**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-Q**




**x**
            **Quarterly
                report pursuant to Section 13 or 15(d) of the Securities Exchange Act
                of 1934 for the quarterly period ended September 30, 2008.**


**OR**


** ̈**
            **Transition
                report pursuant to Section 13 or 15(d) of the Securities Exchange Act
                of 1934 for the transition period from
                                    
                to
                                    .**




Commission
      file number: 001-33859




**United
      States 12 Month Oil Fund, LP**


**(Exact
      name of registrant as specified in its charter)**




**Delaware**
            
            **20-0431897****(State
                or other jurisdiction of**
              **incorporation
                or organization)**
            
            **(I.R.S.
                Employer**
              **Identification
                No.)**




**1320
      Harbor Bay Parkway, Suite 145**


**Alameda,
      California 94502**


**(Address
      of principal executive offices) (Zip code)**




**(510)
      522-3336**


**(Registrant’s
      telephone number, including area code)**




**N/A**


**(Former
      name, former address and former fiscal year, if changed since last report)**




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the registrant
      was required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.




x Yes  ̈ No




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
                accelerated filer ̈
            Accelerated
                filer ̈Non-accelerated
                filerx
            Smaller
                reporting company ̈(Do
                not check if a smaller reporting
                company)




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




 ̈ Yes x No








**UNITED
      STATES 12 MONTH OIL FUND, LP**


**Table
      of Contents**


Page**Part
                  I. FINANCIAL INFORMATION**Item
                    1. Condensed Financial Statements.
              
              1Item
                    2. Management’s Discussion and Analysis of Financial Condition and
                    Results of Operations.
              
              14Item
                    3. Quantitative and Qualitative Disclosures About Market Risk.
              
              29Item
                    4. Controls and Procedures.
              
              30**Part
                    II. OTHER INFORMATION**Item
                  1. Legal Proceedings.
              
              31Item
                  1A. Risk Factors.
              
              31Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds.
              
              31Item
                  3. Defaults Upon Senior Securities.
              
              31Item
                  4. Submission of Matters to a Vote of Security Holders.
              
              31Item
                    5. Other Information.
              
              31Item
                    6. Exhibits.
              
              31










**Part
      I.****FINANCIAL
      INFORMATION**





**Item
      1. Condensed Financial Statements.**





**Index
      to Condensed Financial Statements**




**Documents**
            
            **Page**CondensedStatements
                of Financial Condition at September 30, 2008 (Unaudited) and December
                31,
                2007
            
            2CondensedSchedule
                of Investments (Unaudited) at September 30, 2008
            
            3Condensed
                Statements of Operations (Unaudited) for the three and nine months
                ended
                September 30, 2008
            
            4CondensedStatement
                of Changes in Partners’ Capital (Unaudited) for thenine
                months ended September 30, 2008
            
            5CondensedStatement
                of Cash Flows (Unaudited) for the nine months ended September 30,
                2008
            
            6Notes
                to Condensed Financial Statementsfor the period ended September 30, 2008 (Unaudited)
            
            7




1


***United******States 12 Month Oil Fund, LP***


***Condensed
      Statements of Financial Condition***


***At
      September 30, 2008 (Unaudited) and December 31, 2007***




**September 30, 2008**
              
              **December 31, 2007****Assets**Cash
                  and cash equivalents
              
              $
              4,769,004
              
              $
              18,174,276Equity
                  in UBS Securities LLC trading accounts:Cash
              
              
              1,505,376
              
              
              1,999,108Unrealized
                  gain (loss) on open commodity futures contracts
              
              
              (214,800
              )
              
              1,525,370Interest
                  receivable
              
              
              5,859
              
              
              4,994Receivable
                  from general partner
              
              
              132,953
              
              
              -*Total
                  assets*
              
              $
              6,198,392
              
              $
              21,703,748**Liabilities
                  and Partners' Capital**General
                  Partner management fees (Note 3)
              
              $
              3,094
              
              $
              8,790Brokerage
                  commissions payable
              
              
              300
              
              
              -Other
                  liabilities
              
              
              134,858
              
              
              3,479*Total
                  liabilities*
              
              
              138,252
              
              
              12,269**Commitments
                  and Contingencies**(Notes
                  3, 4 and 5)**Partners'
                  Capital**General
                  Partner
              
              
              -
              
              
              -Limited
                  Partners
              
              
              6,060,140
              
              
              21,691,479*Total
                  Partners' Capital*
              
              
              6,060,140
              
              
              21,691,479*Total
                  liabilities and partners' capital*
              
              $
              6,198,392
              
              $
              21,703,748Limited
                  Partners' units outstanding
              
              
              100,000
              
              
              400,000Net
                  asset value per unit
              
              $
              60.60
              
              $
              54.23Market
                  value per unit
              
              $
              60.66
              
              $
              53.88




*See
      accompanying notes to condensed financial statements.*


2


***United******States 12 Month Oil Fund, LP***


***Condensed
      Schedule of Investments (Unaudited)***


***At
      September 30, 2008***





**Open
      Futures Contracts**


**Number
                of**
              **Contracts**
            
            
            **Gains
                (Losses) on**
              **Open
                Commodity**
              **Contracts**
            
            
            **%
                of**
              **Partners'
                Capital****United
                States Contracts**Crude
                Oil Futures contracts, expire November 2008
            
            
            5
            
            $
            65,750
            
            
            1.08Crude
                Oil Futures contracts, expire December 2008
            
            
            4
            
            
            51,800
            
            
            0.85Crude
                Oil Futures contracts, expire January 2009
            
            
            5
            
            
            68,820
            
            
            1.14Crude
                Oil Futures contracts, expire February 2009
            
            
            5
            
            
            44,750
            
            
            0.74Crude
                Oil Futures contracts, expire March 2009
            
            
            5
            
            
            75,550
            
            
            1.25Crude
                Oil Futures contracts, expire April 2009
            
            
            5
            
            
            7,330
            
            
            0.12Crude
                Oil Futures contracts, expire May 2009
            
            
            5
            
            
            (1,000
            )
            
            (0.02
            )Crude
                Oil Futures contracts, expire June 2009
            
            
            5
            
            
            (70,450
            )
            
            (1.16
            )Crude
                Oil Futures contracts, expire July 2009
            
            
            5
            
            
            (167,700
            )
            
            (2.77
            )Crude
                Oil Futures contracts, expire August 2009
            
            
            5
            
            
            (180,250
            )
            
            (2.97
            )Crude
                Oil Futures contracts, expire September 2009
            
            
            5
            
            
            (77,100
            )
            
            (1.27
            )Crude
                Oil Futures contracts, expire October 2009
            
            
            5
            
            
            (32,300
            )
            
            (0.53
            )59
            
            $
            (214,800
            )
            
            (3.54
            )**Cash
                Equivalents****Cost**
            
            
            **Market
                Value****United
                States - Money Market Funds**Goldman
                Sachs Financial Square Funds - Government Fund
            
            $
            1,000,929
            
            $
            1,000,929
            
            
            16.51Goldman
                Sachs Financial Square Funds - Treasury Instruments Fund
            
            
            2,057,877
            
            
            2,057,877
            
            
            33.96$
            3,058,806
            
            
            3,058,806
            
            
            50.47**Cash**
            
            
            
            
            
            1,710,198
            
            
            28.22**Total
                Cash and Cash Equivalents**
            
            
            
            
            
            4,769,004
            
            
            78.69**Cash
                on deposit with broker**
            
            
            
            
            
            1,505,376
            
            
            24.84**Receivables
                in excess of liabilities**
            
            
            
            
            
            560
            
            
            0.01**Total
                Partners' Capital**
            
            
            
            
            $
            6,060,140
            
            
            100.00




*See
      accompanying notes to condensed financial statements.*


3




***United
      States 12 Month Oil Fund, LP***


***Condensed
      Statements of Operations (Unaudited)***


***For
      the three and nine months ended September 30, 2008***




**Three months ended**
              
              **Nine months ended****September 30, 2008**
              
              **September 30, 2008****Income**Gains
                  (losses) on trading of commodity futures contracts:Realized
                  gains on closed positions
              
              $
              486,750
              
              $
              2,268,860Change
                  in unrealized gains (losses) on open positions
              
              
              (2,845,610
              )
              
              (1,740,170
              )Interest
                  income
              
              
              28,187
              
              
              141,384Other
                  income
              
              
              -
              
              
              3,000*Total
                  income (loss)*
              
              
              (2,330,673
              )
              
              673,074**Expenses**General
                  Partner management fees (Note 3)
              
              
              10,804
              
              
              42,768Brokerage
                  commissions
              
              
              66
              
              
              1,568Other
                  expenses
              
              
              48,808
              
              
              149,402*Total
                  expenses*
              
              
              59,678
              
              
              193,738K-1
                  Tax expense waiver
              
              
              (21,129
              )
              
              (61,450
              )Audit
                  fees waiver
              
              
              (24,201
              )
              
              (71,504
              )*Net
                  expenses*
              
              
              14,348
              
              
              60,784**Net
                  income (loss)**
              
              $
              (2,345,021
              )
              $
              612,290**Net
                  income (loss) per limited partnership unit**
              
              $
              (23.45
              )
              $
              6.37**Net
                  income (loss) per weighted average limited partnership
                  unit**
              
              $
              (23.45
              )
              $
              4.06**Weighted
                  average limited partnership units outstanding**
              
              
              100,000
              
              
              150,730




*See
      accompanying notes to condensed financial statements.*


4


***United
      States 12 Month Oil Fund, LP***


***Condensed
      Statement of Changes in Partners’ Capital (Unaudited)***


***For
      the nine months ended September 30, 2008***


**General**
                **Partner**
              
              **Limited Partners**
              
              **Total****Balances,
                  at December 31, 2007**
              
              $
              -
              
              $
              21,691,479
              
              $
              21,691,479Redemption
                  of 300,000 partnership units
              
              
              -
              
              
              (16,243,629
              )
              
              (16,243,629
              )Net
                  income
              
              
              -
              
              
              612,290
              
              
              612,290**Balances,
                  at September 30, 2008**
              
              $
              -
              
              $
              6,060,140
              
              $
              6,060,140**Net
                  Asset Value Per Unit**At
                  December 31, 2007
              
              $
              54.23At
                  September 30, 2008
              
              $
              60.60




*See
      accompanying notes to condensed financial statements.*


5


***United
      States 12 Month Oil Fund, LP***


***Condensed
      Statement of Cash Flows (Unaudited)***


***For
      the nine months ended September 30, 2008***




**Nine months ended****September 30, 2008****Cash
                  Flows from Operating Activities:**Net
                  income
              
              $
              612,290Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Decrease
                  in commodity futures trading account – cash
              
              
              493,732Unrealized
                  losses on futures contracts
              
              
              1,740,170Increase
                  in interest receivable and other assets
              
              
              (133,818
              )Decrease
                  in management fees payable
              
              
              (5,696
              )Increase
                  in commissions payable
              
              
              300Increase
                  in other liabilities
              
              
              131,379*Net
                  cash provided by operating activities*
              
              
              2,838,357**Cash
                  Flows from Financing Activities:**Redemption
                  of partnership units
              
              
              (16,243,629
              )*Net
                  cash used in financing activities*
              
              
              (16,243,629
              )**Net
                  Decrease in Cash and Cash Equivalents**
              
              
              (13,405,272
              )**Cash
                  and Cash Equivalents**,
                  beginning of period
              
              
              18,174,276**Cash
                  and Cash Equivalents**,
                  end of period
              
              $
              4,769,004




*See
      accompanying notes to condensed financial statements.*


6


**United****States 12 Month Oil Fund, LP**


**Notes
      to Condensed Financial Statements**


**For
      the period ended September 30, 2008 (Unaudited)**




**NOTE
      1 - ORGANIZATION AND BUSINESS**





The
      United States 12 Month Oil Fund, LP (“US12OF”) was organized as a limited
      partnership under the laws of the state of Delaware on June 27, 2007. US12OF
      is
      a commodity pool that issues units that may be purchased and sold on the
      American Stock Exchange (the “AMEX”). US12OF will continue in perpetuity, unless
      terminated sooner upon the occurrence of one or more events as described in
      its Amended and Restated Agreement of Limited Partnership dated as of
      December 4, 2007 (the “LP Agreement”). The investment objective of US12OF is for
      the changes in percentage terms of its net asset value to reflect the changes
      in
      percentage terms of the price of light, sweet crude oil delivered to
      Cushing, Oklahoma, as measured by the changes in the average of the prices
      of
      the 12 futures contracts on light, sweet crude oil as traded on
      the New York Mercantile Exchange (the “NYMEX”), consisting of the near
      month contract to expire and the contracts for the following 11 months for
      a
      total of 12 consecutive months’ contracts, except when the near month contract
      is within two weeks of expiration, in which case it will be measured by the
      futures contracts that are the next month contract to expire and the contracts
      for the following 11 consecutive months, less US12OF’s expenses. US12OF
      accomplishes its objective through investments in futures contracts for light,
      sweet crude oil, and other types of crude oil, heating oil, gasoline, natural
      gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures
      or
      other U.S. and foreign exchanges (collectively, “Futures Contracts”) and other
      oil-related investments such as cash-settled options on Futures Contracts,
      forward contracts for oil and over-the-counter transactions that are based
      on
      the price of crude oil, heating oil, gasoline, natural gas and other
      petroleum-based fuels, Futures Contracts and indices based on the foregoing
      (collectively, “Other Crude Oil-Related Investments”). As of September 30, 2008,
      US12OF held 59 Futures Contracts traded on the NYMEX.





US12OF
      commenced investment operations on December 6, 2007 and has a fiscal year ending
      on December 31. United States Commodity Funds LLC (formerly known as Victoria
      Bay Asset Management, LLC) (the “General Partner”) is responsible for the
      management of US12OF. The General Partner is a member of the National Futures
      Association (the “NFA”) and became a commodity pool operator with the
      Commodity Futures Trading Commission effective December 1, 2005. The General
      Partner is also the general partner of the United States Oil Fund, LP
      (“USOF”), the United States Natural Gas Fund, LP (“USNG”), the United States
      Gasoline Fund, LP (“USG”) and the United States Heating Oil Fund, LP (“USHO”),
      which listed their limited partnership units on the AMEX under the ticker
      symbols “USO” on April 10, 2006, “UNG” on April 18, 2007, “UGA” on February
      26, 2008 and “UHN” on April 9, 2008, respectively.





The
      accompanying unaudited condensed financial statements have been prepared in
      accordance with Rule 10-01 of Regulation S-X promulgated by the U.S.
      Securities and Exchange Commission (the “SEC”) and, therefore, do not include
      all information and footnote disclosure required under accounting principles
      generally accepted in the United States of America. The financial
      information included herein is unaudited, however, such financial
      information reflects all adjustments which are, in the opinion of management,
      necessary for the fair presentation of the condensed financial statements
      for the interim period.




US12OF issues
      limited partnership interests (“units”) to certain authorized purchasers
      (“Authorized Purchasers”) by offering baskets consisting of 100,000 units
      (“Creation Baskets”) through ALPS Distributors, Inc. (the “Marketing Agent”).
      The purchase price for a Creation Basket is based upon the net asset value
      of
      a unit determined as of the earlier of the close of the New York Stock
      Exchange (the “NYSE”) or 4:00 p.m. New York time on the day the order to create
      the basket is properly received. In addition, Authorized
      Purchasers pay US12OF a $1,000 fee for each order to create one
      or more Creation Baskets. Units may be purchased or sold on a nationally
      recognized securities exchange in smaller increments than a Creation Basket.
      Units purchased or sold on a nationally recognized securities exchange are
      not
      purchased or sold at the net asset value of US12OF but rather at market prices
      quoted on such exchange.




In
      November 2007, US12OF initially registered 11,000,000 units on Form S-1 with
      the
      SEC. On December 6, 2007, US12OF listed its units on the AMEX under the ticker
      symbol “USL”. On that day, US12OF established its initial net asset value by
      setting the price at $50.00 per unit and issued 300,000 units in exchange
      for $15,001,000. US12OF also commenced investment operations on December 6,
      2007
      by purchasing Futures Contracts traded on the NYMEX based on light, sweet crude
      oil. As of September 30, 2008, US12OF had registered a total of 11,000,000
      units.


7




**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





**Revenue
      Recognition**





Commodity
      futures contracts, forward contracts, physical commodities, and related options
      are recorded on the trade date. All such transactions are recorded on the
      identified cost basis and marked to market daily. Unrealized gains or losses
      on
      open contracts are reflected in the condensed statement of financial
      condition and in the difference between the original contract amount and the
      market value (as determined by exchange settlement prices for futures contracts
      and related options and cash dealer prices at a predetermined time for forward
      contracts, physical commodities, and their related options) as of the last
      business day of the year or as of the last date of the condensed financial
      statements. Changes in the unrealized gains or losses between periods are
      reflected in the condensed statement of operations. US12OF earns interest
      on its assets denominated in U.S. dollars on deposit with the futures commission
      merchant at the 90-day Treasury bill rate. In addition, US12OF earns
      interest on funds held at the custodian at prevailing market rates earned
      on such investments.





**Brokerage
      Commissions**





Brokerage
      commissions on all open commodity futures contracts are accrued on a full-turn
      basis.




**Income
      Taxes**





US12OF
      is
      not subject to federal income taxes; each partner reports its allocable share
      of
      income, gain, loss deductions or credits on its own income tax
      return.




**Creations
      and Redemptions**





Authorized
      Purchasers may purchase units (“Creation Baskets”) or redeem units (“Redemption
      Baskets”) only in blocks of 100,000 units equal to the net asset value of the
      units determined as of the earlier of the close of the NYSE or 4:00 p.m. New
      York time on the day the order is placed.





US12OF
      records units sold or redeemed one business day after the trade date of the
      purchase or redemption. The amounts due from Authorized Purchasers are
      reflected in US12OF’s condensed statement of financial condition as
      receivable for units sold, and amounts payable to Authorized Purchasers upon
      redemption are reflected as payable for units redeemed.





**Partnership
      Capital and Allocation of Partnership Income and Losses**





Profit
      or
      loss is allocated among the partners of US12OF in proportion to the number
      of
      units each partner holds as of the close of each month. The General Partner
      may
      revise, alter or otherwise modify this method of allocation as described in
      the
      LP Agreement.





**Calculation
      of Net Asset Value**





US12OF calculates
      its net asset value on each trading day by taking the current market value
      of
      its total assets, subtracting any liabilities and dividing the amount by the
      total number of units issued and outstanding. US12OF uses the closing price
      for
      the contracts on the relevant exchange on that day to determine the value of
      contracts held on such exchange.





**Net
      Income (Loss) per Unit**





Net
      income (loss) per unit is the difference between the net asset value per
      unit at the beginning of each period and at the end of each period. The
      weighted average number of units outstanding was computed for purposes of
      disclosing net income (loss) per weighted average unit. The weighted average
      units are equal to the number of units outstanding at the end of the period,
      adjusted proportionately for units redeemed based on the amount of time the
      units were outstanding during such period. There were no units held by the
      General Partner at September 30, 2008.




8


**Offering
      Costs**





Offering
      costs incurred in connection with the registration of additional units after
      the
      initial registration of units are borne by US12OF. These costs include
      registration fees paid to regulatory agencies and all legal, accounting,
      printing and other expenses associated therewith. These costs will be accounted
      for as a deferred charge and thereafter amortized to expense over twelve months
      on a straight-line basis or a shorter period if warranted.





**Cash
      Equivalents**





Cash
      and
      cash equivalents include money market funds and overnight deposits or time
      deposits with original maturity dates of three months or less.





**Use
      of Estimates**





The
      preparation of condensed financial statements in conformity with accounting
      principles generally accepted in the United States of America requires US12OF’s
      management to make estimates and assumptions that affect the reported amount
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the condensed financial statements, and the reported amounts of
      the revenue and expenses during the reporting period. Actual results could
      differ from those estimates and assumptions.




**NOTE 3
      - FEES PAID BY US12OF AND RELATED PARTY TRANSACTIONS**





**General
      Partner Management Fee**





Under
      the LP Agreement, the General Partner is responsible for investing the
      assets of US12OF in accordance with the objectives and policies of US12OF.
      In
      addition, the General Partner has arranged for one or more third parties to
      provide administrative, custody, accounting, transfer agency and other necessary
      services to US12OF. For these services, US12OF is contractually obligated to
      pay
      the General Partner a fee, which is paid monthly and based on average daily
      net
      assets, that is equal to 0.60% per annum on average daily net
      assets.




**Ongoing
      Registration Fees and Other Offering Expenses**





US12OF
      pays all costs and expenses associated with the
      ongoing registration of units subsequent to the initial offering.
      These costs include registration or other fees paid to regulatory agencies
      in
      connection with the offer and sale of units, and all legal, accounting, printing
      and other expenses associated with such offer and sale. For the nine month
      period ended September 30, 2008, US12OF did not incur registration fees or
      other
      offering expenses.




**Directors’
      Fees**




US12OF
      is
      responsible for paying the fees and expenses, including directors’ and officers’
liability insurance, of the independent directors of the General Partner who
      are
      also audit committee members. US12OF shares these fees with USOF,
      USNG, USG and USHO based on the relative assets of each fund, computed on a
      daily basis. These fees for the calendar year 2008 are estimated to be
      a total of $286,000 for all five funds.





**Licensing
      Fees**





As
      discussed in Note 4, US12OF entered into a licensing agreement with the
      NYMEX on January 16, 2008. The agreement has an effective date of December
      4,
      2007. Pursuant to the agreement, US12OF and the affiliated funds managed by
      the
      General Partner pay a licensing fee that is equal to 0.04% for the
      first $1,000,000,000 of combined assets of the funds and 0.02% for combined
      assets above $1,000,000,000. During the nine month period ended September 30,
      2008, US12OF incurred $2,527 under this arrangement.


9





**Investor
      Tax Reporting Cost**


The
        fees
        and expenses associated with US12OF’s tax accounting and reporting requirements,
        with the exception of certain initial implementation service fees and base
        service fees which were borne by the General Partner, are paid by US12OF.
 
 **Other
        Expenses and Fees and Expense Waivers**
  In
        addition to the fees described above, US12OF pays all brokerage fees, taxes
        and other expenses in connection with the operation of US12OF, excluding
        costs
        and expenses paid by the General Partner as outlined in Note 4. In
        addition, the General Partner, though under no obligation to do so, has agreed
        to pay certain expenses normally borne by US12OF to the extent that such
        expenses exceed 0.15% (15 basis points) of its NAV, on an annualized basis,
        until December 31, 2008. The General Partner has no obligation to continue
        such
        payment into subsequent years. These
        costs are estimated to be $97,582 for the year ending December 31, 2008.
        For the
        nine month period ended September 30, 2008, management’s estimated portion of
        these expenses would be $96,466 under this arrangement.




**NOTE
      4 - CONTRACTS AND AGREEMENTS**





US12OF
      is
      party to a marketing agent agreement, dated as of November 13, 2007,
      with the Marketing Agent, whereby the Marketing Agent provides certain
      marketing services for US12OF as outlined in the agreement. The fee of the
      Marketing Agent, which is borne by the General Partner, is equal to 0.06% on
      US12OF’s assets up to $3 billion; and 0.04% on US12OF’s assets in excess of $3
      billion.





The
      above
      fee does not include the following expenses, which are also borne by the General
      Partner: the cost of placing advertisements in various periodicals; web
      construction and development; or the printing and production of various
      marketing materials.





US12OF
      is
      also party to a custodian agreement, dated October 5, 2007, with Brown Brothers
      Harriman & Co. (“BBH&Co.”), whereby BBH&Co. holds investments on
      behalf of US12OF. The General Partner pays the fees of the custodian, which
      are determined by the parties from time to time. In addition, US12OF is party
      to
      an administrative agency agreement, dated October 5, 2007, with the General
      Partner and BBH&Co., whereby BBH&Co. acts as the administrative agent,
      transfer agent and registrar for US12OF. The General Partner also pays the
      fees of BBH&Co. for its services under this agreement and such fees are
      determined by the parties from time to time.





Currently,
      the General Partner pays BBH&Co. for its services, in the foregoing
      capacities, the greater of a minimum of $125,000 annually or an asset-based
      charge of (a) 0.06% for the first $500 million of US12OF’s, USOF’s, USNG’s,
      USG’s and USHO’s combined net assets, (b) 0.0465% for US12OF’s, USOF’s, USNG’s,
      USG’s and USHO’s combined net assets greater than $500 million but less than $1
      billion, and (c) 0.035% for US12OF’s, USOF’s, USNG’s, USG’s and USHO’s combined
      net assets in excess of $1 billion. The General Partner also pays a $25,000
      annual fee for the transfer agency services and transaction fees ranging
      from $7.00 to $15.00 per transaction.





US12OF
      has entered into a brokerage agreement with UBS Securities LLC (“UBS
      Securities”). The agreement requires UBS Securities to provide services to
      US12OF in connection with the purchase and sale of Futures Contracts and
      Other Crude Oil-Related Investments that may be purchased and sold by or through
      UBS Securities for US12OF’s account. The agreement provides that UBS Securities
      charge US12OF commissions of approximately $7 per round-turn trade, plus
      applicable exchange and NFA fees for Futures Contracts and options on
      Futures Contracts.





US12OF
      invests primarily in Futures Contracts traded on the NYMEX. On January 16,
      2008, US12OF and the NYMEX entered into a license agreement whereby US12OF
      was
      granted a non-exclusive license to use certain of the NYMEX’s settlement prices
      and service marks. The agreement has an effective date of December 4,
      2007. Under the license agreement, US12OF and the affiliated funds
      managed by the General Partner pay the NYMEX an asset-based fee for the license,
      the terms of which are described in Note 3.


10




US12OF
      expressly disclaims any association with the NYMEX or endorsement of US12OF
      by
      the NYMEX and acknowledges that “NYMEX” and “New York Mercantile Exchange” are
      registered trademarks of the NYMEX.





**NOTE
      5 - FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISKS AND
      CONTINGENCIES**





US12OF engages
      in the speculative trading of futures contracts and options on futures
      contracts (collectively, “derivatives”). US12OF 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.





All
      of
      the contracts currently traded by US12OF are exchange-traded. The risks
      associated with exchange-traded contracts are generally perceived to be less
      than those associated with over-the-counter transactions since, in
      over-the-counter transactions, US12OF must rely solely on the credit of its
      respective individual counterparties. However, in the future, if US12OF
      were to enter into non-exchange traded contracts, it would be subject to the
      credit risk associated with counterparty non-performance. The credit risk from
      counterparty non-performance associated with such instruments is the net
      unrealized gain, if any. US12OF also has credit risk since the sole counterparty
      to all domestic and foreign futures contracts is the exchange on which the
      relevant contracts are traded. In addition, US12OF bears the risk of financial
      failure by the clearing broker.





The
      purchase and sale of futures and options on futures contracts require margin
      deposits with a futures commission merchant. Additional deposits may be
      necessary for any loss on contract value. The Commodity Exchange Act requires
      a
      futures commission merchant to segregate all customer transactions and assets
      from the futures commission merchant’s proprietary activities.





US12OF’s
      cash and other property, such as U.S. Treasuries, deposited with a futures
      commission merchant are considered commingled with all other customer funds
      subject to the futures commission merchant’s segregation requirements. In the
      event of a futures commission merchant’s insolvency, recovery may be limited to
      a pro rata share of segregated funds available. It is possible that the
      recovered amount could be less than the total of cash and other property
      deposited. The insolvency of a futures commission merchant could result in
      the
      complete loss of US12OF’s assets posted with that futures commission merchant;
      however, the vast majority of US12OF’s assets are held in Treasuries, cash
      and/or cash equivalents with US12OF’s custodian and would not be impacted by the
      insolvency of a futures commission merchant. Also, the failure or insolvency
      of
      US12OF’s custodian could result in a substantial loss of US12OF’s
      assets.





US12OF invests
      its cash in money market funds that seek to maintain a stable net asset value.
      US12OF is exposed to any risk of loss associated with an investment in these
      money market funds. As of September 30, 2008 and December 31, 2007, US12OF
      had
      deposits in domestic and foreign financial institutions, including cash
      investments in money market funds, in the amounts of $6,274,380 and $20,173,384,
      respectively. This amount is subject to loss should these institutions cease
      operations.




For
      derivatives, risks arise from changes in the market value of the contracts.
      Theoretically, US12OF is exposed to a market risk equal to the value
      of futures contracts purchased and unlimited liability on such contracts sold
      short. As both a buyer and a seller of options, US12OF pays or receives a
      premium at the outset and then bears the risk of unfavorable changes in the
      price of the contract underlying the option.





US12OF’s
      policy is to continuously monitor its exposure to market and counterparty risk
      through the use of a variety of financial, position and credit exposure
      reporting controls and procedures. In addition, US12OF has a policy of
      requiring review of the credit standing of each broker or counterparty with
      which it conducts business.





The
      financial instruments held by US12OF are reported in its condensed
      statement of financial condition at market or fair value, or at carrying amounts
      that approximate fair value, because of their highly liquid nature and
      short-term maturity.




11




**NOTE 6
      - FINANCIAL HIGHLIGHTS**





The
      following table presents per unit performance data and other supplemental
      financial data for the nine months ended September 30, 2008 for the limited
      partners. This information has been derived from information presented in the
      condensed financial statements.





**For the nine months ended****September 30, 2008**
              **(unaudited)****Per Unit
                Operating Performance:**Net
                asset value, beginning of period
            
            $
            54.23Total
                income
            
            
            6.77Net
                expenses
            
            
            (0.40
            )Net
                increase in net asset value
            
            
            6.37Net
                asset value, end of period
            
            $
            60.60**Total
                Return**
            
            
            11.75
            %**Ratios
                to Average Net Assets**Total
                income
            
            
            7.07
            %Expenses
                excluding management fees*
            
            
            (0.25
            )%Management
                fees*
            
            
            (0.60
            )%Net
                income
            
            
            6.43
            %




*Annualized





Total
      returns are calculated based on the change in value during the period. An
      individual limited partner’s total return and ratio may vary from the above
      total returns and ratios based on the timing of contributions to and withdrawals
      from US12OF.





**NOTE 7 –
      RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS**





**Fair
      Value of Financial Instruments**




Effective
      January 1, 2008, US12OF adopted FAS 157 - Fair Value Measurements (“FAS 157” or
      the “Statement”). FAS 157 defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (“GAAP”), and
      expands disclosures about fair value measurement. The changes to current
      practice resulting from the application of the Statement relate to the
      definition of fair value, the methods used to measure fair value, and the
      expanded disclosures about fair value measurement. The Statement establishes
      a
      fair value hierarchy that distinguishes between (1) market participant
      assumptions developed based on market data obtained from sources independent
      of
      US12OF (observable inputs) and (2) US12OF’s own assumptions about market
      participant assumptions developed based on the best information available under
      the circumstances (unobservable inputs). The three levels defined by the FAS
      157
      hierarchy are as follows:




Level
      I – Quoted prices (unadjusted) in active markets for *identical* assets
      or liabilities that the reporting entity has the ability to access at the
      measurement date.




Level
      II – Inputs other than quoted prices included within Level 1 that are
      observable for the asset or liability, either directly or indirectly. Level
      II
      assets include the following: quoted prices for *similar* assets
      or liabilities in active markets, quoted prices for identical or similar assets
      or liabilities in markets that are not active, inputs other than quoted prices
      that are observable for the asset or liability, and inputs that are derived
      principally from or corroborated by observable market data by correlation or
      other means (market-corroborated inputs).




12




Level
      III – Unobservable pricing input at the measurement date for the asset or
      liability. Unobservable inputs shall be used to measure fair value to the extent
      that observable inputs are not available.




In
      some
      instances, the inputs used to measure fair value might fall in different levels
      of the fair value hierarchy. The level in the fair value hierarchy within which
      the fair value measurement in its entirety falls shall be determined based
      on
      the lowest input level that is significant to the fair value measurement in
      its
      entirety.




The
      following table summarizes the valuation of US12OF’s securities at September 30,
      2008 using the fair value hierarchy:




**At September
                  30, 2008**
              
              **Total**
              
              **Level I**
              
              **Level II**
              
              **Level III**Investments
              
              $
              3,058,806
              
              $
              3,058,806
              
              $
              -
              
              $
              -Derivative
                  assets
              
              
              (214,800
              )
              
              (214,800
              )
              
              -
              
              
              -





**NOTE 8 –
      SUBSEQUENT EVENTS**





On September 18, 2008, US12OF announced that it would transfer the listing of
      its
      limited partnership units that are listed on the AMEX to the NYSE Arca, Inc.
      in
      connection with NYSE Euronext’s acquisition of the AMEX. US12OF expects that the
      listing transfer will occur sometime during the fourth quarter of
      2008.


13


**Item 2.** **Management’s Discussion and Analysis of Financial Condition and Results of
      Operations.**




The
      following discussion should be read in conjunction with the condensed financial
      statements and the notes thereto of the United States 12 Month Oil Fund, LP
      (“US12OF”) included elsewhere in this quarterly report on Form
      10-Q.




*Forward-Looking
      Information*




This
      quarterly report on Form 10-Q, including this “Management’s Discussion and
      Analysis of Financial Condition and Results of Operations,” contains
      forward-looking statements regarding the plans and objectives of management
      for
      future operations. This information may involve known and unknown risks,
      uncertainties and other factors that may cause US12OF’s actual results,
      performance or achievements to be materially different from future results,
      performance or achievements expressed or implied by any forward-looking
      statements. Forward-looking statements, which involve assumptions and
      describe US12OF’s future plans, strategies and expectations, are generally
      identifiable by use of the words “may,” “will,” “should,” “expect,”
“anticipate,” “estimate,” “believe,” “intend” or “project,” the negative of
      these words, other variations on these words or comparable terminology. These
      forward-looking statements are based on assumptions that may be incorrect,
      and
      US12OF cannot assure investors that the projections included in these
      forward-looking statements will come to pass. US12OF’s actual results could
      differ materially from those expressed or implied by the forward-looking
      statements as a result of various factors.




US12OF
      has based the forward-looking statements included in this quarterly report
      on
      Form 10-Q on information available to it on the date of this quarterly
      report on Form 10-Q, and US12OF assumes no obligation to update any such
      forward-looking statements. Although US12OF undertakes no obligation to revise
      or update any forward-looking statements, whether as a result of new
      information, future events or otherwise, investors are advised to consult any
      additional disclosures that US12OF may make directly to them or through
      reports that US12OF in the future files with the U.S. Securities and
      Exchange Commission (the “SEC”), including annual reports on Form 10-K,
      quarterly reports on Form 10-Q and current reports on Form 8-K.




**Introduction**





US12OF,
      a
      Delaware limited partnership, is a commodity pool that issues units that
      may be purchased and sold on the American Stock Exchange (the “AMEX”). On September 18, 2008, US12OF announced that it would transfer the listing of
      its
      limited partnership units that are listed on the AMEX to the NYSE Arca, Inc.
      in
      connection with NYSE Euronext’s acquisition of the AMEX. US12OF expects that the
      listing transfer will occur sometime during the fourth quarter of 2008. The
      net
      assets of US12OF consist primarily of investments in futures contracts for
      light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural
      gas and other petroleum-based fuels that are traded on the New York Mercantile
      Exchange (the “NYMEX”), ICE Futures or other U.S. and foreign exchanges
      (collectively, “Futures Contracts”). This includes contracts that are of the
      standard industry size as measured in physical amounts of light, sweet crude
      oil, as well as similar contracts that are financially settled but are based
      on
      a percentage of the standard size contracts. US12OF may also invest in other
      crude oil-related investments such as cash-settled options on Futures Contracts,
      forward contracts for crude oil, and over-the-counter transactions that are
      based on the price of crude oil, heating oil, gasoline, natural gas and other
      petroleum-based fuels, Futures Contracts and indices based on the foregoing
      (collectively, “Other Crude Oil-Related Investments”). For convenience and
      unless otherwise specified, Futures Contracts and Other Crude Oil-Related
      Investments collectively are referred to as “Crude Oil Interests” in this
      quarterly report on Form 10-Q.





The
      investment objective of US12OF is to have the changes in percentage terms of
      the
      units’ net asset value (“NAV”) reflect the changes in percentage terms of the
      price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured
      by
      the changes in the average of the prices of the 12 futures contracts (the
“Benchmark Futures Contracts”) on light sweet crude oil traded on the NYMEX,
      consisting of the near month contract to expire and the contracts for the
      following 11 months, for a total of 12 consecutive months’ contracts, except
      when the near month contract is within two weeks of expiration, in which case
      it
      will be measured by the futures contracts that are the next month contract
      to
      expire and the contracts for the following 11 consecutive months, less US12OF’s
      expenses. When calculating the daily movement of the average price of the 12
      contracts, each contract month will be equally weighted.


14




The
      general partner of US12OF, United States Commodity Funds LLC (formerly, Victoria
      Bay Asset Management, LLC) (the “General Partner”), which is registered as
      a commodity pool operator (“CPO”) with the U.S. Commodity Futures Trading
      Commission (the “CFTC”), is authorized by the Amended and Restated
      Agreement of Limited Partnership of US12OF (the “LP Agreement”) to manage
      US12OF. The General Partner is authorized by US12OF in its sole judgment to
      employ and establish the terms of employment for, and termination of, commodity
      trading advisors or futures commission merchants.




**Valuation
      of Futures Contracts and the Computation of the NAV**





The
      NAV
      of US12OF units is calculated once each trading day as of the earlier of the
      close of the New York Stock Exchange (the “NYSE”) or 4:00 p.m. New
      York time. The NAV for a particular trading day is released after 4:15 p.m.
      New York time. Trading on the NYSE typically closes at 4:00 p.m. New
      York time. US12OF uses the NYMEX closing price (determined at the earlier of
      the
      close of the NYMEX or 2:30 p.m. New York time) for the contracts held on
      the NYMEX, but calculates or determines the value of all other US12OF
      investments, including ICE Futures contracts or other
      futures contracts, as of the earlier of the close of the NYSE or 4:00
      p.m. New York time.




**Management’s
      Discussion of Results of Operations and the Crude Oil
      Market**





*Results
      of Operations.* On
      December 6, 2007, US12OF listed its units on the AMEX under the ticker symbol
      “USL.” On that day, US12OF established its initial offering price at $50.00 per
      unit and issued 300,000 units to the initial authorized purchaser, Merrill
      Lynch
      Professional Clearing Corp., in exchange for $15,001,000 in cash. As of
      September 30, 2008, US12OF had issued 400,000 units, 100,000 of which were
      outstanding. As of September 30, 2008, there were 10,600,000 units registered
      but not yet issued.





More
      units may have been issued by US12OF than are outstanding due to the redemption
      of units. Unlike funds that are registered under the Investment Company Act
      of 1940, as amended, units that have been redeemed by US12OF cannot be resold
      by
      US12OF. As a result, US12OF contemplates that additional offerings of its units
      will be registered with the SEC in the future in anticipation of additional
      issuances and redemptions.





As
      of
      September 30, 2008, the total unrealized loss on crude oil Futures
      Contracts owned or held on that day was $(214,800) and US12OF
      established cash deposits, including cash investments in money market funds,
      that were equal to $6,274,380. The majority of cash assets were held in
      overnight deposits at US12OF’s custodian bank, while 23.99% of the cash balance
      was held with the futures commission merchant as margin deposits for
      the Futures Contracts purchased (margin requirements at this time were
      satisfied by unrealized appreciation on investments held at the futures
      commission merchant). The ending per unit NAV on September 30, 2008 was
      $60.60.





*Portfolio
      Expenses* .
      US12OF’s expenses consist of investment management fees, brokerage
      fees and commissions, certain offering costs, licensing fees and the fees
      and expenses of the independent directors of the General Partner. The management
      fee that US12OF pays to the General Partner is calculated as a percentage of
      the
      total net assets of US12OF. US12OF pays the General Partner a management
      fee of 0.60% of net assets. The fee is accrued daily.





During
      the nine month period ended September 30, 2008, the daily average total net
      assets of US12OF were $9,521,254. During the nine month period ended
      September 30, 2008, the management fee paid by US12OF amounted to $42,768,
      and
      was accrued daily. Management fees as a percentage of average net assets
      averaged 0.60% over the course of this nine month period.




US12OF pays
      for all brokerage fees, taxes and other expenses, including certain tax
      reporting costs, licensing fees for the use of intellectual property, ongoing
      registration or other fees paid to the SEC, the Financial Industry
      Regulatory Authority (“FINRA”) and any other regulatory agency in
      connection with offers and sales of its units subsequent to the initial offering
      and all legal, accounting, printing and other expenses associated
      therewith. For the nine month period ended September 30, 2008, US12OF did
      not incur any ongoing registration fees or other offering expenses. In
      addition, the General Partner, though under no obligation to do so, has agreed
      to pay certain costs for tax reporting and audit expenses normally borne by
      US12OF to the extent that such expenses exceed 0.15% (15 basis points) of its
      NAV, on an annualized basis, until December 31, 2008. The General Partner has
      no
      obligation to continue such payment into subsequent years. US12OF
      is responsible for paying the fees and expenses, including directors’ and
      officers’ liability insurance, of the independent directors of the General
      Partner who are also audit committee members. US12OF shares these fees
      with USOF, USNG, USG and USHO  based on the relative assets of each fund
      computed on a daily basis. These fees for calendar year 2008 are estimated
      to be
      a total of $286,000 for all five funds.


15




US12OF
      also incurs commissions to brokers for the purchase and sale of Futures
      Contracts, Other Crude Oil-Related Investments or short-term obligations of
      the United States of two years or less (“Treasuries”). During the nine month
      period ended September 30, 2008, total commissions paid to brokers amounted
      to
      $1,568. Prior to the initial offering of its units, US12OF had estimated that
      its annual level of such commissions was expected to be 0.13% of total net
      assets. As an annualized percentage of average net assets, the figure for
      the nine month period ended September 30, 2008 represented approximately 0.02%
      of average net assets. However, there can be no assurance that commission costs
      and portfolio turnover will not cause commission expenses to rise in future
      quarters.




*Interest
      Income* .
      US12OF
      seeks to invest its assets such that it holds Futures Contracts and Other Crude
      Oil-Related Investments in an amount equal to the total net assets of the
      portfolio. Typically, such investments do not require US12OF to pay the full
      amount of the contract value at the time of purchase, but rather require US12OF
      to post an amount as a margin deposit against the eventual settlement of the
      contract. As a result, US12OF retains an amount that is approximately equal
      to
      its total net assets, which US12OF invests in Treasuries, cash and/or cash
      equivalents. This includes both the amount on deposit with the futures
      commission merchant as margin, as well as unrestricted cash held with US12OF’s
      custodian bank. The Treasuries, cash and/or cash equivalents earn
      interest that accrues on a daily basis. For the nine month period ended
      September 30, 2008, US12OF earned $141,384 in interest income on such cash
      holdings. Based on US12OF’s average daily total net assets during this time
      period, this is equivalent to an annualized yield of 1.98%.




*Tracking
      US12OF’s Benchmark* .
      US12OF
      seeks to manage its portfolio such that changes in its average daily NAV, on
      a
      percentage basis, closely track changes in the average of the daily prices
      of
      the Benchmark Futures Contracts, also on a percentage basis. Specifically,
      US12OF seeks to manage the portfolio such that over any rolling period of 30
      valuation days, the average daily change in the NAV is within a range of 90%
      to
      110% (0.9 to 1.1) of the average daily change of the Benchmark Futures
      Contracts. As an example, if the average daily movement of the average of the
      prices of the Benchmark Futures Contracts for a particular 30-day time period
      was 0.5% per day, US12OF’s management would attempt to manage the portfolio such
      that the average daily movement of the NAV during that same time period fell
      between 0.45% and 0.55% ( *i.e* .,
      between 0.9 and 1.1 of the benchmark’s results). US12OF’s portfolio management
      goals do not include trying to make the nominal price of US12OF’s NAV equal to
      the average of the nominal prices of the current Benchmark Futures
      Contracts or the spot price for crude oil. Management believes that it is not
      practical to manage the portfolio to achieve such an investment goal when
      investing in listed crude oil Futures Contracts.




For
      the
      30 valuation days ended September 30, 2008, the simple average daily change
      in
      the Benchmark Futures Contracts was (0.332)%, while the simple average daily
      change in the NAV of US12OF over the same time period was (0.325)%. The average
      daily difference was 0.007% (or 0.7 basis points, where 1 basis point equals
      1/100 of 1%). As a percentage of the daily movement of the Benchmark Futures
      Contracts, the average error in daily tracking by the NAV was 0.530%, meaning
      that over this time period US12OF’s tracking error was within the plus or minus
      10% range established as its benchmark tracking goal.


16










****PAST
      PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
      RESULTS***


17










****PAST
      PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
      RESULTS***





Since
      the
      offering of US12OF units to the public on December 6, 2007 to September 30,
      2008, the simple average daily change in the Benchmark Futures Contracts
      was 0.114%, while the simple average daily change in the NAV of US12OF over
      the
      same time period was 0.119%. The average daily difference was 0.005% (or 0.5
      basis points, where 1 basis point equals 1/100 of 1%). As a percentage of the
      daily movement of the Benchmark Futures Contracts, the average error in
      daily tracking by the NAV was 0.643%, meaning that over this time period
      US12OF’s tracking error was within the plus or minus 10% range established as
      its benchmark tracking goa l.





An
      alternative tracking measurement of the return performance of US12OF versus
      the
      return of its Benchmark Futures Contracts can be calculated by comparing
      the actual return of US12OF, measured by changes in its NAV, versus the *expected* changes
      in its NAV under the assumption that US12OF’s returns had been exactly the same
      as the daily changes in its Benchmark Futures Contracts.





For
      the
      nine month period ended September 30, 2008, the actual total return of US12OF
      as
      measured by changes in its NAV was 11.75%. This is based on an initial
      NAV of $54.23 on December 31, 2007 and an ending NAV as of September
      30, 2008 of $60.60. During this time period, US12OF made no distributions
      to its unitholders. However, if US12OF’s daily changes in its NAV had instead
      exactly tracked the changes in the daily return of the Benchmark Futures
      Contract, US12OF would have ended the third quarter of 2008 with an
      estimated NAV of $60.04, for a total return over the relevant time period of
      10.74%. The difference between the actual NAV total return of US12OF of 11.75%
      and the expected total return based on the Benchmark Futures Contract of 10.74%
      was an error over the time period of 1.01%, which is to say that US12OF’s actual
      total return exceeded the benchmark result by that percentage. Management
      believes that a portion of the difference between the actual return and the
      expected benchmark return can be attributed to the impact of the interest that
      US12OF collects on its cash and cash equivalent holdings. In addition, during
      the nine month period ended September 30, 2008, US12OF also collected fees
      from
      brokerage firms creating or redeeming baskets of units. This income also
      contributed to US12OF’s actual return exceeding the benchmark results. However,
      if the total assets of US12OF continue to increase, management believes that
      the
      impact on total returns of these fees from creations and redemptions will
      diminish as a percentage of the total return.


18




There
      are
      currently three factors that have impacted, during the latest period, or
      are most likely to impact, US12OF’s ability to accurately track its
      Benchmark Futures Contracts.





First,
      US12OF may buy or sell its holdings in the then current Benchmark Futures
      Contracts at a price other than the closing settlement price of that contract
      on
      the day in which US12OF executes the trade. In that case, US12OF may get a
      price
      that is higher, or lower, than that of the Benchmark Futures Contracts,
      which could cause the changes in the daily NAV of US12OF to either be too
      high or too low relative to the changes in the daily benchmark. During the
      nine
      month period ended September 30, 2008, management attempted to minimize the
      effect of these transactions by seeking to execute its purchases or sales of
      the
      Benchmark Futures Contracts at, or as close as possible to, the end of the
      day settlement price. However, it may not always be possible for US12OF to
      obtain the closing settlement price and there is no assurance that failure
      to
      obtain the closing settlement price in the future will not adversely impact
      US12OF’s attempt to track its benchmark over time.




Second,
      US12OF earns interest on its cash, cash equivalents and Treasury
      holdings. US12OF is not required to distribute any portion of its income to
      its
      unitholders and did not make any distributions to unitholders during the nine
      month period ended September 30, 2008. Interest payments, and any other income,
      were retained within the portfolio and added to US12OF’s NAV. When this income
      exceeds the level of US12OF’s expenses for its management fee, brokerage
      commissions and other expenses (including ongoing registration fees, licensing
      fees and the fees and expenses of the independent directors of the General
      Partner), US12OF will realize a net yield that will tend to cause daily
      changes in the NAV of US12OF to track slightly higher than daily changes in
      the
      average of the prices of the Benchmark Futures Contracts. During the nine
      month period ended September 30, 2008, US12OF earned, on an annualized basis,
      approximately 1.98% on its cash holdings. It also incurred cash expenses on
      an
      annualized basis of 0.60% for management fees and approximately 0.02% in
      brokerage commission costs related to the purchase and sale of futures
      contracts, and 0.23% for other expenses. The foregoing fees and expenses
      resulted in a net yield on an annualized basis of approximately 1.13% and
      affected US12OF’s ability to track its benchmark. If short-term interest rates
      rise above the current levels, the level of deviation created by the yield
      would
      increase. Conversely, if short-term interest rates were to decline, the amount
      of error created by the yield would decrease. If short-term yields drop to
      a
      level lower than the combined expenses of the management fee and the brokerage
      commissions, then the tracking error would become a negative number and would
      tend to cause the daily returns of the NAV to underperform the daily returns
      of
      the Benchmark Futures Contracts.




Third,
      US12OF may hold Other Crude Oil-Related Investments in its portfolio that
      may fail to closely track the Benchmark Futures Contracts’ total return
      movements. In that case, the error in tracking the benchmark could result in
      daily changes in the NAV of US12OF that are either too high, or too low,
      relative to the daily changes in the benchmark. During the nine month period
      ended September 30, 2008, US12OF did not hold any Other Crude Oil-Related
      Investments. However, there can be no assurance that in future quarters US12OF
      will not make use of such Other Crude Oil-Related Investments.





During
      the nine month period ended September 30, 2008, the average prices of front
      12
      month Benchmark Futures Contracts rose from near the $93.28 level to
      approximately the $101.59 level. The prices of front month contracts were also
      higher than the prices of second month contracts for most of the first quarter
      of 2008 and the first half of the second quarter of 2008. The price of the
      front
      month contract was less than the second month contract for the balance of the
      second quarter of 2008 and most of the third quarter of 2008, although the
      front
      month price finished the end of the third quarter of 2008 higher than the second
      month contract.





*Term
      Structure of Crude Oil Futures Prices and the Impact on Total Returns.*Several
      factors determine the total return from investing in a futures contract
      position. One factor that impacts the total return that will result from
      investing in near month crude oil futures contracts and “rolling” those
      contracts forward each month is the price relationship between the current
      near
      month contract and the later month contracts. For example, if the price of
      the
      near month contract is higher than the next month contract (a situation referred
      to as “backwardation” in the futures market), then absent any other change there
      is a tendency for the price of a next month contract to rise in value as it
      becomes the near month contract and approaches expiration. Conversely, if the
      price of a near month contract is lower than the next month contract (a
      situation referred to as “contango” in the futures market), then absent any
      other change there is a tendency for the price of a next month contract to
      decline in value as it becomes the near month contract and approaches
      expiration.


19




As
      an
      example, assume that the price of crude oil for immediate delivery (the “spot”
price), was $50 per barrel, and the value of a position in the near month
      futures contract was also $50. Over time, the price of the barrel of crude
      oil
      will fluctuate based on a number of market factors, including demand for
      oil relative to its supply. The value of the near month contract will likewise
      fluctuate in reaction to a number of market factors. If investors seek to
      maintain their position in a near month contract and not take delivery of the
      oil, every month they must sell their current near month contract as it
      approaches expiration and invest in the next month contract.





