8-K: United States Commodity Index Funds Trust Releases Annual Financial Statements for 2023

The United States Commodity Index Funds Trust has released its annual financial statements for the year ended December 31, 2023, for both the United States Commodity Index Fund (USCI) and the United States Copper Index Fund (CPER).

Summary

• The United States Commodity Index Funds Trust has released its annual financial statements for the year ending December 31, 2023.
• The report includes financial statements for the United States Commodity Index Fund (USCI) and the United States Copper Index Fund (CPER).
• USCI's net asset value per share increased slightly from $56.23 to $56.34, while CPER's net asset value per share increased from $23.07 to $24.10.
• USCI experienced a net loss of $3,093,973 for the year, while CPER had a net income of $6,916,282.
• The total assets for the trust were $301,013,715 at the end of 2023, compared to $426,156,578 at the end of 2022.
• USCI held 4,766 futures contracts at the end of 2023, while CPER held 1,342 futures contracts.
• The management fee for USCI is 0.80% per annum of average daily total net assets, and for CPER it is 0.65%.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to USCI's net loss and the overall decrease in total assets, although CPER's positive performance and the standard nature of the report mitigate some of the negativity.

Positives

• CPER experienced a positive net income of $6,916,282 for the year.
• Both USCI and CPER saw an increase in their net asset value per share.
• The independent auditor provided an unqualified opinion on the financial statements and internal controls for both funds.

Negatives

• USCI experienced a net loss of $3,093,973 for the year.
• The total assets of the trust decreased significantly from $426,156,578 in 2022 to $301,013,715 in 2023.

Risks

• The funds are exposed to market risk due to changes in the value of futures contracts.
• There is credit risk associated with the failure of a counterparty to perform on a contract.
• The funds are subject to the risk of financial failure by the clearing broker or custodian.
• Significant market volatility in commodity markets could negatively impact the funds.
• The funds' performance is impacted by contango and backwardation in the futures markets.

Future Outlook

The document does not contain specific forward-looking statements or guidance, but it does mention that the funds will continue to operate in perpetuity unless terminated according to the Trust Agreement.

Management Comments

• John P. Love, President and Chief Executive Officer of United States Commodity Funds LLC, affirmed the accuracy and completeness of the annual report.
• USCF believes that market arbitrage opportunities will cause the daily changes in the share price to closely track the daily changes in the per share NAV.

Industry Context

This announcement is typical for commodity-based exchange-traded funds, providing transparency to investors regarding the funds' performance and financial position. The funds operate in a competitive market with other commodity ETFs, and their performance is closely tied to the underlying commodity markets.

Comparison to Industry Standards

• The management fees for USCI (0.80%) and CPER (0.65%) are within the typical range for commodity-based ETFs.
• The funds' investment strategies, which focus on tracking specific commodity indices through futures contracts, are standard practice in the industry.
• The use of authorized participants for creation and redemption of shares is a common mechanism for ETFs to maintain market efficiency.
• The funds' financial reporting and auditing practices align with regulatory requirements and industry best practices.
• Similar commodity ETFs include Invesco DB Commodity Index Tracking Fund (DBC) and iShares S&P GSCI Commodity-Indexed Trust (GSG), which also track commodity indices using futures contracts.

Related Party Transactions

• USCF, the sponsor, receives management fees from the funds.
• USCF pays fees to SummerHaven for advisory and licensing services.
• USCF pays fees to BNY Mellon for custodial, administrative, and transfer agency services.

Stakeholder Impact

• Shareholders of USCI experienced a slight increase in net asset value per share, but a net loss for the year.
• Shareholders of CPER experienced an increase in net asset value per share and a net income for the year.
• Authorized participants can continue to create and redeem shares in Creation and Redemption Baskets.
• The funds' performance is subject to market volatility and the risks associated with commodity futures trading.

Next Steps

• The funds will continue to operate and track their respective commodity indices.
• USCF will continue to manage the funds and provide necessary services.
• Investors can access additional information on the USCF website or by contacting USCF directly.

Key Dates

Keywords

Commodity Funds, USCI, CPER, Futures Contracts, Financial Statements, Commodities, Net Asset Value, Annual Report, Derivatives, Commodity Pool