United States Natural Gas Fund (UNG) risk factors, FY2024 10-K

Other

1. 01The 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 UNG’s financial statements and the related notes
2. 02Other factors impacting the natural gas market. The supply of and demand for natural gas may also be impacted by changes in interest rates, inflation, and other local or regional market conditions, as well as by the development of alternative energy sources
3. 03Natural disasters, public health disruptions (such as the COVID-19 pandemic), and international armed conflicts could impact the price of commodities and/or the value, pricing and liquidity of UNG’ investments or assets which, in turn, could cause the loss of your investment in UNG
4. 04Historical performance of UNG and the Benchmark Futures Contract is not indicative of future performance
5. 05An investment in UNG may provide little or no diversification benefits. Thus, in a declining market, UNG may have no gains to offset losses from other investments, and an investor may suffer losses on an investment in UNG while incurring losses with respect to other asset classes
6. 06The market price at which investors buy or sell shares may be significantly less or more than NAV
7. 07Daily percentage changes in UNG’s NAV may not correlate with daily percentage changes in the price of the Benchmark Futures Contract
8. 08Daily percentage changes in the price of the Benchmark Futures Contract may not correlate with daily percentage changes in the spot price of natural gas
9. 09An investment in UNG is not a proxy for investing in the natural gas markets, and the daily percentage changes in the price of the Benchmark Future Contract, or the NAV of UNG, may not correlate with daily percentage changes in the spot price of natural gas
10. 10Natural forces in the natural gas futures market known as “backwardation” and “contango” may increase UNG’s tracking error and/or negatively impact total return

Tax Risk

1. 11An investor’s tax liability may exceed the amount of distributions, if any, on its shares
2. 12An investor’s allocable share of taxable income or loss may differ from economic income or loss on the shares
3. 13UNG could be treated as a corporation for U.S. federal income tax purposes, which may substantially reduce the value of the shares
4. 14UNG is organized and operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state law, and therefore, UNG has a more complex tax treatment than traditional mutual funds
5. 15If UNG is required to withhold tax with respect to any non-U.S. shareholders, the cost of such withholding may be borne by all shareholders
6. 16The impact of changes in U.S. federal income tax laws on UNG is uncertain
7. 17UNG will be subject to credit risk with respect to counterparties to OTC contracts entered into by UNG
8. 18Valuing OTC derivatives may be less certain than valuing exchange-traded and/or cleared financial instruments
9. 19UNG’s rights under an OTC contract may be restricted by regulations
10. 20The use of swap agreements may expose UNG to early termination risk, which could result in significant losses to UNG

Other Risks

1. 21UNG is not leveraged, but it could become leveraged if it had insufficient assets to completely meet its margin or collateral requirements relating to its investments
2. 22UNG may temporarily limit the offering of Creation Baskets
3. 23Certain of UNG’s investments could be illiquid, which could cause large losses to investors at any time or from time to time
4. 24UNG may not meet the listing standards of NYSE Arca, which could adversely impact an investor’s ability to sell shares
5. 25The NYSE Arca may halt trading in UNG’s shares, which would adversely impact an investor’s ability to sell shares
6. 26Shareholders that are not Authorized Participants may only purchase or sell their shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect investors’ investment in the shares
7. 27The lack of an active trading market for UNG’s shares may result in losses on an investor’s investment in UNG at the time the investor sells the shares
8. 28Limited partners and shareholders do not participate in the management of UNG and do not control USCF, so they do not have any influence over basic matters that affect UNG
9. 29Under Delaware law, a limited partner might be held liable for UNG’s obligations as if it were a general partner if the limited partner participates in the control of the partnership’s business and the persons who transact business with the partnership think the limited partner is the general partner
10. 30There is a risk that UNG will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such UNG may not earn any profit
11. 31UNG is subject to extensive regulatory reporting and compliance
12. 32Regulatory changes or actions, including the implementation of new legislation, is impossible to predict but may significantly and adversely affect UNG
13. 33UNG is not a registered investment company so shareholders do not have the protections of the 1940 Act
14. 34Trading in international markets could expose UNG to credit and regulatory risk
15. 35UNG and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of shareholders
16. 36UNG 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
17. 37UNG does not expect to make cash distributions
18. 38An unanticipated number of Redemption Basket requests during a short period of time could have an adverse effect on UNG’s NAV
19. 39The suspension in the ability of Authorized Participants to purchase Creation Baskets could cause UNG’s NAV to differ materially from its trading price
20. 40UNG 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
21. 41As inflation increases, the present value of UNG’ assets may decline
22. 42UNG may potentially lose money by investing in government money market funds
23. 43The failure or bankruptcy of a clearing broker could result in a substantial loss of UNG’s assets and could impair UNG in its ability to execute trades
24. 44The failure or bankruptcy of UNG’s Custodian could result in a substantial loss of UNG’s assets
25. 45Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks
26. 46UNG’s investment returns could be negatively affected by climate change and greenhouse gas restrictions
27. 47USCF is the subject of class action, derivative and other litigation. In light of the inherent uncertainties involved in litigation matters, an adverse outcome in this litigation could materially adversely affect USCF’s financial condition