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Disclosure

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

  • USSO is not a registered investment company so unitholders do not have the protections afforded by the Investment Company Act of 1940.
  • Unlike mutual funds, commodity pools or other investment pools that actively manage their investments in an attempt to realize income and gains from their investing activities and distribute such income and gains to their investors, USSO generally does not expect to distribute cash to limited partners.
  • Investing in Crude Oil Interests subjects USSO to the risks of the crude oil industry and this could result in large fluctuations in the price of USSO’s units.
  • The price of USSO’s units may be influenced by factors such as the short-term supply and demand for crude oil and the short-term supply and demand for USSO’s units. This may cause the units to trade at a price that is above or below USSO’s Net Asset Value (NAV) per unit. Accordingly, changes in the price of units may substantially vary from the changes in the spot price of light, sweet crude oil.  If this variation occurs, then investors may not be able to effectively use USSO as a way to hedge against crude oil-related losses or as a way to indirectly invest in crude oil.
  • An unanticipated number of redemption requests during a short period of time could have an adverse effect on the NAV of USSO.
  • There is a risk that USSO will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such USSO may not earn any profit.
  • USSO engages in the trading of futures contracts and options on futures contracts and may engage in cleared swaps (collectively, “derivatives”). USSO is exposed to both market risk, which is the risk arising from changes in the market value of the contracts, and credit risk, which is the risk of failure by another party to perform according to the terms of a contract.
  • Changes in USSO’s NAV may not inversely correlate with changes in the price of the Benchmark Futures Contract. If this were to occur, investors may not be able to effectively use USSO as a way to hedge against crude oil-related losses or as a way to indirectly invest inversely in crude oil.
  • The Benchmark Futures Contract may not correlate with the spot price of light sweet crude oil and this could cause changes in the price of the units to substantially vary from the changes in the spot price of light sweet crude oil. If this were to occur then you may not be able to effectively use USSO as a way to hedge against crude oil related losses or as a way to invest in crude oil indirectly.
  • When USSO enters into Futures Contracts and Other Crude Oil-Related Investments, it is exposed to the credit risk that the counterparty will not be able to meet its obligations.  The counterparty for the Futures Contracts traded on the NYMEX and on most other futures exchanges is the clearinghouse associated with the particular exchange.
  • USSO bears the risk of financial failure by the clearing broker.
  • The insolvency of a futures commission merchant could result in the complete loss of USSO’s assets posted with that futures commission merchant; however, the vast majority of USSO’s assets are held in U.S. Treasuries, cash and/or cash equivalents with USSO’s custodian and would not be impacted by the insolvency of a futures commission merchant.  Also, the failure or insolvency of USSO’s custodian could result in a substantial loss of USSO’s assets.
  • USCF invests a portion of USSO’s cash in money market funds that seek to maintain a stable net asset value. USSO is exposed to any risk of loss associated with an investment in these money market funds.
  • In the future, USSO may purchase over-the-counter contracts (“OTC Contracts”).  Unlike most exchange-traded futures contracts or exchange-traded options on such futures, each party to an OTC Contract bears the credit risk that the other party may not be able to perform its obligations under its contract.
  • USSO’s exposure to market risk depends on a number of factors, including the markets for oil, the volatility of interest rates and foreign exchange rates, the liquidity of the Futures Contracts and Other Crude Oil-Related Investments markets and the relationships among the contracts held by USSO. 
  • Since there are no limits on the future price of oil, the market risk to USSO could be unlimited.
  • Risks associated with the use of futures contracts are an imperfect correlation between movements in the price of the futures contracts and the market value of the underlying securities and the possibility of an illiquid market for a futures contract.
  • Trading in the interbank market also exposes USSO to a risk of default since failure of a bank with which USSO had entered into a forward contract would likely result in a default and thus possibly substantial losses to USSO.
  • USSO invests primarily in short interests in Futures Contracts, a significant portion of which are traded on United States exchanges, including the NYMEX.  However, a portion of USSO’s trades may take place on markets and exchanges outside of the United States.  Some non-U.S. markets present risks because they are not subject to the same degree of regulation as their U.S. counterparts. 
  • Trading on non-U.S. exchanges may differ from trading on U.S. exchanges in a variety of ways and, accordingly, may subject USSO to additional risks.
  • Accountability levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause a tracking error, which could cause the price of units to substantially vary from the price of the Benchmark Futures Contract and prevent investors from being able to effectively use USSO as a way to hedge against crude oil-related losses or as a way to indirectly invest in crude oil.
  • USCF’s trading system is quantitative in nature and it is possible that USCF might make a mathematical error.  In addition, it is also possible that a computer or software program may malfunction and cause an error in computation.
  • USSO and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of unitholders.
  • USCF is leanly staffed and relies heavily on key personnel to manage trading activities.
  • USSO may experience substantial losses on transactions if the computer or communications system fails.
  • USSO 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.
  • Regulation of the commodity interests and energy markets is extensive and constantly changing; future regulatory developments are impossible to predict but may significantly and adversely affect USSO

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

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

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

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

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

The Fund could terminate at any time and cause the liquidation of your investment which may upset the overall maturity and timing of your investment portfolio. An unanticipated number of redemption requests during a short period of time could have an adverse effect on the NAV of the Fund.

The Fund may not earn trading gains sufficient to compensate for the fees and expenses that it must pay, and as such, the Fund may not earn any profit. You should not invest in DNO if you will need cash distributions from DNO to pay taxes on your share of income and gains of DNO, if any, or for any other reason.

DNO seeks to track the inverse of the total return movement of the Benchmark Futures Contract on a daily basis.

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

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

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

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

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