The United States Commodity Index Funds Trust (the “Trust”) is
a Delaware statutory trust formed on December 21, 2009. The Trust is a series
trust formed pursuant to the Delaware Statutory Trust Act and is organized into
three separate series (each series, a “Trust Series” and collectively,
the “Trust Series”). As of December 31, 2015, the Trust includes
the United States Commodity Index Fund (“USCI”), a commodity pool
formed on April 1, 2010 and first made available to the public on August 10,
2010, the United States Copper Index Fund (“CPER”), a commodity
pool formed on November 26, 2010 and first made available to the public on November
15, 2011 and the United States Agriculture Index Fund (“USAG”),
a commodity pool formed on November 26, 2010 and first made available to the
public on April 13, 2012.
The Trust and Trust Series maintain their main business offices at 1999 Harrison
Street, Suite 1530, Oakland, CA 94612. USCI, CPER and USAG each issues shares
(“shares”) that may be purchased and sold on the NYSE Arca, Inc.
(“NYSE Arca”). The Trust and each Trust Series operate pursuant
to the terms of the Trust’s Third Amended and Restated Declaration of
Trust and Trust Agreement dated as of March 22, 2013, as amended from time to
time, (the “Trust Agreement”), which grants full management control
to their sponsor, United States Commodity Funds LLC (“USCF”).
USCI invests in futures contracts for commodities that are currently traded
on the New York Mercantile Exchange (the “NYMEX”), ICE Futures (“ICE
Futures”), Chicago Board of Trade (“CBOT”), Chicago Mercantile
Exchange (“CME”), London Metal Exchange (“LME”), Commodity
Exchange, Inc. (“COMEX”) or on other foreign exchanges (the NYMEX,
ICE Futures, CBOT, CME, LME, Comex and other foreign exchanges, collectively,
the “Futures Exchanges”) (such futures contracts, collectively,
“Futures Contracts”) and, to a lesser extent, in order to comply
with regulatory requirements or in view of market conditions, other commodity-based
contracts and instruments such as cash-settled options on Futures Contracts,
forward contracts relating to commodities, cleared swap contracts and other
nonexchange traded over-the-counter (“OTC”) transactions that are
based on the price of commodities and Futures Contracts (collectively, “Other
Commodity-Related Investments”). Market conditions that USCF currently
anticipates could cause USCI to invest in Other Commodity Related Investments
would be those allowing USCI to obtain greater liquidity or to execute transactions
with more favorable pricing. Futures Contracts and Other Commodity-Related Investments
collectively are referred to as “Commodity Interests.”
The investment objective of USCI is for the daily changes in percentage terms
of its shares’ per share net asset value (“NAV”) to reflect
the daily changes in percentage terms of the SummerHaven Dynamic Commodity Index
Total ReturnSM (the “SDCI”), less USCI’s expenses. USCF does
not intend to operate USCI in a fashion such that its per share NAV will equal,
in dollar terms, the spot prices of the commodities underlying the Benchmark
Component Futures Contracts (as defined below) that comprise the SDCI or the
prices of any particular group of Futures Contracts. USCI will not seek to achieve
its stated investment objective over a period of time greater than one day.
USCI believes that it is not practical to manage the portfolio to achieve such
an investment goal when investing in Futures Contracts and Other Commodity-Related
Investments. The SDCI is designed to reflect the performance of a diversified
group of commodities. The SDCI is comprised of 14 Futures Contracts that are
selected on a monthly basis from a list of 27 possible Futures Contracts. The
Futures Contracts that at any given time make up the SDCI are referred to herein
as “Benchmark Component Futures Contracts.” The SDCI is owned and
maintained by SummerHaven Index Management, LLC (“SHIM”) and calculated
and published by Bloomberg, L.P. (“Bloomberg”). USCI invests first
in the current Benchmark Component Futures Contracts and other Futures Contracts
intended to replicate the return on the current Benchmark Component Futures
Contracts and, thereafter may hold Futures Contracts in a particular commodity
other than one specified as the Benchmark Component Futures Contract, or may
hold Other Commodity-Related Investments that are intended to replicate the
return on the Benchmark Futures Contracts, but may fail to closely track the
SDCI’s total return movements. If USCI increases in size, and due to its
obligations to comply with regulatory limits or due to other market pricing
or liquidity factors, USCI may invest in Futures Contract months other than
the designated month specified as the Benchmark Component Futures Contract,
or in Other Commodity-Related Investments, which may have the effect of increasing
transaction related expenses and may result in increased tracking error.
USCI’s shares began trading on August 10, 2010. As of December 31, 2015,
USCI held 723 Futures Contracts on the NYMEX, 4,650 Futures Contracts on the
ICE Futures, 4,949 Futures Contracts on the CBOT, 1,148 Futures Contracts on
the CME, 5,889 Futures Contracts on the LME and 886 Futures Contracts on the
COMEX.
The investment objective of CPER is for the daily changes in percentage terms
of its shares’ per share NAV to reflect the daily changes in percentage
terms of the SummerHaven Copper Index Total ReturnSM (the “SCI”),
less CPER’s expenses. USCF does not intend to operate CPER in a fashion
such that its per share NAV will equal, in dollar terms, the spot prices of
the commodities underlying the Benchmark Component Copper Futures Contracts
(as defined below) that comprise the SCI or the prices of any particular group
of Futures Contracts. CPER will not seek to achieve a stated investment objective
over a period of time greater than one day. USCF believes that it is not practical
to manage the portfolio to achieve such an investment goal when investing in
Futures Contracts and Other Copper-Related Investments (as defined below). The
SCI is designed to reflect the performance of the investment returns from a
portfolio of copper futures contracts. The SCI is owned and maintained by SHIM
and calculated and published by the NYSE Arca. The SCI is comprised of either
two or three Eligible Copper Futures Contracts that are selected on a monthly
basis based on quantitative formulas relating to the prices of the Eligible
Copper Futures Contracts developed by SHIM. The Eligible Copper Futures Contracts
that at any given time make up the SCI are referred to herein as “Benchmark
Component Copper Futures Contracts.”
CPER seeks to achieve its investment objective by investing to the fullest extent
possible in the Benchmark Component Copper Futures Contracts. Then, if constrained
by regulatory requirements or in view of market conditions, CPER will invest
next in other Eligible Copper Futures Contracts, and finally to a lesser extent,
in other exchange traded futures contracts that are economically identical or
substantially similar to the Benchmark Component Copper Futures Contracts if
one or more other Eligible Copper Futures Contracts is not available. When CPER
has invested to the fullest extent possible in exchange-traded futures contracts,
CPER may then invest in other contracts and instruments based on the Benchmark
Component Copper Futures Contracts, other Eligible Copper Futures Contracts
or copper, such as cash-settled options, forward contracts, cleared swap contracts
and swap contracts other than cleared swap contracts. Other exchange-traded
futures contracts that are economically identical or substantially similar to
the Benchmark Component Copper Futures Contracts and other contracts and instruments
based on the Benchmark Component Copper Futures Contracts, are collectively
referred to collectively as “Other Copper-Related Investments,”
and together with Benchmark Component Copper Futures Contracts and other Eligible
Copper Futures Contracts, “Copper Interests.”
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