EX-99.1 2 i20134_ex99-1.htm

 

UNITED STATES COMMODITY FUNDS LLC
General Partner of the United States Gasoline Fund, LP

March 24, 2020

Dear United States Gasoline Fund, LP Investor,

Enclosed with this letter is your copy of the 2019 financial statements for the United States Gasoline Fund, LP (ticker symbol “UGA”). We have mailed this statement to all investors in UGA who held shares as of December 31, 2019 to satisfy our annual reporting requirement under federal commodities laws. In addition, we have enclosed a copy of the current United States Commodity Funds LLC (“USCF”) Privacy Policy applicable to UGA. Additional information concerning UGA’s 2019 results may be found by referring to UGA’s Annual Report on Form 10-K (the “Form 10-K”), which has been filed with the U.S. Securities and Exchange Commission (the “SEC”). You may obtain a copy of the Form 10-K by going to the SEC’s website at www.sec.gov, or by going to USCF’s website at www.uscfinvestments.com. You may also call USCF at 1-800-920-0259 to speak to a representative and request additional material, including a current UGA Prospectus.

USCF is the general partner of UGA. USCF is also the general partner or sponsor and operator of several other commodity-based exchange-traded funds. These other funds are referred to in the attached financial statements and include:

United States Oil Fund, LP (ticker symbol: USO) United States Commodity Index Fund (ticker symbol: USCI)
United States Natural Gas Fund, LP (ticker symbol: UNG) United States Copper Index Fund (ticker symbol: CPER)
United States 12 Month Oil Fund, LP (ticker symbol: USL) United States 3x Oil Fund (ticker symbol: USOU)
United States 12 Month Natural Gas Fund, LP (ticker symbol: UNL) United States 3x Short Oil Fund (ticker symbol: USOD)
United States Brent Oil Fund, LP (ticker symbol: BNO)    
       

Information about these other funds is contained within the Form 10-K as well as in the current UGA Prospectus. Investors in UGA who wish to receive additional information about these other funds may do so by going to the USCF website at www.uscfinvestments.com.

You may also call USCF at 1-800-920-0259 to request additional information.

Thank you for your continued interest in UGA.

   
Regards,  
   
/s/ John P. Love  
John P. Love  
President and Chief Executive Officer  
United States Commodity Funds LLC  
   

*This letter is not an offer to buy or sell securities. Investment in UGA or any other funds should be made only after reading such fund’s prospectus. Please consult the relevant prospectus for a description of the risks and expenses involved in any such investment.

 
 

UNITED STATES COMMODITY FUNDS LLC
PRIVACY POLICY

Effective Date: January 1, 2020
Last Updated: December 18, 2019

 
 

Introduction

This document sets forth the Privacy Policy of (i) the United States Commodity Funds LLC (the “Company”), (ii) each of the statutory trusts for which the Company serves as sponsor, the United States Commodity Index Funds Trust (the “Index Funds Trust”) and the USCF Funds Trust (together with the Index Funds Trust, the “Trusts”), and (iii) each of the funds for which the Company serves as the general partner or as sponsor as set forth in Appendix A, which may be amended from time to time (each a “Fund” and together, the “Funds”), relating to the collection, maintenance and use of nonpublic personal information about the Funds’ investors, as required under federal legislation. The Company is a commodity pool operator registered with the Commodity Futures Trading Commission. This Privacy Policy covers the nonpublic personal information of investors who are individuals and who obtain financial products or services primarily for personal, family or household purposes.

Collection of Investor Information

In the course of doing business with Fund shareholders, the Company and the Trusts may collect or have access to nonpublic personal information about Fund shareholders. Shares of the Funds are registered in the name of Cede & Co., as nominee for the Depository Trust Company. However, the Company may collect or have access to personal information about Fund investors for certain purposes relating to the operation of the Funds, including for the distribution of certain required tax reports to investors. This information may include information received from investors and information about investors’ holdings and transactions in shares of the Funds.

“Nonpublic personal information” is personally identifiable financial information about Fund shareholders. For example, it includes Fund shareholders’ social security numbers, account balances, bank account information and investors’ holdings and transactions in shares of the Funds.

The Company, the Trusts and the Funds may collect this information from the following sources:

·Information about shareholder transactions with us and our service providers, or others;
·Information we receive from consumer reporting agencies (including credit bureaus);
·Information we may receive from shareholders.

Disclosure of Nonpublic Personal Information

The Company, the Trusts and the Funds do not sell or rent investor information of the Funds. The Company, the Trusts and the Funds only disclose nonpublic personal information collected about Fund investors as permitted by law. For example, the Company, the Trusts and the Funds may disclose nonpublic personal information about Fund investors:

·To companies that act as service providers in connection with the administration and servicing of the Funds, which may include attorneys, accountants, auditors and other professionals; maintain shareholder accounts, and in connection with the servicing or processing of transactions of the Trusts or the Funds;
·To government entities, in response to subpoenas, court orders, judicial process or to comply with laws or regulations;
·To protect against fraud, unauthorized transactions (such as money laundering), claims or other liabilities, or to collect unpaid debts; and
·When shareholders direct us to do so or consent to the disclosure, including authorization to disclose such information to persons acting in a fiduciary or representative capacity on behalf of the investor.

Fund investors have no right to opt out of the disclosure by the Company, the Trusts or the Funds of non-public personal information under the circumstances described above.

 
 

Protection of Investor Information

The Company, the Trusts and the Funds holds Fund investor information in the strictest confidence. Accordingly, the Company’s policy is to require that all employees, financial professionals and companies providing services on its behalf keep client information confidential. In addition, access to nonpublic personal information about shareholders is limited to our employees and in some cases to third parties (for example, the service providers described above) as permitted by law.

The Company, the Trusts and the Funds maintains safeguards that comply with federal standards to protect investor information. The Company restricts access to the personal and account information of investors to those employees who need to know that information in the course of their job responsibilities. Third parties with whom the Company, the Trusts and the Funds share Fund investor information must agree to follow appropriate standards of security and confidentiality, which includes safeguarding such information physically, electronically and procedurally.

The privacy policy of the Company, the Trusts and the Funds applies to both current and former Fund investors. The Company, the Trusts and the Funds will only disclose nonpublic personal information about a former investor to the same extent as for a current Fund investor.

