Robert N. Gordon

Adjunct Professor NYU’s Stern School of Business

President Twenty-first Securities

bob@twenty-first.com212 418 6000

S&P 500 Investment

Exchange

Traded Funds

Open End

Index Funds

Listed

Index Options

Unlisted

Index Options

Management Fee Yes Yes No No

Tracking Error Yes Yes No No

Commissions on Purchase/Sale Yes No Yes Yes

ST Gains Taxed @ 43.4% 43.4% 31.64% 43.4%

LT Gains Taxed @ 23.8% 23.8% 31.64% 23.8%

Marked-to-Market at Year End No No Yes No

Distribution of Gains Yes Yes No No

Possible Mispricing Yes No Yes Yes

Trades Intra Day Yes No Yes Yes

Taxable Dividends Yes Yes No No

Speculate on Gold Prices:

Best Way to Own Gold

Speculate on Gold Prices:

Best Way to Own Gold

Holding Period

Gold ETFListed

Option on Gold (1256

Contract)

ETN or OTC Option on Gold

Short -Term Gains

43.4% 31.64% 43.4%

Long -Term Gains

31.8% 31.64% 23.8%

Speculate on Gold Prices:

Best Way to Short Gold

Holding Period

Gold ETFListed Option on

Gold (1256 Contract)

ETN or OTC Option on

Gold

Short -Term Gains

43.4% 31.64% 43.4%

Structured Notes:

Build Them Yourself

Principal Protected Structure

• Guarantee of Principal at Maturity

• Plus “Any” Appreciation in the S&P 500

• Deconstructing the Structured Note

into its Component Parts

Principal Protected Structure

• Principal Protection Afforded By the Purchase

of a Zero Coupon Bond

• Zero’s Maturity Coincides with the Maturity of

The Structured Note

Principal Protected Structure

At Current Interest Rates a 5 Year Zero Costs

About 90 cents for a Maturing Dollar

That Leaves 10 cents to Buy Call options on

Your Desired Index

Principal Protected Structure

TAXES

Both Create Taxable Interest Income on the

Original issue Discount from 90 to 100 Over

the 5 Years

Principal Protected Structure

TAXES

S&P 500 Appreciation in the Structured Note

Will Also be Taxed as Interest Income at 43.4%

Principal Protected Structure

TAXES

But S&P 500 Appreciation in a Option is

potentially Taxed More Favorably

Principal Protected Structure

Robert N. Gordon

Adjunct Professor NYU’s Stern School of Business

President Twenty-first Securities

bob@twenty-first.com212 418 6000