ETF: CapEx Composite Fund

Market Performance Plus...

Total shares: 8,000,000

Prospectus

Company Tagline

Market Performance Plus...

CEO's Real Life Name

D. Roudebush (SL: Bogart Beck)

CEO's Real Life Location

Sacramento, CA, USA

Board of Directors

Whereas the CapEx Composite Fund (hereinafter ETF) or (SL CapEX: ETF) is a SUBSIDIARY of SL CapEx, and, is managed by SL CapEx personnel, the (SL CapEX: ETF) Board of Directors shall be comprised of the entire representative Board of SL CapEx as determined by its charter.

At formation of the ETF on February 01, 2010, the SL CapEx Board of Director nominees for the 2010 term consisted of;

Chairman of the Board:
Scott Nestler, Founder NIC

Chief Executive Officer:
Cash Yiyuan, Independent Investor

Chief Operations Officer:
Bogart Beck, Founder BIG

Chief Technology Officer:
Chango Kanto, Founder VPAY

Outside Director:
Kubi Beam, Independent Investor

Cash on hand

141244

Tangible Assets

4658755.91

A new era is upon us...

To whom it may concern;

Almost a year ago the SL CapEx BOD made the difficult decision to seize control of Arbitrage Wise's SLW and WPM enterprises. While certainly an unpopular action for some, in the end it would appear we made the right decision. At that time, Arbitrage made specific commitments regarding his obligations, including a pledge to buy back 100% of the outstanding JTIC shares by year-end 2009. Clearly, that has not occurred in any measurable manner, and, ongoing recent dialogue between Arbitrage and the SL CapEx BOD has lead us to believe that he is no closer to settling those obligations than we were a year ago. As such, the time has come, once again, for SL CapEx to intervene on behalf of the JTIC investors. While a case could perhaps be made to allow JTIC to continue to trade indefinitely, we have arrived at the conclusion that many have suggested is long overdue - it's time to close this chapter, turn the page and move on.

So... now what? As with most of the messes we've been left to clean up, this one will be no easier than any of the others. As of 01/15/2009, EXCLUDING Arbitrage's JTIC holdings, 123 persons held the remaining 4,587,279 JTIC shares. At $0.60 per share, (JTIC's closing price Average over the last 30 days), that represents just over L$2.75M in Market Capitalization secured by virtually ZERO tangible assets and no foreseeable positive outlook.

Dare I say that's more financial risk than even Scott and I are willing to digest independently.

Over the last week or so we've looked at a variety of options and possibilities - none would likely provide much satisfaction for JTIC investors. Coincidentally, during that same time frame Andy Grant has been socializing an IPO concept (RA) that he's developed over on ISE.

(See http://www.intlstockexchange.com/punbb/viewpoll.php?id=1409 ).

While Andy and I sometimes disagree on policy issues and implementation, and technical trading strategies, in this case I think he may be on to something that could help fundamentally reshape the SL Investment landscape, and, may also help us provide a solution for the JTIC situation.

Andy's basic structure is a weighted, actively managed ETF with a corresponding inverse derivative as a stop-loss hedge. While Exchange Traded Funds are nothing new (it all comes down to the trading performance of the Fund Manager and the portfolio), what I do find compelling about Andy's concept is that the derivative product appears to be the very first in SL Finance that cannot be arbitrarily priced by the issuer or underwriter. If that's accurate then it's potentially a profoundly positive game changer.

I think Andy’s hypothesis assumes that the quantifiable risk of an Inverse derivative is directly proportional to the volatility and liquidity of the opposing asset portfolio. Thus broad diversity of the asset portfolio is fundamental to the risk mitigation strategy.

My concern for Andy's product at this point is the relatively small scale of the underlying ETF portfolio, which, while diverse, is at present somewhere in the neighborhood of just L$50K + cash, less the inverse derivative's liability. I think the small scale may be intentional - a "pilot" project to test the hypothesis – if that’s the case I wish Andy and the shareholders good fortune.