Your California Privacy Rights

If you are a California resident, California law provides you with specific rights regarding your personal information, including the right to request that we disclose certain information to you about the collection and use of your personal information over the past 12 months; the right to request that we delete any of your personal information that we have collected from you, subject to certain exceptions; and the right to opt-out of the “sale” of your personal information, as defined by California law. To make such a request, contact us at 1-800-920-0259 or uscfinvestments.com. Please note that we are only required to respond to two such requests per customer each year.

You also have the right not to be discriminated against if you exercise any of your rights under California privacy law.

The Company may have collected the following categories of personal information of California residents in the past 12 months:

·Identifiers such as a name, Internet Protocol address, email address, or other similar identifiers.
·Categories of personal information described in subdivision (e) of California Civil Code Section 1798.80.
·Commercial information, including records of sales or purchases.
·Internet or other electronic network activity information.
·Geolocation data.
·Professional or employment-related information.

Please note that these rights do not apply to personal information collected, processed, sold, or disclosed pursuant to the federal Gramm-Leach-Bliley Act and implementing regulations. Please review the privacy notices in the Appendix below for more information about how we collect, process, sell, and disclose personal information pursuant to these laws and regulations.

This information is collected and used for the purposes disclosed in this Privacy Policy. The Company has not sold personal information of California residents in the past 12 months. The Company may have disclosed any of the above categories of personal information pursuant to an individual’s consent or under a written contract with a service provider for a business purpose in the past 12 months.

Changes to Privacy Policy

The Company, the Trusts and the Funds may modify or amend this Privacy Policy from time to time. The Company will indicate the date when it was most recently updated and its effective date. If there are changes to the privacy policy in the future, a revised privacy policy with those changes will be communicated through an appropriate channel to Fund investors as long as they continue to be Fund investors.

 
 

APPENDIX A

UNITED STATES COMMODITY FUNDS LLC,

GENERAL PARTNER OF

UNITED STATES OIL FUND, LP

UNITED STATES NATURAL GAS FUND, LP

UNITED STATES 12 MONTH OIL FUND, LP

UNITED STATES GASOLINE FUND, LP

UNITED STATES 12 MONTH NATURAL GAS FUND, LP

UNITED STATES BRENT OIL FUND, LP

AND

SPONSOR OF

UNITED STATES COMMODITY INDEX FUND

UNITED STATES COPPER INDEX FUND

EACH A SERIES OF

UNITED STATES COMMODITY INDEX FUNDS TRUST

AND

SPONSOR OF

UNITED STATES 3X OIL FUND

UNITED STATES 3X SHORT OIL FUND

EACH A SERIES OF

USCF FUNDS TRUST

 
 

UNITED STATES COMMODITY FUNDS LLC
UNITED STATES COMMODITY FUNDS TRUST
USCF FUNDS TRUST
EACH OF THE FUNDS FOR WHICH THE COMPANY SERVES AS
GENERAL PARTNER OR SPONSOR

Privacy Notice

FACTS WHAT DO UNITED STATES COMMODITY FUNDS LLC (THE “COMPANY”), THE UNITED STATES COMMODITY FUNDS TRUST AND THE USCF FUNDS TRUST (EACH A “TRUST” AND TOGETHER, THE “TRUSTS”) AND EACH OF THE FUNDS FOR WHICH THE COMPANY SERVES AS GENERAL PARTNER OR SPONSOR (EACH A “FUND” AND TOGETHER, THE “FUNDS”) DO WITH PERSONAL INFORMATION?
Why? Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
What?

The types of personal information we collect and share depend on the product or service you have with us. This information can include:

·      Social Security number

·      account balances

·      account transactions

·      transaction history

·      wire transfer instructions

·      checking account information

When you are no longer our customer, we continue to share your information as described in this notice.

How? All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers ‘ personal information; the reasons the Company and the Trusts choose to share; and whether you can limit this sharing.

 

Reasons we can share your personal information Do we share? Can you limit this sharing?
For our everyday business purposes -    
such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus Yes No
For our marketing purposes -
to offer our products and services to you
No We don’t share
For joint marketing with other financial companies No We don’t share
For our affiliates’ everyday business purposes -
information about your transactions and experiences
Yes No
For our affiliates’ everyday business purposes -
information about your creditworthiness
No We don’t share
For our affiliates to market to you No We don’t share
For non-affiliates to market to you No We don’t share
Questions?          Call 1-510-522-9600 or go to www.uscfinvestments.com
 
 

UNITED STATES COMMODITY FUNDS LLC
UNITED STATES COMMODITY FUNDS TRUST
USCF FUNDS TRUST
EACH OF THE FUNDS FOR WHICH THE COMPANY SERVES AS
GENERAL PARTNER OR SPONSOR

Privacy Notice

What we do
How do the Company, the Trusts and the Funds protect my personal information? To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings.
How do the Company, the Trusts and the Funds collect my personal information?

We collect your personal information, for example, when you

     open an account

     provide account information

     give us your contact information

     make a wire transfer

     tell us where to send the money

  We also collect your information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?

Federal law gives you the right to limit only

     sharing for affiliates’ everyday business purposes - information about your creditworthiness

     affiliates from using your information to market to you

     sharing for non-affiliates to market to you

State laws and individual companies may give you additional rights to limit sharing.

Definitions
Affiliates

Companies related by common ownership or control. They can be financial and non-financial companies.

     Our affiliates include companies which are subsidiaries of Wainwright Holdings, Inc., such as USCF Advisers LLC.

Non-affiliates

Companies not related by common ownership or control. They can be financial and non- financial companies.

     The Company, the Trusts and the Funds do not share with non-affiliates so they can market to you.

Joint marketing

A formal agreement between nonaffiliated financial companies that together market financial products or services to you.

     The Company, the Trusts and the Funds do not conduct joint marketing.

 
 

UNITED STATES GASOLINE FUND, LP
A Delaware Limited Partnership

FINANCIAL STATEMENTS

For the years ended December 31, 2019, 2018 and 2017

AFFIRMATION OF THE COMMODITY POOL OPERATOR

To the Shareholders of the United States Gasoline Fund, LP:

Pursuant to Rule 4.22(h) under the Commodity Exchange Act, the undersigned represents that, to the best of his knowledge and belief, the information contained in this Annual Report for the years ended December 31, 2019, 2018 and 2017 is accurate and complete.

