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The following risk factors should be read in connection with the other information included in this annual report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and UNL’s financial statements and the related notes.
−Removed: UNL’s investment objective is for the daily percentage changes in the NAV per share to reflect the daily percentage changes of the spot price of natural gas delivered at the Henry Hub, Louisiana as measured by the daily changes in the average of the prices of 12 futures contracts on natural gas traded on the New York Mercantile Exchange (the “NYMEX”), consisting of the near month contract to expire and the contracts for the following 11 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 contract that is the next month contract to expire and the contracts for the following 11 consecutive months (the “Benchmark Futures Contracts”), plus interest earned on UNL’s collateral holdings, less UNL’s expenses.
+Added: UNL’s investment objective is for the daily percentage changes in the NAV per share to reflect the daily percentage changes of the spot price of natural gas delivered at the Henry Hub, Louisiana as measured by the daily percentage changes in the average of the prices of 12 futures contracts on natural gas traded on the New York Mercantile Exchange (the “NYMEX”), consisting of the near month contract to expire and the contracts for the following 11 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 contract that is the next month contract to expire and the contracts for the following 11 consecutive months (the “Benchmark Futures Contracts”), plus interest earned on UNL’s collateral holdings, less UNL’s expenses.
When calculating the daily movement of the average price of the 12 month contracts, each contract month is equally weighted.
−Removed: UNL seeks to achieve its investment objective by investing so that the average daily percentage change in UNL’s NAV for any period of 30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the price of the Benchmark Futures Contracts over the same period.
+Added: UNL seeks to achieve its investment objective by investing so that the average daily percentage change in UNL’s NAV for any period of 30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the prices of the Benchmark Futures Contracts over the same period.
UNL’s investment strategy is designed to provide investors with a cost-effective way to invest indirectly in natural gas and to hedge against movements in the spot price of natural gas.
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UNL’s investment strategy is designed to provide investors with a cost-effective way to invest indirectly in natural gas and to hedge against movements in the spot price of natural gas.
−Removed: An investment in UNL involves investment risk similar to a direct investment in Futures Contracts and Other Natural Gas-Related Investments, but it is not a proxy for trading directly in the natural gas market.
+Added: An investment in UNL involves investment risk similar to a direct investment in Futures Contracts and Other Natural Gas-Related Investments, but it is not a proxy for investing in the natural gas market.
Investing in UNL also involves correlation risk, or the risk that investors purchasing shares to hedge against movements in the price of natural gas will have an efficient hedge only if the price they pay for their shares closely correlates with the price of natural gas.
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Investment Risk
−Removed: The NAV of UNL’s shares relates directly to daily changes in the average of the prices of the price Benchmark Futures Contracts and other assets held by UNL and fluctuations in the prices of these assets could materially adversely affect an investment in UNL’s shares.
+Added: The NAV of UNL’s shares relates directly to daily changes in the average of the prices of the Benchmark Futures Contracts and other assets held by UNL and fluctuations in the prices of these assets could materially adversely affect an investment in UNL’s shares.
Past performance is not necessarily indicative of future results;
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The occurrence of recessions or other periods of low or negative economic growth will typically have a direct adverse impact on natural gas demand and therefore, may have an adverse impact on natural gas prices.
−Removed: Other factors that affect general economic conditions in the world or in a major region, such as changes in population growth rates, periods of civil unrest, military conflicts, war, pandemics (e.g., the COVID-19 pandemic in 2020), government austerity programs, or currency exchange rate fluctuations, can also impact the demand for natural gas.
+Added: Other factors that affect general economic conditions in the world or in a major region, such as changes in population growth rates, periods of civil unrest, military conflicts, war (such as the Russia-Ukrain war), pandemics (e.g., the COVID-19 pandemic), government austerity programs, trade wars between nations, or currency exchange rate fluctuations, can also impact the demand for natural gas.
Sovereign debt downgrades, defaults, inability to access debt markets due to credit or legal constraints, liquidity crises, the breakup or restructuring of fiscal, monetary, or political systems such as the European Union, and other events or conditions that impair the functioning of financial markets and institutions also may adversely impact the demand for natural gas.
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Other natural gas supply-related factors.
−Removed: Natural gas prices also vary depending on a number of factors affecting supply, including geopolitical risk associated with wars, terrorist attacks and tensions between countries, including sanctions imposed as a result of the foregoing, any of which can adversely affect natural gas trade flows by limiting or disrupting trade between countries or regions.