If
      the
      futures market is in backwardation, *e.g.* ,
      when
      the expected price of crude oil in the future would be less, the investor would
      be buying a next month contract for a lower price than the current near month
      contract. Hypothetically, and assuming no other changes to either prevailing
      crude oil prices or the price relationship between the spot price, the near
      month contract and the next month contract (and ignoring the impact of
      commission costs and the interest earned on Treasuries, cash and/or cash
      equivalents), the value of the next month contract would rise as it approaches
      expiration and becomes the new near month contract. In this example, the value
      of the $50 investment would tend to rise faster than the spot price of crude
      oil, or fall slower. As a result, it would be possible in this hypothetical
      example for the price of spot crude oil to have risen to $60 after some period
      of time, while the value of the investment in the futures contract would have
      risen to $65, assuming backwardation is large enough or enough time has elapsed.
      Similarly, the spot price of crude oil could have fallen to $40 while the value
      of an investment in the futures contract could have fallen to only $45. Over
      time, if backwardation remained constant, the difference would continue to
      increase.





If
      the
      futures market is in contango, the investor would be buying a next month
      contract for a higher price than the current near month contract.
      Hypothetically, and assuming no other changes to either prevailing crude oil
      prices or the price relationship between the spot price, the near month contract
      and the next month contract (and ignoring the impact of commission costs and
      the
      interest earned on cash), the value of the next month contract would fall as
      it
      approaches expiration and becomes the new near month contract. In this example,
      it would mean that the value of the $50 investment would tend to rise slower
      than the spot price of crude oil, or fall faster. As a result, it would be
      possible in this hypothetical example for the spot price of crude oil to
      have risen to $60 after some period of time, while the value of the investment
      in the futures contract will have risen to only $55, assuming contango is large
      enough or enough time has elapsed. Similarly, the spot price of crude oil could
      have fallen to $45 while the value of an investment in the futures contract
      could have fallen to $40. Over time, if contango remained constant, the
      difference would continue to increase.




Historically,
      the crude oil futures markets have experienced periods of contango and
      backwardation, with backwardation being in place more often than contango.
      During the previous two years, including 2006 and the first half of 2007, these
      markets have experienced contango. However, starting early in the third quarter
      of 2007, the crude oil futures market moved into backwardation and remained
      in
      that condition for the rest of the year. The crude oil markets remained in
      backwardation until late in the second quarter of 2008 when they moved into
      contango. The crude oil markets remained in contango until late in the third
      quarter of 2008, when the markets moved into backwardation. The chart below
      compares the price of the near month contract to the average price of the first
      12 months over the last 10 years (1998-2007). When the price of the near month
      contract is higher than the average price of the front 12 month contracts,
      the
      market would be described as being in backwardation. When the price of the
      near
      month contract is lower than the average price of the front 12 month contracts,
      the market would be described as being in contango. Although the prices of
      the
      near month contract and the average price of the front 12 month contracts do
      tend to move up or down together, it can be seen that at times the near month
      prices are clearly higher than the average price of the 12 month contracts
      (backwardation), and other times they are below the average price of the front
      12 month contracts (contango).




20










****PAST
      PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
      RESULTS***





An
      alternative way to view the same data is to subtract from the dollar price
      of
      the near month contract the average dollar price of the front 12 month
      contracts. If the resulting number is a positive number, then the near month
      price is higher than the average price of the front 12 months and the market
      could be described as being in backwardation. If the resulting number is a
      negative number, then the near month price is lower than the average price
      of
      the front 12 months and the market could be described as being in contango.
      The
      chart below shows the results from subtracting from the near month price the
      average price of the front 12 month contracts for the 10 year period between
      1998 and 2007.


21










****PAST
      PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
      RESULTS***





An
      investment in a portfolio that involved owning only the near month contract
      would likely produce a different result than an investment in a portfolio that
      owned an equal number of each of the front 12 months’ worth of contracts.
      Generally speaking, when the crude oil futures market is in backwardation,
      the
      near month only portfolio would tend to have a higher total return than the
      12
      month portfolio. Conversely, if the crude oil futures market was in contango,
      the portfolio containing 12 months’ worth of contracts would tend to outperform
      the near month only portfolio. The chart below shows the results of owning
      a
      portfolio consisting of the near month contract versus a portfolio containing
      the front 12 months’ worth of contracts. In this example, each month, the near
      month only portfolio would sell the near month contract at expiration and buy
      the next month out contract. The portfolio holding an equal number of the front
      12 months’ worth of contracts would sell the near month contract at expiration
      and replace it with the contract that becomes the new twelfth month
      contract.


22










* ***PAST
      PRICE MOVEMENTS OF CRUDE OIL, NATURAL GAS AND HEATING OIL ARE NOT INDICATIVE
      OF
      FUTURE PRICE MOVEMENTS***




As
      seen
      in the chart, there have been periods of both positive and negative annual
      total
      returns for both portfolios over the last 10 years. In addition, there have
      been
      periods during which the near month only approach had higher returns, and
      periods where the 12 month approach had higher total returns. The above chart
      does not represent the performance history of US12OF or any affiliated funds.





The
      General Partner believes that holding futures contracts whose expiration dates
      are spread out over a 12 month period of time will cause the total return of
      such a portfolio to vary compared to a portfolio that holds only a single
      month’s contract (such as the near month contract).  In particular,
      the General Partner believes that the total return of a portfolio holding
      contracts with a range of expiration months will be impacted differently by
      the
      price relationship between different contract months of the same commodity
      future compared to the total return of a portfolio consisting of the near month
      contract.  The General Partner believes that based on historical
      evidence a portfolio that held futures contracts with a range of expiration
      dates spread out over a 12 month period of time typically would be impacted
      less
      by the positive effect of backwardation, and less by the negative effect of
      contango, compared to a portfolio that held contracts of a single near month.
      As
      a result, absent the impact of any other factors, a portfolio of 12 different
      monthly contracts would tend to have a lower total return than a near month
      only
      portfolio in a backwardation market and a higher total return in a contango
      market.  However there can be no assurance that such historical
      relationships would provide the same or similar results in the
      future.





Periods
      of contango or backwardation do not meaningfully impact US12OF’s investment
      objective of having percentage changes in its per unit NAV track percentage
      changes in the price of the Benchmark Futures Contracts since the impact of
      backwardation and contango tended to equally impact the percentage changes
      in
      price of both US12OF’s units and the Benchmark Futures Contracts. It
      is impossible to predict with any degree of certainty whether backwardation
      or
      contango will occur in the future. It is likely that both conditions will occur
      during different periods.


23





*Crude
      Oil Market.* During
      the nine month period ended September 30, 2008, crude oil prices were impacted
      by several factors. On the consumption side, demand remained strong outside
      the
      United States as continued global economic growth, especially in emerging
      economies such as China and India, remained brisk. Additionally, the U.S.
      dollar, the currency in which crude oil is traded globally, continued to fall,
      effectively making crude oil cheaper for most non-U.S. dollar economies. Crude
      oil prices reached an all time high in July 2008 when the front month contract
      price reached approximately $145 a barrel.





However,
      concerns about a weakening U.S. economy leading to reduced demand for oil
      products became a major factor late in the third quarter of 2008. On the supply
      side, production remained steady despite concerns about violence impacting
      production in Iraq and Nigeria. Political tensions between Iran and the United
      States also contributed to market concerns about interruptions in production.
      At
      the same time, a concern remained about the ability of major oil producing
      countries to continue to raise their production to accommodate increasing
      demand. However, oil prices reversed their upward trend and fell sharply late
      in
      the third quarter of 2008 as a slowing U.S. economy, and flat demand growth
      outside of the U.S., was enough to improve the global supply and demand balance.
      The front month futures contract ended the third quarter of 2008 at
      approximately $100, down 31% from its July 2008 highs.




*Crude
        Oil Price Movements in Comparison to other Energy Commodities and Investment
        Categories.* The
        General Partner believes that investors frequently measure the degree to
        which
        prices or total returns of one investment or asset class move up or down
        in
        value in concert with another investment or asset class. Statistically, such
        a
        measure is usually done by measuring the correlation of the price movements
        of
        the two different investments or asset classes over some period of time.
        The
        correlation is scaled between 1 and -1, where 1 indicates that the two
        investment options move up or down in price or value together, known as
“positive correlation,” and -1 indicating that they move in completely opposite
        directions, known as “negative correlation.” A correlation of 0 would mean that
        the movements of the two are neither positively or negatively correlated,
        known
        as “non-correlation.” That is, the investment options sometimes move up and down
        together and other times move in opposite directions.
 
 For
        the
        ten year time period between 1997 and 2007, the chart below compares the
        monthly
        movements of crude oil versus the monthly movements of several other energy
        commodities, natural gas, heating oil, and unleaded gasoline, as well as
        several
        major non-commodity investment asset classes such as large cap U.S. equities,
        U.S. government bonds and global equities. It can be seen that over this
        particular time period, the movement of crude oil on a monthly basis was
        NOT
        strongly correlated, positively or negatively, with the movements of large
        cap
        U.S. equities, U.S. government bonds or global equities. However, movements
        in
        crude oil had a strong positive correlation to movements in heating oil and
        unleaded gasoline. Finally, crude oil had a positive, but weaker, correlation
        with natural gas.
 10
                  Year Correlation Matrix 1997-2007
              Large
                  Cap U.S. Equities (S&P 500)
              U.S.
                  Govt. Bonds (EFFAS U.S. Government Bond Index)
              Global
                  Equities (FTSE World Index)
              Unleaded
                  Gasoline
              Natural
                  Gas
              Heating
                  Oil
              **Crude
                  Oil**Large
                  Cap U.S. Equities (S&P 500)
              1
              -0.237
              0.949
              -0.087
              -0.008
              -0.065
              **-0.037**US
                  Govt. Bonds (EFFAS U.S. Government Bond Index)
              
              1
              -0.259
              -0.175
              0.197
              0.065
              **0.033**Global
                  Equities (FTSE World Index)
              
              
              1
              0.124
              0.029
              -0.003
              **0.040**Unleaded
                  Gasoline
              
              
              
              1
              0.267
              0.663
              **0.634**Natural
                  Gas
              
              
              
              
              1
              0.480
              **0.344**Heating
                  Oil
              
              
              
              
              
              1
              **0.802**Crude
                  Oil
              
              
              
              
              
              
              **1**source:
                  Bloomberg, NYMEX
 
 ***PAST
        PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
        RESULTS***
 
 Investors
        are cautioned that the historical price relationships between crude oil and
        various other energy commodities, as well as other investment asset classes,
        as
        measured by correlation may not be reliable predictors of future price movements
        and correlation results. The results pictured above would have been different
        if
        a different range of dates had been selected. The General Partner believes
        that
        crude oil has historically not demonstrated a strong correlation with equities
        or bonds over long periods of time. However, the General Partner also believes
        that in the future it is possible that crude oil could have long term
        correlation results that indicate prices of crude oil more closely track
        the
        movements of equities or bonds. In addition, the General Partner believes
        that,
        when measured over time periods shorter than ten years, there will always
        be
        some periods where the correlation of crude oil to equities and bonds will
        be
        either more strongly positively correlated or more strongly negatively
        correlated than the long term historical results suggest.
  24
  The
        chart
        below covers a more recent, but much shorter, range of dates than the above
        chart. Over the nine months ended September 30, 2008, crude oil continued
        to
        have a strong positive correlation with heating oil and unleaded gasoline.
        During this period it also had a stronger correlation with the movements
        of
        natural gas than it had displayed over the prior ten year period. Notably,
        the
        correlation between crude oil and both large cap U.S. equities and global
        equities, which had been essentially non-correlated over the prior ten years,
        displayed results that indicated that they had a weak but positive correlation
        over this shorter time period, particularly due to the recent downturn in
        the
        U.S. economy. Finally, the results showed that crude oil and U.S. government
        bonds, which had essentially been non-correlated for the prior ten year period,
        were weakly negatively correlated over this more recent time
        period.
 Correlation
                  Matrix 2008 YTD (9 months)
              Large
                  Cap US Equities (S&P 500)
              U.S.
                  Govt. Bonds (EFFAS U.S. Government Bond Index)
              Global
                  Equities (FTSE World Index)
              Unleaded
                  Gasoline
              Natural
                  Gas
              Heating
                  Oil
              **Crude
                  Oil**Large
                  Cap U.S. Equities (S&P 500)
              1
              -0.641
              0.920
              0.565
              -0.152
              0.214
              **0.289**US
                  Govt. Bonds (EFFAS U.S. Government Bond Index)
              
              1
              -0.682
              -0.581
              -0.045
              -0.414
              **-0.507**Global
                  Equities (FTSE World Index)
              
              
              1
              0.760
              0.108
              0.496
              **0.575**Gasoline
              
              
              
              1
              0.650
              0.900
              **0.923**Natural
                  Gas
              
              
              
              
              1
              0.805
              **0.771**Heating
                  Oil
              
              
              
              
              
              1
              **0.914**Crude
                  Oil
              
              
              
              
              
              
              **1**source:
                  Bloomberg, NYMEX
 
 ***PAST
        PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
        RESULTS***
 
 25


**Critical
      Accounting Policies**





Preparation
      of the condensed financial statements and related disclosures in compliance
      with
      accounting principles generally accepted in the United States of America
      requires the application of appropriate accounting rules and guidance, as well
      as the use of estimates. US12OF’s application of these policies involves
      judgments and actual results may differ from the estimates used.




The
      General Partner has evaluated the nature and types of estimates that
      it makes in preparing US12OF’s condensed financial statements and related
      disclosures and has determined that the valuation of its investments which
      are not traded on a United States or internationally recognized futures exchange
      (such as forward contracts and over-the-counter contracts) involves a critical
      accounting policy. The values which are used by US12OF for its forward contracts
      are provided by its commodity broker who uses market prices when available,
      while over-the-counter contracts are valued based on the present value of
      estimated future cash flows that would be received from or paid to a third
      party
      in settlement of these derivative contracts prior to their delivery date and
      valued on a daily basis. In addition, US12OF estimates interest income on a
      daily basis using prevailing interest rates earned on its cash and cash
      equivalents. These estimates are adjusted to the actual amount received on
      a
      monthly basis and the difference, if any, is not considered
      material.




**Liquidity
      and Capital Resources**





US12OF
      has not made, and does not anticipate making, use of borrowings or other lines
      of credit to meet its obligations. US12OF has met, and it is anticipated that
      US12OF will continue to meet, its liquidity needs in the normal course of
      business from the proceeds of the sale of its investments or from the
      Treasuries, cash and/or cash equivalents that it intends to hold at all times.
      US12OF’s liquidity needs include: redeeming units, providing margin deposits for
      its existing Futures Contracts or the purchase of additional Futures Contracts
      and posting collateral for its over-the-counter contracts and, except as noted
      below, payment of its expenses, summarized below under “Contractual
      Obligations.”





US12OF currently
      generates cash primarily from (i) the sale of Creation Baskets and (ii) interest
      earned on Treasuries, cash and/or cash equivalents. US12OF has allocated
      substantially all of its net assets to trading in Crude Oil Interests. US12OF
      invests in Crude Oil Interests to the fullest extent possible without being
      leveraged or unable to satisfy its current or potential margin or collateral
      obligations with respect to its investments in Futures Contracts and Other
      Crude
      Oil-Related Investments. A significant portion of the NAV is held in cash and
      cash equivalents that are used as margin and as collateral for US12OF’s
      trading in Crude Oil Interests. The percentage that Treasuries will
      bear to the total net assets will vary from period to period as the market
      values of the Crude Oil Interests change. The balance of the net assets is
      held
      in US12OF’s Futures Contracts and Other Crude Oil-Related Investments
      trading account. Interest earned on US12OF’s interest-bearing funds is paid to
      US12OF.


26




US12OF’s
      investment in Crude Oil Interests may be subject to periods of illiquidity
      because of market conditions, regulatory considerations and other reasons.
      For
      example, most commodity exchanges limit the fluctuations in Futures
      Contracts prices during a single day by regulations referred to as “daily
      limits.” During a single day, no trades may be executed at prices beyond the
      daily limit. Once the price of a Futures Contract has increased or
      decreased by an amount equal to the daily limit, positions in the contracts
      can
      neither be taken nor liquidated unless the traders are willing to effect trades
      at or within the specified daily limit. Such market conditions could prevent
      US12OF from promptly liquidating its positions in Futures
      Contracts.  During the nine month period ended September 30, 2008,
      US12OF was not forced to purchase or liquidate any of its positions while daily
      limits were in effect; however, US12OF cannot predict whether such an event
      may
      occur in the future.





To
      date,
      all of US12OF’s expenses, including its organizational and offering expenses
      related to the initial offering of its units, have been paid by the General
      Partner. Fees and expenses associated with the registration of units with the
      SEC subsequent to the initial offering will be borne by US12OF. In addition,
      fees and expenses (including directors’ and officers’ liability
      insurance) of the independent directors of the General Partner, the management
      fee paid to the General Partner, certain tax reporting fees, brokerage fees
      and
      licensing fees will be paid directly by US12OF. In
      addition, the General Partner, though under no obligation to do so, has agreed
      to pay certain costs for tax reporting and audit expenses normally borne by
      US12OF to the extent that such expenses exceed 0.15% (15 basis points) of its
      NAV, on an annualized basis, until December 31, 2008. The General Partner has
      no
      obligation to continue such payment into subsequent years. If the
      General Partner and US12OF are unsuccessful in raising sufficient funds to
      cover
      US12OF’s expenses or in locating any other source of funding, US12OF will
      terminate and investors may lose all or part of their investment.





**Market
      Risk**





Trading
      in Futures Contracts and Other Crude Oil-Related Investments, such as
      forwards, involves US12OF entering into contractual commitments to purchase
      or sell oil at a specified date in the future. The gross or face amount of
      the contracts will significantly exceed US12OF’s future cash requirements
      since US12OF intends to close out its open positions prior to settlement. As
      a
      result, US12OF is generally only subject to the risk of loss
      arising from the change in value of the contracts. US12OF considers the “fair
      value” of its derivative instruments to be the unrealized gain or loss on the
      contracts. The market risk associated with US12OF’s commitments to purchase oil
      is limited to the gross face amount of the contracts held. However, should
      US12OF enter into a contractual commitment to sell oil, it would be required
      to
      make delivery of the oil at the contract price, repurchase the contract at
      prevailing prices or settle in cash. Since there are no limits on the future
      price of oil, the market risk to US12OF could be unlimited.




US12OF’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 US12OF.
      The limited experience that US12OF has had in utilizing its model to trade
      in Crude Oil Interests in a manner intended to track the changes in the spot
      price of crude oil, as well as drastic market occurrences, could ultimately
      lead
      to the loss of all or substantially all of an investor’s capital.




**Credit
      Risk**





When
      US12OF 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 foreign futures exchanges is the
      clearinghouse associated with the particular exchange. In general,
      clearinghouses are backed by their members who may be required to share in
      the
      financial burden resulting from the nonperformance of one of their members
      and,
      therefore, this additional member support should significantly reduce credit
      risk. Some foreign exchanges are not backed by their clearinghouse members
      but
      may be backed by a consortium of banks or other financial institutions. There
      can be no assurance that any counterparty, clearinghouse, or their members
      or
      their financial backers will satisfy their obligations to US12OF in such
      circumstances.




The
      General Partner attempts to manage the credit risk of US12OF by following
      various trading limitations and policies. In particular, US12OF generally posts
      margin and/or holds liquid assets that are approximately equal to the face
      amount of its obligations to counterparties under the Futures Contracts and
      Other Crude Oil-Related Investments it holds. The General Partner has
      implemented procedures that include, but are not limited to, executing and
      clearing trades only with creditworthy parties and/or requiring the posting
      of
      collateral or margin by such parties for the benefit of US12OF to limit its
      credit exposure. UBS Securities LLC, US12OF’s commodity broker, or any other
      broker that may be retained by US12OF in the future, when acting as US12OF’s
      futures commission merchant in accepting orders to purchase or sell Futures
      Contracts on United States exchanges, is required by CFTC regulations
      to separately account for and segregate as belonging to US12OF, all assets
      of
      US12OF relating to domestic Futures Contracts trading. These futures commission
      merchants are not allowed to commingle US12OF’s assets with its other assets. In
      addition, the CFTC requires commodity brokers to hold in a secure account the
      US12OF assets related to foreign Futures Contracts trading.


27




As
      of
      September 30, 2008, US12OF had deposits in domestic and foreign financial
      institutions, including cash investments in money market funds, in the amount
      of
      $6,274,380. This amount is subject to loss should these institutions cease
      operations.





**Off
      Balance Sheet Financing**





As
      of
      September 30, 2008, US12OF has no loan guarantee, credit support or other
      off-balance sheet arrangements of any kind other than agreements entered into
      in
      the normal course of business, which may include indemnification provisions
      relating to certain risks that service providers undertake in performing
      services which are in the best interests of US12OF. While US12OF’s exposure
      under these indemnification provisions cannot be estimated, they are not
      expected to have a material impact on US12OF’s financial position.





**Redemption
      Basket Obligation**





In
      order
      to meet its investment objective and pay its contractual obligations described
      below, US12OF requires liquidity to redeem units, which redemptions must be
      in blocks of 100,000 units called “Redemption Baskets.” US12OF has to date
      satisfied this obligation by paying from the cash or cash equivalents it holds
      or through the sale of its Treasuries in an amount proportionate to the number
      of units being redeemed.




**Contractual
      Obligations**





US12OF’s
      primary contractual obligations are with the General Partner. In return for
      its
      services, the General Partner is entitled to a management fee calculated as
      a
      fixed percentage of US12OF’s NAV, currently 0.60% of US12OF’s NAV for its
      average net assets.




The
      General Partner agreed to pay the start-up costs associated with the
      formation of US12OF, primarily its legal, accounting and other costs in
      connection with the General Partner’s registration with the CFTC as a CPO and
      the registration and listing of US12OF and its units with the SEC, FINRA
      and the AMEX, respectively. However, offering costs incurred in connection
      with
      registering and listing additional units of US12OF are directly borne on an
      ongoing basis by US12OF, and not by the General Partner.





The
      General Partner pays the fees of US12OF’s marketing agent, ALPS
      Distributors, Inc., and the fees of the custodian and transfer agent, Brown
      Brothers Harriman & Co. (“BBH&Co.”), as well as BBH&Co.’s fees for
      performing administrative services, including in connection with the preparation
      of US12OF’s condensed financial statements and its SEC and CFTC reports. The
      General Partner and US12OF have also entered into a licensing
      agreement with the NYMEX pursuant to which US12OF and the affiliated funds
      managed by the General Partner pay a licensing fee to the NYMEX. The General
      Partner also pays any fees for implementation of services and base service
      fees
      charged by the accounting firm responsible for preparing US12OF’s tax reporting
      forms; however, US12OF pays the fees and expenses associated with its tax
      accounting and reporting requirements. In
      addition, the General Partner, though under no obligation to do so, has agreed
      to pay certain costs for tax reporting and audit expenses normally borne by
      US12OF to the extent that such expenses exceed 0.15% (15 basis points) of its
      NAV, on an annualized basis, until December 31, 2008. The General Partner has
      no
      obligation to continue such payment into subsequent years.


28




In
      addition to the General Partner’s management fee, US12OF pays its brokerage fees
      (including fees to a futures commission merchant), over-the-counter dealer
      spreads, any licensing fees for the use of intellectual property, and,
      subsequent to the initial offering, registration and other fees paid to the
      SEC,
      FINRA, or other regulatory agencies in connection with the offer and sale of
      units, as well as legal, printing, accounting and other expenses associated
      therewith, and extraordinary expenses. The latter are expenses not incurred
      in
      the ordinary course of US12OF’s business, including expenses relating to the
      indemnification of any person against liabilities and obligations to the extent
      permitted by law and under the LP Agreement, the bringing or defending of
      actions in law or in equity or otherwise conducting litigation and incurring
      legal expenses and the settlement of claims and litigation. Commission payments
      to a futures commission merchant are on a contract-by-contract, or round turn,
      basis.  US12OF also pays a portion of the fees and expenses of the
      independent directors of the General Partner.  See Note 3 to the Notes
      to Condensed Financial Statements (Unaudited).





The
      parties cannot anticipate the amount of payments that will be required under
      these arrangements for future periods, as US12OF’s NAVs and trading levels to
      meet its investment objectives will not be known until a future date. These
      agreements are effective for a specific term agreed upon by the parties with
      an
      option to renew, or, in some cases, are in effect for the duration of US12OF’s
      existence. Either party may terminate these agreements earlier for certain
      reasons described in the agreements.




**Item 3.** **Quantitative and Qualitative Disclosures About Market
      Risk.**





***Over-the-Counter
      Derivatives (Including Spreads and Straddles)***




In
      the
      future, US12OF may purchase over-the-counter contracts. Unlike most of the
      exchange-traded Futures Contracts or exchange-traded options on such futures,
      each party to an over-the-counter contract bears the credit risk that the other
      party may not be able to perform its obligations under its
      contract.




Some
      crude oil-based derivatives transactions contain fairly generic terms and
      conditions and are available from a wide range of participants. Other crude
      oil-based derivatives have highly customized terms and conditions and are not
      as
      widely available. Many of these over-the-counter contracts are cash-settled
      forwards for the future delivery of crude oil- or petroleum-based fuels that
      have terms similar to the Futures Contracts. Others take the form of “swaps” in
      which the two parties exchange cash flows based on pre-determined formulas
      tied
      to the spot price of crude oil, forward crude oil prices or crude oil
      futures prices. For example, US12OF may enter into over-the-counter derivative
      contracts whose value will be tied to changes in the difference between
      the spot price of light, sweet crude oil, the price of Futures
      Contracts traded on the NYMEX and the prices of other Futures Contracts
      that may be invested in by US12OF.




To
      protect itself from the credit risk that arises in connection with such
      contracts, US12OF may enter into agreements with each counterparty that provide
      for the netting of its overall exposure to such counterparty, such as the
      agreements published by the International Swaps and Derivatives Association,
      Inc. US12OF also may require that the counterparty be highly rated and/or
      provide collateral or other credit support to address US12OF’s exposure to the
      counterparty. In addition, it is also possible for US12OF and its counterparty
      to agree to clear their agreement through an established futures clearing house
      such as those connected to the NYMEX or the ICE Futures. In that event, US12OF
      would no longer have credit risk of its original counterparty, as the
      clearinghouse would now be US12OF’s counterparty. US12OF would still retain any
      price risk associated with its transaction.





The
      creditworthiness of each potential counterparty is assessed by the General
      Partner. The General Partner assesses or reviews, as appropriate, the
      creditworthiness of each potential or existing counterparty to an
      over-the-counter contract pursuant to guidelines approved by the General
      Partner’s board of directors. Furthermore, the General Partner on behalf of
      US12OF only enters into over-the-counter contracts with (a) members of the
      Federal Reserve System or foreign banks with branches regulated by the Federal
      Reserve Board; (b) primary dealers in U.S. government securities; (c)
      broker-dealers; (d) commodity futures merchants; or (e) affiliates of the
      foregoing. Existing counterparties are also reviewed periodically by the General
      Partner.





US12OF
      anticipates that the use of Other Crude Oil-Related Investments together with
      its investments in Futures Contracts will produce price and total return results
      that closely track the investment goals of US12OF.


29




US12OF
      may employ spreads or straddles in its trading to mitigate the differences
      in
      its investment portfolio and its goal of tracking the price of the
      Benchmark Futures Contracts. US12OF would use a spread when it chooses to
      take simultaneous long and short positions in futures written on the same
      underlying asset, but with different delivery months. The effect of holding
      such
      combined positions is to adjust the sensitivity of US12OF to changes in the
      price relationship between futures contracts which will expire sooner and those
      that will expire later. US12OF would use such a spread if the General Partner
      felt that taking such long and short positions, when combined with the rest
      of
      its holdings, would more closely track the investment goals of US12OF, or if
      the
      General Partner felt it would lead to an overall lower cost of trading to
      achieve a given level of economic exposure to movements in oil prices. US12OF
      would enter into a straddle when it chooses to take an option position
      consisting of a long (or short) position in both a call option and put option.
      The economic effect of holding certain combinations of put options and call
      options can be very similar to that of owning the underlying futures contracts.
      US12OF would make use of such a straddle approach if, in the opinion of the
      General Partner, the resulting combination would more closely track the
      investment goals of US12OF or if it would lead to an overall lower cost of
      trading to achieve a given level of economic exposure to movements in oil
      prices.




During
      the nine month period ended September 30, 2008, US12OF did not employ any
      hedging methods such as those described above since all of its investments
      were
      made over an exchange. Therefore, US12OF was not exposed to counterparty risk.





**Item 4**.**Controls
      and Procedures.**




**Disclosure
      Controls and Procedures**




US12OF
      maintains disclosure controls and procedures that are designed to ensure that
      material information required to be disclosed in US12OF’s periodic reports
      filed or submitted under the Securities Exchange Act of 1934, as amended, is
      recorded, processed, summarized and reported within the time period specified
      in
      the SEC’s rules and forms.




The
      duly
      appointed officers of the General Partner, including its chief executive
      officer and chief financial officer, who perform functions equivalent
      to those of a principal executive officer and principal financial officer of
      US12OF if US12OF had any officers, have evaluated the effectiveness of US12OF’s
      disclosure controls and procedures and have concluded that the disclosure
      controls and procedures of US12OF have been effective as of the end of the
      period covered by this
      quarterly report.





**Change
      in Internal Control Over Financial Reporting**




There
      were no changes in US12OF’s internal control over financial reporting during
      US12OF’s last fiscal quarter that have materially affected, or are reasonably
      likely to materially affect, US12OF’s internal control over financial
      reporting.


30


**Part
      II.**  **OTHER
      INFORMATION**




**Item
      1. Legal Proceedings.**





Not
      applicable.





**Item
      1A. Risk Factors.**





There
      has
      not been a material change from the risk factors previously disclosed in
      US12OF's Annual Report on Form 10-K for the fiscal year ended December 31,
      2007.





**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.**





Not
      applicable.





**Item
      3. Defaults Upon Senior Securities.**





Not
      applicable.





**Item
      4. Submission of Matters to a Vote of Security Holders.**





Not
      applicable.





**Item 5.** **Other Information.**




**Monthly
      Account Statements**




Pursuant
      to the requirement under part 4.22 of the Commodity Exchange Act, each month
      US12OF publishes an account statement for its unitholders, which includes a
      Statement of Income (Loss) and a Statement of Changes in NAV. The account
      statement is filed with the SEC on a current report on Form 8-K pursuant to
      Section 13 or 15(d) of the Exchange Act and posted each month on US12OF’s
      website at www.unitedstates12monthoilfund.com.




**Item 6.****Exhibits.**




Listed
      below are the exhibits which are filed or furnished as part of this quarterly
      report on Form 10-Q (according to the number assigned to them in Item 601
      of Regulation S-K):




**Exhibit****Number**
            **Description
                of Document****31.1***
            Certification
                by Principal Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.**31.2***
            Certification
                by Principal Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.**32.1****
            Certification
                by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.**32.2****
            Certification
                by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350,
                as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





*
            Filed
                herewith


**
            Furnished
                herewith




31


**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.





**United
                States 12 Month Oil Fund, LP
                (Registrant)**By:
            United
                States Commodity Funds LLC, its general partner(formerly
                known as Victoria Bay Asset Management, LLC)By:
            /s/
              Nicholas D. GerberNicholas
                D. GerberChief
                Executive OfficerDate:  November
                14, 2008By:
            /s/
              Howard MahHoward
                MahChief
                Financial OfficerDate:  November
                14, 2008




32