By United States Commodity Funds LLC, as General Partner

     
By: 

/s/ John P. Love

 
  John P. Love
  President & Chief Executive Officer of United States Commodity Funds LLC
  On behalf of United States Gasoline Fund, LP
 
 

 

(LOGO)  
Spicer Jeffries LLP
Certified Public Accountants
   
4601 DTC BOULEVARD · SUITE 700
DENVER, COLORADO 80237
TELEPHONE: (303) 753-1959
  FAX: (303) 753-0338
  www.spicerjeffries.com
   

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of
United States Gasoline Fund, LP

Opinions on the Financial Statements

We have audited the accompanying statements of financial condition of United States Gasoline Fund, LP (the “Fund”) as of December 31, 2019 and 2018, including the schedule of investments as of December 31, 2019 and 2018, and the related statements of operations, changes in partners’ capital and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of United States Gasoline Fund, LP as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinions.

(Signature) 

We have served as the Fund’s auditor since 2008.

Denver, Colorado
March 20, 2020

 
 

United States Gasoline Fund, LP
Schedule of Investments
At December 31, 2019

                           
    Notional
Amount
  Number of
Contracts
  Value/
Unrealized Gain
(Loss) on Open
Commodity
Contracts
  % of
Partners’
Capital
 
Open Futures Contracts - Long                          
United States Contracts                          
NYMEX RBOB Gasoline Futures RB February 2020 contracts, expiring January 2020*   $ 29,100,078     410   $ 10,332     0.04  

 

 

                     
    Principal
Amount
  Market
Value
     
Cash Equivalents                    
United States Treasury Obligations                    
U.S. Treasury Bills:                    
2.03%, 1/09/2020   $ 1,000,000   $ 999,553     3.44  
2.01%, 1/16/2020     1,000,000     999,173     3.44  
2.04%, 1/23/2020     1,000,000     998,767     3.43  
2.02%, 1/30/2020     1,000,000     998,390     3.43  
1.90%, 2/06/2020     1,000,000     998,123     3.43  
1.87%, 2/13/2020     1,000,000     997,784     3.43  
1.85%, 2/20/2020     1,000,000     997,451     3.43  
1.85%, 2/27/2020     1,000,000     997,103     3.43  
1.83%, 3/05/2020     2,000,000     1,993,541     6.86  
1.84%, 3/19/2020     1,000,000     996,057     3.43  
1.88%, 3/26/2020     1,000,000     995,608     3.42  
1.70%, 4/02/2020     1,000,000     995,681     3.42  
1.64%, 4/09/2020     2,000,000     1,991,035     6.85  
1.60%, 4/16/2020     1,000,000     995,318     3.42  
1.60%, 4/23/2020     1,000,000     995,009     3.42  
1.59%, 4/30/2020     1,000,000     994,750     3.42  
1.54%, 5/07/2020     1,000,000     994,620     3.42  
1.55%, 5/14/2020     1,000,000     994,268     3.42  
1.55%, 5/21/2020     1,000,000     993,988     3.42  
1.58%, 5/28/2020     1,000,000     993,546     3.42  
1.53%, 6/04/2020     1,000,000     993,456     3.42  
1.53%, 6/11/2020     1,000,000     993,149     3.41  
1.54%, 6/18/2020     1,000,000     992,818     3.41  
Total Treasury Obligations           24,899,188     85.62  
                     
United States - Money Market Funds                    
Fidelity Investments Money Market Funds - Government Portfolio     500,000     500,000     1.72  
Goldman Sachs Financial Square Funds - Government Fund - Class FS     3,600,000     3,600,000     12.38  
Total Money Market Funds           4,100,000     14.10  
Total Cash Equivalents         $ 28,999,188     99.72  
                     
*Collateral amounted to $2,996,063 on open futures contracts.

See accompanying notes to financial statements.

 
 

United States Gasoline Fund, LP
Schedule of Investments
At December 31, 2018

                           
    Notional
Amount
  Number of
Contracts
  Value/
Unrealized Gain
(Loss) on Open
Commodity
Contracts
  % of
Partners’
Capital
 
Open Futures Contracts - Long                          
United States Contracts                          
NYMEX RBOB Gasoline Futures RB February 2019 contracts, expiring January 2019*   $ 34,217,228     582   $ (2,388,695 )   (7.50 )

 

                     
    Principal
Amount
  Market
Value
     
Cash Equivalents                    
United States Treasury Obligations                    
U.S. Treasury Bills:                    
2.10%, 1/10/2019   $ 2,000,000   $ 1,998,960     6.28  
2.13%, 1/17/2019     2,000,000     1,998,124     6.28  
2.15%, 1/24/2019     2,000,000     1,997,285     6.27  
2.18%, 1/31/2019     2,000,000     1,996,408     6.27  
2.20%, 2/07/2019     1,000,000     997,765     3.13  
2.19%, 2/14/2019     1,000,000     997,348     3.13  
2.20%, 2/21/2019     1,000,000     996,912     3.13  
2.24%, 2/28/2019     1,000,000     996,431     3.13  
2.38%, 3/07/2019     1,000,000     995,748     3.13  
2.28%, 3/14/2019     1,000,000     995,490     3.13  
2.33%, 3/21/2019     1,000,000     994,953     3.13  
2.34%, 3/28/2019     1,000,000     994,482     3.12  
2.37%, 4/04/2019     1,000,000     993,942     3.12  
2.41%, 4/11/2019     2,000,000     1,986,750     6.24  
2.42%, 4/18/2019     1,000,000     992,881     3.12  
2.43%, 4/25/2019     1,000,000     992,400     3.12  
2.46%, 5/02/2019     1,000,000     991,849     3.12  
2.50%, 5/23/2019     2,000,000     1,980,554     6.22  
2.51%, 6/06/2019     1,000,000     989,275     3.11  
2.51%, 6/13/2019     1,000,000     988,771     3.11  
Total Cash Equivalents         $ 25,876,328     81.29  
                     
*Collateral amounted to $6,786,120 on open futures contracts.

See accompanying notes to financial statements.

 
 

United States Gasoline Fund, LP
Statements of Operations
For the years ended December 31, 2019, 2018 and 2017

                     
    Year ended
December 31,
2019
  Year ended
December 31,
2018
  Year ended
December 31,
2017
 
Income                    
Gain (loss) on trading of commodity futures contracts:                    
Realized gain (loss) on closed futures contracts   $ 10,449,487   $ (6,219,221 ) $ 864,192  
Change in unrealized gain (loss) on open futures contracts     2,399,027     (5,687,463 )   (681,370 )
Realized gain (loss) on short-term investments         (420 )    
Dividend income     199,099     38,339     31,618  
Interest income*     588,870     724,902     460,679  
ETF transaction fees     4,550     6,650     10,150  
                     
Total income (loss)     13,641,033     (11,137,213 )   685,269  
                     
Expenses                    
General Partner management fees (Note 3)     219,691     261,469     361,298  
Professional fees     65,523     197,150     185,986  
Brokerage commissions     41,772     42,294     71,846  
Directors’ fees and insurance     8,291     7,560     8,185  
License fees     5,492     6,537     9,033  
Registration fees             46,454  
                     
Total expenses     340,769     515,010     682,802  
                     
Expense waiver (Note 3)     (66,155 )   (188,173 )   (231,179 )
                     
Net expenses     274,614     326,837     451,623  
                     
Net income (loss)   $ 13,366,419   $ (11,464,050 ) $ 233,646  
Net income (loss) per limited partnership share   $ 9.57   $ (9.29 ) $ 0.66  
Net income (loss) per weighted average limited
partnership share
  $ 10.69   $ (8.43 ) $ 0.11  
Weighted average limited partnership shares outstanding     1,250,685     1,360,137     2,192,877  
                     
*Interest income does not exceed paid in kind of 5%.

See accompanying notes to financial statements.

 
 

United States Gasoline Fund, LP
Statements of Changes in Partners’ Capital
For the years ended December 31, 2019, 2018 and 2017

                     
    General Partner   Limited Partners   Total  
Balances, at December 31, 2016   $   $ 70,584,564   $ 70,584,564  
Addition of 1,150,000 partnership shares         31,756,763     31,756,763  
Redemption of 1,900,000 partnership shares         (54,527,041 )   (54,527,041 )
Net income (loss)         233,646     233,646  
                     
Balances, at December 31, 2017         48,047,932     48,047,932  
Addition of 550,000 partnership shares         16,294,842     16,294,842  
Redemption of 650,000 partnership shares         (21,048,275 )   (21,048,275 )
Net income (loss)         (11,464,050 )   (11,464,050 )
                     
Balances, at December 31, 2018         31,830,449     31,830,449  
Addition of 200,000 partnership shares         5,206,294     5,206,294  
Redemption of 700,000 partnership shares         (21,323,879 )   (21,323,879 )
Net income (loss)         13,366,419     13,366,419  
                     
Balances, at December 31, 2019   $   $ 29,079,283   $ 29,079,283  
                     
Net Asset Value Per Share:                    
At December 31, 2016               $ 31.37  
At December 31, 2017               $ 32.03  
At December 31, 2018               $ 22.74  
At December 31, 2019               $ 32.31  
                     

See accompanying notes to financial statements.

 
 

United States Gasoline Fund, LP
Statements of Cash Flows
For the years ended December 31, 2019, 2018 and 2017

                     
    Year ended
December 31,
2019
  Year ended
December 31,
2018
  Year ended
December 31,
2017
 
Cash Flows from Operating Activities:                    
Net income (loss)   $ 13,366,419   $ (11,464,050 ) $ 233,646  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                    
Unrealized (gain) loss on open futures contracts     (2,399,027 )   5,687,463     681,370  
(Increase) decrease in receivable from General Partner     122,018     43,006     38,730  
(Increase) decrease in dividends receivable     (7,719 )   1,962     953  
(Increase) decrease in interest receivable     (704 )   192     (994 )
(Increase) decrease in prepaid insurance     (171 )   (163 )   81  
(Increase) decrease in prepaid registration fees             31,658  
Increase (decrease) in payable due to Broker     524,417     (496,140 )   496,140  
Increase (decrease) in General Partner management fees payable     231     (9,203 )   (9,084 )
Increase (decrease) in professional fees payable     (65,952 )   33,978     15,367  
Increase (decrease) in brokerage commissions payable         (1,610 )   (1,550 )
Increase (decrease) in directors’ fees payable     152     (104 )   14  
Increase (decrease) in license fees payable     (146 )   (570 )   (1,355 )
Increase (decrease) in registration fees payable         (14,795 )   14,795  
Net cash provided by (used in) operating activities     11,539,518     (6,220,034 )   1,499,771  
                     
Cash Flows from Financing Activities:                    
Addition of partnership shares     5,206,294     16,294,842     31,756,763  
Redemption of partnership shares     (21,323,879 )   (21,048,275 )   (54,527,041 )
Net cash provided by (used in) financing activities     (16,117,585 )   (4,753,433 )   (22,770,278 )
                     
Net Increase (Decrease) in Cash and Cash Equivalents     (4,578,067 )   (10,973,467 )   (21,270,507 )
                     
Total Cash, Cash Equivalents and Equity in Trading Accounts, beginning of year     34,253,119     45,226,586     66,497,093  
Total Cash, Cash Equivalents and Equity in Trading Accounts, end of year   $ 29,675,052   $ 34,253,119   $ 45,226,586  
                     
Components of Cash and Cash Equivalents:                    
Cash and Cash Equivalents   $ 26,678,989   $ 27,466,999   $ 41,233,887  
Equity in Trading Accounts:                    
Cash and Cash Equivalents     2,996,063     6,786,120     3,992,699  
Total Cash, Cash Equivalents and Equity in Trading Accounts   $ 29,675,052   $ 34,253,119   $ 45,226,586  
                     

See accompanying notes to financial statements.

 
 

United States Gasoline Fund, LP
Notes to Financial Statements
For the years ended December 31, 2019, 2018 and 2017

NOTE 1 — ORGANIZATION AND BUSINESS

The United States Gasoline Fund, LP (“UGA”) was organized as a limited partnership under the laws of the state of Delaware on April 13, 2007. UGA is a commodity pool that issues limited partnership shares (“shares”) that may be purchased and sold on the NYSE Arca, Inc. (the “NYSE Arca”). Prior to November 25, 2008, UGA’s shares traded on the American Stock Exchange (the “AMEX”). UGA will continue in perpetuity, unless terminated sooner upon the occurrence of one or more events as described in its Third Amended and Restated Agreement of Limited Partnership dated as of December 15, 2017 (the “LP Agreement”). The investment objective of UGA is for the daily changes in percentage terms of its shares’ per share net asset value (“NAV”) to reflect the daily changes in percentage terms of the spot price of gasoline (also known as reformulated gasoline blendstock for oxygen blending, or “RBOB”, for delivery to the New York harbor), as measured by the daily changes in the price of the futures contract for gasoline traded on the New York Mercantile Exchange (the “NYMEX”) that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire (the “Benchmark Futures Contract”), plus interest earned on UGA’s collateral holdings, less UGA’s expenses.

UGA’s investment objective is not for its NAV or market price of shares to equal, in dollar terms, the spot price of gasoline or any particular futures contract based on gasoline, nor is UGA’s investment objective for the percentage change in its NAV to reflect the percentage change of the price of any particular futures contract as measured over a time period greater than one day.

United States Commodity Funds LLC (“USCF”), the general partner of UGA, believes that it is not practical to manage the portfolio to achieve such an investment goal when investing in Futures Contracts (as defined below) and Other Gasoline-Related Investments (as defined below). UGA accomplishes its objective through investments in futures contracts for gasoline, crude oil, natural gas, diesel-heating oil 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 gasoline-related investments such as cash-settled options on Futures Contracts, forward contracts for gasoline, cleared swap contracts and over-the-counter (“OTC”) transactions that are based on the price of gasoline, crude oil and other petroleum-based fuels, Futures Contracts and indices based on the foregoing (collectively, “Other Gasoline-Related Investments”). As of December 31, 2019, UGA held 410 Futures Contracts for gasoline traded on the NYMEX and did not hold any Futures Contracts traded on the ICE Futures.

UGA commenced investment operations on February 26, 2008 and has a fiscal year ending on December 31. USCF is responsible for the management of UGA. USCF is a member of the National Futures Association (the “NFA”) and became registered as a commodity pool operator with the Commodity Futures Trading Commission (the “CFTC”) effective December 1, 2005 and a swaps firm on August 8, 2013. USCF is also the general partner of the United States Oil Fund, LP (“USO”), the United States Natural Gas Fund, LP (“UNG”) and the United States 12 Month Oil Fund, LP (“USL”), which listed their limited partnership shares on the AMEX under the ticker symbols “USO” on April 10, 2006, “UNG” on April 18, 2007 and “USL” on December 6, 2007, respectively. As a result of the acquisition of the AMEX by NYSE Euronext, each of USO’s, UNG’s, and USL’s shares commenced trading on the NYSE Arca on November 25, 2008. USCF is also the general partner of the United States 12 Month Natural Gas Fund, LP (“UNL”) and the United States Brent Oil Fund, LP (“BNO”), which listed their limited partnership shares on the NYSE Arca under the ticker symbols “UNL” on November 18, 2009 and “BNO” on June 2, 2010, respectively. USCF previously served as the general partner for the United States Short Oil Fund, LP (“DNO”) and the United States Diesel-Heating Oil Fund, LP (“UHN”), both of which were liquidated in 2018.

USCF is also the sponsor of the United States Commodity Index Fund (“USCI”), the United States Copper Index Fund (“CPER”) and the USCF Crescent Crypto Index Fund (“XBET”), each a series of the United States Commodity Index Funds Trust (“USCIFT”). USCF previously served as the sponsor for the United States Agricultural Index Fund (“USAG”) a series of USCIFT which was liquidated in 2018. XBET is currently in registration and has not commenced operations. USCI and CPER listed their shares on the NYSE Arca under the ticker symbols “USCI” on August 10, 2010 and “CPER” on November 15, 2011, respectively.

In addition, USCF is the sponsor of the USCF Funds Trust, a Delaware statutory trust, and each of its series, the United States 3x Oil Fund (“USOU”) and the United States 3x Short Oil Fund (“USOD”), which listed their shares on the NYSE Arca on July 20, 2017 under the ticker symbols “USOU” and “USOD”, respectively. Each of USOU and USOD liquidated all of its assets and distributed cash pro rata to all remaining shareholders in December 2019.

USO, UNG, UGA, UNL, USL, BNO, USCI and CPER are referred to collectively herein as the “Related Public Funds.”

 
 

UGA issues shares to certain authorized purchasers (“Authorized Participants”) by offering baskets consisting of 50,000 shares (“Creation Baskets”) through ALPS Distributors, Inc., as the marketing agent (the “Marketing Agent”). The purchase price for a Creation Basket is based upon the NAV of a share calculated shortly after the close of the core trading session on the NYSE Arca on the day the order to create the basket is properly received.

Authorized Participants pay UGA a $350 transaction fee for each order placed to create one or more Creation Baskets or to redeem one or more Redemption Baskets. Shares may be purchased or sold on a nationally recognized securities exchange in smaller increments than a Creation Basket or Redemption Basket. Shares purchased or sold on a nationally recognized securities exchange are not purchased or sold at the per share NAV of UGA but rather at market prices quoted on such exchange.

In November 2007, UGA initially registered 30,000,000 shares on Form S-1 with the U.S. Securities and Exchange Commission (“SEC”). On February 26, 2008, UGA listed its shares on the AMEX under the ticker symbol “UGA” and switched to trading on the NYSE Arca under the same ticker symbol on November 25, 2008. On that day, UGA established its’ initial per share NAV by setting the price at $50.00 and issued 300,000 shares in exchange for $15,000,000. UGA also commenced investment operations on February 26, 2008 by purchasing Futures Contracts traded on the NYMEX based on gasoline. As of December 31, 2019, UGA had registered a total of 80,000,000 shares.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as detailed in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification. UGA is an investment company and follows the accounting and reporting guidance in FASB Topic 946.

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 statements of financial condition and represent 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 financial statements. Changes in the unrealized gains or losses between periods are reflected in the statements of operations. UGA earns income on funds held at the custodian or a futures commission merchant (“FCM”) 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

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

In accordance with U.S. GAAP, UGA is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any tax related appeals or litigation processes, based on the technical merits of the position. UGA files an income tax return in the U.S. federal jurisdiction and may file income tax returns in various U.S. states. UGA is not subject to income tax return examinations by major taxing authorities for years before 2016. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in UGA recording a tax liability that reduces net assets. However, UGA’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analysis of and changes to tax laws, regulations and interpretations thereof. UGA recognizes interest accrued related to unrecognized tax benefits and penalties related to unrecognized tax benefits in income tax fees payable, if assessed. No interest expense or penalties have been recognized as of and for the year ended December 31, 2019.

Creations and Redemptions

Authorized Participants may purchase Creation Baskets or redeem Redemption Baskets only in blocks of 50,000 shares at a price equal to the NAV of the shares calculated shortly after the close of the core trading session on the NYSE Arca on the day the order is placed.

 
 

UGA receives or pays the proceeds from shares sold or redeemed within two business days after the trade date of the purchase or redemption. The amounts due from Authorized Participants are reflected in UGA’s statements of financial condition as receivable for shares sold and amounts payable to Authorized Participants upon redemption are reflected as payable for shares redeemed.

Authorized Participants pay UGA a $350 transaction fee for each order placed to create one or more Creation Baskets or to redeem one or more Redemption Baskets.

Partnership Capital and Allocation of Partnership Income and Losses

Profit or loss shall be allocated among the partners of UGA in proportion to the number of shares each partner holds as of the close of each month. USCF may revise, alter or otherwise modify this method of allocation as described in the LP Agreement.

Calculation of Per Share NAV

UGA’s per share NAV is calculated on each NYSE Arca trading day by taking the current market value of its total assets, subtracting any liabilities and dividing that amount by the total number of shares outstanding. UGA 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 Share

Net income (loss) per share is the difference between the per share NAV at the beginning of each period and at the end of each period. The weighted average number of shares outstanding was computed for purposes of disclosing net income (loss) per weighted average share. The weighted average shares are equal to the number of shares outstanding at the end of the period, adjusted proportionately for shares added and redeemed based on the amount of time the shares were outstanding during such period. There were no shares held by USCF at December 31, 2019.

Offering Costs

Offering costs incurred in connection with the registration of additional shares after the initial registration of shares are borne by UGA. These costs include registration fees paid to regulatory agencies and all legal, accounting, printing and other expenses associated with such offerings. These costs are 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 equivalents include money market funds and overnight deposits or time deposits with original maturity dates of six months or less.

Reclassification

Certain amounts in the accompanying financial statements were reclassified to conform to the current presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires USCF 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 financial statements, and the reported amounts of the revenue and expenses during the reporting period. Actual results may differ from those estimates and assumptions.

NOTE 3 — FEES PAID BY THE FUND AND RELATED PARTY TRANSACTIONS

USCF Management Fee

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

 
 

Ongoing Registration Fees and Other Offering Expenses

UGA pays all costs and expenses associated with the ongoing registration of its shares subsequent to the initial offering. These costs include registration or other fees paid to regulatory agencies in connection with the offer and sale of shares, and all legal, accounting, printing and other expenses associated with such offer and sale. For the years ended December 31, 2019, 2018 and 2017, UGA did not incur registration fees and other offering expenses.

Independent Directors’ and Officers’ Expenses

UGA is responsible for paying its portion of the directors’ and officers’ liability insurance for UGA and the Related Public Funds and the fees and expenses of the independent directors who also serve as audit committee members of UGA and the Related Public Funds. UGA shares the fees and expenses on a pro rata basis with each Related Public Fund, as described above, based on the relative assets of each Related Public Fund computed on a daily basis. These fees and expenses for the year ended December 31, 2019 were $556,951 for UGA and the Related Public Funds. UGA’s portion of such fees and expenses for the year ended December 31, 2019 was $8,291. For the year ended December 31, 2018, these fees and expenses were $521,689 for UGA and the Related Public Funds. UGA’s portion of such fees and expenses for the year ended December 31, 2018 was $7,560. For the year ended December 31, 2017, these fees and expenses were $536,375 for UGA and the Related Public Funds. UGA’s portion of such fees and expenses for the year ended December 31, 2017 was $8,185.

Licensing Fees

As discussed in Note 4 below, UGA entered into a licensing agreement with the NYMEX on April 10, 2006, as amended on October 20, 2011. Pursuant to the agreement, UGA and the Related Public Funds, other than BNO, USCI and CPER, pay a licensing fee that is equal to 0.015% on all net assets. During the years ended December 31, 2019, 2018 and 2017, UGA incurred $5,492, $6,537 and $9,033, respectively, under this arrangement.

Investor Tax Reporting Cost

The fees and expenses associated with UGA’s audit expenses and tax accounting and reporting requirements are paid by UGA. These costs were approximately $65,523 for the year ended December 31, 2019, approximately $150,695 for the year ended December 31, 2018 and approximately $170,000 for the year ended December 31, 2017. Tax reporting costs fluctuate between years due to the number of shareholders during any given year.

Other Expenses and Fees and Expense Waivers

In addition to the fees described above, UGA pays all brokerage fees and other expenses in connection with the operation of UGA, excluding costs and expenses paid by USCF as outlined in Note 4 – Contracts and Agreements below. USCF paid certain expenses on a discretionary basis typically borne by UGA, where expenses exceed 0.15% (15 basis points) of UGA’s NAV, on an annualized basis. USCF has no obligation to continue such payments into subsequent periods. For the year ended December 31, 2019, USCF waived $66,155 of UGA’s expenses. This voluntary expense waiver is in addition to those amounts USCF is contractually obligated to pay as described in Note 4 – Contracts and Agreements.

NOTE 4 — CONTRACTS AND AGREEMENTS

Marketing Agent Agreement

UGA is party to a marketing agent agreement, dated as of February 15, 2008, as amended from time to time, with the Marketing Agent and USCF, whereby the Marketing Agent provides certain marketing services for UGA as outlined in the agreement. The fee of the Marketing Agent, which is borne by USCF, is equal to 0.06% on UGA’s assets up to $3 billion and 0.04% on UGA’s assets in excess of $3 billion. In no event may the aggregate compensation paid to the Marketing Agent and any affiliate of USCF for distribution-related services exceed 10% of the gross proceeds of UGA’s offering.

The above fee does not include website construction and development, which are also borne by USCF.

Brown Brothers Harriman & Co. Agreements

UGA is also party to a custodian agreement, dated January 16, 2008, as amended from time to time, with Brown Brothers Harriman & Co. (“BBH&Co.”) and USCF, whereby BBH&Co. holds investments on behalf of UGA. USCF pays the fees of the custodian, which are determined by the parties from time to time. In addition, UGA is party to an administrative agency agreement, dated February 7, 2008, as amended from time to time, with USCF and BBH&Co., whereby BBH&Co. acts as the administrative agent, transfer agent and registrar for UGA. USCF also pays the fees of BBH&Co. for its services under such agreement and such fees are determined by the parties from time to time.

 
 

Currently, USCF pays BBH&Co. for its services, in the foregoing capacities, a minimum amount of $75,000 annually for its custody, fund accounting and fund administration services rendered to UGA and each of the Related Public Funds, as well as a $20,000 annual fee for its transfer agency services. In addition, USCF pays BBH&Co. an asset-based charge of (a) 0.06% for the first $500 million of the Related Public Funds’ combined net assets, (b) 0.0465% for the Related Public Funds’ combined net assets greater than $500 million but less than $1 billion, and (c) 0.035% once the Related Public Funds’ combined net assets exceed $1 billion. The annual minimum amount will not apply if the asset-based charge for all accounts in the aggregate exceeds $75,000. USCF also pays BBH&Co. transaction fees ranging from $7 to $15 per transaction.

Brokerage and Futures Commission Merchant Agreements

On October 8, 2013, UGA entered into a brokerage agreement with RBC to serve as UGA’s FCM effective October 10, 2013. The agreement with RBC requires it to provide services to UGA in connection with the purchase and sale of Futures Contracts and Other Gasoline-Related Investments that may be purchased and sold by or through RBC for UGA’s account. In accordance with the agreement, RBC charges UGA commissions of approximately $7 to $8 per round-turn trade, including applicable exchange, clearing and NFA fees for Futures Contracts and options on Futures Contracts. Such fees include those incurred when purchasing Futures Contracts and options on Futures Contracts when UGA issues shares as a result of a Creation Basket, as well as fees incurred when selling Futures Contracts and options on Futures Contracts when UGA redeems shares as a result of a Redemption Basket. Such fees are also incurred when Futures Contracts and options on Futures Contracts are purchased or redeemed for the purpose of rebalancing the portfolio. UGA also incurs commissions to brokers for the purchase and sale of Futures Contracts, Other Gasoline-Related Investments or short-term obligations of the United States of two years or less (“Treasuries”).

                     
    For the Year
Ended
December 31,
2019
  For the Year
Ended
December 31,
2018
  For the Year
Ended
December 31,
2017
 
Total commissions accrued to brokers   $ 41,772   $ 42,294   $ 71,846  
Total commissions as annualized percentage of average total net assets     0.11 %   0.10 %   0.12 %
Commissions accrued as a result of rebalancing   $ 39,760   $ 40,992   $ 67,782  
Percentage of commissions accrued as a result of rebalancing     95.18 %   96.92 %   94.34 %
Commissions accrued as a result of creation and redemption activity   $ 2,012   $ 1,302   $ 4,064  
Percentage of commissions accrued as a result of creation and redemption activity     4.82 %   3.08 %   5.66 %
                     

The decrease in total commissions accrued to brokers for the year ended December 31, 2019, compared to the year ended December 31, 2018, was due primarily to a lower number of gasoline futures contracts being held and traded. The decrease in total commissions accrued to brokers for the year ended December 31, 2018, compared to the year ended December 31, 2017, was due primarily to lower number of futures contracts being held and traded. However, there can be no assurance that commission costs and portfolio turnover will not cause commission expenses to rise in future quarters.

NYMEX Licensing Agreement

UGA and the NYMEX entered into a licensing agreement on April 10, 2006, as amended on October 20, 2011, whereby UGA was granted a non-exclusive license to use certain of the NYMEX’s settlement prices and service marks. Under the licensing agreement, UGA and the Related Public Funds, other than BNO, USCI, CPER, USOU and USOD, pay the NYMEX an asset-based fee for the license, the terms of which are described in Note 3. UGA expressly disclaims any association with the NYMEX or endorsement of UGA 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

UGA may engage in the trading of futures contracts, options on futures contracts, cleared swaps and OTC swaps (collectively, “derivatives”). UGA 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.

UGA may enter into futures contracts, options on futures contracts and cleared swaps to gain exposure to changes in the value of an underlying commodity. A futures contract obligates the seller to deliver (and the purchaser to accept) the future delivery of a specified quantity and type of a commodity at a specified time and place. Some futures contracts may call for physical delivery of the asset, while others are settled in cash. The contractual obligations of a buyer or seller may generally be satisfied by taking or making physical delivery of the underlying commodity or by making an offsetting sale or purchase of an identical futures contract on the same or linked exchange before the designated date of delivery. Cleared swaps are agreements that are eligible to be cleared by a clearinghouse, e.g., ICE Clear Europe, and provide the efficiencies and benefits that centralized clearing on an exchange offers to traders of futures contracts, including credit risk intermediation and the ability to offset positions initiated with different counterparties.

 

 

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

Futures contracts, options on futures contracts and cleared swaps involve, to varying degrees, elements of market risk (specifically commodity price risk) and exposure to loss in excess of the amount of variation margin. The face or contract amounts reflect the extent of the total exposure UGA has in the particular classes of instruments. Additional risks associated with the use of futures contracts are an imperfect correlation between movements in the price of the futures contracts and the market value of the underlying securities and the possibility of an illiquid market for a futures contract. Buying and selling options on futures contracts exposes investors to the risks of purchasing or selling futures contracts.

All of the futures contracts held by UGA through December 31, 2019 were exchange-traded. The risks associated with exchange-traded contracts are generally perceived to be less than those associated with OTC swaps since, in OTC swaps, a party must rely solely on the credit of its respective individual counterparties. However, in the future, if UGA 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, on the transaction. UGA has credit risk under its futures contracts since the sole counterparty to all domestic and foreign futures contracts is the clearinghouse for the exchange on which the relevant contracts are traded. In addition, UGA bears the risk of financial failure by the clearing broker.

UGA’s cash and other property, such as Treasuries, deposited with an FCM are considered commingled with all other customer funds, subject to the FCM’s segregation requirements. In the event of an FCM’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 an FCM could result in the complete loss of UGA’s assets posted with that FCM; however, the majority of UGA’s assets are held in investments in Treasuries, cash and/or cash equivalents with UGA’s custodian and would not be impacted by the insolvency of an FCM. The failure or insolvency of UGA’s custodian, however, could result in a substantial loss of UGA’s assets.

USCF invests a portion of UGA’s cash in money market funds that seek to maintain a stable per share NAV. UGA is exposed to any risk of loss associated with an investment in such money market funds. As of December 31, 2019, UGA held investments in money market funds in the amount of $4,100,000. As of December 31, 2018, UGA did not hold any investments in money market funds. UGA also holds cash deposits with its custodian. Pursuant to a written agreement with BBH&Co., uninvested overnight cash balances are swept to offshore branches of U.S. regulated and domiciled banks located in Toronto, Canada; London, United Kingdom; Grand Cayman, Cayman Islands; and Nassau, Bahamas; which are subject to U.S. regulation and regulatory oversight. As of December 31, 2019 and December 31, 2018, UGA held cash deposits and investments in Treasuries in the amounts of $25,575,052 and $34,253,119, respectively, with the custodian and FCM. Some or all of these amounts may be subject to loss should UGA’s custodian and/or FCM cease operations.

For derivatives, risks arise from changes in the market value of the contracts. Theoretically, UGA is exposed to 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, UGA 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.

UGA’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, UGA 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 UGA are reported in its statements 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.

 
 

NOTE 6 — FINANCIAL HIGHLIGHTS

The following table presents per share performance data and other supplemental financial data for the years ended December 31, 2019, 2018 and 2017 for the shareholders. This information has been derived from information presented in the financial statements.

                     
    Year ended
December 31,
2019
  Year ended
December 31,
2018
  Year ended
December 31,
2017
 
Per Share Operating Performance:                    
Net asset value, beginning of year   $ 22.74   $ 32.03   $ 31.37  
Total income (loss)     9.79     (9.05 )   0.87  
Net expenses     (0.22 )   (0.24 )   (0.21 )
Net increase (decrease) in net asset value     9.57     (9.29 )   0.66  
Net asset value, end of year   $ 32.31   $ 22.74   $ 32.03  
                     
Total Return     42.08 %   (29.00 )%   2.10 %
                     
Ratios to Average Net Assets                    
Total income (loss)     37.26 %   (25.56 )%   1.14 %
Management fees     0.60 %   0.60 %   0.60 %
Total expenses excluding management fees     0.33 %   0.58 %   0.53 %
Expenses waived     (0.18 )%   (0.43 )%   (0.38 )%
Net expenses excluding management fees     0.15 %   0.15 %   0.15 %
Net income (loss)     36.51 %   (26.31 )%   0.39 %
                     

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

NOTE 7 — QUARTERLY FINANCIAL DATA (Unaudited)

The following summarized (unaudited) quarterly financial information presents the results of operations and other data for three-month periods ended March 31, June 30, September 30 and December 31, 2019 and 2018.

                           
    First
Quarter
2019
  Second
Quarter
2019
  Third
Quarter
2019
  Fourth
Quarter
2019
 
Total Income (Loss)   $ 10,223,584   $ 2,175,067   $ (2,280,914 ) $ 3,523,296  
Total Expenses     105,844     85,605     76,166     73,154  
Expense Waivers     (32,492 )   (9,376 )   (11,544 )   (12,743 )
Net Expenses     73,352     76,229     64,622     60,411  
Net Income (Loss)   $ 10,150,232   $ 2,098,838   $ (2,345,536 ) $ 3,462,885  
Net Income (Loss) per Share   $ 6.74   $ 1.58   $ (1.95 ) $ 3.20  
                           
    First
Quarter
2018
  Second
Quarter
2018
  Third
Quarter
2018
  Fourth
Quarter
2018
 
Total Income (Loss)   $ 471,100   $ 2,932,657   $ 1,956,402   $ (16,497,372 )
Total Expenses     139,201     135,214     124,674     115,921  
Expense Waivers     (53,005 )   (47,226 )   (40,523 )   (47,419 )
Net Expenses     86,196     87,988     84,151     68,502  
Net Income (Loss)   $ 384,904   $ 2,844,669   $ 1,872,251   $ (16,565,874 )
Net Income (Loss) per Share   $ 0.24   $ 2.34   $ 1.49   $ (13.36 )
                           
 
 

NOTE 8 — FAIR VALUE OF FINANCIAL INSTRUMENTS

UGA values its investments in accordance with Accounting Standards Codification 820 – Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurement. The changes to past practice resulting from the application of ASC 820 relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurement. ASC 820 establishes a fair value hierarchy that distinguishes between: (1) market participant assumptions developed based on market data obtained from sources independent of UGA (observable inputs) and (2) UGA’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 ASC 820 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 I 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).

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 within 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 UGA’s securities at December 31, 2019 using the fair value hierarchy:

                           
At December 31, 2019   Total   Level I   Level II   Level III  
Short-Term Investments   $ 28,999,188   $ 28,999,188   $   $  
Exchange-Traded Futures Contracts                          
Foreign Contracts     10,332     10,332          
                           

During the year ended December 31, 2019, there were no transfers between Level I and Level II.

The following table summarizes the valuation of UGA’s securities at December 31, 2018 using the fair value hierarchy:

                           
At December 31, 2018   Total   Level I   Level II   Level III  
Short-Term Investments   $ 25,876,328   $ 25,876,328   $   $  
Exchange-Traded Futures Contracts                          
United States Contracts     (2,388,695 )   (2,388,695 )        
                           

During the year ended December 31, 2018, there were no transfers between Level I and Level II.

Effective January 1, 2009, UGA adopted the provisions of Accounting Standards Codification 815 — Derivatives and Hedging, which require presentation of qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts and gains and losses on derivatives.

 
 

 

Fair Value of Derivative Instruments

                     
Derivatives not
Accounted for
as Hedging
Instruments
  Statements of Financial
Condition Location
  Fair Value
At
December 31,

2019
  Fair Value
At
December 31,

2018
 
Futures - Commodity Contracts   Assets   $ 10,332   $ (2,388,695 )
                     

The Effect of Derivative Instruments on the Statements of Operations

                   
        For the year ended
December 31, 2019
  For the year ended
December 31, 2018
  For the year ended
December 31, 2017
 
Derivatives
not
Accounted
for as
Hedging
Instruments
  Location of
Gain (Loss)
on Derivatives
Recognized in
Income
  Realized
Gain (Loss)
on Derivatives
Recognized in
Income
  Change in
Unrealized
Gain (Loss) on
Derivatives
Recognized in
Income
  Realized
Gain (Loss)
on Derivatives
Recognized in
Income
  Change in
Unrealized
Gain (Loss) on
Derivatives
Recognized in
Income
  Realized
Gain (Loss)
on Derivatives
Recognized in
Income
  Change in
Unrealized
Gain (Loss) on
Derivatives
Recognized in
Income
 
Futures -
Commodity
Contracts
  Realized gain
(loss) on closed
positions
  $ 10,449,487         $ (6,219,221 )       $ 864,192        
                                           
                                           
    Change in unrealized
gain (loss) on open
positions
        $ 2,399,027         $ (5,687,463 )       $ (681,370 )
                                           
                                               

NOTE 9 — RECENT ACCOUNTING PRONOUNCEMENTS

In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-13, which changes certain fair value measurement disclosure requirements. The new ASU, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the Funds’ policy for the timing of transfers between levels. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Fund has evaluated the implications of certain provisions of the ASU and has determined that there will be no material impacts to the financial statements.

NOTE 10 — SUBSEQUENT EVENTS

UGA has performed an evaluation of subsequent events through the date the financial statements were issued. This evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments.