As filed with
the Securities and Exchange Commission on March 10, 2021
Registration
No. 333-237337
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
ON FORM S-3 TO
FORM
S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNITED
STATES GASOLINE FUND, LP
(Exact Name of Registrant as Specified in Its Charter)
Delaware
|
|
6770
|
|
20-8837263
|
(State or Other
Jurisdiction of
Incorporation or Organization)
|
|
(Primary Standard
Industrial
Classification Code Number)
|
|
(I.R.S. Employer
Identification Number)
|
United
States Commodity Funds LLC
1850 Mt. Diablo Boulevard, Suite 640
Walnut Creek, California 94596
510.522.9600
|
|
Daphne
G. Frydman
1850 Mt. Diablo Boulevard, Suite 640
Walnut Creek, California 94596
510.522.9600
|
(Address, Including
Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)
|
|
(Name, Address,
Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
|
Copies
to:
James M. Cain, Esq.
Eversheds Sutherland (US) LLP
700 Sixth Street, N.W., Suite 700
Washington, DC 20001-3980
202.383.0100
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If the only
securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the
following box: o
If any
of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933 check the following box: x
If this
Form is filed to register additional securities for an offering pursuant to Rule 462(b) under Securities Act, please check the
following box and list the Securities Act registration statement of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this Form
is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective
upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o
If this Form
is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer o
|
Accelerated filer
|
x
|
Non-accelerated filer o
|
Smaller reporting company
|
o
|
|
Emerging growth company
|
o
|
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. o
The registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities
and Commission, acting pursuant to said Section 8(a), may determine.
EXPLANATORY
NOTE
This Post-Effective Amendment No.
1 on Form S-3 to the Registration Statement on Form S-1 (Registration No. 333-237337) is being filed for the purposes of changing
the form of registration statement from Form S-1 to Form S-3 because, as required by Form S-3, General Instruction I.B.1, the
United States Gasoline Fund, LP outstanding voting and non-voting common equity held by non-affiliates was $75 million or more,
as of a date within the prior 60 days of this filing. No additional securities are registered hereby.
The information in
this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject
to Completion, dated March 10, 2021
PRELIMINARY PROSPECTUS
United
States Gasoline Fund, LP®*
60,950,000
Shares
*Principal
U.S. Listing Exchange: NYSE Arca, Inc.
The United
States Gasoline Fund, LP (“UGA”) is an exchange traded fund organized as a limited partnership that issues shares
that trade on the NYSE Arca stock exchange (“NYSE Arca”). UGA’s investment objective is to track a benchmark
of short-term gasoline futures contracts. UGA pays its general partner, United States Commodity Funds LLC (“USCF”),
a limited liability company, a management fee and incurs operating costs. Both USCF and UGA are located at 1850 Mt. Diablo Boulevard,
Suite 640, Walnut Creek, California 94596. The telephone number for both USCF and UGA is 510.522.9600. In order for a hypothetical
investment in shares to break even over the next 12 months, assuming a selling price of $31.33(the net asset value as of February
28, 2021), the investment would have to generate 1.028% return or $0.322, rounded to $0.32. The amount for this breakeven analysis
takes into account a fee waiver. Effective May 1, 2021, the fee waiver will no longer be in place and, thereafter, in order for
a hypothetical investment in share to break even over the succeeding 12 months, assuming a selling price of $31.33 (the net asset
value as of February 28, 2021), the investment would have to generate a 1.299% return or $0.407, rounded to $0.41.
UGA is
an exchange traded fund. This means that most investors who decide to buy or sell shares of UGA place their trade orders through
their brokers and may incur customary brokerage commissions and charges. Shares trade on the NYSE Arca under the ticker symbol
“UGA” and are bought and sold throughout the trading day at bid and ask prices like other publicly traded securities.
Shares
trade on the NYSE Arca after they are initially purchased by “Authorized Participants,” institutional firms that purchase
and redeem shares in blocks of 50,000 shares called “baskets” through UGA’s marketing agent, ALPS Distributors,
Inc. (the “Marketing Agent”). The price of a basket is equal to the net asset value (“NAV”) of 50,000
shares on the day that the order to purchase the basket is accepted by the Marketing Agent. The NAV per share is calculated by
taking the current market value of UGA’s total assets (after close of NYSE Arca) subtracting any liabilities and dividing
that total by the total number of outstanding shares. The offering of UGA’s shares is a “best efforts” offering,
which means that neither the Marketing Agent nor any Authorized Participant is required to purchase a specific number or dollar
amount of shares. USCF pays the Marketing Agent a marketing fee consisting of a fixed annual amount plus an incentive fee based
on the amount of shares sold. Authorized Participants will not receive from UGA, USCF or any of their affiliates any fee or other
compensation in connection with the sale of shares. Aggregate compensation paid to the Marketing Agent and any affiliate of USCF
for distribution-related services in connection with this offering of shares will not exceed ten percent (10%) of the gross proceeds
of the offering.
Investors
who buy or sell shares during the day from their broker may do so at a premium or discount relative to the market value of the
underlying gasoline futures contracts in which UGA invests due to supply and demand forces at work in the secondary trading market
for shares that are closely related to, but not identical to, the same forces influencing the prices of gasoline and the gasoline
futures contracts that serve as UGA’s investment benchmark. INVESTING IN UGA INVOLVES RISKS SIMILAR TO THOSE INVOLVED
WITH AN INVESTMENT DIRECTLY IN THE GASOLINE MARKET, BUT IT IS NOT A PROXY FOR TRADING DIRECTLY IN THE GASOLINE MARKETS.
Investing in UGA also involves the correlation risk described below and other significant risks. You should consider carefully
the risks described below before making an investment decision. See “Risk Factors Involved with an Investment in UGA”
beginning on page 4.
The offering
of UGA’s shares is registered with the Securities and Exchange Commission (“SEC”) in accordance with the Securities
Act of 1933 (the “1933 Act”). The offering is intended to be a continuous offering and is not expected to terminate
until all the registered shares have been sold or three years from the date of the original offering whichever is earlier, unless
extended as permitted under the rules under the 1933 Act, although the offering may be temporarily suspended if and when no suitable
investments for UGA are available or practicable. UGA is not a mutual fund registered under the Investment Company Act of 1940
and is not subject to regulation under the 1940 Act.
NEITHER
THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED IN THIS PROSPECTUS, OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
UGA is
a commodity pool and USCF is a commodity pool operator (“CPO”) subject to regulation by the Commodity Futures Trading
Commission (“CFTC”) and the National Futures Association (“NFA”) under the Commodity Exchange Act (“CEA”).
THE
COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED
ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
The date of
this prospectus is [ ], 2021.
COMMODITY
FUTURES TRADING COMMISSION
RISK
DISCLOSURE STATEMENT
YOU
SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD
BE AWARE THAT COMMODITY INTEREST TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE
THE NET ASSET VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS ON REDEMPTIONS
MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE POOL.
FURTHER,
COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR
THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS.
THIS DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGE 3 AND A STATEMENT OF
THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 39.
THIS
BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL.
THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING
A DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 4.
YOU
SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED
OUTSIDE THE UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER
DIFFERENT OR DIMINISHED PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE UNABLE
TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS
FOR THE POOL MAY BE EFFECTED.
SWAPS
TRANSACTIONS, LIKE OTHER FINANCIAL TRANSACTIONS, INVOLVE A VARIETY OF SIGNIFICANT RISKS. THE SPECIFIC RISKS PRESENTED BY A PARTICULAR
SWAP TRANSACTION NECESSARILY DEPEND UPON THE TERMS OF THE TRANSACTION AND YOUR CIRCUMSTANCES. IN GENERAL, HOWEVER, ALL SWAPS TRANSACTIONS
INVOLVE SOME COMBINATION OF MARKET RISK, CREDIT RISK, COUNTERPARTY CREDIT RISK, FUNDING RISK, LIQUIDITY RISK, AND OPERATIONAL
RISK.
HIGHLY
CUSTOMIZED SWAPS TRANSACTIONS IN PARTICULAR MAY INCREASE LIQUIDITY RISK, WHICH MAY RESULT IN A SUSPENSION OF REDEMPTIONS. HIGHLY
LEVERAGED TRANSACTIONS MAY EXPERIENCE SUBSTANTIAL GAINS OR LOSSES IN VALUE AS A RESULT OF RELATIVELY SMALL CHANGES IN THE VALUE
OR LEVEL OF AN UNDERLYING OR RELATED MARKET FACTOR.
IN EVALUATING
THE RISKS AND CONTRACTUAL OBLIGATIONS ASSOCIATED WITH A PARTICULAR SWAP TRANSACTION, IT IS IMPORTANT TO CONSIDER THAT A SWAP TRANSACTION
MAY BE MODIFIED OR TERMINATED ONLY BY MUTUAL CONSENT OF THE ORIGINAL PARTIES AND SUBJECT TO AGREEMENT ON INDIVIDUALLY NEGOTIATED
TERMS. THEREFORE, IT MAY NOT BE POSSIBLE FOR THE COMMODITY POOL OPERATOR TO MODIFY, TERMINATE, OR OFFSET THE POOL’S OBLIGATIONS
OR THE POOL’S EXPOSURE TO THE RISKS ASSOCIATED WITH A TRANSACTION PRIOR TO ITS SCHEDULED TERMINATION DATE.
UNITED STATES
GASOLINE FUND, LP
TABLE
OF CONTENTS
PROSPECTUS
SUMMARY
This
is only a summary of the prospectus and, while it contains material information about UGA and its shares, it does not contain
or summarize all of the information about UGA and the shares contained in this prospectus that is material and/or which may be
important to you. You should read this entire prospectus, including “Risk Factors Involved with an Investment in UGA”
beginning on page 4, before making an investment decision about the shares. For a glossary of defined terms, see Appendix A.
UGA
United
States Gasoline Fund, LP (“UGA”), a Delaware limited partnership, is a commodity pool that continuously issues common
shares of beneficial interest that may be purchased and sold on the NYSE Arca stock exchange (“NYSE Arca”). UGA is
managed and controlled by United States Commodity Funds LLC (“USCF”), a Delaware limited liability company. USCF is
registered as a CPO with the CFTC and is a member of the NFA.
UGA’s
Investment Objective and Strategy:
The investment
objective of UGA is for the daily changes in percentage terms of its shares’ per share net asset value (“NAV”)
to reflect the daily changes in percentage terms of the spot price of gasoline (also known as reformulated gasoline blendstock
for oxygen blending, or “RBOB”), for delivery to the New York harbor, as measured by the daily changes in the price
of a specified short-term futures contract on gasoline called the “Benchmark Futures Contract,” plus interest earned
on UGA’s collateral holdings, less UGA’s expenses.
UGA seeks to
achieve its investment objective by investing so that the average daily percentage change in UGA’s NAV for any period of
30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the price of
the Benchmark Futures Contract over the same period.
What Is the
“Benchmark Futures Contract”?
The
Benchmark Futures Contract is the futures contract on gasoline as traded on the New York Mercantile Exchange (the “NYMEX”)
that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which
case it will be the futures contract that is the next month contract to expire.
|
|
UGA seeks
to achieve its investment objective by investing in futures contracts for gasoline, other types of gasoline, crude oil, diesel-heating
oil, natural gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures Europe and ICE Futures U.S. (together,
“ICE Futures”) or other U.S. and foreign exchanges (collectively, “Futures Contracts”) and, to a lesser
extent, in order to comply with regulatory requirements, risk mitigation measures, liquidity requirements, or in view of market
conditions, other gasoline-related investments such as cash-settled options on Futures Contracts, forward contracts for gasoline,
cleared swap contracts and non-exchange traded (“over-the-counter” or “OTC”) transactions that are based
on the price of gasoline, crude oil and other petroleum-based fuels, Futures Contracts and indices based on the foregoing (collectively,
“Other Gasoline-Related Investments”). Market conditions that USCF currently anticipates could cause UGA to invest
in Other Gasoline-Related Investments, include those allowing UGA to obtain greater liquidity, or to execute transactions with
more favorable pricing. For convenience and unless otherwise specified, Futures Contracts and Other Gasoline-Related Investments
collectively are referred to as “Gasoline Interests” in this prospectus.
In addition,
USCF believes that market arbitrage opportunities cause the daily changes in UGA’s share price on the NYSE Arca on a percentage
basis to closely track the daily changes in UGA’s per share NAV on a percentage basis. USCF further believes that the daily
changes in the prices of the Benchmark Futures Contract have historically closely tracked the daily changes in the spot price
of gasoline. USCF believes that the net effect of these relationships will be that the daily changes in the price of UGA’s
shares on the NYSE Arca on a percentage basis will closely track the daily changes in the spot price of gasoline on a percentage
basis, less UGA’s expenses.
Specifically,
UGA seeks to achieve its investment objective by investing so that the average daily percentage change in UGA’s NAV for
any period of 30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change
in the price of the Benchmark Futures Contract over the same period.
Investors
should be aware that UGA’s investment objective is not for its NAV or market price of shares to equal, in dollar
terms, the spot price of gasoline or any particular futures contract based on gasoline, nor is UGA’s investment objective
for the percentage change in its NAV to reflect the percentage change of the price of any particular futures contract as measured
over a time period greater than one day. This is because natural market forces called contango and backwardation have impacted
the total return on an investment in UGA’s shares during the past year relative to a hypothetical direct investment in gasoline
and, in the future, it is likely that the relationship between the market price of UGA’s shares and changes in the spot
prices of gasoline will continue to be impacted by contango and backwardation. (It is important to note that the disclosure above
ignores the potential costs associated with physically owning and storing gasoline, which could be substantial.)
Principal
Investment Risks of an Investment in UGA
An investment
in UGA involves a degree of risk. Some of the risks you may face are summarized below. A more extensive discussion of these risks
appears beginning on page 4.
Investment Risk
Investors may choose to use
UGA as a means of investing indirectly in unleaded gasoline. INVESTING IN UGA INVOLVES RISKS SIMILAR TO THOSE INVOLVED WITH
AN INVESTMENT DIRECTLY IN THE GASOLINE MARKET, BUT IT IS NOT A PROXY FOR TRADING DIRECTLY IN THE GASOLINE MARKET. Investing
in UGA also involves the correlation risk described below and other significant risks. You should consider carefully the
risks described below before making an investment decision. See “Risk Factors Involved with an Investment in UGA”
beginning on page 4.
Correlation Risk
To the
extent that investors use UGA as a means of indirectly investing in gasoline, there is the risk that the daily changes in the
price of UGA’s shares on the NYSE Arca on a percentage basis will not closely track the daily changes in the spot price
of gasoline on a percentage basis. This could happen if the price of shares traded on the NYSE Arca does not correlate closely
with the value of UGA’s NAV; the changes in UGA’s NAV do not correlate closely with the changes in the price of the
Benchmark Futures Contract; or the changes in the price of the Benchmark Futures Contract do not closely correlate with the changes
in the cash or spot price of gasoline. This is a risk because if these correlations do not exist, then investors may not be able
to use UGA as a cost-effective way to indirectly invest in gasoline or as a hedge against the risk of loss in gasoline-related
transactions.
The price
relationship between the near month contract to expire and the next month contract to expire that compose the Benchmark Futures
Contract will vary and may impact both the total return over time of UGA’s NAV, as well as the degree to which its total
return tracks other gasoline price indices’ total returns. In cases in which the near month contract’s price is lower
than the next month contract’s price (a situation known as “contango” in the futures markets), then absent the
impact of the overall movement in gasoline prices the value of the Benchmark Futures Contract would tend to decline as it approaches
expiration. In cases in which the near month contract’s price is higher than the next month contract’s price (a situation
known as “backwardation” in the futures markets), then absent the impact of the overall movement in gasoline prices
the value of the Benchmark Futures Contract would tend to rise as it approaches expiration.
Volatility in
the gasoline market could limit UGA’s ability to have a substantial portion of its assets invested in the Benchmark Futures
Contract. In such a circumstance, UGA could, if it determined it appropriate to do so in light of market conditions and regulatory
requirements, invest in other Futures Contract and/or Other Gasoline Related Investments.
Tax Risk
UGA is
organized and operated as a limited partnership in accordance with the provisions of its limited partnership agreement and applicable
state law, and therefore, has a more complex tax treatment than conventional mutual funds.
Over-the-Counter (“OTC”)
Contract Risk
UGA may
also invest in Other Gasoline-Related Investments, many of which are negotiated or “OTC” contracts that are not as
liquid as Futures Contracts and expose UGA to credit risk that its counterparty may not be able to satisfy its obligations to
UGA.
Other Risks
UGA pays
fees and expenses that are incurred regardless of whether UGA is profitable.
Unlike
mutual funds, commodity pools or other investment pools that manage their investments in an attempt to realize income and gains
and distribute such income and gains to their investors, UGA generally does not distribute cash to other shareholders.
You should
not invest in UGA if you will need cash distributions from UGA to pay taxes on your share of income and gains of UGA, if any,
or for any other reason.
You will
have no rights to participate in the management of UGA and will have to rely on the duties and judgment of USCF to manage UGA.
UGA is
subject to actual and potential inherent conflicts involving USCF, various commodity futures brokers and “Authorized Participants,”
the institutional firms that directly purchase and redeem shares in baskets of 50,000 shares. USCF’s officers, directors
and employees do not devote their time exclusively to UGA. USCF’s persons are directors, officers or employees of other
entities that may compete with UGA for their services, including other commodity pools (funds) that USCF manages. USCF could have
a conflict between its responsibilities to UGA and to those other entities. As a result of these and other relationships, parties
involved with UGA have a financial incentive to act in a manner other than in the best interests of UGA and the shareholders.
UGA’s
Fees and Expenses
This
table describes the fees and expenses that you may pay if you buy and hold shares of UGA. You should note that you may pay brokerage
commissions on purchases and sales of UGA’s shares, which are not reflected in the table. Authorized Participants will pay
applicable creation and redemption fees. See “Creation and Redemption of Shares—Creation and Redemption
Transaction Fee,” page 66.
Annual
Fund Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment)
Management Fees(1)
|
|
|
0.60
|
%
|
Distribution Fees
|
|
|
NONE
|
|
Other Fund Expenses(1)
|
|
|
0.42
|
%
|
Expense Fund Waiver(2)
|
|
|
(0.27
|
)%
|
Net Other Fund Expenses
|
|
|
0.15
|
%
|
Total Annual Fund Operating Expenses After Expense Waiver(2)
|
|
|
0.75
|
%
|
Total Annual Fund Operating Expenses Before Expense Waiver(2)
|
|
|
1.02
|
%
|
|
(1)
|
Based on amounts for the
year ended December 31, 2020. The individual expense amounts in dollar terms are shown in the table below. As used in this table,
(i) Professional Expenses include expenses for legal, audit, tax accounting and printing; and (ii) Independent Director and Officer
Expenses include amounts paid to independent directors and for officers’ liability insurance.
|
Management Fees
|
|
$
|
431,847
|
|
Professional Expenses
|
|
$
|
146,835
|
|
Brokerage Commissions
|
|
$
|
137,982
|
|
Independent Director and Officer Expenses
|
|
$
|
8,237
|
|
License Fees
|
|
$
|
10,796
|
|
Registration Fees
|
|
$
|
0
|
|
|
|
|
|
|
These amounts are based
on UGA’s average total net assets, which are the sum of daily total net assets of UGA divided by the number of calendar
days in the year. For the year ended December 31, 2020, UGA’s average total net assets were $71,975,291.
|
(2)
|
USCF has voluntarily agreed
to pay certain expenses typically borne by UGA. Effective May 1, 2021, the fee waiver will no longer be in place.
|
RISK
FACTORS INVOLVED WITH AN INVESTMENT IN UGA
You
should consider carefully the risks described below before making an investment decision. You should also refer to the other information
included in this prospectus as well as information found in our periodic reports, which include UGA’s financial statements
and the related notes that are incorporated by reference. See “Incorporation By Reference of Certain Information”,
page 69.