That brings us to the launch point for discussion regarding JTIC and the disposition of its investors. As I’ve mentioned, Scott and I are not prepared to independently bail out the JTIC investors – it is just far too expensive with no near term upside opportunity. We can, however, offer assistance by leveraging our existing pool of assets in a manner that builds a foundation for future growth and concurrently provides the potential to hedge against further losses. We’ll ultimately test Andy’s hypothesis on a larger scale.

In a nutshell, here’s what we’re proposing;

1. SL CapEx would form a NEW Exchange Traded Fund as a subsidiary of SL CapEx, however with its own tracking Stock.

2. SL CapEx then places its “Long Term Investment Portfolio” (current NAV of approx. L$1.9M) in an ETF Trust Account.

3. The ETF then acquires all remaining shares of JTIC (excepting Arbitrage Wise’ shares) at a predetermined Exchange Rate.

4. The ETF also acquires BTX to secure its asset portfolio (current NAV of approx.L$2.8M) w/ ETF as sole surviving entity.

5. SL CapEx would appoint Bogart Beck as the Fund’s Portfolio Manager and ETF Trust Administrator.

6. SL CapEx to allow a brief (indeterminate) timeframe to normalize ETF’s trading range and assess its portfolio volatility…

7. … ETF to launch an Inverse Derivative product using a methodology similar to that of RA and Andy Grant’s hypothesis.

Please find below a brief synopsis of the ETF Launch Capitalization structure required to account for the current Market Cap of JTIC and BTX which both historically trade at a substantial premium to their Net Asset Value.

1. Formation of ETF with 8M Authorized shares at L$1.20 per share for a total Market Cap of L$9.6M

2. Acquisition of JTIC with a merger Exchange Rate of 0.5:1 (0.5 ETF Shares for each 1 share of JTIC) Evaluates JTIC at L$0.60 per share - its 30 day closing average.

3. Acquisition of BTX with a merger Exchange Rate of 2.5:1 (2.5 ETF Shares for each 1 share of BTX) Evaluates BTX at L$3.00 per share - discounted but close to its 30 day closing average.

4. The initial NAV of ETF held securities would be approx. $4.8M ... not too bad when considering the disposition of JTIC.

Respectfully,

The SL CapEx BOD

EDITORS NOTE: The above proposal was ratified by a majority of BTX and CAPX shareholders on January 31, 2010 with the formal resolution outcome being the formation of THIS PRODUCT (ETF).

Whereas the definitive architecture of proposed derivative products hereof (ie; Inverse Fund) have yet to be described in detail, any such subsequent products shall each be subject to ETF shareholder approval via formal resolution prior to launch.

Business Overview

The CapEx Composite Fund (hereinafter ETF)(SL CapEX: ETF) has been developed as a marketable security trading on the SL Capital Exchange and is comprised of all the tangible Investment Portfolio Assets of SL CapEX.

As a SUBSIDIARY of SL CapEx, the ETF will NOT produce a periodic Income Statement or Balance Sheet but rather will report its performance as measured against a market capitalization-weighted composite index of all securities trading on SL CapEX as of February 01, 2010.

To establish a comparative performance baseline of 100 basis points, the CapEx Composite Index has been initially weighted as follows;

TICKER / WEIGHT
============
CAPX = 18.48%
FED = 6.23%
MLS = 8.53%
NIC = 32.30%
PHX = 2.00%
SLR = 5.94%
VBL = 7.10%
VPAY = 10.39%
ZEN = 9.04%
============
TOTAL = 100.00% (or 100 basis points).

The CapEx Composite Index will be periodically reviewed by CapEx management and will be re-balanced at least quarterly to reduce performace jitter and/or any time a security is added to or delisted from SL CapEx.

We believe this relatively simple methodology will help to facilitate qualitative measurement of fund performance for the average investor, and, will likely also create tracking-error arbitrage opportunities for the sophisticated investor - a good balance for our marketplace.

