GLDUS128 Patrick Gerschel options) markets. Similar changes are in the process of being adopted in the European Union. Japan, and other major financial markets. These changes include, but are not limited to: requirements that many categories of the most liquid OTC derivatives (currently limited to specified interest rate swaps and index credit default swaps) be executed on qualifying, regulated exchanges and be submitted for clearing; real-time public and regulatory reporting of specified information regarding OTC derivative transactions; enhanced documentation requirements; margin requirements for uncleared swaps; position limits; and recordkceping requirements. While these changes arc intended to mitigate systemic risk and to enhance transparency and execution quality in the OTC derivative markets, the impact of these changes is not known at this time. For instance, cleared OTC derivatives arc subject to margin requirements established by regulated clearinghouses, including daily exchanges of cash variation (or mark-to-market) margin and an upfront posting of cash or securities initial margin to cover the clearinghouse's potential future exposure to the default of a party to a particular OTC derivative transaction. Furthermore, "financial end users," such as the Underlying Fund, that enter into OTC derivatives that are not cleared are generally required to exchange margin to collateralize such derivatives. Under the new rules, the level of margin that will be required to be exchanged in connection with uncleared derivatives will in many cases be substantially greater than the level currently required by market participants or clearinghouses. These changes could significantly increase the costs to the Underlying Fund of utilizing OTC derivatives, reduce the level of exposure the Underlying Fund is able to obtain (whether for risk management or investment purposes) through OTC derivatives, and reduce the amounts available to the Underlying Fund