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Item 1A. Risk Factors

2021-02-26 compared with 2020-03-13 · 137 added, 107 removed, 354 unchanged (41% of the section changed)

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Each Trust Series’ investment objective is for the daily percentage change in the NAV per share to reflect the daily percentage changes of the Applicable Index, less the Trust Series’ expenses.

Each Trust Series seeks to achieve its investment objective by investing in a combination of Futures Contracts and Other Commodity Related Investments such that the daily changes in its NAV, measured in percentage terms, will closely track the changes in the daily price of the Applicable Index, also measured in percentage terms.

Each Trust Series seeks to achieve its investment objective by investing in a combination of Futures Contracts and Other Commodity Related Investments such that the daily percentage changes in its NAV, measured in percentage terms, will closely track the changes in the daily price of the Applicable Index, also measured in percentage terms.

Each Trust Series’ investment strategy is designed to provide investors with a cost-effective way to invest indirectly in various commodities and to hedge against movements in the spot price of applicable commodities.

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Consequently, you could lose all or substantially all of your investment in a Trust Series.

Changes to U.S.

tariff and import/export regulations may have a negative effect on Trust Series’ developments.

There has been ongoing discussion and commentary regarding potential significant changes to U.S.

trade policies, treaties and tariffs.

The current U.S.

presidential administration, along with the U.S.

Congress, has created significant uncertainty about the future relationship between the United States and other countries with respect to trade policies, treaties and tariffs.

These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global crude oil, generally.

Any of these factors could depress economic activity and could have a material adverse effect on Trust Series’ business, financial condition and results of operations, which in turn would negatively impact Trust Series and its shareholders.

Uncertainty about presidential administration initiatives could negatively impact Trust Series’ business, financial condition and results of operations.

The current presidential administration has called for significant changes to U.S.

trade, healthcare, immigration, foreign and government regulatory policy.

Accordingly, there is significant uncertainty with respect to legislation, regulation and government policy at the federal level, as well as the state and local levels.

Recent events have created heightened uncertainty and introduced new and difficult-to-quantify macroeconomic and political risks.

There has been a corresponding increase in the uncertainty surrounding interest rates, inflation, foreign exchange rates, trade volumes and fiscal and monetary policy.

To the extent the U.S.

Congress or the current presidential administration implements changes to U.S.

policy, those changes may impact, among other things, the U.S.

and global economy, international trade and relations, unemployment, immigration, corporate taxes, healthcare, the U.S.

regulatory environment, inflation, supply and demand for commodities (including crude oil), and other areas.

Although Trust Series cannot predict the impact, if any, of these changes to Trust Series’ business, they could adversely affect Trust Series’ business, financial condition, operating results and cash flows.

Economic impacts due to Brexit.

In June 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (“Brexit”) and, following the House of Commons having passed a Brexit deal on December 20, 2019, the U.K.

formally left the European Union on January 31, 2020.

is currently in a transition period until December 31, 2020, when agreements surrounding trade and other aspects of the U.K.’s future relationship with the European Union will need to be finalized.

Until such agreements are finalized, there will be political and economic uncertainty in the United Kingdom and the European Union.

In addition, the fiscal and monetary policies of foreign nations, such as Russia and China, may have a severe impact on the worldwide and U.S.

commodity markets.

Such disruptions could adversely impact the value of the investments of each Trust Series.

Because USCF anticipates it will “roll” the position of each Trust Series held in Applicable Interests, it may be subject to the potential negative impact from rolling futures positions.

USCF anticipates it will “roll” the positions of each Trust Series held in Applicable Interests and, as a result, is subject to risks related to rolling.

The contractual obligations of a buyer or seller holding a futures contract to expiration may generally be satisfied by settling in cash as designated in the contract specifications.

Alternatively, futures contracts may be closed out prior to expiration by making an offsetting sale or purchase of an identical futures contract on the same or linked exchange before the designated date of settlement.

Once this date is reached, the futures contract “expires.” As the futures contracts held by a Trust Series near expiration, they are generally closed out and replaced by contracts with a later expiration.

This process is referred to as “rolling.” The Trust Series does not intend to hold futures contracts through expiration, but instead to “roll” its positions.

When the market for these contracts is such that the prices are higher in the more distant delivery months than in the nearer delivery months, the sale during the course of the “rolling process” of the more nearby contract would take place at a price that is lower than the price of the more distant contract.

This pattern of higher futures prices for longer expiration futures contracts is often referred to as “contango.” Alternatively, when the market for these contracts is such that the prices are higher in the nearer months than in the more distant months, the sale during the course of the “rolling process” of the more nearby contract would take place at a price that is higher than the price of the more distant contract.

This pattern of higher futures prices for shorter expiration futures contracts is referred to as “backwardation.”

The presence of contango in certain futures contracts at the time of rolling would be expected to adversely affect the long positions of a Trust Series, and positively affect the short positions of a Trust Series.

Similarly, the presence of backwardation in certain futures contracts at the time of rolling such contracts would be expected to adversely affect the short positions of a Trust Series and positively affect the long positions of a Trust Series.

There have been extended periods in which contango or backwardation has existed in the futures contract markets for various types of futures contracts, and such periods can be expected to occur in the future.