UGA’s
investment objective is for the daily percentage changes in the NAV per share to reflect the daily percentage changes of the spot
price of gasoline (also known as reformulated gasoline blendstock for oxygen blending, or “RBOB”, for delivery to
the New York harbor), as measured by the daily changes in the price of the futures contract for gasoline traded on the New York
Mercantile Exchange (the “NYMEX”), that is the near month contract to expire, except when the near month contract
is within two weeks of expiration, in which case the futures contract will be the next month contract to expire (the “Benchmark
Futures Contract”), plus interest earned on UGA’s collateral holdings, less UGA’s expenses. UGA seeks to achieve
its investment objective by investing so that the average daily percentage change in UGA’s NAV for any period of 30 successive
valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the price of the Benchmark
Futures Contract over the same period. UGA’s investment strategy is designed to provide investors with a cost-effective
way to invest indirectly in unleaded gasoline and to hedge against movements in the spot price of unleaded gasoline. An investment
in UGA involves investment risk similar to a direct investment in Futures Contracts and Other Gasoline-Related Investments, but
it is not a proxy for trading directly in gasoline markets. Investing in UGA also involves correlation risk, or the risk that
investors purchasing shares to hedge against movements in the price of unleaded gasoline will have an efficient hedge only if
the price they pay for their shares closely correlates with the price of unleaded gasoline. In addition to investment risk and
correlation risk, an investment in UGA involves tax risks, OTC risks, and other risks.
Investment
Risk
The
NAV of UGA’s shares relates directly to the value of the Benchmark Futures Contract and other assets held by UGA and fluctuations
in the prices of these assets could materially adversely affect an investment in UGA’s shares. Past performance is not necessarily
indicative of future results; all or substantially all of an investment in UGA could be lost.
The net
assets of UGA consist primarily of investments in Futures Contracts and, to a lesser extent, in Other Gasoline-Related Investments.
The NAV of UGA’s shares relates directly to the value of these assets (less liabilities, including accrued but unpaid expenses),
which in turn relates to the price of unleaded gasoline in the marketplace. Unleaded gasoline prices depend on local, regional
and global events or conditions that affect supply and demand for oil.
Economic
conditions impacting gasoline. The demand for unleaded gasoline correlates closely with general economic growth
rates. The occurrence of recessions or other periods of low or negative economic growth will typically have a direct adverse impact
on unleaded gasoline prices. Other factors that affect general economic conditions in the world or in a major region, such as
changes in population growth rates, periods of civil unrest, pandemics (e.g.COVID-19), government austerity programs, or currency
exchange rate fluctuations, can also impact the demand for unleaded gasoline. Sovereign debt downgrades, defaults, inability to
access debt markets due to credit or legal constraints, liquidity crises, the breakup or restructuring of fiscal, monetary, or
political systems such as the European Union, and other events or conditions (e.g. pandemics such as COVID-19) that impair the
functioning of financial markets and institutions also may adversely impact the demand for unleaded gasoline.
Other
gasoline demand-related factors. Other factors that may affect the demand for unleaded gasoline and therefore its
price, include technological improvements in energy efficiency; seasonal weather patterns, which affect the demand for unleaded
gasoline associated with heating and cooling; increased competitiveness of alternative energy sources that have so far generally
not been competitive with oil without the benefit of government subsidies or mandates; and changes in technology or consumer preferences
that alter fuel choices, such as toward alternative fueled vehicles.
Other
gasoline supply-related factors. Unleaded gasoline prices also vary depending on a number of factors affecting
supply. For example, increased supply from the development of new oil supply sources and technologies to enhance recovery from
existing sources tends to reduce unleaded gasoline prices to the extent such supply increases are not offset by commensurate growth
in demand. Similarly, increases in industry refining or petrochemical manufacturing capacity may impact the supply of unleaded
gasoline. World oil supply levels can also be affected by factors that reduce available supplies, such as adherence by member
countries to the Organization of the Petroleum Exporting Countries (“OPEC”) production quotas and the occurrence of
wars, hostile actions, natural disasters, disruptions in competitors’ operations, or unexpected unavailability of distribution
channels that may disrupt supplies.
Technological
change can also alter the relative costs for companies in the petroleum industry to find, produce, and refine oil and to manufacture
petrochemicals, which in turn may affect the supply of and demand for gasoline.
Other
factors impacting the gasoline market.
The supply
of and demand for unleaded gasoline may also be impacted by changes in interest rates, inflation, and other local or regional
market conditions, as well as by the development of alternative energy sources.
Price
Volatility May Possibly Cause the Total Loss of Your Investment.
Futures
contracts have a high degree of price variability and are subject to occasional rapid and substantial changes. Consequently, you
could lose all or substantially all of your investment in UGA.
An investment
in UGA may provide little or no diversification benefits. Thus, in a declining market, UGA may have no gains to offset losses
from other investments, and an investor may suffer losses on an investment in UGA while incurring losses with respect to other
asset classes.
Historically,
Futures Contracts and Other Gasoline-Related Investments have generally been non-correlated to the performance of other asset
classes such as stocks and bonds. Non-correlation means that there is a low statistically valid relationship between the performance
of futures and other commodity interest transactions, on the one hand, and stocks or bonds, on the other hand.
However, there
can be no assurance that such non-correlation will continue during future periods. If, contrary to historic patterns, UGA’s
performance were to move in the same general direction as the financial markets, investors will obtain little or no diversification
benefits from an investment in UGA’s shares. In such a case, UGA may have no gains to offset losses from other investments,
and investors may suffer losses on their investment in UGA at the same time they incur losses with respect to other investments.
Variables such
as drought, floods, weather, pandemics (such as COVID-19), embargoes, tariffs and other political events may have a larger impact
on unleaded gasoline prices and unleaded gasoline-linked instruments, including Futures Contracts and Other Gasoline-Related Investments,
than on traditional securities. These additional variables may create additional investment risks that subject UGA’s investments
to greater volatility than investments in traditional securities.
Non-correlation
should not be confused with negative correlation, where the performance of two asset classes would be opposite of each other.
There is no historical evidence that the spot price of unleaded gasoline and prices of other financial assets, such as stocks
and bonds, are negatively correlated. In the absence of negative correlation, UGA cannot be expected to be automatically profitable
during unfavorable periods for the stock market, or vice versa.
Historical
performance of UGA and the Benchmark Futures Contract is not indicative of future performance.
Past performance
of UGA or the Benchmark Futures Contract is not necessarily indicative of future results. Therefore, past performance of UGA or
the Benchmark Futures Contract should not be relied upon in deciding whether to buy shares of UGA.
COVID-19
and other infectious disease outbreaks could negatively affect the valuation and performance of UGA’s investments.
An outbreak
of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019
and has now been detected globally. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. COVID-19
has resulted in numerous deaths, travel restrictions, closed international borders, enhanced health screenings at ports of entry
and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines and the imposition
of both local and more widespread “work from home” measures, cancellations, loss of employment, supply chain disruptions,
and lower consumer and institutional demand for goods and services, as well as general concern and uncertainty. The ongoing spread
of COVID-19 has had, and is expected to continue to have, a material adverse impact on local economies in the affected jurisdictions
and also on the global economy, as cross border commercial activity and market sentiment are increasingly impacted by the outbreak
and government and other measures seeking to contain its spread. The impact of COVID-19, and other infectious disease outbreaks
that may arise in the future, could adversely affect individual issuers and capital markets in ways that cannot necessarily be
foreseen. In addition, actions taken by government and quasi-governmental authorities and regulators throughout the world in response
to the COVID-19 outbreak, including significant fiscal and monetary policy changes, may affect the value, volatility, pricing
and liquidity of some investments or other assets, including those held by or invested in by UGA. Public health crises caused
by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally.
The duration of the COVID-19 outbreak and its ultimate impact on UGA and, on the global economy, cannot be determined with certainty.
The COVID-19 pandemic and its effects may last for an extended period of time, and could result in significant and continued market
volatility, exchange trading suspensions and closures, declines in global financial markets, higher default rates, and a substantial
economic downturn or recession. The foregoing could impair UGA’s ability to maintain operational standards (such as with respect
to satisfying redemption requests), disrupt the operations of UGA’s service providers, adversely affect the value and liquidity
of UGA’s investments, and negatively impact UGA’s performance and your investment in UGA. The extent to which COVID-19 will affect
UGA and UGA’s service providers and portfolio investments will depend on future developments, which are highly uncertain and cannot
be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions taken to contain COVID-19.
Given the significant economic and financial market disruptions associated with the COVID-19 pandemic, the valuation and performance
of UGA’s investments could be impacted adversely.
Correlation
Risk
Investors
purchasing shares to hedge against movements in the price of unleaded gasoline will have an efficient hedge only if the price
investors pay for their shares closely correlates with the price of unleaded gasoline. Investing in UGA’s shares for hedging
purposes involves the following risks:
|
·
|
The market price at
which the investor buys or sells shares may be significantly less or more than NAV.
|
|
·
|
Daily percentage changes
in NAV may not closely correlate with daily percentage changes in the price of the Benchmark Futures Contract.
|
|
·
|
Daily percentage changes
in the prices of the Benchmark Futures Contract may not closely correlate with daily percentage changes in the price of unleaded
gasoline.
|
Volatility in
the gasoline market could limit UGA’s ability to have a substantial portion of its assets invested in the Benchmark Futures
Contract. In such a circumstance, UGA could, if it determined it appropriate to do so in light of market conditions and regulatory
requirements, invest in other Futures Contract and/or Other Gasoline Related Investments.
The
market price at which investors buy or sell shares may be significantly less or more than NAV.
UGA’s
NAV per share will change throughout the day as fluctuations occur in the market value of UGA’s portfolio investments. The
public trading price at which an investor buys or sells shares during the day from their broker may be different from the NAV
of the shares, which is also the price shares can be redeemed with UGA by Authorized Participants in Redemption Baskets. USCF
expects that exploitation of certain arbitrage opportunities by Authorized Participants and their clients and customers will tend
to cause the public trading price to track NAV per share closely over time, but there can be no assurance of that. For example,
a shortage of UGA’s shares in the market and other factors could cause UGA’s shares to trade at a premium. Investors should
be aware that such premiums can be transitory. To the extent an investor purchases shares that include a premium (e.g., because
of a shortage of shares in the market due to the inability of Authorized Participants to purchase additional shares from UGA that
could be resold into the market) and the cause of the premium no longer exists causing the premium to disappear (e.g., because
more shares are available for purchase from UGA by Authorized Participants that could be resold into the market) such investor’s
return on its investment would be adversely impacted due to the loss of the premium.
