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,
  2010.


OR


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





Commission
File Number: 001-33975





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    xNon-accelerated
      filer     ̈
              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.
                      
                      16Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk.
                      
                      33Item
      4. Controls and Procedures.
                      
                      34Part
      II. OTHER INFORMATIONItem
      1. Legal Proceedings.
                      
                      35Item
      1A. Risk Factors.
                      
                      35Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.
                      
                      35Item
      3. Defaults Upon Senior Securities.
                      
                      35Item
      4. Reserved.
                      
                      35Item
      5. Other Information.
                      
                      35Item
      6. Exhibits.
                      
                      35








Part I.FINANCIAL
INFORMATION





Item
1. Condensed Financial Statements.





Index
to Condensed Financial Statements





Documents
                
                PageCondensed
      Statements of Financial Condition at September 30, 2010 (Unaudited) and
      December 31, 2009
                
                2Condensed
      Schedule of Investments (Unaudited) at September 30, 2010
                
                3Condensed
      Statements of Operations (Unaudited) for the three and nine months ended
      September 30, 2010 and 2009
                
                4Condensed
      Statement of Changes in Partners’ Capital (Unaudited) for the nine months
      ended September 30, 2010
                
                5Condensed
      Statements of Cash Flows (Unaudited) for the nine months ended September
      30, 2010 and 2009
                
                6Notes
      to Condensed Financial Statements for the period ended September 30, 2010
      (Unaudited)
                
                7


1





United
States Gasoline Fund, LP


Condensed
Statements of Financial Condition


At
September 30, 2010 (Unaudited) and December 31, 2009





September 30, 2010
                
                
                December 31, 2009AssetsCash
      and cash equivalents (Note 5)
                
                $
                53,092,768
                
                
                $
                61,883,040Equity
      in UBS Securities LLC trading accounts:Cash
                
                
                8,190,672
                
                
                
                1,354,561Unrealized
      gain on open commodity futures contracts
                
                
                3,516,143
                
                
                
                5,883,944Receivable
      from General Partner (Note 3)
                
                
                214,740
                
                
                
                256,355Dividend
      receivable
                
                
                2,619
                
                
                
                2,868Other
      assets
                
                
                252,726
                
                
                
                197,365Total
      assets
                
                $
                65,269,668
                
                
                $
                69,578,133Liabilities
      and Partners’ CapitalGeneral
      Partner management fees payable (Note 3)
                
                $
                31,509
                
                
                $
                34,774Professional
      fees payable
                
                
                299,110
                
                
                
                350,250Brokerage
      commission fees payable
                
                
                3,100
                
                
                
                2,700Other
      liabilities
                
                
                4,348
                
                
                
                4,669Total
      liabilities
                
                
                338,067
                
                
                
                392,393Commitments and Contingencies(Notes 3, 4 and 5)Partners’
      CapitalGeneral
      Partner
                
                
                -
                
                
                
                -Limited
      Partners
                
                
                64,931,601
                
                
                
                69,185,740Total
      Partners’ Capital
                
                
                64,931,601
                
                
                
                69,185,740Total
      liabilities and partners’ capital
                
                $
                65,269,668
                
                
                $
                69,578,133Limited
      Partners’ units outstanding
                
                
                1,900,000
                
                
                
                1,900,000Net
      asset value per unit
                
                $
                34.17
                
                
                $
                36.41Market
      value per unit
                
                $
                34.07
                
                
                $
                36.58





See
accompanying notes to condensed financial statements.


2





United
States Gasoline Fund, LP


Condensed
Schedule of Investments (Unaudited)


At
September 30, 2010


Gain on Open
                
                
                % ofNumber of
                
                
                Commodity
                
                
                Partners’Contracts
                
                
                Contracts
                
                
                CapitalOpen
      Futures Contracts - LongUnited
      States ContractsNYMEX
      RBOB Gasoline Futures RB contracts, expire November 2010
                
                
                759
                
                
                $
                3,516,143
                
                
                
                5.42





Principal Amount
                        
                        
                        Market ValueCash
      EquivalentsUnited
      States - Money Market FundsFidelity
      Institutional Government Portfolio - Class I
                        
                        $
                        34,053,021
                        
                        
                        $
                        34,053,021
                        
                        
                        
                        52.44Goldman
      Sachs Financial Square Funds - Government Fund - Class SL
                        
                        
                        6,401,875
                        
                        
                        
                        6,401,875
                        
                        
                        
                        9.86Morgan
      Stanley Institutional Liquidity Fund - Government
Portfolio
                        
                        
                        10,004,058
                        
                        
                        
                        10,004,058
                        
                        
                        
                        15.41Total
      Cash Equivalents
                        
                        
                        
                        
                        
                        $
                        50,458,954
                        
                        
                        
                        77.71





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, 2010 and 2009





Three months
                  ended
                  September 30, 2010
                
                
                Three months
                  ended
                  September 30, 2009
                
                
                Nine months
                  ended
                  September 30, 2010
                
                
                Nine months
                  ended
                  September 30, 2009IncomeGain
      (loss) on trading of commodity futures contracts:Realized
      gain (loss) on closed positions
                
                $
                (5,156,031
                )
                
                $
                (4,214,431
                )
                
                $
                (3,883,683
                )
                
                $
                31,614,845Change
      in unrealized gain (loss) on open positions
                
                
                6,453,203
                
                
                
                3,411,437
                
                
                
                (2,367,801
                )
                
                
                (4,709,590
                )Dividend
      income
                
                
                10,397
                
                
                
                21,616
                
                
                
                22,541
                
                
                
                81,685Interest
      income
                
                
                418
                
                
                
                730
                
                
                
                1,554
                
                
                
                3,878Other
      income
                
                
                5,000
                
                
                
                5,000
                
                
                
                13,000
                
                
                
                24,000Total
      income (loss)
                
                
                1,312,987
                
                
                
                (775,648
                )
                
                
                (6,214,389
                )
                
                
                27,014,818ExpensesGeneral
      Partner management fees (Note 3)
                
                
                103,692
                
                
                
                105,400
                
                
                
                337,479
                
                
                
                275,939Professional
      fees
                
                
                39,200
                
                
                
                37,720
                
                
                
                299,110
                
                
                
                111,930Brokerage
      commission fees
                
                
                17,100
                
                
                
                16,963
                
                
                
                54,608
                
                
                
                57,302Other
      expenses
                
                
                8,754
                
                
                
                5,338
                
                
                
                36,593
                
                
                
                14,646Total
      expenses
                
                
                168,746
                
                
                
                165,421
                
                
                
                727,790
                
                
                
                459,817Expense
      waiver (Note 3)
                
                
                (13,278
                )
                
                
                (11,370
                )
                
                
                (214,741
                )
                
                
                (43,203
                )Net
      expenses
                
                
                155,468
                
                
                
                154,051
                
                
                
                513,049
                
                
                
                416,614Net
      income (loss)
                
                $
                1,157,519
                
                
                $
                (929,699
                )
                
                $
                (6,727,438
                )
                
                $
                26,598,204Net
      income (loss) per limited partnership unit
                
                $
                0.32
                
                
                $
                (0.38
                )
                
                $
                (2.24
                )
                
                $
                12.10Net
      income (loss) per weighted average limited partnership
unit
                
                $
                0.56
                
                
                $
                (0.43
                )
                
                $
                (3.12
                )
                
                $
                12.47Weighted
      average limited partnership units outstanding
                
                
                2,071,739
                
                
                
                2,146,739
                
                
                
                2,154,212
                
                
                
                2,133,333





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, 2010





General Partner
                    
                    
                    Limited Partners
                    
                    
                    TotalBalances,
      at December 31, 2009
                    
                    $
                    -
                    
                    
                    $
                    69,185,740
                    
                    
                    $
                    69,185,740Addition
      of 1,100,000 partnership units
                    
                    
                    -
                    
                    
                    
                    40,505,135
                    
                    
                    
                    40,505,135Redemption
      of 1,100,000 partnership units
                    
                    
                    -
                    
                    
                    
                    (38,031,836
                    )
                    
                    
                    (38,031,836
                    )Net
      loss
                    
                    
                    -
                    
                    
                    
                    (6,727,438
                    )
                    
                    
                    (6,727,438
                    )Balances,
      at September 30, 2010
                    
                    $
                    -
                    
                    
                    $
                    64,931,601
                    
                    
                    $
                    64,931,601Net
      Asset Value Per Unit:At
      December 31, 2009
                    
                    $
                    36.41At
      September 30, 2010
                    
                    $
                    34.17





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, 2010 and 2009





Nine months ended
                
                
                Nine months endedSeptember 30, 2010
                
                
                September 30, 2009Cash
      Flows from Operating Activities:Net
      income (loss)
                
                $
                (6,727,438
                )
                
                $
                26,598,204Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Increase
      in commodity futures trading account – cash
                
                
                (6,836,111
                )
                
                
                (4,808,843
                )Unrealized
      loss on futures contracts
                
                
                2,367,801
                
                
                
                4,709,590Decrease
      in receivable from General Partner
                
                
                41,615
                
                
                
                83,145(Increase)
      decrease in dividend receivable
                
                
                249
                
                
                
                (888
                )Increase
      in other assets
                
                
                (55,361
                )
                
                
                (704
                )Increase
      (decrease) in General Partner management fees payable
                
                
                (3,265
                )
                
                
                23,000Increase
      (decrease) in professional fees payable
                
                
                (51,140
                )
                
                
                111,930Increase
      in brokerage commission fees payable
                
                
                400
                
                
                
                1,300Decrease
      in other liabilities
                
                
                (321
                )
                
                
                (147,037
                )Net
      cash provided by (used in) operating activities
                
                
                (11,263,571
                )
                
                
                26,569,697Cash
      Flows from Financing Activities:Addition
      of partnership units
                
                
                40,505,135
                
                
                
                61,873,841Redemption
      of partnership units
                
                
                (38,031,836
                )
                
                
                (50,527,810
                )Net
      cash provided by financing activities
                
                
                2,473,299
                
                
                
                11,346,031Net
      Increase (Decrease) in Cash and Cash Equivalents
                
                
                (8,790,272
                )
                
                
                37,915,728Cash and Cash
      Equivalents, beginning of period
                
                
                61,883,040
                
                
                
                11,691,510Cash and Cash
      Equivalents, end of period
                
                $
                53,092,768
                
                
                $
                49,607,238





See
accompanying notes to condensed financial statements.


6





United
States Gasoline Fund, LP


Notes
to Condensed Financial Statements


For
the period ended September 30, 2010 (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 13, 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 for 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,
cleared swap contracts 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, 2010, UGA held 759 Futures Contracts for
gasoline 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 (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 (the “CFTC”) 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 (“USSO”), the United States 12 Month Natural Gas Fund, LP (“US12NG”) and the
United States Brent Oil Fund, LP (“USBO”), which listed their limited
partnership units on the NYSE Arca under the ticker symbols “DNO” on September
24, 2009, “UNL” on November 18, 2009 and “BNO” on June 2, 2010, respectively.
The General Partner is also the sponsor of the United States Commodity Index
Fund (“USCI”) which listed its units on the NYSE Arca under the ticker symbol
“USCI” on August 10, 2010.





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 (“GAAP”). 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., as the marketing agent (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 placed to
create one or more Creation Baskets or to 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, 2010, UGA had registered a total of 80,000,000 units.





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 represent the difference between the original contract amount and the market
value (as determined by exchange settlement prices for futures contracts and
related options and cash dealer prices at a predetermined time for forward
contracts, physical commodities, and their related options) as of the last
business day of the year or as of the last date of the 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 income 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.





In
accordance with GAAP, UGA is required to determine whether a tax position is
more likely than not to be sustained upon examination by the applicable taxing
authority, including resolution of any tax related appeals or litigation
processes, based on the technical merits of the position.  UGA files
an income tax return in the U.S. federal jurisdiction, and may file income tax
returns in various U.S. states.  UGA is not subject to income tax
return examinations by major taxing authorities for years before 2007 (year of
inception).  The tax benefit recognized is measured as the largest
amount of benefit that has a greater than fifty percent likelihood of being
realized upon ultimate settlement.  De-recognition of a tax benefit
previously recognized results in UGA recording a tax liability that reduces net
assets.  However, UGA’s conclusions regarding this policy may be
subject to review and adjustment at a later date based on factors including, but
not limited to, on-going analyses of and changes to tax laws, regulations and
interpretations thereof.  UGA recognizes interest accrued related to
unrecognized tax benefits and penalties related to unrecognized tax benefits in
income tax fees payable, if assessed.  No interest expense or
penalties have been recognized as of and for the period ended September 30,
2010.





Creations
and Redemptions





Authorized
Purchasers may purchase Creation Baskets or redeem Redemption Baskets only in
blocks of 100,000 units at a price 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.


8





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.





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, 2010.





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 are accounted for as a
deferred charge and thereafter amortized to expense over twelve months on a
straight-line basis or a shorter period if warranted.





Cash
Equivalents





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





Reclassification





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





Use
of Estimates





The
preparation of condensed financial statements in conformity with GAAP 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
may 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, equal to 0.60% per annum of average daily net
assets.


9





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, 2010 and 2009, UGA
incurred $9,941 and $0, respectively, in registration fees and other offering
expenses.





Directors’
Fees and Expenses





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. These fees and expenses for the calendar year 2010 are
estimated to be a total of $1,178,870 for all funds.  Effective as of
April 1, 2010, UGA is responsible for paying its portion of any payments that
may become due to the independent directors pursuant to the deferred
compensation agreements entered into between the independent directors, the
General Partner and each of the affiliated funds.  UGA shares all
director fees and expenses, including any that may become due pursuant to the
deferred compensation agreements, with USOF, USNG, US12OF, USHO, USSO, US12NG
and USBO, based on the relative assets of each fund, computed on a daily
basis.





Licensing
Fees





As
discussed in Note 4 below, 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, other than USBO and USCI, 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, 2010 and 2009, UGA incurred $13,367 and $10,968, respectively,
under this arrangement.





Investor
Tax Reporting Cost





UGA pays
the fees and expenses associated with its audit expenses and tax accounting and
reporting requirements. These costs are estimated to be $300,000 for the
calendar year 2010.





Other
Expenses and Fees and Expense Waivers





In
addition to the fees described above, UGA pays all brokerage fees and other
expenses in connection with the operation of UGA, excluding costs and
expenses paid by the General Partner as outlined in Note 4
below.  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, 2010.  The General Partner has no obligation to continue
such payments into subsequent periods.





NOTE
4 - CONTRACTS AND AGREEMENTS





UGA is
party to a marketing agent agreement, dated as of February 15, 2008, as amended
from time to time, with the Marketing Agent and 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
fee does not include the following expenses, which are also borne by the General
Partner: the cost of placing advertisements in various periodicals; web
construction and development; or the printing and production of various
marketing materials.





UGA is
also party to a custodian agreement, dated January 16, 2008, as amended from
time to time, with Brown Brothers Harriman & Co. (“BBH&Co.”) and 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, as amended from time to time, 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 such agreement and such fees are
determined by the parties from time to time.


10





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’s, USSO’s, US12NG’s, USBO’s and USCI’s
combined net assets, (b) 0.0465% for UGA’s, USOF’s, USNG’s, US12OF’s, USHO’s,
USSO’s, US12NG’s, USBO’s and USCI’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, USSO’s, US12NG’s, USBO’s and USCI’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. In accordance with the agreement, UBS Securities charges UGA
commissions of approximately $7 per round-turn trade, including applicable
exchange and NFA fees for Futures Contracts and options on Futures
Contracts.





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, other than USBO and USCI, 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.


11





Through
September 30, 2010, all of the futures contracts held by UGA were
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, a party must rely solely
on the credit of its respective individual counterparties. However, in the
future, if UGA were to enter into non-exchange traded contracts, it would be
subject to the credit risk associated with counterparty non-performance. The
credit risk from counterparty non-performance associated with such instruments
is the net unrealized gain, if any, on the transaction. UGA has credit risk
under its futures contracts since the sole counterparty to all domestic and
foreign futures contracts is the clearinghouse for the exchange on which the
relevant contracts are traded. In addition, UGA bears the risk of financial
failure by the clearing broker.





UGA’s
cash and other property, such as 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 U.S. 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.





The
General Partner invests a portion of UGA’s 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,
2010 and December 31, 2009, UGA had deposits in domestic and foreign financial
institutions,including
cash investments in money market funds, in the amounts of $61,283,440 and
$63,237,601, respectively. This amount is subject to loss should these
institutions cease operations.





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





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





The
financial instruments held by UGA are reported in its 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





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




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




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




12




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




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




The
following table summarizes the valuation of UGA’s securities at December 31,
2009 using the fair value hierarchy:




At December 31, 2009
                Total
                
                Level I
                
                Level II
                
                Level IIIShort-Term
      Investments
                
                $
                53,435,830
                
                
                $
                53,435,830
                
                
                $
                -
                
                
                $
                -Exchange-Traded
      Futures ContractsUnited
      States Contracts
                
                
                5,883,944
                
                
                
                5,883,944
                
                
                
                -
                
                
                
                -





During
the year ended December 31, 2009, there were no significant transfers between
Level I and Level II.




The
following table summarizes the valuation of UGA’s securities at September 30,
2010 using the fair value hierarchy:




At September 30, 2010
                Total
                
                Level I
                
                Level II
                
                Level IIIShort-Term
      Investments
                
                $
                50,458,954
                
                
                $
                50,458,954
                
                
                $
                -
                
                
                $
                -Exchange-Traded
      Futures ContractsUnited
      States Contracts
                
                
                3,516,143
                
                
                
                3,516,143
                
                
                
                -
                
                
                
                -





During
the nine months ended September 30, 2010, there were no significant
transfers between Level I and Level II.