These extended periods have in the past and can in the future cause significant losses for a Trust Series, and the periods can have as much or more impact over time than movements in the level of Trust Series’ Applicable Benchmark Component Futures Contracts.

COVID-19 and other infectious disease outbreaks could negatively affect the valuation and performance of the Trust Series’ investments.

An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and has now been detected globally.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.

COVID-19 has resulted in numerous deaths, travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines and the imposition of both local and more widespread “work from home” measures, cancellations, loss of employment, supply chain disruptions, and lower consumer and institutional demand for goods and services, as well as general concern and uncertainty.

The ongoing spread of COVID-19 has had, and is expected to continue to have, a material adverse impact on local economies in the affected jurisdictions and also on the global economy, as cross border commercial activity and market sentiment are increasingly impacted by the outbreak and government and other measures seeking to contain its spread.

The impact of COVID-19, and other infectious disease outbreaks that may arise in the future, could adversely affect individual issuers and capital markets in ways that cannot necessarily be foreseen.

In addition, actions taken by government and quasi-governmental authorities and regulators throughout the world in response to the COVID-19 outbreak, including significant fiscal and monetary policy changes, may affect the value, volatility, pricing and liquidity of some investments or other assets, including those held by or invested in by the Trust Series.

Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally.

The duration of the COVID-19 outbreak and its ultimate impact on the Trust Series and, on the global economy, cannot be determined with certainty.

The COVID-19 pandemic and its effects may last for an extended period of time, and could result in significant and continued market volatility, exchange trading suspensions and closures, declines in global financial markets, higher default rates, and a substantial economic downturn or recession.

The foregoing could impair the Trust Series’ ability to maintain operational standards (such as with respect to satisfying redemption requests), disrupt the operations of the Trust Series’ service providers, adversely affect the value and liquidity of the Trust Series’ investments, and negatively impact the Trust Series’ performance and your investment in the Trust Series.

The extent to which COVID-19 will affect the Trust Series and the Trust Series’ service providers and portfolio investments will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken to contain COVID-19.

Given the significant economic and financial market disruptions associated with the COVID-19 pandemic, the valuation and performance of the Trust Series’ investments could be impacted adversely.

An investment in a Trust Series may provide little or no diversification benefits.

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In such a case, a Trust Series may have no gains to offset losses from other investments, and investors may suffer losses on their investment in a Trust Series at the same time they incur losses with respect to other investments.

Variables such as drought, floods, weather, embargoes, tariffs and other political events may have a larger impact on commodity prices and commodity-linked instruments, including Futures Contracts and Other Commodity-Related Investments, than on traditional securities.

Variables such as drought, floods, weather, pandemics (such as COVID-19), embargoes, tariffs and other political events may have a larger impact on commodity prices and commodity-linked instruments, including Futures Contracts and Other Commodity-Related Investments, than on traditional securities.

These additional variables may create additional investment risks that subject a Trust Series’ investments to greater volatility than investments in traditional securities.

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In the absence of negative correlation, a Trust Series cannot be expected to be automatically profitable during unfavorable periods for the stock market, or vice versa.

Historical performance of a Trust Series and the Benchmark Futures Contract is not indicative of future performance.

Past performance of a Trust Series or the Benchmark Futures Contract is not necessarily indicative of future results.

Therefore, past performance of a Trust Series or the Benchmark Futures Contract should not be relied upon in deciding whether to buy shares of a Trust Series.

Historical performance of a Trust Series and the Applicable Benchmark Component Futures Contracts is not indicative of future performance.

Past performance of a Trust Series or the Applicable Benchmark Component Futures Contracts is not necessarily indicative of future results.

Therefore, past performance of a Trust Series or the Applicable Benchmark Component Futures Contracts should not be relied upon in deciding whether to buy shares of a Trust Series.

Correlation Risk

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Daily percentage changes in a Trust Series’ NAV may not correlate with daily percentage changes in the price of the Applicable Index .

It is possible that the daily percentage changes in a Trust Series’ NAV per share may not closely correlate to daily percentage changes in the price of the Applicable Index.

Non-correlation may be attributable to disruptions in the market for a particular commodity, the imposition of position or accountability limits by regulators or exchanges, or other extraordinary circumstances.

As a Trust Series approaches or reaches position limits with respect to a Benchmark Component Futures Contract or other Futures Contracts or in view of market conditions, a Trust Series may begin investing in Other Commodity-Related Investments.

In addition, a Trust Series is not able to replicate exactly the changes in the price of the Applicable Index because the total return generated by a Trust Series is reduced by expenses and transaction costs, including those incurred in connection with a Trust Series’ trading activities, and increased by interest income from a Trust Series’ holdings of Treasury securities.

Tracking the Applicable Index requires trading of a Trust Series’ portfolio with a view to tracking the Applicable Index over time and is dependent upon the skills of USCF and its trading principals, among other factors.

Daily percentage changes in the price of the Benchmark Component Futures Contract may not correlate with daily percentage changes in the spot price of the corresponding commodity.

The correlation between changes in prices of a Benchmark Component Futures Contract and the spot price of the corresponding commodity may at times be only approximate.

