Fund Objective & Key Features

The United States 12 Month Oil Fund, LP (USL) is an exchange traded security that is designed to track the movements of West Texas Intermediate light, sweet crude oil (WTI). USL issues units that may be purchased and sold on the NYSE Arca.

USL is a commodity pool organized as a Delaware limited partnership that issues units that may be purchased and sold on the NYSE Arca.

USL's Objective

The investment objective of USL is to have the changes in percentage terms of the units' net asset value reflect the changes in percentage terms of the price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the average of the prices of 12 Futures Contracts on crude oil traded on the New York Mercantile Exchange (the "Benchmark Futures Contracts"), consisting of the near month contract to expire and the contracts for the following eleven months, for a total of 12 consecutive months' contracts, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contracts that are the next month contract to expire and the contracts for the following eleven consecutive months, less USL's expenses. When calculating the daily movement of the average price of the 12 contracts each contract month will be equally weighted.

USL's Portfolio

The portfolio consists of listed crude oil futures contracts and other oil related futures, forwards, and swap contracts. These investments will be collateralized by cash, cash equivalents and US government obligations with remaining maturities of two years or less.

USL's Key Features

USL provides a vehicle to hedge crude oil movements or to take directional positions on oil prices
USL offers the convenience of an exchange-traded security (NYSE Arca)
USL permits commodity-like exposure without using a commodity futures account
USL provides equity-like order flexibility, including market, limit, stop, stop limit and GTC orders
USL provides Market Price, NAV, and Portfolio Holdings on a daily basis

USL's Creation & Redemption Process

Creation/redemption basket size: 100,000 units
Order cut-off for APs is 12:00 pm EST
USL's NAV calculated as of 4:00 pm EST
Settlement is T+3
Transaction charge for each AP order is $1,000 (per order, not per basket)
Creation payment is in cash and/or acceptable Treasuries
Custodian is Brown Brothers Harriman & Co.
Marketing Agent is ALPS Distributors, Inc.

U.S. Federal Income Tax Considerations

A summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of units in USL, and the U.S. federal income tax treatment of USL, is set forth in the Prospectus .

Each prospective investor is advised to consult its own tax advisor as to the U.S. federal income tax consequences of an investment in USL to the investor and as to applicable state, local or foreign taxes.

Tax Status of USL

USL is organized and will be operated as a limited partnership in accordance with the provisions of the Amended and Restated Agreement of Limited Partnership, dated October 30, 2009, and applicable state law. Under the Internal Revenue Code of 1986, as amended (the "Code"), an entity classified as a partnership that is deemed to be a "publicly traded partnership" is generally taxable as a corporation for federal income tax purposes. The Code provides an exception to this general rule for a publicly traded partnership whose gross income for each taxable year of its existence consists of at least 90% "qualifying income" ("qualifying income exception"). For this purpose, section 7704 defines "qualifying income" as including, in pertinent part, interest (other than from a financial business), dividends and gains from the sale or disposition of capital assets held for the production of interest or dividends. In addition, in the case of a partnership a principal activity of which is the buying and selling of commodities (other than as inventory) or of futures, forwards and options with respect to commodities, "qualifying income" includes income and gains from such commodities and futures, forwards and options with respect to commodities. USL and the General Partner have represented the following to Sutherland Asbill & Brennan LLP:

at least 90% of USL's gross income for each taxable year will constitute "qualifying income" within the meaning of Code section 7704 (as described above);
USL will be organized and operated in accordance with its governing agreements and applicable law; and
USL has not elected, and will not elect, to be classified as a corporation for U.S. federal income tax purposes.

Based in part on these representations, Sutherland Asbill & Brennan LLP is of the opinion that USL will be classified as a partnership for federal income tax purposes and that it will not be taxable as a corporation for such purposes.

If USL failed to satisfy the qualifying income exception in any year, other than a failure that is determined by the Internal Revenue Service to be inadvertent and that is cured within a reasonable time after discovery, USL would be taxable as a corporation for federal income tax purposes and would pay federal income tax on its income at regular corporate rates. In that event, unitholders would not report their share of USL's income or loss on their returns. In addition, distributions to unitholders would be treated as dividends to the extent of USL's current and accumulated earnings and profits. To the extent a distribution exceeded USL's earnings and profits, the distribution would be treated as a return of capital to the extent of a unitholder's basis in its units, and thereafter as gain from the sale of units. Accordingly, if USL were to be taxable as a corporation, it would likely have a material adverse effect on the economic return from an investment in USL and on the value of the units.

Under recently enacted legislation, interests in and income from "qualified publicly traded partnerships" satisfying certain gross income tests are treated as qualifying assets and income, respectively, for purposes of determining eligibility for regulated investment company ("RIC") status. A RIC may invest up to 25% of its assets in interests in a qualified publicly traded partnership. The determination of whether a publicly traded partnership such as USL is a qualified publicly traded partnership is made on an annual basis. USL expects to be a qualified publicly traded partnership in each of its taxable years. However, such qualification is not assured.

The foregoing is only a partial summary of the federal income tax consequences of an investment in USL. The full summary can be found in the Prospectus .

Fund Details
USL Data	as of 02/03/2012
Ticker	USL
IIV	USL.IV
CUSIP	91288V103
ISIN	US91288V1035
Minimum Trade Size	1 share
Marginable*	Yes
Options Traded	Yes
Administrator	Brown Brothers Harriman & Co.
Distributor	ALPS Distributors, Inc.
General Partner	United States Commodity Funds, LLC
Management Expense Ratio	0.60%
Trading Increment	$0.01

*There are special risks associated with margin investing. Please ask your financial advisor for more information about these risks.

back to the top >>