Business Strategy

Whereas traditional capitalization-weighted index funds seek to mirror the performance of the underlying index, we believe the methodology is systematically inefficient when a passive management style is employed as the sole fund strategy. Cap-weighted indexes tend to overweight overvalued stocks and conversely tend to underweight undervalued stocks. Additionally, the potential for accutely sub-optimal perfornmance is further compounded in SL by the sheer lack of diversification in the index itself. This very real concentration of risk is often amplified by extreme price volatility and a general lack of liquidity in the SL capital markets.

To mitigate such risk, the CapEx Composite Fund will employ a hybrid or ENHANCED 3-tier management strategy utilizing both passive and active trading components, as follows;

The passive component will seek to allocate 1/3 of the fund asset pool to directly mirror the CapEx Composite index. Our target for this component will be a static portfolio comprised of a 5% ownership stake in each indexed company.

EDITORS NOTE: At formation, the initial fund asset pool is severely unbalanced. Achieving the passive component goal will take some time and aggressive early active trading to reach its target. Once achieved, the passive component will only be rebalanced when the underlying index is rebalanced.

The second component of the fund will allocate 1/3 of the asset pool to active management using a FUNDAMENTALS-based trading strategy. Its purpose is to help reduce volatility in the composite index, offset potential composite index front-running at or near re-balancing, and to participate in ex-dividend distribution and opportunistic fair-value to market arbitrage. If managed properly, the active component should outperform the composite index by a small margin.

Whereas traditional ETF's typically trade at or near the NAV of the underlying portfolio, our strategy of employing an active component with authorization to participate in arbitrage opportunities should allow the CapEx Composite Fund to trade on the open market at a price substantially higher then NAV.
As such, at formation, the ETF has been priced at L$1.20 per unit, exactly 2x the initial fund NAV.

EDITORS NOTE: To achieve the initial targets of the first and second components, the fund manager will be authorized to execute off-market transactions (stock swaps) under the supervision of the SL CapEX Chairman. Any such transactions will be disclosed and reported via Press Release and/or a forum post immediately following the completion of such swaps. This authorization will be rescinded upon initial attainment of the fund targets.

The third component of the fund will seek to maintain fully 1/3 of the asset pool in CASH as a hedge against overall market declines and to provide sufficent resources to take advantage of short-term arbitrage opportunities as have been described in the active component above.

EDITORS NOTE: At formation, the funds cash position is substantially LESS than 1/3 of the asset pool. I have appealed to Scott to allocate a greater portion of the SL CapEX Capital Reserve to the ETF for this purpose. In the absense of such accomodation it may take some time to achieve the funds target cash weighting.

Business Strengths

Our greatest strength is without question the depth of experience of our Management Team and Board of Directors - we've each been around the SL block several times - we've witnessed the challenges firsthand, we continue to participate in all facets of the SL community at large and we're firmly dedicated to the value proposition that we offer the community via SL CapExand the CapEX Composite Fund.

Use of Capital

No incremental capital is being sought beyond allocation of some existing CapEx capital surplus to help increase NAV.

On an ongoing basis, (only upon achieving the ETF's initial asset allocation targets), we fully intend to distribute a substantial percentage of any monthly profits via dividend distribution. While difficult to predict at this early stage of development, a monthly dividend distribution of 85-90% of post-expense profits is likely an achievable goal.

Risk Factors

Capital Investment both in real-life and Second Life(tm) is fundamentally all about MANAGING RISK and is primarily about balancing the risk versus reward scenario. In any Investment opportunity there may be SUBSTANTIAL RISKS which must be thoroughly and diligently considered.