The degree of imperfection of correlation depends upon circumstances such as variations in the speculative commodities market, supply of and demand for Futures Contracts (including the Benchmark Component Futures Contract) and Other Commodity-Related Investments, and technical influences in futures trading.

A Trust Series’ NAV per share will change throughout the day as fluctuations occur in the market value of that Trust Series’ portfolio investments.

The public trading price at which an investor buys or sells shares during the day from their broker may be different from the NAV of the shares.

Price differences may relate primarily to supply and demand forces at work in the secondary trading market for shares that are closely related to, but not identical to, the same forces influencing the prices of the commodities comprising the Applicable Benchmark Component Futures Contracts and the Applicable Index at any point in time.

USCF expects that exploitation of certain arbitrage opportunities by “Authorized Participants,” the institutional firms that directly purchase and redeem shares in blocks of 50,000 shares (“Creation Baskets” and “Redemption Baskets” respectively, together, “baskets”), and their clients and customers will tend to cause the public trading price to track NAV per share closely over time, but there can be no assurance of that.

For example, a shortage of a Trust Series’ shares in the market and other factors could cause that Trust Series’ shares to trade at a premium.

Investors should be aware that such premiums can be transitory.

To the extent an investor purchases shares that include a premium (e.g., because of a shortage of shares in the market due to the inability of Authorized Participants to purchase additional shares from a Trust Series that could be resold in the market) and the cause of the premium no longer exists causing the premium to disappear (e.g., because more shares are available for purchase from the Trust Series by Authorized Participants that could be resold into the market) such investor’s return on its investment would be adversely impacted due to the loss of the premium.

The NAV of a Trust Series’ shares may also be influenced by non-concurrent trading hours between the NYSE Arca and the various futures exchanges on which a commodity comprising the Applicable Index is traded.

While the shares trade on the NYSE Arca from 9:30 a.m.

Eastern Time, the trading hours for the futures exchanges on commodities trade may not necessarily coincide during all of this time.

An investment in a Trust Series is not a proxy for investing in the commodities markets, and the daily percentage changes in the price of the Applicable Benchmark Component Futures Contracts, or the NAV of the Trust Series, may not correlate with daily percentage changes in the spot price of the physical commodities that underlie the Applicable Index.

An investment in a Trust Series is not a proxy for investing in the commodities markets.

To the extent that investors use a Trust Series as a means of investing indirectly in physical commodities, there is the risk that the daily changes in the price of the Trust Series’ shares on the NYSE Arca, on a percentage basis, will not closely track the daily changes in the spot price of the commodities on a percentage basis.

This could happen if the price of shares traded on the NYSE Arca does not correlate closely with the value of the Trust Series’ NAV;

the changes in the Trust Series’ NAV do not correlate closely with the changes in the price of the Benchmark Component Futures Contract;

or the changes in the price of the Benchmark Component Futures Contract does not closely correlate with the changes in the cash or spot price of the commodities.

This is a risk because if these correlations do not exist, then investors may not be able to use the Trust Series as a cost-effective way to indirectly invest in commodities or as a hedge against movements in the spot price of commodities.

The degree of correlation among a Trust Series’ share price, the price of the Benchmark Component Futures Contract and the spot price of commodities depends upon circumstances such as variations in the speculative commodities market, supply of and demand for Futures Contracts (including the Applicable Benchmark Component Futures Contracts) and Other Related Investments, and technical influences on trading futures contracts.

Investors who are not experienced in investing in futures contracts or the factors that influence that market or speculative trading in futures markets and may not have the background or ready access to the types of information that investors familiar with these markets may have and, as a result, may be at greater risk of incurring losses from trading in a Trust Series’ shares than such other investors with such experience and resources.

Daily percentage changes in the price of the Applicable Benchmark Component Futures Contract may not correlate with daily percentage changes in the spot price of the corresponding commodity.

The correlation between changes in prices of an Applicable Benchmark Component Futures Contract and the spot price of the corresponding commodity may at times be only approximate.

The degree of imperfection of correlation depends upon circumstances such as variations in the speculative commodities market, supply of and demand for Futures Contracts (including the Applicable Benchmark Component Futures Contract) and Other Commodity-Related Investments, and technical influences in futures trading.

In addition, a Trust Series is not able to replicate exactly the changes in the price of the Applicable Index because the total return generated by the Trust Series is reduced by expenses and transaction costs, including those incurred in connection with the Trust Series’ trading activities, and increased by interest income from the Trust Series’ holdings of Treasuries.

Tracking the Applicable Index requires trading of the relevant Trust Series’ portfolio with a view to tracking the Applicable Index over time and is dependent upon the skills of USCF and its trading principals, among other factors.

The price relationship between each Applicable Index at any point in time and the Futures Contracts that will become the Applicable Benchmark Component Futures Contracts on the next rebalancing date will vary and may impact both a Trust Series’ total return and the degree to which its total return tracks that of commodity price indices.

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Once the daily price fluctuation limit has been reached in a particular futures contract, no trades may be made at a price beyond that limit.

As discussed above, the CFTC has proposed to adopt limits on speculative positions in 25 physical commodity futures and option contracts as well as swaps that are economically equivalent to such contracts in the agriculture, energy and metals markets.