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





Fair
Value of Derivative Instruments





Derivatives not
                                      
                                      Statement ofAccounted
                                      
                                      Financial
                                      
                                      Fair Value
                                      
                                      Fair Valuefor as Hedging
                                      
                                      Condition
                                      
                                      At
                                      
                                      AtInstruments
                                      
                                      Location
                                      
                                      September 30, 2010
                                      
                                      December 31, 2009Futures
      - Commodity Contracts
                                      
                                      Assets
                                      
                                      
                                      $
                                      3,516,143
                                      
                                      
                                      $
                                      5,883,944


13





The
Effect of Derivative Instruments on the Statements of Operations





For the nine months ended
                        
                        
                        For the nine months endedSeptember 30, 2010
                        
                        
                        September 30, 2009Location of
                        
                        Realized
                        
                        
                        Change in
                        
                        
                        Realized
                        
                        
                        Change inDerivatives not
                        
                        Gain or (Loss)
                        
                        Gain or (Loss)
                        
                        
                        Unrealized
                        
                        
                        Gain or (Loss)
                        
                        
                        UnrealizedAccounted
                        
                        on Derivatives
                        
                        on Derivatives
                        
                        
                        Gain or (Loss)
                        
                        
                        on Derivatives
                        
                        
                        Gain or (Loss)for as Hedging
                        
                        Recognized
                        
                        Recognized
                        
                        
                        Recognized
                        
                        
                        Recognized
                        
                        
                        RecognizedInstruments
                        
                        in Income
                        
                        in Income
                        
                        
                        in Income
                        
                        
                        in Income
                        
                        
                        in IncomeFutures
      - Commodity Contracts
                        
                        Realized
      gain (loss) on closed positions
                        
                        $
                        (3,883,683
                        )
                        
                        
                        
                        
                        
                        $
                        31,614,845Change
      in unrealized gain (loss) on open positions
                        
                        
                        
                        
                        
                        $
                        (2,367,801
                        )
                        
                        
                        
                        
                        
                        $
                        (4,709,590
                        )





NOTE
7 - FINANCIAL HIGHLIGHTS





The
following table presents per unit performance data and other supplemental
financial data for the nine months ended September 30, 2010 and 2009 for the
unitholders. This information has been derived from information presented in the
condensed financial statements.





For the nine
                        months ended
                      
                      
                      For the nine
                        months endedSeptember 30, 2010
                      
                      
                      September 30, 2009(Unaudited)
                      
                      
                      (Unaudited)Per Unit Operating
    Performance:Net
      asset value, beginning of period
                      
                      $
                      36.41
                      
                      
                      $
                      20.21Total
      income (loss)
                      
                      
                      (2.00
                      )
                      
                      
                      12.30Net
      expenses
                      
                      
                      (0.24
                      )
                      
                      
                      (0.20
                      )Net
      increase (decrease) in net asset value
                      
                      
                      (2.24
                      )
                      
                      
                      12.10Net
      asset value, end of period
                      
                      $
                      34.17
                      
                      
                      $
                      32.31Total
      Return
                      
                      
                      (6.15
                      )%
                      
                      
                      59.87
                      %Ratios
      to Average Net AssetsTotal
      income (loss)
                      
                      
                      (8.26
                      )%
                      
                      
                      43.93
                      %Management
      fees*
                      
                      
                      0.60
                      %
                      
                      
                      0.60
                      %Total
      expenses excluding management fees*
                      
                      
                      0.69
                      %
                      
                      
                      0.40
                      %Expenses
      waived*
                      
                      
                      (0.38
                      )%
                      
                      
                      (0.09
                      )%Net
      expenses excluding management fees*
                      
                      
                      0.31
                      %
                      
                      
                      0.31
                      %Net income
      (loss)
                      
                      
                      (8.95
                      )%
                      
                      
                      43.26
                      %*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.


14




NOTE
8 – RECENT ACCOUNTING PRONOUNCEMENTS





In
January 2010, the Financial Accounting Standards Board issued Accounting
Standards Update (“ASU”)No. 2010-06 “Improving
Disclosures about Fair Value Measurements.” ASU No. 2010-06 clarifies existing
disclosure andrequires additional
disclosures regarding fair value measurements. Effective for fiscal years
beginningafter
December 15, 2010, and for interim periods within those fiscal years, entities
will need to disclose informationabout purchases, sales,
issuances and settlements of Level 3 securities on a gross basis, rather than as
a net number ascurrently required. The
implementation of ASU No. 2010-06 is not expected to have a material impact on
UGA’s financial statement disclosures.





NOTE
9 – SUBSEQUENT EVENTS





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


15





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 for the changes in percentage terms of its units’ net asset
value (“NAV”) 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 for
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 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
invests 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, cleared swap contracts 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.





UGA seeks
to achieve its investment objective by investing in a combination of 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 daily changes in the price of the Benchmark Futures
Contract have historically exhibited a close correlation with the daily changes
in 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 Futures Contracts and Other Gasoline-Related
Investments.


16





On any
valuation day, the Benchmark Futures Contract is the near month futures contract
for gasoline traded on the NYMEX unless the near month contract is within two
weeks of expiration, 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.





The
regulation of commodity interests in the United States is a rapidly changing
area of law and is subject to ongoing modification by governmental and judicial
action.  On July 21, 2010, a broad financial regulatory reform bill,
“The Dodd-Frank Wall Street Reform and Consumer Protection Act,” was signed into
law that includes provisions altering the regulation of commodity
interests.  Provisions in the new law include the requirement that
position limits on energy-based commodity futures contracts be established; new
registration, recordkeeping, capital and margin requirements for “swap dealers”
and “major swap participants” as determined by the new law and applicable
regulations; and the forced use of clearinghouse mechanisms for most
over-the-counter transactions. Additionally, the new law requires the
aggregation, for purposes of position limits, of all positions in energy futures
held by a single entity and its affiliates, whether such positions exist on U.S.
futures exchanges, non-U.S. futures exchanges, or in over-the-counter contracts.
The U.S. Commodity Futures Trading Commission (the “CFTC”), along with the SEC
and other federal regulators, has been tasked with developing the rules and
regulations enacting the provisions noted above.  The new law and the
rules to be promulgated may negatively impact UGA’s ability to meet its
investment objective either through limits or requirements imposed on it or upon
its counterparties.  In particular, new position limits imposed on UGA
or its counterparties may impact UGA’s ability to invest in a manner that most
efficiently meets its investment objective, and new requirements, including
capital and mandatory clearing, may increase the cost of UGA’s investments and
doing business, which could adversely affect UGA’s investors.





The
general partner of UGA, United States Commodity Funds LLC (the “General
Partner”), which is registered as a commodity pool operator (“CPO”) with 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.





Price
Movements





Gasoline
futures prices were volatile during the nine months ended September 30, 2010 and
exhibited moderate daily swings along with an uneven upward trend between
January and late April and a downward trend from May to September 2010. The
price of the Benchmark Futures Contract started the period at $2.053 per gallon.
It hit a peak on May 3, 2010 with a price of $2.435. The low of the period was
on August 24, 2010 when the price dropped to $1.809 per gallon. The period ended
with the Benchmark Futures Contract at $2.036 per gallon, down approximately
0.82% over the period.  UGA’s NAV had a starting level of $36.41 per
unit and reached its high for the period on May 3, 2010 at $39.90 per unit.
UGA’s NAV reached its low for the period on August 24, 2010 at $30.41 per unit.
UGA’s NAV on September 30, 2010 was $34.17, down approximately 6.15% over the
period. The Benchmark Futures Contract prices listed above began with the
February 2010 contract and ended with the November 2010 contract. The return of
approximately -0.82% 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. Furthermore, the change in the nominal price of
these differing gasoline Futures Contracts, measured from the start of the
period to the end of the period, does not represent the actual benchmark results
that UGA seeks to track, which are more fully described below in the section
titled “Tracking UGA’s Benchmark”.





During
the nine months ended September 30, 2010, the gasoline futures market exhibited
periods of both contango and backwardation. During the periods of contango, the
price of the near month gasoline Futures Contract was typically lower than the
price of the next month gasoline Futures Contract, or contracts further away
from expiration.  On days when the market was in backwardation, 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.   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.”


17





Valuation
of Futures Contracts and the Computation of the NAV





The NAV
of UGA’s 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 NYSE Arca or 4:00 p.m. New York
time.





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 registered one subsequent
offering of its units: 50,000,000 units which were registered with the SEC on
April 30, 2010. As of September 30, 2010, UGA had issued 5,300,000 units,
1,900,000 of which were outstanding. As of September 30, 2010, there were
74,700,000 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, 2010 Compared to the Nine Months Ended September 30,
2009





As of
September 30, 2010, the total unrealized gain on Futures Contracts owned or held
on that day was $3,516,143 and UGA established cash deposits,including cash investments in
money market funds, that were equal to $61,283,440. UGA held 86.63% of its cash
assets in overnight deposits and money market funds at its custodian bank, while
13.37% of the cash balance was held as margin deposits for the Futures Contracts
purchased. The ending per unit NAV on September 30, 2010 was
$34.17.





By
comparison, as of September 30, 2009, the total unrealized loss on 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 as margin deposits for
the Futures Contracts purchased. The ending per unit NAV on September 30, 2009
was $32.31. The increase in the per unit NAV from September 30, 2009 compared to
September 30, 2010 was primarily a result of higher prices for gasoline and the
related increase in the value of the gasoline Futures Contracts that UGA had
invested in between the period ended September 30, 2009 and the period ended
September 30, 2010.





Portfolio Expenses. UGA’s
expenses consist of investment management fees, brokerage fees and commissions,
certain offering costs, licensing fees, the fees and expenses of the independent
directors of the General Partner and expenses relating to tax accounting and
reporting requirements. The management fee that UGA pays to the General Partner
is calculated as a percentage of the total net assets of UGA.  UGA
pays the General Partner a management fee of 0.60% of its average net assets.
The fee is accrued daily and paid monthly.





During
the nine months ended September 30, 2010, the daily average total net assets of
UGA were $75,201,276. The management fee incurred by UGA during the period
amounted to $337,479. By comparison, 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.


18





In
addition to the management fee, UGA pays all brokerage fees 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 and expenses for the nine months
ended September 30, 2010 was $390,311, as compared to $183,878 for the nine
months ended September 30, 2009. The increase in expenses from the nine months
ended September 30, 2009 as compared to the nine months ended September 30, 2010
was primarily due to UGA’s increased size which resulted in increased estimates
for tax reporting, legal, accounting, printing, and other
expenses.  UGA incurred $9,941 and $0 in fees and other expenses
relating to the registration and offering of additional units during the nine
months ended September 30, 2010 and 2009, respectively.  During the
nine months ended September 30, 2010, an expense waiver was in effect which
offset certain of the expenses incurred by UGA.  The total amount of
the expense waiver was $214,741. For the nine months ended September 30, 2010,
the expenses of UGA, including management fees, commissions, and all other
expenses, before allowance for the expense waiver, totaled $727,790, and after
allowance for the expense waiver, totaled $513,049.





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 and expenses 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”), the United States Short Oil Fund, LP (“USSO”), the United States 12
Month Natural Gas Fund, LP (“US12NG”) and the United States Brent Oil Fund, LP
(“USBO”), based on the relative assets of each fund computed on a daily basis.
These fees and expenses for the calendar year 2010 are estimated to be a total
of $1,178,870 for all funds. By comparison, for the year ended December 31,
2009, these fees and expenses amounted to a total of $433,046 for all funds, and
UGA’s portion of such fees and expenses was $3,734. Directors’ expenses are
expected to increase in 2010 due to an increase in the amount of directors’ and
officers’ liability insurance coverage and the incurrence of the independent
directors’ deferred compensation expense.  Effective as of March 3,
2009, the General Partner 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.Effective as of April 1,
2010, UGA is also responsible for paying its portion of any payments that may
become due to the independent directors pursuant to the deferred compensation
agreements entered into between the independent directors, the General Partner
and UGA, USOF, USNG, US12OF, USHO, USSO, US12NG and USBO.





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, 2010, total commissions paid to brokers amounted to $54,608. By
comparison, during the nine months ended September 30, 2009, total commissions
paid to brokers amounted to $57,302.  The decrease in the total
commissions paid to brokers from the nine months ended September 30, 2009
compared to the nine months ended September 30, 2010 was primarily a function of
the decrease in UGA’s trading activities including fewer creations and
redemptions during the nine months ended September 30, 2010. A decrease in
creation and redemption activity resulted in fewer trades and a lower total
commission amount.  As an annualized percentage of total net assets,
the figure for the nine months ended September 30, 2010 represents approximately
0.10% of total net assets. By comparison, the figure for the nine months ended
September 30, 2009 represented approximately 0.12% 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.





UGA pays
fees and expenses associated with its audit expenses and tax accounting and
reporting requirements.  These costs are estimated to be $300,000 for
the calendar year 2010.  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, 2010.  The General Partner has no
obligation to continue such payments into subsequent periods.


19





Dividend and 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 income that accrues on a daily basis. For the nine months ended
September 30, 2010, UGA earned $24,095 in dividend and interest income on such
cash and/or cash equivalents. Based on UGA’s average daily total net assets,
this was equivalent to an annualized yield of 0.04%. UGA did not purchase
Treasuries during the nine months ended September 30, 2010 and held only cash
and/or cash equivalents during this time period. By comparison, for the nine
months ended September 30, 2009, UGA earned $85,563 in dividend and interest
income on such cash and/or cash equivalents.  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 only cash and/or cash equivalents during this time period. Interest rates
on short-term investments, including cash, cash equivalents, and Treasuries,
were sharply lower during the nine months ended September 30, 2010 compared to
the nine months ended September 30, 2009. As a result, the amount of income
earned by UGA as a percentage of total net assets was lower during the nine
months ended September 30, 2010.





For the Three Months EndedSeptember
30, 2010
Compared to the Three Months EndedSeptember30,
2009





Portfolio
Expenses.  During the three months ended September 30, 2010,
the daily average total net assets of UGA were $68,564,379. The management fee
incurred by UGA during the period amounted to $103,692. By comparison, 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.





In
addition to the management fee, UGA pays all brokerage fees 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 and expenses for the
three months ended September 30, 2010 was $65,054, as compared to $60,021 for
the three months ended September 30, 2009. The increase in expenses from the
three months ended September 30, 2009 as compared to the three months ended
September 30, 2010 was primarily due to UGA’s increased size and activity that
resulted from its increased size, including increased estimates for tax
reporting, legal, accounting, printing, and other expenses.  UGA
incurred $3,425 and $0 in fees and other expenses relating to the registration
and offering of additional units during the three months ended September 30,
2010 and 2009, respectively.  During the three months ended September
30, 2010, an expense waiver was in effect which offset certain of the expenses
incurred by UGA.  The total amount of the expense waiver was
$13,278.  For the three months ended September 30, 2010, the expenses
of UGA, including management fees, commissions, and all other expenses, before
allowance for the expense waiver, totaled $168,746, and after allowance for
the expense waiver, totaled $155,468.





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 and expenses with USOF,
USNG, US12OF, USHO, USSO, US12NG and USBO, based on the relative assets of
each fund computed on a daily basis. These fees and expenses for the calendar
year 2010 are estimated to be a total of $1,178,870 for all funds. By
comparison, for the year ended December 31, 2009, these fees and expenses
amounted to a total of $433,046 for all funds, and UGA’s portion of such fees
and expenses was $3,734. Directors’ expenses are expected to increase in 2010
due to an increase in the amount of directors’ and officers’ liability insurance
coverage and the incurrence of the independent directors’ deferred compensation
expense.  Effective as of March 3, 2009, the General Partner 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.  Effective as of April 1, 2010, UGA is also responsible
for paying its portion of any payments that may become due to the independent
directors pursuant to the deferred compensation agreements entered into between
the independent directors, the General Partner and UGA, USOF, USNG, US12OF,
USHO, USSO, US12NG and USBO.


20





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, 2010, total commissions paid to brokers amounted to $17,100. By
comparison, during the three months ended September 30, 2009, total commissions
paid to brokers amounted to $16,963. The
increase in the total commissions paid to brokers for the three months ended
September 30, 2010 as compared to the three months ended September 30, 2009 was
primarily the result of a discretionary, commission-related liability. UGA
carries a liability for futures contracts owned but expected to be sold by the
next roll period. This liability is added to commissions paid to brokers in each
reporting period.  This liability was reduced during the three months
ended September 30, 2009, whereas it remained unchanged during the three months
ended September 30, 2010. As a result, total commissions were higher during the
three months ended September 30, 2010.As an
annualized percentage of total net assets, the figure for the three months ended
September 30, 2010 represents approximately 0.10% of total net assets. By
comparison, the figure for the three months ended September 30, 2009 represented
approximately 0.10% 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.





UGA pays
the fees and expenses associated its audit expenses and tax accounting
and reporting requirements.  These costs are estimated to be $300,000
for the calendar year 2010. 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, 2010.  The General Partner has no obligation to continue
such payments into subsequent periods.





Dividend and 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 income that accrues on a daily basis. For the three months
ended September 30, 2010, UGA earned $10,815 in dividend and interest income on
such cash and/or cash equivalents. Based on UGA’s average daily total net
assets, this was equivalent to an annualized yield of 0.06%. UGA did not
purchase Treasuries during the three months ended September 30, 2010 and held
only cash and/or cash equivalents during this time period. By comparison, for
the three months ended September 30, 2009, UGA earned $22,346 in dividend and
interest income on such cash and/or cash equivalents.  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 only cash and/or cash equivalents during this time period.
Interest rates on short-term investments, including cash, cash equivalents, and
Treasuries, were lower during the three months ended September 30, 2010 compared
to the three months ended September 30, 2009. As a result, the amount of income
earned by UGA as a percentage of total net assets was lower during the three
months ended September 30, 2010.





Tracking
UGA’s Benchmark





UGA’s
management seeks to manage UGA’s 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’s management seeks to manage the portfolio such that over any
rolling period of 30-valuation days, the average daily change in UGA’s 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 price of the Benchmark Futures Contract for a particular
30-valuation 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, 2010, the simple average daily change in
the Benchmark Futures Contract was 0.227%, while the simple average daily change
in the NAV of UGA over the same time period was 0.223%. The average daily
difference was -0.004% (or -0.4 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 -0.251%, 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-valuation day period ended September 30,
2010.  The second chart below shows the monthly total returns of UGA
as compared to the monthly value of the Benchmark Futures Contract since
inception.




Since the
commencement of the offering of UGA units to the public on February 26, 2008 to
September 30, 2010, the simple average daily change in the Benchmark Futures
Contract was -0.012%, while the simple average daily change in the NAV of UGA
over the same time period was -0.014%. The average daily difference was -0.002%
(or -0.2 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 -0.465%, meaning that over this time period UGA’s
tracking error was within the plus or minus 10% range established as its
benchmark tracking goal.


21











*
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
RESULTS


22




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, 2010, the actual total return of UGA as measured
by changes in its NAV was -6.15%. This is based on an initial NAV of $36.41 on
December 31, 2009 and an ending NAV as of September 30, 2010 of $34.17. 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 had an estimated
NAV of $34.39 as of September 30, 2010, for a total return over the relevant
time period of -5.54%. The difference between the actual NAV total return of UGA
of -6.15% and the expected total return based on the Benchmark Futures Contract
of -5.54% was an error over the time period of -0.61%, which is to say that
UGA’s actual total return underperformed 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 offset in part by the income that UGA
collects on its cash and cash equivalent holdings. During the nine months ended
September 30, 2010, UGA received dividend and interest income of $24,095, which
is equivalent to a weighted average income rate of 0.04% for such period. In
addition, during the nine months ended September 30, 2010, UGA also collected
$13,000 from its Authorized Purchasers for 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, 2010,
UGA incurred net expenses of $513,049. Income from dividends and interest and
Authorized Purchaser collections net of expenses was $(475,954), which is
equivalent to an annualized weighted average net income rate of (0.85)% for the
nine months ended September 30, 2010.








*
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





23




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, 2010, 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 dividend and interest income on its cash and cash equivalents. 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, 2010. 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, 2010, UGA earned, on an annualized basis,
approximately 0.04% on its cash holdings. It also incurred cash expenses on an
annualized basis of 0.60% for management fees and approximately 0.10% in
brokerage commission costs related to the purchase and sale of futures
contracts, and 0.21% for other net expenses. The foregoing fees and expenses
resulted in a net yield on an annualized basis of approximately -0.87% 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.


24





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, 2010, UGA did not hold any Other Gasoline-Related
Investments. If UGA increases in size, and due to its obligations to comply with
regulatory limits, UGA may invest in Other Gasoline-Related Investments, which
may have the effect of increasing transaction related expenses and may 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 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
income earned on 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 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 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
income earned on cash and/or cash equivalents), 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.





The chart
below compares the price of the near month contract to the price of the next
month contract over the last 10 years (2000-2009) 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.


25











*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





An
alternative 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 contract price from the price of the near month
contract for the 10 year period between 2000 and 2009. 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 contract, 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.


26











*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, 2009 and held to
September 30, 2010 decreased based upon the changes in the NAV for UGA units on
those days, by -6.15%, while the spot price of gasoline for immediate delivery
during the same period decreased by -0.38% (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
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 71.19%
(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 tend 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, 2010, the price of unleaded gasoline in the
United States was impacted by several factors. The price of the Benchmark
Futures Contract began 2010 at $2.053 per gallon. It rose over the course of
this time period and hit a peak on August 3, 2010 of $2.194 per gallon. The
third quarter ended with the Benchmark Futures Contract at $2.036 per gallon,
down approximately 0.82% 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).


27





During
the nine months ended September 30, 2010, the price of crude oil, the raw
material from which gasoline is refined, rose by approximately 0.8% from
approximately $79.36 per barrel to approximately $79.97 per barrel. The price of
crude oil was volatile and was influenced by several factors. The decline in the
dollar, the currency by which crude oil is priced, declined relative to other
global currencies causing investors to seek to hedge perceived inflation by
investing in commodities. On the consumption side, demand increased inside and
outside the United States as global economic growth, including emerging
economies such as China and India, improved for the third quarter of the
year.  On the supply side, efforts to reduce production by the
Organization of the Petroleum Exporting Countries to more closely match global
consumption were partially successful.  Crude oil prices finished the
third quarter of 2010 approximately 0.8% higher than at the beginning of the
year.  Management believes, however, that should the global economic
situation cease to improve, or decline, there is a meaningful possibility that
crude oil prices could further 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 2000 and 2009, 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 weak, correlation with natural gas.


28





10 Year Correlation
                    Matrix 2000-2009
                  
                  Large
                    Cap U.S.
                    Equities
                    (S&P
                    500)
                  
                  
                  U.S. Gov’t.
                    Bonds
                    (EFFAS U.S.
                    Gov’t. Bond
                    Index)
                  
                  
                  Global
                    Equities
                    (FTSE
                    World
                    Index)
                  
                  
                  Crude Oil
                  
                  
                  Heating
                    Oil
                  
                  
                  Natural
                    Gas
                  
                  
                  Unleaded
                    GasolineLarge
      Cap U.S. Equities (S&P 500)
                  
                  
                  1.000
                  
                  
                  
                  -0.259
                  
                  
                  
                  0.966
                  
                  
                  
                  0.152
                  
                  
                  
                  0.087
                  
                  
                  
                  0.023
                  
                  
                  
                  0.135U.S.
      Gov’t. Bonds (EFFAS U.S. Gov’t. Bond Index)
                  
                  
                  
                  
                  
                  
                  1.000
                  
                  
                  
                  -0.237
                  
                  
                  
                  -0.127
                  
                  
                  
                  -0.078
                  
                  
                  
                  0.128
                  
                  
                  
                  -0.214Global
      Equities (FTSE World Index)
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1.000
                  
                  
                  
                  0.246
                  
                  
                  
                  0.165
                  
                  
                  
                  0.084
                  
                  
                  
                  0.196Crude
      Oil
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1.000
                  
                  
                  
                  0.783
                  
                  
                  
                  0.334
                  
                  
                  
                  0.724Heating
      Oil
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1.000
                  
                  
                  
                  0.466
                  
                  
                  
                  0.613Natural
      Gas
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1.000
                  
                  
                  
                  0.257Unleaded
      Gasoline
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  1.000





source:
Bloomberg, NYMEX





PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





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, 2010, unleaded gasoline
continued to have a strong positive correlation with crude oil and heating oil.
During this period, it also had a negative correlation with the movements of
natural gas. 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, 2009, exhibited mild correlation over this
shorter time period. 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, 2009, were negatively correlated over this more recent
time period.





Correlation Matrix
                              12 months ended
                              September 30, 2010
                            
                            Large Cap
                              U.S.
                              Equities
                              (S&P 500)
                            
                            
                            U.S. Gov't.
                              Bonds
                              (EFFAS
                              U.S. Gov’t.
                              Bond Index)
                            
                            
                            Global
                              Equities
                              (FTSE
                              World
                              Index)
                            
                            
                            Crude Oil
                            
                            
                            Heating
                              Oil
                            
                            
                            Natural
                              Gas
                            
                            
                            Unleaded
                              GasolineLarge
      Cap U.S. Equities (S&P 500)
                            
                            
                            1.000
                            
                            
                            
                            -0.504
                            
                            
                            
                            0.973
                            
                            
                            
                            0.715
                            
                            
                            
                            0.717
                            
                            
                            
                            -0.075
                            
                            
                            
                            0.676U.S.
      Gov't. Bonds (EFFAS U.S. Gov’t. Bond Index)
                            
                            
                            
                            
                            
                            
                            1.000
                            
                            
                            
                            -0.504
                            
                            
                            
                            -0.559
                            
                            
                            
                            -0.587
                            
                            
                            
                            -0.282
                            
                            
                            
                            -0.569Global
      Equities (FTSE World Index)
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1.000
                            
                            
                            
                            0.743
                            
                            
                            
                            0.748
                            
                            
                            
                            -0.074
                            
                            
                            
                            0.687Crude
      Oil
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1.000
                            
                            
                            
                            0.943
                            
                            
                            
                            0.115
                            
                            
                            
                            0.958Heating
      Oil
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1.000
                            
                            
                            
                            0.003
                            
                            
                            
                            0.914Natural
      Gas
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1.000
                            
                            
                            
                            -0.004Unleaded
      Gasoline
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1.000





Source:
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. In addition, the General Partner believes that, when measured
over time periods shorter than ten years, there will always be some periods
where the correlation of gasoline to equities and bonds will be either more
strongly positively correlated or more strongly negatively correlated than the
long term historical results suggest.


29





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 above, 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 Futures 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 and dividend income on a daily basis using
prevailing 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, if applicable, 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) income earned on 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 UGA’s
NAV is held in cash and cash equivalents that are used as margin and as
collateral for its trading in Gasoline Interests. The balance of the net assets
is held in UGA’s account at its custodian bank. Income received from UGA’s money
market funds is paid to UGA. During the nine months ended September 30, 2010,
UGA’s expenses exceeded the income UGA earned and the cash earned from the sale
of Creation Baskets and the redemption of Redemption Baskets. To the extent
expenses exceed income, UGA’s NAV will be negatively impacted.


30





UGA’s
investments 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, 2010,
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.





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
the initial offering of units, 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) 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. 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, in addition to margin required to be posted by
the exchange or clearinghouse in connection with trades on the exchange or
through the clearinghouse, 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.


31





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 their other assets. In addition, the CFTC requires
commodity brokers to hold in a secure account UGA’s assets related to foreign
Futures Contracts trading.





If, in
the future, UGA purchases 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, 2010, UGA had deposits in domestic and foreign financial
institutions,including
cash investments in money market funds, in the amount of $61,283,440. This
amount is subject to loss should these institutions cease
operations.





Off
Balance Sheet Financing





As of
September 30, 2010, 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, since 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,
other than USBO, 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 borne 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 exceed
0.15% (15 basis points) of UGA’s NAV, on an annualized basis, through at least
December 31, 2010. The General Partner has no obligation to continue such
payments into subsequent periods.


32





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.As of September 30, 2010,
UGA’s portfolio consisted of 759 RBOB Gasoline Futures RB Contracts traded on
the NYMEX.  For a list of UGA’s current holdings, please see UGA’s
website at www.unitedstatesgasolinefund.com.





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 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
transactions under the agreement through an established futures clearinghouse
such as those connected to the NYMEX or the ICE Futures. In that event, UGA
would no longer bear the 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 and would be required to deposit margin to
secure the clearinghouse’s exposure to UGA.





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, or (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.


33





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. However, there can be no
assurance of this. Over-the-counter contracts may result in higher
transaction-related expenses than the brokerage commissions paid in connection
with the purchase of Futures Contracts, which may impact UGA’s ability to
successfully track the Benchmark Futures Contract.





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, 2010, UGA did not employ any hedging methods
such as those described above since all of its investments were made over an
exchange. Therefore, during such period, 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.


34





Part II. OTHER INFORMATION





Item
1.  Legal Proceedings.





Not
applicable.





Item
1A.  Risk Factors.





There has
not been a material change from the risk factors previously disclosed in UGA’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed on
March 16, 2010, and UGA’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2010, filed on August 9, 2010.





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





Not
applicable.





Item
3.  Defaults Upon Senior Securities.





Not
applicable.





Item
4.Reserved.





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
              
              DescriptionofDocument31.1*
              
              Certification
      by Principal Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2*
              
              Certification
      by Principal Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1*
              
              Certification
      by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2*
              
              Certification
      by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





*
            Filed
      herewith.


35





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 partnerBy:
              /s/
      Nicholas
      D.
    GerberNicholas
      D. GerberPresident
      and Chief Executive Officer(Principal
      executive officer)Date:  November9,
      2010By:
              /s/ Howard
      MahHoward
      MahChief
      Financial Officer(Principal
      financial and accounting officer)Date:  November9,
      2010


36