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United States 12 Month Natural Gas
The United States Oil Fund, LP, also known as USO, is an exchange-traded security designed to track the daily price movements of crude oil. NYSE Arca is where it is traded under the ticker symbol USO. In exchange-traded notes, the investment objective is for the daily percentage change in the funds's net asset value to be directly correlated with the price of light, sweet crude oil. It does this by having its shares follow oil prices, either up or down.
Certain structured notes whose performance is likewise based on the performance of particular oil-based indexes serve as collateral for USO shares. Under the ticker symbol USOU, the United States 12 Month Oil Fund is frequently linked to the price of light, sweet crude oil futures for the first delivery month. This exchange-traded security seeks daily investment results that are two times the performance of the daily tracked benchmark excluding fees and expenses.
USO investors are not entitled to receive any of the oil held in the underlying ETF, as they would be with a traditional mutual fund. Instead, USO shares have a finite life since they have a continuous creation and redemption mechanism designed to keep the shares' trading prices close to their net asset values. USO is exempt from SEC registration because it is an ETF rather than a mutual fund. A creation unit consists of 100,000 shares traded in the secondary market and redeemed for massive blocks of underlying oil futures, cash, and other securities. Owners of creation units are the only ones who may buy or sell baskets.
The holder of an ETN is allowed to exchange it for an underlying basket of securities that the note tracks, but the ETN itself does not have the same claim on the underlying assets as a traditional mutual fund does. In February 2007, the United States Oil Fund was initially publicly offered, trading on the New York Stock Exchange (NYSE) under the ticker "USO." USCF manages the fund's operations as the commodity pool operator with Wo Track Ltd acting as the commodity trading advisor. Consequently, investors should invest in USO to speculate on the price of oil without actually owning it or having physical access to it.
The fund's underlying assets consist of Light, Sweet Crude Oil futures contracts traded on the NYMEX and ICE futures exchanges. Benchmark oils for delivery in the next month are those with the expiration date closest to the one listed on the NYMEX and ICE futures exchanges.
Some USO investors may be subject to K-1s or Schedule K-1, which lists the income, deductions, gains, or losses of a partnership. It may be a pass-through security and maybe taxed differently than other ETFs because the fund is organized as a limited partnership. US Commodity Funds LLC, the general partner of USCF, will email K-1s to existing unitholders by March 15 following the close of each tax year and file the documents with the Internal Revenue Service (IRS) by March 31. Brokerage firms often print them or distribute them electronically to their customers. All shareholders of record as of the close of business on the last business day in February will receive a Form 1099 from the USO, an investment in which is not a partnership interest.