The Position Limit Rules would, among other things:

identify which contracts are subject to speculative position limits;

set thresholds that restrict the size of speculative positions that a person may hold in the spot month, other individual months, and all months combined;

create an exemption for positions that constitute bona fide hedging transactions;

impose responsibilities on DCMs and SEFs to establish position limits or, in some cases, position accountability rules;

and apply to both futures and swaps across four relevant venues:

OTC, DCMs, SEFs as well as certain non-U.S.

located platforms.

The CFTC’s first attempt at finalizing the Position Limit Rules, in 2011, was successfully challenged by market participants in 2012 and, since then, the CFTC has re-proposed them and solicited comments from market participants multiple times.

At this time, it is unclear how the Position Limit Rules may affect the Trust Series, but the effect may be substantial and adverse.

By way of example, the Position Limit Rules may negatively impact the ability of a Trust Series to meet its investment objectives through limits that may inhibit USCF’s ability to sell additional Creation Baskets of the Trust Series.

See "The Commodity Interest Markets-Commodities Regulation"

in this annual report on Form 10-K for additional information.

Until such time as the Position Limit Rules are adopted, the regulatory architecture in effect prior to the adoption of the Position Limit Rules will govern transactions in commodities and related derivatives.

Under that system, the CFTC enforces federal limits on speculation in nine agricultural products (e.g., corn, wheat and soy), while futures exchanges establish and enforce position limits and accountability levels for other agricultural products and certain energy products (e.g., oil and natural gas).

As a result, a Trust Series may be limited with respect to the size of its investments in any commodities subject to these limits.

Under existing and recently adopted CFTC regulations, for the purpose of position limits, a market participant is generally required, subject to certain narrow exceptions, to aggregate all positions for which that participant controls the trading decisions with all positions for which that participant has a 10 percent or greater ownership interest in an account or position, as well as the positions of two or more persons acting pursuant to an express or implied agreement or understanding with that participant.

The Aggregation Rules will also apply with respect to the Position Limit Rules if and when such Position Limit Rules are adopted.

As discussed above, on October 15, 2020, the CFTC approved the Position Limits Rule.

The Position Limits Rule establishes federal position limits for 25 core referenced futures contracts (comprised of agricultural, energy and metals futures contracts), futures and options linked to the core referenced futures contracts, and swaps that are economically equivalent to the core referenced futures contracts.

The Position Limits Rule sets position limits for the spot month and non-spot month;

however, the non-spot month limits only apply in respect of the agricultural futures contracts that are currently subject to position limits under Part 150 of the CFTC regulations (the “legacy agricultural contracts”).

With respect to regulatory oversight, the Position Limits Rule delegates authority to designated contract markets and swap execution facilities to oversee certain aspects of the position limits framework.

In addition to setting the federal position limits, the Position Limits Rule also provides several exemptions from such position limits, including an expanded list of enumerated bona fide hedge exemptions and certain spread exemptions.

Further, the Position Limits Rule sets forth two alternative processes for pursuing an exemption for non-enumerated hedge positions.

Other than for the legacy agricultural contracts, compliance with the limits imposed by the Position Limits Rule will not be required until 2022, except that economically equivalent swaps need not comply with the Position Limits Rule until 2023.

Certain of the Applicable Benchmark Component Futures Contracts will be subject to position limits under the Position Limits Rule, and the Trust Series’ trading does not qualify as an enumerated bona fide hedge.

Accordingly, the Position Limits Rule could negatively impact the ability of the Trust Series to meet their investment objectives by inhibiting USCF’s ability to effectively invest the proceeds from sales of Creation Baskets of the Trust Series in particular amounts and types of its permitted investments.

Until such time as compliance with the Position Limits Rule is required, the regulatory architecture in effect prior to the adoption of the Position Limit Rules will govern transactions in commodities and related derivatives.

Under that system, the CFTC enforces federal limits on speculation in the nine legacy agricultural contracts, while futures exchanges establish and enforce position limits and accountability levels for other agricultural products and certain energy products (e.g., oil and natural gas).

Under existing CFTC regulations and the Position Limits Rule, for the purpose of position limits, a market participant is generally required, subject to certain narrow exceptions, to aggregate in accordance with the Aggregation Rules.

All of these limits may potentially cause a tracking error between the price of a Trust Series’ shares and the Applicable Index.

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In addition, if a Trust Series exceeds accountability levels on either the NYMEX or ICE Futures and is required by such exchanges to reduce its holdings, such reduction could potentially cause a tracking error between the price of a Trust Series’ shares and the Applicable Index.

Risk mitigation measures imposed by the Trust Series’ FCMs have the potential to cause tracking error by limiting a Trust Series’ investments, including its ability to fully invest in the Applicable Benchmark Component Futures Contract and other Futures Contracts, which could cause the price of the Trust Series’ shares to substantially vary from the price of the Applicable Benchmark Component Futures Contracts.

The Trust Series’ FCMs have discretion to impose limits on the positions that a Trust Series may hold in the Applicable Benchmark Component Futures Contracts as well as certain other months.

To date, the Trust Series’ FCMs have not imposed any such limits.

However, were the FCMs to impose limits on a Trust Series, such Trust Series’ ability to have a substantial portion of its assets invested in the Applicable Benchmark Component Futures Contract and other Futures Contracts could be severely limited, which could lead the Trust Series to invest in other Futures Contracts or, potentially, Other Related Investments.

The Trust Series could also have to more frequently rebalance and adjust the types of holdings in its portfolio than is currently the case.

This could inhibit the Trust Series from pursuing its investment objective in the same manner that it has historically and currently.

In addition, when offering Creation Baskets for purchase, limitations imposed by exchanges and/or any of the FCMs could limit a Trust Series’ ability to invest the proceeds of the purchases of Creation Baskets in Applicable Benchmark Component Futures Contracts and other Futures Contracts.

If this were the case, the Trust Series may invest in other permitted investments, including Other Related Investments, and may hold larger amounts of Treasuries, cash and cash equivalents, which could impair the Trust Series’ ability to meet its investment objective.

An investor’s tax liability may exceed the amount of distributions, if any, on its shares.

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This difference could be temporary or permanent and, if permanent, could result in it being taxed on amounts in excess of its economic income.

Items of income, gain, deduction, loss and credit with respect to shares could be reallocated, and for taxable periods beginning after December 31, 2017, the Trust Series could be liable for U.S.

Federal income tax, if the U.S.

Internal Revenue Service (“IRS”) does not accept the assumptions and conventions applied by the Trust Series in allocating those items, with potential adverse consequences for an investor.

Items of income, gain, deduction, loss and credit with respect to shares could be reallocated, the Trust Series could be liable for U.S.

Federal income tax, if the IRS does not accept the assumptions and conventions applied by the Trust Series in allocating those items, with potential adverse consequences for an investor.

tax rules pertaining to entities taxed as partnerships are complex and their application to large, publicly traded entities such as the Trust Series is in many respects uncertain.

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Business – Commodities Regulation ,” are intended to mitigate this risk.

Nevertheless, if a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, a Trust Series may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding.

If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, a Trust Series may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding.

The Trust on behalf of a Trust Series may obtain only limited recovery or may obtain no recovery in such circumstances.

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As a result, it may be difficult to obtain an independent value for an outstanding OTC derivatives transaction.

The Trust Series pay fees and expenses that are incurred regardless of whether they are profitable.

Unlike mutual funds, commodity pools or other investment pools that manage their investments in an attempt to realize income and gains and distribute such income and gains to their investors, the Trust Series generally do not distribute cash shareholders.

You should not invest in a Trust Series if you will need cash distributions from the Trust Series to pay taxes on your share of income and gains of the Trust Series, if any, or for any other reason.

You will have no rights to participate in the management of a Trust Series and will have to rely on the duties and judgment of USCF to manage the Trust Series.

The Trust Series is subject to actual and potential inherent conflicts involving USCF, various commodity futures brokers and “Authorized Participants,” the institutional firms that directly purchase and redeem shares in baskets of 50,000 shares.

USCF’s officers, directors and employees do not devote their time exclusively to the Trust Series.

USCF’s personnel are directors, officers or employees of other entities that may compete with the Trust Series for their services, including other commodity pools (funds) that USCF manages.

USCF could have a conflict between its responsibilities to the Trust Series and to those other entities.

As a result of these and other relationships, parties involved with the Trust Series have a financial incentive to act in a manner other than in the best interest of the Trust Series and the shareholders.

Certain of a Trust Series’ investments could be illiquid, which could cause large losses to investors at any time or from time to time.

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In addition, even if collateral is used to reduce counterparty credit risk, sudden changes in the value of OTC transactions may leave a party open to financial risk due to a counterparty default since the collateral held may not cover a party’s exposure on the transaction in such situations.

Each Trust Series is not actively managed and tracks the Applicable Index during periods in which the price of the Benchmark Component Futures Contracts are flat or declining, as well as when the price is rising.

Each Trust Series is not actively managed by conventional methods.

Accordingly, if a Trust Series’ investments in Related Interests are declining in value, the Trust Series will not close out such positions except in connection with paying the proceeds to an Authorized Participant upon the redemption of basket or closing out futures positions in connection with the monthly change in the Benchmark Component Futures Contracts.

USCF will seek to cause the NAV of each Trust Series’ shares to track the Applicable Index during periods in which the price is flat or declining as well as when the price is rising.

The Trust Series are not actively managed and their investment objectives are for the daily changes in percentage terms of their shares’ per share NAV for any period of 30 successive valuation days to be within plus/minus 10 percent (10%) of the average daily percentage change in the price of the Applicable Benchmark Component Futures Contracts over the same period.

The Trust Series are not actively managed by conventional methods.

Accordingly, if a Trust Series' investments are declining in value, the Trust Series will not close out such positions except in connection with paying the proceeds to an Authorized Participant upon the redemption of a basket or closing out futures positions in connection with the monthly change in the Applicable Benchmark Component Futures Contracts.

USCF will seek to cause the NAV of the shares of each Trust Series to track the Applicable Index during periods in which the price is flat or declining as well as when the price is rising.

The ability of each Trust Series to invest in the Applicable Benchmark Component Futures Contracts could be limited as a result of any or all of the following:

evolving market conditions, a change in regulatory accountability levels and position limits imposed on the Trust Series with respect to its investment in Futures Contracts, additional or different risk mitigation measures taken by market participants, generally, including a Trust Series, with respect to such Trust Series acquiring additional Futures Contracts, or such Trust Series selling additional shares.