Price
differences may relate primarily to supply and demand forces at work in the secondary trading market for shares that are closely
related to, but not identical to, the same forces influencing the prices of gasoline and the Benchmark Futures Contract at any
point in time. For example, a shortage of UGA shares in the market and other factors could cause UGA’s shares to trade at
a premium. Investors should be aware that such premiums can be transitory. To the extent an investor purchases shares that include
a premium (e.g., because of a shortage of shares in the market due to the inability of Authorized Participants to purchase additional
shares from UGA that could be resold into the market) and the cause of the premium no longer exists causing the premium to disappear
(e.g., because more shares are available for purchase from UGA by Authorized Participants that could be resold into the market)
such investor’s return on its investment would be adversely impacted due to the loss of the premium. See the risk factor,
An unanticipated number of Creation Basket requests during a short period of time could result in a shortage of shares,
below.
The NAV
of UGA’s shares may also be influenced by non-concurrent trading hours between the NYSE Arca and the various futures exchanges
on which unleaded gasoline is traded. While the shares trade on the NYSE Arca from 9:30 a.m. to 4:00 p.m. Eastern Time, the trading
hours for the futures exchanges on which unleaded gasoline trades may not necessarily coincide during all of this time. As a result,
during periods when the NYSE Arca is open and the futures exchanges on which unleaded gasoline is traded are closed, trading spreads
and the resulting premium or discount on the shares may widen and, therefore, increase the difference between the price of the
shares and the NAV of the shares.
Daily
percentage changes in UGA’s NAV may not correlate with daily percentage changes in the price of the Benchmark Futures Contract.
It is possible
that the daily percentage changes in UGA’s NAV per share may not closely correlate to daily percentage changes in the price
of the Benchmark Futures Contract. Non-correlation may be attributable to disruptions in the market for unleaded gasoline, the
imposition of position or accountability limits by regulators or exchanges, or other extraordinary circumstances. As UGA approaches
or reaches position limits with respect to the Benchmark Futures Contract and other Futures Contracts or in view of market conditions,
UGA may begin investing in Other Gasoline-Related Investments. In addition, UGA is not able to replicate exactly the changes in
the price of the Benchmark Futures Contract because the total return generated by UGA is reduced by expenses and transaction costs,
including those incurred in connection with UGA’s trading activities, and increased by interest income from UGA’s
holdings of Treasuries (defined below). Tracking the Benchmark Futures Contract requires trading of UGA’s portfolio with
a view to tracking the Benchmark Futures Contract over time and is dependent upon the skills of USCF and its trading principals,
among other factors.
In addition,
UGA is not able to replicate exactly the changes in the price of the Benchmark Futures Contract because the total return generated
by UGA is reduced by expenses and transaction costs, including those incurred in connection with UGA’s trading activities, and
increased by interest income from UGA’s holdings of Treasuries (defined below). Tracking the Benchmark Futures Contract requires
trading of UGA’s portfolio with a view to tracking the Benchmark Futures Contract over time and is dependent upon the skills of
USCF and its trading principals, among other factors.
An investment
in UGA is not a proxy for investing in the gasoline markets, and the daily percentage changes in the price of the Benchmark Futures
Contract, or the NAV of UGA, may not correlate with daily percentage changes in the spot price of unleaded gasoline.
An investment
in UGA is not a proxy for investing in the gasoline markets. To the extent that investors use UGA as a means of indirectly investing
in gasoline, there is the risk that the daily changes in the price of UGA’s shares on the NYSE Arca, on a percentage basis,
will not closely track the daily changes in the spot price of gasoline on a percentage basis. This could happen if the price of
shares traded on the NYSE Arca does not correlate closely with the value of UGA’s NAV; the changes in UGA’s NAV do
not correlate closely with the changes in the price of the Benchmark Futures Contract; or the changes in the price of the Benchmark
Futures Contract do not closely correlate with the changes in the cash or spot price of gasoline. This is a risk because if these
correlations do not exist, then investors may not be able to use UGA as a cost-effective way to indirectly invest in gasoline
or as a hedge against the risk of loss in gasoline-related transactions. The degree of correlation among UGA’s share price,
the price of the Benchmark Futures Contract and the spot price of gasoline depends upon circumstances such as variations in the
speculative gasoline market, supply of and demand for Futures Contracts (including the Benchmark Futures Contract) and Other Gasoline-Related
Investments, and technical influences on trading gasoline futures contracts. Investors who are not experienced in investing in
gasoline futures contracts or the factors that influence that market or speculative trading in the gasoline markets and may not
have the background or ready access to the types of information that investors familiar with these markets may have and, as a
result, may be at greater risk of incurring losses from trading in UGA shares than such other investors with such experience and
resources.
Daily
percentage changes in the price of the Benchmark Futures Contract may not correlate with daily percentage changes in the spot
price of gasoline.
The correlation
between changes in prices of the Benchmark Futures Contract and the spot price of gasoline may at times be only approximate. The
degree of imperfection of correlation depends upon circumstances such as variations in the speculative gasoline market, supply
of and demand for Futures Contracts (including the Benchmark Futures Contract) and Other Gasoline-Related Investments, and technical
influences in gasoline futures trading.
Natural
forces in the gasoline futures market known as “backwardation” and “contango” may increase UGA’s
tracking error and/or negatively impact total return.
The design of
UGA’s Benchmark Futures Contract is such that every month it begins by using the near month contract to expire until the
near month contract is within two weeks of expiration, when, over a one day period, it transitions to the next month contract
to expire as its benchmark contract and keeps that contract as its benchmark until it becomes the near month contract and close
to expiration. In the event of a gasoline futures market where near month contracts trade at a higher price than next month to
expire contracts, a situation described as “backwardation” in the futures market, then absent the impact of the overall
movement in gasoline prices the value of the benchmark contract would tend to rise as it approaches expiration. Conversely, in
the event of a gasoline futures market where near month contracts trade at a lower price than next month contracts, a situation
described as “contango” in the futures market, then absent the impact of the overall movement in gasoline prices the
value of the benchmark contract would tend to decline as it approaches expiration. When compared to total return of other price
indices, such as the spot price of gasoline, the impact of backwardation and contango may cause the total return of UGA’s
per share NAV to vary significantly. Moreover, absent the impact of rising or falling gasoline prices, a prolonged period of contango
could have a significant negative impact on UGA’s per share NAV and total return and investors could lose part or all of
their investment.
While contango
and backwardation are consistently present in trading in the futures markets, such conditions can be exacerbated by market forces.
For example, extraordinary market conditions in the crude oil markets, including “super contango” (a higher level
of contango arising from the overabundance of oil being produced and the limited availability of storage for such excess supply),
occurred during 2020, in the crude oil futures markets due to over-supply of crude oil in the face of weak demand during the COVID-19
pandemic when disputes among oil-producing countries regarding limitations on the production of oil also were occurring. Volatility
in the gasoline market was also elevated, but it did not reach the same extreme levels as the volatility in the oil futures market
did. However, increased volatility in the future could impact UGA’s ability to have a substantial portion of its assets
invested in the Benchmark Futures Contract. In such a circumstance, UGA could, if it determined it appropriate to do so in light
of market conditions and regulatory requirements, invest in other Futures Contract and/or Gasoline Related Investments.
See
“Additional Information About UGA, its Investment Objective and Investments” for a discussion of the potential
effects of contango and backwardation.
Accountability
levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause tracking error, by
limiting UGA’s investments, including its ability to fully invest in the Benchmark Futures Contract, which could cause the
price of shares to substantially vary from the price of the Benchmark Futures Contract.
Designated
contract markets, such as the NYMEX and ICE Futures, have established accountability levels and position limits on the maximum
net long or net short futures contracts in commodity interests that any person or group of persons under common trading control
(other than as a hedge, which an investment by UGA is not) may hold, own or control. These levels and position limits apply to
the futures contracts that UGA invests in to meet its investment objective. In addition to accountability levels and position
limits, the NYMEX and ICE Futures also set daily price limits on futures contracts. The daily price fluctuation limit establishes
the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price.
Once the daily price fluctuation limit has been reached in a particular futures contract, no trades may be made at a price beyond
that limit.
The accountability
levels for the Benchmark Futures Contract and other Futures Contracts traded on U.S. based futures exchanges, such as the NYMEX,
are not a fixed ceiling, but rather a threshold above which the NYMEX may exercise greater scrutiny and control over an investor’s
positions. The current accountability level for investments for any one month in the Benchmark Futures Contract is 5,000 contracts.
In addition, the NYMEX imposes an accountability level for all months of 7,000 net futures contracts for gasoline. In addition,
the ICE Futures maintains the same accountability levels, position limits and monitoring authority for its gasoline contract as
the NYMEX. If UGA and the Related Public Funds exceed these accountability levels for investments in the futures contracts for
gasoline, the NYMEX and ICE Futures will monitor such exposure and may ask for further information on their activities, including
the total size of all positions, investment and trading strategy, and the extent of liquidity resources of UGA and the Related
Public Funds. If deemed necessary by the NYMEX and/or ICE Futures, UGA could be ordered to reduce its aggregate position back
to the accountability level.
Position limits
differ from accountability levels in that they represent fixed limits on the maximum number of futures contracts that any person
may hold and cannot allow such limits to be exceeded without express CFTC authority to do so. In addition to accountability levels
and position limits that may apply at any time, the NYMEX and the ICE Futures impose position limits on contracts held in the
last few days of trading in the near month contract to expire. It is unlikely that UGA will run up against such position limits
because UGA’s investment strategy is to close out its positions and “roll” from the near month contract to expire
to the next month contract to expire beginning two weeks from expiration of the contract.
On October 15,
2020, the CFTC approved the Position Limits Rule. The Position Limits Rule establishes federal position limits for 25 core referenced
futures contracts (comprised of agricultural, energy and metals futures contracts), futures and options linked to the core referenced
futures contracts, and swaps that are economically equivalent to the core referenced futures contracts. The Position Limits Rule
sets position limits for the spot month and non-spot month; however, the non-spot month limits only apply in respect of the agricultural
futures contracts that are currently subject to position limits under Part 150 of the CFTC regulations (the “legacy agricultural
contracts”). With respect to regulatory oversight, the Position Limits Rule delegates authority to designated contract markets
and swap execution facilities to oversee certain aspects of the position limits framework. In addition to setting the federal
position limits, the Position Limits Rule also provides several exemptions from such position limits, including an expanded list
of enumerated bona fide hedge exemptions and certain spread exemptions. Further, the Position Limits Rule sets forth two alternative
processes for pursuing an exemption for non-enumerated hedge positions. Other than for the legacy agricultural contracts, compliance
with the limits imposed by the Position Limits Rule will not be required until 2022, except that economically equivalent swaps
need not comply with the Position Limits Rule until 2023.
The Benchmark
Futures Contract will be subject to position limits under the Position Limits Rule, and UGA’s trading does not qualify as
an enumerated bona fide hedge. Accordingly, the Position Limits Rule could negatively impact the ability of UGA to meet its investment
objective by inhibiting USCF’s ability to effectively invest the proceeds from sales of Creation Baskets of UGA in particular
amounts and types of its permitted investments.
Until such time
as compliance with the Position Limits Rule is required, the regulatory architecture in effect prior to the adoption of the Position
Limit Rule will govern transactions in commodities and related derivatives. Under that system, the CFTC enforces federal limits
on speculation in the nine legacy agricultural contracts, while futures exchanges establish and enforce position limits and accountability
levels for other agricultural products and certain energy products (e.g., oil and natural gas).
Under
existing CFTC regulations and the Position Limits Rule, for the purpose of position limits, a market participant is generally
required, subject to certain narrow exceptions, to aggregate all positions for which that participant controls the trading decisions
with all positions for which that participant has a 10% or greater ownership interest in an account or position, as well as the
positions of two or more persons acting pursuant to an express or implied agreement or understanding with that market participant
(the “Aggregation Rules”).
Risk mitigation
measures imposed by UGA’s FCMs have the potential to cause tracking error by limiting UGA’s investments, including
its ability to fully invest in the Benchmark Futures Contract and other Futures Contracts, which could cause the price of UGA’s
shares to substantially vary from the price of the Benchmark Futures Contract.
UGA’s
future commission merchants (“FCMs”) have discretion to impose limits on the positions that UGA may hold in the Benchmark
Futures Contract as well as certain other months. To date, UGA’s FCMs have not imposed any such limits. However, were UGA’s
FCMs to impose limits, UGA’s ability to have a substantial portion of its assets invested in the Benchmark Futures Contract
and other Futures Contracts could be severely limited, which could lead UGA to invest in other Futures Contracts or, potentially,
Other Gasoline Related Investments. UGA could also have to more frequently rebalance and adjust the types of holdings in its portfolio
than is currently the case. This could inhibit UGA from pursuing its investment objective in the same manner that it has historically
and currently.
In addition,
when offering Creation Baskets for purchase, limitations imposed by exchanges and/or any of UGA’s FCMs could limit UGA’s
ability to invest the proceeds of the purchases of Creation Baskets in Benchmark Futures Contract and other Futures Contracts.
If this were the case, UGA may invest in other permitted investments, including Other Gasoline Related Investments, and may hold
larger amounts of Treasuries, cash and cash equivalents, which could impair UGA’s ability to meet its investment objective.
Tax
Risk
An
investor’s tax liability may exceed the amount of distributions, if any, on its shares.
Cash or
property will be distributed at the sole discretion of USCF. USCF has not and does not currently intend to make cash or other
distributions with respect to shares. Investors will be required to pay U.S. federal income tax and, in some cases, state, local,
or foreign income tax, on their allocable share of UGA’s taxable income, without regard to whether they receive distributions
or the amount of any distributions. Therefore, the tax liability of an investor with respect to its shares may exceed the amount
of cash or value of property (if any) distributed.
An
investor’s allocable share of taxable income or loss may differ from its economic income or loss on its shares.
Due to
the application of the assumptions and conventions applied by UGA in making allocations for tax purposes and other factors, an
investor’s allocable share of UGA’s income, gain, deduction or loss may be different than its economic profit or loss
from its shares for a taxable year. This difference could be temporary or permanent and, if permanent, could result in it being
taxed on amounts in excess of its economic income.
Items
of income, gain, deduction, loss and credit with respect to shares could be reallocated, and UGA could be liable for U.S. federal
income tax, if the U.S. Internal Revenue Service (“IRS”) does not accept the assumptions and conventions applied by
UGA in allocating those items, with potential adverse consequences for an investor.
The U.S. tax
rules pertaining to partnerships are complex and their application to large, publicly traded partnerships such as UGA is in many
respects uncertain. UGA applies certain assumptions and conventions in an attempt to comply with the intent of the applicable
rules and to report taxable income, gains, deductions, losses and credits in a manner that properly reflects shareholders’
economic gains and losses. These assumptions and conventions may not fully comply with all aspects of the Internal Revenue Code
of 1986, as amended (the “Code”), and applicable Treasury Regulations, however, and it is possible that
the IRS will successfully challenge UGA’s allocation methods and require UGA to reallocate items of income, gain, deduction,
loss or credit in a manner that adversely affects investors.
UGA may
be liable for U.S. federal income tax on any “imputed understatement” of tax resulting from an adjustment as a result
of an IRS audit. The amount of the imputed understatement generally includes increases in allocations of items of income or gains
to any investor and decreases in allocations of items of deduction, loss, or credit to any investor without any offset for any
corresponding reductions in allocations of items of income or gain to any investor or increases in allocations of items of deduction,
loss, or credit to any investor. If UGA is required to pay any U.S. federal income taxes on any imputed understatement, the resulting
tax liability would reduce the net assets of UGA and would likely have an adverse impact on the value of the shares. Under certain
circumstances, UGA may be eligible to make an election to cause the investors to take into account the amount of any imputed understatement,
including any interest and penalties. The ability of a publicly traded partnership such as UGA to make this election is uncertain.
If the election is made, UGA would be required to provide investors who owned beneficial interests in the shares in the year to
which the adjusted allocations relate with a statement setting forth their proportionate shares of the adjustment (“Adjusted
K-1s”). The investors would be required to take the adjustment into account in the taxable year in which the Adjusted K-1s
are issued.
UGA
could be treated as a corporation for federal income tax purposes, which may substantially reduce the value of the shares.
UGA has
received an opinion of counsel that, under current U.S. federal income tax laws, UGA will be treated as a partnership that is
not taxable as a corporation for U.S. federal income tax purposes, provided that (i) at least 90 percent of UGA’s annual
gross income will be derived from (a) income and gains from commodities (not held as inventory) or futures, forwards, options,
swaps and other notional principal contracts with respect to commodities, and (b) interest income, (ii) UGA is organized and operated
in accordance with its governing agreements and applicable law and (iii) UGA does not elect to be taxed as a corporation for federal
income tax purposes. Although USCF anticipates that UGA has satisfied and will continue to satisfy the “qualifying income”
requirement for all of its taxable years, that result cannot be assured. UGA has not requested and will not request any ruling
from the IRS with respect to its classification as a partnership not taxable as a corporation for federal income tax purposes.
If the IRS were to successfully assert that UGA is taxable as a corporation for federal income tax purposes in any taxable year,
rather than passing through its income, gains, losses and deductions proportionately to shareholders, UGA would be subject to
tax on its net income for the year at corporate tax rates. In addition, although USCF does not currently intend to make distributions
with respect to shares, any distributions would be taxable to shareholders as dividend income. Taxation of UGA as a corporation
could materially reduce the after-tax return on an investment in shares and could substantially reduce the value of the shares.
UGA
is organized and operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state
law, and therefore, UGA has a more complex tax treatment than traditional mutual funds.
UGA is
organized and operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state law.
No U.S. federal income tax is paid by UGA on its income. Instead, UGA will furnish shareholders each year with tax information
on IRS Schedule K-1 (Form 1065) and each U.S. shareholder is required to report on its U.S. federal income tax return its allocable
share of the income, gain, loss and deduction of UGA.
This
must be reported without regard to the amount (if any) of cash or property the shareholder receives as a distribution from UGA
during the taxable year. A shareholder, therefore, may be allocated income or gain by UGA but receive no cash distribution with
which to pay the tax liability resulting from the allocation, or may receive a distribution that is insufficient to pay such liability.
In addition
to federal income taxes, shareholders may be subject to other taxes, such as state and local income taxes, unincorporated business
taxes, business franchise taxes and estate, inheritance or intangible taxes that may be imposed by the various jurisdictions in
which UGA does business or owns property or where the shareholders reside. Although an analysis of those various taxes is not
presented here, each prospective shareholder should consider their potential impact on its investment in UGA. It is each shareholder’s
responsibility to file the appropriate U.S. federal, state, local and foreign tax returns.
If
UGA is required to withhold tax with respect to any Non-U.S. shareholders, the cost of such withholding may be borne by all shareholders.
Under certain
circumstances, UGA may be required to pay withholding tax with respect to allocations to Non-U.S. shareholders. Although the LP
Agreement provides that any such withholding will be treated as being distributed to the Non-U.S. shareholder, UGA may not be
able to cause the economic cost of such withholding to be borne by the Non-U.S. shareholder on whose behalf such amounts were
withheld since it does not generally expect to make any distributions. Under such circumstances, the economic cost of the withholding
may be borne by all shareholders, not just the shareholders on whose behalf such amounts were withheld. This could have a material
impact on the value of the shares.
The
impact of changes in U.S. tax laws on UGA is uncertain.
U.S.
tax laws and Treasury regulations are subject to change, sometimes with retroactive effect. We cannot predict with certainty
how any changes in the tax laws might affect the U.S. economy, the demand for and the price of commodities, or our status as
a publicly traded partnership. As a result, it is possible that changes in the Code, as well as any U.S. Treasury
regulations, administrative interpretations or court decisions interpreting the Code could have unexpected or negative
impacts on UGA and some or all of its shareholders. Shareholders are urged to consult with their tax advisor regarding tax
legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in
UGA.
OTC Contract Risk
UGA
will be subject to credit risk with respect to counterparties to OTC contracts entered into by UGA or held by special purpose
or structured vehicles.
UGA faces
the risk of non-performance by the counterparties to the OTC contracts. Unlike in futures contracts, the counterparty to these
contracts is generally a single bank or other financial institution, rather than a clearing organization backed by a group of
financial institutions. As a result, there will be greater counterparty credit risk in these transactions. A counterparty may
not be able to meet its obligations to UGA, in which case UGA could suffer significant losses on these contracts. The two-way
margining requirements imposed by U.S. regulators are intended to mitigate this risk.
If a counterparty
becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, UGA may experience significant delays
in obtaining any recovery in a bankruptcy or other reorganization proceeding. UGA may obtain only limited recovery or may obtain
no recovery in such circumstances.
Valuing
OTC derivatives may be less certain than actively traded financial instruments.
In general,
valuing OTC derivatives is less certain than valuing actively traded financial instruments such as exchange traded futures contracts
and securities or cleared swaps because the price and terms on which such OTC derivatives are entered into or can be terminated
are individually negotiated, and those prices and terms may not reflect the best price or terms available from other sources.
In addition, while market makers and dealers generally quote indicative prices or terms for entering into or terminating OTC contracts,
they typically are not contractually obligated to do so, particularly if they are not a party to the transaction. As a result,
it may be difficult to obtain an independent value for an outstanding OTC derivatives transaction.
Other Risks
UGA
is not leveraged.
UGA has
not leveraged, and does not intend to leverage, its assets through borrowings or otherwise, and makes its investments accordingly.
Consistent with the foregoing, UGA’s announced investment intentions, and any changes thereto, will take into account the
need for UGA to make permitted investments that also allow it to maintain adequate liquidity to meet its margin and collateral
requirements and to avoid, to the extent reasonably possible, UGA becoming leveraged. If market conditions require it, these risk
reduction procedures, including changes to UGA’s investments, may occur on short notice if they occur other than during
a roll or rebalance period.
UGA
may temporarily limit the offering of Creation Baskets.
UGA may
determine to limit the issuance of its shares through the offering of Creation Baskets to its Authorized Participants in order
to allow it to reinvest the proceeds from sales of its Creation Baskets in currently permitted assets in a manner that meets its
investment objective. UGA will announce to the market through the filing of a Current Report on Form 8-K if it intends to limit
the offering of Creation Baskets at any time. In such case, orders for Creation Baskets will be considered for acceptance in the
order they are received by UGA and UGA would continue to accept requests for redemption of its shares from Authorized Participants
through Redemption Baskets during the period of the limited offering of Creation Baskets.
Certain
of UGA’s investments could be illiquid, which could cause large losses to investors at any time or from time to time.
Futures
positions cannot always be liquidated at the desired price. It is difficult to execute a trade at a specific price when there
is a relatively small volume of buy and sell orders in a market. A market disruption, such as a foreign government taking political
actions that disrupt the market for its currency, its unleaded gasoline production or exports, or another major export, can also
make it difficult to liquidate a position. Because both Futures Contracts and Other Gasoline-Related Investments may be illiquid,
UGA’s Gasoline Interests may be more difficult to liquidate at favorable prices in periods of illiquid markets and losses
may be incurred during the period in which positions are being liquidated. The large size of the positions that UGA may acquire
increases the risk of illiquidity both by making its positions more difficult to liquidate and by potentially increasing losses
while trying to do so.
OTC contracts
that are not subject to clearing may be even less marketable than futures contracts because they are not traded on an exchange,
do not have uniform terms and conditions, and are entered into based upon the creditworthiness of the parties and the availability
of credit support, such as collateral, and in general, they are not transferable without the consent of the counterparty. These
conditions make such contracts less liquid than standardized futures contracts traded on a commodities exchange and could adversely
impact UGA’s ability to realize the full value of such contracts. In addition, even if collateral is used to reduce counterparty
credit risk, sudden changes in the value of OTC transactions may leave a party open to financial risk due to a counterparty default
since the collateral held may not cover a party’s exposure on the transaction in such situations.
UGA is
not actively managed and its investment objective is to track the Benchmark Futures Contract so that the average daily percentage
change in UGA’s NAV for any period of 30 successive valuation days will be within plus/minus ten percent (10%) of the average
daily percentage change in the price of the Benchmark Futures Contract over the same period.
UGA is not actively
managed by conventional methods. Accordingly, if UGA’s investments in Gasoline Interests are declining in value, in the
ordinary course, UGA will not close out such positions except in connection with paying the proceeds to an Authorized Participant
upon the redemption of a basket or closing out its positions in Futures Contracts and other permitted investments
(i) in connection with the monthly change in the Benchmark Futures Contract or when UGA otherwise determines it
would be appropriate to do so, e.g., due to regulatory requirements or risk mitigation measures, or to avoid UGA
becoming leveraged, and it reinvests the proceeds in new Futures Contracts or Other Gasoline-Related Investments
to the extent possible. USCF will seek to cause the NAV of UGA’s shares to track the Benchmark Futures Contract
during periods in which its price is flat or declining as well as when the price is rising.
UGA’s
ability to invest in the Benchmark Futures Contract could be limited as a result of any or all of the following: evolving market
conditions, a change in regulatory accountability levels and position limits imposed on UGA with respect to its investment in
Futures Contracts, risk mitigation measures taken by market participants, generally, including UGA, with respect
to UGA acquiring additional Futures Contracts, or UGA selling additional shares. Accordingly, for the foreseeable future, to address
and comply with the market conditions, regulatory requirements and other factors that have influenced, and will continue to influence,
its investment decisions, UGA intends to buy or sell its permitted investments when UGA increases or decreases either its portfolio
overall or its holdings of particular investments.
UGA
may not meet the listing standards of NYSE Arca, which would adversely impact an investor’s ability to sell shares.
NYSE Arca
may suspend UGA’s shares from trading on the exchange with or without prior notice to UGA, upon failure of UGA to comply
with the NYSE’s listing requirements, or when in its sole discretion, the NYSE Arca determines that such suspension of dealings
is in the public interest or otherwise warranted. There can be no assurance that the requirements necessary to maintain the listing
of UGA’s shares will continue to be met or will remain unchanged. If UGA were unable to meet the NYSE’s listing standards
and were to become delisted, an investor’s ability to sell its shares would be adversely impacted.
The
NYSE Arca may halt trading in UGA’s shares, which would adversely impact an investor’s ability to sell shares.
Trading
in shares may be halted due to market conditions or, in light of NYSE Arca rules and procedures, for reasons that, in the view
of the NYSE Arca, make trading in shares inadvisable. In addition, trading is subject to trading halts caused by extraordinary
market volatility pursuant to “circuit breaker” rules that require trading to be halted for a specified period based
on a specified market decline.
The
liquidity of UGA’s shares may also be affected by the withdrawal from participation of Authorized Participants, which could
adversely affect the market price of the shares.
In the
event that one or more Authorized Participants which have substantial interests in the shares withdraw from participation, the
liquidity of the shares will likely decrease, which could adversely affect the market price of the shares and result in investors
incurring a loss on their investment.
Shareholders
that are not Authorized Participants may only purchase or sell their shares in secondary trading markets, and the conditions associated
with trading in secondary markets may adversely affect investors’ investment in the shares.
Only
Authorized Participants may directly purchase from or redeem shares with, UGA through Creation Baskets or Redemption Baskets.
All other investors that desire to purchase or sell shares must do so through the NYSE Arca or in other markets, if any, in which
the shares may be traded. Shares may trade at a premium or discount to NAV per share.
The
lack of an active trading market for UGA’s shares may result in losses on an investor’s investment in UGA at the time
the investor sells the shares.
Although
UGA’s shares are listed and traded on the NYSE Arca, there can be no guarantee that an active trading market for the shares
will be maintained. If an investor needs to sell shares at a time when no active trading market for them exists, the price the
investor receives upon sale of the shares, assuming they were able to be sold, likely would be lower than if an active market
existed.
Limited
partners and shareholders do not participate in the management of UGA and do not control USCF, so they do not have any influence
over basic matters that affect UGA.
The limited
partners and shareholders take no part in the management or control, and have a minimal voice in UGA’s operations or business.
Limited partners and shareholders must therefore rely upon the duties and judgment of USCF to manage UGA’s affairs. Limited
partners and shareholders have no right to elect USCF on an annual or any other continuing basis. If USCF voluntarily withdraws,
however, the holders of a majority of UGA’s outstanding shares (excluding for purposes of such determination shares owned,
if any, by the withdrawing general partner and its affiliates) may elect its successor. USCF may not be removed as general partner
except upon approval by the affirmative vote of the holders of at least 66 2/3 percent of UGA’s outstanding shares (excluding
shares, if any, owned by USCF and its affiliates), subject to the satisfaction of certain conditions set forth in the LP Agreement.
UGA
could become leveraged if it had insufficient assets to completely meet its margin or collateral requirements relating to its
investments.
Although
UGA does not and will not borrow money or use debt to satisfy its margin or collateral obligations in respect of its investments,
it could become leveraged if UGA were to hold insufficient assets that would allow it to meet not only the current, but also future,
margin or collateral obligations required for such investments. Such a circumstance could occur if UGA were to hold assets that
have a value of less than zero.
USCF endeavors
to have the value of UGA’s Treasuries, cash and cash equivalents, whether held by UGA or posted as margin or other collateral,
at all times approximate the aggregate market value of its obligations under its Futures Contracts and Other Gasoline-Related
Investments. Although permitted to do so under its Limited Partnership Agreement, UGA has not and does not intend to leverage
its assets by making investments beyond its potential ability to meet the potential margin and collateral obligations relating
to such investments. Consistent with this, UGA’s investment decisions will take into account the need for UGA to make permitted
investments that also allow it to maintain adequate liquidity to meet its margin and collateral requirements and to avoid, to
the extent reasonably possible, UGA becoming leveraged, including by its holding of assets that have a high probability of having
a value of less than zero.
