UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q




x
              Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934 for the quarterly period ended September 30,
  2009.


OR


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





Commission
File Number: 001-33975





United
States Gasoline Fund, LP


(Exact
name of registrant as specified in its charter)




Delaware
            
            20-8837263(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)





1320
Harbor Bay Parkway, Suite 145


Alameda,
California 94502


(Address
of principal executive offices) (Zip code)





(510)
522-9600


(Registrant’s
telephone number, including area code)





N/A


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





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





x
Yes     ̈ No





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


 ̈
Yes     ̈ No





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





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





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





 ̈
Yes    x No









UNITED
STATES GASOLINE FUND, LP


Table
of Contents





PagePart
      I. FINANCIAL INFORMATIONItem
      1.  Condensed Financial Statements.
                
                1Item
      2. Management’s Discussion and Analysis of Financial Condition and
      Results of Operations.
                
                14Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk.
                
                31Item
      4. Controls and Procedures.
                
                32Part
      II. OTHER INFORMATIONItem
      1. Legal Proceedings.
                
                33Item
      1A. Risk Factors.
                
                33Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.
                
                33Item
      3. Defaults Upon Senior Securities.
                
                33Item
      4. Submission of Matters to a Vote of Security Holders.
                
                33Item
      5. Other Information.
                
                33Item
      6. Exhibits.
                
                33





Part I.FINANCIAL
INFORMATION





Item
1. Condensed Financial Statements.





Index
to Condensed Financial Statements




Documents
              
              PageCondensed
      Statements of Financial Condition at September 30,
      2009  (Unaudited) and December 31, 2008
              
              
              2Condensed
      Schedule of Investments (Unaudited) at September 30, 2009
              
              
              3Condensed
      Statements of Operations (Unaudited) for the three and nine months ended
      September 30, 2009, the three months ended September 30, 2008 and the
      period from February 26, 2008 (commencement of operations) to September
      30, 2008
              
              
              4Condensed
      Statement of Changes in Partners’ Capital (Unaudited) for the nine months
      ended September 30, 2009
              
              
              5Condensed
      Statements of Cash Flows (Unaudited) for the nine months ended September
      30, 2009 and the period from February 26, 2008 (commencement of
      operations) to September 30, 2008
              
              
              6Notes
      to Condensed Financial Statements for the period ended September 30,
      2009 (Unaudited)
              
              
              7


1


United
States Gasoline Fund, LP


Condensed
Statements of Financial Condition


At
September 30, 2009 (Unaudited) and December 31, 2008





September 30, 2009
                    
                    
                    December 31, 2008AssetsCash
      and cash equivalents
                    
                    $
                    49,607,238
                    
                    
                    $
                    11,691,510Equity
      in UBS Securities LLC trading accounts:Cash
                    
                    
                    11,923,684
                    
                    
                    
                    7,114,841Unrealized
      gain (loss) on open commodity futures contracts
                    
                    
                    (3,277,869
                    )
                    
                    
                    1,431,721Receivable
      from general partner
                    
                    
                    43,203
                    
                    
                    
                    126,348Interest
      receivable
                    
                    
                    5,139
                    
                    
                    
                    4,251Other
      assets
                    
                    
                    704
                    
                    
                    
                    —Total
      assets
                    
                    $
                    58,302,099
                    
                    
                    $
                    20,368,671Liabilities
      and Partners' CapitalGeneral
      Partner management fees payable (Note 3)
                    
                    $
                    28,902
                    
                    
                    $
                    5,902Brokerage
      commission fees payable
                    
                    
                    2,700
                    
                    
                    
                    1,400Other
      liabilities
                    
                    
                    116,843
                    
                    
                    
                    151,950Total
      liabilities
                    
                    
                    148,445
                    
                    
                    
                    159,252Commitments and Contingencies(Notes 3, 4 and 5)Partners'
      CapitalGeneral
      Partner
                    
                    
                    —
                    
                    
                    
                    —Limited
      Partners
                    
                    
                    58,153,654
                    
                    
                    
                    20,209,419Total
      Partners' Capital
                    
                    
                    58,153,654
                    
                    
                    
                    20,209,419Total
      liabilities and partners' capital
                    
                    $
                    58,302,099
                    
                    
                    $
                    20,368,671Limited
      Partners' units outstanding
                    
                    
                    1,800,000
                    
                    
                    
                    1,000,000Net
      asset value per unit
                    
                    $
                    32.31
                    
                    
                    $
                    20.21Market
      value per unit
                    
                    $
                    32.11
                    
                    
                    $
                    19.46





See
accompanying notes to condensed financial statements.


2


United
States Gasoline Fund, LP


Condensed
Schedule of Investments (Unaudited)


At
September 30, 2009





Loss on OpenNumber of
                                  
                                  
                                  Commodity
                                  
                                  
                                  % of Partners'Contracts
                                  
                                  
                                  Contracts
                                  
                                  
                                  CapitalOpen
      Futures Contracts — LongUnited
      States ContractsNYMEX
      RBOB Gasoline Futures RB contracts, expire November 2009
                                  
                                  
                                  791
                                  
                                  
                                  $
                                  (3,277,869
                                  )
                                  
                                  
                                  (5.64
                                  )Principal
                                    Amount
                                  
                                  
                                  Market ValueCash
      EquivalentsUnited
      States - Money Market FundsFidelity
      Institutional Government Portfolio – Class I
                                  
                                  $
                                  23,032,318
                                  
                                  
                                  $
                                  23,032,318
                                  
                                  
                                  
                                  39.60Goldman
      Sachs Financial Square Funds – Government Fund – Class SL
                                  
                                  
                                  22,392,623
                                  
                                  
                                  
                                  22,392,623
                                  
                                  
                                  
                                  38.51Total
      Cash Equivalents
                                  
                                  
                                  
                                  
                                  
                                  $
                                  45,424,941
                                  
                                  
                                  
                                  78.11





See
accompanying notes to condensed financial statements.


3





United
States Gasoline Fund, LP


Condensed
Statements of Operations (Unaudited)


For
the three and nine months ended September 30, 2009, the three months ended
September 30, 2008 and the period from February 26, 2008 (commencement of
operations) to September 30, 2008





Threemonths
                    ended
                    September 30,
                    2009
                  
                  
                  Three months
                    ended
                    September 30,
                    2008
                  
                  
                  Nine months
                    ended
                    September 30,
                    2009
                  
                  
                  Period from
                    February 26,
                    2008 to
                    September 30,
                    2008IncomeGain
      (loss) on trading of commodity futures contracts:Realized
      gain (loss) on closed positions
                  
                  $
                  (4,214,431
                  )
                  
                  $
                  (7,632,467
                  )
                  
                  $
                  31,614,845
                  
                  
                  $
                  (2,810,800
                  )Change
      in unrealized gain (loss) on open positions
                  
                  
                  3,411,437
                  
                  
                  
                  426,560
                  
                  
                  
                  (4,709,590
                  )
                  
                  
                  1,057,795Interest
      income
                  
                  
                  22,346
                  
                  
                  
                  118,162
                  
                  
                  
                  85,563
                  
                  
                  
                  247,742Other
      income
                  
                  
                  5,000
                  
                  
                  
                  1,000
                  
                  
                  
                  24,000
                  
                  
                  
                  6,000Total
      income (loss)
                  
                  
                  (775,648
                  )
                  
                  
                  (7,086,745
                  )
                  
                  
                  27,014,818
                  
                  
                  
                  (1,499,263
                  )ExpensesGeneral
      Partner management fees (Note 3)
                  
                  
                  105,400
                  
                  
                  
                  37,889
                  
                  
                  
                  275,939
                  
                  
                  
                  81,854Brokerage
      commission fees
                  
                  
                  16,963
                  
                  
                  
                  4,322
                  
                  
                  
                  57,302
                  
                  
                  
                  10,750Other
      expenses
                  
                  
                  43,058
                  
                  
                  
                  94,987
                  
                  
                  
                  126,576
                  
                  
                  
                  226,340Total
      expenses
                  
                  
                  165,421
                  
                  
                  
                  137,198
                  
                  
                  
                  459,817
                  
                  
                  
                  318,944Expense
      waiver
                  
                  
                  (11,370
                  )
                  
                  
                  (81,054
                  )
                  
                  
                  (43,203
                  )
                  
                  
                  (196,148
                  )Net
      expenses
                  
                  
                  154,051
                  
                  
                  
                  56,144
                  
                  
                  
                  416,614
                  
                  
                  
                  122,796Net
      income (loss)
                  
                  $
                  (929,699
                  )
                  
                  $
                  (7,142,889
                  )
                  
                  $
                  26,598,204
                  
                  
                  $
                  (1,622,059
                  )Net
      income (loss) per limited partnership unit
                  
                  $
                  (0.38
                  )
                  
                  $
                  (15.67
                  )
                  
                  $
                  12.10
                  
                  
                  $
                  (0.44
                  )Net
      income (loss) per weighted average limitedpartnership
      unit
                  
                  $
                  (0.43
                  )
                  
                  $
                  (16.19
                  )
                  
                  $
                  12.47
                  
                  
                  $
                  (4.03
                  )Weighted
      average limited partnership units outstanding
                  
                  
                  2,146,739
                  
                  
                  
                  441,304
                  
                  
                  
                  2,133,333
                  
                  
                  
                  402,752





See
accompanying notes to condensed financial statements.


4


United
States Gasoline Fund, LP


Condensed
Statement of Changes in Partners’ Capital (Unaudited)


For
the nine months ended September 30, 2009





General Partner
                    
                    
                    Limited Partners
                    
                    
                    TotalBalances,
      at December 31, 2008
                    
                    $
                    —
                    
                    
                    $
                    20,209,419
                    
                    
                    $
                    20,209,419Addition
      of 2,400,000 partnership units
                    
                    
                    —
                    
                    
                    
                    61,873,841
                    
                    
                    
                    61,873,841Redemption
      of 1,600,000 partnership units
                    
                    
                    —
                    
                    
                    
                    (50,527,810
                    )
                    
                    
                    (50,527,810
                    )Net
      income
                    
                    
                    —
                    
                    
                    
                    26,598,204
                    
                    
                    
                    26,598,204Balances,
      at September 30, 2009
                    
                    $
                    —
                    
                    
                    $
                    58,153,654
                    
                    
                    $
                    58,153,654Net
      Asset Value Per UnitAt
      December 31, 2008
                    
                    $
                    20.21At
      September 30, 2009
                    
                    $
                    32.31





See
accompanying notes to condensed financial statements.