A Trust Series may not meet the listing standards of NYSE Arca, which would adversely impact an investor’s ability to sell shares.

The shares of each Trust Series are listed for trading on the NYSE Arca.

NYSE Arca may suspend a Trust Series' shares from trading on the exchange with other without prior notice to the Trust Series upon failure of such Trust Series to comply with the NYSE’s listing requirements or, when in its sole discretion, the NYSE Arca determines that such suspension of dealings is in the public interest or otherwise warranted.

There can be no assurance that the requirements necessary to maintain the listing of each Trust Series' shares will continue to be met or will remain unchanged.

If a Trust Series were unable to meet the NYSE’s listing standards and were to become delisted, an investor’s ability to sell its shares would be adversely impacted.

The NYSE Arca may halt trading in a Trust Series’ shares, which would adversely impact an investor’s ability to sell shares.

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If an investor needs to sell shares at a time when no active trading market for them exists, the price the investor receives upon sale of the shares, assuming they were able to be sold, likely would be lower than if an active market existed.

Limited partners may have limited liability in certain circumstances, including potentially having liability for the return of wrongful distributions.

Under Delaware law, a limited partner might be held liable for a Trust Series’ obligations as if it were a general partner if the limited partner participates in the control of the partnership’s business and the persons who transact business with the partnership think the limited partner is the general partner.

A limited partner will not be liable for assessments in addition to its initial capital investment in any of a Trust Series’ shares.

However, a limited partner may be required to repay to a Trust Series any amounts wrongfully returned or distributed to it under some circumstances.

Under Delaware law, a Trust Series may not make a distribution to limited partners if the distribution causes a Trust Series’ liabilities (other than liabilities to partners on account of their partnership interests and nonrecourse liabilities) to exceed the fair value of a Trust Series’ assets.

Delaware law provides that a limited partner who receives such a distribution and knew at the time of the distribution that the distribution violated the law will be liable to the limited partnership for the amount of the distribution for three years from the date of the distribution.

SummerHaven is leanly staffed and relies heavily on key personnel to manage advisory activities.

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There is a risk that a Trust Series will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such a Trust Series may not earn any profit.

Each Trust Series pays brokerage charges of approximately 0.10% of average total net assets based on brokerage fees of $3.50 per buy or sell, management fees of 0.95% of NAV on its average net assets (before any applicable voluntary or contractual expense waivers), and OTC spreads and extraordinary expenses (e.g., subsequent offering expenses, other expenses not in the ordinary course of business, including the indemnification of any person against liabilities and obligations to the extent permitted by law and required under the Trust Agreement and under agreements entered into by USCF on each Trust Series’ behalf and the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expenses and the settlement of claims and litigation) that cannot be quantified.

Each Trust Series pays brokerage charges of approximately 0.10% of average total net assets based on brokerage fees of $3.00 per buy or sell, management fees of 0.65% of NAV on its average net assets in the case of CPER and 0.80% in the case of USCI (in each case, before any applicable voluntary or contractual expense waivers), and OTC spreads and extraordinary expenses (e.g., subsequent offering expenses, other expenses not in the ordinary course of business, including the indemnification of any person against liabilities and obligations to the extent permitted by law and required under the Trust Agreement and under agreements entered into by USCF on each Trust Series’ behalf and the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring of legal expenses and the settlement of claims and litigation) that cannot be quantified.

These fees and expenses must be paid in all cases regardless of whether each Trust Series’ activities are profitable.

Accordingly, each Trust Series must earn trading gains sufficient to compensate for these fees and expenses before it can earn any profit.

Fewer representative commodities may result in greater Applicable Index volatility.

Each Applicable Index is concentrated in terms of the number of commodities represented.

Investors should be aware that other commodities indices are more diversified in terms of both the number and variety of commodities included.

Concentration in fewer commodities may result in a greater degree of volatility in an Applicable Index and the NAV of a Trust Series which tracks an Applicable Index under specific market conditions and over time.

Each Trust Series is subject to extensive regulatory reporting and compliance.

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Therefore, even those systems determined to be effective may provide only reasonable assurance with respect to financial statement preparation and presentation.

Fewer representative commodities may result in greater Applicable Index volatility.

Each Applicable Index is concentrated in terms of the number of commodities represented.

Investors should be aware that other commodities indices are more diversified in terms of both the number and variety of commodities included.

Regulatory changes or actions, including the implementation of new legislation is impossible to predict but may significantly and adversely affect a Trust Series.

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Shareholders do not participate in the management of a Trust Series and do not control USCF, so they do not have any influence over basic matters that affect each Trust Series.

In addition, each Trust Series could terminate at any time and cause the liquidation and potential loss of an investment and could upset the overall maturity and timing of an investment portfolio.

Shareholders have very limited voting rights with respect to each Trust Series’ affairs.

Shareholders have very limited voting rights with respect to each Trust Series’ affairs and have none of the statutory rights normally associated with the ownership of shares of a corporation (including, for example, the right to bring “oppression” or “derivative” actions).

Shareholders may elect a replacement sponsor only if USCF resigns voluntarily or loses its corporate charter.

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Shareholders must therefore rely upon the duties and judgment of USCF to manage each Trust Series’ affairs.

Each Trust Series may terminate at any time, regardless of whether such Trust Series has incurred losses, subject to the terms of the Trust Agreement.

For example, the dissolution or resignation of USCF would cause any Trust Series to terminate unless, within 90 days of the event, shareholders holding shares representing at least 66 2/3% of the outstanding shares of all of the Trust Series elect to continue the Trust and appoint a successor sponsor.

In addition, USCF may terminate any Trust Series if it determines that such Trust Series’ aggregate net assets in relation to its operating expenses make the continued operation of such Trust Series unreasonable or imprudent.

However, no level of losses will require USCF to terminate a Trust Series.

A Trust Series’ termination would result in the liquidation of its assets and the distribution of the proceeds thereof, first to creditors and then to the shareholders in accordance with their positive book capital account balances, after giving effect to all contributions, distributions and allocations for all periods, and each Trust Series could incur losses in liquidating its assets in connection with a termination.

Termination could also negatively affect the overall maturity and timing of an investment portfolio.

A Trust Series could become leveraged if the Trust Series had insufficient assets to completely meet its margin or collateral requirements relating to its investments.

Although the Trusts Series do not and will not borrow money or use debt to satisfy their margin or collateral obligations in respect of their investments, a Trust Series could become leveraged if the Trust Series were to hold insufficient assets that would allow it to meet not only the current, but also future, margin or collateral obligations required for such investments.

Such a circumstance could occur if the Trust Series were to hold assets that have a value of less than zero.

USCF endeavors to have the value of the Trust Series’ Treasuries, cash and cash equivalents, whether held by a Trust Series or posted as margin or other collateral, at all times approximate the aggregate market value of its obligations under its Futures Contracts and Other Related Investments.

Although permitted to do so under the Trust Agreement, the Trust Series have not and do not intend to leverage their assets by making investments beyond the Trust Series’ potential ability to meet the potential margin and collateral obligations relating to such investments.

Consistent with this, the Trust Series’ investment decisions will take into account the need for the Trust Series to make permitted investments that also allow them to maintain adequate liquidity to meet its margin and collateral requirements and to avoid, to the extent reasonably possible, becoming leveraged, including by the holding of assets that have a high probability of having a value of less than zero.

A Trust Series could terminate at any time and cause the liquidation and potential loss of an investor’s investment and could upset the overall maturity and timing of an investor’s investment portfolio.

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As a consequence, it could be necessary to liquidate positions in a Trust Series’ trading positions before the time that the trading strategies would otherwise dictate liquidation.

The Trust Series may potentially lose money on its holdings of money market mutual funds.

A Trust Series may potentially lose money on its holdings of money market mutual funds.

The SEC adopted amendments to Rule 2a-7 under the 1940 Act which became effective in 2016, to reform money market funds (“MMFs”).

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A government money market fund’s share price can also be negatively affected during periods of high redemption pressures and/or illiquid markets.

A Trust Series may determine that to allow it to reinvest the proceeds from sales of its Creation Baskets in currently permitted assets in a manner that meets its investment objective it may limit its offers of Creation Baskets.

A Trust Series may determine that it will limit the issuance of its shares through the offering of Creation Baskets to its Authorized Participants.

As a result of certain circumstances described herein, including (1) the need to comply with regulatory requirements (including, but not limited to, exchange accountability levels and position limits);

(2) market conditions (including but not limited to those allowing USCI to obtain greater liquidity or to execute transactions with more favorable pricing);

and (3) risk mitigation measures taken by the Trust Series’ current and other FCMs that limit the Trust Series and other market participants from investing in particular copper futures contracts, a Trust Series’ management can determine that it will limit the issuance of shares and the offerings of Creation Baskets because it is unable to invest the proceeds from such offerings in investments that would permit it to reasonably meet its investment objective.

If such a determination is made, the same consequences associated with a suspension of the offering of Creation Baskets, as described in the foregoing risk factor, An unanticipated number of Creation Basket requests during a short period of time could result in a shortage of shares, could also occur as a result of a Trust Series determining to limit the offering of creation baskets.

The failure or bankruptcy of a futures commission merchant or clearing house could result in a substantial loss of Trust Series’ assets and could impair Trust Series in its ability to execute trades.

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Investors cannot be assured that the agreement between SummerHaven and USCF for use of an Applicable Index will continue for any length of time.

Should the agreement between SummerHaven and USCF for use of an Applicable Index be terminated, USCF will be required to find a replacement index, which may have an adverse affect on a Trust Series.

Should the agreement between SummerHaven and USCF for use of an Applicable Index be terminated, USCF will be required to find a replacement index, which may have an adverse effect on a Trust Series.

Investors cannot be assured of SummerHaven’s continued services, and discontinuance may be detrimental to a Trust Series.

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USCF intends to maintain separate and distinct records for each Trust Series and account for each Trust Series separately from any other Trust Series, but it is possible a court could conclude that the methods used do not satisfy the Delaware Statutory Trust Act, which would potentially expose assets in one series to the liabilities of another Trust Series.

The Trust Agreement Limits the Forum in Which Claims May be Brought Against USCF, the Trust, the Trustee or their Respective Directors and Officers,

The rights of USCF, the Trust, the Trust Series, DTC (as registered owner of the Trust Series’ global certificate for shares) and the shareholders are governed by the laws of the State of Delaware.

USCF, the Trust, the Trust Series and DTC and, by accepting shares, each DTC Participant and each shareholder, consent to the exclusive jurisdiction of the courts of the State of Delaware and any federal courts located in Delaware other than for a person to assert a claim of Delaware jurisdiction over USCF, the Trust or the Trust Series.

As a result, any claims, suits, actions or proceedings arising out of or relating in any way to the 1933 Act, the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Trust, the Delaware Statutory Trust Act (the “Trust Act”), the Trust Agreement or asserting a claim governed by the internal affairs (or similar) doctrine (including, without limitation, any claims, suits, actions or proceedings to interpret, apply or enforce (i) the provisions of the Trust Agreement, or (ii) the duties (including fiduciary duties), obligations or liabilities of the Trust to USCF, the shareholders or the Trustee, or of USCF or the Trustee to the Trust, to the shareholders or each other, or (iii) the rights or powers of, or restrictions on, the Trust, the Trustee or the shareholders, or (iv) any provision of the Trust Act or other laws of the State of Delaware pertaining to trusts made applicable to the Trust pursuant to the Trust Act, or (v) any other instrument, document, agreement or certificate contemplated by any provision of the Trust Act or the Trust Agreement relating in any way to the Trust, shall be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, any other court in the State of Delaware with subject matter jurisdiction.

We believe this provision benefits us and the shareholders:

(1) by having disputes resolved by a forum with the experience and established precedent for resolving these types of disputes under Delaware law, (2) by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, and, (3) as a result of the foregoing, limiting the time cost and uncertainty of litigation.

However, this provision may limit the right of a Trust Series’ shareholders to bring a claim in a judicial forum they believe is more favorable for its disputes against USCF, the Trust, or the Trustee.

In addition, it may have the effect of discouraging lawsuits against USCF, the Trust, the Trustee, or their respective directors and officers.

Although the Trust Agreement contains the exclusive choice of forum provision described above and such provisions are expressly permitted under the Trust Act, there are no court cases that we are aware of that have interpreted the Trust Act in this regard and thus, it is possible that a court could rule that such a provision is inapplicable for a particular claim or action or that such provision is unenforceable.

With the validity and enforceability of exclusive forum selection provisions still somewhat in question outside of the State of Delaware, there may be increased litigation over such provisions.

Challenging shareholders might bring actions in courts outside of Delaware to attack a forum selection clause that specifies Delaware as the exclusive jurisdiction.

A non-Delaware court could view negatively a forum selection clause in favor of Delaware, in particular, because such a provision may appear to divest the non-Delaware court of its legal jurisdiction.

Section 27 of the Exchange Act vests exclusive federal jurisdiction for all claims brought to enforce any duty or liability created under the Exchange Act.

Therefore, any exclusive forum selection clauses will not apply to any such claim.

In addition, Section 22 of the 1933 Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the 1933 Act or the rules and regulations thereunder.

As a result, there is uncertainty as to whether a court would enforce an exclusive forum selection clause in connection with claims arising under the 1933 Act and/or the Exchange Act, and the rules and regulations thereunder, and in any event, stockholders will not be deemed to have waived the Company’s compliance with the federal securities laws and the rules and regulations thereunder.

USCF and the Trustee are not obligated to prosecute any action, suit or other proceeding in respect of any Trust Series property.

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While the Funds have established business continuity plans, there are inherent limitations in such plans.

General Risk Factors

Changes to U.S.

tariff and import/export regulations could have a negative effect on the Funds.

There has been ongoing discussion and commentary regarding significant changes that have been and could be made to U.S.

trade policies, treaties and tariffs.

presidential administration and U.S.

Congress is in the process of reversing changes made by the prior U.S.

presidential administration and there is uncertainty about the future relationship between the United States and other countries with respect to trade policies, treaties and tariffs.

These developments, or the perception that any of them could occur, could have a material adverse effect on global economic conditions and the stability of global financial markets, and could significantly reduce global trade and, in particular, trade between the impacted nations and the United States.

Any of these factors could depress economic activity and negatively impact the Funds.

There is uncertainty surrounding potential legal, regulatory and policy changes by the new presidential administration in the United States that may directly affect financial institutions and the global economy.

As a result of the United States presidential election, which occurred on November 3, 2020 and subsequent senate runoff elections, there has been a change in control of the executive and legislative branches of the U.S.

Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which lead to changes involving the level of oversight and regulation of the energy sector, climate change, and the financial services industry, as well as changes in tax rates.

The nature, timing and economic and political effects of potential changes to the current legal and regulatory framework affecting the energy sector and financial institutions remain highly uncertain.

Uncertainty surrounding future changes may adversely affect the Funds' investments.

Unresolved Staff Comments.

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Not applicable.

Legal Proceedings.

Although each of the Trust Series may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise, none of the Trust Series is currently a party to any pending material legal proceedings.

Mine Safety Disclosures.

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors