Explanation

For an investor who:

1. Believes commodity prices trend
2. Wants an index not dominated by any one commodity

The most appropriate choice is A: equal-weighted and rebalanced annually

Why equal-weighted:

• Equal weighting ensures no single commodity dominates the index
• Each commodity has the same weight, providing diversification
• This prevents concentration risk in any single commodity

Why annual rebalancing:

• For trending markets, less frequent rebalancing is better
• Annual rebalancing allows trends to play out
• More frequent rebalancing (monthly) would cut off potential trends prematurely

Why not production-weighted:

• Production-weighted indexes can be dominated by commodities with high production volumes
• This contradicts the investor's goal of avoiding domination by any single commodity

Therefore, A: equal-weighted and rebalanced annually best meets both criteria.