5


United
States Gasoline Fund, LP


Condensed
Statements of Cash Flows (Unaudited)


For
the nine months ended September 30, 2009 and the period from February 26, 2008
to September 30, 2008





Period fromNine months ended
                
                
                February 26, 2008 toSeptember 30, 2009
                
                
                September 30, 2008Cash
      Flows from Operating Activities:Net
      income (loss)
                
                $
                26,598,204
                
                
                $
                (1,622,059
                )Adjustments
      to reconcile net income (loss) to net cash provided by (used in)operating
      activities:Increase
      in commodity futures trading account – cash
                
                
                (4,808,843
                )
                
                
                (1,801,350
                )Unrealized
      (gain) loss on futures contracts
                
                
                4,709,590
                
                
                
                (1,057,795
                )Decrease
      in receivable from general partner
                
                
                83,145
                
                
                
                —Increase
      in interest receivable and other assets
                
                
                (1,592
                )
                
                
                (216,917
                )Increase
      in management fees payable
                
                
                23,000
                
                
                
                8,334Increase
      in commission fees payable
                
                
                1,300
                
                
                
                1,000Increase
      (decrease) in other liabilities
                
                
                (35,107
                )
                
                
                222,273Net
      cash provided by (used in) operating activities
                
                
                26,569,697
                
                
                
                (4,466,514
                )Cash
      Flows from Financing Activities:Subscription
      of partnership units
                
                
                61,873,841
                
                
                
                32,597,025Redemption
      of partnership units
                
                
                (50,527,810
                )
                
                
                (16,108,892
                )Net
      cash provided by financing activities
                
                
                11,346,031
                
                
                
                16,488,133Net
      Increase in Cash and Cash Equivalents
                
                
                37,915,728
                
                
                
                12,021,619Cash and Cash
      Equivalents, beginning of period
                
                
                11,691,510
                
                
                
                1,000Cash and Cash
      Equivalents, end of period
                
                $
                49,607,238
                
                
                $
                12,022,619





See
accompanying notes to condensed financial statements.


6


United
States Gasoline Fund, LP


Notes
to Condensed Financial Statements


For
the period ended September 30, 2009 (Unaudited)





NOTE
1 - ORGANIZATION AND BUSINESS





The
United States Gasoline Fund, LP (“UGA”) was organized as a limited partnership
under the laws of the state of Delaware on April 12, 2007.  UGA is a
commodity pool that issues limited partnership units (“units”) that may be
purchased and sold on the NYSE Arca, Inc. (the “NYSE Arca”). Prior to November
25, 2008, UGA’s units traded on the American Stock Exchange (the “AMEX”). UGA
will continue in perpetuity, unless terminated sooner upon the occurrence of one
or more events as described in its Amended and Restated Agreement of
Limited Partnership dated as of February 11, 2008 (the “LP Agreement”). The
investment objective of UGA is for the changes in percentage terms of its units’
net asset value to reflect the changes in percentage terms of the spot price of
gasoline as measured by the changes in the price of the futures contract on
unleaded gasoline (also known as reformulated gasoline blendstock for oxygen
blending, or “RBOB”) for delivery to the New York harbor, 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 the futures contract will be the next month contract to expire, less UGA’s
expenses. UGA accomplishes its objective through investments in futures
contracts for gasoline, crude oil, natural gas, heating oil and other
petroleum-based fuels that are traded on the NYMEX, ICE Futures or other U.S.
and foreign exchanges (collectively, “Futures Contracts”) and other
gasoline-related investments such as cash-settled options on Futures Contracts,
forward contracts for gasoline and over-the-counter transactions that are based
on the price of gasoline, crude oil and other petroleum-based fuels, Futures
Contracts and indices based on the foregoing (collectively, “Other
Gasoline-Related Investments”). As of September 30, 2009, UGA held 791 Futures
Contracts traded on the NYMEX.





UGA
commenced investment operations on February 26, 2008 and has a fiscal year
ending on December 31. United States Commodity Funds LLC (formerly known as
Victoria Bay Asset Management, LLC) (the “General Partner”) is responsible
for the management of UGA. The General Partner is a member of the National
Futures Association (the “NFA”) and became a commodity pool operator
registered with the Commodity Futures Trading Commission effective December 1,
2005. The General Partner is also the general partner of the United States
Oil Fund, LP (“USOF”), the United States Natural Gas Fund, LP (“USNG”), the
United States 12 Month Oil Fund, LP (“US12OF”) and the United States Heating Oil
Fund, LP (“USHO”), which listed their limited partnership units on the AMEX
under the ticker symbols “USO” on April 10, 2006, “UNG” on April 18, 2007,
“USL” on December 6, 2007 and “UHN” on April 9, 2008, respectively. As a result
of the acquisition of the AMEX by NYSE Euronext, each of USOF’s, USNG’s,
US12OF’s and USHO’s units commenced trading on the NYSE Arca on November 25,
2008. The General Partner is also the general partner of the United States Short
Oil Fund, LP, which listed its limited partnership units on the NYSE Arca on
September 24, 2009.  The General Partner has also filed registration
statements to register units of the United States 12 Month Natural Gas Fund, LP
and the United States Brent Oil Fund, LP.





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





UGA issues
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 calculated shortly after
the close of the core trading session on the NYSE Arca on the day the order to
create the basket is properly received. In addition, Authorized
Purchasers pay UGA a $1,000 fee for each order to create one or
more Creation Baskets or redeem one or more baskets consisting of 100,000 units
(“Redemption Baskets”). Units may be purchased or sold on a nationally
recognized securities exchange in smaller increments than a Creation Basket or
Redemption Basket. Units purchased or sold on a nationally recognized securities
exchange are not purchased or sold at the net asset value of UGA but rather at
market prices quoted on such exchange.


7


In
November 2007, UGA initially registered 30,000,000 units on Form S-1 with the
SEC. On February 26, 2008, UGA listed its units on the AMEX under the ticker
symbol “UGA”. On that day, UGA established its initial net asset value by
setting the price at $50.00 per unit and issued 300,000 units in exchange
for $15,001,000. UGA also commenced investment operations on February 26, 2008
by purchasing Futures Contracts traded on the NYMEX based on gasoline. As of
September 30, 2009, UGA had registered a total of 30,000,000 units and had
1,800,000 units outstanding.





NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Revenue
Recognition





Commodity
futures contracts, forward contracts, physical commodities, and related options
are recorded on the trade date. All such transactions are recorded on the
identified cost basis and marked to market daily. Unrealized gains or losses on
open contracts are reflected in the condensed statement of financial
condition and in the difference between the original contract amount and the
market value (as determined by exchange settlement prices for futures contracts
and related options and cash dealer prices at a predetermined time for forward
contracts, physical commodities, and their related options) as of the last
business day of the year or as of the last date of the condensed financial
statements. Changes in the unrealized gains or losses between periods are
reflected in the condensed statement of operations. UGA 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, UGA 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





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





Additions
and Redemptions





Authorized
Purchasers may purchase Creation Baskets or redeem Redemption Baskets only in
blocks of 100,000 units equal to the net asset value of the units calculated
shortly after the close of the core trading session on the NYSE Arca on the day
the order is placed.





UGA
receives or pays the proceeds from units sold or redeemed within three business
days after the trade date of the purchase or redemption. The amounts due from
Authorized Purchasers are reflected in UGA’s condensed statement of
financial condition as receivable for units sold, and amounts payable to
Authorized Purchasers upon redemption are reflected as payable for units
redeemed.





Partnership
Capital and Allocation of Partnership Income and Losses





Profit or
loss shall be allocated among the partners of UGA 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





UGA’s net
asset value is calculated on each NYSE Arca 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. UGA uses the closing
price for the contracts on the relevant exchange on that day to determine the
value of contracts held on such exchange.


8


Net
Income (Loss) per Unit





Net
income (loss) per unit is the difference between the net asset value per
unit at the beginning of each period and at the end of each period. The
weighted average number of units outstanding was computed for purposes of
disclosing net income (loss) per weighted average unit. The weighted average
units are equal to the number of units outstanding at the end of the period,
adjusted proportionately for units redeemed based on the amount of time the
units were outstanding during such period. There were no units held by the
General Partner at September 30, 2009.





Offering
Costs





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





Use
of Estimates





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





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





General
Partner Management Fee





Under
the LP Agreement, the General Partner is responsible for investing the
assets of UGA in accordance with the objectives and policies of UGA. 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 UGA. For these services, UGA is contractually obligated to pay the
General Partner a fee, which is paid monthly and based on average daily net
assets, that is equal to 0.60% per annum on average daily net
assets.





Ongoing
Registration Fees and Other Offering Expenses





UGA pays
all costs and expenses associated with the ongoing registration
of its units subsequent to the initial offering. These costs include
registration or other fees paid to regulatory agencies in connection with the
offer and sale of units, and all legal, accounting, printing and other expenses
associated with such offer and sale. For the nine months ended September
30, 2009 and the period from February 26, 2008 (commencement of operations) to
September 30, 2008, UGA incurred $0 and $0, respectively, in registration fees
and other offering expenses.





Directors’
Fees





UGA is
responsible for paying its portion of the directors’ and officers’ liability
insurance of the General Partner and the fees and expenses of the independent
directors of the General Partner who are also the General Partner’s audit
committee members. UGA shares these fees with USOF, USNG, US12OF, USHO
and USSO based on the relative assets of each fund, computed on a daily basis.
These fees for the calendar year 2009 are estimated to be a total of $477,000
for all funds.


9


Licensing
Fees





As
discussed in Note 4, UGA entered into a licensing agreement with the NYMEX
on May 30, 2007. Pursuant to the agreement, UGA and the affiliated funds managed
by the General Partner pay a licensing fee that is equal to 0.04% for the
first $1,000,000,000 of combined assets of the funds and 0.02% for combined
assets above $1,000,000,000. During the nine months ended September 30, 2009 and
the period from February 26, 2008 (commencement of operations) to September 30,
2008, UGA incurred $10,968 and $4,403, respectively, under this
arrangement.





Investor
Tax Reporting Cost





The fees
and expenses associated with UGA’s audit expenses and 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 UGA.





Other
Expenses and Fees and Expense Waivers





In
addition to the fees described above, UGA pays all brokerage fees, taxes and
other expenses in connection with the operation of UGA, excluding costs and
expenses paid by the General Partner as outlined in Note 4. The General Partner,
though under no obligation to do so, agreed to pay certain expenses, to the
extent that such expenses exceed 0.15% (15 basis points) of UGA’s NAV, on an
annualized basis, through at least December 31, 2009. The General Partner has no
obligation to continue such payment into subsequent periods.





NOTE
4 - CONTRACTS AND AGREEMENTS





UGA is
party to a marketing agent agreement, dated as of January 18, 2008,
with the Marketing Agent and the General Partner, whereby the Marketing
Agent provides certain marketing services for UGA as outlined in the agreement.
The fee of the Marketing Agent, which is borne by the General Partner, is equal
to 0.06% on UGA’s assets up to $3 billion; and 0.04% on UGA’s assets in excess
of $3 billion.





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.





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





Currently,
the General Partner pays BBH&Co. for its services, in the foregoing
capacities, a minimum amount of $75,000 annually for its custody, fund
accounting and fund administration services rendered to UGA and each of the
affiliated funds managed by the General Partner, as well as a $20,000 annual fee
for its transfer agency services. In addition, the General Partner pays
BBH&Co. an asset-based charge of (a) 0.06% for the first $500 million of
UGA’s, USOF’s, USNG’s, US12OF’s, USHO and USSO’s combined net assets, (b)
0.0465% for UGA’s, USOF’s, USNG’s, US12OF’s, USHO’s and USSO’s combined net
assets greater than $500 million but less than $1 billion, and (c) 0.035% once
UGA’s, USOF’s, USNG’s, US12OF’s, USHO’s and USSO’s combined net assets exceed $1
billion. The annual minimum amount will not apply if the asset-based charge for
all accounts in the aggregate exceeds $75,000. The General Partner also pays
transaction fees ranging from $7.00 to $15.00 per transaction.





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


10


UGA
invests primarily in Futures Contracts traded on the NYMEX.  On May
30, 2007, UGA and the NYMEX entered into a licensing agreement whereby UGA was
granted a non-exclusive license to use certain of the NYMEX’s settlement prices
and service marks. Under the licensing agreement, UGA and the 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.





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





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





UGA engages
in the trading of Futures Contracts and options on Futures Contracts
(collectively, “derivatives”). UGA is exposed to both market risk, which is the
risk arising from changes in the market value of the contracts, and credit risk,
which is the risk of failure by another party to perform according to the terms
of a contract.





UGA may
enter into futures contracts and options on futures contracts to gain exposure
to changes in the value of an underlying commodity. A futures contract obligates
the seller to deliver (and the purchaser to accept) the future delivery of a
specified quantity and type of a commodity at a specified time and place. Some
futures contracts may call for physical delivery of the asset, while others are
settled in cash.The contractual obligations of a buyer or seller may
generally be satisfied by taking or making physical delivery of the underlying
commodity or by making an offsetting sale or purchase of an identical futures
contract on the same or linked exchange before the designated date of
delivery.





The
purchase and sale of futures contracts 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.





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





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





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





UGA invests
a portion of its cash in money market funds that seek to maintain a stable net
asset value. UGA is exposed to any risk of loss associated with an investment in
these money market funds. As of September 30, 2009 and December 31, 2008, UGA
had deposits in domestic and foreign financial institutions,including cash investments in
money market funds, in the amounts of $61,530,922 and $18,806,351, respectively.
This amount is subject to loss should these institutions cease
operations.


11


For
derivatives, risks arise from changes in the market value of the contracts.
Theoretically, UGA 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, UGA pays or receives a
premium at the outset and then bears the risk of unfavorable changes in the
price of the contract underlying the option.





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





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




NOTE 6
– FAIR VALUE OF FINANCIAL INSTRUMENTS
 
 Effective
January 1, 2008, UGA adopted Accounting Standards Codification 820 – Fair Value
Measurements and Disclosures (“ASC 820”).  ASC 820 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurement. The
changes to past practice resulting from the application of ASC 820 relate to the
definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurement. ASC 820 establishes a fair
value hierarchy that distinguishes between (1) market participant assumptions
developed based on market data obtained from sources independent of UGA
(observable inputs) and (2) UGA’s own assumptions about market participant
assumptions developed based on the best information available under the
circumstances (unobservable inputs). The three levels defined by the ASC 820
hierarchy are as follows:
  Level I –
Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.
  Level II
– Inputs other than quoted prices included within Level I that are observable
for the asset or liability, either directly or indirectly.  Level II
assets include the following: quoted prices for similar assets or liabilities
in active markets, quoted prices for identical or similar assets or liabilities
in markets that are not active, inputs other than quoted prices that are
observable for the asset or liability, and inputs that are derived principally
from or corroborated by observable market data by correlation or other means
(market-corroborated inputs).
  Level III
– Unobservable pricing input at the measurement date for the asset or liability.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available.
  In some
instances, the inputs used to measure fair value might fall in different levels
of the fair value hierarchy.  The level in the fair value hierarchy
within which the fair value measurement in its entirety falls shall be
determined based on the lowest input level that is significant to the fair value
measurement in its entirety.
  The
following table summarizes the valuation of UGA’s securities at September 30,
2009 using the fair value hierarchy:
  At September 30, 2009
                                  
                                  Total
                                  
                                  
                                  Level I
                                  
                                  
                                  Level II
                                  
                                  
                                  Level IIIShort-Term
      Investments
                                  
                                  $
                                  45,424,941
                                  
                                  
                                  $
                                  45,424,941
                                  
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —Exchange-Traded
      Futures ContractsUnited
      States Contracts
                                  
                                  
                                  (3,277,869
                                  )
                                  
                                  
                                  (3,277,869
                                  )
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —




12




NOTE 7
- FINANCIAL HIGHLIGHTS
 
 The
following table presents per unit performance data and other supplemental
financial data for the nine months ended September 30, 2009 and the period from
February 26, 2008 (commencement of operations) to September 30, 2008 for the
unitholders. This information has been derived from information presented in the
condensed financial statements.
 
 For the period fromFebruary 26, 2008For the nine months
                        ended
                      
                      
                      (commencement of
                        operations)September 30, 2009
                      
                      
                      to September 30, 2008(Unaudited)
                      
                      
                      (Unaudited)Per Unit Operating
    Performance:Net
      asset value, beginning of period
                      
                      $
                      20.21
                      
                      
                      $
                      50.00Total
      income (loss)
                      
                      
                      12.30
                      
                      
                      
                      (0.14
                      )Net
      expenses
                      
                      
                      (0.20
                      )
                      
                      
                      (0.30
                      )Net
      increase (decrease) in net asset value
                      
                      
                      12.10
                      
                      
                      
                      (0.44
                      )Net
      asset value, end of period
                      
                      $
                      32.31
                      
                      
                      $
                      49.56Total
      Return
                      
                      
                      59.87
                      %
                      
                      
                      (0.88
                      )%Ratios
      to Average Net AssetsTotal
      income (loss)
                      
                      
                      43.93
                      %
                      
                      
                      (6.55
                      )%Management
      fees*
                      
                      
                      0.60
                      %
                      
                      
                      0.60
                      %Total
      expenses excluding management fees*
                      
                      
                      0.40
                      %
                      
                      
                      1.73
                      %Expenses
      waived*
                      
                      
                      (0.09
                      )%
                      
                      
                      (1.43
                      )%Net
      expenses excluding management fees*
                      
                      
                      0.31
                      %
                      
                      
                      0.30
                      %Net
      income (loss)
                      
                      
                      43.26
                      %
                      
                      
                      (7.08
                      )%*Annualized
 
 Total
returns are calculated based on the change in value during the period. An
individual unitholder’s total return and ratio may vary from the above
total returns and ratios based on the timing of contributions to and withdrawals
from UGA.




NOTE
8 – RECENTLY ADOPTED ACCOUNTING STANDARDS




In March
2008, the Financial Accounting Standards Board (the “FASB”) released Accounting
Standards Codification 815 – Derivatives and Hedging (“ASC 815”). ASC 815
requires qualitative disclosures about objectives and strategies for using
derivatives, quantitative disclosures about fair value amounts of, and gains and
losses on, derivative instruments, and disclosures about credit-risk-related
contingent features in derivative agreements. UGA adopted ASC 815 on
January 1, 2009.





NOTE
9 – SUBSEQUENT EVENTS





UGA has
performed an evaluation of subsequent events through November 16, 2009, which is
the date the financial statements were issued. This evaluation did not result in
any subsequent events that necessitated disclosures and/or
adjustments.


13


Item 2.  Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
  The
following discussion should be read in conjunction with the condensed financial
statements and the notes thereto of the United States Gasoline Fund, LP (“UGA”)
included elsewhere in this quarterly report on Form 10-Q.




Forward-Looking
Information





This
quarterly report on Form 10-Q, including this “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” contains
forward-looking statements regarding the plans and objectives of management for
future operations. This information may involve known and unknown risks,
uncertainties and other factors that may cause UGA’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 UGA’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 UGA cannot assure
investors that the projections included in these forward-looking statements will
come to pass. UGA’s actual results could differ materially from those
expressed or implied by the forward-looking statements as a result of various
factors.





UGA has
based the forward-looking statements included in this quarterly report on Form
10-Q on information available to it on the date of this quarterly report on
Form 10-Q, and UGA assumes no obligation to update any such forward-looking
statements. Although UGA 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 UGA may make directly to them or through reports that UGA in the
future files with the U.S. Securities and Exchange Commission (the “SEC”),
including annual reports on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K.





Introduction





UGA, a
Delaware limited partnership, is a commodity pool that issues units that
may be purchased and sold on the NYSE Arca, Inc. (the “NYSE Arca”). The
investment objective of UGA is to have the changes in percentage terms of its
units’ net asset value (“NAV”) reflect the changes in percentage terms of the
price of gasoline, as measured by the changes in the price of the futures
contract on unleaded gasoline (also known as reformulated gasoline blendstock
for oxygen blending, or “RBOB”, for delivery to the New York harbor), 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 (the "Benchmark Futures Contract"), less UGA’s
expenses.





UGA seeks
to achieve its investment objective by investing in a combination of gasoline
futures contracts and other gasoline-related investments such that changes in
its NAV, measured in percentage terms, will closely track the changes in
the price of the Benchmark Futures Contract, also measured in percentage
terms. UGA’s general partner believes the Benchmark Futures Contract
historically has exhibited a close correlation with the spot price of gasoline.
It is not the intent of UGA to be operated in a fashion such that the NAV will
equal, in dollar terms, the spot price of gasoline or any particular futures
contract based on gasoline. Management believes that it is not practical to
manage the portfolio to achieve such an investment goal when investing in listed
gasoline futures contracts and other gasoline-related investments.





On any
valuation day, the Benchmark Futures Contract is the near
month futures contract for gasoline traded on the New York Mercantile
Exchange (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 gasoline 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.





UGA
invests in futures contracts for other types of gasoline, crude oil, natural
gas, heating oil and other petroleum-based fuels that are traded on the NYMEX,
ICE Futures or other U.S. and foreign exchanges (collectively, “Futures
Contracts”) and other gasoline-related investments such as cash-settled options
on Futures Contracts, forward contracts for gasoline and over-the-counter
transactions that are based on the price of gasoline, crude oil and other
petroleum-based fuels, Futures Contracts and indices based on the foregoing
(collectively, “Other Gasoline-Related Investments”). For convenience and unless
otherwise specified, Futures Contracts and Other Gasoline-Related Investments
collectively are referred to as “Gasoline Interests” in this quarterly report on
Form 10-Q.


14


The
regulation of Gasoline Interests in the United States is a rapidly changing area
of law and is subject to ongoing modification by governmental and judicial
action.  As stated in the section “What are the Risk Factors Involved
with an Investment in UGA?” of UGA’s prospectus as filed with the SEC,
regulation of the commodity interests and energy markets is extensive and
constantly changing; future regulatory developments in the commodity interests
and energy markets are impossible to predict but may significantly and adversely
affect UGA.





Currently,
a number of proposals to alter the regulation of Gasoline Interests are being
considered by federal regulators and legislators. These proposals include the
imposition of hard position limits on energy-based commodity futures contracts,
the extension of position and accountability limits to futures contracts on
non-U.S. exchanges previously exempt from such limits, and the forced use of
clearinghouse mechanisms for all over-the-counter transactions. An additional
proposal would aggregate and limit all positions in energy futures held by a
single entity, whether such positions exist on U.S. futures exchanges, non-U.S.
futures exchanges, or in over-the-counter contracts. If any of the
aforementioned proposals is implemented, UGA’s ability to meet its
investment objective may be negatively impacted.





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





Gasoline
futures prices exhibited an uneven upward trend during the nine months ended
September 30, 2009. The price of the Benchmark Futures Contract started the
period at $1.0620 per gallon which was the low of the period. Prices rose
sharply over the course of the period and hit a peak on June 16, 2009 of $2.071
per gallon. The period ended with the Benchmark Futures Contract at $1.752 per
gallon, up approximately 64.93% over this time period (investors are cautioned
that these represent prices for gasoline on a wholesale basis and should not be
directly compared to retail prices at a gasoline service station). Similarly,
UGA’s NAV rose during the period from a starting level of $20.21 per unit to a
high of $35.71 per unit on August 3, 2009. UGA’s NAV reached its low for the
period on February 3, 2009 at $19.73 per unit. The NAV on September 30, 2009 was
$32.31, up approximately 59.87% over the period. The return of approximately
64.93% on the Benchmark Futures Contract listed above is a hypothetical return
only and could not actually be achieved by an investor holding futures
contracts. An investment in gasoline futures contracts would need to be rolled
forward during the time period described in order to achieve such a
result.





For the
first quarter of 2009, the gasoline futures market remained primarily in a state
of contango, meaning that the price of the near month gasoline futures contract
was typically higher than the price of the next month gasoline futures contract,
or contracts further away from expiration.  At the end of the first
quarter of 2009, the gasoline futures marked moved into a backwardation market
and remained there through the end of the first half of 2009.  In
September 2009, the gasoline futures market moved from a backwardation market
into contango, and ended the quarter ended September 30, 2009 in
contango.  A backwardation market is one in which the price of the
near month gasoline futures contract is higher than the price of the next month
gasoline futures contract, or contracts further away from
expiration.   For a discussion of the impact of backwardation and
contango on total returns, see “Term Structure of Gasoline Prices and the Impact
on Total Returns.”





Valuation
of Futures Contracts and the Computation of the NAV





The NAV
of UGA units is calculated once each NYSE Arca trading day. The NAV for a
particular trading day is released after 4:00 p.m. New York time. Trading
during the core trading session on the NYSE Arca typically closes at
4:00 p.m. New York time. UGA’s administrator 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 UGA investments, including ICE Futures contracts or other
futures contracts, as of the earlier of the close of the New York
Stock Exchange or 4:00 p.m. New York time.


15


Results
of Operations and the Gasoline Market





Results of
Operations. On February 26, 2008, UGA listed its units on the
American Stock Exchange (the “AMEX”) under the ticker symbol “UGA.” On that day,
UGA established its initial offering price at $50.00 per unit and issued 300,000
units to the initial authorized purchaser, Kellogg Capital Group, LLC, in
exchange for $15,001,000 in cash. As a result of the acquisition of the AMEX by
NYSE Euronext, UGA’s units no longer trade on the AMEX and commenced trading on
the NYSE Arca on November 25, 2008.





Since its
initial offering of 30,000,000 units, UGA has not made any subsequent offering
of its units. As of September 30, 2009, UGA had issued 3,700,000 units,
1,800,000 of which were outstanding. As of September 30, 2009, there were
26,300,000 units registered but not yet issued.





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





For the Nine Months Ended
September 30, 2009 Compared to the Period fromFebruary 26, 2008
(Commencement of Operations) to September 30, 2008





Since UGA
was conducting operations for only a portion of the nine months ended September
30, 2008, the comparison of the results of operations for the nine months ended
September 30, 2009 and the period from February 26, 2008 to September 30, 2008
may not be meaningful.





As of
September 30, 2009, the total unrealized loss on gasoline Futures Contracts
owned or held on that day was $3,277,869 and UGA established cash
deposits,including cash
investments in money market funds, that were equal to $61,530,922. UGA held
80.62% of its cash assets in overnight deposits and money market funds at its
custodian bank, while 19.38% of the cash balance was held with the futures
commission merchant as margin deposits for the Futures Contracts purchased.
The ending per unit NAV on September 30, 2009 was $32.31.





By
comparison, as of September 30, 2008, the total unrealized gain on gasoline
Futures Contracts owned or held on that day was $1,057,795 and UGA
established cash deposits,including cash investments in money market funds, that were equal to
$13,823,969. UGA held 86.97% of its cash assets in overnight deposits and money
market funds at its custodian bank, while 13.03% of the cash balance was held
with the futures commission merchant as margin deposits for the Futures
Contracts purchased. The ending per unit NAV on September 30, 2008 was $49.56.
The decrease in the per unit NAV from September 30, 2008 to September 30, 2009
was primarily a result of sharply lower prices for gasoline and the related
decline in the value of the gasoline Futures Contracts that UGA had invested in
between the period ended September 30, 2008 and the period ended September 30,
2009.





Portfolio Expenses. UGA’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. UGA pays the General
Partner a management fee of 0.60% of its average net assets. The fee
is accrued daily.





During
the nine months ended September 30, 2009, the daily average total net assets
of UGA were $61,488,170. The management fee paid by UGA during the period
amounted to $275,939, which was calculated at 0.60% of its average net assets
and was accrued daily. By comparison, during the period from February 26, 2008
to September 30, 2008, the daily average total net assets of UGA
were $22,904,104. The management fee paid by UGA during the period amounted
to $81,854, which was calculated at 0.60% of its average net assets and was
accrued daily.





In
addition to the management fee, UGA pays all brokerage fees, taxes and
other expenses, including certain tax reporting costs, licensing fees for the
use of intellectual property, ongoing registration or other fees paid to the
SEC, the Financial Industry Regulatory Authority (“FINRA”) and any
other regulatory agency in connection with offers and sales of its units
subsequent to the initial offering and all legal, accounting, printing and other
expenses associated therewith. The total of these fees, taxes and expenses for
the nine months ended September 30, 2009 was $183,878, as compared to $237,090
for the period from February 26, 2008 to September 30, 2008. The decrease in
expenses from the period from the period from February 26, 2008 to September 30,
2008 to the nine months ended September 30, 2009 was primarily due to the
current reporting period being longer than the comparison period.  UGA did
not incur any fees or other expenses relating to the registration and offering
of additional units for the nine months ended September 30, 2009 or for the
period from February 26, 2008 to September 30, 2008.


16


UGA is responsible for paying its
portion of the directors’ and officers’ liability insurance of the General
Partner and the fees and expenses of the independent directors of the General
Partner who are also the General Partner’s audit committee members.
UGA shares these fees with the United States Oil Fund, LP (“USOF”), the
United States Natural Gas Fund, LP (“USNG”), the United States 12 Month Oil
Fund, LP (“US12OF”), the United States Heating Oil Fund, LP (“USHO”) and the
United States Short Oil Fund, LP (“USSO”) based on the relative assets of each
fund computed on a daily basis. These fees for calendar year 2009 are estimated
to be a total of $477,000 for all funds. By comparison, for the year ended
December 31, 2008, these fees amounted to a total of $282,000 for all funds, and
UGA’s portion of such fees was $2,759.Directors’
expenses are expected to increase in 2009 due to payment for directors’ and
officers’ liability insurance and an increase in the compensation awarded to the
independent directors of the
General Partner. Effective as of March 3, 2009, the General Partner has obtained
directors’ and officers’ liability insurance covering all of the directors and
officers of the General Partner. Previously, the General Partner did not have
liability insurance for its directors and officers; instead, the independent
directors received a payment in lieu of directors’ and officers’ liability
insurance coverage.





UGA also
incurs commissions to brokers for the purchase and sale of Futures Contracts,
Other Gasoline-Related Investments or short-term obligations of the United
States of two years or less (“Treasuries”). During the nine months ended
September 30, 2009, total commissions paid to brokers amounted to $57,302. By
comparison, during the period from February 26, 2008 to September 30, 2008,
total commissions paid to brokers amounted to $10,750. The increase in the total
commissions paid to brokers from the period from February 26, 2008 to September
30, 2008 to the nine months ended September 30, 2009 was primarily a function of
the increase in UGA’s average total net assets, increased redemptions and
creations of units during the nine months ended September 30, 2009 and the
reporting period being longer than the comparison period. The increase in assets
required UGA to purchase a greater number of futures contracts and incur a
larger amount of commissions. As an annualized percentage of total net assets,
the figure for the nine months ended September 30, 2009 represents
approximately 0.12% of total net assets. By comparison, the figure for the
period from February 26, 2008 to September 30, 2008 represented 0.08% 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.  UGA seeks to invest its assets such that it holds
Futures Contracts and Other Gasoline-Related Investments in an amount equal to
the total net assets of its portfolio. Typically, such investments do not
require UGA to pay the full amount of the contract value at the time of
purchase, but rather require UGA to post an amount as a margin deposit against
the eventual settlement of the contract. As a result, UGA retains an amount that
is approximately equal to its total net assets, which UGA 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 and cash equivalents held with UGA’s custodian bank. The
Treasuries, cash and/or cash equivalents earn interest that accrues on a daily
basis. For the nine months ended September 30, 2009, UGA earned $85,563 in
interest income on such cash holdings. Based on UGA’s average daily total net
assets, this was equivalent to an annualized yield of 0.19%. UGA did not
purchase Treasuries during the nine months ended September 30, 2009 and
held all of its funds in cash and/or cash equivalents during this time period.
By comparison, for the period from February 26, 2008 to September 30, 2008, UGA
earned $247,742 in interest income on such cash holdings. Based on UGA’s average
daily total net assets, this was equivalent to an annualized yield of 1.82%. UGA
did not purchase Treasuries during the period from February 26, 2008 to
September 30, 2008 and held all of its funds in cash and/or cash equivalents
during this time period. Interest rates on short-term investments in the United
States, including cash, cash equivalents, and short-term Treasuries, were
sharply lower during the nine months ended September 30, 2009 compared to the
period from February 26, 2008 to September 30, 2008. As a result, the amount of
interest earned by UGA as a percentage of total net assets was lower during the
nine months ended September 30, 2009 compared to the nine months ended September
30, 2008.





For the Three Months Ended
September 30, 2009 Compared to the Three Months Ended September 30,
2008





During
the three months ended September 30, 2009, the daily average total net assets
of UGA were $69,693,775. The management fee paid by UGA during the period
amounted to $105,400, which was calculated at 0.60% of its average net assets
and was accrued daily. By comparison, during the three months ended September
30, 2008, the daily average total net assets of UGA were $25,122,354.
The management fee paid by UGA during the period amounted to $37,889, which was
calculated at 0.60% of its average net assets and was accrued
daily.


17


In
addition to the management fee, UGA pays all brokerage fees, taxes and
other expenses, including certain tax reporting costs, licensing fees for the
use of intellectual property, ongoing registration or other fees paid to the
SEC, 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. The total of these
fees, taxes and expenses for the three months ended September 30, 2009 was
$60,021, as compared to $99,309 for the three months ended September 30,
2008.  The decrease in expenses from the three months ended September
30, 2008 to the three months ended September 30, 2009 was primarily due to
higher expenses, including higher licensing fees and tax reporting costs,
incurred in the three months ended September 30, 2008 in connection with
the initial launch and operation of UGA. UGA did not incur any fees or other
expenses relating to the registration and offering of additional units for the
three months ended September 30, 2009 or for the three months ended September
30, 2008.





UGA is
responsible for paying its portion of the directors’ and officers’ liability
insurance of the General Partner and the fees and expenses of the independent
directors of the General Partner who are also the General Partner’s audit
committee members. UGA shares these fees with USOF, USNG, US12OF, USHO
and USSO based on the relative assets of each fund computed on a daily basis.
These fees for the three months ended September 30, 2009 amounted to a total of
$80,648 for all funds, and UGA’s portion of such fees was $893. By comparison,
for the three months ended September 30, 2008, these fees amounted to a total of
$72,126 for all funds, and UGA’s portion of such fees was $881. Directors’ expenses
increased from the three months ended September 30, 2008 to the three
months ended September 30, 2009 due to payment for
directors’ and officers’ liability insurance and an increase in the compensation
awarded to the independent directorsof the General Partner.
Effective as of March 3, 2009, the General Partner has obtained directors’ and
officers’ liability insurance covering all of the directors and officers of the
General Partner. Previously, the General Partner did not have liability
insurance for its directors and officers; instead, the independent directors
received a payment in lieu of directors’ and officers’ liability insurance
coverage.





UGA also
incurs commissions to brokers for the purchase and sale of Futures Contracts,
Other Gasoline-Related Investments or Treasuries. During the three months
ended September 30, 2009, total commissions paid to brokers amounted to $16,963.
By comparison, during the three months ended September 30, 2008, total
commissions paid to brokers amounted to $4,322. The increase in the total
commissions paid to brokers from the three months ended September 30, 2008 to
the three months ended September 30, 2009 was primarily a function of the
increase in UGA’s average total net assets and increased redemptions and
creations of units during the three months ended September 30, 2009. The
increase in assets required UGA to purchase a greater number of futures
contracts and incur a larger amount of commissions. As an annualized percentage
of total net assets, the figure for the three months ended September 30,
2009 represents approximately 0.10% of total net assets. By comparison, the
figure for the three months ended September 30, 2008 represented 0.07% 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.  UGA seeks to invest its assets such that it holds
Futures Contracts and Other Gasoline-Related Investments in an amount equal to
the total net assets of its portfolio. Typically, such investments do not
require UGA to pay the full amount of the contract value at the time of
purchase, but rather require UGA to post an amount as a margin deposit against
the eventual settlement of the contract. As a result, UGA retains an amount that
is approximately equal to its total net assets, which UGA 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 and cash equivalents held with UGA’s custodian bank. The
Treasuries, cash and/or cash equivalents earn interest that accrues on a daily
basis. For the three months ended September 30, 2009, UGA earned $22,346 in
interest income on such cash holdings. Based on UGA’s average daily total net
assets, this was equivalent to an annualized yield of 0.13%. UGA did not
purchase Treasuries during the three months ended September 30, 2009 and
held all of its funds in cash and/or cash equivalents during this time period.
By comparison, for the three months ended September 30, 2008, UGA earned
$118,162 in interest income on such cash holdings. Based on UGA’s average daily
total net assets, this was equivalent to an annualized yield of 1.87%. UGA did
not purchase Treasuries during the three months ended September 30, 2008
and held all of its funds in cash and/or cash equivalents during this time
period. Interest rates on short-term investments in the United States, including
cash, cash equivalents, and short-term Treasuries, were sharply lower during the
three months ended September 30, 2009 compared to the three months ended
September 30, 2008. As a result, the amount of interest earned by UGA as a
percentage of total net assets was lower during the three months ended September
30, 2009.


18


Tracking
UGA’s Benchmark





UGA seeks
to manage its portfolio such that changes in its average daily NAV, on a
percentage basis, closely track the changes in the average daily price of the
Benchmark Futures Contract, also on a percentage basis. Specifically, UGA
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 in the price 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, UGA’s management
would attempt to manage the portfolio such that the average daily movement of
the NAV during that same time period fell between 0.45% and 0.55% (i.e., between 0.9 and 1.1 of
the benchmark’s results). UGA’s portfolio management goals do not include trying
to make the nominal price of UGA’s NAV equal to the nominal price of the current
Benchmark Futures Contract or the spot price for gasoline. Management
believes that it is not practical to manage the portfolio to achieve such an
investment goal when investing in listed gasoline Futures
Contracts.





For the
30 valuation days ended September 30, 2009, the simple average daily change in
the Benchmark Futures Contract was -0.190%, while the simple average daily
change in the NAV of UGA over the same time period was -0.192%. The average
daily difference was -1.738 % (or .001738 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 -0.003%,
meaning that over this time period UGA’s tracking error was within the plus or
minus 10% range established as its benchmark tracking goal. The first chart
below shows the daily movement of UGA’s NAV versus the daily movement of the
Benchmark Futures Contract for the 30-day period ended September 30,
2009.








19








Since the
offering of UGA units to the public on February 26, 2008 to September 30,
2009, the simple average daily change in the Benchmark Futures Contract was
-0.046%, while the simple average daily change in the NAV of UGA over the same
time period was -0.047%. The average daily difference was -0.0004% (or -0.04
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 -1.134%, meaning that over this time period UGA’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 UGA versus the
return of its Benchmark Futures Contract can be calculated by comparing the
actual return of UGA, measured by changes in its NAV, versus the expected changes in its NAV
under the assumption that UGA’s returns had been exactly the same as the daily
changes in its Benchmark Futures Contract.





For the
nine months ended September 30, 2009, the actual total return of UGA as measured
by changes in its NAV was 59.87%. This is based on an initial NAV of $20.21
on December 31, 2008 and an ending NAV as of September 30, 2009 of $32.31.
During this time period, UGA made no distributions to its unitholders. However,
if UGA’s daily changes in its NAV had instead exactly tracked the changes in the
daily return of the Benchmark Futures Contract, UGA would have ended the third
quarter of 2009 with an estimated NAV of $32.53, for a total return over the
relevant time period of 60.96%. The difference between the actual NAV total
return of UGA of 59.87% and the expected total return based on the Benchmark
Futures Contract of 60.96% was an error over the time period of 1.09%, which is
to say that UGA’s actual total return trailed 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 net
impact of the expenses that UGA pays and the interest that UGA collects on
its cash and cash equivalent holdings. During the nine months ended September
30, 2009, UGA received interest income of $85,563, which is equivalent to a
weighted average interest rate of 0.19% for the nine months ended September 30,
2009. In addition, during the nine months ended September 30, 2009, UGA also
collected $24,000 from its authorized purchasers (“Authorized Purchasers”)
creating or redeeming baskets of units. This income also contributed to UGA’s
actual return. However, if the total assets of UGA 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.
During the nine months ended September 30, 2009, UGA incurred net expenses of
$416,614. Income from interest and Authorized Purchaser collections net of
expenses was $(307,051), which is equivalent to a weighted average net interest
rate of -0.67% for the nine months ended September 30,
2009.


20


By
comparison, for the period from February 26, 2008 to September 30, 2008, the
actual total return of UGA as measured by changes in its NAV was -0.88%. This
was based on an initial NAV of $50.00 on February 26, 2008 and an
ending NAV as of September 30, 2008 of $49.56. During this time period, UGA made
no distributions to its unitholders. However, if UGA’s daily changes in its NAV
had instead exactly tracked the changes in the daily return of the Benchmark
Futures Contract, UGA would have ended the third quarter of 2008 with an
estimated NAV of $49.30, for a total return over the relevant time period of
(1.40)%. The difference between the actual NAV total return of UGA of -0.88% and
the expected total return based on the Benchmark Futures Contract of
(1.40)% was an error over the time period of 0.52%, which is to say that UGA’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
UGA collected on its cash and cash equivalent holdings. During the period from
February 26, 2008 to September 30, 2008, UGA received interest income of
$247,742, which is equivalent to a weighted average interest rate of 1.82% for
the period from February 26, 2008 to September 30, 2008. In addition, during the
period from February 26, 2008 to September 30, 2008, UGA also collected $6,000
from Authorized Purchasers creating or redeeming baskets of units. During the
period from February 26, 2008 to September 30, 2008, UGA incurred net expenses
of $122,796. Income from interest and Authorized Purchaser collections net of
expenses was $130,946, which is equivalent to a weighted average net interest
rate of 0.92% for the period from February 26, 2008 to September 30, 2008. This
income also contributed to UGA’s actual return exceeding the benchmark
results.





There are
currently three factors that have impacted or are most likely to impact
UGA’s ability to accurately track its Benchmark Futures
Contract.





First,
UGA 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
during which UGA executes the trade. In that case, UGA may pay a price that is
higher, or lower, than that of the Benchmark Futures Contract, which could
cause the changes in the daily NAV of UGA to either be too high or too low
relative to the changes in the Benchmark Futures Contract. During the nine
months ended September 30, 2009, management attempted to minimize the effect of
these transactions by seeking to execute its purchase or sale of the Benchmark
Futures Contract at, or as close as possible to, the end of the day settlement
price. However, it may not always be possible for UGA 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 UGA’s attempt to track
the Benchmark Futures Contract over time.





Second,
UGA earns interest on its cash, cash equivalents and Treasury
holdings. UGA is not required to distribute any portion of its income to
its unitholders and did not make any distributions to unitholders during the
nine months ended September 30, 2009. Interest payments, and any other income,
were retained within the portfolio and added to UGA’s NAV. When this income
exceeds the level of UGA’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), UGA will realize a net yield that will tend to cause daily changes in
the NAV of UGA to track slightly higher than daily changes in the Benchmark
Futures Contract. During the nine months ended September 30, 2009, UGA earned,
on an annualized basis, approximately 0.19% on its cash holdings. It also
incurred cash expenses on an annualized basis of 0.60% for management fees and
approximately 0.12% in brokerage commission costs related to the purchase and
sale of futures contracts, and 0.19% for other expenses. The foregoing fees and
expenses resulted in a net yield on an annualized basis of approximately -0.72%
and affected UGA’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
decrease. Conversely, if short-term interest rates were to decline, the amount
of error created by the yield would increase. When short-term yields drop to a
level lower than the combined expenses of the management fee and the brokerage
commissions, then the tracking error becomes a negative number and would tend to
cause the daily returns of the NAV to underperform the daily returns of the
Benchmark Futures Contract.


21


Third,
UGA may hold Other Gasoline-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 Futures Contract could result
in daily changes in the NAV of UGA that are either too high, or too low,
relative to the daily changes in the Benchmark Futures Contract. During the nine
months ended September 30, 2009, UGA did not hold any Other Gasoline-Related
Investments. However, there can be no assurance that in the future UGA will not
make use of such Other Gasoline-Related Investments, which may have the effect
of increasing transaction related expenses and result in increased tracking
error.





Term
Structure of Gasoline Futures Prices and the Impact on Total
Returns





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





As an
example, assume that the price of gasoline for immediate delivery (the “spot”
price), was $2.00 per gallon, and the value of a position in the near month
futures contract was also $2.00. Over time, the price of a gallon of gasoline
will fluctuate based on a number of market factors, including demand for
gasoline relative to its supply.  The value of the near month contract
will likewise fluctuate in reaction to a number of market factors. If
investors seek to maintain their position in a near month contract and not take
delivery of the gasoline, 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 gasoline 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 gasoline
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 $2.00 investment would
tend to rise faster than the spot price of gasoline, or fall slower. As a
result, it would be possible in this hypothetical example for the price of spot
gasoline to have risen to $2.50 after some period of time, while the value of
the investment in the futures contract would have risen to $2.60, assuming
backwardation is large enough or enough time has elapsed. Similarly, the spot
price of gasoline could have fallen to $1.50 while the value of an investment in
the futures contract could have fallen to only $1.60. 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 gasoline
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 $2.00 investment would tend to rise slower
than the spot price of gasoline, or fall faster. As a result, it would be
possible in this hypothetical example for the spot price of gasoline to
have risen to $2.50 after some period of time, while the value of the investment
in the futures contract will have risen to only $2.40, assuming contango is
large enough or enough time has elapsed.  Similarly, the spot price of
gasoline could have fallen to $1.50 while the value of an investment in the
futures contract could have fallen to $1.40. Over time, if contango remained
constant, the difference would continue to increase.


22


The chart
below compares the price of the near month contract to the price of the next
month contract over the last 10 years (1999-2008) for gasoline. When the price
of the near month contract is higher than the price of the next month contract,
the market would be described as being in backwardation. When the price of the
near month contract is lower than the price of the next month contract, the
market would be described as being in contango. Although the prices of the near
month contract and the price of the next month contract do tend to move up or
down together, it can be seen that at times the near month prices are clearly
higher than the price of the next month contract (backwardation), and other
times they are below the price of the next month contract (contango). In
addition, investors can observe that gasoline prices, both near month and next
month, often display a seasonal pattern in which the price of gasoline tends to
rise in the summer months and decline in the winter months. This mirrors the
physical demand for gasoline, which typically peaks in the
summer.


23


Near
Month Gasoline Price and Next Month Gasoline Price *


(10 years
ending 12/31/08)











*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





Another
way to view backwardation and contango data over time is to subtract the dollar
price of the next month gasoline futures contract from the dollar price of the
near month gasoline futures contract. If the resulting number is a positive
number, then the price of the near month contract is higher than the price of
the next month and the market could be described as being in backwardation. If
the resulting number is a negative number, then the near month price is lower
than the price of the next month and the market could be described as being in
contango. The chart below shows the results from subtracting the next month
price from the price of the near month contract for the 10 year period between
1999 and 2008. Investors will note that the near month gasoline futures
contract spent time in both backwardation and contango. Investors will further
note that the markets display a very seasonal pattern that corresponds to the
seasonal demand patterns for gasoline mentioned above. That is, in many, but not
all, cases the price of the near month is higher than the next month during the
middle of the summer months as the price of gasoline for delivery in those
summer months rises to meet peak demand. At the same time, the price of the near
month, when that month is just before the onset of
spring, does not rise as far or as fast as the price of a next month contract
whose delivery falls closer to the start of the summer season.


24


Gasoline
Near Month Futures Contract Price Minus Next Month Futures Contract Price
*


(10 year
ending 12/31/08)











*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





While the
investment objective of UGA is not to have the market price of its units match,
dollar for dollar, changes in the spot price of gasoline, contango and
backwardation have impacted the total return on an investment in UGA units
during the past year relative to a hypothetical direct investment in
gasoline. For example, an investment in UGA units made on December 31, 2008 and
held to September 30, 2009 increased based upon the changes in the NAV for UGA
units on those days, by 59.87%, while the spot price of gasoline for immediate
delivery during the same period increased by 60.96% (note: this comparison
ignores the potential costs associated with physically owning and storing
gasoline, which could be substantial). By comparison, an investment in UGA units
made on February 26, 2008 and held to September 30, 2008 decreased, based upon
the changes in the NAV for UGA units on those days, by 0.32%, while the spot
price of gasoline for immediate delivery during the same period decreased by
0.83% (note: this comparison ignores the potential costs associated with
physically owning and storing gasoline, which could be
substantial).





Periods
of contango or backwardation do not materially impact UGA’s investment objective
of having the percentage changes in its per unit NAV track the 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 UGA’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.





Gasoline Market. During the
nine months ended September 30, 2009, the price of unleaded gasoline in the
United States was impacted by several factors. The price of the Benchmark
Futures Contract on January 2, 2009 was at $1.0620 per gallon. It rose sharply
over the course of the quarter and hit a peak on June 16, 2009 of $2.071 per
gallon. The third quarter ended with the Benchmark Futures Contract at $1.752
per gallon, up approximately 64.93% over this time period (investors are
cautioned that these represent prices for gasoline on a wholesale basis and
should not be directly compared to retail prices at a gasoline service
station).


25


During
the nine months ended September 30, 2009, the price of crude oil, the raw
material from which gasoline is refined, rose approximately 58.32% from
approximately $44.60 per barrel to approximately $70.61per barrel. The price of
crude oil was influenced by several factors, including ongoing weak demand for
crude oil globally and modest decreases in the production levels of crude oil
However, oil prices still increased as investors looked forward to improvements
in the global economy. Management believes however that should the global
economic situation remain weak, there is a meaningful possibility that crude oil
prices could retreat from their current levels.





Management
believes that over both the medium-term and the long-term, changes in the price
of crude oil will exert the greatest influence on the price of refined petroleum
products such as gasoline. At the same time, there can be other factors that,
particularly in the short term, cause the price of gasoline to rise (or fall),
more (or less) than the price of crude oil. For example, higher gasoline prices
cause American consumers to reduce their gasoline consumption, particularly
during the high demand period of the summer driving season and gasoline prices
are impacted by the availability of refining capacity. Furthermore, a slowdown
or recession in the U.S. economy may have a greater impact on U.S. gasoline
prices than on global crude oil prices. As a result, it is possible that changes
in gasoline prices may not match the changes in crude oil prices.





Unleaded Gasoline Price Movements in
Comparison to other Energy Commodities and Investment
Categories.  The General Partner believes that investors
frequently measure the degree to which prices or total returns of one investment
or asset class move up or down in value in concert with another investment or
asset class. Statistically, such a measure is usually done by measuring the
correlation of the price movements of the two different investments or asset
classes over some period of time. The correlation is scaled between 1 and -1,
where 1 indicates that the two investment options move up or down in price or
value together, known as “positive correlation,” and -1 indicating that they
move in completely opposite directions, known as “negative correlation.” A
correlation of 0 would mean that the movements of the two are neither positively
or negatively correlated, known as “non-correlation.” That is, the investment
options sometimes move up and down together and other times move in opposite
directions.





For the
ten year time period between 1998 and 2008, the chart below compares the monthly
movements of unleaded gasoline prices versus the monthly movements of the prices
of several other energy commodities, such as natural gas, crude oil and heating
oil, as well as several major non-commodity investment asset classes, such as
large cap U.S. equities, U.S. government bonds and global equities. It can be
seen that over this particular time period, the movement of unleaded gasoline on
a monthly basis was not strongly correlated, positively or negatively, with the
movements of large cap U.S. equities, U.S. government bonds or global equities.
However, movements in unleaded gasoline had a strong positive correlation to
movements in crude oil and heating oil. Finally, unleaded gasoline had a
positive, but weaker, correlation with natural gas.







10 Year Correlation
                  Matrix 1998-2008
                
                Large
                  Cap
                  U.S.
                  Equities
                  (S&P
                  500)
                
                
                U.S. Govt.
                  Bonds
                  (EFFAS
                  U.S.
                  Government
                  Bond Index)
                
                
                Global
                  Equities
                  (FTSE
                  World
                  Index)
                
                
                Crude Oil
                
                
                Natural
                  Gas
                
                
                Heating
                  Oil
                
                
                Unleaded
                  GasolineLarge
      Cap U.S. Equities (S&P 500)
                
                
                1.000
                
                
                
                -0.223
                
                
                
                0.936
                
                
                
                0.063
                
                
                
                0.045
                
                
                
                0.003
                
                
                
                0.266U.S.
      Govt. Bonds (EFFAS U.S. Government Bond Index)
                
                
                
                
                
                
                1.000
                
                
                
                -0.214
                
                
                
                -0.29
                
                
                
                0.054
                
                
                
                0.037
                
                
                
                -0.134Global
      Equities (FTSE World Index)
                
                
                
                
                
                
                
                
                
                
                1.000
                
                
                
                0.155
                
                
                
                0.072
                
                
                
                0.084
                
                
                
                0.384Crude
      Oil
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1.000
                
                
                
                0.292
                
                
                
                0.738
                
                
                
                0.747Natural
      Gas
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1.000
                
                
                
                0.394
                
                
                
                0.254Heating
      Oil
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1.000
                
                
                
                0.787Unleaded
      Gasoline
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1.000source: Bloomberg, NYMEX




PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS




26




The chart
below covers a more recent, but much shorter, range of dates than the above
chart. Over the one year period ended September 30, 2009, unleaded gasoline
continued to have a strong positive correlation with crude oil and heating oil.
During this period, it also had a weaker correlation with the movements of
natural gas than it had displayed over the ten year period ended December 31,
2008. Notably, the correlation between unleaded gasoline and both large cap U.S.
equities and global equities, which had been essentially non-correlated over the
ten year period ended December 31, 2008, displayed results that indicated that
they had a moderate to strong positive correlation over this shorter time
period, particularly due to the recent downturn in the U.S. economy. Finally,
the results showed that unleaded gasoline and U.S. government bonds, which had
essentially been non-correlated for the ten year period ended December 31, 2008,
were negatively correlated over this more recent time period.




Correlation
      Matrix 12
                          months
      ended September 30, 2009
                        
                        Large
                          Cap
      US
                          Equities
                          (S&P
                          500)
                        
                        
                        US
      Gov't
                          Bonds
                          (EFFAS
                          US
      Govt
                          Bond
      Index)
                        
                        
                        Global
                          Equities
                          (FTSE
                          World
                          Index)
                        
                        
                        Oil
                        
                        
                        Heating
                          Oil
                        
                        
                        Natural
                          Gas
                        
                        
                        Unleaded
                          GasolineLarge
      Cap US Equities (S&P 500)
                        
                        
                        1.000
                        
                        
                        
                        0.088
                        
                        
                        
                        0.988
                        
                        
                        
                        0.706
                        
                        
                        
                        0.694
                        
                        
                        
                        0.205
                        
                        
                        
                        0.522US
      Gov't Bonds (EFFAS US Govt Bond Index)
                        
                        
                        
                        
                        
                        
                        1.000
                        
                        
                        
                        0.102
                        
                        
                        
                        -0.313
                        
                        
                        
                        -0.303
                        
                        
                        
                        0.082
                        
                        
                        
                        -0.423Global
      Equities (FTSE World Index)
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1.000
                        
                        
                        
                        0.705
                        
                        
                        
                        0.697
                        
                        
                        
                        0.205
                        
                        
                        
                        0.552Oil
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1.000
                        
                        
                        
                        0.810
                        
                        
                        
                        0.193
                        
                        
                        
                        0.768Heating
      Oil
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1.000
                        
                        
                        
                        0.252
                        
                        
                        
                        0.865Natural
      Gas
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1.000
                        
                        
                        
                        -0.089Unleaded
      Gasoline
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        1.000Source:
      Bloomberg, NYMEX




PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





Investors
are cautioned that the historical price relationships between gasoline and
various other energy commodities, as well as other investment asset classes, as
measured by correlation may not be reliable predictors of future price movements
and correlation results. The results pictured above would have been different if
a different range of dates had been selected. The General Partner believes that
gasoline has historically not demonstrated a strong correlation with equities or
bonds over long periods of time. However, the General Partner also believes that
in the future it is possible that gasoline could have long term correlation
results that indicate prices of gasoline more closely track the movements of
equities or bonds.


27


The correlations between
gasoline, crude oil, natural gas and heating oil are relevant because the
General Partner endeavors to invest UGA’s assets in Futures Contracts and Other
Gasoline-Related Investments so that daily changes in percentage terms in UGA’s
NAV correlate as closely as possible with daily changes in percentage terms in
the price of the Benchmark Futures Contract. If certain other fuel-based
commodity futures contracts do not closely correlate with the gasoline
Futures Contracts, then their use could lead to greater tracking error. As
noted, the General Partner also believes that the changes in percentage terms in
the price of the Benchmark Futures Contract will closely correlate with changes
in percentage terms in the spot price of gasoline.





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. UGA’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 UGA’s condensed financial statements and related
disclosures and has determined that the valuation of its investments which
are not traded on a United States or internationally recognized futures exchange
(such as forward contracts and over-the-counter contracts) involves a critical
accounting policy. The values which are used by UGA for its forward contracts
are provided by its commodity broker who uses market prices when available,
while over-the-counter contracts are valued based on the present value of
estimated future cash flows that would be received from or paid to a third party
in settlement of these derivative contracts prior to their delivery date and
valued on a daily basis. In addition, UGA 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





UGA has
not made, and does not anticipate making, use of borrowings or other lines of
credit to meet its obligations. UGA has met, and it is anticipated that UGA 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. UGA’s liquidity needs
include: redeeming units, providing margin deposits for its existing Futures
Contracts or the purchase of additional Futures Contracts and posting collateral
for its over-the-counter contracts and, except as noted below, payment of its
expenses, summarized below under “Contractual Obligations.”





UGA
currently generates cash primarily from (i) the sale of baskets consisting of
100,000 units (“Creation Baskets”) and (ii) interest earned on Treasuries, cash
and/or cash equivalents. UGA has allocated substantially all of its net assets
to trading in Gasoline Interests. UGA invests in Gasoline 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 Gasoline-Related Investments. A significant portion
of the NAV is held in cash and cash equivalents that are used as margin and
as collateral for UGA’s trading in Gasoline Interests. The balance of the
net assets is held in UGA’s account at its custodian bank. Interest earned on
UGA’s interest-bearing funds is paid to UGA. During
the nine months ended September 30, 2009, UGA’s expenses exceeded the interest
income UGA earned and the cash earned by the sale of Creation Baskets and the
redemption of Redemption Baskets. To the extent expenses have exceeded interest
income, UGA’s NAV will be negatively impacted.





UGA’s
investment in Gasoline Interests may be subject to periods of illiquidity
because of market conditions, regulatory considerations and other reasons. For
example, most commodity exchanges limit the fluctuations in futures
contracts prices during a single day by regulations referred to as “daily
limits.” During a single day, no trades may be executed at prices beyond the
daily limit. Once the price of a futures contract has increased or
decreased by an amount equal to the daily limit, positions in the contracts can
neither be taken nor liquidated unless the traders are willing to effect trades
at or within the specified daily limit. Such market conditions could prevent UGA
from promptly liquidating its positions in futures contracts. During
the nine months ended September 30, 2009, UGA was not forced to purchase or
liquidate any of its positions while daily limits were in effect; however, UGA
cannot predict whether such an event may occur in the future.


28


Prior to
the initial offering of UGA, all payments with respect to UGA’s expenses were
paid by the General Partner.  UGA does not have an obligation or
intention to refund such payments by the General Partner.  The General
Partner is under no obligation to pay UGA’s current or future expenses. Since
such date, UGA has been responsible for expenses relating to (i) management
fees, (ii) brokerage fees and commissions, (iii) licensing fees for the use
of intellectual property, (iv) ongoing registration expenses in connection
with offers and sales of its units subsequent to the initial offering, (v)
taxes and other expenses, including certain tax reporting costs, (vi) fees
and expenses of the independent directors of the General Partner and (vii) other
extraordinary expenses not in the ordinary course of business, while the General
Partner has been responsible for expenses relating to the fees of UGA’s
marketing agent, administrator and custodian and registration expenses relating
to the initial offering of units. If the General Partner and UGA are
unsuccessful in raising sufficient funds to cover these respective expenses or
in locating any other source of funding, UGA will terminate and investors may
lose all or part of their investment.





Market
Risk





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





UGA’s
exposure to market risk depends on a number of factors, including the
markets for gasoline, the volatility of interest rates and foreign exchange
rates, the liquidity of the Futures Contracts and Other Gasoline-Related
Investments markets and the relationships among the contracts held by UGA. The
limited experience that UGA has had in utilizing its model to trade in
Gasoline Interests in a manner intended to track the changes in the spot price
of gasoline, 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 UGA
enters into Futures Contracts and Other Gasoline-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 futures exchanges is the clearinghouse associated with
the particular exchange. In general, clearinghouses are backed by their members
who may be required to share in the financial burden resulting from the
nonperformance of one of their members, and therefore, this additional member
support should significantly reduce credit risk. Some foreign exchanges are not
backed by their clearinghouse members but may be backed by a consortium of banks
or other financial institutions. There can be no assurance that any
counterparty, clearinghouse, or their members or their financial backers will
satisfy their obligations to UGA in such circumstances.





The
General Partner attempts to manage the credit risk of UGA by following
various trading limitations and policies. In particular, UGA generally posts
margin and/or holds liquid assets that are approximately equal to the market
value of its obligations to counterparties under the Futures Contracts and Other
Gasoline-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 UGA to limit its credit
exposure.


29


UBS
Securities LLC, UGA’s commodity broker, or any other broker that may be retained
by UGA in the future, when acting as UGA’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 UGA, all assets of UGA relating to domestic Futures
Contracts trading. These futures commission merchants are not allowed to
commingle UGA’s assets with its other assets. In addition, the CFTC requires
commodity brokers to hold in a secure account UGA’s assets related to foreign
Futures Contracts trading.





In the
future, UGA may purchase over-the-counter contracts. See “Item 3. Quantitative
and Qualitative Disclosures About Market Risk” of this quarterly report on Form
10-Q for a discussion of over-the-counter contracts.





As of
September 30, 2009, UGA had deposits in domestic and foreign financial
institutions,including
cash investments in money market funds, in the amount of $61,530,922. This
amount is subject to loss should these institutions cease
operations.





Off
Balance Sheet Financing





As of
September 30, 2009, UGA 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 UGA. While UGA’s exposure under
these indemnification provisions cannot be estimated, they are not expected to
have a material impact on UGA’s financial position.





Redemption
Basket Obligation





In order
to meet its investment objective and pay its contractual obligations described
below, UGA requires liquidity to redeem units, which redemptions must be in
blocks of 100,000 units called “Redemption Baskets.” UGA 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





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





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





The
General Partner pays the fees of UGA’s marketing agent, ALPS Distributors,
Inc., and the fees of the custodian and transfer agent, Brown Brothers Harriman
& Co. (“BBH&Co.”), as well as BBH&Co.’s fees for performing
administrative services, including those in connection with the preparation of
UGA’s condensed financial statements and its SEC and CFTC
reports.  The General Partner and UGA have also entered into
a licensing agreement with the NYMEX pursuant to which UGA and the affiliated
funds managed by the General Partner pay a licensing fee to the NYMEX. UGA also
pays the fees and expenses associated with its tax accounting and reporting
requirements with the exception of certain initial implementation service fees
and base service fees which are paid by the General Partner. The General
Partner, though under no obligation to do so, agreed to pay certain costs for
tax reporting and audit expenses normally borne by UGA to the extent that such
expenses exceeded 0.15% (15 basis points) of UGA’s NAV, on an annualized basis,
through at least December 31, 2009. The General Partner has no obligation to
continue such payment into subsequent periods.


30


In
addition to the General Partner’s management fee, UGA pays its brokerage fees
(including fees to a futures commission merchant), over-the-counter dealer
spreads, any licensing fees for the use of intellectual property, and,
subsequent to the initial offering, registration and other fees paid to the SEC,
FINRA, or other regulatory agencies in connection with the offer and sale of
units, as well as legal, printing, accounting and other expenses associated
therewith, and extraordinary expenses. The latter are expenses not incurred in
the ordinary course of UGA’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.  UGA also pays a portion of the fees and expenses of the independent
directors of the General Partner.  See Note 3 to the Notes to
Condensed Financial Statements (Unaudited).





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





Item 3.  Quantitative
and Qualitative Disclosures About Market Risk.





Over-the-Counter
Derivatives





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





Some
gasoline-based derivatives transactions contain fairly generic terms and
conditions and are available from a wide range of participants. Other
gasoline-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 gasoline- 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 gasoline, forward gasoline prices or
gasoline futures prices. For example, UGA may enter into over-the-counter
derivative contracts whose value will be tied to changes in the difference
between the spot price of gasoline, the price of Futures Contracts
traded on the NYMEX and the prices of other Futures Contracts in which UGA
may invest.





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





The
creditworthiness of each potential counterparty is assessed by the General
Partner. The General Partner assesses or reviews, as appropriate, the
creditworthiness of each potential or existing counterparty to an
over-the-counter contract pursuant to guidelines approved by the General
Partner's board of directors (the “Board”). Furthermore, the General Partner on
behalf of UGA only enters into over-the-counter contracts with counterparties
who are, or are affiliates of, (a) banks regulated by a United States federal
bank regulator, (b) broker-dealers regulated by the SEC, (c) insurance companies
domiciled in the United States, and (d) producers, users or traders of energy,
whether or not regulated by the CFTC. Any entity acting as a counterparty shall
be regulated in either the United States or the United Kingdom unless otherwise
approved by the Board after consultation with its legal counsel. Existing
counterparties are also reviewed periodically by the General
Partner.





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


31


UGA 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. UGA 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 UGA to changes in the price
relationship between futures contracts which will expire sooner and those that
will expire later. UGA 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 UGA, or if the
General Partner felt it would lead to an overall lower cost of trading to
achieve a given level of economic exposure to movements in gasoline prices. UGA
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.
UGA 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 UGA or if it would lead to an overall lower cost of trading to achieve a
given level of economic exposure to movements in gasoline prices.





During
the nine months ended September 30, 2009, UGA did not employ any hedging methods
such as those described above since all of its investments were made over an
exchange. Therefore, during the nine months ended September 30, 2009, UGA was
not exposed to counterparty risk.





Item 4.  Controls and
Procedures.





Disclosure
Controls and Procedures





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





The duly
appointed officers of the General Partner, including its chief executive
officer and chief financial officer, who perform functions equivalent
to those of a principal executive officer and principal financial officer of UGA
if UGA had any officers, have evaluated the effectiveness of UGA’s disclosure
controls and procedures and have concluded that the disclosure controls and
procedures of UGA have been effective as of the end of the period covered by
this quarterly report on Form 10-Q.





Change
in Internal Control Over Financial Reporting





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


32


Part II. OTHER INFORMATION





Item
1.  Legal Proceedings.





Not
applicable.





Item
1A.  Risk Factors.





Except as
noted below, there has not been a material change from the risk factors
previously disclosed in UGA’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2008.




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 UGA.
 
 The
futures markets are subject to comprehensive statutes, regulations, and margin
requirements. In addition, the CFTC and the exchanges are authorized to take
extraordinary actions in the event of a market emergency, including, for
example, the retroactive implementation of speculative position limits or higher
margin requirements, the establishment of daily price limits and the suspension
of trading.
 
 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. Considerable regulatory attention has been focused on
non-traditional investment pools which are publicly distributed in the United
States. There is a possibility of future regulatory changes altering, perhaps to
a material extent, the nature of an investment in UGA or the ability of UGA to
continue to implement its investment strategy. 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
UGA is impossible to predict, but could be substantial and adverse.
 
 In the
wake of the economic crisis last year, the Administration, federal regulators
and Congress are revisiting the regulation of the financial sector, including
securities and commodities markets. These efforts are likely to result in
significant changes in the regulation of these markets.
 
 Currently,
a number of proposals that would alter the regulation of Gasoline Interests are
being considered by federal regulators and Congress. These proposals include the
imposition of fixed position limits on energy-based commodity futures contracts,
extension of position and accountability limits to futures contracts on non-U.S.
exchanges previously exempt from such limits, and the forced use of
clearinghouse mechanisms for all over-the-counter transactions. Certain
proposals would aggregate and limit all positions in energy futures held by a
single entity, whether such positions exist on U.S. futures exchanges, non-U.S.
futures exchanges, or in over-the-counter contracts. While it cannot be
predicted at this time what reforms will eventually be made or how they will
impact UGA, if any of the aforementioned proposals are implemented, UGA’s
ability to meet its investment objective may be negatively impacted and
investors could be adversely affected.




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





Not
applicable.





Item
3.  Defaults Upon Senior Securities.





Not
applicable.





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





Not
applicable.





Item 5.  Other
Information.





Monthly
Account Statements





Pursuant
to the requirement under Rule 4.22 under the Commodity Exchange Act, each month
UGA 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 furnished to 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 UGA’s website
at www.unitedstatesgasolinefund.com.





Item 6. Exhibits.
 
 Listed
below are the exhibits which are filed as part of this quarterly report on Form
10-Q (according to the number assigned to them in Item 601 of Regulation
S-K):
  ExhibitNumber
                  
                  Description of Document3.1*
                  
                  Amended
      and Restated Agreement of Limited Partnership.3.3**
                  
                  Fourth
      Amended and Restated Limited Liability Company Agreement of the General
      Partner.10.4*
                  
                  Custodian
      Agreement.10.6*
                  
                  Administrative
      Agency Agreement.10.8*
                  
                  Amendment
      Agreement to the Marketing Agent Agreement.31.1*
                  
                  Certification
      by Principal Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2*
                  
                  Certification
      by Principal Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1*
                  
                  Certification
      by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2*
                  
                  Certification
      by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.99.1*
                  
                  Customer
      Agreement for Futures
Contracts.
 
 *
              Filed
      herewith**
              Incorporated
      by reference to the Quarterly Report on Form 10-Q for the United States
      Oil Fund, LP for the quarter ended September 30, 2009, filed on November
      9, 2009.




33





SIGNATURES





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





United
States Gasoline Fund, LP (Registrant)


By:
United States Commodity Funds LLC, its general partner





By:
              /s/ Nicholas
      D. GerberNicholas
      D. GerberChief
      Executive OfficerDate:  November
      16, 2009By:
              /s/
      Howard MahHoward
      MahChief
      Financial Officer





Date:  November
16, 2009


34