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Fund Details - Objective & Key Features

United States Brent Oil Fund® LP (BNO) is an exchange-traded security designed to track the movements of Brent crude oil. BNO issues units that may be purchased and sold on the NYSE Arca.

BNO's Objective

The investment objective of BNO is for the daily changes in percentage terms of its units' net asset value ("NAV") to reflect the daily changes in percentage terms of the spot price of Brent crude oil as measured by the changes in the price of the futures contract on Brent crude oil as traded on the ICE Futures Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case the futures contract will be the next month contract to expire (the "Benchmark Futures Contract"), less BNO's expenses.

BNO's Target

Crude oil is one of the world's most widely-used commodities and one of the most actively traded commodities worldwide. A key geo-political benchmark, the price of oil is among the most quoted statistics in business headlines today. Due to the liquidity and price transparency of Brent light, sweet crude oil futures contracts, they are used as a principal international pricing benchmark for all grades and qualities of crude oil.

BNO's Portfolio

The portfolio consists of listed crude oil futures contracts and other oil-related futures and may consist of forward and swap contracts. These investments will be collateralized by cash, cash equivalents and US government obligations with remaining maturities of two years or less.

BNO's Key Features

  • BNO provides a vehicle to hedge against the risk of loss associated with the rising cost of crude oil
  • BNO offers the convenience of an exchange-traded security listed on the NYSE Arca
  • BNO permits commodity-like exposure without using a commodity futures account
  • BNO provides "equity-like" order flexibility, including market, limit, stop, stop limit and good-til-cancelled (GTC) orders
  • BNO provides Market Price, NAV, and Portfolio Holdings on a daily basis

BNO's Creation & Redemption Process

  • Creation/redemption basket size: 50,000 units
  • Through December 31, 2012, transaction charge for each AP order is $350 (per order, not per basket)
  • Order cut-off for APs is 12:00 pm ET
  • BNO's NAV is calculated generally around 4:00 pm ET
  • Settlement is T+3
  • Custodian is Brown Brothers Harriman & Co.
  • Marketing Agent is ALPS Distributors, Inc.

U.S. Federal Income Tax Considerations

A summary of the material U.S. federal income tax consequences of the purchase, ownership and disposition of units in BNO, and the U.S. federal income tax treatment of BNO, is set forth in the Prospectus.

Each prospective investor is advised to consult its own tax advisor as to the U.S. federal income tax consequences of an investment in BNO to the investor and as to applicable state, local or foreign taxes.

Tax Status of BNO

BNO is organized and will be operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state law. Under the Internal Revenue Code of 1986, as amended (the "Code"), an entity classified as a partnership that is deemed to be a "publicly traded partnership" is generally taxable as a corporation for federal income tax purposes. The Code provides an exception to this general rule for a publicly traded partnership whose gross income for each taxable year of its existence consists of at least 90% "qualifying income" ("qualifying income exception"). For this purpose, section 7704 defines "qualifying income" as including, in pertinent part, interest (other than from a financial business), dividends and gains from the sale or disposition of capital assets held for the production of interest or dividends. In addition, in the case of a partnership a principal activity of which is the buying and selling of commodities (other than as inventory) or of futures, forwards and options with respect to commodities, "qualifying income" includes income and gains from such commodities and futures, forwards and options with respect to commodities. BNO and the General Partner have represented the following to Reed Smith LLP:

  • At least 90% of BNO's gross income for each taxable year will constitute "qualifying income" within the meaning of Code section 7704 (as described above);
  • BNO will be organized and operated in accordance with its governing agreements and applicable law;
  • BNO has not elected, and will not elect, to be classified as a corporation for U.S. federal income tax purposes.

If BNO failed to satisfy the qualifying income exception in any year, other than a failure that is determined by the Internal Revenue Service to be inadvertent and that is cured within a reasonable time after discovery, BNO would be taxable as a corporation for federal income tax purposes and would pay federal income tax on its income at regular corporate rates. In that event, unitholders would not report their share of BNO's income or loss on their returns. In addition, distributions to unitholders would be treated as dividends to the extent of BNO's current and accumulated earnings and profits. To the extent a distribution exceeded BNO's earnings and profits, the distribution would be treated as a return of capital to the extent of a unitholder's basis in its units, and thereafter as gain from the sale of units. Accordingly, if BNO were to be taxable as a corporation, it would likely have a material adverse effect on the economic return from an investment in BNO and on the value of the units.

The foregoing is only a partial summary of the federal income tax consequences of an investment in BNO. The full summary can be found in the Prospectus.

Fund Details
BNO as of 05/23/2013
Ticker BNO
CUSIP 91167Q100
ISIN US91167Q1004
Minimum Trade Size 1 unit
Marginable* Yes
Options Traded Yes
Administrator Brown Brothers Harriman & Co
Distributor ALPS Distributors, Inc.
General Partner United States Commodity Funds LLC
Management Expense Ratio0.75%
Trading Increment $0.01

*There are special risks associated with margin investing. Please ask your financial advisor for more information about these risks.

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. Please read it carefully before investing.

The Commodity Futures Trading Commission has not passed upon the merits of participating in these pools nor has the Commission passed on the adequacy or accuracy of this Prospectus.

Neither the Securities and Exchange Commission ("SEC"), nor any State Securities Commission has approved or disapproved the securities offered in this Prospectus or determined if this Prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

BNO®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.

This investment is not suitable for all investors.

Commodity trading is highly speculative. Commodities and futures generally are volatile and are not suitable for all investors. BNO is speculative and involves a high degree of risk. Investing in BNO subjects you to the risks of the oil industry. These risks could result in large fluctuations in the price of BNO's units. An investor may lose all or substantially all of an investment in BNO. Funds that focus on a single sector generally experience greater volatility.

The Benchmark Futures Contract does not correlate exactly with the spot price of Brent crude oil and this could cause the changes in the price of the units to substantially vary from the changes in the spot price of Brent crude oil. Therefore, you may not be able to effectively use BNO to hedge against crude oil-related losses or as a way to indirectly invest in crude oil. For further discussion of these and additional risks associated with an investment in BNO units, click here.

Units of BNO may be purchased or sold throughout the day through any brokerage account, which will result in typical brokerage commissions. Investors buy and sell units in the secondary market (i.e., not directly from BNO). Only authorized purchasers may trade directly with BNO, in minimum blocks of 50,000 units.

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

BNO United States Brent Oil Fund® and Design mark are registered trademarks of The United States Commodity Funds LLC. The United States Commodity Funds® is a registered trademark. | All rights reserved.

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