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Disclosure

Description of United States 12 Month Oil Fund, LP and the General Risks of the Offering

An investment in the units issued by United States 12 Month Oil Fund, LP ("U12OF") involves risks. These risks can significantly impact the market value of the units. Some of the risks you may face are summarized below.

  • Unlike mutual funds, commodity pools or other investment pools that actively manage their investments in an attempt to realize income and gains from their investing activities and distribute such income and gains to their investors, US12OF generally does not expect to distribute cash to limited partners. 
  • There is a risk that US12OF will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such US12OF may not earn any profit.
  • The Benchmark Oil Futures Contract may not correlate with the spot price of light, sweet crude oil causing changes in the price of units to substantially vary from the changes in the spot price of light, sweet crude oil.  If this were to occur, investors may not be able to effectively use US12OF as a way to hedge against crude oil-related losses or as a way to indirectly invest in crude oil.
  • Investing in Other Oil Interests subjects US12OF to the risks of the crude oil industry and this could result in large fluctuations in the price of US12OF’s units.
  • US12OF’s exposure to market risk depends on a number of factors, including the markets for light, sweet crud oil, the volatility of interest rates and foreign exchange rates, the liquidity of the Oil Futures Contracts and Other Oil Interests markets and the relationships among the contracts held by US12OF.  Drastic market occurrences could ultimately lead to the loss of all or substantially all of an investor’s capital.
  • US12OF engages in the trading of futures contracts and options on futures contracts (collectively, “derivatives”). US12OF is exposed to both market risk, which is the risk arising from changes in the market value of the contracts, and credit risk, which is the risk of failure by another party to perform according to the terms of a contract.
  • Risks associated with the use of futures contracts are an imperfect correlation between movements in the price of the futures contracts and the market value of the underlying securities and the possibility of an illiquid market for a futures contract.
  • Certain of US12OF’s investments could be illiquid which could cause large losses to investors at any time or from time to time.
  • US12OF has credit risk under its futures contracts since the sole counterparty to all domestic and foreign futures contracts is the clearinghouse for the exchange on which the relevant contracts are traded.  In addition, US12OF bears the risk of financial failure by the clearing broker
  • The insolvency of a futures commission merchant could result in the complete loss of US12OF’s assets posted with that futures commission merchant; however, the vast majority of US12OF’s assets are held in U.S. Treasuries, cash and/or cash equivalents with US12OF’s custodian and would not be impacted by the insolvency of a futures commission merchant.  Also, the failure or insolvency of US12OF’s custodian could result in a substantial loss of US12OF’s assets.
  • Through March 31, 2011, all of the futures contracts held by US12OF were exchange-traded. However, in the future, if US12OF were to enter into non-exchange traded or over-the-counter contracts (OTC), it would be subject to the credit risk associated with counterparty non-performance. Unlike most exchange-traded futures contracts or exchange-traded options on such futures, each party to an OTC Contract bears the credit risk that the other party may not be able to perform its obligations under its contract.
  • USCF invests a portion of US12OF’s cash in money market funds that seek to maintain a stable net asset value. US12OF is exposed to any risk of loss associated with an investment in these money market funds.
  • Proposed regulation by the CFTC and SEC as promulgated under the Dodd-Frank Act would change operational requirements by US12OF, increasing cost and changing operational procedures which could negatively impact US12OF.
  • US12OF is not a registered investment company so unit holders do not have the protections afforded by the Investment Company Act of 1940.
  • USCF’s trading system is quantitative in nature and it is possible that USCF might make a mathematical error.  In addition, it is also possible that a computer or software program may malfunction and cause an error in computation.
  • An unanticipated number of redemption requests during a short period of time could have an adverse effect on the net asset value of US12OF.
  • A portion of US12OF’s trades may take place on markets and exchanges outside the United States.  Some non-U.S. markets present risks because they are not subject to the same degree of regulation as their U.S. counterparts. 
  • Regulation of the commodity interests and energy markets is extensive and constantly changing; future regulatory developments are impossible to predict but may significantly and adversely affect US12OF.

*Some risks listed above may be mitigated due to rules proposed by the CFTC and SEC as promulgated under the Dodd-Frank Act.  For a discussion of these risks and others, please see the current Prospectus .

For a copy of the Prospectus contact: ALPS Distributors, Inc., 1290 Broadway, Suite 1100, Denver, Colorado 80203 or call 800.920.0259 or click me .

USL is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.

Commodities and futures generally are volatile and are not suitable for all investors. USL is speculative and involves a high degree of risk. An investor may lose all or substantially all of an investment in USL. Funds that focus on a single sector generally experience greater volatility.

For further discussion of these and additional risks associated with an investment in USL units, click here.

Investing in USL subjects you to the risks of the oil industry. These risks could result in large fluctuations in the price of USL's units. An investor could lose all or substantially all of his/her investment.

The price of units may not accurately track the spot price of oil and you may not be able to effectively use USL as a way to hedge the risk of losses in your oil-related transactions or as a way to indirectly invest in oil.

Investors buy and sell units in the secondary market (i.e., not directly from USL). Only "authorized purchasers" may trade directly with USL, in minimum blocks of 100,000 units.

The United States 12 Month Oil Fund Fund is distributed by ALPS Distributors, Inc.

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