UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




FORM
      10-K




x
            Annual
                report pursuant to
                Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
                fiscal year ended December 31, 2007.




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




Commission
      file number: 001-33096




United
      States Natural Gas Fund,
      LP


(Exact
      name of registrant as
      specified in its charter)




Delaware
            
            20-5576760(State
                or other jurisdiction ofincorporation
                or
                organization)
            
            (I.R.S.
                EmployerIdentification
                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)




Securities
      registered pursuant to
      Section 12(b) of the Act:


Units American
        Stock
        Exchange
 (Title
        of class)     (Name of exchange on which
        registered)






Securities
      registered pursuant to
      Section 12(g) of the Act: None




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


 ̈ Yes x No





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.


 ̈ Yes x No





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 if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405) is not contained herein, and will not be contained, to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-K or any
      amendment to this Form 10-K. x




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 definitions of "large accelerated filer," "accelerated filer" and
      "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one.)


Large
      accelerated filer  ̈ Accelerated
      filer    ̈ Non-accelerated
      filer xSmaller 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 Act.).


 ̈ Yes x No


The
        aggregate market value of the registrant’s units held by non-affiliates of the
        registrant as of June
        30,
        2007 was: $61,950,000.
  The
        registrant had 11,500,000 outstanding units as of March 13,
        2008.


DOCUMENTS
      INCORPORATED BY
      REFERENCE:


None.








UNITED
                  STATES NATURAL GAS
                  FUND, LPTable
                  of
                  ContentsPart
                  I.
              
              PageItem
                  1. Business
              
              1Item
                  1A. Risk Factors
              
              33Item
                  1B. Unresolved Staff Comments
              
              48Item
                  2. Properties
              
              48Item
                  3. Legal Proceedings
              
              49Item
                  4. Submission of Matters to a Vote of Security
                  Holders
              
              50Part
                  II.Item
                  5. Market for Registrant's Common Equity, Related
                  StockholderMatters
                  and Issuer Purchases of Equity
                  Securities
              
              50Item
                  6. Selected Financial Data
              
              51Item
                  7. Management's Discussion and Analysis of Financial
                  Conditionand
                  Results of Operations
              
              52Item
                  7A. Quantitative and Qualitative Disclosures About
                  Market Risk
              
              60Item
                  8. Financial Statements and Supplementary
                  Data
              
              61Item
                  9. Changes in and Disagreements with Accountants onAccounting
                  and Financial Disclosure
              
              72Item
                  9A. Controls and Procedures
              
              72Item
                  9B. Other Information
              
              72Part
                  III.Item
                  10. Directors, Executive Officers and
                  Corporate Governance
              
              73Item
                  11. Executive Compensation
              
              76Item
                  12. Security Ownership of Certain Beneficial Owners
                  andManagement
                  and Related Stockholder
                  Matters
              
              77Item
                  13. Certain Relationships and Related
                  Transactions, and Director Independence
              
              77Item
                  14. Principal Accountant Fees and
                  Services
              
              77Part
                  IV.Item
                  15. Exhibits and Financial Statement
                  Schedules
              
              78Exhibit
                  Index
              
              78Signatures
              
              79


Part
        I





Item 1.
            Business.




What
        is USNG?
  United
        States Natural Gas Fund, LP ("USNG") is a Delaware limited partnership
        organized on September 11, 2006. USNG maintains its main business office
        at 1320
        Harbor Bay Parkway, Suite 145, Alameda, California 94502. USNG is a commodity
        pool that issues limited partnership interests ("units") traded on the American
        Stock Exchange (the "AMEX"). It operates pursuant to the terms of
        the Second Amended and Restated Agreement of Limited Partnership dated
        as of December 4, 2007 (the "LP Agreement"), which grants full management
        control to the General Partner.
  Who
        is the General
        Partner?
  USNG's
        sole general partner is Victoria Bay Asset Management, LLC (the "General
        Partner"), a single member limited liability company that was formed in the
        state of Delaware on May 10, 2005. It maintains its main business office
        at 1320
        Harbor Bay Parkway, Suite 145, Alameda, California 94502. The General Partner
        is
        a wholly-owned subsidiary of Wainwright Holdings, Inc., a Delaware corporation
        (“Wainwright”). Mr. Nicholas Gerber (discussed below) controls Wainwright
        by virtue of his ownership of Wainwright’s shares. Wainwright is a holding
        company that also owns an insurance company organized under Bermuda law and
        a
        registered investment adviser firm named Ameristock Corporation. The General
        Partner is a member of the National Futures Association (the "NFA") and was
        registered with the Commodity Futures Trading Commission (the "CFTC") as
        of
        December 1, 2005. The General Partner’s registration as a Commodity Pool
        Operator ("CPO") was approved on December 1, 2005.
  On
            May
            12, 2005, the General Partner formed the United States Oil Fund, LP (“USOF”),
            another limited partnership that is a commodity pool and issues units
            traded on the AMEX.  The investment objective of USOF is for the
            changes in percentage terms of its units’ net asset value (“NAV”) 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 price of the futures
            contract for light, sweet crude oil traded on the New York Mercantile
            Exchange (the "NYMEX"), less USOF's expenses.  USOF began trading on
            April 10, 2006.  The General Partner is the general partner of USOF
            and is responsible for the management of the USOF.  Wainwright was the
            initial limited partner of USOF.  Investors in USNG who wish to receive
            additional information concerning the United States Oil Fund, LP, may
            do so by
            calling 1-800-920-0259, or going on-line to
            www.unitedstatesoilfund.com.
 
 On
            June
            27, 2007, the General Partner formed the United States 12 Month Oil Fund,
            LP
            (“US12OF”), also a limited partnership that is a commodity pool and issues units
            traded on the AMEX.  The investment objective of US12OF is for the
            changes in percentage terms of its units’ NAV 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
            12 futures
            contracts on crude oil traded on the NYMEX, less US12OF's
            expenses.  US12OF began trading on December 6, 2007. The General
            Partner is the general partner of US12OF and is responsible for the management
            of US12OF.  Wainwright was the initial limited partner of
            US12OF.  Investors in USNG who wish to receive additional information
            concerning the United States 12 Month Oil Fund, LP, may do so by calling
            1-800-920-0259, or going on-line to
            www.unitedstates12monthoilfund.com.
  On
              April
              12, 2007, the General Partner formed the United States Gasoline Fund,
              LP
              (“USG”), also a limited partnership that is a commodity pool and issues units
              traded on the AMEX.  The investment  objective of USG is for
              the changes in the percentage terms of its units’ NAV to reflect the changes in
              percentage terms of the price of unleaded gasoline delivered to the
              New York
              harbor, as measured by the changes in the price of the futures contract
              on
              gasoline traded on the NYMEX, less USG's expenses.  USG began trading
              on February 26, 2008.  The General Partner is the general partner of
              USG and is responsible for the management of USG.  Wainwright was the
              initial limited partner of USG. Investors in USNG who wish to receive
              additional
              information concerning the United States Gasoline Fund, LP, may do
              so by calling
              1-800-920-0259, or going on-line to
              www.unitedstatesgasolinefund.com.
 The
            General Partner is currently in the process of registering two other
            exchange
            traded securities, the United States Heating Oil Fund, LP (“USHO") and
            the United States 12 Month Natural Gas Fund, LP (“US12NG”).  USHO
            will be a publicly traded limited partnership which seeks to have the
            changes in
            percentage terms of its units’ NAV track the changes in percentage terms of the
            price of heating oil (also known as No. 2 fuel) delivered to the New
            York
            harbor. US12NG will be a publicly traded limited partnership which will
            seek to have the changes in percentage terms of its units’ NAV reflect the
            changes in percentage terms of the price of natural gas delivered at
            the Henry
            Hub, Louisiana, as measured by the changes in the average of the prices
            of 12
            futures contracts on natural gas traded on the NYMEX, consisting of the
            near
            month contract to expire and the contracts for the following eleven months,
            for
            a total of 12 consecutive months’ contracts.
 1
 The
            General Partner is required to evaluate the credit risk for USNG to the
            futures
            commission merchant, oversee the purchase and sale of USNG’s units by certain
            authorized purchasers ("Authorized Purchasers"), review daily positions
            and
            margin requirements of USNG and manage USNG’s investments. The General Partner
            also pays the fees of ALPS Distributors, Inc. (the "Marketing Agent"),
            and Brown
            Brothers Harriman & Co. ("BBH&Co."), which acts as the administrator
            (the "Administrator") and the custodian (the "Custodian") for
            USNG.
 Limited
              partners have no right to elect the General Partner on an annual or
              any other
              continuing basis. If the General Partner voluntarily withdraws, however,
              the
              holders of a majority of USNG's outstanding units (excluding for purposes
              of
              such determination units owned, if any, by the withdrawing General Partner
              and its affiliates) may elect its successor. The General Partner may
              not be
              removed as general partner except upon approval by the affirmative
              vote of the
              holders of at least 66 and 2/3 percent of USNG's outstanding units
              (excluding
              units owned, if any, by the General Partner and its affiliates), subject to
              the satisfaction of certain conditions set forth in the LP
              Agreement.
  The
              business and affairs of the General Partner are managed by a board
              of directors,
              which is comprised of four management directors, some of whom are also
              its
              executive officers (the “Management Directors”) and three independent directors
              who meet the independent director requirements established by the AMEX
              and the
              Sarbanes-Oxley Act of 2002. Notwithstanding the foregoing, the Management
              Directors have the authority to manage the General Partner pursuant
              to its Third
              Amended and Restated Limited Liability Company Agreement. The board
              of directors
              of the General Partner has an audit committee which is made up of the
              three
              independent directors (Peter M. Robinson, Gordon L. Ellis and Malcolm
              R. Fobes
              III). The audit committee is governed by an audit committee charter
              that is
              posted on USNG’s website, www.unitedstatesnaturalgasfund.com. Mr. Fobes and
              Mr. Ellis meet the financial sophistication requirements of the AMEX and
              the audit committee charter. Through its Management Directors, the
              General
              Partner manages the day-to-day operations of USNG.
  How
          Does USNG
          Operate?
  The
          net
          assets of USNG consist primarily of investments in futures contracts for
          natural
          gas, crude oil, heating oil, gasoline and other petroleum-based fuels that
          are traded on the NYMEX, ICE Futures or other U.S. and foreign exchanges
          (collectively, “Futures Contracts”). USNG may also invest in other natural
          gas-related investments such as cash-settled options on Futures Contracts,
          forward contracts for natural gas and over-the-counter transactions that
          are
          based on the price of natural gas, oil and other petroleum-based
          fuels, Futures Contracts and indices based on the foregoing (collectively,
“Other Natural Gas Related Investments”). For convenience and unless otherwise
          specified, Futures Contracts and Other Natural Gas Related Investments
          collectively are referred to as “Natural Gas Interests” in this annual report on
          Form 10-K.
  USNG
          invests in Natural Gas 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
          Natural Gas Related Investments. In pursuing this objective, the primary
          focus
          of the General Partner is the investment in Futures Contracts and the
          management of its investments in short-term obligations of the United States
          of
          two years or less (“Treasuries”), cash and/or cash equivalents for
          margining purposes and as collateral.
  The
          investment objective of USNG is to have the changes in percentage terms
          of the
          units’ NAV reflect the changes in percentage terms of the spot price
          of natural gas delivered at the Henry Hub, Louisiana, as measured by the
          changes
          in the price of the futures contract on natural gas traded on 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 the futures contract will
          be
          the next month to expire, less USNG's expenses.
 2


It
        is not
        the intent of USNG to be operated in a fashion such that its NAV will equal,
        in
        dollar terms, the spot price of natural gas or any particular futures contract
        based on natural gas.USNG seeks to achieve its investment objective by
        investing in a mix of Futures Contracts and Other Natural Gas Related
        Investments such that changes in USNG’s NAV will closely track the changes in
        the price of a specified Futures Contract (“Benchmark Futures
        Contract”). The General Partner believes changes in the price of the
        Benchmark Futures Contract have historically exhibited a close correlation
        with the changes in the spot price of natural gas. On any valuation day (a
        valuation day is any day as of which USNG calculates its NAV), the Benchmark
        Futures Contract is the near month contract for natural gas traded on the
        NYMEX
        unless the near month contract will expire within two weeks of the valuation
        day, in which case the Benchmark Futures Contract is the next month contract
        for
        natural gas on the NYMEX.
  As
        a
        specific benchmark, the General Partner endeavors to place USNG’s trades in
        Futures Contracts and Other Natural Gas-Related Investments and otherwise
        manage
        USNG’s investments so that “A” will be within plus/minus 10 percent of “B”,
        where:
 ·
                A
                    is the average daily change in USNG’s NAV for any period of 30 successive
                    valuation days, i.e., any day as of which USNG calculates its
                    NAV,
                    and
 ·
                B
                    is the average daily change in the price of the Benchmark Futures
                    Contract
                    over the same period.


An
      investment in the units allows both retail and institutional investors to easily
      gain exposure to the natural gas market in a cost-effective manner. The units
      also provide additional means for diversifying an investor’s investments or
      hedging exposure to changes in natural gas prices.


The
        Benchmark Futures Contract will be changed or “rolled” from the near month
        contract to expire to the next month to expire during one day.
  The
          General Partner believes that market arbitrage opportunities will cause
          changes
          in USNG’s unit price on the AMEX to closely track changes in USNG’s NAV. The
          General Partner believes that changes in USNG’s NAV in percentage terms will
          closely track the changes in percentage terms in the Benchmark Futures
          Contract,
          less USNG’s expenses.
  These
        relationships are illustrated in the following diagram:


3
 The
        Price of USNG’s Units Is Expected
        to Correlate Closely
 With
        USNG’S NAV
  USNG’s
        units are traded on the AMEX. The price of
 units
        fluctuates in response to USNG’s NAV and the supply and demand
 pressures
        of the AMEX. Because of certain arbitrage opportunities, the
 General
        Partner believes the price of USNG’s units traded on the
 AMEX
        will
        correlate closely with USNG’s NAV.
   Changes
        in USNG’s NAV Are Expected to
        Correlate Closely With
 Changes
        in the Price of the
        Benchmark
 Futures
        Contract
  The
        General Partner endeavors to invest USNG’s assets as fully as
 possible
        in natural gas Futures Contracts and Other Natural Gas Related
        Investments so that
 changes
        in the NAV closely correlate with the changes in the price of the
 Benchmark
        Futures Contract.
  4
 The
            General Partner employs a “neutral” investment strategy intended to track
            changes in the price of the Benchmark Futures Contract regardless of
            whether the price goes up or goes down. USNG’s “neutral” investment strategy is
            designed to permit investors generally to purchase and sell USNG’s units for the
            purpose of investing indirectly in natural gas in a cost-effective manner,
            and/or to permit participants in the natural gas or other industries
            to hedge
            the risk of losses in their natural gas-related transactions. Accordingly,
            depending on the investment objective of an individual investor, the
            risks
            generally associated with investing in natural gas and/or the risks involved
            in
            hedging may exist. In addition, an investment in USNG involves the risk
            that the
            changes in the price of USNG’s units will not accurately track the changes in
            the Benchmark Futures Contract.
 USNG’s
          total portfolio composition is disclosed each business day that the AMEX
          is open
          for trading on USNG’s website and through the AMEX’s website at
          http://www.amex.com. The website disclosure of portfolio holdings is made
          daily
          and includes, as applicable, the name and value of each Natural Gas Interest,
          the specific types of Other Natural Gas Related Investments and characteristics
          of such Other Natural Gas Related Investments, Treasuries, and the amount
          of
          cash and/or cash equivalents held in USNG’s portfolio. USNG’s website is
          publicly accessible at no charge. USNG’s assets are held in segregation pursuant
          to Commodity Exchange Act (the "CEA") and CFTC regulations.
 
 The
            units issued by USNG may be purchased
            only by Authorized Purchasers only in blocks of 100,000 units called
            Creation Baskets. The amount of the purchase payment for a Creation Basket
            is
            equal to the aggregate NAV of units in the Creation Basket. Similarly,
            Authorized Purchasers may redeem units only in blocks of 100,000 units
            called
            Redemption Baskets. The amount of the redemption proceeds for a Redemption
            Basket is equal to the aggregate NAV of the units in the Redemption Basket.
            The
            purchase price for Creation Baskets and the redemption price for Redemption
            Baskets is the actual NAV calculated at the end of the business day when
            notice
            for a purchase or redemption is received by USNG. The AMEX publishes
            an
            approximate intra-day NAV based on the prior day’s NAV and the current
            price of the Benchmark Futures Contract, but the basket price is determined
            based on the actual NAV at the end of the day.
 While
          USNG issues units only in Creation  Baskets, units may also
          be purchased and sold in much smaller increments on the AMEX. These
          transactions, however, are effected at the bid and ask prices established
          by specialist firm(s). Like any listed security, units of USNG can be purchased
          and sold at any time a secondary market is open.


5


What
          is USNG’s Investment
          Strategy?
  In
          managing USNG’s assets, the General Partner does not use a technical trading
          system that issues buy and sell orders. The General Partner instead employs
          a
          quantitative methodology whereby each time a Creation Basket is sold, the
          General Partner purchases Natural Gas Interests, such as the Benchmark
          Futures Contract, that have an aggregate face amount that approximates
          the
          amount of Treasuries and/or cash received upon the issuance of the Creation
          Basket.
  As
            an
            example, assume that a Creation Basket is sold by USNG, and that USNG’s closing
            NAV per unit is $50.00.  In that case, USNG would receive $5,000,000
            in proceeds from the sale of the Creation Basket ($50 NAV per unit multiplied
            by
            100,000 units, and ignoring the Creation Basket fee of
            $1,000).
  If
            one
            were to assume further that the General Partner wants to invest the entire
            proceeds from the Creation Basket in the Benchmark Futures Contract and
            that the
            face amount of the Benchmark Futures Contract is $59,950, USNG would
            be unable
            to buy the exact number of Benchmark Futures Contracts whose face amount
            equaled
            $5,000,000.  Instead, USNG would be able to purchase 83 Benchmark
            Futures Contracts with an aggregate face amount of $4,975,850. Assuming
            a margin
            requirement equal to 10% of the value of the Benchmark Futures Contract,
            USNG
            would be required to deposit $497,585 in Treasuries and cash with the
            futures
            commission merchant through which the Benchmark Futures Contracts were
            purchased. The remainder of the proceeds from the sale of the Creation
            Basket
            would remain invested in cash, cash equivalents and/or Treasuries as
            determined
            by the General Partner from time to time based on factors such as potential
            calls for margin or anticipated redemptions.
 6
 The
          specific Futures Contracts purchased depend on various factors, including a
          judgment by the General Partner as to the appropriate diversification of
          USNG’s
          investments in futures contracts with respect to the month of expiration,
          and
          the prevailing price volatility of particular contracts. While the General
          Partner has made significant investments in NYMEX futures contracts, as
          USNG reaches certain position limits on the NYMEX, or for
          other reasons, it has also and may continue to invest in Futures Contracts
          traded on other exchanges or invest in Other Natural Gas Related Investments
          such as contracts in the “over-the-counter” market.
  The
          General Partner does not anticipate letting its Futures Contracts expire
          and taking delivery of the underlying natural gas. Instead, the General
          Partner
          will close existing positions when it is determined appropriate to do so
          and
          reinvest the proceeds in new Futures Contracts. Positions may also be
          closed out to meet orders for Redemption Baskets.
  By
          remaining invested as fully as possible in Futures Contracts or Other Natural
          Gas Related Investments, the General Partner believes that the changes
          in
          percentage terms of USNG’s NAV will continue to closely track the changes
          in percentage terms in the prices of the futures contracts in which USNG
          invests. The General Partner believes that certain arbitrage opportunities
          result in the price of the units traded on the AMEX closely tracking the
          NAV of
          USNG.
  What
          are Futures
          Contracts?
  Futures
          Contracts are agreements between two parties. One party agrees to buy natural
          gas from the other party at a later date at a price and quantity agreed
          upon
          when the contract is made. Futures Contracts are traded on futures
          exchanges, including the NYMEX. For
          example, natural gas Futures Contracts traded on the NYMEX trade in units
          of
          10,000 million British Thermal Units (“mmBtu”).  The price of
          natural gas Futures Contracts traded on the NYMEX are priced by floor brokers
          and other exchange members both through an “open outcry” of offers to purchase
          or sell the contracts and through an electronic, screen-based system that
          determines the price by matching electronically offers to purchase and
          sell.
  Certain
          typical and significant characteristics of Futures Contracts are discussed
          below. Additional risks of investing in Futures Contracts are included in
“What are the Risk Factors Involved with an Investment in USNG?”
 Impact
            of Accountability Levels,
            Position Limits and Price Fluctuation Limits . Futures
            Contracts include typical and significant characteristics. Most significantly,
            the CFTC and U.S. designated contract markets such as the NYMEX have
            established
            accountability levels and position limits on the maximum net long or
            net
            short Futures Contracts in commodity interests that any person or group of
            persons under common trading control (other than as a hedge, which an
            investment
            in USNG is not) may hold, own or control. The net position is the difference
            between an individual or firm’s open long contracts and open short contracts in
            any one commodity. In addition, most U.S. futures exchanges, such as
            the NYMEX,
            limit the daily price fluctuation for Futures Contracts.
 7
 
 The
              accountability levels for the Benchmark Futures Contract and
              other Futures Contracts traded on the NYMEX are not a fixed ceiling, but
              rather a threshold above which the NYMEX may exercise greater scrutiny
              and
              control over an investor’s positions. The current accountability level for
              investments at any one time in natural gas Futures Contracts (including
              investments in the Benchmark Futures Contract) is 12,000 contracts. If USNG
              exceeds this accountability level for investments in natural gas Futures
              Contracts, the NYMEX will monitor USNG’s exposure and ask for further
              information on USNG’s activities, including the total size of all positions,
              investment and trading strategy, and the extent of USNG’s liquidity resources.
              If deemed necessary by the NYMEX, it could also order USNG to reduce
              its
              position back to the accountability level. As of December 31, 2007,
              USNG held
              7,924 natural gas Futures Contracts traded on the NYMEX.
 If
            the
            NYMEX orders USNG to reduce its position back to the accountability level,
            or to
            an accountability level that the NYMEX deems appropriate for USNG, such
            an
            accountability level may impact the mix of investments in Natural Gas
            Interests
            made by USNG. To illustrate, assume that the price of the Benchmark Futures
            Contract and the unit price of USNG are each $10, and that the NYMEX
            has
            determined that USNG may not own more than 12,000 contracts in natural
            gas
            Futures Contracts. In such case, USNG could invest up to $1.2 billion
            of its
            daily net assets in the Benchmark Futures Contracts (i.e., $10 per contract
            multiplied by 10,000 (a Benchmark Futures Contract is a contract for 10,000
            million British Thermal units) multiplied by 12,000 contracts) before
            reaching
            the accountability level imposed by the NYMEX. Once the daily net assets
            of the
            portfolio exceed $1.2 billion in the Benchmark Futures Contract, the
            portfolio may not be able to make any further investments
            in
            the Benchmark Futures Contract, depending on whether the NYMEX imposes
            limits. If the NYMEX does impose limits at the $1.2 billion level (or
            another
            level), USNG anticipates that it will invest the majority of its assets
            above
            that level in a mix of other Futures Contracts or Other Natural Gas Related
            Investments.
  In
            addition to accountability levels, the NYMEX imposes position limits
            on
            contracts held in the last few days of trading in the near month contract
            to
            expire. It is unlikely that USNG will run up against such position limits
            because USNG’s investment strategy is to change or "roll" from the near month
            contract beginning two weeks prior to expiration of the
            contract.
  U.S.
            futures exchanges, including the NYMEX, also limit the amount of price
            fluctuation for Futures Contracts. For example, the NYMEX imposes a $3.00
            per mmBtu ($30,000 per contract) price fluctuation limit for natural
            gas Futures
            Contracts. This limit is initially based off of the previous trading
            day’s
            settlement price. If any Benchmark Futures Contract is traded, bid, or
            offered at the limit for five minutes, trading is halted for five minutes.
            When
            trading resumes, it begins at the point where the limit was imposed and
            the
            limit is reset to be $3.00 per mmBtu in either direction of that point.
            If
            another halt were triggered, the market would continue to be expanded
            by $3.00
            per mmBtu in either direction after each successive five-minute trading
            halt.
            There is no maximum price fluctuation limit during any one trading
            session.
 8
 
 Examples
              of the position and price limits imposed are as follows:
 Futures
                            Contract
                        
                        Position
                            Accountability
                          Levels
                            and Limits
                        
                        Maximum
                            Daily
                          Price
                            FluctuationNYMEX
                            Natural Gas
                        
                        Any
                            one month/all months: 12,000 net futures, but not to
                            exceed 1,000
                            contracts in the last three days of trading in the spot
                            month.
                        
                        $3.00
                            per mmBtu ($30,000 per contract) for all months. If any
                            contract is
                            traded, bid, or offered at the limit for five minutes,
                            trading is halted
                            for five minutes. When trading resumes, the limit is
                            expanded by $3.00 per
                            mmBtu in either direction. If another halt were triggered,
                            the market
                            would continue to be expanded by $3.00 per mmBtu in either
                            direction after
                            each successive five-minute trading halt. There will
                            be no maximum price
                            fluctuation limits during any one trading
                            session.NYMEX Light,
                            Sweet Crude Oil
                        
                        Any
                            one month/all months: 20,000 net futures, but not to
                            exceed 3,000
                            contracts in the last three days of trading in the spot
                            month.
                        
                        $10.00
                            per barrel ($10,000 per contract) for all months. If
                            any contract is
                            traded, bid, or offered at the limit for five minutes,
                            trading is halted
                            for five minutes. When trading resumes, the limit is
                            expanded by $10.00
                            per barrel in either direction. If another halt were
                            triggered, the market
                            would continue to be expanded by $10.00 per barrel in
                            either direction
                            after each successive five-minute trading halt. There
                            will be no maximum
                            price fluctuation limits during any one trading
                            session.NYMEX
                            Heating Oil
                        
                        Any
                            one month/all months 7,000 net futures but not to exceed
                            1,000 contracts
                            in the last three days of trading in the spot month
                        
                        $0.25
                            per gallon ($10,500 per contract) for all months. If
                            any contract is
                            traded, bid, or offered at the limit for five minutes,
                            trading is halted
                            for five minutes. When trading resumes, the limit is
                            expanded by $0.25 per
                            gallon in either direction. If another halt were triggered,
                            the market
                            would continue to be expanded by $0.25 per gallon in
                            either direction
                            after each successive five-minute trading halt. There
                            will be no maximum
                            price fluctuation limits during any one trading
                            session.NYMEX
                            Gasoline
                        
                        Any
                            one month/all months: 7,000 net futures,  but not to exceed 1,000
                            contracts in the last three days of trading in the spot
                            month
                        
                        $0.25
                            per gallon ($10,500 per contract) for all months. If
                            any contract is
                            traded, bid, or offered at the limit for five minutes,
                            trading is halted
                            for five minutes. When trading resumes, the limit is
                            expanded by $0.25 per
                            gallon in either direction. If another halt were triggered,
                            the market
                            would continue to be expanded by $0.25 per gallon in
                            either direction
                            after each successive five-minute trading halt. There
                            will be no maximum
                            price fluctuation limits during any one trading
                            session.ICE
                            UK Natural Gas Futures
                        
                        There
                            are no position limits.
                        
                        There
                            is no maximum daily price fluctuation limit.ICE
                            Brent Crude Futures
                        
                        There
                            are no position limits.
                        
                        There
                            is no maximum daily price fluctuation limit.ICE
                            WTI Crude Futures
                        
                        There
                            are no position limits.
                        
                        There
                            is no maximum daily price
                            fluctuation.
 9
 
 Price
          Volatility. Despite
          daily price limits, the price volatility of Futures Contracts generally has
          been historically greater than that for traditional securities such as
          stocks
          and bonds. Price volatility often is greater day-to-day as opposed to
          intra-day. Futures Contracts tend to be more volatile than stocks and bonds
          because price movements of natural gas are more currently and directly
          influenced by economic factors for which current data is available and
          are
          traded by natural gas futures traders throughout the day. These economic
          factors
          include: changes in interest rates; governmental, agricultural, trade,
          fiscal,
          monetary and exchange control programs and policies; weather and climate
          conditions; changing supply and demand relationships; changes in balances
          of
          payments and trade; U.S. and international rates of inflation; currency
          devaluations and revaluations; U.S. and international political and economic
          events; and changes in philosophies and emotions of market participants.
          Because
          USNG invests a significant portion of its assets in Futures Contracts, the
          assets of USNG, and therefore the prices of USNG units, may be subject
          to
          greater volatility than traditional securities.
 Marking-to-Market
          Futures
          Positions. Futures Contracts are marked to market at the end of each
          trading day and the margin required with respect to such contracts is adjusted
          accordingly. This process of marking-to-market is designed to prevent losses
          from accumulating in any futures account. Therefore, if USNG’s futures positions
          have declined in value, USNG may be required to post variation margin to
          cover this decline. Alternatively, if USNG futures positions have increased
          in
          value, this increase will be credited to USNG’s account.
  What
          is the Natural Gas Market and
          the Petroleum-Based Fuel Market?
  Natural
          Gas.  Natural gas accounts for almost a quarter of U.S. energy
          consumption. The price of natural gas is established by the supply and
          demand
          conditions in the North American market, and more particularly, in the
          main
          refining center of the U.S. Gulf Coast. The natural gas market essentially
          constitutes an auction, where the highest bidder wins the supply. When
          markets
          are “strong” (i.e., when demand is high and/or supply is low), the bidder must
          be willing to pay a higher premium to capture the supply. When markets
          are
“weak” (i.e., when demand is low and/or supply is high), a bidder may choose not
          to outbid competitors, waiting instead for later, possibly lower priced,
          supplies. Demand for natural gas by consumers, as well as agricultural,
          manufacturing and transportation industries, determines overall demand
          for
          natural gas. Since the precursors of product demand are linked to economic
          activity, natural gas demand will tend to reflect economic conditions.
          However,
          other factors such as weather significantly influence natural gas
          demand.
 
 The
          NYMEX
          is the world’s largest physical commodity futures exchange and the dominant
          market for the trading of energy and precious metals. The Benchmark Futures
          Contract trades in units of 10,000 mmBtu and is based on delivery at the
          Henry
          Hub in Louisiana, the nexus of 16 intra- and interstate natural gas pipeline
          systems that draw supplies from the region’s prolific gas deposits. The
          pipelines serve markets throughout the U.S. East Coast, the Gulf Coast,
          the
          Midwest, and up to the Canadian border. Because of the volatility of natural
          gas
          prices, a vigorous basis market has developed in the pricing relationships
          between the Henry Hub and other important natural gas market centers in
          the
          continental United States and Canada. The NYMEX makes available for trading
          a
          series of basis swap futures contracts that are quoted as price differentials
          between approximately 30 natural gas pricing points and the Henry Hub.
          The basis
          contracts trade in units of 2,500 mmBtu on the NYMEX ClearPort® trading
          platform. The NYMEX ClearPort® is an electronic trading platform through which a
          slate of energy futures contracts are available for competitive trading.
          Transactions can also be consummated off-NYMEX and submitted to the NYMEX
          for
          clearing via the NYMEX ClearPort® clearing website as an exchange of futures for
          physicals or an exchange of futures for swaps transactions.
 
 Light,
          Sweet Crude
          Oil.  Crude oil is the world’s most actively traded commodity.
          The Futures Contracts for light, sweet crude oil that are traded on the
          NYMEX are the world’s most liquid forum for crude oil trading, as well as the
          most liquid futures contracts on a physical commodity. Due to the liquidity
          and
          price transparency of oil Futures Contracts, they are used as a principal
          international pricing benchmark. The Futures Contracts for light, sweet
          crude oil trade on the NYMEX in units of 1,000 U.S. barrels (42,000 gallons)
          and, if not closed out before maturity, will result in delivery of oil
          to
          Cushing, Oklahoma, which is also accessible to the world market by two
          major
          interstate petroleum pipeline systems.
  Demand
          for petroleum products by consumers, as well as agricultural, manufacturing
          and
          transportation industries, determines demand for crude oil by refiners.
          Since
          the precursors of product demand are linked to economic activity, crude
          oil
          demand will tend to reflect economic conditions. However, other factors
          such as
          weather also influence product and crude oil demand.
  Crude
          oil
          supply is determined by both economic and political factors. Oil prices
          (along
          with drilling costs, availability of attractive prospects for drilling,
          taxes
          and technology, among other factors) determine exploration and development
          spending, which influence output capacity with a lag. In the short run,
          production decisions by Organization of Petroleum Exporting Countries ("OPEC")
          also affect supply and prices. Oil export embargoes and the current conflict
          in
          Iraq represent other routes through which political developments move the
          market. It is not possible to predict the aggregate effect of all or any
          combination of these factors.
  In
          Europe, Brent crude oil is the standard for futures contracts traded on
          the ICE
          Futures, an electronic marketplace for energy trading and price discovery.
          Brent
          crude oil is the price reference for two-thirds of the world’s traded
          oil.
 10
 Heating
          Oil.Heating oil,
          also known as No. 2 fuel oil, accounts for 25% of the yield of a barrel
          of crude
          oil, the second largest “cut” from oil after gasoline. The heating oil Futures
          Contract, listed and traded at the NYMEX, trades in units of 42,000 gallons
          (1,000 barrels) and is based on delivery in the New York harbor, the principal
          cash market center. The price of heating oil has historically been
          volatile.
  Gasoline.Gasoline
          is the
          largest single volume refined product sold in the U.S. and accounts for
          almost
          half of national oil consumption. The gasoline Futures Contract, listed
          and
          traded on the NYMEX, trades in units of 42,000 gallons (1,000 barrels)
          and is
          based on delivery at petroleum products terminals in the New York harbor,
          the
          major East Coast trading center for imports and domestic shipments from
          refineries in the New York harbor area or from the Gulf Coast refining
          centers.
          The price of gasoline has historically been volatile.
  Why
          Does USNG Purchase and
          Sell Futures Contracts?
  USNG’s
          investment objective is to have the changes in percentage terms of the
          units’
NAV reflect the changes in percentage terms of the Benchmark Futures
          Contract, less USNG’s expenses. USNG invests primarily in Futures
          Contracts. USNG seeks to have its aggregate NAV approximate at all times
          the
          aggregate face amount of the Futures Contracts and Other Natural Gas
          Related Investments it holds.
  Other
          than investing in Futures Contracts and Other Natural Gas Related
          Investments, USNG only invests in assets to support these investments in
          Natural
          Gas Interests. At any given time, most of USNG’s investments are in Treasuries,
          cash and/or cash equivalents that serve as segregated assets supporting
          USNG’s positions in Futures Contracts and Other Natural Gas Related
          Investments. For example, the purchase of a Futures Contract with a stated
          value
          of $10 million would not require USNG to pay $10 million upon entering
          into the
          contract; rather, only a margin deposit, generally of 5% to 10% of the
          stated
          value of the Futures Contract, would be required. To secure
          its Futures Contract obligations, USNG would deposit the required
          margin with the futures commission merchant and would separately hold,
          through
          its Custodian, Treasuries, cash and/or cash equivalents in an amount
          equal to the balance of the current market value of the contract, which
          at the
          contract’s inception would be $10 million minus the amount of the deposit, or
          $9.5 million (assuming a 5% margin).
  As
          a
          result of the foregoing, between 5% and 10% of USNG’s assets are held as margin
          in segregated accounts with the futures commission merchant. In addition
          to the
          Treasuries or cash it posts with the futures commission merchant for
          the Futures Contracts it owns, USNG holds through the Custodian,
          Treasuries, cash and/or cash equivalents that can be posted as margin or as
          collateral to support its over-the-counter contracts. USNG earns interest
          income
          from the Treasuries and/or
          cash equivalents that it purchases, and on the cash it holds through the
          Custodian. The earned interest income increases the NAV and limited
          partners’ capital contribution accounts. USNG reinvests the earned interest
          income, holds it in cash, and uses it to pay its expenses. When reinvesting
          the
          earned interest income, USNG makes investments that are consistent with
          its
          investment objectives.
 11
 What
          is the Flow of
          Units?


What
        are the Trading Policies of
        USNG?
  Liquidity
  USNG
        invests only in Futures Contracts and Other Natural Gas Related Investments
        that are traded in sufficient volume to permit, in the opinion of the General
        Partner, ease of taking and liquidating positions in these financial
        interests.
  Spot
        Commodities
  While
        natural gas Futures Contracts traded on the NYMEX can be physically settled,
        USNG does not intend to take or make physical delivery. However, USNG may
        from
        time to time trade in Other Natural Gas Related Investments, including
        contracts based on the spot price of natural gas.
 12
 Leverage
  While
        USNG’s historical ratio of margin to total assets has generally ranged from
        5% to 10%, the General Partner endeavors to have the value of USNG’s Treasuries,
        cash and/or cash equivalents, whether held by USNG or posted as margin or
        collateral at all times, approximate the aggregate face value of USNG's
        obligations under its Futures Contracts and Other Natural Gas Related
        Investments.
  Borrowings
  Borrowings
        are not used by USNG, unless USNG is required to borrow money in the event
        of
        physical delivery, USNG trades in cash commodities, or for short-term needs
        created by unexpected redemptions. USNG maintains the value of its Treasuries,
        cash and/or cash equivalents whether held by USNG or posted as margin or
        collateral to at all times approximate the aggregate face value of its
        obligations under USNG's Futures Contracts and Other Natural Gas Related
        Investments. USNG has not established and does not plan to establish credit
        lines.
  Pyramiding
  USNG
        has
        not and will not employ the technique, commonly known as pyramiding, in which
        the speculator uses unrealized profits on existing positions as variation
        margin
        for the purchase or sale of additional positions in the same or another
        commodity interest.
  Who
        are the Service
        Providers?
  BBH&Co.
        is the registrar and transfer agent for the units. BBH&Co. is also the
        Custodian for USNG. In this capacity, BBH&Co. holds USNG’s Treasuries,
        cash and/or cash equivalents pursuant to a custodial agreement. In
        addition, BBH&Co. performs certain administrative and accounting services
        for USNG and prepares certain Securities and Exchange Commission ("SEC")
        and
        CFTC reports on behalf of USNG. The General Partner pays BBH&Co. a fee
        for these services.
  USNG
        also
        employs a Marketing Agent. The General Partner pays the Marketing Agent
        a marketing fee of $425,000 per annum plus an incentive fee as follows:
        0.00% on USNG’s assets from $0-500 million; 0.04% on USNG’s assets from $500
        million-$4 billion; and 0.03% on USNG’s assets in excess of $4 billion;
        provided, however, that in no event may the aggregate compensation paid to
        the
        Marketing Agent and any affiliate of the General Partner for
        distribution-related services in connection with the offering of units exceed
        ten percent (10%) of the gross proceeds of the offering.
  UBS
        Securities LLC (“UBS Securities”) is USNG’s futures commission merchant. USNG
        and UBS Securities have entered into an Institutional Futures Client Account
        Agreement. This Agreement requires UBS Securities to provide services to
        USNG in
        connection with the purchase and sale of Natural Gas Interests that may be
        purchased or sold by or through UBS Securities for USNG’s account. USNG pays the
        fees of UBS Securities.
  UBS
        Securities’ principal business address is 677 Washington Blvd, Stamford, CT
        06901. UBS Securities is a futures clearing broker for USNG. UBS Securities
        is
        registered in the U.S. with the Financial Industry Regulatory
        Authority ("FINRA") as a broker-dealer and with the CFTC as a futures
        commission merchant. UBS Securities is a member of various U.S. futures and
        securities exchanges.
  UBS
        Securities was involved in the 2003 Global Research Analyst Settlement. This
        settlement was part of the global settlement that UBS Securities and nine
        other
        firms reached with the SEC, FINRA, New York Stock Exchange (the "NYSE") and
        various state regulators. As part of the settlement, UBS Securities agreed
        to pay $80,000,000 divided among retrospective relief, for procurement of
        independent research and for investor education. UBS Securities has also
        undertaken to adopt enhanced policies and procedures reasonably designed
        to
        address potential conflicts of interest arising from research
        practices.
  On
          June
          27, 2007, the Office of the Secretary of the Commonwealth of Massachusetts
          filed
          an administrative complaint (the “Complaint”) and notice of adjudicatory
          proceeding, captioned In The Matter of UBS Securities, LLC, Docket No.
          E-2007-0049, which alleges, in sum and substance, that UBS Securities has
          been
          violating the Massachusetts Uniform Securities Act (the “MUSA”) and related
          regulations by providing the advisers for certain hedge funds with gifts
          and
          gratuities in the form of below market office rents, personal loans with
          below
          market interest rates, event tickets, and other perks, in order to induce
          those
          hedge fund advisers to increase or retain their level of prime brokerage
          fees
          paid to UBS Securities. The Secretary seeks to require UBS Securities to
          permanently cease and desist from conduct that violates the MUSA and
          regulations, to censure UBS Securities, to require UBS Securities to pay
          an
          administrative fine of an unspecified amount, and to find as fact the
          allegations of the Complaint.
 13
 Further,
        UBS Securities, like most full service investment banks and broker-dealers,
        receives inquiries and is sometimes involved in investigations by the SEC,
        FINRA, NYSE and various other regulatory organizations, exchanges and
        government agencies. UBS Securities fully cooperates with the authorities
        in all
        such requests. UBS Securities regularly discloses
        to FINRA arbitration awards, disciplinary action and regulatory events. These
        disclosures are publicly available on FINRA’s website at www.finra.org. Actions
        with respect to UBS Securities’ futures commission merchant business are
        publicly available on the website of the NFA (www.nfa.futures.org).
  UBS
        Securities acts only as clearing broker for USNG and, as such, is paid
        commissions for executing and clearing trades on behalf of USNG. UBS Securities
        neither acts in any supervisory capacity with respect to the General Partner
        nor
        participates in the management of the General Partner or USNG.
  Currently,
        the General Partner does not employ commodity trading advisors. If, in the
        future, the General Partner does employ commodity trading advisors, it will
        choose each advisor based on arms-length negotiations and will consider the
        advisor’s experience, fees and reputation.
  Fees
          of USNG
 Fees
          and Compensation Arrangements with the General Partner and Non-Affiliated
          Service Providers*
 
 Service
                    Provider
                Compensation
                    Paid by the General PartnerBrown
                    Brothers Harriman & Co., Custodian and Administrator
                Minimum
                    amount of $125,000 annually* for its custody, fund accounting
                    and fund
                    administration services rendered to all funds, as well as a $25,000
                    annual
                    fee for its transfer agency services. In addition, an asset-based
                    charge
                    of (a) 0.06% for the first $500 million of USOF, USNG, US12OF and
                    USG's combined assets, (b) 0.0465% for USOF, USNG, US12OF and USG’s
                    combined assets greater than $500 million but less than $1 billion,
                    and
                    (c) 0.035% once USOF, USNG, US12OF and USG’s combined net assets
                    exceed $1 billion.**ALPS
                    Distributors, Inc.,
                  Marketing
                    Agent
                0.06%
                    on assets up to $3 billion; 0.04% on assets in excess of $3
                    billion.**
  *  
          The annual minimum amount will not apply if the asset-based charge for
          all
          accounts in the aggregate exceeds $125,000. The General Partner also will
          pay
          transaction charge fees to BBH&Co., ranging from $7.00 to $15.00 per
          transaction for the funds.
  **
          The
          General Partner pays this compensation.
  Fees
          and Compensation Arrangements
          between USNG and Non-Affiliated Service Providers***
 
 Service
                    Provider
                Compensation
                    Paid by USNGUBS
                  Securities LLC, Futures Commission Merchant
                Approximately
                  $4.00 per buy or sellNon-Affiliated
                    Brokers
                Approximately
                    0.20% of assets
  ***USNG
          pays this compensation.
 14
 NYMEX
          Licensing Fee****
 
 Assets
                Licensing
                    FeeFirst
                    $1,000,000,000
                0.04%
                    of NAVAfter
                    the first $1,000,000,000
                0.02%
                    of NAV
  ****
          Fees are calculated
          on a daily basis (accrued at 1/365 of the applicable percentage of NAV
          on that
          day) and paid on a monthly basis.  USNG is responsible for its pro rata
          share of the assets held by USOF, USNG, US12OF and USG as well as other
          funds managed by the General Partner, including US12NG and USHO, when and
          if
          such funds commence operations.
  Compensation
          to the General Partner
 
 Assets
                Management
                    FeeFirst
                    $1,000,000,000
                0.60%
                    of NAVAfter
                    the first $1,000,000,000
                0.50%
                    of NAV
  Form
          of Units
  Registered
          Form .
          Units
          are issued in registered form in accordance with the LP Agreement. The
          Administrator has been appointed registrar and transfer agent for the purpose
          of
          transferring units in certificated form. The Administrator keeps a record
          of all
          holders of the units in the registry (the “Register”). The General Partner
          recognizes transfers of units in certificated form only if done in accordance
          with the LP Agreement. The beneficial interests in such units are held
          in
          book-entry form through participants and/or accountholders in the Depository
          Trust Company ("DTC").
  Book
          Entry .
          Individual certificates are not issued for the units. Instead, units are
          represented by one or more global certificates, which are deposited by
          the
          Administrator with DTC and registered in the name of Cede & Co., as nominee
          for DTC. The global certificates evidence all of the units outstanding
          at any
          time. Unitholders are limited to (1) participants in DTC such as banks,
          brokers, dealers and trust companies ("DTC Participants"), (2) those who
          maintain, either directly or indirectly, a custodial relationship with
          a DTC
          Participant ("Indirect Participants"), and (3) those banks, brokers,
          dealers, trust companies and others who hold interests in the units through
          DTC
          Participants or Indirect Participants, in each case who satisfy the requirements
          for transfers of units. DTC Participants acting on behalf of investors
          holding
          units through such participants’ accounts in DTC follow the delivery
          practice applicable to securities eligible for DTC’s Same-Day Funds Settlement
          System. Units are credited to DTC Participants’ securities accounts following
          confirmation of receipt of payment.
  DTC .
          DTC is
          a limited purpose trust company organized under the laws of the State of
          New
          York and is a member of the Federal Reserve System, a “clearing corporation”
within the meaning of the New York Uniform Commercial Code and a “clearing
          agency” registered pursuant to the provisions of Section 17A of the Securities
          Exchange Act of 1934, as amended (the “Exchange Act”). DTC holds securities for
          DTC Participants and facilitates the clearance and settlement of transactions
          between DTC Participants through electronic book-entry changes in accounts
          of
          DTC Participants.
 15
 Transfer
          of Units
  Transfers
          of Units Only Through
          DTC. The units are only transferable through the book-entry
          system
          of DTC. Limited partners who are not DTC Participants may transfer their
          units
          through DTC by instructing the DTC Participant holding their units (or
          by
          instructing the Indirect Participant or other entity through which their
          units
          are held) to transfer the units. Transfers are made in accordance with
          standard
          securities industry practice.
  Transfers
          of interests in units with DTC are made in accordance with the usual rules
          and
          operating procedures of DTC and the nature of the transfer. DTC has established
          procedures to facilitate transfers among the participants and/or accountholders
          of DTC. Because DTC can only act on behalf of DTC Participants, who in
          turn act
          on behalf of Indirect Participants, the ability of a person or entity having
          an
          interest in a global certificate to pledge such interest to persons or
          entities
          that do not participate in DTC, or otherwise take actions in respect of
          such
          interest, may be affected by the lack of a definitive security in respect
          of
          such interest.
  DTC
          has
          advised us that it takes any action permitted to be taken by a unitholder
          (including, without limitation, the presentation of a global certificate
          for
          exchange) only at the direction of one or more DTC Participants in whose
          account
          with DTC interests in global certificates are credited and only in respect
          of
          such portion of the aggregate principal amount of the global certificate
          as to
          which such DTC Participant or Participants has or have given such
          direction.
  Transfer/Application
          Requirements. All purchasers of USNG’s units, and potentially any
          purchasers of units in the future, who wish to become limited partners
          or other
          record holders and receive cash distributions, if any, or have certain
          other
          rights, must deliver an executed transfer application in which the purchaser
          or
          transferee must certify that, among other things, he, she or it agrees
          to be
          bound by USNG’s LP Agreement and is eligible to purchase USNG’s securities. Each
          purchaser of units must execute a transfer application and certification.
          The
          obligation to provide the form of transfer application is imposed on the
          seller
          of units or, if a purchase of units is made through an exchange, the form
          may be
          obtained directly through USNG. Further, the General Partner may request
          each
          record holder to furnish certain information, including that holder’s
          nationality, citizenship or other related status. A record holder is a
          unitholder that is, or has applied to be, a limited partner. An investor
          who is
          not a U.S. resident may not be eligible to become a record holder or one
          of the
          USNG’s limited partners if that investor’s ownership would subject USNG to the
          risk of cancellation or forfeiture of any of USNG’s assets under any federal,
          state or local law or regulation. If the record holder fails to furnish
          the
          information or if the General Partner determines, on the basis of the
          information furnished by the holder in response to the request, that such
          holder
          is not qualified to become one of USNG’s limited partners, the General Partner
          may be substituted as a holder for the record holder, who will then be
          treated
          as a non-citizen assignee, and USNG will have the right to redeem those
          securities held by the record holder.
  A
          transferee’s broker, agent or nominee may complete, execute and deliver a
          transfer application and certification. USNG may, at its discretion, treat
          the
          nominee holder of a unit as the absolute owner. In that case, the beneficial
          holder’s rights are limited solely to those that it has against the nominee
          holder as a result of any agreement between the beneficial owner and the
          nominee
          holder.
  A
          person
          purchasing USNG’s existing units, who does not execute a transfer application
          and certify that the purchaser is eligible to purchase those securities
          acquires
          no rights in those securities other than the right to resell those securities.
          Whether or not a transfer application is received or the consent of the
          General
          Partner obtained, USNG's units are securities and are transferable according
          to
          the laws governing transfers of securities.
 16
 Any
          transfer of units will not be recorded by the transfer agent or recognized
          by
          the General Partner unless a completed transfer application is delivered
          to the
          General Partner or the Administrator. When acquiring units, the transferee
          of
          such units that completes a transfer application will:
  · be
          an
          assignee until admitted as a substituted limited partner upon the consent
          and
          sole discretion of the General Partner and the recording of the assignment
          on
          the books and records of the partnership;
 · automatically
          request admission as a substituted limited partner;
 · agree
          to
          be bound by the terms and conditions of, and execute, the LP
          Agreement;
 · represent
          that such transferee has the capacity and authority to enter into the LP
          Agreement;
 · grant
          powers of attorney to the General Partner and any liquidator of USNG;
          and
 · make
          the
          consents and waivers contained in the LP Agreement.
  An
          assignee will become a limited partner in respect of the transferred units
          upon
          the consent of the General Partner and the recordation of the name of the
          assignee on our books and records. Such consent may be withheld in the
          sole
          discretion of the General Partner.
  If
          consent of the General Partner is withheld, such transferee shall be an
          assignee. An assignee shall have an interest in the partnership equivalent
          to
          that of a limited partner with respect to allocations and distributions,
          including, without limitation, liquidating distributions, of the partnership.
          With respect to voting rights attributable to units that are held by assignees,
          the General Partner shall be deemed to be the limited partner with respect
          thereto and shall, in exercising the voting rights in respect of such units
          on
          any matter, vote such units at the written direction of the assignee who
          is the
          recordholder of such units. If no such written direction is received, such
          units
          will not be voted. An assignee shall have no other rights of a limited
          partner.
  Until
          a
          unit has been transferred on USNG's books, we and the transfer agent may
          treat
          the record holder of the unit as the absolute owner for all purposes, except
          as
          otherwise required by law or stock exchange regulations.
  Withdrawal
          of Limited
          Partners
  As
          discussed in the LP Agreement, if the General Partner gives at least fifteen
          (15) days’ written notice to a limited partner, then the General Partner may for
          any reason, in its sole discretion, require any such limited partner to
          withdraw
          entirely from the partnership or to withdraw a portion of its partner capital
          account. If the General Partner does not give at least fifteen (15) days’
written notice to a limited partner, then it may only require withdrawal
          of all
          or any portion of the capital account of any limited partner in the following
          circumstances: (i) the unitholder made a misrepresentation to the General
          Partner in connection with its purchase of units; or (ii) the limited
          partner’s ownership of units would result in the violation of any law or
          regulations applicable to the partnership or a partner. In these circumstances,
          the General Partner without notice may require the withdrawal at any time,
          or
          retroactively. The limited partner thus designated shall withdraw from
          the
          partnership or withdraw that portion of its partner capital account specified,
          as the case may be, as of the close of business on such date as determined
          by
          the General Partner. The limited partner thus designated shall be deemed
          to have
          withdrawn from the partnership or to have made a partial withdrawal from
          its
          partner capital account, as the case may be, without further action on
          the part
          of the limited partner and the provisions of the LP Agreement shall
          apply.
 17
 Calculating
          NAV
  USNG’s
          NAV is calculated by:
  ·
                Taking
                    the current market value of its total
                    assets
 ·
                Subtracting
                    any liabilities
  The
          Administrator calculates the NAV of USNG once each trading day. The NAV
          for a
          particular trading day is released after 4:15 p.m. New York time. It calculates
          the NAV as of the earlier of the close of the NYSE or 4:00 p.m. New York
          time.
          Trading on the AMEX typically closes at 4:15 p.m. New York time. USNG 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 USNG investments as of the earlier of
          the
          close of the NYSE or 4:00 p.m. New York time.
  In
          addition, in order to provide updated information relating to USNG for
          use by
          investors and market professionals, the AMEX calculates and disseminates
          throughout the trading day an updated indicative fund value. The indicative
          fund
          value is calculated by using the prior day’s closing NAV per unit of USNG as a
          base and updating that value throughout the trading day to reflect changes
          in
          the most recently reported trade price for the Benchmark Futures Contracts
          on the NYMEX. The prices reported for the active Benchmark Futures Contract
          month are adjusted based on the prior day’s spread differential between
          settlement values for that contract and the spot month contract. In the
          event
          that the spot month contract is also the active contract, the last sale
          price
          for the active contract is not adjusted. The indicative fund value unit
          basis
          disseminated during AMEX trading hours should not be viewed as an actual
          real
          time update of the NAV, because the NAV is calculated only once at the
          end of
          each trading day.
  The
          indicative fund value is disseminated on a per unit basis every 15 seconds
          during regular AMEX trading hours of 9:30 a.m. New York time to 4:15 p.m.
          New
          York time. The normal trading hours of the NYMEX are 10:00 a.m. New York
          time to
          2:30 p.m. New York time. This means that there is a gap in time at the
          beginning
          and the end of each day during which USNG’s units are traded on the AMEX, but
          real-time NYMEX trading prices for futures contracts traded on the NYMEX
          are not available. As a result, during those gaps there is no update to
          the
          indicative fund value.
  The
          AMEX
          disseminates the indicative fund value through the facilities of CTA/CQ
          High
          Speed Lines. In addition, the indicative fund value is published on the
          AMEX's
          website and is available through on-line information services such as Bloomberg
          and Reuters.
  Dissemination
          of the indicative fund value provides additional information that is not
          otherwise available to the public and is useful to investors and market
          professionals in connection with the trading of USNG units on the AMEX.
          Investors and market professionals are able throughout the trading day
          to
          compare the market price of USNG and the indicative fund value. If the
          market
          price of USNG units diverges significantly from the indicative fund value,
          market professionals have an incentive to execute arbitrage trades. For
          example, if USNG appears to be trading at a discount compared to the indicative
          fund value, a market professional could buy USNG units on the AMEX and
          sell
          short futures contracts. Such arbitrage trades can tighten the tracking
          between the market price of USNG and the indicative fund value and thus
          can be
          beneficial to all market participants.
  In
          addition, other Futures Contracts, Other Natural Gas Related Investments
          and Treasuries held by USNG are valued by the Administrator, using rates
          and
          points received from client approved third party vendors (such as Reuters
          and WM
          Company) and advisor quotes. These investments are not included in the
          indicative value. The indicative fund value is based on the prior day’s NAV and
          moves up and down solely according to changes in the average of the prices
          of
          the Benchmark Futures Contracts for natural gas traded on the
          NYMEX.
 18
 Creation
          and Redemption of
          Units
  USNG
          creates and redeems units from time to time, but only in one or more Creation
          Baskets or Redemption Baskets. The creation and redemption of baskets are
          only
          made in exchange for delivery to USNG or the distribution by USNG of the
          amount
          of Treasuries and any cash represented by the baskets being created or
          redeemed,
          the amount of which is based on the combined NAV of the number of units
          included
          in the baskets being created or redeemed determined as of 4:00 p.m. New
          York
          time on the day the order to create or redeem baskets is properly
          received.
  Authorized
          Purchasers are the only persons that may place orders to create and redeem
          baskets. Authorized Purchasers must be (1) registered broker-dealers or
          other
          securities market participants, such as banks and other financial institutions,
          that are not required to register as broker-dealers to engage in securities
          transactions as described below, and (2) DTC Participants. To become an
          Authorized Purchaser, a person must enter into an Authorized Purchaser
          Agreement
          with the General Partner. The Authorized Purchaser Agreement provides the
          procedures for the creation and redemption of baskets and for the delivery
          of
          the Treasuries and any cash required for such creations and redemptions.
          The
          Authorized Purchaser Agreement and the related procedures attached thereto
          may
          be amended by USNG, without the consent of any limited partner or unitholder
          or
          Authorized Purchaser. Authorized Purchasers pay a transaction fee of $1,000
          to
          USNG for each order they place to create or redeem one or more baskets.
          Authorized Purchasers who make deposits with USNG in exchange for baskets receive
          no fees, commissions or other form of compensation or inducement of any
          kind
          from either USNG or the General Partner, and no such person has any obligation
          or responsibility to the General Partner or USNG to effect any sale or
          resale of
          units. As of December 31, 2007, 4 Authorized Purchasers had entered into
          agreements with USNG to purchase Creation Baskets.
  Certain
            Authorized Purchasers are expected to have the facility to participate
            directly
            in the physical natural gas market and the natural gas futures market.
            In some
            cases, an Authorized Purchaser or its affiliates may from time to time
            acquire
            natural gas or sell natural gas and may profit in these instances. The
            General
            Partner believes that the size and operation of the natural gas market
            make it
            unlikely that an Authorized Purchaser’s direct activities in the natural gas or
            securities markets will impact the price of natural gas, Futures Contracts,
            or
            the price of the units.
  Each
          Authorized Purchaser is required to be registered as a broker-dealer under
          the
          Exchange Act and is a member in good standing with FINRA, or exempt from
          being
          or otherwise not required to be licensed as a broker-dealer or a member
          of
          FINRA, and qualified to act as a broker or dealer in the states or other
          jurisdictions where the nature of its business so requires. Certain Authorized
          Purchasers may also be regulated under federal and state banking laws and
          regulations. Each Authorized Purchaser has its own set of rules and procedures,
          internal controls and information barriers as it determines is appropriate
          in
          light of its own regulatory regime.
  Under
          the
          Authorized Purchaser Agreement, the General Partner has agreed to indemnify
          the
          Authorized Purchasers against certain liabilities, including liabilities
          under
          the Securities Act of 1933, as amended, and to contribute to the payments
          the
          Authorized Purchasers may be required to make in respect of those
          liabilities.
  The
          following description of the procedures for the creation and redemption
          of
          baskets is only a summary and an investor should refer to the relevant
          provisions of the LP Agreement and the form of Authorized Purchaser Agreement
          for more detail, each of which is attached as an exhibit to this annual
          report
          on Form 10-K.
  Creation
          Procedures
  On
          any
          business day, an Authorized Purchaser may place an order with the Marketing
          Agent to create one or more baskets. For purposes of processing purchase
          and
          redemption orders, a “business day” means any day other than a day when any of
          the AMEX, the NYMEX or the NYSE is closed for regular trading. Purchase
          orders
          must be placed by 12:00 p.m. New York time or the close of regular trading
          on
          the NYSE, whichever is earlier; except in the case of the initial Authorized
          Purchaser’s or any other Authorized Purchaser’s initial order to purchase one or
          more Creation Baskets on the first day the baskets are to be offered and
          sold,
          when such orders shall be placed by 9:00 a.m. New York time on the day
          agreed to
          by the General Partner and the initial Authorized Purchaser. The day on
          which
          the Marketing Agent receives a valid purchase order is the purchase order
          date.
  By
          placing a purchase order, an Authorized Purchaser agrees to deposit Treasuries,
          cash or a combination of Treasuries and cash with USNG, as described below.
          Prior to the delivery of baskets for a purchase order, the Authorized Purchaser
          must also have wired to the Custodian the non-refundable transaction fee
          due for
          the purchase order. Authorized Purchasers may not withdraw a creation
          request.
  Determination
            of Required Deposits
 
 The
            total deposit required to create each basket (“Creation Basket Deposit”) is the
            amount of Treasuries and/or cash that is in the same proportion to the
            total
            assets of USNG (net of estimated accrued but unpaid fees, expenses and
            other
            liabilities) on the date the order to purchase is accepted as the number
            of
            units to be created under the purchase order is in proportion to the
            total
            number of units outstanding on the date the order is received. The General
            Partner determines, directly in its sole discretion or in consultation
            with the
            Administrator, the requirements for Treasuries and the amount of cash,
            including
            the maximum permitted remaining maturity of a Treasury and proportions
            of
            Treasury and cash that may be included in deposits to create baskets.
            The
            Marketing Agent publishes such requirements at the beginning of each
            business
            day. The amount of cash deposit required is the difference between the
            aggregate
            market value of the Treasuries required to be included in a Creation
            Basket
            Deposit as of 4:00 p.m. New York time on the date the order to purchase
            is
            properly received and the total required deposit.
 
 Delivery
            of Required Deposits
 
 An
            Authorized Purchaser who places a purchase order is responsible for transferring
            to USNG’s account with the Custodian the required amount of Treasuries and cash
            by the end of the third business day following the purchase order date.
            Upon
            receipt of the deposit amount, the Administrator directs DTC to credit
            the
            number of baskets ordered to the Authorized Purchaser’s DTC account on the third
            business day following the purchase order date. The expense and risk
            of delivery
            and ownership of Treasuries until such Treasuries have been received
            by the
            Custodian on behalf of USNG is borne solely by the Authorized
            Purchaser.
  Because
            orders to purchase baskets must be placed by 12:00 p.m., New York time,
            but the
            total payment required to create a basket during the continuous offering
            period
            will not be determined until 4:00 p.m., New York time, on the date the
            purchase
            order is received, Authorized Purchasers will not know the total amount
            of the
            payment required to create a basket at the time they submit an irrevocable
            purchase order for the basket. USNG’s NAV and the total amount of the payment
            required to create a basket could rise or fall substantially between
            the time an
            irrevocable purchase order is submitted and the time the amount of the
            purchase
            price in respect thereof is determined.
 19
 Rejection
            of Purchase Orders
 
 The
            General Partner acting by itself or through the Marketing Agent may reject
            a
            purchase order or a Creation Basket Deposit if:
 
 ·
                  it
                      determines that the investment alternative available to USNG
                      at that time
                      will not enable it to meet its investment
                      objective;
 ·
                  it
                      determines that the purchase order or the Creation Basket Deposit
                      is not
                      in proper form;
 ·
                  it
                      believes that the purchase order or the Creation Basket Deposit
                      would have
                      adverse tax consequences to USNG or its
                      unitholders;
 ·
                  the
                      acceptance or receipt of the Creation Basket Deposit would,
                      in the opinion
                      of counsel to the General Partner, be unlawful;
                      or
 ·
                  circumstances
                      outside the control of the General Partner, Marketing Agent
                      or Custodian
                      make it, for all practical purposes, not feasible to process
                      creations of
                      baskets.
 None
            of the General Partner, Marketing Agent or Custodian will be liable for
            the
            rejection of any purchase order or Creation Basket Deposit.
 Redemption
            Procedures
  The
          procedures by which an Authorized Purchaser can redeem one or more baskets
          mirror the procedures for the creation of baskets. On any business day,
          an
          Authorized Purchaser may place an order with the Marketing Agent to redeem
          one
          or more baskets. Redemption orders must be placed by 12:00 p.m. New York
          time or
          the close of regular trading on the NYSE, whichever is earlier. A redemption
          order so received will be effective on the date it is received in satisfactory
          form by the Marketing Agent. The redemption procedures allow Authorized
          Purchasers to redeem baskets and do not entitle an individual unitholder
          to
          redeem any units in an amount less than a Redemption Basket, or to redeem
          baskets other than through an Authorized Purchaser. By placing a redemption
          order, an Authorized Purchaser agrees to deliver the baskets to be redeemed
          through DTC’s book-entry system to USOF not later than 3:00 p.m. New York time
          on the third business day following the effective date of the redemption
          order.
          Prior to the delivery of the redemption distribution for a redemption order,
          the
          Authorized Purchaser must also have wired to USOF’s account at the Custodian the
          non-refundable transaction fee due for the redemption order. Authorized
          Purchasers may not withdraw a redemption request.
  Determination
            of Redemption Distribution
 
 The
            redemption distribution from USNG consists of a transfer to the redeeming
            Authorized Purchaser of an amount of Treasuries and/or cash that is in
            the same
            proportion to the total assets of USNG (net of estimated accrued but
            unpaid
            fees, expenses and other liabilities) on the date the order to redeem
            is
            properly received as the number of units to be redeemed under the redemption
            order is in proportion to the total number of units outstanding on the
            date the
            order is received. The General Partner, directly or in consultation with
            the
            Administrator, determines the requirements for Treasuries and the amounts
            of
            cash, including the maximum permitted remaining maturity of a Treasury,
            and the
            proportions of Treasuries and cash that may be included in distributions
            to
            redeem baskets. The Marketing Agent publishes such requirements as of
            4:00 p.m.
            New York time on the redemption order date.
 
 Delivery
            of Redemption Distribution
 
 The
            redemption distribution due from USNG will be delivered to the Authorized
            Purchaser by 3:00 p.m. New York time on the third business day following
            the
            redemption order date if, by 3:00 p.m. New York time on such third business
            day,
            USNG’s DTC account has been credited with the baskets to be redeemed. If USNG’s
            DTC account has not been credited with all of the baskets to be redeemed
            by such
            time, the redemption distribution will be delivered to the extent of
            whole
            baskets received. Any remainder of the redemption distribution will be
            delivered
            on the next business day to the extent of remaining whole baskets received
            if
            USNG receives the fee applicable to the extension of the redemption distribution
            date which the General Partner may, from time to time, determine and
            the
            remaining baskets to be redeemed are credited to USNG’s DTC account by 3:00 p.m.
            New York time on such next business day. Any further outstanding amount
            of the
            redemption order shall be cancelled. Pursuant to information from the
            General
            Partner, the Custodian will also be authorized to deliver the redemption
            distribution notwithstanding that the baskets to be redeemed are not
            credited to
            USNG’s DTC account by 3:00 p.m. New York time on the third business day
            following the redemption order date if the Authorized Purchaser has
            collateralized its obligation to deliver the baskets through DTC’s book
            entry-system on such terms as the General Partner may from time to time
            determine.
 
 Suspension
            or Rejection of Redemption Orders
 
 The
            General Partner may, in its discretion, suspend the right of redemption,
            or
            postpone the redemption settlement date, (1) for any period during which
            the
            AMEX or the NYMEX is closed other than customary weekend or holiday closings,
            or
            trading on the AMEX or the NYMEX is suspended or restricted, (2) for
            any period
            during which an emergency exists as a result of which delivery, disposal
            or
            evaluation of Treasuries is not reasonably practicable, or (3) for such
            other
            period as the General Partner determines to be necessary for the protection
            of
            the limited partners. None of the General Partner, the Marketing Agent,
            the
            Administrator, or the Custodian will be liable to any person or in any
            way for
            any loss or damages that may result from any such suspension or
            postponement.
 
 The
            General Partner will reject a redemption order if the order is not in
            proper
            form as described in the Authorized Purchaser Agreement or if the fulfillment
            of
            the order, in the opinion of its counsel, might be unlawful.
  Creation
          and Redemption Transaction
          Fee
  To
          compensate USNG for its expenses in connection with the creation and redemption
          of baskets, an Authorized Purchaser is required to pay a transaction fee
          to USNG
          of $1,000 per order to create or redeem baskets. An order may include multiple
          baskets. The transaction fee may be reduced, increased or otherwise changed
          by
          the General Partner. The General Partner shall notify DTC of any change
          in the
          transaction fee and will not implement any increase in the fee for the
          redemption of baskets until 30 days after the date of the
          notice.
  Tax
          Responsibility
  Authorized
          Purchasers are responsible for any transfer tax, sales or use tax, stamp
          tax,
          recording tax, value added tax or similar tax or governmental charge applicable
          to the creation or redemption of baskets, regardless of whether or not
          such tax
          or charge is imposed directly on the Authorized Purchaser, and agree to
          indemnify the General Partner and USNG if they are required by law to pay
          any
          such tax, together with any applicable penalties, additions to tax or interest
          thereon.
  Secondary
          Market
          Transactions
  As
          noted,
          USNG creates and redeems units from time to time, but only in one or more
          Creation Baskets or Redemption Baskets. The creation and redemption of
          baskets
          is only made in exchange for delivery to USNG or
          the
          distribution by USNG of the amount of Treasuries and cash represented by
          the
          baskets being created or redeemed, the amount of which is based on the
          aggregate
          NAV of the number of units included in the baskets being created or redeemed
          determined on the day the order to create or redeem baskets is properly
          received.
 20
 As
          discussed above, Authorized Purchasers are the only persons that may place
          orders to create and redeem baskets. Authorized Purchasers must be registered
          broker-dealers or other securities market participants, such as banks and
          other
          financial institutions that are not required to register as broker-dealers
          to
          engage in securities transactions. An Authorized Purchaser is under no
          obligation to create or redeem baskets, and an Authorized Purchaser is
          under no
          obligation to offer to the public units of any baskets it does create.
          Authorized Purchasers that do offer to the public units from the baskets
          they
          create do so at per-unit offering prices that are expected to reflect,
          among other factors, the trading price of the units on the AMEX, the NAV
          of USNG
          at the time the Authorized Purchaser purchased the Creation Baskets and
          the
          NAV at the time of the offer of the units to the public, the supply of and
          demand for units at the time of sale, and the liquidity of the Futures
          Contract
          market and the market for Other Natural Gas Related Investments. The prices
          of
          units offered by Authorized Purchasers are expected to fall between USNG’s NAV
          and the trading price of the units on the AMEX at the time of sale. Units
          initially comprising the same basket but offered by Authorized Purchasers
          to the
          public at different times may have different offering prices. An order
          for one
          or more baskets may be placed by an Authorized Purchaser on behalf of multiple
          clients. Authorized Purchasers who make deposits with USNG in exchange
          for
          baskets receive no fees, commissions or other form of compensation or inducement
          of any kind from either USNG or the General Partner, and no such person
          has any
          obligation or responsibility to the General Partner or USNG to effect any
          sale
          or resale of units. Units are expected to trade in the secondary market
          on the
          AMEX. Units may trade in the secondary market at prices that are lower
          or higher
          relative to their NAV per unit. The amount of the discount or premium in
          the
          trading price relative to the NAV per unit may be influenced by various
          factors,
          including the number of investors who seek to purchase or sell units in
          the
          secondary market and the liquidity of the Futures Contracts market and the
          market for Other Natural Gas Related Investments. While the units trade
          on the
          AMEX until 4:15 p.m. New York time, liquidity in the market for Futures
          Contracts and Other Natural Gas Related Investments may be reduced after
          the
          close of the NYMEX at 2:30 p.m. New York time. As a result, during this
          time,
          trading spreads, and the resulting premium or discount, on the units may
          widen.
  Prior
            Performance of USNG and
            Affiliates
  USNG’s
            offering began on April 18, 2007 and is a continuous offering. As of
            December 31, 2007, the total amount of money raised by USNG from Authorized
            Purchasers was $1,458,787,976; the total number of Authorized Purchasers
            was 4,
            the number of baskets purchased by Authorized Purchasers was 379; and
            the
            aggregate amount of units purchased was 37.9 million. For more information
            on
            the performance of USNG, see the Performance Tables below.
 
 PAST
            PERFORMANCE IS NOT NECESSARILY
            INDICATIVE OF FUTURE RESULTS
  Experience
            in Raising and Investing
            in Funds through
            December 31, 2007
  Dollar
                      Amount Offered:
                  $
                  3,664,500,000Dollar
                      Amount Raised:
                  $
                  1,458,787,976Offering
                      Expenses*:SEC
                      registration fee**:
                  $
                  104,010FINRA registration fee**:
                  
                  151,000AMEX
                      Listing fee**:
                  $
                  5,000Auditor's
                      fees and expenses**:
                  $
                  29,000Legal
                      fees and expenses**:
                  $
                  526,746Printing
                      expenses:
                  $
                  40,323Length
                      of Offering:
                  
                  Continuous
 ——————
 *  
            Amounts are for organizational and offering expenses incurred in connection
            with offerings from April 18, 2007 through December 31, 2007.
 ** Paid
            for
            by the General Partner in connection with the initial public
            offering.
  Performance
            Capsule
 Name
                        of Commodity Pool:
                    
                    USNGType
                        of Commodity Pool:
                    
                    Exchange
                        traded securityInception
                        of Trading:
                    
                    April
                        18, 2007Aggregate
                        Gross Capital Subscriptions (from inception through
                        December 31, 2007):
                    
                    $
                    1,458,787,977Total
                        Net Assets as of December 31, 2007:
                    
                    $
                    593,394,981
                    *Initial
                        NAV Per Unit as of Inception:
                    
                    $
                    50.00NAV
                        per Unit as of December 31, 2007:
                    
                    $
                    36.18Worst
                        Monthly Percentage Draw-down:
                    
                    
                    November
                        2007 (-16.16
                    %)Worst
                        Peak-to-Valley Draw-down:
                    
                    
                    April
                        2007- August 2007 (-34.74
                    %)Total
                        Rate of Return Since Inception:
                    
                    
                    (27.64
                    %)
 ——————
 * Inclusive
              of transactions recorded on a trade date + 1 basis.
 PAST
            PERFORMANCE IS NOT NECESSARILY
            INDICATIVE OF FUTURE RESULTS
 
 Month
                  
                  Rates of Return
                    For the Year 2007April
                  
                  
                  4.30
                  %May
                  
                  
                  (0.84
                  %)June
                  
                  
                  (15.90
                  %)July
                  
                  
                  (9.68
                  %)August
                  
                  
                  (13.37
                  %)September
                  
                  
                  12.28
                  %October
                  
                  
                  12.09
                  %November
                  
                  
                  (16.16
                  %)December
                  
                  
                  0.75
                  %
 21
 The
          General Partner is also currently the general partner of USOF, US12OF and
          USG.
          Each of the General Partner, USOF, US12OF and USG is located in
          California.
 
 USOF
          is a
          publicly traded limited partnership which seeks to have the changes in
          percentage terms of its units' NAV track the changes in percentage terms
          of the
          spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as
          measured by the changes in the price of the futures contract on light,
          sweet
          crude oil as traded on 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 the futures contract will be the next month contract to expire, less
          USOF's
          expenses. USOF invests in a mixture of listed crude oil futures contracts,
          other
          non-listed oil related investments, Treasuries, cash and cash equivalents.
          USOF
          began trading on the AMEX on April 10, 2006 and is a continuous offering.
          As of
          December 31, 2007, the total amount of money raised by USOF from Authorized
          Purchasers was $6,142,802,106; the total number of Authorized Purchasers
          was 12;
          the number of baskets purchased by Authorized Purchasers was 1,074; and
          the
          aggregate amount of units purchased was 107.4 million.
 
 US12OF
          is
          a publicly traded limited partnership which seeks to have the changes in
          percentage terms of  its units’ NAV track 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 12 futures contracts
          on
          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.  US12OF invests in a
          mixture of listed crude oil futures contracts, other non-listed oil related
          investments, Treasuries, cash and cash equivalents.  US12OF began
          trading on the AMEX on December 6, 2007 and is a continuous
          offering.  As of December 31, 2007, the total amount of money raised
          by US12OF from Authorized Purchasers was $20,127,316; the total number
          of
          Authorized Purchasers was 2; the number of baskets purchased by Authorized
          Purchasers was 4; and the aggregate amount of units purchased was
          400,000.
  USG
            is a
            publicly traded limited partnership which seeks to have the changes in
            percentage terms of its units’ NAV track the changes in percentage terms of the
            price of unleaded gasoline delivered to the New York harbor, as measured
            by the
            changes in the price of the futures contract on gasoline traded on the
            NYMEX,
            less USG’s expenses.  USG invests in a mixture of listed gasoline
            futures contracts, other gasoline related investments, Treasuries, cash
            and cash
            equivalents.  USG began trading on the AMEX on February 26, 2008 and
            is a continuous offering.  During the year ended December 31, 2007,
            USG had not yet commenced investment activities nor issued units.
 Since
          the
          offering of USOF units to the public on April 10, 2006 to December 31,
          2007, the
          simple average daily change in the price
          of
          a specified oil futures contract (the “Benchmark Oil Futures Contract”)
          was -0.031%, while the simple average daily change in the NAV of USOF over
          the
          same time period was 0.042%. The average daily difference was 0.011% (or
          1.1
          basis point, where 1 basis point equals 1/100 of 1%). As a percentage of
          the
          daily movement of the Benchmark Oil Futures Contract, the average error
          in daily
          tracking by the NAV was 2.98%, meaning that over this time period USOF’s
          tracking error was within the plus or minus 10% range established as its
          benchmark tracking goal.
 
 Since
          the
          offering of US12OF units to the public on December 6, 2007 to December
          31, 2007,
          the simple average daily change in the
          average of the prices of 12 futures contracts on crude oil traded on the
          NYMEX
          (the “Benchmark 12 Month Oil Futures Contracts”) was 0.480%, while
          the simple average daily change in the NAV of US12OF over the same time
          period
          was 0.489%. The average daily difference was 0.009% (or 0.9 basis point,
          where 1
          basis point equals 1/100 of 1%). As a percentage of the daily movement
          of the
          Benchmark 12 Month Oil Futures Contracts, the average error in daily tracking
          by
          the NAV was 2.651%, meaning that over this time period US12OF’s tracking error
          was within the plus or minus 10% range established as its benchmark tracking
          goal.
 
 There
          are
          significant differences between investing in USOF and US12OF and investing
          directly in the futures market. The General Partner’s results with USOF and
          US12OF may not be representative of results that may be experienced with
          a fund
          directly investing in futures contracts or other managed funds investing
          in
          futures contracts. For more information on the performance of USOF and
          US12OF,
          see the Performance Tables below.  Since
          USG
          did not commence investment activities nor issue units during the year
          ended
          December 31, 2007, performance information has not been included for
          USG.
 
 PAST
          PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
 Experience
          in Raising and Investing in Funds through December 31, 2007
 
 Dollar
                    Amount Offered in USOF Offering*:
                
                $
                7,094,860,000Dollar
                    Amount Raised in USOF Offering:
                
                $
                6,142,801,102Organizational
                    Expenses in USOF Offering:SEC
                    registration fee**:
                
                $
                800,474FINRA
                    registration fee**:
                
                $
                377,500AMEX
                    listing fee**:
                
                $
                5,000Auditor’s
                    fees and expenses**:
                
                $
                59,000Legal
                    fees and expenses**:
                
                $
                1,249,109Printing
                    expenses**:
                
                $
                241,977Length
                    of USOF offering:
                
                Continuous
 
 *
                Reflects
                    the offering price per unit set forth on the cover page of the
                    registration statement registering such units filed with the
                    SEC.
 **
                Through
                    December 31, 2006, these expenses were paid for by an affiliate
                    of the
                    General Partner in connection with the initial public offering.
                    Following
                    December 31, 2006, USOF has recorded these expenses.
 
 Dollar
                    Amount Offered in US12OF Offering*:
                
                $
                550,000,000Dollar
                    Amount Raised in US12OF Offering:
                
                $
                20,127,316Organizational
                    Expenses in US12OF Offering:SEC
                    registration fee**:
                
                $
                16,885FINRA
                    registration fee**:
                
                $
                75,500AMEX
                    listing fee**:
                
                $
                5,000Auditor’s
                    fees and expenses**:
                
                $
                10,700Legal
                    fees and expenses**:
                
                $
                233,799Printing
                    expenses**:
                
                $
                23,755Length
                    of US12OF offering:
                
                Continuous
 
 *
                Reflects
                    the offering price per unit set forth on the cover page of the
                    registration statement registering such units filed with the
                    SEC.
 **
                These
                    expenses were paid for by the General Partner.
 22
 
 Compensation
                to the General Partner and Other Compensation
 
 USOF:
 Expenses
                Paid
                by USOF through December 31, 2007 in dollar terms
                (unaudited):
 
 Expense
                      
                      Amount
                          inDollar
                          TermsAmount
                          Paid to General Partner in USOF Offering:
                      
                      $
                      3,622,613Amount
                          Paid in Portfolio Brokerage Commissions in USOF offering:
                      
                      $
                      1,184,956Other
                          Amounts Paid in USOF Offering:
                      
                      $
                      1,530,281Total
                          Expenses Paid in USOF Offering:
                      
                      $
                      6,337,850
 
 Expenses
                Paid
                by USOF through December 31, 2007 as a Percentage of Average Daily
                Net Assets
                (unaudited):
 
 Expenses
                          in USOF Offering:
                      Amount
                          As a Percentage ofAverage
                          Daily Net AssetsGeneral
                          Partner:
                      0.50%
                          annualizedPortfolio
                          Brokerage Commissions:
                      0.16%
                          annualizedOther
                          Amounts Paid in USOF Offering
                      0.21%
                          annualizedTotal
                          Expense Ratio:
                      0.87%
                          annualizedUSOF
                          Performance:Name
                          of Commodity Pool:
                      USOFType
                          of Commodity Pool:
                      Exchange
                          traded securityInception
                          of Trading:
                      April
                          10, 2006Aggregate
                          Subscriptions (from inception through December 31, 2007):
                      $6,142,801,105Total
                          Net Assets as of December 31, 2007:
                      $485,222,737Initial
                          NAV Per Unit as of Inception:
                      $67.39NAV
                          per Unit as of December 31, 2007:
                      $75.82Worst
                          Monthly Percentage Draw-down:
                      September
                          2006  (11.71%)Worst
                          Peak-to-Valley Draw-down:
                      June
                          2006 - January 2007 (30.60%)
 
 US12OF:
 Expenses
                Paid
                by US12OF through December 31, 2007 in dollar terms
                (unaudited):
 
 Expense
                      
                      Amount
                          inDollar
                          TermsAmount
                          Paid to General Partner in US12OF Offering:
                      
                      $
                      8,790Amount
                          Paid in Portfolio Brokerage Commissions in US12OF
                          offering:
                      
                      $
                      892Other
                          Amounts Paid in US12OF Offering:
                      
                      $
                      3,479Total
                          Expenses Paid in US12OF Offering:
                      
                      $
                      13,161
 
 Expenses
                Paid
                by US12OF through December31, 2007 as a Percentage of Average Daily
                Net Assets
                (unaudited):
 
 Expenses
                          in US12OF Offering:
                      Amount
                          As a Percentage ofAverage
                          Daily Net AssetsGeneral
                          Partner:
                      0.60%
                          annualizedPortfolio
                          Brokerage Commissions:
                      0.06%
                          annualizedOther
                          Amounts Paid in US12OF Offering
                      0.24%
                          annualizedTotal
                          Expense Ratio:
                      0.90%
                          annualizedUS12OF
                          Performance:Name
                          of Commodity Pool:
                      US12OFType
                          of Commodity Pool:
                      Exchange
                          traded securityInception
                          of Trading:
                      December
                          6, 2007Aggregate
                          Subscriptions (from inception through December 31, 2007):
                      $20,126,316Total
                          Net Assets as of December 31, 2007:
                      $21,691,479Initial
                          NAV Per Unit as of Inception:
                      $50.00NAV
                          per Unit as of December 31, 2007:
                      $54.23Worst
                          Monthly Percentage Draw-down:
                      N/AWorst
                          Peak-to-Valley Draw-down:
                      N/A
  COMPOSITE
                  PERFORMANCE DATA FOR USOF
 PAST
                  PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
 
 Month
                        
                        Rates
                            of ReturnFor
                            the Year 2006April*
                        
                        
                        3.47
                        %May
                        
                        
                        (2.91
                        %)June
                        
                        
                        3.16
                        %July
                        
                        
                        (0.50
                        %)August
                        
                        
                        (6.97
                        %)September
                        
                        
                        (11.71
                        %)October
                        
                        
                        (8.46
                        %)November
                        
                        
                        4.73
                        %December
                        
                        
                        (5.21
                        %)Annual
                            Rate of Return (since inception through December 31,
                            2006)
                        
                        
                        (23.03
                        %)
 *
                    Partial from April 10, 2006.
 23
 Month
                      
                      Rates
                          of ReturnFor
                          the Year 2007January
                      
                      
                      (6.55
                      %)February
                      
                      
                      5.63
                      %March
                      
                      
                      4.61
                      %April
                      
                      
                      (4.26
                      %)May
                      
                      
                      (4.91
                      %)June
                      
                      
                      9.06
                      %July
                      
                      
                      10.57
                      %August
                      
                      
                      (4.95
                      %)September
                      
                      
                      12.11
                      %October
                      
                      
                      16.98
                      %November
                      
                      
                      (4.82
                      %)December
                      
                      
                      8.67
                      %Annual
                          Rate of Return (through December 31, 2007)
                      
                      
                      46.17
                      %
 
 COMPOSITE
                PERFORMANCE DATA FOR US12OF
 PAST
                PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
 Month
                      
                      Rates
                          of ReturnFor
                          the Year 2007December*
                      
                      
                      8.46
                      %Annual
                          Rate of Return (through December 31, 2007)
                      
                      
                      8.46
                      %
 *
                Partial from December 6, 2007.
  Draw-down:
                Losses experienced over a specified period. Draw-down is measured
                on the basis
                of monthly returns only and does not reflect intra-month
                figures.
  Worst
                Monthly Percentage Draw-down: The largest single month loss sustained
                since
                inception of trading.
  Worst
                Peak-to-Valley Draw-down: The largest percentage decline in the NAV
                per unit
                over the history of the fund. This need not be a continuous decline,
                but can be
                a series of positive and negative returns where the negative returns
                are larger
                than the positive returns.  Worst Peak-to-Valley Draw-down represents
                the greatest percentage decline from any month-end NAV per unit that
                occurs
                without such month-end NAV per unit being equaled or exceeded as
                of a subsequent
                month-end. For example, if the NAV per unit declined by $1 in each
                of January
                and February, increased by $1 in March and declined again by $2 in
                April, a
“peak-to-trough drawdown” analysis conducted as of the end of April would
                consider that “drawdown” to be still continuing and to be $3 in amount, whereas
                if the NAV per unit had increased by $2 in March, the January-February
                drawdown
                would have ended as of the end of February at the $2 level.
  Nicholas
                Gerber, the president and CEO of the General Partner, ran the Marc
                Stevens
                Futures Index Fund over 10 years ago. This fund combined commodity
                futures with
                equity stock index futures. It was a very small private offering,
                which had
                under $1 million in assets. The Marc Stevens Futures Index Fund was
                a commodity
                pool and Mr. Gerber was the CPO. Ameristock Corporation is an affiliate
                of the
                General Partner and it is a California-based registered investment
                advisor
                registered under the Investment Advisers Act of 1940, as amended
                (the "Advisers
                Act") that has been sponsoring and providing portfolio management
                services to
                mutual funds since 1995. Ameristock Corporation is the investment
                adviser to the
                Ameristock Mutual Fund, Inc., a mutual fund registered under the
                Investment
                Company Act of 1940, as amended (the "1940 Act") that focuses on
                large cap U.S.
                equities that has approximately $425 million in assets as of December
                31, 2007.
                Ameristock Corporation is also the investment advisor to the Ameristock
                ETF
                Trust, an open-end management investment company registered under
                the 1940 Act
                that seeks investment results that correspond to the performance
                of U.S.
                Treasury indices owned and compiled by Ryan Holdings LLC and Ryan
                ALM,
                Inc.
 Investments
  The
            General Partner applies substantially all of USNG’s assets toward trading
            in Futures Contracts and Other Natural Gas Related Investments, Treasuries,
            cash and/or cash equivalents. The General Partner has sole authority
            to
            determine the percentage of assets that are:
  ·
                  held
                      on deposit with the futures commission merchant or other
                      custodian,
 ·
                    used
                        for other investments, and
 ·
                  held
                      in bank accounts to pay current obligations and as
                      reserves.
  The
            General Partner deposits substantially all of USNG’s net assets with the
            Custodian or other custodian. When USNG purchases a Futures Contract
            and certain
            exchange traded Other Natural Gas Related Investments, USNG is also required
            to
            deposit with the futures commission merchant on behalf of the exchange a
            portion of the value of the contract or other interest as security to
            ensure
            payment for the obligation under natural gas at maturity. This deposit is
            known as “margin.” USNG invests the remainder of its assets equal to the
            difference between the margin deposited and the face value of the Futures
            Contract in Treasuries, cash and/or cash equivalents.
  The
            General Partner believes that all entities that hold or trade USNG’s assets are
            based in the United States and are subject to United States
            regulations.
  Approximately
            5% to 10% of USNG’s assets have normally been committed as margin
            for Futures Contracts. However, from time to time, the percentage of assets
            committed as margin may be substantially more, or less, than such range.
            The
            General Partner invests the balance of USNG’s assets not invested in natural gas
            interests or held in margin as reserves to be available for changes in
            margin.
            All interest income is used for USNG’s benefit.
  The
            futures commission merchant, a government agency or a commodity exchange
            could
            increase margins applicable to USNG to hold trading positions at any
            time.
            Moreover, margin is merely a security deposit and has no bearing on the
            profit
            or loss potential for any positions taken.
  USNG’s
            assets are held in segregation pursuant to the CEA and CFTC
            regulations.
 24
 The
            Commodity Interest
            Markets
  General
  The CEA
            governs the regulation of commodity interest transactions, markets and
            intermediaries. In December 2000, the CEA was amended by the Commodity
            Futures
            Modernization Act of 2000 (the "CFMA"), which substantially revised the
            regulatory framework governing certain commodity interest transactions
            and the
            markets on which they trade. The CEA, as amended by the CFMA, now provides
            for
            varying degrees of regulation of commodity interest transactions depending
            upon
            the variables of the transaction. In general, these variables include
            (1) the
            type of instrument being traded (e.g., contracts for future delivery,
            options,
            swaps or spot contracts), (2) the type of commodity underlying the instrument
            (distinctions are made between instruments based on agricultural commodities,
            energy and metals commodities and financial commodities), (3) the nature
            of the
            parties to the transaction (retail, eligible contract participant, or
            eligible
            commercial entity), (4) whether the transaction is entered into on a
            principal-to-principal or intermediated basis, (5) the type of market
            on which
            the transaction occurs, and (6) whether the transaction is subject to
            clearing
            through a clearing organization. Information regarding commodity interest
            transactions, markets and intermediaries, and their associated regulatory
            environment, is provided below.
  Futures
            Contracts
  A
            futures
            contract such as a Futures Contract is a standardized contract traded
            on, or
            subject to the rules of, an exchange that calls for the future delivery
            of a
            specified quantity and type of a commodity at a specified time and place.
            Futures contracts are traded on a wide variety of commodities, including
            agricultural products, bonds, stock indices, interest rates, currencies,
            energy
            and metals. The size and terms of futures contracts on a particular commodity
            are identical and are not subject to any negotiation, other than with
            respect to
            price and the number of contracts traded between the buyer and
            seller.
  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. The difference
            between
            the price at which the futures contract is purchased or sold and the
            price paid
            for the offsetting sale or purchase, after allowance for brokerage commissions,
            constitutes the profit or loss to the trader. Some futures contracts,
            such as
            stock index contracts, settle in cash (reflecting the difference between
            the
            contract purchase/sale price and the contract settlement price) rather
            than by
            delivery of the underlying commodity.
  In
            market
            terminology, a trader who purchases a futures contract is long in the
            market and
            a trader who sells a futures contract is short in the market. Before
            a trader
            closes out his long or short position by an offsetting sale or purchase,
            his
            outstanding contracts are known as open trades or open positions. The
            aggregate
            amount of open positions held by traders in a particular contract is
            referred to
            as the open interest in such contract.
  Forward
            Contracts
  A
            forward
            contract is a contractual obligation to purchase or sell a specified
            quantity of
            a commodity at or before a specified date in the future at a specified
            price
            and, therefore, is economically similar to a futures contract. Unlike
            futures
            contracts, however, forward contracts are typically traded in the
            over-the-counter markets and are not standardized contracts. Forward
            contracts
            for a given commodity are generally available for various amounts and
            maturities
            and are subject to individual negotiation between the parties involved.
            Moreover, generally there is no direct means of offsetting or closing
            out a
            forward contract by taking an offsetting position as one would a futures
            contract on a U.S. exchange. If a trader desires to close out a forward
            contract
            position, he generally will establish an opposite position in the contract
            but
            will settle and recognize the profit or loss on both positions simultaneously
            on
            the delivery date. Thus, unlike in the futures contract market where
            a trader
            who has offset positions will recognize profit or loss immediately, in
            the
            forward market a trader with a position that has been offset at a profit
            will
            generally not receive such profit until the delivery date, and likewise
            a trader
            with a position that has been offset at a loss will generally not have
            to pay
            money until the delivery date. In recent years, however, the terms of
            forward
            contracts have become more standardized, and in some instances such contracts
            now provide a right of offset or cash settlement as an alternative to
            making or
            taking delivery of the underlying commodity.
  The
            forward markets provide what has typically been a
            highly liquid market for foreign exchange trading, and in certain cases
            the
            prices quoted for foreign exchange forward contracts may be more favorable
            than
            the prices for foreign exchange futures contracts traded on U.S. exchanges.
            The
            forward markets are largely unregulated. Forward contracts are, in general,
            not
            cleared or guaranteed by a third party. Commercial banks participating
            in
            trading foreign exchange forward contracts often do not require margin
            deposits,
            but rely upon internal credit limitations and their judgments regarding
            the
            creditworthiness of their counterparties. In recent years, however, many
            over-the-counter market participants in foreign exchange trading have
            begun to
            require that their counterparties post margin.  Further,
              as the result of the CFMA, over-the-counter derivative instruments
              such as
              forward contracts and swap agreements (and options on forwards and
              physical
              commodities) may begin to be traded on lightly-regulated exchanges
              or electronic
              trading platforms that may, but are not required to, provide for clearing
              facilities. Exchanges and electronic trading platforms on which over-the-counter
              instruments may be traded and the regulation and criteria for that
              trading are
              more fully described below under “Futures Exchanges and Clearing Organizations.”
Nonetheless, absent a clearing facility, USNG’s trading in foreign exchange and
              other forward contracts is exposed to the creditworthiness of the counterparties
              on the other side of the trade.
 25
 Options
            on Futures
            Contracts
  Options
            on futures contracts are standardized contracts traded on an exchange.
            An option
            on a futures contract gives the buyer of the option the right, but not the
            obligation, to take a position at a specified price (the striking, strike,
            or
            exercise price) in the underlying futures contract or underlying interest.
            The
            buyer of a call option acquires the right, but not the obligation, to
            purchase
            or take a long position in the underlying interest, and the buyer of
            a put
            option acquires the right, but not the obligation, to sell or take a
            short
            position in the underlying interest.
  The
            seller, or writer, of an option is obligated to take a position in the
            underlying interest at a specified price opposite to the option buyer
            if the
            option is exercised. Thus, the seller of a call option must stand ready
            to take
            a short position in the underlying interest at the strike price if the
            buyer
            should exercise the option. The seller of a put option, on the other
            hand, must
            stand ready to take a long position in the underlying interest at the
            strike
            price.
  A
            call
            option is said to be in-the-money if the strike price is below current
            market
            levels and out-of-the-money if the strike price is above current market
            levels.
            Conversely, a put option is said to be in-the-money if the strike price
            is above
            the current market levels and out-of-the-money if the strike price is
            below
            current market levels.
  Options
            have limited life spans, usually tied to the delivery or settlement date
            of the
            underlying interest. Some options, however, expire significantly in advance
            of
            such date. The purchase price of an option is referred to as its premium,
            which
            consists of its intrinsic value (which is related to the underlying market
            value) plus its time value. As an option nears its expiration date, the
            time
            value shrinks and the market and intrinsic values move into parity. An
            option
            that is out-of-the-money and not offset by the time it expires becomes
            worthless. On certain exchanges, in-the-money options are automatically
            exercised on their expiration date, but on others unexercised options
            simply
            become worthless after their expiration date.
  Regardless
            of how much the market swings, the most an option buyer can lose is the
            option
            premium. The option buyer deposits his premium with his broker, and the
            money
            goes to the option seller. Option sellers, on the other hand, face risks
            similar
            to participants in the futures markets. For example, since the seller
            of a call
            option is assigned a short futures position if the option is exercised,
            his risk
            is the same as someone who initially sold a futures contract. Because
            no one can
            predict exactly how the market will move, the option seller posts margin
            to
            demonstrate his ability to meet any potential contractual
            obligations.
  Options
              on Forward Contracts or
              Commodities
  Options
                on forward contracts or commodities operate in a manner similar to
                options on
                futures contracts. An option on a forward contract or commodity gives
                the buyer
                of the option the right, but not the obligation, to take a position
                at a
                specified price in the underlying forward contract or commodity.
                However,
                similar to forward contracts, options on forward contracts or on
                commodities are
                individually negotiated contracts between counterparties and are
                typically
                traded in the over-the-counter market. Therefore, options on forward
                contracts
                and physical commodities possess many of the same characteristics
                of forward
                contracts with respect to offsetting positions and credit risk that
                are
                described above.
  Swap
                Contracts
  Swap
                transactions generally involve contracts between two parties to exchange
                a
                stream of payments computed by reference to a notional amount and
                the price of
                the asset that is the subject of the swap. Swap contracts are principally
                traded
                off-exchange, although recently, as a result of regulatory changes
                enacted as
                part of the CFMA, certain swap contracts are now being traded in
                electronic
                trading facilities and cleared through clearing organizations.
  Swaps
                are
                usually entered into on a net basis, that is, the two payment streams
                are netted
                out in a cash settlement on the payment date or dates specified in
                the
                agreement, with the parties receiving or paying, as the case may
                be, only the
                net amount of the two payments. Swaps do not generally involve the
                delivery of
                underlying assets or principal. Accordingly, the risk of loss with
                respect to
                swaps is generally limited to the net amount of payments that the
                party is
                contractually obligated to make. In some swap transactions one or
                both parties
                may require collateral deposits from the counterparty to support that
                counterparty’s obligation under the swap agreement. If the counterparty to such
                a swap defaults, the risk of loss consists of the net amount of payments
                that
                the party is contractually entitled to receive less any collateral deposits
                it is holding.
  Participants
  The
                two
                broad classes of persons who trade commodities are hedgors and speculators.
                Hedgors include financial institutions that manage or deal in interest
                rate-sensitive instruments, foreign currencies or stock portfolios,
                and
                commercial market participants, such as farmers and manufacturers,
                that market
                or process commodities. Hedging is a protective procedure designed
                to lock in
                profits that could otherwise be lost due to an adverse movement in
                the
                underlying commodity, for example, the adverse price movement between
                the time a
                merchandiser or processor enters into a contract to buy or sell a
                raw or
                processed commodity at a certain price and the time he must perform
                the
                contract. In such a case, at the time the hedgor contracts to physically
                sell
                the commodity at a future date he will simultaneously buy a futures
                or forward
                contract for the necessary equivalent quantity of the commodity.
                At the time for
                performance of the contract, the hedgor may accept delivery under
                his futures
                contract and sell the commodity quantity as required by his physical
                contract or
                he may buy the actual commodity, sell if under the physical contract
                and close
                out his position by making an offsetting sale of a futures
                contract.
 26
 The
            commodity interest markets enable the hedgor to shift the risk of price
            fluctuations. The usual objective of the hedgor is to protect the profit
            that he
            expects to earn from farming, merchandising, or processing operations
            rather
            than to profit from his trading. However, at times the impetus for a
            hedge
            transaction may result in part from speculative objectives.
 Unlike
              the hedgor, the speculator generally expects neither to make nor take
              delivery
              of the underlying commodity. Instead, the speculator risks his capital
              with the
              hope of making profits from price fluctuations in the commodities.
              The
              speculator is, in effect, the risk bearer who assumes the risks that
              the hedgor
              seeks to avoid. Speculators rarely make or take delivery of the underlying
              commodity; rather they attempt to close out their positions prior to
              the
              delivery date. Because the speculator may take either a long or short
              position
              in commodities, it is possible for him to make profits or incur losses
              regardless of whether prices go up or down.
  Futures
                Exchanges and Clearing
                Organizations
  Futures
                exchanges provide centralized market facilities in which multiple
                persons have
                the ability to execute or trade contracts by accepting bids and offers
                from
                multiple participants. Futures exchanges may provide for execution
                of trades at
                a physical location utilizing trading pits and/or may provide for
                trading to be
                done electronically through computerized matching of bids and offers
                pursuant to
                various algorithms. Members of a particular exchange and the trades
                executed on
                such exchange are subject to the rules of that exchange. Futures
                exchanges and
                clearing organizations are given reasonable latitude in promulgating
                rules and
                regulations to control and regulate their members. Examples of regulations
                by
                exchanges and clearing organizations include the establishment of
                initial margin
                levels, rules regarding trading practices, contract specifications,
                speculative
                position limits, daily price fluctuation limits, and execution and
                clearing
                fees.
  Clearing
                organizations provide services designed to mutualize or transfer
                the credit risk
                arising from the trading of contracts on an exchange or other electronic
                trading
                facility. Once trades made between members of an exchange or electronic
                trading
                facility have been confirmed, the clearing organization becomes substituted
                for
                the clearing member acting on behalf of each buyer and each seller
                of contracts
                traded on the exchange or trading platform and in effect becomes
                the other party
                to the trade. Thereafter, each clearing member party to the trade
                looks only to
                the clearing
                organization for performance. The clearing organization generally
                establishes
                some sort of security or guarantee fund to which all clearing members
                of the
                exchange must contribute; this fund acts as an emergency buffer that
                is intended
                to enable the clearing organization to meet its obligations with
                regard to the
                other side of an insolvent clearing member’s contracts. Furthermore, the
                clearing organization requires margin deposits and continuously marks
                positions
                to market to provide some assurance that its members will be able
                to fulfill
                their contractual obligations. Thus, a central function of the clearing
                organization is to ensure the integrity of trades, and members effecting
                transactions on an exchange need not concern themselves with the
                solvency of the
                party on the opposite side of the trade; their only remaining concerns
                are the
                respective solvencies of their own customers, their clearing broker
                and the
                clearing organization. The clearing organizations do not deal with
                customers,
                but only with their member firms and the guarantee of performance
                for open
                positions provided by the clearing organization does not run to
                customers.
  U.S.
                Futures
                Exchanges
  Futures
                exchanges in the United States are subject to varying degrees of
                regulation by
                the CFTC based on their designation as one of the following: a designated
                contract market, a derivatives transaction execution facility, an
                exempt board
                of trade or an electronic trading facility.
  A
                designated contract market is the most highly regulated level of
                futures
                exchange. Designated contract markets may offer products to retail
                customers on
                an unrestricted basis. To be designated as a contract market, the
                exchange must
                demonstrate that it satisfies specified general criteria for designation,
                such
                as having the ability to prevent market manipulation, rules and procedures
                to
                ensure fair and equitable trading, position limits, dispute resolution
                procedures, minimization of conflicts of interest and protection
                of market
                participants. Among the principal designated contract markets in
                the United
                States are the Chicago Board of Trade, the Chicago Mercantile Exchange
                and the
                NYMEX. Each of the designated contract markets in the United States
                must provide
                for the clearance and settlement of transactions with a CFTC-registered
                derivatives clearing organization.
 27
  A
                derivatives transaction execution facility (a "DTEF"), is a new type
                of exchange
                that is subject to fewer regulatory requirements than a designated
                contract
                market but is subject to both commodity interest and participant
                limitations.
                DTEFs limit access to eligible traders that qualify as either eligible
                contract
                participants or eligible commercial entities for futures and option
                contracts on
                commodities that have a nearly inexhaustible deliverable supply,
                are highly
                unlikely to be susceptible to the threat of manipulation, or have
                no cash
                market, security futures products, and futures and option contracts
                on
                commodities that the CFTC may determine, on a case-by-case basis,
                are highly
                unlikely to be susceptible to the threat of manipulation. In addition,
                certain
                commodity interests excluded or exempt from the CEA, such as swaps,
                etc. may be
                traded on a DTEF. There is no requirement that a DTEF use a clearing
                organization, except with respect to trading in security futures
                contracts, in
                which case the clearing organization must be a securities clearing
                agency.
                However, if futures contracts and options on futures contracts on
                a DTEF are
                cleared, then it must be through a CFTC-registered derivatives clearing
                organization, except that some excluded or exempt commodities traded
                on a DTEF
                may be cleared through a clearing organization other than one registered
                with
                the CFTC.
  An
              exempt
              board of trade is also a newly designated form of exchange. An exempt
              board of
              trade is substantially unregulated, subject only to CFTC anti-fraud
              and
              anti-manipulation authority. An exempt board of trade is permitted
              to trade
              futures contracts and options on futures contracts provided that the
              underlying
              commodity is not a security or securities index and has an inexhaustible
              deliverable supply or no cash market. All traders on an exempt board
              of trade
              must qualify as eligible contract participants. Contracts deemed eligible
              to be
              traded on an exempt board of trade include contracts on interest rates,
              exchange
              rates, currencies, credit risks or measures, debt instruments, measures
              of
              inflation, or other macroeconomic indices or measures. There is no
              requirement
              that an exempt board of trade use a clearing organization. However,
              if contracts
              on an exempt board of trade are cleared, then it must be through a
              CFTC-registered derivatives clearing organization. A board of trade
              electing to
              operate as an exempt board of trade must file a written notification
              with the
              CFTC.
  An
              electronic trading facility is a new form of exchange that operates
              by means of
              an electronic or telecommunications network and maintains an automated
              audit
              trail of bids, offers, and the matching of orders or the execution
              of
              transactions on the electronic trading facility. The CEA does not apply
              to, and
              the CFTC has no jurisdiction over, transactions on an electronic trading
              facility in certain excluded commodities that are entered into between
              principals that qualify as eligible contract participants, subject
              only to CFTC
              anti-fraud and anti- manipulation
              authority. In general, excluded commodities include interest rates,
              currencies,
              securities, securities indices or other financial, economic or commercial
              indices or measures.
  The
              General Partner intends to monitor the development of and opportunities
              and
              risks presented by the new less-regulated exchanges and exempt boards
              and may,
              in the future, allocate a percentage of USNG’s assets to trading in products on
              these exchanges. Provided USNG maintains assets exceeding $5 million,
              USNG would
              qualify as an eligible contract participant and thus would be able
              to trade on
              such exchanges.
  Non-U.S.
              Futures
              Exchanges
  Non-U.S.
              futures exchanges differ in certain respects from their U.S. counterparts.
              Importantly, non-U.S. futures exchanges are not subject to regulation
              by the
              CFTC, but rather are regulated by their home country regulator. In
              contrast to
              U.S. designated contract markets, some non-U.S. exchanges are principals’
markets, where trades remain the liability of the traders involved,
              and the
              exchange or an affiliated clearing organization, if any, does not become
              substituted for any party. Due to the absence of a clearing system,
              such
              exchanges are significantly more susceptible to disruptions. Further,
              participants in such markets must often satisfy themselves as to the
              individual
              creditworthiness of each entity with which they enter into a trade.
              Trading on
              non-U.S. exchanges is often in the currency of the exchange’s home jurisdiction.
              Consequently, USNG is subject to the additional risk of fluctuations
              in the
              exchange rate between such currencies and U.S. dollars and the possibility
              that
              exchange controls could be imposed in the future. Trading on non-U.S.
              exchanges
              may differ from trading on U.S. exchanges in a variety of ways and,
              accordingly,
              may subject USNG to additional risks.
 28
 Accountability
              Levels and Position
              Limits
  The
              CFTC
              and U.S. designated contract markets have established accountability
              levels and
              position limits on the maximum net long or net short futures contracts in
              commodity interests that any person or group of persons under common
              trading control (other than a hedgor, which USNG is not) may hold,
              own or
              control. Among the purposes of accountability levels and position limits
              is to
              prevent a corner or squeeze on a market or undue influence on prices
              by any
              single trader or group of traders. The position limits currently established
              by
              the CFTC apply to certain agricultural commodity interests, such as
              grains
              (oats, barley, and flaxseed), soybeans, corn, wheat, cotton, eggs,
              rye, and
              potatoes, but not to interests in energy products. In addition, U.S.
              exchanges
              may set accountability levels and position limits for all commodity
              interests
              traded on that exchange. For example, the current accountability level
              for
              investments at any one time in the Benchmark Futures Contract is
              12,000 contracts. The NYMEX also imposes position limits on contracts
              held in
              the last few days of trading in the near month contract to expire.
              Certain
              exchanges or clearing organizations also set limits on the total net
              positions
              that may be held by a clearing broker. In general, no position limits
              are in
              effect in forward or other over-the-counter contract trading or in
              trading on
              non-U.S. futures exchanges, although the principals with which USNG
              and the
              clearing brokers may trade in such markets may impose such limits as
              a matter of
              credit policy. For purposes of determining accountability levels and
              position
              limits USNG’s commodity interest positions will not be attributable to investors
              in their own commodity interest trading.
  Daily
              Price
              Limits
  Most
              U.S.
              futures exchanges (but generally not non-U.S. exchanges) limit the amount
              of fluctuation in some futures contract or options on futures contract
              prices during a single trading period by regulations. These regulations
              specify
              what are referred to as daily price fluctuation limits or more commonly,
              daily
              limits. The daily limits establish the maximum amount that the price
              of a
              futures or options on futures contract may vary either up or down from
              the
              previous day’s settlement price. Once the daily limit has been reached in a
              particular futures or options on futures contract, no trades may be
              made at a
              price beyond the limit. Positions in the futures or options contract
              may then be
              taken or liquidated, if at all, only at inordinate expense or if traders
              are
              willing to effect trades at or within the limit during the period for
              trading on
              such day. Because the daily limit rule governs price movement only
              for a
              particular trading day, it does not limit losses and may in fact substantially
              increase losses because it may prevent the liquidation of unfavorable
              positions.
              Futures contract prices have occasionally moved to the daily limit
              for several
              consecutive trading days, thus preventing prompt liquidation of positions
              and
              subjecting the trader to substantial losses for those days. The concept
              of daily
              price limits is not relevant to over-the-counter contracts, including
              forwards
              and swaps, and thus such limits are not imposed by banks and others
              who deal in
              those markets.
  In
              contrast, the NYMEX does not impose daily limits but rather limits
              the amount of
              price fluctuation for Futures Contracts. For example, the NYMEX imposes a
              $3.00 per mmBtu ($30,000 per contract) price fluctuation limit for the
              Benchmark Futures Contracts. This limit is initially based off of the
              previous
              trading day’s settlement price. If any Benchmark Futures Contract is
              traded, bid, or offered at the limit for five minutes, trading is halted
              for
              five minutes. When trading resumes it begins at the point where the
              limit was
              imposed and the limit is reset to be $3.00 per mmBtu in either direction
              of that
              point. If another halt were triggered, the market would continue to
              be expanded
              by $3.00 per mmBtu in either direction after each successive five-minute
              trading
              halt. There is no maximum price fluctuation limit during any one trading
              session.
  Commodity
              Prices
  Commodity
              prices are volatile and, although ultimately determined by the interaction
              of
              supply and demand, are subject to many other influences, including
              the
              psychology of the marketplace and speculative assessments of future
              world and
              economic events. Political climate, interest rates, treaties, balance
              of
              payments, exchange controls and other governmental interventions as
              well as
              numerous other variables affect the commodity markets, and even with
              comparatively complete information it is impossible for any trader
              to predict
              reliably commodity prices.
 29
 Regulation
  Futures
              exchanges in the United States are subject to varying degrees of regulation
              under the CEA depending on whether such exchange is a designated contract
              market, DTEF, exempt board of trade or electronic trading facility.
              Derivatives
              clearing organizations are also subject to the CEA and CFTC regulation.
              The CFTC
              is the governmental agency charged with responsibility for regulation
              of futures
              exchanges and commodity interest trading conducted on those exchanges.
              The
              CFTC’s function is to implement the CEA’s objectives of preventing price
              manipulation and excessive speculation and promoting orderly and efficient
              commodity interest markets. In addition, the various exchanges and
              clearing
              organizations themselves exercise regulatory and supervisory authority
              over
              their member firms.
  The
              CFTC
              possesses exclusive jurisdiction to regulate the activities of CPOs
              and
              commodity trading advisors and has adopted regulations with respect
              to the
              activities of those persons and/or entities. Under the CEA, a registered
              CPO,
              such as the General Partner, is required to make annual filings with
              the CFTC
              describing its organization, capital structure, management and controlling
              persons. In addition, the CEA authorizes the CFTC to require and review
              books
              and records of, and documents prepared by, registered CPOs. Pursuant
              to this
              authority, the CFTC requires CPOs to keep accurate, current and orderly
              records
              for each pool that they operate. The CFTC may suspend the registration
              of a CPO
              (1) if the CFTC finds that the operator’s trading practices tend to disrupt
              orderly market conditions, (2) if any controlling person of the operator
              is
              subject to an order of the CFTC denying such person trading privileges
              on any
              exchange, and (3) in certain other circumstances. Suspension, restriction
              or
              termination of the General Partner’s registration as a CPO would prevent it,
              until that registration were to be reinstated, from managing USNG,
              and might
              result in the termination of USNG. USNG itself is not required to be
              registered with the CFTC in any capacity.
  The
              CEA
              gives the CFTC similar authority with respect to the activities of
              commodity
              trading advisors. If a trading advisor’s commodity trading advisor registration
              were to be terminated, restricted or suspended, the trading advisor
              would be
              unable, until the registration were to be reinstated, to render trading
              advice
              to USNG.
  The
              CEA
              requires all futures commission merchants, such as USNG’s clearing brokers, to
              meet and maintain specified fitness and financial requirements, to
              segregate
              customer funds from proprietary funds and account separately for all
              customers’
funds and positions, and to maintain specified books and records open
              to
              inspection by the staff of the CFTC. The CFTC has similar authority
              over
              introducing brokers, or persons who solicit or accept orders for commodity
              interest trades but who do not accept margin deposits for the execution
              of
              trades. The CEA authorizes the CFTC to regulate trading by futures
              commission
              merchants and by their officers and directors, permits the CFTC to
              require
              action by exchanges in the event of market emergencies, and establishes
              an
              administrative procedure under which customers may institute complaints
              for
              damages arising from alleged violations of the CEA. The CEA also gives
              the
              states powers to enforce its provisions and the regulations of the
              CFTC.
  USNG’s
              investors are afforded prescribed rights for reparations under the
              CEA.
              Investors may also be able to maintain a private right of action for
              violations
              of the CEA. The CFTC has adopted rules implementing the reparation
              provisions of
              the CEA, which provide that any person may file a complaint for a reparations
              award with the
              CFTC
              for violation of the CEA against a floor broker or a futures commission
              merchant, introducing broker, commodity trading advisor, CPO, and their
              respective associated persons.
  Pursuant
              to authority in the CEA, the NFA has been formed and registered with
              the CFTC as
              a registered futures association. At the present time, the NFA is the
              only
              self-regulatory organization for commodity interest professionals,
              other than
              futures exchanges. The CFTC has delegated to the NFA responsibility
              for the
              registration of commodity trading advisors, CPOs, futures commission
              merchants,
              introducing brokers, and their respective associated persons and floor
              brokers.
              The General Partner, each trading advisor, the selling agents and the
              clearing
              brokers are members of the NFA. As such, they are subject to NFA standards
              relating to fair trade practices, financial condition and consumer
              protection.
              USNG itself is not required to become a member of the NFA. As the
              self-regulatory body of the commodity interest industry, the NFA promulgates
              rules governing the conduct of professionals and disciplines those
              professionals
              that do not comply with these rules. The NFA also arbitrates disputes
              between
              members and their customers and conducts registration and fitness screening
              of
              applicants for membership and audits of its existing members.
 30
 The
              regulations of the CFTC and the NFA prohibit any representation by
              a person
              registered with the CFTC or by any member of the NFA, that registration
              with the
              CFTC, or membership in the NFA, in any respect indicates that the CFTC
              or the
              NFA, as the case may be, has approved or endorsed that person or that
              person’s
              trading program or objectives. The registrations and memberships of
              the parties
              described in this summary must not be considered as constituting any
              such
              approval or endorsement. Likewise, no futures exchange has given or
              will give
              any similar approval or endorsement.
  The
              regulation of commodity interest trading in the United States and other
              countries is an evolving area of the law. The various statements made
              in this
              summary are subject to modification by legislative action and changes
              in the
              rules and regulations of the CFTC, the NFA, the futures exchanges,
              clearing
              organizations and other regulatory bodies.
  The
              function of the CFTC is to implement the objectives of the CEA of preventing
              price manipulation and other disruptions to market integrity, avoiding
              systemic
              risk, preventing fraud and promoting innovation, competition and financial
              integrity of transactions. As mentioned above, this regulation, among
              other
              things, provides that the trading of commodity interest contracts generally
              must
              be upon exchanges designated as contract markets or DTEFs and that
              all trading
              on those exchanges must be done by or through exchange members. Under
              the CFMA,
              commodity interest trading in some commodities between sophisticated
              persons may
              be traded on a trading facility not regulated by the CFTC. As a general
              matter,
              trading in spot contracts, forward contracts, options on forward contracts
              or
              commodities, or swap contracts between eligible contract participants
              is not
              within the jurisdiction of the CFTC and may therefore be effectively
              unregulated. The trading advisors may engage in those transactions
              on behalf of
              USNG in reliance on this exclusion from regulation.
  In
              general, the CFTC does not regulate the interbank and forward foreign
              currency
              markets with respect to transactions in contracts between certain sophisticated
              counterparties such as USNG or between certain regulated institutions
              and retail
              investors. Although U.S. banks are regulated in various ways by the
              Federal
              Reserve Board, the Comptroller of the Currency and other U.S. federal
              and state
              banking officials, banking authorities do not regulate the forward
              markets.
  While
              the
              U.S. government does not currently impose any restrictions on the movements
              of
              currencies, it could choose to do so. The imposition or relaxation
              of exchange
              controls in various jurisdictions could significantly affect the market
              for that
              and other jurisdictions’ currencies. Trading in the interbank market also
              exposes USNG to a risk of default since failure of a bank with which
              USNG had
              entered into a forward contract would likely result in a default and
              thus
              possibly substantial losses to USNG.
  The
              CFTC
              is prohibited by statute from regulating trading on non-U.S. futures
              exchanges
              and markets. The CFTC, however, has adopted regulations relating to
              the
              marketing of non-U.S. futures contracts in the United States. These
              regulations
              permit certain contracts traded on non-U.S. exchanges to be offered
              and sold in
              the United States.
  Commodity
              Margin
  Original
              or initial margin is the minimum amount of funds that must be deposited
              by a
              commodity interest trader with the trader’s broker to initiate and maintain an
              open position in futures contracts. Maintenance margin is the amount
              (generally
              less than the original margin) to which a trader’s account may decline before he
              must deliver additional margin. A margin deposit
              is like a
              cash performance bond. It helps assure the trader’s performance of the futures
              contracts that he or she purchases or sells. Futures contracts are
              customarily
              bought and sold on initial margin that represents a very small percentage
              (ranging upward from less than 2%) of the aggregate purchase or sales
              price of
              the contract. Because of such low margin requirements, price fluctuations
              occurring in the futures markets may create profits and losses that,
              in relation
              to the amount invested, are greater than are customary in other forms
              of
              investment or speculation. As discussed below, adverse price changes
              in the
              futures contract may result in margin requirements that greatly exceed
              the
              initial margin. In addition, the amount of margin required in connection
              with a
              particular futures contract is set from time to time by the exchange
              on which
              the contract is traded and may be modified from time to time by the
              exchange
              during the term of the contract.
 31
 Brokerage
              firms, such as USNG’s clearing brokers, carrying accounts for traders in
              commodity interest contracts may not accept lower, and generally require
              higher,
              amounts of margin as a matter of policy to further protect themselves.
              The
              clearing brokers require USNG to make margin deposits equal to exchange
              minimum
              levels for all commodity interest contracts. This requirement may be
              altered
              from time to time in the clearing brokers’ discretion.
  Trading
              in the over-the-counter markets where no clearing facility is provided
              generally
              does not require margin but generally does require the extension of
              credit
              between counterparties.
  When
              a
              trader purchases an option, there is no margin requirement; however,
              the option
              premium must be paid in full. When a trader sells an option, on the
              other hand,
              he or she is required to deposit margin in an amount determined by
              the margin
              requirements established for the underlying interest and, in addition,
              an amount
              substantially equal to the current premium for the option. The margin
              requirements imposed on the selling of options, although adjusted to
              reflect the
              probability that out-of-the-money options will not be exercised, can
              in fact be
              higher than those imposed in dealing in the futures markets directly.
              Complicated margin requirements apply to spreads and conversions, which
              are
              complex trading strategies in which a trader acquires a mixture of
              options
              positions and positions in the underlying interest.
  Margin
              requirements are computed each day by a trader’s clearing broker. When the
              market value of a particular open commodity interest position changes
              to a point
              where the margin on deposit does not satisfy maintenance margin requirements,
              a
              margin call is made by the broker. If the margin call is not met within
              a
              reasonable time, the broker may close out the trader’s position. With respect to
              USNG’s trading, USNG (and not its investors personally) is subject to margin
              calls.
  Finally,
              many major U.S. exchanges have passed certain cross margining arrangements
              involving procedures pursuant to which the futures and options positions
              held in
              an account would, in the case of some accounts, be aggregated and margin
              requirements would be assessed on a portfolio basis, measuring the
              total risk of
              the combined positions.
  SEC
                Reports
 
 USNG
                makes available, free of charge, on its website, its Annual Reports
                on
                Form 10-K, its Quarterly Reports on Form 10-Q, its Current Reports on
                Form 8-K and amendments to these reports filed or furnished pursuant to
                Section 13(a) or 15(d) of the Exchange Act as soon as reasonably
                practicable after these forms are filed with, or furnished to, the
                SEC.
 32
 Item 1A.
                            Risk
                                Factors.
 The
                        risk
                        factors should be read in connection with the other information
                        included in this
                        annual report on Form 10-K, including Management’s Discussion and Analysis of
                        Financial Condition and Results of Operations and USNG’s condensed financial
                        statements and the related notes.
  Risks
                    Associated With Investing Directly or Indirectly in Natural Gas
 
 Investing
                    in Natural Gas Interests subjects USNG to the risks of the natural
                    gas industry
                    and this could result in large fluctuations in the price of USNG’s
                    units.
 
 USNG
                    is
                    subject to the risks and hazards of the natural gas industry
                    because it invests
                    in Natural Gas Interests. The risks and hazards that are inherent in the natural
                    gas industry may cause the price of natural gas to widely fluctuate.
                    If the
                    changes in percentage terms of USNG’s units accurately track the percentage
                    changes in the Benchmark Futures Contract or the spot price of
                    natural gas, then
                    the price of its units may also fluctuate. The exploration for,
                    and production
                    of, natural gas is an uncertain process with many risks. The
                    cost of drilling,
                    completing and operating wells for natural gas is often uncertain,
                    and a number
                    of factors can delay or prevent drilling operations or production,
                    including:
 
 •
                          unexpected
                              drilling conditions;
 •
                          pressure
                              or irregularities in formations;
 •
                          equipment
                              failures or repairs;
 •
                          fires
                              or other accidents;
 •
                          adverse
                              weather conditions;
 •
                          pipeline
                              ruptures or spills; and
 •
                          shortages
                              or delays in the availability of drilling rigs and
                              the delivery of
                              equipment.
 
 Natural
                    gas transmission, distribution, gathering, and processing activities
                    involve
                    numerous risks that may affect the price of natural gas.
 
 There
                    are
                    a variety of hazards inherent in natural gas transmission, distribution,
                    gathering, and processing, such as leaks, explosions, pollution,
                    release of
                    toxic substances, adverse weather conditions (such as hurricanes
                    and flooding),
                    pipeline failure, abnormal pressures, uncontrollable flows of
                    natural gas,
                    scheduled and unscheduled maintenance, physical damage to the
                    gathering or
                    transportation system, and other hazards which could affect the
                    price of natural
                    gas. To the extent these hazards limit the supply or delivery
                    of natural gas,
                    natural gas prices will increase.
 
 The
                    price of natural gas may fluctuate on a seasonal and quarterly
                    basis and this
                    would result in fluctuations in the price of USNG’s units.
 
 Natural
                    gas prices fluctuate seasonally. For example, in some parts of
                    the United States
                    and other markets, the natural gas demand for power peaks during
                    the cold winter
                    months, with market prices peaking at that time. As a result,
                    in the future, the
                    overall price of natural gas may fluctuate substantially on a
                    seasonal and
                    quarterly basis and thus make consecutive period to period comparisons
                    less
                    relevant.
 
 Natural
                    gas transmission and storage operations are subject to government
                    regulations
                    and rate proceedings which could have an impact on the price
                    of natural
                    gas.
  Natural
                    gas transmission and storage operations in North America are
                    subject to
                    regulation and oversight by the Federal Energy Regulatory Commission,
                    various
                    state regulatory agencies, and Canadian regulatory authorities.
                    These regulatory
                    bodies have the authority to effect rate settlements on natural
                    gas storage,
                    transmission and distribution services. As a consequence, the
                    price of natural
                    gas may be affected by a change in the rate settlements effected
                    by one or more
                    of these regulatory bodies.
  The
                      price of USNG’s units may be influenced by factors such as the short-term
                      supply
                      and demand for natural gas and the short-term supply and demand
                      for USNG’s
                      units. This may cause the units to trade at a price that is
                      above or below
                      USNG’s NAV per unit. Accordingly, changes in the price of units
                      may
                      substantially vary from the changes in the spot price of natural
                      gas. If this
                      variation occurs, then investors may not be able to effectively
                      use USNG as a
                      way to hedge against natural gas-related losses or as a way
                      to indirectly invest
                      in natural gas.
 
 While
                      it
                      is expected that the trading prices of the units will fluctuate
                      in accordance
                      with the changes in USNG’s NAV, the prices of units may also be influenced by
                      other factors, including the short-term supply and demand for
                      natural gas and
                      the units. There is no guarantee that the units will not trade
                      at appreciable
                      discounts from, and/or premiums to, USNG’s NAV. This could cause the changes in
                      the price of the units to substantially vary from the changes
                      in the price of
                      natural gas. This may be harmful to investors because if changes
                      in the price of
                      units vary substantially from changes in the Benchmark Futures
                      Contract or the
                      spot price of natural gas, then investors may not be able to
                      effectively use
                      USNG as a way to hedge the risk of losses in their natural
                      gas-related
                      transactions or as a way to indirectly invest in natural
                      gas.
 
 33
 Changes
                in USNG’s NAV may not correlate with changes in the price of the Benchmark
                Futures Contract. If this were to occur, investors may not be able
                to
                effectively use USNG as a way to hedge against natural gas-related
                losses or as
                a way to indirectly invest in natural gas.
 The
                  General Partner endeavors to invest USNG’s assets as fully as possible in
                  short-term Futures Contracts and Other Natural Gas-Related Investments
                  so that
                  the changes in percentage terms in the NAV closely correlates with
                  the changes
                  in percentage terms in the price of the Benchmark Futures Contract.
                  However,
                  changes in USNG’s NAV may not correlate with the changes in the price of the
                  Benchmark Futures Contract for several reasons as set forth below:
  •
                        USNG
                            (i) may not be able to buy/sell the exact amount of Futures
                            Contracts and
                            Other Natural Gas-Related Investments to have a perfect
                            correlation with
                            NAV; (ii) may not always be able to buy and sell Futures
                            Contracts or
                            Other Natural Gas-Related Investments at the market price;
                            (iii) may not
                            experience a perfect correlation between the spot price
                            of natural gas and
                            the underlying investments in Futures Contracts, Other
                            Natural Gas-Related
                            Investments and Treasuries, cash and cash equivalents;
                            and (iv) is
                            required to pay fees, including the brokerage fees and
                            the management fee,
                            which will have an effect on the
                            correlation.
 
 •
                        Short-term
                            supply and demand for natural gas may cause the changes
                            in the market
                            price of the Benchmark Futures Contract to vary from
                            changes in USNG’s NAV
                            if USNG has fully invested in Futures Contracts that
                            do not reflect such
                            supply and demand and it is unable to replace such contracts
                            with Futures
                            Contracts that do reflect such supply and demand. In
                            addition, there are
                            also technical differences between the two markets, e.g.,
                            one is a physical
                            market while the other is a futures market traded on
                            exchanges, that may
                            cause variations between the spot price of natural gas
                            and the prices of
                            related futures contracts.
 
 •
                        USNG
                            plans to buy only as many Futures Contracts and Other
                            Natural Gas-Related
                            Investments that it can to get the changes in percentage
                            terms of the NAV
                            as close as possible to the changes in percentage terms
                            in the price of
                            the Benchmark Futures Contract. The remainder of its
                            assets will be
                            invested in Treasuries, cash and cash equivalents and
                            will be used to
                            satisfy initial margin and additional margin requirements,
                            if any, and to
                            otherwise support its investments in Natural Gas Interests.
                            Investments in
                            Treasuries, cash and cash equivalents, both directly
                            and as margin, will
                            provide rates of return that will vary from changes in
                            the value of the
                            spot price of natural gas and the price of the Benchmark
                            Futures
                            Contract.
  •
                        In
                            addition, because USNG will incur certain expenses in
                            connection with its
                            investment activities, and will hold most of its assets
                            in more liquid
                            short-term securities for margin and other liquidity
                            purposes and for
                            redemptions that may be necessary on an ongoing basis,
                            the General Partner
                            will not be able to fully invest USNG’s assets in Futures Contracts or
                            Other Natural Gas-Related Investments and there cannot
                            be perfect
                            correlation between changes in USNG’s NAV and changes in the price of the
                            Benchmark Futures Contract.•
                        As
                            USNG grows, there may be more or less correlation. For
                            example, if USNG
                            only has enough money to buy three Benchmark Futures
                            Contracts and it
                            needs to buy four contracts to track the price of natural
                            gas then the
                            correlation will be lower, but if it buys 20,000 Benchmark
                            Futures
                            Contracts and it needs to buy 20,001 contracts then the
                            correlation will
                            be higher. At certain asset levels, USNG may be limited
                            in its ability to
                            purchase the Benchmark Futures Contract or other Futures
                            Contracts due to
                            accountability levels imposed by the relevant exchanges.
                            To the extent
                            that USNG invests in these other Futures Contracts or
                            Other Natural
                            Gas-Related Investments, the correlation with the Benchmark
                            Futures
                            Contract may be lower. If USNG is required to invest
                            in other Futures
                            Contracts and Other Natural Gas-Related Investments that
                            are less
                            correlated with the Benchmark Futures Contract, USNG
                            would likely invest
                            in over-the-counter contracts to increase the level of
                            correlation of
                            USNG’s assets. Over-the-counter contracts entail certain risks
                            described
                            below under “Over-the-Counter Contract
                            Risk.”
 
 •
                        USNG
                            may not be able to buy the exact number of Futures Contracts
                            and Other
                            Natural Gas-Related Investments to have a perfect correlation
                            with the
                            Benchmark Futures Contract if the purchase price of Futures
                            Contracts
                            required to be fully invested in such contracts is higher
                            than the
                            proceeds received for the sale of a Creation Basket on
                            the day the basket
                            was sold. In such case, USNG could not invest the entire
                            proceeds from the
                            purchase of the Creation Basket in such futures contracts
                            (for example,
                            assume USNG receives $4,000,000 for the sale of a Creation
                            Basket and
                            assume that the price of a Futures Contract for natural
                            gas is $59,950,
                            then USNG could only invest in only 66 Futures Contracts
                            with an aggregate
                            value of $3,956,700), USNG would be required to invest
                            a percentage of the
                            proceeds in Treasuries to be deposited as margin with
                            the futures
                            commission merchant through which the contract was purchased.
                            The
                            remainder of the purchase price for the Creation Basket
                            would remain
                            invested in Treasuries, cash and/or cash equivalents as determined
                            by
                            the General Partner from time to time based on factors
                            such as potential
                            calls for margin or anticipated redemptions. If the trading
                            market for
                            Futures Contracts is suspended or closed, USNG may not
                            be able to purchase
                            these investments at the last reported price for such
                            investments.
  If
                  changes in USNG’s NAV do not correlate with changes in the price of the
                  Benchmark Futures Contract, then investing in USNG may not be an
                  effective way
                  to hedge against natural gas-related losses or indirectly invest
                  in natural
                  gas.
 
 The
                  Benchmark Futures Contract may not correlate with the price of
                  natural gas and
                  this could cause the changes in the price of the units to substantially
                  vary
                  from the changes in the spot price of natural gas. If this were
                  to occur, then
                  investors may not be able to effectively use USNG as a way to hedge
                  against
                  natural gas-related losses or as a way to indirectly invest in
                  natural
                  gas.
 
 When
                  using the Benchmark Futures Contract as a strategy to track the
                  spot price of
                  natural gas, at best the correlation between changes in prices
                  of such Natural
                  Gas Interests and the delivery price of natural gas can be only
                  approximate. The
                  degree of imperfection of correlation depends upon circumstances
                  such as
                  variations in the speculative natural gas market, supply of and
                  demand for such
                  Natural Gas Interests and technical influences in futures trading.
                  If there is a
                  weak correlation between the Natural Gas Interests and the spot
                  price of natural
                  gas, then the price of units may not accurately track the spot
                  price of natural
                  gas and investors may not be able to effectively use USNG as a
                  way to hedge the
                  risk of losses in their natural gas-related transactions or as
                  a way to
                  indirectly invest in natural gas.
 34
 USNG
                may experience a loss if it is required to sell Treasuries at a price
                lower than
                the price at which they were acquired.
 The
                  value
                  of Treasuries generally moves inversely with movements in interest
                  rates. If
                  USNG is required to sell Treasuries at a price lower than the price
                  at which
                  they were acquired, USNG will experience a loss. This loss may
                  adversely impact
                  the price of the units and may decrease the correlation between
                  the price of the
                  units, the price of USNG’s Futures Contracts and Other Natural Gas-Related
                  Investments, and the delivery price of natural gas.
 
 Certain
                  of USNG’s investments could be illiquid which could cause large losses
                  to
                  investors at any time or from time to time.
 
 USNG
                  may
                  not always be able to liquidate its positions in its investments
                  at the desired
                  price. It is difficult to execute a trade at a specific price when
                  there is a
                  relatively small volume of buy and sell orders in a market. A market
                  disruption,
                  such as a foreign government taking political actions that disrupt
                  the market in
                  its currency, its natural gas production or exports, or in another
                  major export,
                  can also make it difficult to liquidate a position. Alternatively,
                  limits
                  imposed by futures exchanges or other regulatory organizations,
                  such as
                  accountability levels, position limits and price fluctuation limits,
                  may
                  contribute to a lack of liquidity with respect to some commodity
                  interests.
 
 Unexpected
                  market illiquidity may cause major losses to investors at any time
                  or from time
                  to time. In addition, USNG does not intend at this time to establish
                  a credit
                  facility, which would provide an additional source of liquidity
                  and instead will
                  rely only on the Treasuries, cash and/or cash equivalents that
                  it holds. The
                  anticipated large value of the positions in Futures Contracts that
                  the General
                  Partner will acquire or enter into for USNG increases the risk
                  of illiquidity.
                  Other Natural Gas-Related Investments that USNG invests in, such
                  as negotiated
                  over-the-counter contracts, may have a greater likelihood of being
                  illiquid
                  since they are contracts between two parties that take into account
                  not only
                  market risk, but also the relative credit, tax, and settlement
                  risks under such
                  contracts. Such contracts also have limited transferability that
                  results from
                  such risks and from the contract’s express limitations.
  Because
                  both Futures Contracts and Other Natural Gas-Related Investments
                  may be
                  illiquid, USNG’s Natural Gas Interests may be more difficult to liquidate at
                  favorable prices in periods of illiquid markets and losses may
                  be incurred
                  during the period in which positions are being liquidated.
 
 If
                  the nature of hedgors and speculators in futures markets has shifted
                  such that
                  natural gas purchasers are the predominant hedgors in the market,
                  USNG might
                  have to reinvest at higher futures prices or choose Other Natural
                  Gas-Related
                  Investments.
 
 The
                  changing nature of the hedgors and speculators in the natural gas
                  market will
                  influence whether futures prices are above or below the expected
                  future spot
                  price. In order to induce speculators to take the corresponding
                  long side of the
                  same futures contract, natural gas producers must generally be
                  willing to sell
                  futures contracts at prices that are below expected future spot
                  prices.
                  Conversely, if the predominant hedgors in the futures market are
                  the purchasers
                  of the natural gas who purchase futures contracts to hedge against
                  a rise in
                  prices, then speculators will only take the short side of the futures
                  contract
                  if the futures price is greater than the expected future spot price
                  of natural
                  gas. This can have significant implications for USNG when it is
                  time to reinvest
                  the proceeds from a maturing Futures Contract into a new Futures
                  Contract.
 
 While
                  USNG does not intend to take physical delivery of natural gas under
                  Futures
                  Contracts, physical delivery under such contracts impacts the value
                  of the
                  contracts.
 
 While
                  it
                  is not the current intention of USNG to take physical delivery
                  of natural gas
                  under its Futures Contracts, futures contracts are not required
                  to be
                  cash-settled and it is possible to take delivery under these contracts.
                  Storage
                  costs associated with purchasing natural gas could result in costs
                  and other
                  liabilities that could impact the value of Futures Contracts or
                  Other Natural
                  Gas-Related Investments. Storage costs include the time value of
                  money invested
                  in natural gas as a physical commodity plus the actual costs of
                  storing the
                  natural gas less any benefits from ownership of natural gas that
                  are not
                  obtained by the holder of a futures contract. In general, Futures
                  Contracts have
                  a one-month delay for contract delivery and the back month (the
                  back month is
                  any future delivery month other than the spot month) includes storage
                  costs. To
                  the extent that these storage costs change for natural gas while
                  USNG holds
                  Futures Contracts or Other Natural
                  Gas-Related Investments, the value of the Futures Contracts or
                  Other Natural
                  Gas-Related Investments, and therefore USNG’s NAV, may change as
                  well.
 35
 
 The
                    price relationship between the near month contract and the next
                    month contract
                    that compose the Benchmark Futures Contract will vary and may
                    impact both the
                    total return over time of USNG’s NAV, as well as the degree to which its total
                    return tracks other natural gas price indices’ total returns.
 The
                      design of USNG’s Benchmark Futures Contract is such that every month it begins
                      by using the near month contract to expire until the near month
                      contract is
                      within two weeks of expiration, when it will use the next month
                      contract to
                      expire as its benchmark contract and keeps that contract as
                      its benchmark until
                      it becomes the near month contract and close to expiration.
                      In the event of a
                      natural gas futures market where near month contracts trade
                      at a higher price
                      than next month to expire contracts, a situation described
                      as “backwardation” in
                      the futures market, then absent the impact of the overall movement
                      in natural
                      gas prices the value of the benchmark contract would tend to
                      rise as it
                      approaches expiration. As a result the total return of the
                      Benchmark Futures
                      Contract would tend to track higher. Conversely, in the event
                      of a natural gas
                      futures market where near month contracts trade at a lower
                      price than next to
                      near month contracts, a situation described as “contango” in the futures market,
                      then absent the impact of the overall movement in natural gas
                      prices the value
                      of the benchmark contract would tend to decline as it approaches
                      expiration. As
                      a result the total return of the Benchmark Futures Contract
                      would tend to track
                      lower. When compared to total return of other price indices,
                      such as the spot
                      price of natural gas, the impact of backwardation and contango
                      may lead the
                      total return of USNG’s NAV to vary significantly. In the event of a prolonged
                      period of contango, and absent the impact of rising or falling
                      natural gas
                      prices, this could have a significant negative impact on USNG’s NAV and total
                      return.
 
 Regulation
                      of the commodity interests and energy markets is extensive
                      and constantly
                      changing; future regulatory developments are impossible to
                      predict but may
                      significantly and adversely affect USNG.
 
 The
                      regulation of commodity interest transactions in the United
                      States is a rapidly
                      changing area of law and is subject to ongoing modification
                      by governmental and
                      judicial action. In addition, various national governments
                      have expressed
                      concern regarding the disruptive effects of speculative trading
                      in the energy
                      markets and the need to regulate the derivatives markets in
                      general. The effect
                      of any future regulatory change on USNG is impossible to predict,
                      but could be
                      substantial and adverse.
 
 Investing
                      in USNG for purposes of hedging may be subject to several risks
                      including the
                      possibility of losing the benefit of favorable market movement.
 
 Participants
                      in the natural gas or in other industries may use USNG as a
                      vehicle to hedge the
                      risk of losses in their natural gas-related transactions. There
                      are several
                      risks in connection with using USNG as a hedging device. While
                      hedging can
                      provide protection against an adverse movement in market prices,
                      it can also
                      preclude a hedgor’s opportunity to benefit from a favorable market movement.
                      In
                      a hedging transaction, the hedgor may be concerned that the
                      hedged item will
                      increase in price, but must recognize the risk that the price
                      may instead
                      decline and if this happens he will have lost his opportunity
                      to profit from the
                      change in price because the hedging transaction will result
                      in a loss rather
                      than a gain. Thus, the hedgor foregoes the opportunity to profit
                      from favorable
                      price movements.
 
 In
                      addition, if the hedge is not a perfect one, the hedgor can
                      lose on the hedging
                      transaction and not realize an offsetting gain in the value
                      of the underlying
                      item being hedged.
 
 When
                      using futures contracts as a hedging technique, at best, the
                      correlation between
                      changes in prices of futures contracts and of the items being
                      hedged can be only
                      approximate. The degree of imperfection of correlation depends
                      upon
                      circumstances such as: variations in speculative markets, demand
                      for futures and
                      for natural gas products, technical influences in futures trading,
                      and
                      differences between anticipated energy costs being hedged and
                      the instruments
                      underlying the standard futures contracts available for trading.
                      Even a
                      well-conceived hedge may be unsuccessful to some degree because
                      of unexpected
                      market behavior as well as the expenses associated with creating
                      the
                      hedge.
  36
 
 In
                    addition, using an investment in USNG as a hedge for changes
                    in energy costs
                    (e.g., investing
                    in
                    natural gas, crude oil, gasoline, or other fuels, or electricity)
                    may not
                    correlate because changes in the spot price of natural gas may
                    vary from changes
                    in energy costs because the spot price of natural gas may not
                    be at the same
                    rate as changes in the price of other energy products and, in
                    any case, the
                    price of natural gas does not reflect the refining, transportation,
                    and other
                    costs that may impact the hedgor’s energy costs.
 An
                      investment in USNG may provide little or no diversification
                      benefits. Thus, in a
                      declining market, USNG may have no gains to offset losses from
                      other
                      investments, and an investor may suffer losses on its investment
                      in USNG while
                      incurring losses with respect to other asset classes.
 
 Historically,
                      Futures Contracts and Other Natural Gas-Related Investments
                      have generally been
                      non-correlated to the performance of other asset classes such
                      as stocks and
                      bonds. Non-correlation means that there is a low statistically
                      valid
                      relationship between the performance of futures and other commodity
                      interest
                      transactions, on the one hand, and stocks or bonds, on the
                      other hand. However,
                      there can be no assurance that such non-correlation will continue
                      during future
                      periods. If, contrary to historic patterns, USNG’s performance were to move in
                      the same general direction as the financial markets, investors
                      will obtain
                      little or no diversification benefits from an investment in
                      the units. In such a
                      case, USNG may have no gains to offset losses from other investments,
                      and
                      investors may suffer losses on their investment in USNG at
                      the same time they
                      incur losses with respect to other investments.
 
 Variables
                      such as drought, floods, weather, embargoes, tariffs and other
                      political events
                      may have a larger impact on natural gas prices and natural
                      gas-linked
                      instruments, including Futures Contracts and Other Natural
                      Gas-Related
                      Investments, than on traditional securities. These additional
                      variables may
                      create additional investment risks that subject USNG’s investments to greater
                      volatility than investments in traditional securities.
 
 Non-correlation
                      should not be confused with negative correlation, where the
                      performance of two
                      asset classes would be opposite of each other. There is no
                      historic evidence
                      that the spot price of natural gas and prices of other financial
                      assets, such as
                      stocks and bonds, are negatively correlated. In the absence
                      of negative
                      correlation, USNG cannot be expected to be automatically profitable
                      during
                      unfavorable periods for the stock market, or vice versa.
 
 USNG’s
                      Operating Risks
 
 USNG
                      is not a registered investment company so unitholders do not
                      have the
                      protections of the 1940 Act.
 
 USNG
                      is
                      not an investment company subject to the 1940 Act. Accordingly,
                      investors do not
                      have the protections afforded by that statute which, for example,
                      requires
                      investment companies to have a majority of disinterested directors
                      and regulates
                      the relationship between the investment company and its investment
                      manager.
 
 The
                      General Partner is leanly staffed and relies heavily on key
                      personnel to manage
                      trading activities.
 
 In
                      managing and directing the day-to-day activities and affairs
                      of USNG, the
                      General Partner relies heavily on Messrs. Nicholas Gerber, John Love
                      and John Hyland. If Messrs. Gerber, Love or Hyland were to leave or be
                      unable to carry out their present responsibilities, it may
                      have an adverse
                      effect on the management of USNG. Furthermore, Messrs. Gerber,
                      Love and Hyland
                      are currently involved in the management of USOF, US12OF and
                      USG, and the
                      General Partner is currently in the process of registering
                      two other exchange
                      traded securities, USHO and US12NG. Messrs. Gerber and Love are
                      also employed by Ameristock Corporation, a registered investment
                      adviser that
                      manages a public mutual fund. It is estimated that Mr. Gerber
                      will spend
                      approximately 50% of his time on USOF, USNG, USHO, USG, US12OF
                      and US12NG
                      matters. Mr. Love will spend approximately 95% of his time
                      on USOF, USNG, USHO,
                      USG, US12OF and US12NG matters and Mr. Hyland will spend approximately
                      75% of
                      his time on USOF, USNG, USHO, USG, US12OF and US12NG matters.
                      To the extent that
                      the General Partner establishes additional funds, even greater
                      demands will be
                      placed on Messrs. Gerber, Love and Hyland, as well as the other officers of
                      the General Partner, including Mr. Mah, the Chief Financial
                      Officer, and its
                      Board of Directors.
  37
 Accountability
                  levels, position limits, and daily price fluctuation limits set
                  by the exchanges
                  have the potential to cause a tracking error, which could cause
                  the price of
                  units to substantially vary from the price of the Benchmark Futures
                  Contract and
                  prevent investors from being able to effectively use USNG as a
                  way to hedge
                  against natural gas-related losses or as a way to indirectly invest
                  in natural
                  gas.
 U.S.
                    designated contract markets such as the NYMEX have established
                    accountability
                    levels and position limits on the maximum net long or net short
                    futures
                    contracts in commodity interests that any person or group of
                    persons under
                    common trading control (other than as a hedge, which an investment
                    in USNG is
                    not) may hold, own or control. For example, the current accountability
                    level for
                    investments at any one time in the Benchmark Futures Contract is 12,000.
                    While this is not a fixed ceiling, it is a threshold above which
                    the NYMEX may
                    exercise greater scrutiny and control over an investor, including
                    limiting an
                    investor to holding no more than 12,000 Benchmark Futures Contracts.
                    With regard
                    to position limits, the NYMEX limits an investor from holding
                    more than 1,000
                    net futures in the last 3 days of trading in the near month contract
                    to
                    expire.
 
 In
                    addition to accountability levels and position limits, the NYMEX
                    also sets daily
                    price fluctuation limits on the Futures Contracts. The daily
                    price fluctuation
                    limit establishes the maximum amount that the price of a futures
                    contract may
                    vary either up or down from the previous day’s settlement price. Once the daily
                    price fluctuation limit has been reached in a particular Futures
                    Contract, no
                    trades may be made at a price beyond that limit.
 
 For
                    example, the NYMEX imposes a $3.00 per mmBtu ($30,000 per contract)
                    price
                    fluctuation limit for the Benchmark Futures Contracts. This limit
                    is initially
                    based off of the previous trading day’s settlement price. If any Benchmark
                    Futures Contract is traded, bid, or offered at the limit for
                    five minutes,
                    trading is halted for five minutes. When trading resumes it begins
                    at the point
                    where the limit was imposed and the limit is reset to be $3.00
                    per mmBtu in
                    either direction of that point. If another halt were triggered,
                    the market would
                    continue to be expanded by $3.00 per mmBtu in either direction
                    after each
                    successive five-minute trading halt. There is no maximum price
                    fluctuation limit
                    during any one trading session.
 
 All
                    of
                    these limits may potentially cause a tracking error between the
                    price of the
                    units and the price of the Benchmark Futures Contract. This may
                    in turn prevent
                    investors from being able to effectively use USNG as a way to
                    hedge against
                    natural gas-related losses or as a way to indirectly invest in
                    natural
                    gas.
 
 USNG
                    is
                    not limiting the size of the offering and is committed to utilizing
                    substantially all of its proceeds to purchase Futures Contracts
                    and Other
                    Natural Gas-Related Investments. If USNG encounters accountability
                    levels,
                    position limits, or price fluctuation limits for natural gas
                    contracts on the
                    NYMEX, it may then, if permitted under applicable regulatory
                    requirements,
                    purchase Futures Contracts on the ICE Futures (formerly, the
                    International
                    Petroleum Exchange) or other exchanges that trade listed natural
                    gas futures.
                    The Futures Contracts available on the ICE Futures are comparable
                    to the
                    contracts on the NYMEX, but they may have different underlying
                    commodities,
                    sizes, deliveries, and prices.
 
 There
                    are technical and fundamental risks inherent in the trading system
                    the General
                    Partner intends to employ.
 
 The
                    General Partner’s trading system is quantitative in nature and it is possible
                    that the General Partner might make a mathematical error. In
                    addition, it is
                    also possible that a computer or software program may malfunction
                    and cause an
                    error in computation.
 38
 
 USNG
                      and the General Partner may have conflicts of interest, which
                      may permit them to
                      favor their own interests to the detriment of unitholders.
 
 USNG
                      and
                      the General Partner may have inherent conflicts to the extent
                      the General
                      Partner attempts to maintain USNG’s asset size in order to preserve its fee
                      income and this may not always be consistent with USNG’s objective of having the
                      value of its unit’s NAV track changes in the Benchmark Futures Contract. The
                      General Partner’s officers, directors and employees do not devote their time
                      exclusively to USNG. These persons are directors, officers
                      or employees of other
                      entities that may compete with USNG for their services. They
                      could have a
                      conflict between their responsibilities to USNG and to those
                      other
                      entities.
 
 In
                      addition, the General Partner’s principals, officers, directors or employees may
                      trade futures and related contracts for their own account.
                      A conflict of
                      interest may exist if their trades are in the same markets
                      and at the same time
                      as USNG trades using the clearing broker to be used by USNG.
                      A potential
                      conflict also may occur if the General Partner’s principals, officers, directors
                      or employees trade their accounts more aggressively or take
                      positions in their
                      accounts which are opposite, or ahead of, the positions taken
                      by
                      USNG.
 
 The
                      General Partner has sole current authority to manage the investments
                      and
                      operations of USNG, and this may allow it to act in a way that
                      furthers its own
                      interests which may create a conflict with the best interests
                      of investors.
                      Limited partners have limited voting control, which will limit
                      the ability to
                      influence matters such as amendment of the LP Agreement, change
                      in USNG’s basic
                      investment policy, dissolution of this fund, or the sale or
                      distribution of
                      USNG’s assets.
 
 The
                      General Partner serves as the general partner to each of USG, USOF, US12OF,
                      USHO and US12NG, as well as USNG. The General Partner may have
                      a conflict to the
                      extent that its trading decisions for USNG may be influenced
                      by the effect they
                      would have on the other funds it manages. These trading decisions
                      may be
                      influenced since the General Partner also serves as the general
                      partner for all
                      of the funds and is required to meet all of the funds’ investment objectives as
                      well as USNG’s. If the General Partner believes that a trading decision
                      it made
                      on behalf of USNG might (i) impede its other funds from reaching
                      their
                      investment objectives, or (ii) improve the likelihood of meeting
                      its other
                      funds’ objectives, then the General Partner may choose to change its
                      trading
                      decision for USNG, which could either impede or improve the
                      opportunity for USNG
                      from meeting its investment objective. In addition, the General
                      Partner is
                      required to indemnify the officers and directors of its other
                      funds if the need
                      for indemnification arises. This potential indemnification
                      will cause the
                      General Partner’s assets to decrease. If the General Partner’s other sources of
                      income are not sufficient to compensate for the indemnification,
                      then the
                      General Partner may terminate and investors could lose their
                      investment.
 
 Unitholders
                      may only vote on the removal of the General Partner and limited
                      partners have
                      only limited voting rights. Unitholders and limited partners
                      will not
                      participate in the management of USNG and do not control the
                      General Partner so
                      they will not have influence over basic matters that affect
                      USNG.
 
 Unitholders
                      that have not applied to become limited partners have no voting
                      rights, other
                      than to remove the General Partner. Limited partners will have
                      limited voting
                      rights with respect to USNG’s affairs. Unitholders may remove the General
                      Partner only if 66 2/3% of the unitholders elect to do so.
                      Unitholders and
                      limited partners will not be permitted to participate in the
                      management or
                      control of USNG or the conduct of its business. Unitholders
                      and limited partners
                      must therefore rely upon the duties and judgment of the General
                      Partner to
                      manage USNG’s affairs.
  39
 
 The
                    General Partner may manage a large amount of assets and this
                    could affect USNG’s
                    ability to trade profitably.
 Increases
                      in assets under management may affect trading decisions. In
                      general, the General
                      Partner does not intend to limit the amount of assets of USNG
                      that it may
                      manage. The more assets the General Partner manages, the more
                      difficult it may
                      be for it to trade profitably because of the difficulty of
                      trading larger
                      positions without adversely affecting prices and performance
                      and of managing
                      risk associated with larger positions.
 
 USNG
                      could terminate at any time and cause the liquidation and potential
                      loss of an
                      investor’s investment and could upset the overall maturity and timing
                      of an
                      investor’s investment portfolio.
 
 USNG
                      may
                      terminate at any time, regardless of whether USNG has incurred
                      losses, subject
                      to the terms of the LP Agreement. In particular, unforeseen
                      circumstances,
                      including the death, adjudication of incompetence, bankruptcy,
                      dissolution, or
                      removal of the General Partner could cause USNG to terminate
                      unless a majority
                      interest of the limited partners within 90 days of the event
                      elects to continue
                      the partnership and appoints a successor general partner, or
                      the affirmative
                      vote of a majority interest of the limited partners subject
                      to conditions.
                      However, no level of losses will require the General Partner
                      to terminate USNG.
                      USNG’s termination would cause the liquidation and potential loss
                      of an
                      investor’s investment. Termination could also negatively affect the
                      overall
                      maturity and timing of an investor’s investment portfolio.
 
 Limited
                      partners may not have limited liability in certain circumstances,
                      including
                      potentially having liability for the return of wrongful
                      distributions.
 
 Under
                      Delaware law, a limited partner might be held liable for our
                      obligations as if
                      it were a General Partner if the limited partner participates
                      in the control of
                      the partnership’s business and the persons who transact business with the
                      partnership think the limited partner is the General Partner.
 
 A
                      limited
                      partner will not be liable for assessments in addition to its
                      initial capital
                      investment in any of our capital securities representing limited
                      partnership
                      interests. However, a limited partner may be required to repay
                      to us any amounts
                      wrongfully returned or distributed to it under some circumstances.
                      Under
                      Delaware law, USNG may not make a distribution to limited partners
                      if the
                      distribution causes our liabilities (other than liabilities
                      to partners on
                      account of their partnership interests and nonrecourse liabilities)
                      to exceed
                      the fair value of our assets. Delaware law provides that a
                      limited partner who
                      receives such a distribution and knew at the time of the distribution
                      that the
                      distribution violated the law will be liable to the limited
                      partnership for the
                      amount of the distribution for three years from the date of
                      the
                      distribution.
 
 With
                      adequate notice, a limited partner may be required to withdraw
                      from the
                      partnership for any reason.
 
 If
                      the
                      General Partner gives at least fifteen (15) days’ written notice to a limited
                      partner, then the General Partner may for any reason, in its
                      sole discretion,
                      require any such limited partner to withdraw entirely from
                      the partnership or to
                      withdraw a portion of its partner capital account. The General
                      Partner may
                      require withdrawal even in situations where the limited partner
                      has complied
                      completely with the provisions of the LP Agreement.
  40
 
 USNG’s
                    existing units are, and any units USNG issues in the future will
                    be, subject to
                    restrictions on transfer. Failure to satisfy these requirements
                    will preclude a
                    transferee from being able to have all the rights of a limited
                    partner.
 No
                      transfer of any unit or interest therein may be made if such
                      transfer would (a)
                      violate the then applicable federal or state securities laws
                      or rules and
                      regulations of the SEC, any state securities commission, the
                      CFTC or any other
                      governmental authority with jurisdiction over such transfer,
                      or (b) cause USNG
                      to be taxable as a corporation or affect USNG’s existence or qualification as a
                      limited partnership. In addition, investors may only become
                      limited partners if
                      they transfer their units to purchasers that meet certain conditions
                      outlined in
                      the LP Agreement, which provides that each record holder or
                      limited partner or
                      unitholder applying to become a limited partner (each a record
                      holder) may be
                      required by the General Partner to furnish certain information,
                      including that
                      holder’s nationality, citizenship or other related status. A transferee
                      who is
                      not a U.S. resident may not be eligible to become a record
                      holder or a limited
                      partner if its ownership would subject USNG to the risk of
                      cancellation or
                      forfeiture of any of its assets under any federal, state or
                      local law or
                      regulation. All purchasers of USNG’s units, who wish to become limited partners
                      or record holders, and receive cash distributions, if any,
                      or have certain other
                      rights, must deliver an executed transfer application in which
                      the purchaser or
                      transferee must certify that, among other things, he, she or
                      it agrees to be
                      bound by USNG’s LP Agreement and is eligible to purchase USNG’s securities. Any
                      transfer of units will not be recorded by the transfer agent
                      or recognized by us
                      unless a completed transfer application is delivered to the
                      General Partner or
                      the Administrator. A person purchasing USNG’s existing units, who does not
                      execute a transfer application and certify that the purchaser
                      is eligible to
                      purchase those securities acquires no rights in those securities
                      other than the
                      right to resell those securities. Whether or not a transfer
                      application is
                      received or the consent of the General Partner obtained, our
                      units will be
                      securities and will be transferable according to the laws governing
                      transfers of
                      securities. See “Transfer of Units.”
 
 USNG
                      does not expect to make cash distributions.
 
 The
                      General Partner has not previously made any cash distributions
                      and intends to
                      re-invest any realized gains in Natural Gas Interests rather
                      than distributing
                      cash to limited partners. Therefore, unlike mutual funds, commodity
                      pools or
                      other investment pools that actively manage their investments
                      in an attempt to
                      realize income and gains from their investing activities and
                      distribute such
                      income and gains to their investors, USNG generally does not
                      expect to
                      distribute cash to limited partners. An investor should not
                      invest in USNG if it
                      will need cash distributions from USNG to pay taxes on its
                      share of income and
                      gains of USNG, if any, or for any other reason. Although USNG
                      does not intend to
                      make cash distributions, the income earned from its investments
                      held directly or
                      posted as margin may reach levels that merit distribution,
                      e.g., at levels where
                      such income is not necessary to support its underlying investments
                      in natural
                      gas interests and investors adversely react to being taxed
                      on such income
                      without receiving distributions that could be used to pay such
                      tax. If this
                      income becomes significant then cash distributions may be made.
 
 There
                      is a risk that USNG will not earn trading gains sufficient
                      to compensate for the
                      fees and expenses that it must pay and as such USNG may not
                      earn any
                      profit.
 
 USNG
                      pays
                      brokerage charges of approximately 0.17% (based on futures
                      commission merchant
                      fees of $4.00 per buy or sell, management fees of 0.60% of
                      NAV on the first
                      $1,000,000,000 of assets and 0.50% of NAV after the first $1,000,000,000
                      of
                      assets, and over-the-counter spreads and extraordinary expenses
                      (i.e.
                      expenses not in the
                      ordinary course of business, including the indemnification
                      of any person against
                      liabilities and obligations to the extent permitted by law
                      and required under
                      the LP Agreement and under agreements entered into by the General
                      Partner on
                      USNG’s behalf and the bringing and defending of actions at law or
                      in equity and
                      otherwise engaging in the conduct of litigation and the incurring
                      of legal
                      expenses and the settlement of claims and litigation) that
                      can not be
                      quantified. These fees and expenses must be paid in all cases
                      regardless of
                      whether USNG’s activities are profitable. Accordingly, USNG must earn trading
                      gains sufficient to compensate for these fees and expenses
                      before it can earn
                      any profit.
  41
 
 USNG,
                    historically, has depended upon its affiliates to pay all its
                    expenses. If this
                    offering of units does not raise sufficient funds to pay USNG’s future expenses
                    and no other source of funding of expenses is found, USNG may
                    be forced to
                    terminate and investors may lose all or part of their investment.
 Prior
                      to
                      the offering of units that commenced on April 17, 2007, all
                      of USNG’s expenses
                      were funded by the General Partner and its affiliates. These
                      payments by the
                      General Partner and its affiliates were designed to allow USNG
                      the ability to
                      commence the public offering of its units. USNG now directly
                      pays certain of
                      these fees and expenses. The General Partner will continue
                      to pay other fees and
                      expenses, as set forth in the LP Agreement. If the General
                      Partner and USNG are
                      unable to raise sufficient funds to cover their expenses or
                      locate any other
                      source of funding, USNG may be forced to terminate and investors
                      may lose all or
                      part of their investment.
 
 USNG
                      may incur higher fees and expenses upon renewing existing or
                      entering into new
                      contractual relationships.
 
 The
                      clearing arrangements between the clearing brokers and USNG
                      generally are
                      terminable by the clearing brokers once the clearing broker
                      has given USNG
                      notice. Upon termination, the General Partner may be required
                      to renegotiate or
                      make other arrangements for obtaining similar services if USNG
                      intends to
                      continue trading in Futures Contracts or Other Natural Gas-Related
                      Investments
                      at its present level of capacity. The services of any clearing
                      broker may not be
                      available, or even if available, these services may not be
                      available on the
                      terms as favorable as those of the expired or terminated clearing
                      arrangements.
 
 USNG
                      may miss certain trading opportunities because it will not
                      receive the benefit
                      of the expertise of independent trading advisors.
 
 The
                      General Partner does not employ trading advisors for USNG;
                      however, it reserves
                      the right to employ them in the future. The only advisor to
                      USNG is the General
                      Partner. A lack of indepedent trading advisors may be disadvantageous to
                      USNG because it will not receive the benefit of a trading advisor’s
                      expertise.
 
 An
                      unanticipated number of redemption requests during a short
                      period of time could
                      have an adverse effect on the NAV of USNG.
 
 If
                      a
                      substantial number of requests for redemption of Redemption
                      Baskets are received
                      by USNG during a relatively short period of time, USNG may
                      not be able to
                      satisfy the requests from USNG’s assets not committed to trading. As a
                      consequence, it could be necessary to liquidate positions in
                      USNG’s trading
                      positions before the time that the trading strategies would
                      otherwise dictate
                      liquidation.
 
 The
                      failure or bankruptcy of a clearing broker could result in
                      a substantial loss of
                      USNG’s assets.
 
 Under
                      CFTC regulations, a clearing broker maintains customers’ assets in a bulk
                      segregated account. If a clearing broker fails to do so, or
                      is unable to satisfy
                      a substantial deficit in a customer account, its other customers
                      may be subject
                      to risk of substantial loss of their funds in the event of
                      that clearing
                      broker’s bankruptcy. In that event, the clearing broker’s customers, such as
                      USNG, are entitled to recover, even in respect of property
                      specifically
                      traceable to them, only a proportional share of all property
                      available for
                      distribution to all of that clearing broker’s customers. USNG also may be
                      subject to the risk of the failure of, or delay in performance
                      by, any exchanges
                      and markets and their clearing organizations, if any, on which
                      commodity
                      interest contracts are traded.
 
 From
                      time
                      to time, the clearing brokers may be subject to legal or regulatory
                      proceedings
                      in the ordinary course of their business. A clearing broker’s involvement in
                      costly or time-consuming legal proceedings may divert financial
                      resources or
                      personnel away from the clearing broker’s trading operations, which could impair
                      the clearing broker’s ability to successfully execute and clear USNG’s
                      trades.
  42
 Third
        parties may infringe upon or otherwise violate intellectual property rights
        or
        assert that the General Partner has infringed or otherwise violated their
        intellectual property rights, which may result in significant costs and diverted
        attention.
 Third
          parties may utilize USNG’s intellectual property or technology, including the
          use of its business methods, trademarks and trading program software, without
          permission. The General Partner has a patent pending for USNG’s business method
          and it is registering its trademarks. USNG does not currently have any
          proprietary software. However, if it obtains proprietary software in the
          future,
          then any unauthorized use of USNG’s proprietary software and other technology
          could also adversely affect its competitive advantage. USNG may have difficulty
          monitoring unauthorized uses of its patents, trademarks, proprietary software
          and other technology. Also, third parties may independently develop business
          methods, trademarks or proprietary software and other technology similar
          to that
          of the General Partner or claim that the General Partner has violated their
          intellectual property rights, including their copyrights, trademark rights,
          trade names, trade secrets and patent rights. As a result, the General
          Partner
          may have to litigate in the future to protect its trade secrets, determine
          the
          validity and scope of other parties’ proprietary rights, defend itself against
          claims that it has infringed or otherwise violated other parties’ rights, or
          defend itself against claims that its rights are invalid. Any litigation
          of this
          type, even if the General Partner is successful and regardless of the merits,
          may result in significant costs, divert its resources from USNG, or require
          it
          to change its proprietary software and other technology or enter into royalty
          or
          licensing agreements. See “Legal Risks” below.
 
 The
          success of USNG depends on the ability of the General Partner to accurately
          implement trading systems, and any failure to do so could subject USNG
          to losses
          on such transactions.
 
 The
          General Partner uses mathematical formulas built into a generally available
          spreadsheet program to decide whether it should buy or sell Natural Gas
          Interests each day. Specifically, the General Partner uses the spreadsheet
          to
          make mathematical calculations and to monitor positions in Natural Gas
          Interests
          and Treasuries and correlations to the Benchmark Futures Contract. The
          General
          Partner must accurately process the spreadsheets’ outputs and execute the
          transactions called for by the formulas. In addition, USNG relies on the
          General
          Partner to properly operate and maintain its computer and communications
          systems. Execution of the formulas and operation of the systems are subject
          to
          human error. Any failure, inaccuracy or delay in implementing any of the
          formulas or systems and executing USNG’s transactions could impair its ability
          to achieve USNG’s investment objective. It could also result in decisions to
          undertake transactions based on inaccurate or incomplete information. This
          could
          cause substantial losses on transactions.
 
 USNG
          may experience substantial losses on transactions if the computer or
          communications system fails.
 
 USNG’s
          trading activities, including its risk management, depend on the integrity
          and
          performance of the computer and communications systems supporting them.
          Extraordinary transaction volume, hardware or software failure, power or
          telecommunications failure, a natural disaster or other catastrophe could
          cause
          the computer systems to operate at an unacceptably slow speed or even fail.
          Any
          significant degradation or failure of the systems that the General Partner
          uses
          to gather and analyze information, enter orders, process data, monitor
          risk
          levels and otherwise engage in trading activities may result in substantial
          losses on transactions, liability to other parties, lost profit opportunities,
          damages to the General Partner’s and USNG’s reputations, increased operational
          expenses and diversion of technical resources.
 
 If
          the computer and communications systems are not upgraded, USNG’s financial
          condition could be harmed.
 
 The
          development of complex computer and communications systems and new technologies
          may render the existing computer and communications systems supporting
          USNG’s
          trading activities obsolete. In addition, these computer and communications
          systems must be compatible with those of third parties, such as the systems
          of
          exchanges, clearing brokers and the executing brokers. As a result, if
          these
          third parties upgrade their systems, the General Partner will need to make
          corresponding upgrades to continue effectively its trading activities.
          USNG’s
          future success will depend on USNG’s ability to respond to changing technologies
          on a timely and cost-effective basis.
 43
 USNG
          depends on the reliable performance of the computer and communications
          systems
          of third parties, such as brokers and futures exchanges, and may experience
          substantial losses on transactions if they fail.
 USNG
            depends on the proper and timely function of complex computer and communications
            systems maintained and operated by the futures exchanges, brokers and
            other data
            providers that the General Partner uses to conduct trading activities.
            Failure
            or inadequate performance of any of these systems could adversely affect
            the
            General Partner’s ability to complete transactions, including its ability to
            close out positions, and result in lost profit opportunities and significant
            losses on commodity interest transactions. This could have a material
            adverse
            effect on revenues and materially reduce USNG’s available capital. For example,
            unavailability of price quotations from third parties may make it difficult
            or
            impossible for the General Partner to use its proprietary software that
            it
            relies upon to conduct its trading activities. Unavailability of records
            from
            brokerage firms may make it difficult or impossible for the General Partner
            to
            accurately determine which transactions have been executed or the details,
            including price and time, of any transaction executed. This unavailability
            of
            information also may make it difficult or impossible for the General
            Partner to
            reconcile its records of transactions with those of another party or
            to
            accomplish settlement of executed transactions.
 
 The
            occurrence of a terrorist attack, or the outbreak, continuation or expansion
            of
            war or other hostilities could disrupt USNG’s trading activity and materially
            affect USNG’s profitability.
 
 The
            operations of USNG, the exchanges, brokers and counterparties with which
            USNG
            does business, and the markets in which USNG does business could be severely
            disrupted in the event of a major terrorist attack or the outbreak, continuation
            or expansion of war or other hostilities. The terrorist attacks of September
            11,
            2001 and the war in Iraq, global anti-terrorism initiatives and political
            unrest
            in the Middle East and Southeast Asia continue to fuel this
            concern.
 
 Risk
            of Leverage and Volatility
 
 If
            the General Partner permits USNG to become leveraged, investors could
            lose all
            or substantially all of their investment if USNG’s trading positions suddenly
            turn unprofitable.
 
 Commodity
            pools’ trading positions in futures contracts or other commodity interests are
            typically required to be secured by the deposit of margin funds that
            represent
            only a small percentage of a futures contract’s (or other commodity interests’)
            entire face value. This feature permits commodity pools to “leverage” their
            assets by purchasing or selling futures contracts (or other commodity
            interests)
            with an aggregate value in excess of the commodity pool’s assets. While this
            leverage can increase the pool’s profits, relatively small adverse movements in
            the price of the pool’s futures contracts can cause significant losses to the
            pool. While the General Partner has not and does not intend to leverage
            USNG’s
            assets, it is not prohibited from doing so under the LP Agreement or
            otherwise.
 44
 The
            price of natural gas is volatile which could cause large fluctuations
            in the
            price of units.
 Movements
              in the price of natural gas may be the result of factors outside of
              the General
              Partner’s control and may not be anticipated by the General Partner. Among
              the
              factors that can cause volatility in the price of natural gas are:
 •
                    worldwide
                        or regional demand for energy, which is affected by economic
                        conditions;
 •
                    the
                        domestic and foreign supply and inventories of oil and
                        gas;
 •
                    weather
                        conditions, including abnormally mild winter or summer weather,
                        and
                        abnormally harsh winter or summer
                        weather;
 •
                    availability
                        and adequacy of pipeline and other transportation
                        facilities;
 •
                    domestic
                        and foreign governmental regulations and
                        taxes;
 •
                    political
                        conditions in gas or oil producing
                        regions;
 •
                    the
                        ability of members of OPEC to agree upon and maintain oil
                        prices and
                        production levels;
 •
                    the
                        price and availability of alternative fuels; and•
                    the
                        impact of energy conservation
                        efforts.
 
 The
              impact of environmental and other governmental laws and regulations
              that may
              affect the price of natural gas.
 
 Environmental
              and other governmental laws and regulations have increased the costs
              to plan,
              design, drill, install, operate and abandon natural gas and oil wells.
              Other
              laws have prevented exploration and drilling of natural gas in certain
              environmentally sensitive federal lands and waters. Several environmental
              laws
              that have a direct or an indirect impact on the price of natural gas
              include,
              but are not limited to, the Clean Air Act, Clean Water Act, Resource
              Conservation and Recovery Act, and the Comprehensive Environmental
              Response,
              Compensation and Liability Act of 1980.
 
 The
              limited method for transporting and storing natural gas may cause the
              price of
              natural gas to increase.
 
 Natural
              gas is primarily transported and stored throughout the United States
              by way of
              pipeline and underground storage facilities. These systems may not
              be adequate
              to meet demand, especially in times of peak demand or in areas of the
              United
              States where gas service is already limited due to minimal pipeline
              and storage
              infrastructure. As a result of the limited method for transporting
              and storing
              natural gas, the price of natural gas may increase.
 
 Over-the-Counter
              Contract Risk
 
 Over-the-counter
              transactions are subject to little, if any, regulation.
 
 A
              portion
              of USNG’s assets may be used to trade over-the-counter natural gas interest
              contracts, such as forward contracts or swap or spot contracts. Over-the-counter
              contracts are typically traded on a principal-to-principal basis through
              dealer
              markets that are dominated by major money center and investment banks
              and other
              institutions and are essentially unregulated by the CFTC. Investors
              therefore do
              not receive the protection of CFTC regulation or the statutory scheme
              of the CEA
              in connection with this trading activity by USNG. The markets for
              over-the-counter contracts rely upon the integrity of market participants
              in
              lieu of the additional regulation imposed by the CFTC on participants
              in the
              futures markets. The lack of regulation in these markets could expose
              USNG in
              certain circumstances to significant losses in the event of trading
              abuses or
              financial failure by participants.
 
 45
 USNG
            will be subject to credit risk with respect to counterparties to
            over-the-counter contracts entered into by USNG or held by special purpose
            or
            structured vehicles.
 USNG
              also
              faces the risk of non-performance by the counterparties to the over-the-counter
              contracts. Unlike in futures contracts, the counterparty to these contracts
              is
              generally a single bank or other financial institution, rather than
              a clearing
              organization backed by a group of financial institutions. As a result,
              there
              will be greater counterparty credit risk in these transactions. A counterparty
              may not be able to meet its obligations to USNG, in which case USNG
              could suffer
              significant losses on these contracts.
 
 If
              a
              counterparty becomes bankrupt or otherwise fails to perform its obligations
              due
              to financial difficulties, USNG may experience significant delays in
              obtaining
              any recovery in a bankruptcy or other reorganization proceeding. USNG
              may obtain
              only limited recovery or may obtain no recovery in such
              circumstances.
 
 USNG
              may be subject to liquidity risk with respect to its over-the-counter
              contracts.
 
 Over-the-counter
              contracts may have terms that make them less marketable than Futures
              Contracts.
              Over-the-counter contracts are less marketable because they are not
              traded on an
              exchange, do not have uniform terms and conditions, and are entered
              into based
              upon the creditworthiness of the parties and the availability of credit
              support,
              such as collateral, and in general, they are not transferable without
              the
              consent of the counterparty. These conditions diminish the ability
              to realize
              the full value of such contracts.
 
 Risk
              of Trading in International Markets
 
 Trading
              in international markets could expose USNG to credit and regulatory
              risk.
 
 The
              General Partner invests primarily in Futures Contracts, a significant
              portion of
              which are traded on United States exchanges including the NYMEX. However,
              a
              portion of USNG’s trades may take place on markets and exchanges outside the
              United States. Some non-U.S. markets present risks because they are
              not subject
              to the same degree of regulation as their U.S. counterparts. None of
              the CFTC,
              NFA, or any domestic exchange regulates activities of any foreign boards
              of
              trade or exchanges, including the execution, delivery and clearing
              of
              transactions, nor has the power to compel enforcement of the rules
              of a foreign
              board of trade or exchange or of any applicable non-U.S. laws. Similarly,
              the
              rights of market participants, such as USNG, in the event of the insolvency
              or
              bankruptcy of a non-U.S. market or broker are also likely to be more
              limited
              than in the case of U.S. markets or brokers. As a result, in these
              markets, USNG
              has less legal and regulatory protection than it does when it trades
              domestically.
 
 In
              some
              of these non-U.S. markets, the performance on a contract is the responsibility
              of the counterparty and is not backed by an exchange or clearing corporation
              and
              therefore exposes USNG to credit risk. Trading in non-U.S. markets
              also leaves
              USNG susceptible to swings in the value of the local currency against
              the U.S.
              dollar. Additionally, trading on non-U.S. exchanges is subject to the
              risks
              presented by exchange controls, expropriation, increased tax burdens
              and
              exposure to local economic declines and political instability. An adverse
              development with respect to any of these variables could reduce the
              profit or
              increase the loss earned on trades in the affected international
              markets.
 
 International
              trading activities subject USNG to foreign exchange risk.
 
 The
              price
              of any non-U.S. Futures Contract, option on any non-U.S. Futures Contract
              or
              other non-U.S. Natural Gas-Related Investment, and, therefore, the
              potential
              profit and loss on such Natural Gas Interests, may be affected by any
              variance
              in the foreign exchange rate between the time the order is placed and
              the time
              it is liquidated, offset or exercised. As a result, changes in the
              value of the
              local currency relative to the U.S. dollar may cause losses to USNG
              even if the
              contract traded is profitable.
 
 USNG’s
              international trading would expose it to losses resulting from non-U.S.
              exchanges that are less developed or less reliable than United States
              exchanges.
 
 Some
              non-U.S. exchanges also may be in a more developmental stage so that
              prior price
              histories may not be indicative of current price dynamics. In addition,
              USNG may
              not have the same access to certain positions on foreign trading exchanges
              as do
              local traders, and the historical market data on which the General
              Partner bases
              its strategies may not be as reliable or accessible as it is for U.S.
              exchanges.
 
 46
 Tax
            Risk
 An
              investor’s tax liability may exceed the amount of distributions, if any, on
              its units.
 
 Cash
              or
              property will be distributed at the sole discretion of the General
              Partner. The
              General Partner has not and does not intend to make cash or other distributions
              with respect to units.  Investors will be required to pay U.S. federal
              income tax and, in some cases, state, local, or foreign income tax,
              on their
              allocable share of USNG’s taxable income, without regard to whether they receive
              distributions or the amount of any distributions. Therefore, tax liability
              of an
              investor with respect to its units may exceed the amount of cash or
              value of
              property (if any) distributed.
 
 An
              investor’s allocable share of taxable income or loss may differ from its
              economic income or loss on its units.
 
 Due
              to
              the application of the assumptions and conventions applied by USNG
              in making
              allocations for tax purposes and other factors, an investor’s allocable share of
              USNG’s income, gain, deduction or loss may be different than its economic
              profit
              or loss from its units for a taxable year. This difference could be
              temporary or
              permanent and, if permanent, could result in an investor being taxed
              on amounts
              in excess of its economic income.
 
 Items
              of income, gain, deduction, loss and credit with respect to units could
              be
              reallocated if the IRS does not accept the assumptions and conventions
              applied
              by USNG in allocating those items, with potential adverse consequences
              for an
              investor.
 
 The
              U.S.
              tax rules pertaining to partnerships are complex and their application
              to large,
              publicly traded partnerships such as USNG is in many respects uncertain.
              USNG
              will apply certain assumptions and conventions in an attempt to comply
              with the
              intent of the applicable rules and to report taxable income, gains,
              deductions,
              losses and credits in a manner that properly reflects unitholders’ economic
              gains and losses. These assumptions and conventions may not fully comply
              with
              all aspects of the Internal Revenue Code (“Code”) and applicable Treasury
              Regulations, however, and it is possible that the U.S. Internal Revenue
              Service
              will successfully challenge our allocation methods and require us to
              reallocate
              items of income, gain, deduction, loss or credit in a manner that adversely
              affects investors. If this occurs, investors may be required to file
              an amended
              tax return and to pay additional taxes plus deficiency interest.
 
 USNG
              could be treated as a corporation for federal income tax purposes,
              which may
              substantially reduce the value of the units.
 
 USNG
              has
              received an opinion of counsel that, under current U.S. federal income
              tax laws,
              USNG will be treated as a partnership that is not taxable as a corporation
              for
              U.S. federal income tax purposes, provided that (i) at least 90 percent
              of
              USNG’s annual gross income consists of “qualifying income” as defined in the
              Code, (ii) USNG is organized and operated in accordance with its governing
              agreements and applicable law and (iii) USNG does not elect to be taxed
              as a
              corporation for federal income tax purposes. Although the General Partner
              anticipates that USNG has satisfied and will continue to satisfy the
“qualifying
              income” requirement for all of its taxable years, that result cannot be assured.
              USNG has not requested and will not request any ruling from the IRS
              with respect
              to its classification as a partnership not taxable as a corporation
              for federal
              income tax purposes. If the IRS were to successfully assert that USNG
              is taxable
              as a corporation for federal income tax purposes in any taxable year,
              rather
              than passing through its income, gains, losses and deductions proportionately
              to
              unitholders, USNG would be subject to tax on its net income for the
              year at
              corporate tax rates. In addition, although the General Partner does
              not
              currently intend to make distributions with respect to units, any distributions
              would be taxable to unitholders as dividend income. Taxation of USNG
              as a
              corporation could materially reduce the after-tax return on an investment
              in
              units and could substantially reduce the value of the units.
 
 47
 Legal
          Risks
 An
            affiliate of USNG has been notified of intellectual property rights that
            could
            adversely impact USNG.
  Goldman
            Sachs &
Co.
  Goldman,
            Sachs & Co. (“Goldman Sachs”) sent USOF a letter on March 17, 2006,
            providing USOF and the General Partner notice under 35 U.S.C. Section
            154(d) of
            two pending United States patent applications, Publication Nos. 2004/0225593A1
            and 2006/0036533A1. Both patent applications are generally directed to
            a method
            and system for creating and administering a publicly traded interest
            in a
            commodity pool. In particular, the Abstract of each patent application
            defines a
            means for creating and administering a publicly traded interest in a
            commodity
            pool that includes the steps of forming a commodity pool having a first
            position
            in a futures contract and a corresponding second position in a margin
            investment, and issuing equity interests of the commodity pool to third
            party
            investors. Subsequently, two U.S. patents were issued; the first, patent
            number
            US7,283,978B2, was issued on October 16, 2007, and the second, patent
            number
            US7,319,984B2, was issued on January 15, 2008.
  Preliminarily,
              USOF's management is of the view that the structure and operations of
              USOF and its affiliated commodity pools do not infringe these patents.
              USOF is
              also in the process of reviewing prior art (prior structures and operations
              of
              similar investment vehicles) that may invalidate one or more of the
              claims in
              these patents. In addition, USOF has retained patent counsel to advise
              it on
              these matters and is in the process of obtaining their opinions regarding
              the
              non-infringement of each of these patents by USOF and/or the patents'
              invalidity
              based on prior art. If the patents were alleged to apply to USOF's
              structure
              and/or operations, and are found by a court to be valid and infringed,
              Goldman
              Sachs may be awarded significant monetary damages and/or injunctive
              relief. See
              “USNG's Operating Risks — Third parties may infringe upon or otherwise
              violate intellectual property rights or assert that the General Partner
              has
              infringed or otherwise violated their intellectual property rights, which may
              result in significant costs and diverted attention.”
 Item 1B.
                  Unresolved
                      Staff
                      Comments.
 
 Not
            applicable.
 
 Item 2.
                  Properties.
 
 Not
            applicable.
 48
 Item 3.
                  Legal
                      Proceedings.
  Although
            USNG may, from time to time, be involved in litigation arising out of
            its
            operations in the normal course
            of
            business or otherwise, it is currently not a party to any pending material
            legal
            proceedings, except for the items noted below.
  Goldman
              Sachs
  Goldman
                Sachs sent USOF a letter on March 17, 2006, providing USOF and the
                General
                Partner notice under 35 U.S.C. Section 154(d) of two pending United
                States
                patent applications, Publication Nos. 2004/0225593A1 and 2006/0036533A1.
                Both
                patent applications are generally directed to a method and system
                for creating
                and administering a publicly traded interest in a commodity pool.
                In particular,
                the Abstract of each patent application defines a means for creating
                and
                administering a publicly traded interest in a commodity pool that
                includes the
                steps of forming a commodity pool having a first position in a futures
                contract
                and a corresponding second position in a margin investment, and issuing
                equity
                interests of the commodity pool to third party investors. Subsequently,
                two U.S.
                patents were issued; the first, patent number US7,283,978B2, was
                issued on
                October 16, 2007, and the second, patent number US7,319,984B2, was
                issued on
                January 15, 2008.
  Preliminarily, USOF's
                    management is of the view that the structure and operations of USOF and
                    its
                    affiliated commodity pools do not infringe these patents. USOF
                    is also in the
                    process of reviewing prior art (prior structures and operations
                    of similar
                    investment vehicles) that may invalidate one or more of the claims
                    in these
                    patents. In addition, USOF has retained patent counsel to advise
                    it on these
                    matters and is in the process of obtaining their opinions regarding
                    the
                    non-infringement of each of these patents by USOF and/or the
                    patents' invalidity
                    based on prior art. If the patents were alleged to apply to USOF's
                    structure
                    and/or operations, and are found by a court to be valid and infringed,
                    Goldman
                    Sachs may be awarded significant monetary damages and/or injunctive
                    relief. See
                    “USNG's Operating Risks — Third parties may infringe upon or otherwise
                    violate intellectual property rights or assert that the General
                    Partner has
                    infringed or otherwise violated their intellectual property rights,
                    which may
                    result in significant costs and diverted
                    attention.”
 49
 Item 4.
                  Submission
                      of Matters to a Vote
                      of Security Holders.
 
 Not
            applicable.
  Part
              II
 
 Item 5.
                    Market
                        for Registrant’s Common
                        Equity, Related Stockholder Matters and Issuer Purchases
                        of Equity
                        Securities.
  Price
                Range of
                Units
  USNG’s
                units have traded on the AMEX under the symbol “UNG” since its initial
                public offering on April 18, 2007. The following table sets forth
                the range of
                reported high and low sales prices of the units as reported on AMEX
                for the
                period from April 18, 2007 to December 31, 2007.
  High
                      
                      LowFiscal
                          year 2007Second
                          quarter (beginning April 18, 2007)
                      
                      $
                      53.65
                      
                      $
                      42.92Third
                          quarter
                      
                      $
                      44.31
                      
                      $
                      33.95Fourth
                          quarter
                      
                      $
                      44.13
                      
                      $
                      34.53
  As
                of
                December 31, 2007, USNG had 22,078 holders
                of units.
 50
 D ividends
 USNG
              has
              not made and does not intend to make cash distributions to its unitholders.
 
 Issuer
              Purchases of Equity
              Securities
  USNG
              does
              not purchase units directly from its unitholders; however, in connection
              with
              its redemption of baskets held by Authorized Purchasers, USNG redeemed
              215
              baskets (comprising 21,500,000 units) during the year ended December
              31,
              2007.
 Item 6.
                  Selected
                      Financial
                      Data.
 
 Financial
            Highlights (for the period
            from April 18, 2007 to December 31, 2007)
 (Dollar
            amounts in 000’s except for
            Net Loss per unit)
  Total
                        assets
                    
                    $
                    593,395Net
                        realized and unrealized loss on futures transactions, inclusive
                        of
                        commissions
                    
                    $
                    (20,247
                    )Net
                        loss
                    
                    $
                    (13,592
                    )Weighted-average
                        limited partnership units
                    
                    
                    7,644,574Net
                      loss per unit
                    
                    $
                    (13.82
                    )Net
                        loss per weighted average unit
                    
                    $
                    (1.78
                    )Cash
                        at end of year
                    
                    $
                    488,067
 51
 Item 7.
                  Management’s
                      Discussion and
                      Analysis of Financial Condition and Results of
                      Operations.
  The
            following discussion should be read in conjunction with the consolidated
            financial statements and the notes thereto of USNG included elsewhere
            in this
            annual report on Form 10-K.
 
 Forward-Looking
              Information
  This
              annual report on Form 10-K, 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 USNG'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 USNG'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 USNG
              cannot
              assure investors that these projections included in these forward-looking
              statements will come to pass. USNG's actual results could differ materially
              from those expressed or implied by the forward-looking statements as
              a result of
              various factors.
  USNG
              has
              based the forward-looking statements included in this annual report
              on Form 10-K
              on information available to it on the date of this annual report on Form
              10-K, and USNG assumes no obligation to update any such forward-looking
              statements. Although USNG 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 USNG may make directly to them or through reports that USNG in the
              future files with the SEC, including annual reports on Form 10-K, quarterly
              reports on Form 10-Q and current reports on Form 8-K.
 Introduction
 
 USNG,
                a
                Delaware limited partnership, is a commodity pool that issues units that
                may be purchased and sold on the AMEX. The investment objective of USNG is
                for changes in percentage terms of the units’ NAV on a daily basis to
                reflect the changes in percentage terms in the price of natural gas
                delivered at the Henry Hub, Louisiana, as measured by the "Benchmark
                Futures
                Contract," also on a daily basis, less USNG’s expenses.
 
 USNG
                seeks to achieve its investment objective by investing in a combination
                of
                natural gas Futures Contracts and Other Natural Gas Related Investments
                such
                that changes in USNG’s NAV, measured in percentage terms, will closely track the
                changes in the price of the Benchmark Futures Contract, also
                measured in percentage terms. USNG’s General Partner believes the Benchmark
                Futures Contract historically has exhibited a close correlation with the
                spot price of natural gas. It is not the intent of USNG to be operated
                in a
                fashion such that the NAV will equal, in dollar terms, the spot price
                of natural
                gas or any particular futures contract based on natural gas. Management
                believes
                that it is not practical to manage the portfolio to achieve such
                an investment
                goal when investing in listed natural gas Futures Contracts.
 At
                present, on any valuation day the Benchmark Futures Contract is the near
                month futures contract for natural gas traded on the NYMEX unless the near
                month contract will expire within two weeks of the valuation day,
                in which case
                the Benchmark Futures Contract is the next month contract for natural gas
                traded on the NYMEX. “Near month contract” means the next contract traded on the
                NYMEX due to expire;
“next
                month contract” means the first contract traded on the NYMEX due to expire after
                the near month contract.
  USNG
                  may
                  also invest in Futures Contracts and Other Natural Gas Related Investments.
                  The General Partner of USNG is registered as a CPO with the CFTC,
                  and is
                  authorized by the LP Agreement to manage USNG. The General Partner is
                  authorized by USNG in its sole judgment to employ, establish the
                  terms of
                  employment for and terminate commodity trading advisors or futures
                  commission
                  merchants.
 52
 Valuation
              of Futures Contracts
              and the Computation of the NAV
 The
                NAV
                of USNG units is calculated once each trading day as of the earlier
                of the close
                of 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 AMEX typically closes at 4:15 p.m. New York time. USNG uses the
                NYMEX closing price (determined at the earlier of the close of that
                exchange or
                2:30 p.m. New York time) for the contracts held on the NYMEX, but
                calculates or determines the value of all other USNG investments,
                including ICE
                Futures 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
                Operation and the Natural Gas Market
 
 Results
                of
                Operations. On April 18, 2007, USNG listed its units on the
                AMEX under the ticker symbol “UNG.” On that day USNG established its initial
                offering price at $50.00 per unit and issued 200,000 units to the
                initial
                Authorized Purchaser, Kellogg Capital Group LLC, in exchange for
                $13,478,000 in
                cash.
  Since
                its
                initial offering of 30,000,000 units, USNG has made one subsequent offering
                of its units: 50,000,000 units which were registered with the SEC on
                November 21, 2007. Units offered by USNG in subsequent offerings
                were sold by it
                for cash at the units' NAV as described in the applicable prospectus.
                As of
                December 31, 2007, USNG had issued 37,900,000 units, 16,400,000 of
                which were outstanding.
  More
                units have been issued than are outstanding due to the redemption
                of units as
                contemplated and permitted under the LP Agreement. Unlike funds that
                are
                registered under the 1940 Act, units that have been redeemed by USNG cannot
                be resold by USNG without registration of their offering with the
                SEC. As a
                result, USNG contemplates that further offerings of its units will
                be
                registered with the SEC in the future in anticipation of additional
                issuances.
  As
                of
                December 31, 2007, the total unrealized gain on natural gas Futures
                Contracts owned or held on that day was $20,043,880 and USNG
                established cash deposits that were equal to $396,687,048. The majority
                of those
                cash assets were held in overnight deposits at USNG’s Custodian, while 21.46% of
                the cash balance was held as margin deposits with the futures commission
                merchant for the Futures Contracts purchased. The ending per unit NAV on
                December 31, 2007 was $36.18.
 
 Portfolio
                Expenses .
                USNG’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
                USNG pays to the General Partner is calculated as a percentage of
                the total net
                assets of USNG. For total net assets of up to $1 billion, the management
                fee is
                0.60%. For total net assets over $1billion, the management fee is
                0.50% on the
                incremental amount of assets. During the period ended December 31,
                2007, the
                daily average total net assets of USNG were $292,344,830. During the
                period ended December 31, 2007 the total net assets of USNGdid
                notexceed $1 billion. The management fee paid by USNG
                amounted to $1,239,862, which was calculated at the 0.60% rate for
                the total net
                assets up to and including $1 billion and at the rate of 0.50% on
                total net
assets over $1 billion, and accrued daily. Management expenses as
                a percentage
                of total net assets averaged 0.60% over the course of the period.
  USNG pays
                  for all brokerage fees, taxes and other expenses, including licensing
                  fees for
                  the use of intellectual property, ongoing registration or other
                  fees paid to the
                  SEC, 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 period from April 18, 2007 to December 31,
                  2007, USNG incurred $41,980 in ongoing registration fees and other offering
                  expenses. USNG 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. USNG shares
                  these fees with USOF and US12OF based on the relative assets of
                  each fund
                  computed on a daily basis. These fees for calendar year 2007
                  amounted to a total of $286,000 for all three
                  funds.
  USNG
                also
                incurs commissions to brokers for the purchase and sale of Futures
                Contracts,
                Other Natural Gas Related Investments or Treasuries. During the period from
                April 18, 2007 to December 31, 2007, total commissions paid amounted
                to
                $351,310. Prior to the initial offering of its units, USNG 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 2007 represents approximately 0.17% of total 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 .
                  USNG
                  seeks to invest its assets such that it holds Futures Contracts and
                  Other Natural Gas Related Investments in an amount equal to the total
                  net
                  assets of the portfolio. Typically, such investments do not require
                  USNG to pay
                  the full amount of the contract value at the time of purchase,
                  but rather
                  require USNG to post an amount as a margin deposit against the
                  eventual
                  settlement of the contract. As a result, USNG retains an amount
                  that is
                  approximately equal to its total net assets, which USNG 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 USNG’s Custodian. The Treasuries, cash and/or cash
                  equivalents earn interest that accrues on a daily basis. For the
                  period from
                  April 18, 2007 to December 31, 2007, USNG earned $8,242,264 in
                  interest income
                  on such cash holdings. Based on USNG’s average daily total net assets, this is
                  equivalent to an annualized yield of 3.99%. USNG did not
                  purchase Treasuries during the period from April 18, 2007 to December 31,
                  2007 and held all of its funds in cash and/or cash equivalents
                  during this time
                  period.
 53
 Tracking
                USNG’s
                Benchmark .
                USNG
                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
                price of the
                Benchmark Futures Contract, also on a percentage basis. Specifically,
                USNG 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 Contract. As an
                example, if the average daily movement of the Benchmark Futures Contract
                for a particular 30-day time period was 0.5% per day, USNG 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). USNG’s portfolio management
                goals do not include trying to make the nominal price of USNG’s NAV equal to the
                nominal price of the current Benchmark Futures Contract or the spot
                price for
                natural gas. Management believes that it is not practical to manage
                the
                portfolio to achieve such an investment goal when investing in listed
                natural
                gas Futures Contracts.
 
 For
                the
                30 valuation days ending December 31, 2007, the simple average daily
                change in
                the Benchmark Futures Contract was -0.289%, while the simple average daily
                change in the NAV of USNG over the same time period was -0.281%.
                The average
                daily difference was 0.0156% (or 1.56 basis points, where 1 basis
                point equals
                1/100 of 1%). As a percentage of the daily movement of the Benchmark
                Futures
                Contract, the average error in daily tracking by the NAV was 1.231%,
                meaning
                that over this time period USNG’s tracking error was within the plus or minus
                10% range established as its benchmark tracking goal.
  
  
  54
 Since
                the
                offering of USNG units to the public on April 18, 2007 to December 31,
                2007, the simple average daily change in the Benchmark Futures Contract was
                -0.154%, while the simple average daily change in the NAV of USNG
                over the same
                time period was -0.143%. The average daily difference was 0.013%
                (or 1.3 basis
                point, where 1 basis point equals 1/100 of 1%). As a percentage of
                the daily
                movement of the Benchmark Futures Contract, the average error in
                daily tracking
                by the NAV was 1.994%, meaning that over this time period USNG’s tracking error
                was within the plus or minus 10% range established as its benchmark
                tracking
                goal.
 
 An
                alternative tracking measurement of the return performance of USNG
                versus the
                return of its Benchmark Futures Contract can be calculated by comparing the
                actual return of USNG, measured by changes in its NAV, versus the expected changes
                in its NAV under the assumption that USNG’s returns had been exactly the same as
                the daily changes in its Benchmark Futures Contract.
 
 For
                the
                period ended December 31, 2007, the actual total return of USNG as measured
                by changes in its NAV was -27.64%. This is based on initial NAV of $50.00
                on April 18, 2007 and an ending NAV as of December 31, 2007 of $36.18.
                During this time period, USNG made no distributions to its unitholders.
                However,
                if USNG’s daily changes in its NAV had instead exactly tracked the changes
                in
                the daily return of the Benchmark Futures Contract, USNG would have ended
                2007 with an estimated NAV of $35.45, for a total return over the
                relevant time
                period of -29.11%. The difference between the actual NAV total return
                of USNG of
                27.64% and the expected total return based on the Benchmark Futures
                Contracts of 29.11% was an error over the time period of 1.47%, which
                is to say
                that USNG’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 USNG collects on its cash and cash equivalent
                holdings. In addition, during the period from April 18, 2007 to December
                31, 2007, USNG also collected fees from brokerage firms creating
                or redeeming
                baskets of units. This income also contributed to USNG’s actual return exceeding
                the benchmark results. However, if the total assets of USNG 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.
  There
                are
                currently three factors that have impacted, during the latest period,
                or are
                most likely to impact, USNG’s ability to accurately track its
                Benchmark Futures Contract.
 
 First,
                USNG may buy or sell its holdings in the then current Benchmark Futures
                Contract at a price other than the closing settlement price of that
                contract on
                the day in which USNG executes the trade. In that case, USNG may
                get a price
                that is higher, or lower, than that of the Benchmark Futures Contract,
                which, could cause the changes in the daily NAV of USNG to either be too
                high or too low relative to the changes in the daily benchmark. In
                2007,
                management attempted to minimize the effect of these transactions
                by seeking to
                execute its purchase 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 USNG 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 USNG’s attempt to track its benchmark over
                time.
  Second,
                  USNG earns interest on its cash, cash equivalents and Treasury
                  holdings. USNG is not required to distribute any portion of its
                  income to its
                  unitholders and did not make any distribution to unitholders in
                  2007. Interest
                  payments, and any other income, were retained within the portfolio
                  and added to
                  USNG’s NAV. When this income exceeds the level of USNG’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), USNG will realize
                  a net yield
                  that will tend to cause daily changes in the NAV of USNG to track
                  slightly
                  higher than daily changes in the Benchmark Futures Contract. During 2007,
                  USNG earned, on an annualized basis, approximately 3.99% on its
                  cash holdings.
                  It also incurred cash expenses on an annualized basis of 0.60%
                  for management
                  fees and approximately 0.17% in brokerage commission costs related
                  to the
                  purchase and sale of futures contracts, and 0.22% for other expenses.
                  The
                  foregoing fees and expenses resulted in a net yield on an annualized
                  basis of
                  approximately 3.00% and affected USNG’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
                  Contract.
 55
 Third,
                USNG may hold Other Natural Gas Related Investments in its portfolio that
                may fail to closely track the Benchmark Futures Contract's total return
                movements. In that case, the error in tracking the benchmark could
                result in
                daily changes in the NAV of USNG that are either too high, or too
                low, relative
                to the daily changes in the benchmark. During the period from April
                18, 2007 to
                December 31, 2007, USNG did not hold any Other Natural Gas Related
                Investments. However, there can be no assurance that in future quarters
                USNG
                will not make use of such Other Natural Gas Related Investments.
  During
                the period from April 18, 2007 to December 31,
                2007, the prices of front month futures contracts fell from $7.631
                to $7.483. The prices of front month contracts were also lower than
                the
                prices of second month contracts during this time period, a condition
                in the futures market referred to as "contango." The relationship
                between the
                prices of different months of the same futures contracts, the "term
                structure of
                futures prices," can have a major impact on the total return of owning
                such
                futures contracts over time.
  Term
                Structure of Natural Gas
                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 in investing in near month
                natural gas
                Futures Contracts and “rolling” those contracts forward each month is the price
                relationship between the current near month contract and the next
                month
                contract. If the price of 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.
  As
                  an
                  example, assume that the price of natural gas for immediate delivery
                  (the “spot”
price), was $7 per 10,000 million British thermal units (MMBtu),
                  and the value
                  of a position in the near month futures contract was also $7. Over
                  time, the
                  price of 10,000 MMBtu of natural gas will fluctuate based on a number of
                  market factors, including demand for natural gas 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 holding
                  in a near month
                  contract position 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 natural gas
                  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 natural gas 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 $7 investment would tend to rise
                  faster than
                  the spot price of natural gas, or fall slower. As a result, it
                  would be possible
                  in this hypothetical example for the price of spot natural  gas to have
                  risen to $9 after some period of time, while the value of the investment
                  in the
                  futures contract will have risen to $10, assuming backwardation
                  is large enough
                  or enough time has elapsed. Similarly, the spot price of natural
                  gas could have
                  fallen to $5 while the value of an investment in the futures contract
                  could have
                  fallen to only $6. 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
                  natural gas
                  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 $7 investment would tend to
                  rise slower than
                  the spot price of natural gas, or fall faster. As a result, it
                  would be possible
                  in this hypothetical example for the price of spot natural gas
                  to have risen to
                  $9 after some period of time, while the value of the investment
                  in the futures
                  contract will have risen to only $8, assuming contango is large
                  enough or enough
                  time has elapsed. Similarly, the spot price of natural  gas could have
                  fallen to $6 while the value of an investment in the futures contract
                  could have
                  fallen to $7. Over time, if contango remained constant, the difference
                  would
                  continue to increase.
 56
 Historically,
                  the natural gas futures markets have experienced periods of contango
                  and
                  backwardation. Because natural gas demand is seasonal, it is possible
                  for the
                  price of Futures Contracts for delivery within one or two months
                  to rapidly move
                  from backwardation into contango and back again within a relatively
                  short period
                  of time of less than one year. While the investment objective of
                  USNG is not to
                  have the market price of its units match, dollar for dollar, changes
                  in the spot
                  price of natural gas, contango has impacted the total return on an
                  investment in USNG units during the past year relative to a hypothetical
                  direct
                  investment in natural gas. For example, an investment made in USNG units
                  made on June 30, 2007 and held to September 30, 2007 decreased,
                  based upon the changes in the closing market prices for USNG units
                  on those
                  days, by 12.14%, while the spot price of natural gas for immediate
                  delivery
                  during the same period increased
                  by 1.4%  (note: this comparison ignores the potential costs associated with
                  physically owning and storing natural gas, which could be
                  substantial). This period of contango did not meaningfully impact USNG’s
                  investment objective of having percentage changes in its per unit
                  NAV track
                  percentage changes in the price of the Benchmark Futures Contract
                  since the
                  impact of backwardation and contango tended to equally impact the
                  percentage
                  changes in price of both USNG’s units and the Benchmark Futures
                  Contract. 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 and, because of
                  the seasonal
                  nature of natural gas demand, both may occur within a single year's
                  time.
  Natural
                  gas market. During
                  the period ended December 31, 2007, natural gas prices in the United
                  States were
                  impacted by several factors. At the beginning of the period, the
                  amount of
                  natural gas in storage was at higher than average levels versus
                  the previous
                  five years. The summer weather in the United States was moderate through
                  much of the season. A major use of natural gas in summer months
                  is the
                  production of electricity for residential and commercial buildings.
                  A major
                  variable in the use of natural gas for electricity production for
                  residential or
                  commercial buildings is weather, as it impacts the use of air conditioners
                  and
                  thus can cause wide swings in peak demand for electricity. The
                  mild weather had
                  the effect of reducing the rate at which the storage levels of
                  natural gas fell.
                  Later in the period, during the fall and early winter, weather
                  also remained
                  relatively warm, reducing the need for natural gas for heating
                  purposes. During
                  the entire period, the seasonally adjusted inventory levels of stored
                  natural gas remained above five-year averages. Finally, the natural
                  gas
                  producing portions of the United States located near the Gulf of
                  Mexico were not
                  adversely impacted by major hurricanes as has happened in the recent
                  past. As a
                  result of all the factors mentioned above, the natural gas market
                  in the United
                  States remained reasonably well supplied. The price of natural
                  gas remained
                  fairly range-bound for most of the period in the $6.00 to $8.00
                  level. Prices
                  ranged from a low of $5.468 to a high of $8.637 per mmBtu with
                  an average price
                  of $7.201.
 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. USNG'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 USNG'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. To the extent USNG makes such investments, the
                values used by
                USNG for its forward contracts will be provided by its commodity
                broker who
                values over-the-counter contracts 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, USNG 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
 
 USNG
                has
                not made, and does not anticipate making, use of borrowings or other
                lines of
                credit to meet its obligations. USNG has met, and it is anticipated
                that USNG
                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. USNG’s liquidity needs
                include: redeeming units, providing margin deposits for its existing
                natural gas
                futures contracts or the purchase of additional natural gas Futures
                Contracts
                and posting collateral for its over-the-counter contracts and payment
                of its
                expenses, summarized below under “Contractual Obligations.”
 
 USNG
                currently generates cash primarily from (i) the sale of Creation
                Baskets and
                (ii) interest earned on Treasuries, cash and/or cash equivalents.
                USNG has
                allocated substantially all of its nets assets to trading in Natural
                Gas
                Interests. A significant portion of the NAV was held in cash and
                cash
                equivalents that were used as margin for USNG's trading in natural gas
                interests. The percentage that Treasuries will bear to the total net assets
                vary from period to period as the market values of the Natural Gas
                Interests
                change. The balance of the net assets is held in USNG's Futures Contracts
                and Other Natural Gas Related Investments trading account. Interest
                earned on
                USNG's interest bearing-funds is paid to USNG.
 57
 USNG's
                investment in Natural Gas 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 or liquidated unless the traders are willing to
                effect trades
                at or within the specified daily limit. Such market conditions could
                prevent
                USNG from promptly liquidating its positions in Futures Contracts. During
                the period from April 18, 2007 to December 31, 2007, USNG was not
                forced to
                purchase or liquidate any of its positions while daily limits were
                in effect;
                however, USNG cannot predict whether such an event may occur in the
                future.
  Through
                April 10, 2006, all of the expenses of USOF, which is also managed
                by the
                General Partner, and of the General Partner, were funded by its affiliates.
                Since April 10, 2006, these expenses have largely been borne by the
                General
                Partner and USOF.
  To
                date,
                all of USNG'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 have been borne by USNG. 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, brokerage fees and licensing fees will be paid directly
                by
                USNG. If the General Partner and USNG are unsuccessful in raising
                sufficient funds to cover USNG's expenses or in locating any other
                source of
                funding, USNG will terminate and investors may lose all or part of
                their
                investment.
  Market
                Risk
 
 Trading
                in Futures Contracts and Other Natural Gas Related Investments, such
                as
                forwards, involves USNG entering into contractual commitments to purchase
                or sell natural gas at a specified date in the future. The gross
                or face amount
                of the contracts will significantly exceed USNG's future cash requirements
                since USNG intends to close out its open positions prior to settlement.
                As a
                result, USNG is generally only subject to the risk of loss arising
                from the change in value of the contracts. USNG considers the "fair
                value'' of
                its derivative instruments to be the unrealized gain or loss on the
                contracts.
                The market risk associated with USNG's commitments to purchase natural
                gas is
                limited to the gross face amount of the contacts held. However, should
                USNG
                enter into a contractual commitment to sell natural gas, it would
                be required to
                make delivery of the natural gas at the contract price, repurchase
                the contract
                at prevailing prices or settle in cash. Since there are no limits
                on the future
                price of natural gas, the market risk to USNG could be unlimited.
  USNG's
                exposure to market risk depends on a number of factors, including the
                markets for natural gas, the volatility of interest rates and foreign
                exchange
                rates, the liquidity of the Futures Contracts and Other Natural Gas Related
                Investments markets and the relationships among the contracts held
                by USNG. The
                limited experience that USNG has in utilizing its model to trade in natural
                gas interests in a manner intended to track the spot price of natural
                gas, 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
                USNG
                enters into Futures Contracts and Other Natural Gas 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 f utures
                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 USNG in such
                circumstances.
  The
                General Partner attempts to manage the credit risk of USNG by following
                various trading limitations and policies. In particular, USNG 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
                Natural Gas 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 USNG to limit its credit
                exposure.
  UBS
                Securities LLC, USNG's commodity broker, or any other broker that
                may be
                retained by USNG in the future, when acting as USNG'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 USNG, all assets of USNG
                relating to
                domestic Futures Contracts trading. A futures commission merchant
                is not allowed
                to commingle USNG's assets with its other assets. In addition, the
                CFTC requires
                commodity brokers to hold in a secure account the USNG assets related
                to
                foreign Futures Contracts trading.
 
 Off
                Balance Sheet
                Financing
 
 As
                of
                December 31, 2007, USNG 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 USNG. While USNG's exposure
                under
                these indemnification provisions cannot be estimated, they are not
                expected to
                have a material impact on USNG's financial position.
 58
 Redemption
                Basket
                Obligation
 
 In
                order
                to meet its investment objective and pay its contractual obligations
                described
                below, USNG requires liquidity to redeem units, which redemptions must be
                in blocks of 100,000 units called Redemption Baskets. USNG 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
 
 USNG'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 USNG's NAV, currently 0.60% for a NAV of $1 billion
                or less,
                and thereafter 0.50% for a NAV above $1 billion. The General
                Partner agreed to pay the start-up costs associated with the formation of
                USNG, primarily its legal, accounting and other costs in connection
                with the General Partner's registration with the CFTC as a commodity pool
                operator and the registration and listing of USNG and its units with
                the SEC and the AMEX, respectively. However, the costs of registering
                and
                listing additional units of USNG with the SEC are directly borne
                on an ongoing
                basis by USNG, and not by the General Partner.
 
 The
                General Partner pays the fees of the custodian and transfer agent,
                BBH&Co., as well as BBH&Co.'s fees for performing administrative
                services, including in connection with the preparation of USNG's condensed
                financial statements and its SEC and CFTC reports. The General Partner also
                pays the fees of USNG's accountants and a separate firm for providing
                tax
                related services, as well as those of the Marketing Agent. The General
                Partner
                and USNG have also entered into a licensing agreement with the NYMEX
                pursuant to which USNG and the affiliated funds managed by the General
                Partner pay a licensing fee to the NYMEX.
  In
                addition to the General Partner's management fee, USNG 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,
                registration
                and, subsequent to the initial offering, the fees paid to the SEC,
                FINRA or any
                other regulatory agency 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 USNG'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. USNG 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.
 
 The
                parties cannot anticipate the amount of payments that will be required
                under
                these arrangements for future periods, as USNG'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
                and have
                an option to renew, or, in some cases, are in effect for the duration
                of USNG's
                existence. Either party may terminate these agreements earlier for
                certain
                reasons described in the agreements.
 59
 Item
                  7A.  Quantitative
                  and Qualitative
                  Disclosure About Market Risk
  Over-the-Counter
                Derivatives
                (Including Spreads and Straddles)
 In
                  the
                  future, USNG may purchase over-the-counter contracts. Unlike most
                  of the
                  exchange-traded oil futures contracts or exchange-traded options
                  on such
                  futures, each party to over-the-counter contract bears the credit
                  risk that the
                  other party may not be able to perform its obligations under its
                  contract.
  Some
                  natural gas-based derivatives transactions contain fairly generic
                  terms and
                  conditions and are available from a wide range of participants.
                  Other natural
                  gas-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 natural gas- 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 the natural gas, forward natural gas
                  prices or natural gas futures prices. For example, USNG may enter
                  into
                  over-the-counter derivative contracts whose value will be tied
                  to changes in the
                  difference between the spot price of natural gas, the price of Futures
                  Contracts traded on NYMEX and the prices of other Futures Contracts that
                  may be invested in by USNG.
  To
                  protect itself from the credit risk that arises in connection with
                  such
                  contracts, USNG may enter into agreements with each counterparty
                  that provide
                  for the netting of its overall exposure to its counterparty, such
                  as the
                  agreements published by the International Swaps and Derivatives
                  Association,
                  Inc. USNG also may require that the counterparty be highly rated and/or
                  provide collateral or other credit support to address USNG’s exposure to the
                  counterparty. In addition, it is also possible for USNG 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, USNG
                  would no longer have credit risk of its original counterparty,
                  as the clearing
                  house would now be USNG's counterparty. USNG would still retain
                  any price risk
                  associated with its transaction.
  USNG
                  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 Contract. USNG 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 USNG to changes in the
                  price
                  relationship between futures contracts which will expire sooner
                  and those that
                  will expire later. USNG 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 USNG,
                  or the General
                  Partner felt if it would lead to an overall lower cost of trading
                  to achieve a
                  given level of economic exposure to movements in natural gas prices.
                  USNG 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.
                  USNG 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 USNG 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 period from April 18, 2007 to December 31, 2007, USNG did
                    not employ any
                    hedging methods since all of its investments were made over an
                    exchange.
                    Therefore, USNG was not exposed to counterparty
                    risk.
 60
 Item 8.
                    Financial
                        Statements and
                        Supplementary Data.
 Index
                  to Financial
                  Statements
  Documents
                        
                        PageReport
                            of Independent Registered Public Accounting
                            Firm
                        
                        
                        62Statements
                            of Financial Condition at December 31, 2007 and
                            2006
                        
                        
                        63Condensed
                          Schedule of Investments at December 31,
                          2007
                        
                        
                        64Statements
                            of Operations for the period from April
                            18, 2007 (commencement of operations) to December 31, 2007 and the
                            period from September 11, 2006 (inception) to December
                            31,
                            2006
                        
                        
                        65Statements
                          of Changes in Partners' Capital for the period
                          from April 18, 2007 (commencement of operations) to December
                          31, 2007 and
                          the period from September 11, 2006 (inception) to December
                          31,
                          2006
                        
                        
                        66Statements
                            of Cash Flows for the period
                            from April 18, 2007 (commencement of operations) to December
                            31, 2007 and the period from September 11, 2006 (inception)
                            to
                            December 31, 2006
                        
                        
                        67Notes
                            to Financial Statements
                        
                        
                        68
 61
 
 Reportof Independent Registered Public Accounting
                  Firm
 
 To
                  the
                  Partners of
 United
                    States Natural Gas Fund, LP
  We
                      have
                      audited the accompanying statements of financial condition
                      of United States
                      Natural Gas Fund, LP, (the “Fund”) as of December 31, 2007 and 2006, including
                      the condensed schedule of investments as of December 31, 2007,
                      and the related
                      statements of operations, changes in partners’ capital and cash flows for the
                      period from April 18, 2007 (commencement of operations) to
                      December 31, 2007 and
                      the period from September 11, 2006 (inception) to December
                      31, 2006. These
                      financial statements are the responsibility of the Fund’s management. Our
                      responsibility is to express an opinion on these financial
                      statements based on
                      our audits.
 
 We
                      conducted our audits in accordance with the standards of the
                      Public Company Accounting Oversight Board (United States).
                      Those standards
                      require that we plan and perform the audits to obtain reasonable
                      assurance about
                      whether the financial statements are free of material misstatement.
                      The Fund is
                      not required to have, nor were we engaged to perform, an audit
                      of its internal
                      control over financial reporting. Our audits included consideration
                      of internal
                      control over financial reporting as a basis for designing audit
                      procedures that
                      are appropriate in the circumstances, 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. An audit
                      also includes
                      examining, on a test basis, evidence supporting the amounts
                      and disclosures in
                      the financial statements, assessing the accounting principles
                      used and
                      significant estimates made by management, as well as evaluating
                      the overall
                      financial statement presentation. We believe that our audits
                      provide a
                      reasonable basis for our opinion.
 
 In
                      our
                      opinion, the financial statements referred to above present
                      fairly, in all
                      material respects, the financial position of United States
                      Natural Gas Fund, LP
                      as of December 31, 2007 and 2006, and the results of its operations
                      and its cash
                      flows for the period from April 18, 2007 (commencement of operations)
                      through
                      December 31, 2007 and the period from September 11, 2006 (inception)
                      to December
                      31, 2006 in conformity with accounting principles generally
                      accepted in the
                      United States of America.
 
 /s/ SPICER
                      JEFFRIES
                      LLP
  Greenwood
                    Village, Colorado
 March
                    20, 2008
 62
 United
                            States Natural Gas Fund, LPStatements
                            of Financial
                            ConditionAt
                            December 31, 2007 and
                            20062007
                        
                        2006AssetsCash
                            and cash equivalents
                        
                        $
                        488,067,199
                        
                        $
                        1,000Equity
                            in UBS Securities LLC trading accounts:Cash
                        
                        
                        85,115,889
                        
                        
                        -Unrealized
                            gain on open commodity futures contracts
                        
                        
                        20,043,880
                        
                        
                        -Interest
                            receivable
                        
                        
                        690,046
                        
                        
                        -Other
                            assets
                        
                        
                        92,955
                        
                        
                        -Total
                            assets
                        
                        $
                        594,009,969
                        
                        $
                        1,000Liabilities
                            and Partners'
                            CapitalGeneral
                            Partner management fees (Note 3)
                        
                        $
                        264,556
                        
                        $
                        -Accrued Tax Reporting Costs
                        
                        
                        239,954
                        
                        
                        -License Fee Payable
                        
                        
                        51,560
                        
                        
                        -Accrued Directors' Fees
                        
                        
                        36,118
                        
                        
                        -Brokerage
                            commissions payable
                        
                        
                        22,800
                        
                        
                        -Total
                            liabilities
                        
                        
                        614,988
                        
                        
                        -Commitments
                            and Contingencies(Notes 3,
                            4 and 5)Partners'
                            CapitalGeneral
                            Partner
                        
                        
                        -
                        
                        
                        20Limited
                            Partners
                        
                        
                        593,394,981
                        
                        
                        980Total
                            Partners'
                            Capital
                        
                        
                        593,394,981
                        
                        
                        1,000Total
                            liabilities and
                            partners' capital
                        
                        $
                        594,009,969
                        
                        $
                        1,000Limited
                            Partners' units outstanding
                        
                        
                        16,400,000
                        
                        
                        -Net
                            asset value per unit
                        
                        $
                        36.18
                        
                        $
                        -Market
                            value per unit
                        
                        $
                        36.24
                        
                        $
                        -See
                            accompanying notes
                            to financial statements.
 63
 United
                                  States Natural Gas Fund, LPCondensed
                                  Schedule of
                                  InvestmentsAt
                                  December 31,
                                  2007Open
                                  Futures ContractsGain on
                                  OpenNumber
                                  of
                              
                              Commodity
                              
                              %
                                  of
                                  Partners'Contracts
                              
                              Contracts
                              
                              CapitalUnited
                                  States
                                  ContractsNatural
                                  Gas Futures contracts, expires February 2008
                              
                              
                              7,924
                              
                              $
                              20,043,880
                              
                              
                              3.38
  Cash
                                  EquivalentsCost
                              
                              Market
                                  ValueUnited
                                  States - Money Market
                                  FundsGoldman
                                    Sachs Financial Square Funds - Government Fund
                              
                              $
                              25,791,412
                              
                              $
                              25,791,412
                              
                              
                              4.34Goldman
                                  Sachs Financial Square Funds - Treasury Instruments
                                  Fund
                              
                              
                              150,704,628
                              
                              
                              150,704,628
                              
                              
                              25.40$
                              176,496,040
                              
                              
                              176,496,040
                              
                              
                              29.74
 Cash
                              
                              
                              311,571,159
                              
                              
                              52.51Total
                                cash and cash equivalents
                              
                              
                              488,067,199
                              
                              
                              82.25Cash
                                  on deposit with
                                  broker
                              
                              
                              85,115,889
                              
                              
                              14.34Other
                                  assets and
                                  receivables in excess of liabilities
                              
                              
                              168,013
                              
                              
                              0.03Total
                                  Partners'
                                  Capital
                              
                              $
                              593,394,981
                              
                              
                              100.00See
                                  accompanying notes to
                                  financial statements.
 64
 United
                                  States Natural Gas
                                  Fund, LPStatements
                                  of OperationsFor
                                  the period from April
                                  18, 2007 (commencement of operations) to December
                                  31, 2007
                                  andthe
                                period from September 11, 2006 (inception) to December
                                31, 2006Period
                                  from
                              
                              Period
                                  fromApril
                                  18, 2007
                                  to
                              
                              September
                                  11, 2006 toDecember
                                  31,
                                  2007
                              
                              December
                                  31, 2006IncomeGains
                                  (losses) on trading of commodity futures contracts:Realized losses
                                  on closed positions
                              
                              $
                              (39,939,850
                              )
                              $
                              -Change
                                  in unrealized gains on open positions
                              
                              
                              20,043,880
                              
                              
                              -Interest
                                  income
                              
                              
                              8,242,264
                              
                              
                              -Other
                                  income
                              
                              
                              107,000
                              
                              
                              -Total loss
                              
                              
                              (11,546,706
                              )
                              
                              -ExpensesGeneral
                                  Partner management fees (Note 3)
                              
                              
                              1,239,862Brokerage
                                  commissions
                              
                              
                              351,310Other
                                  expenses
                              
                              
                              454,149
                              
                              
                              -Total
                                  expenses
                              
                              
                              2,045,321
                              
                              
                              -Net loss
                              
                              $
                              (13,592,027
                              )
                              $
                              -Net loss
                                  per limited
                                  partnership unit
                              
                              $
                              (13.82
                              )
                              $
                              -Net loss
                                  per weighted
                                  average limited partnership unit
                              
                              $
                              (1.78
                              )
                              $
                              -Weighted
                                  average limited
                                  partnership units outstanding
                              
                              
                              7,644,574
                              
                              
                              -See
                                  accompanying notes
                                  to financial statements.
 65
 United
                                States Natural Gas
                                Fund, LPStatements
                                of Changes in
                                Partners' CapitalFor
                                the period from April 18,
                                2007 (commencement of operations) to December 31,
                                2007
                                andthe
                              period from September 11, 2006 (inception) to December
                              31, 2006General
                                Partner
                            
                            Limited
                                Partners
                            
                            TotalBalances,
                              at Inception
                            
                            $
                            -
                            
                            $
                            -
                            
                            $
                            -Initial contribution of capital
                            
                            
                            20
                            
                            
                            980
                            
                            
                            1,000Balances,
                                at December 31,
                                2006
                            
                            
                            20
                            
                            
                            980
                            
                            
                            1,000Addition
                                of 37,900,000 partnership units
                            
                            
                            -
                            
                            
                            1,458,786,977
                            
                            
                            1,458,786,977Redemption
                                of 21,500,000 partnership units
                            
                            
                            (20
                            )
                            
                            (851,800,949
                            )
                            
                            (851,800,969
                            )Net
                                loss
                            
                            
                            -
                            
                            
                            (13,592,027
                            )
                            
                            (13,592,027
                            )Balances,
                                at December 31,
                                2007
                            
                            $
                            -
                            
                            $
                            593,394,981
                            
                            $
                            593,394,981Net
                                Asset Value Per
                                UnitAt December 31, 2006
                            
                            $
                            -At
                                April 18, 2007 (commencement of operations)
                            
                            $
                            50.00At
                                December 31, 2007
                            
                            $
                            36.18See
                                accompanying notes
                                to financial statements.
  66
  United
                                States Natural Gas
                                Fund, LPStatements
                                of Cash FlowsFor
                                the period from April
                                18, 2007 (commencement of operations) to December
                                31, 2007
                                andthe
                                period from September 11, 2006 (inception) to December
                                31,
                                2006Period
                                from
                            
                            Period
                                fromApril
                                18, 2007
                                to
                            
                            September
                                11, 2006 toDecember
                                31, 2007
                            
                            December
                                31, 2006Cash
                                Flows from Operating
                                Activities:Net
                                loss
                            
                            $
                            (13,592,027
                            )
                            $
                            -Adjustments
                                to reconcile net loss to net cash used in operating
                                activities:Increase
                                in commodity futures trading account - cash
                            
                            
                            (85,115,889
                            )
                            
                            -Unrealized
                                gains on futures contracts
                            
                            
                            (20,043,880
                            )
                            
                            -Increase
                                in interest receivable and other assets
                            
                            
                            (783,001
                            )
                            
                            -Increase
                                in management fees payable
                            
                            
                            264,556
                            
                            
                            -Increase
                                in commissions payable
                            
                            
                            22,800
                            
                            
                            -Increase
                                in other liabilities
                            
                            
                            327,632
                            
                            
                            -Net
                                cash used in operating
                                activities
                            
                            
                            (118,919,809
                            )
                            
                            -Cash
                                Flows from Financing
                                Activities:Subscription
                                of partnership units
                            
                            
                            1,458,786,977
                            
                            
                            1,000Redemption
                                of partnership units
                            
                            
                            (851,800,969
                            )
                            
                            -Net
                                cash provided
                                by financing activities
                            
                            
                            606,986,008
                            
                            
                            1,000Net
                                Increase in Cash and Cash
                                Equivalents
                            
                            
                            488,066,199
                            
                            
                            1,000Cash
                                and Cash
                                Equivalents,
                                beginning of period
                            
                            
                            1,000
                            
                            
                            -Cash
                                and Cash
                                Equivalents,
                                end of period
                            
                            $
                            488,067,199
                            
                            $
                            1,000See
                                accompanying notes
                                to financial statements.
 67
 United
                  States Natural Gas Fund, LP
 Notes
                to Financial
                Statements
 For
                the period from April 18, 2007
                (commencement of operations) to December 31, 2007 and the period from
                September 11, 2006 (inception) to December 31, 2006
  NOTE
                1 - ORGANIZATION AND
                BUSINESS
 
 United
                States Natural Gas Fund, LP ("USNG") was organized as a limited partnership
                under the laws of the state of Delaware on September 11, 2006. USNG
                is a
                commodity pool that issues units that may be purchased and sold on
                the American
                Stock Exchange (the "AMEX"). USNG will continue in perpetuity, unless
                terminated
                sooner upon the occurrence of one or more events as described in
                its Second
                Amended and Restated Agreement of Limited Partnership (the "LP Agreement").
                The
                investment objective of USNG is to have the changes in percentage
                terms of its
                net asset value reflect the changes in percentage terms of the price
                of natural
                gas delivered to the Henry Hub, Louisiana, as measured by the changes
                in the
                price of the futures contract on natural gas (the "Benchmark Futures
                Contract")
                as 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,
                less USNG's
                expenses. USNG will accomplish its objective through investments in futures
                contracts for natural gas traded on the NYMEX or other regulated
                commodity
                exchanges. USNG may also invest in futures contracts for natural gas, crude
                oil, heating oil, gasoline 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 natural gas-related investments such as
                cash-settled options on Futures Contracts, forward contracts for
                natural gas and
                over-the-counter transactions that are based on the price of natural
                gas, oil
                and other petroleum-based fuels, Futures Contracts and indices based
                on the
                foregoing (collectively, "Other Natural Gas Related Investments"),
                if in the
                opinion of Victoria Bay Asset Management, LLC (the "General Partner") such
                investments will allow USNG to achieve its investment objective.
                As of December
                31, 2007, USNG held 7,924 Futures Contracts traded on the
                NYMEX.
  USNG
                commenced operations on April 18, 2007 and has a fiscal year ending
                on December
                31. The General Partner of USNG is responsible for the management of
                USNG. 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 (the "CFTC") effective December 1, 2005. The General
                Partner
                is also the general partner of United States Oil Fund, LP ("USOF"), United
                States 12 Month Oil Fund, LP ("US12OF") and United States Gasoline Fund, LP
                ("USG") which listed their units on the AMEX under the ticker symbols "USO"
                on April 10, 2007, "USL" on December 6, 2007 and "UGA" on February
                26, 2008,
                respectively.
  USNG
                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 4:00 p.m. New York time on
                the day the order to create the basket is properly received. In addition,
                Authorized Purchasers pay USNG a $1,000 fee for each order to create one or
                more Creation Baskets. Units can 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
                made at the net asset value of USNG but rather at market prices quoted on
                such exchange.
 
 In
                April
                2007, USNG initially registered 30,000,000 units on Form S-1 with
                the Securities
                and Exchange Commission (the "SEC"). On April 18, 2007, USNG listed
                its units on the AMEX under the ticker symbol “UNG”. On that day, USNG
                established its initial net asset value by setting the price at $50.00
                per unit
                and issued 200,000 units to the initial Authorized Purchaser, Merrill
                Lynch
                Professional Clearing Corp., in exchange for $10,001,000 in cash.
                As of
                December 31, 2007, USNG had registered a total of 80,000,000 units.
                USNG commenced investment operations on April 18, 2007 by purchasing
                Benchmark Futures Contracts traded on the NYMEX.
  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 statement of financial condition and
                are 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 condensed
                statement of operations. USNG 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, USNG 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
 
 USNG
                  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.
  Additions
                    and
                    Redemptions
 
 Authorized
                    Purchasers may purchase Creation Baskets from USNG as of the beginning of
                    each business day based upon the prior day's net asset value.
                    Authorized
                    Purchasers may redeem units from USNG only in blocks of 100,000
                    units called
“Redemption Baskets”. The amount of the redemption proceeds for a Redemption
                    Basket will be equal to the net asset value of the units in the
                    Redemption
                    Basket determined as of 4:00 p.m. New York time on the day the
                    order to redeem
                    the basket is properly received.
  USNG
                    receives or pays the proceeds from 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
                    USNG's statement of financial condition as receivable for units sold,
                    and
                    amounts payable to Authorized Purchasers upon redemption are
                    reflected as
                    payable for units redeemed.
 68
 Partnership
                Capital and Allocation of
                Partnership Income and Losses
 
 Profit
                or
                loss shall be allocated among the partners of USNG 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
 
 USNG
                calculates 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. USNG 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 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 December 31, 2007.
  Offering
                  Costs
 
 Offering
                  costs incurred in connection with the registration of additional
                  units after the
                  initial registration of units are borne by USNG. 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 portfolios and overnight time
                deposits
                with original maturity dates of three months or less.
 
 Use
                of Estimates
 
 The
                preparation of financial statements in conformity with accounting
                principles generally accepted in the United States of America requires
                USNG’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 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 THE FUND
                  AND RELATED PARTY TRANSACTIONS 
 General
                    Partner Management
                    Fee
 
 Under
                  the
                  LP Agreement, the General Partner is responsible for investing
                  the assets of
                  USNG in accordance with the objectives and policies of USNG. 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 USNG. For these services, USNG 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 net assets
                  of $1,000,000,000
                  or less and 0.50% per annum on average daily net assets that are
                  greater than
                  $1,000,000,000.
  Ongoing
                    Registration Fees and Other
                    Offering Expenses
 
 USNG
                        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 period from April 18, 2007
                        to December 31, 2007, USNG incurred $41,980 in registration fees and
                        other offering expenses.
 Director's
                      Fees
  USNG
                      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. USNG shares these fees with USOF and
                      US12OF based on the relative assets of each fund, computed
                      on a daily basis.
                      These fees for calendar year 2007 amounted to a total of $286,000
                      for all of the
                      funds.
  Licensing
                      Fees
  As
                      discussed in Note 4, USNG entered into a licensing agreement with the NYMEX
                      on May 30, 2007. The agreement has an effective date of April
                      10, 2006. Pursuant
                      to the agreement, USNG 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.
                      For the period ended December 31, 2007, USNG incurred $81,317 under this
                      arrangement.
  Investor
                        Tax Reporting
                        Cost
  The
                        fees
                        and expenses associated with USNG's tax accounting and reporting
                        requirements,
                        with the exception of certain initial implementation service
                        fees and base
                        service fees which are borne by the General Partner, are
                        paid by
                        USNG. These costs are estimated to be $450,000 for the period from
                        April
                        18, 2007 to December 31, 2007.
  Other
                      Expenses and
                      Fees
  In
                      addition to the fees described above,
                      USNG pays all brokerage fees, taxes and other expenses in connection
                      with
                      the operation of USNG, excluding costs and expenses paid by the General
                      Partner as outlined in Note 4.
 69
 NOTE
                4 - CONTRACTS AND
                AGREEMENTS
 
 USNG
                is
                party to a marketing agent agreement, dated as of April 17, 2007, with the
                Marketing Agent, whereby the Marketing Agent provides certain marketing
                services
                for USNG as outlined in the agreement. The fees of the Marketing
                Agent, which
                are borne by the General Partner, include the
                following fee: 0.06% on USNG's assets up to $3 billion; and 0.04% on
                USNG's assets in excess of $3 billion.
 
 The
                above
                fees do 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.
 
 USNG
                is
                also party to a custodian agreement, dated January 12, 2007, with
                Brown Brothers
                Harriman & Co. ("BBH&Co."), whereby BBH&Co. holds investments on
                behalf of USNG. The General Partner pays the fees of the custodian, which
                shall be determined by the parties from time to time. In addition,
                USNG is party
                to an administrative agency agreement dated, March 5, 2007, with
                the General
                Partner and BBH&Co., whereby BBH&Co. acts as the administrative agent,
                transfer agent and registrar for USNG. The General Partner also pays
                the fees of
                BBH&Co. for its services under this agreement and such fees will be
                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 USNG's, USOF's, US12OF's
                and USG's combined net assets, (b) 0.0465% for USNG's, USOF's, US12OF's and
                USG's combined net assets greater than $500 million but less than
                $1 billion,
                and (c) 0.035% for USNG's, USOF's, US12OF's and USG'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.
 
 USNG
                invests primarily in Futures Contracts traded on the NYMEX. On May 30,
                2007, USNG and the NYMEX entered into a license agreement whereby
                USNG 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 April 10,
                2006. Under the license agreement, USNG 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.
 
 USNG
                expressly disclaims any association with the NYMEX or endorsement
                of USNG by the
                NYMEX and acknowledges that “NYMEX” and “New York Mercantile Exchange” are
                registered trademarks of the NYMEX.
 
 USNG
                has
                entered into a brokerage agreement with UBS Securities LLC ("UBS
                Securities").
                The agreement requires UBS Securities to provide services to USNG
                in connection
                with the purchase and sale of Futures Contracts and Other Natural
                Gas Related
                Investments that may be purchased and sold by or through UBS Securities
                for
                USNG's account. The agreement provides that UBS Securities charge
                USNG
                commissions of approximately $7per round-turn trade, plus applicable exchange and NFA fees
                for Futures Contracts and options on Futures Contracts.
 
 NOTE
                5 - FINANCIAL INSTRUMENTS,
                OFF-BALANCE SHEET RISKS AND CONTINGENCIES
 
 USNG
                engages in the speculative trading of Futures Contracts and options
                on Futures Contracts (collectively, "derivatives"). USNG 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 USNG 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, USNG must rely solely on the credit of their respective
                individual
                counterparties. However, in the future, if USNG 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.
                USNG also
                has credit risk since the sole counterparty to all domestic and foreign
                futures
                contracts is the exchange clearing corporation. In addition, USNG 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.
 
 USNG’s
                  cash and other property, such as U.S. Treasury Bills, 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.
  USNG
                  invests its cash in money market funds that seek to maintain a
                  stable net asset
                  value. USNG is exposed to any risk of loss associated with an investment
                  in
                  these money market funds. As of December 31, 2007 and 2006 USNG had
                  deposits in domestic financial institutions in the amount of $396,687,048
                  and $1,000, 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, USNG 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, USNG 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.
 70
 USNG’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, USNG 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 USNG are reported in its 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.
 
 Goldman,
                    Sachs & Co. (“Goldman Sachs”) sent USOF a letter on March 17, 2006,
                    providing USOF and the General Partner notice under 35 U.S.C.
                    Section 154(d) of
                    two pending United States patent applications, Publication Nos.
                    2004/0225593A1
                    and 2006/0036533A1. Both patent applications are generally directed
                    to a method
                    and system for creating and administering a publicly traded interest
                    in a
                    commodity pool. In particular, the Abstract of each patent application
                    defines a
                    means for creating and administering a publicly traded interest
                    in a commodity
                    pool that includes the steps of forming a commodity pool having
                    a first position
                    in a futures contract and a corresponding second position in
                    a margin
                    investment, and issuing equity interests of the commodity pool
                    to third party
                    investors. Subsequently, two U.S. patents were issued; the first,
                    patent number
                    US7,283,978B2, was issued on October 16, 2007, and the second,
                    patent number
                    US7,319,984B2, was issued on January 15, 2008.
  Preliminarily,
                        USOF's management is of the view that the structure and operations of USOF
                        and its affiliated commodity pools do not infringe these
                        patents. USOF is also
                        in the process of reviewing prior art (prior structures and
                        operations of
                        similar investment vehicles) that may invalidate one or more
                        of the claims in
                        these patents. In addition, USOF has retained patent counsel
                        to advise it on
                        these matters and is in the process of obtaining their opinions
                        regarding the
                        non-infringement of each of these patents by USOF and/or
                        the patents' invalidity
                        based on prior art. If the patents were alleged to apply
                        to USOF's structure
                        and/or operations, and are found by a court to be valid and
                        infringed, Goldman
                        Sachs may be awarded significant monetary damages and/or
                        injunctive relief. See
                        “USNG's Operating Risks — Third parties may infringe upon or otherwise
                        violate intellectual property rights or assert that the General
                        Partner has
                        infringed or otherwise violated their intellectual property
                        rights, which may
                        result in significant costs and diverted
                        attention.”
 
 NOTE 6
                - FINANCIAL HIGHLIGHTS
 
 The
                following table presents per unit performance data and other supplemental
                financial data for the period from April 18, 2007 (commencement of
                operations) to December 31, 2007 and the period from September 11, 2006
                (inception) to December 31, 2006 for the limited partners. This information
                has
                been derived from information presented in the condensed financial
                statements.
  For
                            the period from
                        
                        
                        For
                            the period
                            fromApril
                            18, 2007 to
                        
                        
                        September
                            11, 2006
                            toDecember
                            31, 2007
                        
                        
                        December
                            31,
                            2006Per
                            Unit Operating
                            Performance:Net
                            asset value, beginning of period
                        
                        
                        $
                        50.00
                        
                        
                        $
                        -Total loss
                        
                        
                        
                        (13.55
                        )
                        
                        
                        -Total
                            expenses
                        
                        
                        
                        (0.27
                        )
                        
                        
                        -Net
                            decrease in net asset value
                        
                        
                        
                        (13.82
                        )
                        
                        
                        -Net
                            asset value, end of period
                        
                        
                        $
                        36.18
                        
                        
                        $
                        -Total
                            Return
                        
                        
                        
                        (27.64
                        )%
                        
                        
                        -
                        %Ratios
                            to Average Net Assets
                            (annualized)Total loss
                        
                        
                        
                        (5.59
                        )%
                        
                        
                        -
                        %Expenses
                            excluding management fees
                        
                        
                        
                        (0.39
                        )%
                        
                        
                        -
                        %Management
                            fees
                        
                        
                        
                        (0.60
                        )%
                        
                        
                        -
                        %Net loss
                        
                        
                        
                        (6.58
                        )%
                        
                        
                        -
                        %
  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 USNG.
  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, 2007 and 2006.
  First
                            Quarter
                          
                          Second
                            Quarter
                          
                          Third
                            Quarter
                          
                          Fourth
                            Quarter2007
                          
                          2007
                          
                          2007
                          
                          2007Total
                              Income (Loss)
                          
                          $
                          -
                          
                          $
                          (7,658,968
                          )
                          $
                          8,655,926
                          
                          $
                          (12,543,664
                          )Total
                              Expenses
                          
                          -
                          
                          79,457
                          
                          621,505
                          
                          1,344,359Net
                              Income (Loss)
                          
                          $
                          -
                          
                          $
                          (7,738,425
                          )
                          $
                          8,034,421
                          
                          $
                          (13,888,023
                          )Net
                              Income (Loss) per Unit
                          
                          $
                          -
                          
                          $
                          (6.51
                          )
                          $
                          (5.28
                          )
                          $
                          (2.03
                          )
  First
                            Quarter
                          
                          Second
                            Quarter
                          
                          Third
                            Quarter
                          
                          Fourth
                            Quarter2006
                          
                          2006
                          
                          2006
                          
                          2006Total
                              Income (Loss)
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -Total
                              Expenses
                          
                          -
                          
                          -
                          
                          -
                          
                          -Net
                              Income (Loss)
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -Net
                              Income (Loss) per Unit
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -
                          
                          $
                          -
 71
 Item 9.
                    Changes
                        in and Disagreements
                        With Accountants on Accounting and Financial
                        Disclosure.
  Not
              applicable.
  Item 9A.
                    Controls
                        and
                        Procedures.
  Disclosure
                Controls and
                Procedures.
  USNG
                maintains disclosure controls and procedures that are designed to
                ensure that
                material information required to be disclosed in USNG’s periodic reports
                filed or submitted under the Exchange Act, 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
                USNG if USNG had any officers, have evaluated the effectiveness of
                USNG’s
                disclosure controls and procedures and have concluded that the disclosure
                controls and procedures of USNG have been effective as of the end
                of the period
                covered by this annual report on Form
                10-K.
 
 Management’s
                Annual Report on
                Internal Control Over Financial Reporting and Attestation Report
                of Registered
                Public Accounting Firm.
  This
                annual report on Form 10-K does not include a report of management's
                assessment
                regarding internal control over financial reporting or an attestation
                report of
                USNG's registered public accounting firm due to a transition period
                established
                by the rules of the SEC for newly public companies.
  Change
                in Internal Control Over
                Financial Reporting.
  There
                were no changes in USNG’s internal control over financial reporting during
                USNG’s last fiscal quarter that have materially affected, or are reasonably
                likely to materially affect, USNG’s internal control over financial
                reporting.
 Item 9B.
                    Other
                        Information.
  Monthly
                  Account
                  Statements.
  Pursuant
                  to the requirement under part 4.22 of the CEA, each month USNG
                  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 USNG's website at
                  www.unitedstatesnaturalgasfund.com.
 72
 Part
              III
 
 Item 10.
                    Directors,
                        Executive Officers
                        and Corporate Governance.
  Messrs.
              Gerber and Mah also serve as executive officers of the General Partner.
              USNG has
              no executive officers. Its affairs are generally managed by the General
              Partner.
              The following individuals serve as Management Directors of the General
              Partner.
 Nicholas
                  Gerber has been the President and CEO of the General Partner since
                  June
                  9, 2005 and a Management Director of the General Partner since
                  May 10, 2005. He
                  maintains his main business office at 1320 Harbor Bay Parkway,
                  Suite 145,
                  Alameda, California 94502. Mr. Gerber acts as a portfolio manager
                  for USNG,
                  USOF, US12OF and USG.  Mr. Gerber will act as a portfolio manager for
                  USHO and US12NG. He registered with the NFA as a Principal of the
                  General
                  Partner in November 2005, and as an Associated Person of the General
                  Partner in
                  December 2005. Currently, Mr. Gerber manages USNG, USOF, US12OF
                  and USG. He will
                  also manage USHO and US12NG. Mr. Gerber has also served as Vice
                  President/Chief
                  Investment Officer of Lyon’s Gate Reinsurance Company, Ltd. since June of 2003.
                  Mr. Gerber has an extensive background in securities portfolio
                  management and in
                  developing investment funds that make use of indexing and futures
                  contracts. He
                  is also the founder of Ameristock Corporation, a California-based
                  investment
                  adviser registered under the Advisers Act, that has been sponsoring
                  and
                  providing portfolio management services to mutual funds since 1995.
                  Since 1995,
                  Mr. Gerber has been the portfolio manager of the Ameristock Mutual
                  Fund, Inc. a
                  mutual fund registered under the 1940 Act, focused on large cap
                  U.S. equities
                  that currently has approximately $482 million in assets. He has
                  also been a
                  Trustee for the Ameristock ETF Trust since June 2006, and a portfolio
                  manager
                  for the Ameristock/Ryan 1 Year, 2 Year, 5 Year, 10 Year and 20
                  Year Treasury ETF
                  since June 2007. In these roles, Mr. Gerber has gained extensive
                  experience in
                  evaluating and retaining third-party service providers, including
                  custodians,
                  accountants, transfer agents, and distributors. Prior to managing
                  Ameristock
                  Mutual Fund Inc., Mr. Gerber served as a portfolio manager with
                  Bank of America
                  Capital Management. While there he was responsible for the daily
                  stewardship of
                  four funds with a combined value in excess of $240 million. At
                  Bank of America
                  Capital Management, Mr. Gerber worked extensively in the development
                  and
                  managing of mutual funds and institutional accounts that were designed
                  to track
                  assorted equity market indices such as the Standard & Poor’s 500 and the
                  Standard & Poor’s Midcap 400. Before joining Bank of America, he was
                  managing director and founder of the Marc Stevens Futures Index
                  Fund, a fund
                  that combined the use of commodity futures with equity stock index
                  futures. The
                  futures index fund was a commodity pool and Mr. Gerber was the
                  CPO. It was
                  ultimately purchased by Newport Commodities. Mr. Gerber’s two decades of
                  experience in institutional investment include a period of employment
                  as a floor
                  trader on the NYMEX. Mr. Gerber has passed the Series 3 examination
                  for
                  associated persons. He holds an MBA in finance from the University
                  of San
                  Francisco and a BA from Skidmore College. Mr. Gerber is 45 years
                  old.
 
 Howard
                  Mah
                  has been a Management Director of the General Partner since May
                  10, 2005,
                  Secretary of the General Partner since June 9, 2005, and Chief
                  Financial Officer
                  of the General Partner since May 23, 2006. In these roles, Mr.
                  Mah is currently
                  involved in the management of USNG, USOF, US12OF and USG and will be
                  involved in the management of USHO and US12NG.  Mr. Mah also serves as
                  the General Partner’s Chief Compliance Officer. He received a Bachelor of
                  Education from the University of Alberta, in 1986 and an MBA from
                  the University
                  of San Francisco in 1988. He has been Secretary and Chief Compliance
                  Officer of
                  the Ameristock ETF Trust since February 2007, Compliance Officer
                  of Ameristock
                  Corporation since 2001, a tax & finance consultant in private practice since
                  1995, Secretary of Ameristock Mutual Fund since 1995 and Ameristock
                  Focused
                  Value Fund from December 2000 to January 2005, Chief Compliance
                  Officer of
                  Ameristock Mutual Fund since 2004 and the Co-Portfolio Manager
                  of the Ameristock
                  Focused Value Fund from December 2000 to January 2005. Mr. Mah
                  is 43 years
                  old.
 
 Andrew
                  F.
                  Ngim has been a Management Director of the General Partner since
                  May 10,
                  2005 and Treasurer of the General Partner since June 9, 2005. As
                  Treasurer of
                  the General Partner, Mr. Ngim is currently involved in the management
                  of USNG,
                  USOF, US12OF and USG and will be involved in the management of USHO and
                  US12NG. He received a Bachelor of Arts from the University of California
                  at
                  Berkeley in 1983. Mr. Ngim has been the Managing Director and co-portfolio
                  manager of Ameristock Corporation since 1999, Trustee of the Ameristock
                  ETF
                  Trust since February 2007, and a portfolio manager for the Ameristock/Ryan
                  1
                  Year, 2 Year, 5 Year, 10 Year and 20 Year Treasury ETF since June
                  2007. He was
                  the co-portfolio manager of the Ameristock Large Company Growth
                  Fund from
                  December 2000 to June 2002 and a Benefits Consultant with PricewaterhouseCoopers
                  from 1994 to 1999. Mr. Ngim is 47 years old.
 
 Robert
                  L.
                  Nguyen has been a Management Director of the General Partner since
                  May
                  10, 2005. As a Management Director of the General Partner, Mr.
                  Nguyen is
                  currently involved on the management of USNG, USOF, US12OF and
                  USG and will
                  be involved in the management of USHO and US12NG.  He received a
                  Bachelor of Science from California State University Sacramento
                  in 1981. Mr.
                  Nguyen has been the Managing Principal of Ameristock Corporation
                  since 2000. He
                  was Co-Portfolio Manager of the Ameristock Large Company Growth
                  Fund from
                  December 2000 to June 2002 and Institutional Specialist with Charles
                  Schwab
& Company Inc. from 1995 to 1999. Mr. Nguyen is 48 years
                  old.
 73
 
 The
                  following individuals provide significant services to USNG but
                  are employed by
                  the entities noted below.
 
 John
                  P.
                  Love acts as the Portfolio Operations Manager for USNG, USOF,
                  US12OF and
                  USG and is expected to be the Portfolio Operations Manager for USHO
                  and
                  US12NG.  Mr. Love is also employed by the General Partner. Mr. Love
                  has served as the operations manager of Ameristock Corporation
                  since 2002, where
                  he was responsible for back office and marketing activities for
                  the Ameristock
                  Mutual Fund and Ameristock Focused Value Fund and for the firm
                  in general. From
                  1993 to September 2002, Mr. Love was a project manager and managing
                  director for
                  IT and interactive media development firms, including TouchVision
                  Interactive
                  and Digital Boardwalk Inc. providing leadership to project teams
                  from
                  pre-contract through deployment, while assisting with business
                  and process
                  development. As the managing director of Jamison/Gold (Keane Interactive),
                  he
                  provided leadership to all departments including operations, production,
                  technology, sales, marketing, administration, recruiting, and finance.
                  Mr. Love
                  holds a Series 3 license and is registered with the NFA as an Associated
                  Person
                  of the General Partner. He holds a BFA in cinema-television from
                  the University
                  of Southern California. Mr. Love is 36 years old.
 
 John
                  T. Hyland,
                  CFA acts as a Portfolio Manager and as the Chief Investment
                  Officer for
                  the General Partner. Mr. Hyland is employed by the General Partner.
                  He
                  registered with the NFA as an Associated Person of the General
                  Partner in
                  December 2005, and as a Principal of the General Partner in January
                  2006. Mr. Hyland became the Portfolio Manager for USOF, USNG, US12OF
                  and USG in April 2006, March 2007, June 2007 and April 2007, respectively,
                  and
                  as Chief Investment Officer of the General Partner, acts in such
                  capacity on
                  behalf of USOF, USNG, US12OF and USG.  He is also expected to become
                  the Portfolio Manager for USHO and US12NG. As part of his responsibilities
                  for USNG, USOF, US12OF and USG, Mr. Hyland handles day-to-day trading,
                  helps set
                  investment policies, and oversees USNG’s, USOF’s, US12OF’s and USG's activities
                  with its futures commission brokers, custodian-administrator, and
                  marketing
                  agent. Mr. Hyland has an extensive background in portfolio management
                  and
                  research with both equity and fixed income securities, as well
                  as in the
                  development of new types of complex investment funds. In July 2001,
                  Mr. Hyland
                  founded Towerhouse Capital Management, LLC, a firm that provides
                  portfolio
                  management and new fund development expertise to non-U.S. institutional
                  investors. Mr. Hyland has been, and remains, a Principal and Portfolio
                  Manager
                  for Towerhouse. From July 2001 to January 2002, Mr. Hyland was
                  the Director of
                  Global Property Securities Research for Roulac International, where
                  he worked on
                  the development of a hedge fund focused on global real estate stocks.
                  From 1996
                  through 2001, Mr. Hyland was the Director of Securities Research
                  and Portfolio
                  Manager for the capital markets division of CB Richard Ellis, a
                  global
                  commercial real estate services firm. His division provided portfolio
                  management
                  of equities as an advisor or sub-advisor for mutual funds and separate
                  accounts
                  focused on real estate investment trusts. In addition, his group
                  conducted
                  research in the area of structured commercial real estate debt
                  (including
                  Commercial Mortgage-Back Securities, or “CMBS”), and lead the creation of one of
                  the earliest re-securitizations of multiple CMBS pool tranches
                  into a
                  Collateralized Debt Obligation vehicle. In the ten years prior
                  to working at CB
                  Richard Ellis, Mr. Hyland had worked as a portfolio manager or
                  financial
                  representative for several other investment firms and mutual funds.
                  Mr. Hyland
                  received his Chartered Financial Analyst (“CFA”) designation in 1994. From 1993
                  until 2003, Mr. Hyland was on the Board of Directors of the Security
                  Analysts of
                  San Francisco (“SASF”), a not-for-profit organization of investment management
                  professionals. He served as the president of the SASF from 2001-2002.
                  Mr. Hyland
                  is a member of the CFA Institute (formerly AIMR). He is also a
                  member of the
                  National Association of Petroleum Investment Analysts, a not-for-profit
                  organization of investment professionals focused on the oil industry.
                  He serves
                  as an arbitrator for FINRA, as part of their dispute resolution
                  program. He is a
                  graduate of the University of California, Berkeley and received
                  a BA in
                  political science/international relations in 1982. Mr. Hyland is
                  48 years
                  old.
 74
 The
                following individuals serve as independent directors of the General
                Partner.
 
 Peter
                M.
                Robinson has been an Independent Director of the General Partner since
                September 30, 2005 and, as such, serves on the board of directors
                of the General
                Partner, which acts on behalf of USNG, USOF, US12OF and USG and will
                serve on behalf of US12NG and USHO, if such funds commence operations.
                Mr.
                Robinson has been employed as a Research Fellow with the Hoover Institution
                since 1993. Mr. Robinson graduated from Dartmouth College in 1979
                and Oxford
                University in 1982. Mr. Robinson spent six years in the White House,
                serving
                from 1982 to 1983 as chief speechwriter to Vice President George
                Bush and from
                1983 to 1988 as special assistant and speechwriter to President Ronald
                Reagan.
                After the White House, Mr. Robinson received an MBA from the Stanford
                University
                Graduate School of Business. Mr. Robinson then spent a year in New
                York City
                with Fox Television. He spent a second year in Washington, D.C.,
                with the SEC,
                where he served as the director of the Office of Public Affairs,
                Policy
                Evaluation, and Research. Mr. Robinson has also written three books
                and has been
                published in the New York
                Times, Red Herring, and Forbes
                ASAP and he is the
                editor of Can Congress Be
                Fixed?: Five Essays on Congressional Reform (Hoover Institution Press,
                1995). Mr. Robinson is 50 years old.
 
 Gordon
                L.
                Ellis has been an Independent Director of the General Partner since
                September 30, 2005 and, as such, serves on the board of directors
                of the General
                Partner, which acts on behalf of USNG, USOF, US12OF and USG and will
                serve on behalf of US12NG and USHO, if such funds commence operations. Mr.
                Ellis has been Chairman of International Absorbents, Inc. since July
                1988,
                President and Chief Executive Officer since November 1996 and a Class
                I Director
                of the company since July 1985. Mr. Ellis is also a director of Absorption
                Corp., International Absorbents, Inc.’s wholly-owned subsidiary. Mr. Ellis is a
                director/trustee of Polymer Solutions, Inc., a former publicly-held
                company that
                sold all of its assets effective as of February 3, 2004 and is currently
                winding
                down its operations and liquidating following such sale. Mr. Ellis
                is a
                professional engineer with an MBA in international finance. Mr. Ellis
                is 60
                years old.
 
 Malcolm
                R. Fobes
                III has been an Independent Director of the General Partner since
                September 30, 2005 and, as such, serves on the board of directors
                of the General
                Partner, which acts on behalf of USNG, USOF, US12OF and USG and will serve
                on behalf of US12NG and USHO, if such funds commence operations. Mr. Fobes
                is the founder, Chairman and Chief Executive Officer of Berkshire
                Capital
                Holdings, Inc., a California-based investment adviser registered
                under the
                Advisers Act, that has been sponsoring and providing portfolio management
                services to mutual funds since 1997. Since 1997, Mr. Fobes has been
                the Chairman
                and President of The Berkshire Funds, a mutual fund investment company
                registered under the 1940 Act. Mr. Fobes also serves as portfolio
                manager of the
                Berkshire Focus Fund, a mutual fund registered under the 1940 Act,
                which
                concentrates its investments in the electronic technology industry.
                From April
                2000 to July 2006, Mr. Fobes also served as co-portfolio manager
                of The Wireless
                Fund, a mutual fund registered under the 1940 Act, which concentrates
                its
                investments in companies engaged in the development, production,
                or distribution
                of wireless-related products or services. In these roles, Mr. Fobes
                has gained
                extensive experience in evaluating and retaining third-party service
                providers,
                including custodians, accountants, transfer agents, and distributors.
                Mr. Fobes
                was also contributing editor of Start a Successful Mutual Fund: The
                Step-by-Step
                Reference Guide to Make It Happen (JV Books, 1995). Prior to forming
                Berkshire
                Capital Holdings, Inc., Mr. Fobes was employed by various technology-related
                companies, including Adobe Systems, Inc., a leading provider of digital
                publishing and imaging software technologies. Mr. Fobes holds a B.S.
                degree in
                Finance and Economics from San Jose State University in California.
                Mr. Fobes is
                43 years old.
 
 The
                following are individual principals, as that term is defined in CFTC
                Rule 3.1,
                for the General Partner: Melinda Gerber, the Gerber Family Trust,
                Howard Mah,
                Andrew Ngim, Robert Nguyen, Peter Robinson, Gordon Ellis, Malcolm
                Fobes, John
                Love, and John Hyland. These individuals are principals due to their
                positions,
                however, Nicholas Gerber and Melinda Gerber are also principals due
                to their
                controlling stake in Wainwright. None of the principals owns or has
                any other
                beneficial interest in USNG.  Nicholas Gerber and John Hyland make
                trading and investment decisions for USNG. Nicholas Gerber, John
                Love, and John
                Hyland execute trades on behalf of USNG. In addition, Nicholas Gerber,
                John
                Love, John Hyland and Robert Nguyen are registered with the CFTC
                as Associated
                Persons of the General Partner and are associate members of the
                NFA.
  Audit
                Committee
 
 The
                General Partner has an audit committee which is made up of the three
                independent
                directors (Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes
                III). The
                audit committee is governed by an audit committee charter that is
                posted on
                USNG’s website. The
                Board
                has not made a determination as to whether any of the members of
                the audit
                committee may be considered to be an “Audit Committee Financial Expert” as such
                term is defined in Item 407(d)(5) of Regulation S-K. However, the
                Board believes
                that Messrs. Fobes and Ellis are able to read and understand financial
                statements and meet the financial sophistication requirements of
                the AMEX and
                applicable FINRA rules as they relate to audit committees. As such,
                given the
                limited scope of USOF’s activities and the qualifications and experience of all
                of the members of the audit committee, the board of directors does
                not believe
                it is necessary to designate a member of the audit committee as an
“Audit
                Committee Financial Expert.”
 
 Other
                Committees
 
 Since
                the
                individuals who perform work on behalf of USNG are not compensated
                by USNG, but
                instead by the General Partner, Ameristock or ALPS Distributors,
                Inc., USNG does
                not have a compensation committee. Similarly, since the Directors
                noted above
                serve on the board of directors of the General Partner, there is
                no nominating
                committee of the board of directors that acts on behalf of USNG.
 75
 
 Code
                  of Ethics
 The
                    General Partner of USNG has adopted a Code of Business Conduct
                    and Ethics (the
“Code of Ethics”) that applies to its principal executive officer, principal
                    financial officer, principal accounting officer or controller,
                    or persons
                    performing similar functions, and also to USOF, US12OF, USNG,
                    USG, USHO and
                    US12NG.  USNG has posted the text of the Code of Ethics on its website
                    at www.unitedstatesnaturalgasfund.com.  USNG intends to disclose any
                    amendments or waivers to the Code of Ethics applicable to the
                    General Partner’s
                    principal executive officer, principal financial officer, principal
                    accounting
                    officer or controller, or persons performing similar functions,
                    on its
                    website.  A copy of the Code of Ethics has been filed with the
                    SEC.
 Item 11.
                    Executive
                        Compensation.
  Compensation
                to the General Partner
                and Other Compensation.
  USNG
                does
                not directly compensate any of the executive officers noted above. The
                executive officers noted above are compensated by the General Partner for
                the work they perform on behalf of USNG and other entities controlled
                by the
                General Partner. USNG does not reimburse the General Partner, nor
                does it set
                the amount or form of any portion of the compensation paid to the
                executive
                officers by the General Partner. USNG pays fees to the General Partner
                pursuant
                to the LP Agreement, under which the fund is obligated to pay the General
                Partner an annualized fee of 0.50% of average daily net assets of
                USNG for the
                first $1,000,000,000 and 0.20% of average daily net assets of USNG
                for amounts
                above $1,000,000,000. For the period from April 18, 2007 to December
                31, 2007,
                USNG paid the General Partner aggregate fees of $1,239,862.
  Director
                Compensation
 
 The
                following table sets forth compensation earned during the period
                from April 18,
                2007 to December 31, 2007, by the Directors of the General
                Partner.
 Change
                              inPensionValue
                              andFees
                          
                          
                          
                          
                          
                          
                          
                          NonqualifiedEarned
                              or
                          
                          
                          
                          
                          
                          Non-Equity
                          
                          DeferredPaid
                              in
                          
                          Stock
                          
                          Option
                          
                          Incentive
                              Plan
                          
                          Compensation
                          
                          All
                              OtherName
                          
                          Cash
                          
                          Awards
                          
                          Awards
                          
                          Compensation
                          
                          Plan
                          
                          Compensation
                              (1)
                          
                          TotalManagement
                              DirectorsNicholas
                              Gerber
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          0
                          
                          $
                          0Andrew
                              F. Ngim
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          0
                          
                          $
                          0Howard
                              Mah
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          0
                          
                          $
                          0Robert
                              L. Nguyen
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          0
                          
                          $
                          0Independent
                              DirectorsPeter
                              M. Robinson
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          89,000
                          
                          $
                          89,000Gordon
                              L. Ellis
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          88,000
                          
                          $
                          88,000Malcolm
                              R. Fobes III
                          
                          $
                          0
                          
                          
                          NA
                          
                          
                          NA
                          
                          
                          NA
                          
                          $
                          0
                          
                          $
                          109,000
                          
                          $
                          109,000
 (1)
                Payments made under this column represent cash payments made in lieu
                of
                directors’ and officers’ insurance coverage. Such payments were made only to the
                Independent Directors of the General Partner for their service on
                the boards of
                USOF, USNG and US12OF.
 76
 
 Item 12.
                    Security
                        Ownership of Certain
                        Beneficial Owners and Management and Related Stockholder
                        Matters.
 
 None
              of
              the directors or executive officers of the General Partner, nor the
              employees of
              USNG own any units of USNG.  The
              following table sets forth information regarding the beneficial ownership
              of
              USNG’s units by each person or entity known to it to be the beneficial owner
              of
              more than 5% of its outstanding units as of March 13, 2008.  The
              information in the table is presented as of December 31, 2007 and is based
              solely on a Schedule 13G filed with the SEC on March 7, 2008 by FMRLLC
              (“FMR”)on behalf of
              itself and affiliated
              persons and entities.
 Name
                          and Address of Beneficial Owner
                      Amount
                          and
                        Nature
                          of
                        Beneficial
                          Ownership
                      Percent
                        of
                          ClassFMR
                          LLC
                        82
                          Devonshire Street
                        Boston,
                          MA  02109
                      1,364,647*
                      12.636%
 
 *
                      FMR
                          has reported that it does not have sole voting authority
                          over any units
                          and that it has sole dispositive authority over 1,364,647
                          units. Pursuant
                          to the Schedule 13G,FidelityManagement & Research
                          Company (“Fidelity”),a
                          wholly-owned
                          subsidiary of FMR,
                          beneficially owns 1,364,647 units(for
                          which Edward
                          C. Johnson 3d and FMR, through
                          its control of Fidelity, have sole dispositive authority)
                          as a result ofits acting as investment
                          adviser
                          to various
                          investment companiesregistered under the 1940
                          Act.
  Item 13.
                    Certain
                        Relationships and
                        Related Transactions, and Director
                        Independence.
  USNG
              has and will continue to have certain
              relationships with the General Partner and its affiliates. However, there
              have been no direct financial transactions between USNG and the directors
              or
              officers of the General Partner that have not been disclosed herein. See
              "Item 11. Executive Compensation" and "Item 12. Security Ownership
              of Certain
              Beneficial Owners and Management and Related Stockholder Matters."
              Any
              transaction with a related person that must be disclosed in accordance
              with SEC
              Regulation S-K item 404(a), including financial transactions by USOF
              with
              directors or executive officers of the General Partner or holders of
              beneficial
              interests in the General Partner or USOF of more than 5%, will be subject
              to the
              provisions regarding "Resolutions of Conflicts of Interest; Standard
              of Care" as
              set forth in Section 7.7 of the LP Agreement and will be reviewed and
              approved
              by the audit committee of the General Partner.
  Item 14.
                    Principal
                        Accountant Fees and
                        Services.
  During
                the period from April 18, 2007 to December 31, 2007, the General
                Partner made
                the following payments to its independent auditors:
 2007
                      
                      
                      2006Audit
                          fees
                      
                      $
                      75,000
                      
                      $
                      44,000Audit-related
                          fees
                      
                      
                      -
                      
                      
                      -Tax
                          fees
                      
                      
                      -
                      
                      
                      -All
                          other fees
                      
                      
                      -
                      
                      
                      -$
                      75,000
                      
                      $
                      44,000
  Audit
                fees consist of fees paid to Spicer Jeffries LLP for (i) the audit of
                USNG’s annual financial statements included in the Annual Report on Form
                10-K,
                and review of financial statements included in the Quarterly Reports
                on Form
                10-Q and filed on USNG's current reports on Form 8-K; and (ii) services
                that are normally provided by the Independent Registered Public Accountants
                in
                connection with statutory and regulatory filings of registration
                statements.
  Tax
                fees
                consist of fees paid to Spicer Jeffries LLP for professional services
                rendered
                in connection with tax compliance and partnership income tax return
                filings.
  The
                  audit
                  committee has established policies and procedures which are intended
                  to control
                  the services provided by USNG’s independent auditors and to monitor their
                  continuing independence.  Under these policies and procedures, no
                  audit or permitted non-audit services (including fees and terms
                  thereof), except
                  for the de minimis
                  exceptions for non-audit services described in Section 10A(i)(1)(B)
                  of the
                  Exchange Act, may be undertaken by USNG’s independent auditors unless the
                  engagement is specifically pre-approved by the audit committee.  The
                  audit committee may form and delegate authority to subcommittees
                  consisting of
                  one or more members when appropriate, including the authority to
                  grant
                  pre-approvals of audit and permitted non-audit services, provided
                  that decisions
                  of such subcommittee to grant pre-approvals must be presented to
                  the full audit
                  committee at its next scheduled meeting.
 77
 Part
              IV
 Item 15.
                        Exhibits
                            and Financial
                            Statement
                            Schedules.
 1.
                      See
                          Index to Financial Statements on page 61.2.
                      No
                          financial statement schedules are filed herewith because
                          (i) such
                          schedules are not required or (ii) the information required
                          has been
                          presented in the aforementioned financial statements.3.
                      Exhibits
                          required to be filed by Item 601 of Regulation
                          S-K.
 
 Exhibit
                Index
  Listed
                below are the exhibits which are filed or furnished as part of this
                annual
                report on Form 10-K (according to the number assigned to them in
                Item 601 of
                Regulation S-K):
 Exhibit
                              Number
                          
                          Description
                              of
                              Document3.1*
                          
                          Second
                              Amended and
                              Restated Agreement of Limited Partnership.3.2**
                          
                          Certificate
                              of Limited
                              Partnership of the Registrant.10.1***
                          
                          Form
                              of Initial
                              Authorized Purchaser Agreement.10.2****
                          
                          Form
                              of Marketing
                              Agent Agreement.10.3****
                          
                          Form
                              ofCustodian
                              Agreement.10.4****
                          
                          Form
                              of Administrative
                              Agency Agreement.10.5*****
                          
                          License
                            Agreement.14.1******
                          
                          Code
                            of
                            Ethics.
  31.1******
                        
                        Certification
                            of Principal Executive Officer Pursuant to
                            Rule 13a-14(a) under the Securities Exchange Act of
                            1934.31.2******
                        
                        Certification
                            of Principal Financial Officer Pursuant to
                            Rule 13a-14(a) under the Securities Exchange Act of
                            1934.32.1*******
                        
                        Certification
                            of Principal Executive Officer Pursuant to
                            Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.
                            S. C.
                            1350).32.2*******
                        
                        Certification
                            of Principal Financial Officer Pursuant to
                            Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.
                            S. C.
                            1350).
 *              
                  Incorporated by reference to Registrant's Current Report on Form
                  8-K filed on
                  December 7, 2007.
 **            
                  Incorporated by reference to Registrant's Registration Statement
                  on Form S-1
                  (File No. 333- 137871) filed on October 6, 2006.
 ***          
                  Incorporated by reference to Registrant's Pre-Effective Amendment
                  No. 2 to
                  the Registration Statement on Form S-1 (File No. 333- 137871) filed
                  on March 9,
                  2007.
 ****       
                   Incorporated by reference to Registrant's Pre-Effective Amendment
                  No. 1 to
                  the Registration Statement on Form S-1 (File No. 333- 137871) filed
                  on December
                  22, 2006.
 *****      
                  Incorporated by reference to Registrant's Quarterly Report on Form
                  10-Q for the
                  Quarter ended March 31, 2007, filed on June 1, 2007.
 ******    Filed
                  Herewith
 ******* 
Furnished
                  Herewith
 78
 SIGNATURES
  Pursuant
              to the requirements of Section 13 or 15(d) 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 Natural Gas Fund, LP (Registrant)
                      By:
                        Victoria Bay Asset Management, LLC, its general partner/s/
                        Nicholas D. GerberNicholas
                        D.
                        GerberChief
                        Executive Officer ofVictoria
                        Bay Asset
                        Management, LLC
                      (Principal
                        executive
                        officer)DateDate:
                        March 26, 2008/s/
                      Howard
                      MahHoward
                        MahChief
                        Financial Officerof
                        Victoria Bay
                        Asset Management, LLC
                      (Principal
                        financial and
                        accounting officer)DateDate:
                        March 26, 2008
 
 79
  Pursuant
              to the requirements of
              the Securities Exchange Act of 1934, this Report has been signed below
              by the
              following persons on behalf of the Registrant in the capacities and
              on the dates
              indicated.
 Signature
                      Title
                        (Capacity)
                      Date/s/
                        Nicholas D.
                        Gerber
                      Management
                        Director
                      March 26,
                        2008Nicholas
                        D.
                        Gerber/s/
                        Howard
                        Mah
                      Management
                        Director
                      March 26,
                        2008Howard
                        Mah/s/
                        Andrew
                        Ngim
                      Management
                        Director
                      March 26,
                        2008Andrew
                        Ngim/s/
                        Robert
                        Nguyen
                      Management
                        Director
                      March 26,
                        2008Robert
                        Nguyen/s/
                        Peter M.
                        Robinson
                      Independent
                        Director
                      March 26,
                        2008Peter
                        M.
                        Robinson/s/
                        Gordon L.
                        Ellis
                      Independent
                        Director
                      March 26,
                        2008Gordon
                        L.
                        Ellis/s/
                        Malcolm R. Fobes
                        III
                      Independent
                        Director
                      March 26,
                        2008Malcolm
                        R. Fobes
                        III
 80