+Added: Natural gas prices also vary depending on a number of factors affecting supply, including geopolitical risk associated with wars (such as the Russia-Ukraine war), terrorist attacks and tensions between countries, including sanctions imposed as a result of the foregoing, or trade wars, any of which can adversely affect natural gas trade flows by limiting or disrupting trade between countries or regions.
Natural gas supply levels can also be affected by other factors that reduce available supplies, such as natural disasters, disruptions in competitors’ operations, or unexpected unavailability of distribution channels.
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Consequently, you could lose all or substantially all of your investment in UNL.
−Removed: Market volatility is attributable to things like the COVID-19 pandemic in 2020 and related supply chain disruptions, war, such as the war between Russia and Ukraine, and continuing disputes among oil-producing countries.
+Added: Market volatility is attributable to things like the COVID-19 pandemic and related supply chain disruptions, war (such as the Russia-Ukraine war), continuing disputes among natural gas-producing countries, the introduction of or changes in tariffs or trade barriers, and trade wars between nations.
Events such as these, and others, could cause volatility in the future, which may affect the value, pricing and liquidity of some investments or other assets, including those held by or invested in by UNL and the impact of which could limit UNL’s ability to have a substantial portion of its assets invested in the Benchmark Futures Contracts.
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Such events can, directly or indirectly, negatively impact, and/or cause volatility in, the price of commodities such as natural gas and the value, pricing, and liquidity of the investments or other assets held by UNL.
−Removed: Geopolitical conflict, including war and armed conflicts (such as Russia’s continued military actions against Ukraine that started in February 2022, conflicts in the Middle East, and the expansion of such conflicts in surrounding areas), sanctions, and acts of terrorism, can also, directly or indirectly, negatively impact, and/or cause volatility in, the price of commodities such as natural gas and the value, pricing, and liquidity of the investments or other assets held by UNL.
+Added: Geopolitical conflict, including war and armed conflicts (such as the Russia-Ukraine war, conflicts in the Middle East, and the expansion of such conflicts in surrounding areas), sanctions, the introduction of or changes in tariffs or trade barriers, global or local recessions, and acts of terrorism, can also, directly or indirectly, negatively impact, and/or cause volatility in, the price of commodities such as natural gas and the value, pricing, and liquidity of the investments or other assets held by UNL.
A negative impact on, or volatility in, the price of natural gas or the value, pricing and liquidity of UNL’s investments or other assets resulting from the occurrence of any of the aforementioned events, or similar events, could cause you to lose all, or substantially all, of your investment in UNL.
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In such a case, UNL may have no gains to offset losses from other investments, and investors may suffer losses on their investment in UNL at the same time they incur losses with respect to other investments.
−Removed: Variables such as drought, floods, weather, military conflicts, pandemics (such as the COVID-19 pandemic in 2020), embargoes, tariffs and other political events may have a larger impact on natural gas prices and natural gas-linked instruments, including Futures Contracts and Other Natural Gas-Related Investments, than on traditional securities.
+Added: Variables such as drought, floods, weather, military conflicts, pandemics (such as the COVID-19 pandemic), embargoes, tariffs and other political events may have a larger impact on natural gas prices and natural gas-linked instruments, including Futures Contracts and Other Natural Gas-Related Investments, than on traditional securities.
These additional variables may create additional investment risks that subject UNL’s investments to greater volatility than investments in traditional securities.
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Non- correlation may be attributable to disruptions in the market for natural gas, the imposition of position or accountability limits by regulators or exchanges, or other extraordinary circumstances.
−Removed: As UNL approaches or reaches position limits with respect to the Benchmark Futures Contracts and other Futures Contracts or in view of market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by UNL, UNL’s FCMs, counterparties or other market participants) and other conditions as described herein.
+Added: As UNL approaches or reaches position limits with respect to the Benchmark Futures Contracts and other Futures Contracts or in view of market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by UNL, UNL’s FCMs, counterparties or other market participants) and other conditions described herein.
UNL may begin investing in Other Natural Gas-Related Investments.
In addition, UNL is not able to replicate exactly the changes in the price of the Benchmark Futures Contracts because the total return generated by UNL is reduced by expenses and transaction costs, including those incurred in connection with UNL’s trading activities, and increased by interest income from UNL’s holdings of Treasuries (defined below).
−Removed: Tracking the Benchmark Futures Contracts requires trading of UNL’s portfolio with a view to tracking the Benchmark Futures Contracts over time and is dependent upon the skills of USCF and its trading principals, among other factors.
Daily percentage changes in the average of the prices of the Benchmark Futures Contracts may not correlate with daily percentage changes in the spot price of natural gas.
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Natural forces in the natural gas futures market known as “backwardation” and “contango” may increase UNL’s tracking error and/or negatively impact total return.
−Removed: UNL’s Benchmark Futures Contracts consist of the near month contract to expire and the 11 following months, which are changed to the next month contract to expire and the 11 following months during one day each month.
+Added: UNL’s Benchmark Futures Contracts is the near month contract to expire and the 11 following months, which are changed to the next month contract to expire and the 11 following months during one day each month.
In the event of a natural gas futures market where near month contracts trade at a higher price than next month to expire contracts, a situation described as “backwardation” in the futures market, then absent the impact of the overall movement in natural gas prices the value of the Benchmark Futures Contracts would tend to rise as it approaches expiration.
Conversely, in the event of a natural gas futures market where near month contracts trade at a lower price than next month contracts, a situation described as “contango” in the futures market, then absent the impact of the overall movement in natural gas prices, the value of the benchmark contracts would tend to decline as it approaches expiration.
−Removed: When compared to the total return of other price indices, such as the spot price of natural gas, the impact of backwardation and contango may cause the total return of UNL’s per share NAV to vary significantly.
−Removed: Moreover, absent the impact of rising or falling natural gas prices, a prolonged period of contango could have a significant negative impact on UNL’s per share NAV and total return and investors could lose part or all of their investment.
While contango and backwardation are consistently present in trading in the futures markets, such conditions can be exacerbated by market forces.
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Moreover, absent the impact of rising or falling natural gas prices, a prolonged period of contango could have a significant negative impact on UNL’s per share NAV and total return and investors could lose part or all of their investment.
+Added: See “ Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in this annual report on Form 10-K for a discussion of the potential effects of contango and backwardation.
−Removed: Accountability levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause tracking error by limiting UNL’s investments, including its ability to fully invest in the Benchmark Futures Contracts, which means that changes in the price of shares could substantially vary from the changes in the price of the Benchmark Futures Contracts.
+Added: Accountability levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause tracking error by limiting UNL’s investments, including its ability to fully invest in the Benchmark Futures Contracts, which means that changes in the of shares could substantially vary from the changes in the average prices of the Benchmark Futures Contracts.
Designated contract markets, such as the NYMEX, have established accountability levels and position limits on the maximum net long or net short futures contracts in commodity interests that any person or group of persons under common trading control (other than as a hedge, which an investment by UNL is not) may hold, own or control.
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If UNL and the Related Public Funds exceed these accountability levels for investments in the futures contracts for natural gas, the NYMEX and ICE Futures will monitor such exposure and may ask for further information on their activities, including the total size of all positions, investment and trading strategy, and the extent of liquidity resources of UNL and the Related Public Funds.
−Removed: If deemed necessary by the NYMEX and/or ICE Futures, UNL could be ordered to reduce its aggregate net futures contracts back to the accountability level.
+Added: If deemed necessary by the NYMEX and/or ICE Futures, UNL could be ordered to reduce its aggregate position back to the accountability level.
The foregoing accountability levels and position limits are subject to change.
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Position limits differ from accountability levels in that they represent fixed limits on the maximum number of futures contracts that any person may hold and cannot be exceeded without express CFTC authority to do so.
−Removed: In addition to accountability levels imposed by NYMEX and position limits that may apply at any time, the NYMEX and the ICE Futures impose position limits on contracts held in the last few days of trading in the near month contract to expire.
+Added: In addition to accountability levels imposed and position limits that may apply at any time, the NYMEX and the ICE Futures impose position limits on contracts held in the last few days of trading in the near month contract to expire.
It is unlikely that UNL will run up against such position limits because of UNL’s investment strategy.
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In addition, if UNL 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 UNL’s shares and the average of the prices of the Benchmark Futures Contracts.
−Removed: Risk mitigation measures that could be imposed by UNL’s FCMs have the potential to cause tracking error by limiting UNL’s investments, including its ability to fully invest in the Benchmark Futures Contracts and other Futures Contracts, which means that the change in the price of UNL’s shares could substantially vary from the price of the Benchmark Futures Contracts.
+Added: Risk mitigation measures that could be imposed by UNL’s FCMs have the potential to cause tracking error by limiting UNL’s investments, including its ability to fully invest in the Benchmark Futures Contracts and other Futures Contracts, which means that the change in the price of UNL’s shares could substantially vary from the changes to prices of the Benchmark Futures Contracts.
UNL’s FCMs have discretion to impose limits on the positions that UNL may hold in the Benchmark Futures Contract as well as certain other months.
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Investors will be required to pay U.S.
−Removed: federal income tax and, in some cases, state, local, or foreign income tax, on their allocable share of UNL’s taxable income, without regard to whether they receive distributions or the amount or value of any such distributions.
+Added: federal income tax and, in some cases, state, local, or non-U.S.
+Added: income tax, on their allocable share of UNL’s taxable income, without regard to whether they receive distributions or the amount or value of any such distributions.
Therefore, the tax liability of an investor with respect to its shares may exceed the amount of cash or value of property (if any) distributed with respect to such shares.
−Removed: An investor’s allocable share of taxable income or loss may differ from economic income or loss on the shares.
−Removed: Due to the application of the assumptions and conventions applied by UNL in making allocations for tax purposes and other factors, an investor’s allocable share of UNL’s income, gain, deduction, loss, or credit may be different than economic profit or loss from the shares for a taxable year.
−Removed: This difference could be temporary or permanent and, if permanent, could result in it being taxed on amounts in excess of its economic income.
+Added: An investor’s allocable share of taxable income or loss may differ from its economic income or loss on the shares.
+Added: Due to the application of the assumptions and conventions applied by UNL in making allocations for U.S.
+Added: federal income tax purposes and other factors, an investor’s allocable share of UNL’s income, gain, deduction, loss, or credit may be different than its economic profit or loss from the shares for a taxable year.
+Added: This difference could be temporary or permanent and, if permanent, may subject an investor to tax on amounts in excess of its economic income.
Items of income, gain, deduction, loss and credit with respect to shares could be reallocated, for U.S.
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federal income tax, if the IRS does not accept the assumptions and conventions applied by UNL in allocating those items, with potential adverse consequences for an investor.
−Removed: federal income tax rules pertaining to partnerships are complex and their application to large, publicly traded partnerships such as UNL is in many respects uncertain.
+Added: federal income tax rules pertaining to entities treated as partnerships for U.S.
+Added: federal income tax purposes are complex and their application to large, publicly traded partnerships such as UNL is in many respects uncertain.
UNL applies certain assumptions and conventions in an attempt to comply with the intent of the applicable rules and to report taxable income, gains, deductions, losses and credits in a manner that properly reflects shareholders’ economic gains and losses.
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federal income tax laws, UNL will be treated as a partnership that is not taxable as a corporation for U.S.
−Removed: federal income tax purposes, provided that (i) at least 90 percent of UNL’s annual gross income will be derived from (a) income and gains from commodities (not held as inventory) or futures, forwards, options, swaps and other notional principal contracts with respect to commodities, and (b) interest income;
+Added: federal income tax purposes, provided that (i) at least 90 percent of UNL’s annual gross income will be derived from (a) income and gains from commodities (not held as inventory) or futures, forwards, options, swaps and other notional principal contracts with respect to commodities, and (b) interest income (“qualifying income”);
(ii) UNL is organized and operated in accordance with its governing agreements and applicable law;
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federal income tax purposes in any taxable year, rather than passing through its income, gains, losses, deductions, and credits proportionately to its shareholders, UNL would be subject to U.S.
−Removed: federal income tax imposed at the corporate flat rate of 21% on its net income for the year.
+Added: federal income tax imposed at the applicable corporate rates on its net income for the year.
In addition, although USCF does not currently intend to make distributions with respect to UNL shares, if UNL were treated as a corporation for U.S.
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federal income tax is paid by UNL on its income.
−Removed: Instead, UNL will furnish shareholders each year with tax information on IRS Schedules K-1 and/or K-3 (Form 1065) and each U.S.
+Added: Instead, UNL will furnish shareholders each year with tax information on IRS Schedules K-1 and/or K-3 (Form 1065), as applicable, and each U.S.
shareholder is required to report on its U.S.
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It is each shareholder’s responsibility to file the appropriate U.S.
−Removed: federal, state, local and foreign tax returns.
+Added: federal, state, local and non-U.S.
If UNL is required to withhold tax with respect to any non-U.S.
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federal income taxes could have a negative effect on UNL or its investors.
−Removed: The rules dealing with U.S.
+Added: Matters pertaining to U.S.
federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S.
Treasury Department.
−Removed: On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law.
−Removed: At this time, we cannot predict with certainty how the tax provisions of the IRA or any other proposed or future tax legislation might affect UNL, its investors, or UNL’s investments.
−Removed: Investors are urged to consult with their tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares.
+Added: The Trump Administration has proposed significant changes to the Code and existing U.S.
+Added: federal income tax regulations and there are a number of proposals in Congress that, if enacted, would similarly modify the Code.
+Added: The likelihood of any such legislation being enacted is uncertain, but new legislation and any U.S.
+Added: Treasury regulations, administrative interpretations or court decisions interpreting such legislation could result in adverse tax consequences to UNL and its investors.
+Added: Investors are urged to consult with their tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in UNL shares.
OTC Contract Risk
UNL will be subject to credit risk with respect to counterparties to OTC contracts entered into by UNL.
−Removed: UNL faces the risk of non-performance by counterparties to its OTC contracts.
+Added: UNL faces the risk of non-performance by the counterparties to its OTC contracts.
Unlike in futures contracts, the counterparty to OTC contracts is generally a single bank or other financial institution, rather than a clearing organization backed by a group of financial institutions.
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regulators are intended to mitigate this risk.
−Removed: If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, UNL may experience significant delays in obtaining any recovery in a bankruptcy or other reorganization proceeding.
+Added: If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, UNL may experience significant delays in obtaining recovery in a bankruptcy or other reorganization proceeding.
UNL may obtain only limited recovery or may obtain no recovery in such circumstances.
UNL mitigates these risks by typically entering into transactions only with major, global financial institutions.
−Removed: Valuing OTC derivatives may be less certain than actively-traded financial instruments.
+Added: Valuing OTC derivatives may be less certain than valuing exchange-traded and/or cleared financial instruments.
In general, valuing OTC derivatives is less certain than valuing actively traded financial instruments such as exchange traded futures contracts and securities or cleared swaps because, for OTC derivatives, the price and terms on which such OTC derivatives are entered into or can be terminated are individually negotiated, and those prices and terms may not reflect the best price or terms available from other sources.
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If market conditions require it, UNL may implement risk reduction procedures, which may include changes to UNL’s investments, and such changes may occur on short notice.
−Removed: UNL does not and will not borrow money or use debt to satisfy its margin or collateral obligations in respect of its investments, it could become leveraged if UNL 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.
+Added: UNL does not and will not borrow money or use debt to satisfy its margin or collateral obligations in respect of its investments, but it could become leveraged if UNL 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 UNL were to hold assets that have a value of less than zero.
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If UNL 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.
−Removed: The NYSE Arca may halt trading in UNL’s shares, which could adversely impact an investor’s ability to sell shares.
+Added: The NYSE Arca may halt trading in UNL’s shares, which would adversely impact an investor’s ability to sell shares.
Trading in shares may be halted due to market conditions or, in light of NYSE Arca rules and procedures, for reasons that, in the view of the NYSE Arca, make trading in shares inadvisable.
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The futures markets are subject to comprehensive statutes, regulations, and margin requirements.
−Removed: In addition, the CFTC and futures exchanges are authorized to take extraordinary actions in the event of a market emergency including, for example, the retroactive implementation of speculative position limits or higher margin requirements, the establishment of daily price limits and the suspension of trading.
−Removed: Regulation of commodity interest transactions in the United States is a rapidly changing area of law and is subject to ongoing modification by governmental and judicial action.
−Removed: Considerable regulatory attention has been focused on non-traditional investment pools that are publicly distributed in the United States.
−Removed: In addition, the SEC, CFTC and the exchanges are authorized to take extraordinary actions in the event of a market emergency, including, for example, the retroactive implementation of speculative position limits or higher margin requirements, the establishment of daily price limits and the suspension of trading.
−Removed: Further, various national governments outside of the United States have expressed concern regarding the disruptive effects of speculative trading in the commodities markets and the need to regulate the derivatives markets in general.
+Added: Such statutes, regulations and requirements are subject to ongoing modification by governmental and judicial action.
+Added: This is particularly so whenever there is a change in presidential administration, which can lead to changes in regulatory priorities and policy.
The effect of any future regulatory change on UNL is impossible to predict, but it could be substantial and adverse.
+Added: In addition, the CFTC, SEC, futures exchanges, and other entities are authorized to take extraordinary actions in the event of a market emergency including, for example, the retroactive implementation of speculative position limits or higher margin requirements, the establishment of daily price limits and the suspension of trading.
For a more detailed discussion of the regulations to be imposed by the CFTC and the SEC and the potential impacts thereof on UNL, please see “Item 1.
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The foregoing could also create significant deviations from UNL’s investment objective.
−Removed: UNL 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.
+Added: Any potential impact to the market for shares of UNL that could occur from an Authorized Participant’s inability to create new baskets would likely not extend beyond the time when UNL resumes selling Creation Baskets.
+Added: UNL 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 or suspend its offers of Creation Baskets.
UNL may determine to limit the issuance of its shares through the offering of Creation Baskets to its Authorized Participants.
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(2) market conditions (including but not limited to those allowing UNL to obtain greater liquidity or to execute transactions with more favorable pricing);
−Removed: and (3) risk mitigation measures (including those that may be taken by UNL, UNL's FCMs, counterparties or other market participants) that limit UNL and other market participants from investing in particular natural gas futures contracts, UNL's 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.
+Added: and (3) risk mitigation measures (including those that may be taken by UNL, UNL’s FCMs, counterparties or other market participants) that limit UNL and other market participants from investing in particular natural gas futures contracts, UNL’s management may 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, “The suspension in the ability of Authorized Participants to purchase Creation Baskets could cause UNL’s NAV to differ materially from its trading price,” could also occur as a result of UNL determining to limit the offering of creation baskets.
−Removed: UNL may be subject to interest rate risk, which may prevent UNL from investing fully at prevailing rates until any current investments in Treasury Bills mature in order to avoid selling those investments at a loss.
+Added: UNL may be subject to interest rate risk, which may prevent UNL from investing fully at prevailing rates until any current investments in Treasuries mature in order to avoid selling those investments at a loss.
Interest rate risk is the risk that fixed income securities and other investments in UNL’s portfolio will fluctuate in value because of a change in interest rates.
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When interest rates rise, the value of fixed income securities typically falls.
−Removed: In a rising interest rate environment, UNL may not be able to fully invest at prevailing rates until any current investments in Treasury Bills mature in order to avoid selling those investments at a loss.
+Added: In a rising interest rate environment, UNL may not be able to fully invest at prevailing rates until any current investments in Treasuries mature in order to avoid selling those investments at a loss.
Interest rate risk is generally lower for shorter term investments and higher for longer term investments.
−Removed: In addition, in rising interest rate environments, it is possible that the Treasury Bills held by UNL will decline in value.
−Removed: When interest rates fall, UNL may be required to reinvest the proceeds from the sale, redemption or early prepayment of a Treasury Bill or money market security at a lower interest rate.
+Added: In addition, in rising interest rate environments, it is possible that the Treasuries held by UNL will decline in value.
+Added: When interest rates fall, UNL may be required to reinvest the proceeds from the sale, redemption or early prepayment of a Treasuries or money market security at a lower interest rate.
As inflation increases, the present value of UNL’s assets may decline.
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Other world economies similarly experienced elevated inflation rates.
−Removed: The Federal Reserve increased rates and successfully reduced inflation so that it is close to the stated two percent goal.
+Added: The Federal Reserve increased interest rates and successfully reduced inflation so that it is close to the stated two percent goal.
As a result, in 2024, the Federal Reserve began reducing interest rates.
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The insolvency of the Custodian could result in a complete loss of UNL’s assets held by that Custodian, which, at any given time, would likely comprise a substantial portion of UNL’s total assets.
+Added: Competing claims of intellectual property rights may adversely affect UNL and an investment in UNL’s shares.
+Added: USCF believes that it has properly licensed or obtained the appropriate consent of all necessary parties with respect to intellectual property rights.
+Added: However, other third parties could allege ownership as to such rights and may bring legal action asserting their claims.
+Added: The expenses in litigating, negotiating, cross-licensing or otherwise settling such claims may adversely affect UNL.
+Added: Additionally, as a result of such action, UNL could potentially change its investment objective, strategies or benchmark.
+Added: Each of these factors could have a negative impact on the performance of UNL.
Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks.
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Cyber-attacks include, but are not limited to, gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
−Removed: Cyberattacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites.
+Added: Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites.
Cyber security failures or breaches of UNL’s clearing broker or third party service provider (including, but not limited to, index providers, the administrator and transfer agent, the custodian), have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of UNL shareholders to transact business, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.
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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.