, 2010. No distributions were paid to Shareholders during the Year Ended December 31, 2010. Therefore, the total return for the Fund, on a market value basis, was 14.27%. #### Fund Share Net Asset Performance For the Three Months Ended December 31, 2012, the net asset value of each Share decreased 3.55% from $28.74 per Share to $27.72 per Share. Depreciation in futures contracts prices for Heating Oil, Copper, Corn, RBOB Gasoline, Crude Oil, Wheat, Soybeans, Zinc, Aluminum, Gold, Natural Gas, Silver and Sugar during the Three Months Ended December 31, 2012 more than offset rising futures contract prices for Brent Crude, contributing to an overall 3.19% decrease in the level of the DBLCI–OY Diversified TR™. No distributions were paid to Shareholders during the Year Ended December 31, 2012. Therefore, the total return for the Fund, on a net asset value basis, was -3.55%. Net loss for the Three Months Ended December 31, 2012 was $240.4 million, resulting from $1.4 million of interest income, net realized gains of $190.4 million, net change in unrealized losses of $417.7 million and operating expenses of $14.5 million. For the Three Months Ended December 31, 2011, the net asset value of each Share increased 3.51% from $25.92 per Share to $26.83 per Share. Appreciation in futures contracts prices for Copper, Corn, RBOB Gasoline, Crude Oil, Brent Crude, Wheat, Soybeans, and Heating Oil during the Three Months Ended December 31, 2011 more than offset falling futures contract prices for Zinc, Aluminum, Gold, Natural Gas, Silver and Sugar contributing to an overall 3.75% increase in the level of the DBLCI–OY Diversified TR™. No distributions were paid to Shareholders during the Year Ended December 31, 2011. Therefore, the total return for the Fund, on a net asset value basis, was 3.51%. Net income for the Three Months Ended December 31, 2011 was $179.3 million, resulting from $0.2 million of interest income, net realized gains of $92.2 million, net change in unrealized gains of $98.7 million and operating expenses of $11.8 million. For the Three Months Ended December 31, 2010, the net asset value of each Share increased 14.40% from $24.10 per Share to $27.57 per Share. Appreciation in futures contracts prices for Zinc, Copper, Aluminum, Corn, RBOB Gasoline, Crude Oil, Brent Crude, Wheat, Soybeans, Heating Oil, Natural Gas, Sugar, Gold and Silver during the Three Months Ended December 31, 2010 contributed to an overall 14.25% increase in the level of the DBLCI–OY Diversified TR™.4 No distributions were paid to Shareholders during the Year Ended December 31, 2010. Therefore, the total return for the Fund, on a net asset value basis, was 14.40%. Net income for the Three Months Ended December 31, 2010 was $631.1 million, resulting from $1.4 million of interest income, net realized gains of $360.4 million, net change in unrealized gains of $279.7 million and operating expenses of $10.4 million. ### Off-Balance Sheet Arrangements and Contractual Obligations In the normal course of its business, the Fund is a party to financial instruments with off-balance sheet risk. The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in a future obligation or loss. The financial instruments used by the Fund are commodity futures, whose values are based upon an underlying asset and generally represent future commitments which have a reasonable possibility to be settled in cash or through physical delivery. The financial instruments are traded on an exchange and are standardized contracts. The Fund has not utilized, nor does it expect to utilize in the future, special purpose entities to facilitate off-balance sheet financing arrangements and has no loan guarantee arrangements or off-balance sheet arrangements of any kind, other than agreements entered into in the normal course of business noted above, which may include indemnification provisions related to certain risks service providers undertake in performing services which are in the best interests of the Fund. While the Fund’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Fund’s financial position. The Fund’s contractual obligations are with the Managing Owner and the Commodity Broker. Management Fee payments made to the Managing Owner are calculated as a fixed percentage of the Fund’s net asset value. Commission payments to the Commodity Broker are on a contract-by-contract, or round-turn, basis. As such, the Managing Owner cannot anticipate the amount of payments that will be required under these arrangements for future periods as net asset values are not known until a future date. These agreements are effective for one year terms, renewable automatically for additional one year terms unless terminated. Additionally, these agreements may be terminated by either party for various reasons. ## Market risk As filed, 14,644 characters. INTRODUCTION The Fund is designed to replicate positions in a commodity index. The market sensitive instruments held by it are subject to the risk of trading loss. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Fund’s main line of business. Market movements can produce frequent changes in the fair market value of the Fund’s open positions and, consequently, in its earnings and cash flow. The Fund’s market risk is primarily influenced by changes in the price of commodities. ### Standard of Materiality Materiality as used in this section, “Quantitative and Qualitative Disclosures About Market Risk,” is based on an assessment of reasonably possible market movements and the potential losses caused by such movements, taking into account the effects of margin, and any other multiplier features, as applicable, of the Fund’s market sensitive instruments. QUANTIFYING THE FUND’S TRADING VALUE AT RISK ### Quantitative Forward-Looking Statements The following quantitative disclosures regarding the Fund’s market risk exposures contain “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact (such as the dollar amount of maintenance margin required for market risk sensitive instruments held at the end of the reporting period). Value at risk, or VaR, is a statistical measure of the value of losses that would not be expected to be exceeded over a given time horizon and at a given probability level arising from movement of underlying risk factors. Loss is measured as a decline in the fair value of the portfolio as a result of changes in any of the material variables by which fair values are determined. VaR is measured over a specified holding period (1 day) and to a specified level of statistical confidence (99th percentile). However, the inherent uncertainty in the markets in which the Fund trades and the recurrence in the markets traded by the Fund of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated VaR or the Fund’s experience to date (i.e., “risk of ruin”). In light of this, as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification included in this section should not be considered to constitute any assurance or representation that the Fund’s losses in any market sector will be limited to VaR or by the Fund’s attempts to manage its market risk. THE FUND’S TRADING VALUE AT RISK The Fund calculates VaR using the actual historical market movements of the Fund’s total assets. The following table indicates the trading VaR associated with the Fund’s total assets as of December 31, 2012. | Description | Total Assets | Daily Volatility | VaR\* (99 Percentile) | Number of times VaR Exceeded | | --- | ---: | ---: | ---: | ---: | | PowerShares DB Commodity Index Tracking Fund | $6,614,804,375 | 0.94% | $143,451,648 | 0 | 33 The following table indicates the trading VaR associated with the Fund’s total assets as of December 31, 2011. | Description | Total Assets | Daily Volatility | VaR\* (99 Percentile) | Number of times VaR Exceeded | | --- | ---: | ---: | ---: | ---: | | PowerShares DB Commodity Index Tracking Fund | $5,488,516,952 | 1.31% | $167,938,883 | 2 | \* The VaR represents the one day downside risk, under normal market conditions, with a 99% confidence level. It is calculated using historical market moves of the Fund’s total assets and uses a one year look-back. NON-TRADING RISK The Fund has non-trading market risk as a result of investing in short-term United States Treasury Obligations. The market risk represented by these investments is expected to be immaterial. QUALITATIVE DISCLOSURES REGARDING PRIMARY TRADING RISK EXPOSURES The following qualitative disclosures regarding the Fund’s market risk exposures—except for those disclosures that are statements of historical fact—constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. The Fund’s primary market risk exposures are subject to numerous uncertainties, contingencies and risks. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures of the Fund. There can be no assurance that the Fund’s current market exposure will not change materially. Investors may lose all or substantially all of their investment in the Fund. The following were the primary trading risk exposures of the Fund as of December 31, 2012 by market sector. ### ENERGY ### Light Sweet Crude Oil The price of light sweet crude oil is volatile and is affected by numerous factors. The level of global industrial activity influences the demand for light sweet crude oil. In addition, various other factors can affect the demand for light sweet crude oil, such as weather, political events and labor activity. The supply of light sweet crude oil can be affected by many events, in particular, the meetings of the Organization of Petroleum Exporting Countries. Market expectations about events that will influence either demand or supply can cause prices for light sweet crude oil to fluctuate greatly. A significant amount of the world oil production capacity is controlled by a relatively small number of producers. Any large change in production by one of these producers could have a substantial effect on the price of light sweet crude oil. ### Heating Oil The price of heating oil is volatile and is affected by numerous factors. The level of global industrial activity influences the demand for heating oil. In addition, the seasonal temperatures in countries throughout the world can also heavily influence the demand for heating oil. Heating oil is derived from crude oil and as such, any factors that influence the supply of crude oil may also influence the supply of heating oil. ### Brent Crude Oil The price of Brent crude oil is volatile and is affected by numerous factors. The price of Brent crude oil is influenced by many factors, including, but not limited to, the amount of output by oil producing nations, worldwide supply/stockpiles, weather, various geopolitical factors that cause supply disruptions (e.g., war, terrorism), global demand (particularly from emerging nations), currency fluctuations, and activities of market participants such as hedgers and speculators. ### RBOB Gasoline The price of RBOB Gasoline is volatile and is affected by numerous factors. The level of global industrial activity influences the demand for RBOB Gasoline. In addition, the demand has seasonal variations, which occur during “driving seasons” usually considered the summer months in North America and Europe. RBOB Gasoline is derived from crude oil and as such, any factors that influence the supply of crude oil may also influence the supply of RBOB Gasoline. ### Natural Gas The price of natural gas is volatile and is affected by numerous factors. The level of global industrial activity influences the demand for natural gas. In addition to the seasonal temperatures in countries throughout the world, any fluctuations in temperature may also heavily influence the demand for natural gas. ### METALS ### Gold The price of gold is volatile and is affected by numerous factors. Gold prices float freely in accordance with supply and demand. The price movement of gold may be influenced by a variety of factors, including announcements from central banks regarding reserve gold holdings, agreements among central banks, purchases and sales of gold by central banks, other governmental agencies that hold large supplies of gold, political uncertainties, economic concerns such as an increase or decrease in confidence in the global monetary system, the relative strength of the U.S. dollar, interest rates and numerous other factors. Gold prices may also be affected by industry factors such as industrial and jewelry demand. ### Silver The price of silver is volatile and is affected by numerous factors. The largest industrial users of silver (e.g., photographic, jewelry, and electronic industries) may influence its price. A change in economic conditions, such as a recession, can adversely affect industries which are dependent upon the use of silver. In turn, such a negative economic impact may decrease demand for silver, and, consequently, its price. Worldwide speculation and hedging activity by silver producers may also impact its price. ### Aluminum The price of aluminum is volatile. The price movement of aluminum may be influenced by a variety of factors, including the level of global industrial activity and demand, especially relating to the transportation, packaging and building sectors, each of which significantly influences the demand, and in turn, the price of aluminum. Prices for aluminum are influenced by a number of factors including the level of economic activity in large aluminum consuming markets, political uncertainties, economic concerns and the rate of supply of new metal from producers. The production of aluminum is a power intensive process that requires large amounts of inexpensive power. Disruptions in the amount of energy available to aluminum producers could affect the supply of aluminum. ### Zinc The price of zinc is volatile and is affected by numerous factors. The price of zinc is primarily affected by the global demand for and supply of zinc. Demand for zinc is significantly influenced by the level of global industrial economic activity. The galvanized steel industrial sector is particularly important given that the use of zinc in the manufacture of galvanized steel accounts for approximately 50% of world-wide zinc demand. The galvanized steel sector is in turn heavily dependent on the automobile and construction sectors. An additional, but highly volatile component of demand, is adjustments to inventory in response to changes in economic activity and/or pricing levels. The supply of zinc concentrate (the raw material) has generally been dominated by China, Australia, North America and Latin America. The supply of zinc is also affected by current and previous price levels, which will influence investment decisions in new mines and smelters. It is not possible to predict the aggregate effect of all or any combination of these factors. ### Copper The price of copper is volatile. The price of copper is primarily affected by the global demand for and supply of copper. Demand for copper is significantly influenced by the level of global industrial economic activity. Industrial sectors which are particularly important include the electrical and construction sectors. In recent years demand has been supported by strong consumption from newly industrializing countries, which continue to be in a copper-intensive period of economic growth as they develop their infrastructure (such as China). An additional, but highly volatile, component of demand is adjustments to inventory in response to changes in economic activity and/or pricing levels. Apart from the United States, Canada and Australia, the majority of copper concentrate supply (the raw material) comes from outside the Organization for Economic Cooperation and Development countries. Chile is the largest producer of copper concentrate. In previous years, copper supply has been affected by strikes, financial problems, political turmoil and terrorist activity. ### AGRICULTURAL ### Corn The price of corn is volatile. The price movement of corn may be influenced by three primary supply factors: farmer planting decisions, climate, and government agricultural policies and three major market demand factors: livestock feeding, shortages or surpluses of world grain supplies, and domestic and foreign government policies and trade agreements. Additionally, the price movement of corn may be influenced by a variety of other factors, including weather conditions, disease, transportation costs, political uncertainties and economic concerns. ### Wheat The price of wheat is volatile. The price movement of wheat may be influenced by three primary supply factors: farmer planting decisions, climate, and government agricultural policies and three major market demand factors: food, shortages or surpluses of world grain supplies, and domestic and foreign government policies and trade agreements. Additionally, the price movement of wheat may be influenced by a variety of other factors, including weather conditions, disease, transportation costs, political uncertainties and economic concerns. ### Soybeans The price of soybeans is volatile. The price movement of soybeans may be influenced by a variety of factors, including demand, weather conditions, disease, crop production, transportation costs, political uncertainties and economic concerns. ### Sugar The price of sugar is volatile. The price movement of sugar may be influenced by a variety of factors, including demand, weather conditions, disease, crop production, transportation costs, political uncertainties and economic concerns. QUALITATIVE DISCLOSURES REGARDING NON-TRADING RISK EXPOSURE ### General The Fund is unaware of any (i) anticipated known demands, commitments or capital expenditures; (ii) material trends, favorable or unfavorable, in its capital resources; or (iii) trends or uncertainties that will have a material effect on operations. QUALITATIVE DISCLOSURES REGARDING MEANS OF MANAGING RISK EXPOSURE Under ordinary circumstances, the Managing Owner’s discretionary power is limited to determining whether the Fund will make a distribution. Under emergency or extraordinary circumstances, the Managing Owner’s discretionary powers increase, but remain circumscribed. These special circumstances, for example, include the unavailability of the Index or certain natural or man-made disasters. The Managing Owner does not apply risk management techniques. The Fund initiates positions only on the “long” side of the market and does not employ “stop-loss” techniques. ## Controls and procedures As filed, 2,718 characters. #### Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of the management of the Managing Owner, including Martin Kremenstein, its Chief Executive Officer, and Michael Gilligan, its Chief Financial Officer, the Fund carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this annual report, and, based upon that evaluation, Martin Kremenstein, the Chief Executive Officer, and Michael Gilligan, the Chief Financial Officer, of the Managing Owner, concluded that the Fund’s disclosure controls and procedures were effective to ensure that information the Fund is required to disclose in the reports that it files or submits with the Securities and Exchange Commission (the “SEC”) under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by the Fund in the reports that it files or submits under the Exchange Act is accumulated and communicated to management of the Managing Owner, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. #### Changes in Internal Control Over Financial Reporting There has been no change in internal control over financial reporting (as defined in the Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the Fund’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting. #### Management’s Annual Report on Internal Control Over Financial Reporting Management of the Managing Owner is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Rules 13a-15(f) and 15d-15(f) of the Exchange Act, for the Fund. Martin Kremenstein, the Chief Executive Officer, and Michael Gilligan, the Chief Financial Officer, of the Managing Owner, assessed the effectiveness of the Fund’s internal control over financial reporting as of December 31, 2012. Their report in connection with their assessment may be found in the “Report of Management on Internal Control Over Financial Reporting” on page 38 of this Annual Report on Form 10-K. The Fund’s independent registered public accounting firm, KPMG LLP, has audited the Fund’s internal control over financial reporting as of December 31, 2012, as stated in their report on page 39 of this Form 10-K. Filed Feb 22, 2013. Source: SEC EDGAR, the filing index for accession 0001193125-13-071759. Last ingested by Listed: Oct 24, 2026, 15:11 ET. No prices; not investment advice.