Specific to SL CapEx-based Investment REGARDLESS of whether you consider this activity to be simply STOCK MARKET GAME PLAY, an ECONOMIC SIMULATION, a TOY ECONOMY or a bona fide investment opportunity I implore you to familiarize yourself with both the Linden Lab Terms of Service (TOS) and the SL Capital Exchange Terms of Service (TOS) contained at the following links; (these be the basic rules)

Linden Lab TOS: http://secondlife.com/corporate/tos.php
SL CapEx TOS: http://www.slcapex.com/content/info

TO BE CRYSTAL CLEAR: YOU COULD LOSE SOME OR ALL OF YOUR SL CAPITAL INVESTMENT! ($L's)

Prior to considering any investment one must identify, analyze and mitigate risk at both a macro-level (example; governmental, regulatory, operating environment, et al) and at an enterprise or micro-level
(ie; company, competition, etc.). Additionally, the potential risks must be considered from both an internal (controllable) and external (no control) standpoint. We have diligently considered the following potential risks;

MACRO-LEVEL: There has been community discussion within the last year as to whether (or when) governmental agencies might intervene within the SL Financial community from a regulatory or legislative standpoint. This is an external risk over which we have no control.

There has also been debate and dialogue regarding Linden Lab's support and ongoing administrative control over the unit of measure commonly called $Lindens on several fronts, including;

(a) CONVERSION of $Lindens to a LEGAL TENDER CURRENCY and the potential tax consequences thereof. Here, too, we have no control or authority. Players ar encouraged to seek their own counsel regarding any potential tax consequences in their local jurisdiction.

(b) Linden Lab's ability to MAINTAIN a STABLE ECONOMY as measured by the EXCHANGE RATE of $Lindens to US Dollars, the availability and pricing of virtual Real Estate within the SL environment, and various other user experience metrics as are published from time-to-time by LL and others.

Regardless of LL's apparent unwillingness to acknowledge its role as the CENTRAL BANKING AUTHORITY and MONETARY POLICY ADMINISTRATOR within SL, they DO CONTROL the $L:$US conversion rate and thus have totalitarian authority and sphere of influence over the $Linden Unit of Measure and its trade value within the overall SL Economy.

We additionally have little direct control over the SL technical environment or the innovations and feature sets it supports. Our OPPORTUNITY is in finding unique ways to thrive and survive within and adjacent to the boundaries of the SL Metaverse.

MICRO/ENTERPRISE-LEVEL: The majority of our internal risks are directly related to our ability to articulate and execute viable business strategies, and our ability to successfully develop and deploy technologies that add value within the SL community.

Innovation within the SL community is MARGINALLY DEFENSIBLE from a competitive standpoint. Most successful SL product concepts are mimicked and/or improved upon by others rather rapidly. Creative Marketing strategies and ontinual product and process improvement is required to attain or maintain any level of competitive advantage within SL.

A portion of our Intellectual Property portfolio may be defensible from either a Copyright(C), Trademark(tm) or Patent standpoint. While we can make no claim as to the longterm sustainability of such competitive position we do intend to vigorously protect such rights where practical and economically viable.

Management

Reporting to Scott Nestler, Bogart Beck has been appointed as Managing Director of the fund responsible for portfolio performance, trade execution and operations. Cash Yiyuan is responsible for communication and Investor Relations. Chango Kanto shall serve as the funds Chief Technology Officer.

These roles generally mimic the experience, expertise and responsibilities of our SL CapEx roles which has proven to be a formidable and complementary management team structure.

With two Americanos and two Aussies serving the community, investors can generally trust that at least one of us is available for consultation almost any time 7/24/365.

The success or failure of any venture can generally be laid at the feet of its leadership. In considering the appropriate experience level and business accumen required of this venture it should be relatively clear that both broad and deep industry knowledge is required. Our daily decisions run the gamut from programming decisions to corporate governance to fiduciary and regulatory prudence.

The Board of Directors and Management Team of SL CapEx together as a collective bring the dynamics, chemistry and fortitude necessary to successfully operate this business.

We have exceptional vision, clearly articulated command and control and seperation of duties, and the operational discipline required of an enterprise that does what we do.

Ours is a DIFFICULT JOB on the BEST DAYS and an IMPOSSIBLE JOB on others - we can't please everyone every time. Regardless, we persevere mindful of the prize and the dream - it's still intact and we're as engaged as ever.

We wish you THE BEST in your Investment endeavors!

Questions?? Please feel free to drop us an e-mail or IM in-world!