Limited
partners may have limited liability in certain circumstances, including potentially having liability for the return of wrongful
distributions.
Under
Delaware law, a limited partner might be held liable for UGA’s obligations as if it were a general partner if the limited
partner participates in the control of the partnership’s business and the persons who transact business with the partnership
think the limited partner is the general partner.
A limited partner
will not be liable for assessments in addition to its initial capital investment in any of UGA’s shares. However, a limited
partner may be required to repay to UGA any amounts wrongfully returned or distributed to it under some circumstances. Under Delaware
law, UGA may not make a distribution to limited partners if the distribution causes UGA’s liabilities (other than liabilities
to partners on account of their partnership interests and nonrecourse liabilities) to exceed the fair value of UGA’s assets.
Delaware law provides that a limited partner who receives such a distribution and knew at the time of the distribution that the
distribution violated the law will be liable to the limited partnership for the amount of the distribution for three years from
the date of the distribution.
The
LLC Agreement provides limited authority to the Non-Management Directors, and any Director of USCF may be removed by USCF’s
parent company, which is wholly owned by Concierge Technologies, Inc., a controlled public company where the majority
of shares are owned by Nicholas D. Gerber along with certain family members and certain other shareholders.
USCF’s
Board of Directors (the “Board”) currently consists of four Management Directors, each of whom are also executive
officers or employees of USCF (“Management Directors”), and three Non-Management Directors, each of whom are considered
independent for purposes of applicable NYSE Arca and SEC rules. Under USCF’s Sixth Amended and Restated Limited Liability
Company Agreement, dated as of May 15, 2015 (as amended from time to time), the (“LLC Agreement”), the Non-Management
Directors have only such authority as the Management Directors expressly confer upon them, which means that the Non-Management
Directors may have less authority to control the actions of the Management Directors than is typically the case with the independent
members of a company’s Board. In addition, any Director may be removed by written consent of Wainwright Holdings, Inc. (“Wainwright”),
which is the sole member of USCF. The sole shareholder of Wainwright is Concierge Technologies, Inc. (“Concierge”),
a company publicly traded under the ticker symbol “CNCG”. Mr. Nicholas D. Gerber, along with certain of Mr. Gerber’s
family members and certain other shareholders, own the majority of the shares in Concierge, which is the sole shareholder of Wainwright,
the sole member of USCF. Accordingly, although USCF is governed by the Board, which consists of both Management Directors and
Non-Management Directors, pursuant to the LLC Agreement, it is possible for Mr. Gerber to exercise his indirect control of Wainwright
to effect the removal of any Director (including the Non-Management Directors which comprise the Audit Committee) and to replace
that Director with another Director. Having control in one person could have a negative impact on USCF and UGA, including their
regulatory obligations.
There
is a risk that UGA will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such
UGA may not earn any profit.
UGA pays
brokerage charges of approximately 0.10% of average total net assets based on brokerage fees of $3.50 per buy or sell, management
fees of 0.60% of NAV on its average net assets, and OTC spreads and extraordinary expenses (e.g., subsequent offering expenses,
other expenses not in the ordinary course of business, including the indemnification of any person against liabilities and obligations
to the extent permitted by law and required under the LP Agreement and under agreements entered into by USCF on UGA’s behalf
and the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation and the incurring
of legal expenses and the settlement of claims and litigation) that cannot be quantified.
These
fees and expenses must be paid in all cases regardless of whether UGA’s activities are profitable. Accordingly, UGA must
earn trading gains sufficient to compensate for these fees and expenses before it can earn any profit.
UGA
is subject to extensive regulatory reporting and compliance.
UGA is
subject to a comprehensive scheme of regulation under the federal commodities and securities laws. UGA could be subject to sanctions
for a failure to comply with those requirements, which could adversely affect its financial performance (in the case of financial
penalties) or ability to pursue its investment objective (in the case of a limitation on its ability to trade).
Because
UGA’s shares are publicly traded, UGA is subject to certain rules and regulations of federal, state and financial market
exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded.
These entities include the Public Company Accounting Oversight Board (the “PCAOB”), the SEC, the CFTC, the NFA, and
the NYSE Arca and these authorities have continued to develop additional regulations or interpretations of existing regulations.
UGA’s ongoing efforts to comply with these regulations and interpretations have resulted in, and are likely to continue
resulting in, a diversion of management’s time and attention from revenue-generating activities to compliance related activities.
UGA is responsible
for establishing and maintaining adequate internal control over financial reporting. UGA’s internal control system is designed
to provide reasonable assurance to its management regarding the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined
to be effective may provide only reasonable assurance with respect to financial statement preparation and presentation.
Regulatory
changes or actions, including the implementation of new legislation is impossible to predict but may significantly and adversely
affect UGA.
The futures
markets are subject to comprehensive statutes, regulations, and margin requirements. In addition, the CFTC and futures exchanges
are authorized to take extraordinary actions in the event of a market emergency, including, for example, the retroactive implementation
of speculative position limits or higher margin requirements, the establishment of daily price limits and the suspension of trading.
Regulation of commodity interest transactions in the United States is a rapidly changing area of law and is subject to ongoing
modification by governmental and judicial action. Considerable regulatory attention has been focused on non-traditional investment
pools that are publicly distributed in the United States. In addition, the SEC, CFTC and the exchanges are authorized to take
extraordinary actions in the event of a market emergency, including, for example, the retroactive implementation of speculative
position limits or higher margin requirements, the establishment of daily price limits and the suspension of trading. Further,
various national governments outside of the United States have expressed concern regarding the disruptive effects of speculative
trading in the energy markets and the need to regulate the derivatives markets in general. The effect of any future regulatory
change on UGA is impossible to predict, but it could be substantial and adverse.
UGA
is not a registered investment company so shareholders do not have the protections of the 1940 Act.
UGA is
not an investment company subject to the 1940 Act. Accordingly, investors do not have the protections afforded by that statute,
which, for example, requires investment companies to have a majority of disinterested directors and regulates the relationship
between the investment company and its investment manager.
Trading
in international markets could expose UGA to credit and regulatory risk.
UGA invests
primarily in Futures Contracts, a significant portion of which are traded on United States exchanges, including the NYMEX. However,
a portion of UGA’s trades may take place on markets and exchanges outside the United States. Trading on such non-U.S. markets
or exchanges presents risks because they are not subject to the same degree of regulation
as their U.S. counterparts, including potentially different or diminished investor protections. In trading contracts denominated
in currencies other than U.S. dollars, UGA is subject to the risk of adverse exchange-rate
movements between the dollar and the functional currencies of such contracts. Additionally, trading on non-U.S. exchanges
is subject to the risks presented by exchange controls, expropriation, increased tax burdens and exposure to local economic declines
and political instability. An adverse development with respect to any of these variables could reduce the profit or increase the
loss earned on trades in the affected international markets.
UGA
and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of shareholders.
UGA is
subject to actual and potential inherent conflicts involving USCF, various commodity futures brokers and Authorized Participants.
USCF’s officers, directors and employees do not devote their time exclusively to UGA and also are directors, officers or
employees of other entities that may compete with UGA for their services. They could have a conflict between their responsibilities
to UGA and to those other entities. As a result of these and other relationships, parties involved with UGA have a financial incentive
to act in a manner other than in the best interests of UGA and the shareholders. USCF has not established any formal procedure
to resolve conflicts of interest. Consequently, investors are dependent on the good faith of the respective parties subject to
such conflicts of interest to resolve them equitably. Although USCF attempts to monitor these conflicts, it is extremely difficult,
if not impossible, for USCF to ensure that these conflicts do not, in fact, result in adverse consequences to the shareholders.
USCF serves
as the general partner or sponsor to each of UGA and the Related Public Funds. USCF may have a conflict to the extent that its
trading decisions for UGA may be influenced by the effect they would have on the other funds it manages. By way of example, if,
as a result of reaching position limits imposed by the NYMEX, UGA purchased gasoline futures contracts, this decision could impact
UGA’s ability to purchase additional gasoline futures contracts if the number of contracts held by funds managed by USCF
reached the maximum allowed by the NYMEX. Similar situations could adversely affect the ability of any fund to track its Benchmark
Futures Contract.
UGA may
also be subject to certain conflicts of interest with respect to its FCMs, including, but not limited to, conflicts that result
from the FCMs receiving greater amounts of compensation from other clients, or purchasing opposite or competing positions on behalf
of third-party accounts traded through the FCMs. In addition, USCF’s principals, officers, directors or employees may trade
futures and related contracts for their own account. A conflict of interest may exist if their trades are in the same markets
and at the same time as UGA trades using the clearing broker to be used by UGA. A potential conflict also may occur if USCF’s
principals, officers, directors or employees trade their accounts more aggressively or take positions in their accounts which
are opposite, or ahead of, the positions taken by UGA.
UGA
could terminate at any time and cause the liquidation and potential loss of an investor’s investment and could upset the
overall maturity and timing of an investor’s investment portfolio.
UGA may terminate
at any time, regardless of whether UGA has incurred losses, subject to the terms of the LP Agreement. In particular, unforeseen
circumstances, including, but not limited to, (i) market conditions, regulatory requirements, risk mitigation measures taken by
UGA or third parties or otherwise that would lead UGA to determine that it could no longer foreseeably meet its business objective
or that UGA’s aggregate net assets in relation to its operating expenses or its margin or collateral requirements make the
continued operation of UGA unreasonable or imprudent, or (ii) adjudication of incompetence, bankruptcy, dissolution, withdrawal
or removal of USCF as the general partner of UGA could cause UGA to terminate unless a majority interest of the limited partners
within 90 days of the event elects to continue the partnership and appoints a successor general partner, or the affirmative vote
of a majority in interest of the limited partners subject to certain conditions. However, no level of losses will require USCF
to terminate UGA. UGA’s termination would cause the liquidation and potential loss of an investor’s investment. Termination
could also negatively affect the overall maturity and timing of an investor’s investment portfolio.
UGA
does not expect to make cash distributions.
UGA has
not previously made any cash distributions and intends to reinvest any realized gains in additional Gasoline Interests rather
than distributing cash to shareholders. Therefore, unlike mutual funds, commodity pools or other investment pools that actively
manage their investments in an attempt to realize income and gains from their investing activities and distribute such income
and gains to their investors, UGA generally does not expect to distribute cash to limited partners. An investor should not invest
in UGA if the investor will need cash distributions from UGA to pay taxes on its share of income and gains of UGA, if any, or
for any other reason. Nonetheless, although UGA does not intend to make cash distributions, the income earned from its investments
held directly or posted as margin may reach levels that merit distribution, e.g., at levels where such income is not necessary
to support its underlying investments in Gasoline Interests and investors adversely react to being taxed on such income without
receiving distributions that could be used to pay such tax. If this income becomes significant then cash distributions may be
made.
An
unanticipated number of Redemption Basket requests during a short period of time could have an adverse effect on UGA’s NAV.
While USCF makes
every effort to predict and maintain an adequate amount of shares outstanding, if a substantial number of requests for Creation
Baskets are received by UGA during a relatively short period of time that substantially differs from past creation volumes, due
to market volatility or otherwise, it could result in circumstances where, because of high demand for its shares, UGA may not
have sufficient shares available for sale to satisfy demand. Authorized Participants may, therefore, be unable to purchase additional
Creation Baskets.
An unanticipated
number of Creation Basket requests during a short period of time could result in a shortage of shares.
While USCF makes
every effort to predict and maintain an adequate amount of shares outstanding, if a substantial number of requests for Creation
Baskets are received by UGA during a relatively short period of time that substantially differ from past creation volumes, due
to market volatility or otherwise, including, for example, the occurrence of a pandemic like COVID-19, UGA may not have sufficient
shares available for sale to satisfy demand and Authorized Participants may, therefore, be unable to purchase additional Creation
Baskets.
In the event
that there was a suspension in the ability of Authorized Participants to purchase additional Creation Baskets, Authorized Participants
and other groups that make a market in shares of UGA would likely still continue to actively trade the shares. However, in such
a situation, Authorized Participants and other market makers may seek to adjust the market they make in the shares. Specifically,
such market participants may increase the spread between the prices that they quote for offers to buy and sell shares to allow
them to adjust to the potential uncertainty as to when they might be able to purchase additional Creation Baskets of shares. In
addition, Authorized Participants may be less willing to offer to quote offers to buy or sell shares in large numbers. The potential
impact of either wider spreads between bid and offer prices, or reduced number of shares on which quotes may be available, could
increase the trading costs to investors in UGA compared to the quotes and the number of shares on which bids and offers are made
if the Authorized Participants still were able to freely create new baskets of shares. In addition, there could be a significant
variation between the market price at which shares are traded and the shares’ NAV, which is also the price shares can be redeemed
with UGA by Authorized Participants in Redemption Baskets. The foregoing could also create significant deviations from UGA’s investment
objective. Any potential impact to the market in shares of UGA that could occur from the Authorized Participant’s inability to
create new baskets would likely not extend beyond the time when additional shares would be registered and available for distribution.
UGA may
limit the offering of Creation Baskets if it determines that it cannot reasonably reinvest the proceeds in a manner that meets
its investment objective and satisfy regulatory requirements and risk mitigation measures.
UGA may determine
that UGA will limit the issuance of its shares through the offering of Creation Baskets to its Authorized Participants. As a result
of certain circumstances described herein, including (1) the need to comply with regulatory requirements (including, but not limited
to, exchange accountability levels and position limits); (2) market conditions (including but not limited to those allowing UGA
to obtain greater liquidity or to execute transactions with more favorable pricing); and (3) risk mitigation measures taken by
UGA’s current and other FCMs that limit UGA and other market participants from investing in particular gasoline futures contracts,
UGA’s management can determine that it will limit the issuance of shares and the offerings of Creation Baskets because it is unable
to invest the proceeds from such offerings in investments that would permit it to reasonably meet its investment objective.
If such a determination
is made, the same consequences associated with a suspension of the offering of Creation Baskets.
UGA may
potentially lose money on its holdings of money market funds.
The SEC adopted
amendments to Rule 2a-7 under the 1940 Act which became effective in 2016, to reform money market funds (“MMFs”).
While the rule applies only to MMFs, it may indirectly affect institutional investors such as UGA. A portion of UGA’s
assets that are not used for margin or collateral in the Futures Contracts currently are invested in government MMFs. UGA does
not hold any non-government MMFs and does not anticipate investing in any non-government MMFs. However, if UGA invests
in other types of MMFs besides government MMFs in the future, UGA could be negatively impacted by investing in an MMF that does
not maintain a stable $1.00 NAV or that has the potential to impose redemption fees and gates (temporary suspension of redemptions).
Although such
government money market funds seek to preserve the value of an investment at $1.00 per share, there is no guarantee that they
will be able to do so and UGA may lose money by investing in a government money market fund. An investment in a government
money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation, referred to herein as the FDIC, or
any other government agency. The share price of a government money market fund can fall below the $1.00 share price. UGA
cannot rely on or expect a government money market fund’s adviser or its affiliates to enter into support agreements or
take other actions to maintain the government money market fund’s $1.00 share price. The credit quality of a government
money market fund’s holdings can change rapidly in certain markets, and the default of a single holding could have an adverse
impact on the government money market fund’s share price. Due to fluctuations in interest rates, the market value of securities
held by a government money market fund may vary. A government money market fund’s share price can also be negatively affected
during periods of high redemption pressures and/or illiquid markets.
The
failure or bankruptcy of an FCM or clearing house could result in a substantial loss of UGA’s assets and could impair UGA
in its ability to execute trades.
The CEA and
CFTC regulations impose several requirements on FCMs and clearing houses that are designed to protect customers, including mandating
the implementation of risk management programs, internal monitoring and controls, capital and liquidity standards, customer disclosures,
and auditing and examination programs. In particular, the CEA and CFTC regulations require FCMs and clearing houses to segregate
all funds received from customers from proprietary assets. There can be no assurance that the requirements imposed by the CEA
and CFTC regulations will prevent losses to, or not materially adversely affect, UGA or its investors.
In particular,
in the event of an FCM’s or clearing house’s bankruptcy, UGA could be limited to recovering either a pro rata share
of all available funds segregated on behalf of the FCM’s combined customer accounts or UGA may not recover any assets at
all. UGA may also incur a loss of any unrealized profits on its open and closed positions. This is because if
such a bankruptcy were to occur, UGA would be afforded the protections granted to customers of an FCM, and participants to transactions
cleared through a clearing house, under the United States Bankruptcy Code and applicable CFTC regulations. Such provisions generally
provide for a pro rata distribution to customers of customer property held by the bankrupt FCMs or an exchange’s clearing
house if the customer property held by the FCMs or the exchange’s clearing house is insufficient to satisfy all customer
claims.
Bankruptcy of
a clearing FCM can be caused by, among other things, the default of one of the FCM’s customers. In this event, the exchange’s
clearing house is permitted to use the entire amount of margin posted by UGA (as well as margin posted by other customers of the
FCM) to cover the amounts owed by the bankrupt FCM. Consequently, UGA could be unable to recover amounts due to it on its futures
positions, including assets posted as margin, and could sustain substantial losses.
Notwithstanding
that UGA could sustain losses upon the failure or bankruptcy of its FCM, the majority of UGA’s assets are held in Treasuries,
cash and/or cash equivalents with the Custodian and would not be impacted by the bankruptcy of an FCM.
The
failure or bankruptcy of the Custodian could result in a substantial loss of UGA’s assets.
The majority
of UGA’s assets are held in Treasuries, cash and/or cash equivalents with the Custodian. The insolvency of the Custodian
could result in a complete loss of UGA’s assets held by that Custodian, which, at any given time, would likely comprise
a substantial portion of UGA’s total assets.
Third
parties may infringe upon or otherwise violate intellectual property rights or assert that USCF has infringed or otherwise violated
their intellectual property rights, which may result in significant costs and diverted attention.
It is
possible that third parties might utilize UGA’s intellectual property or technology, including the use of its business methods,
trademarks and trading program software, without permission. USCF has a patent for UGA’s business method and has registered
its trademarks. UGA does not currently have any proprietary software. However, if it obtains proprietary software in the future,
any unauthorized use of UGA’s proprietary software and other technology could also adversely affect its competitive advantage.
UGA may not have adequate resources to implement procedures for monitoring unauthorized uses of its patents, trademarks, proprietary
software and other technology. Also, third parties may independently develop business methods, trademarks or proprietary software
and other technology similar to that of USCF or claim that USCF has violated their intellectual property rights, including their
copyrights, trademark rights, trade names, trade secrets and patent rights. As a result, USCF may have to litigate in the future
to protect its trade secrets, determine the validity and scope of other parties’ proprietary rights, defend itself against
claims that it has infringed or otherwise violated other parties’ rights, or defend itself against claims that its rights
are invalid. Any litigation of this type, even if USCF is successful and regardless of the merits, may result in significant costs,
divert its resources from UGA, or require it to change its proprietary software and other technology or enter into royalty or
licensing agreements.
Due
to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks.
With the increased
use of technologies such as the internet and the dependence on computer systems to perform necessary business functions, UGA is
susceptible to operational and information security risks. In general, cyber incidents can result from deliberate attacks or unintentional
events such as a cyber-attack against UGA, a natural catastrophe, an industrial accident, failure of UGA’s disaster recovery
systems, or consequential employee error. Cyber-attacks include, but are not limited to, gaining unauthorized access to digital
systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service
attacks on websites. Cyber security failures or breaches of UGA’s clearing broker or third party service provider (including,
but not limited to, index providers, the administrator and transfer agent, the custodian), have the ability to cause disruptions
and impact business operations, potentially resulting in financial losses, the inability of UGA shareholders to transact business,
violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation
costs, and/or additional compliance costs. Adverse effects can become particularly acute if those events affect UGA’s electronic
data processing, transmission, storage, and retrieval systems, or impact the availability, integrity, or confidentiality of our
data.
In addition,
substantial costs may be incurred in order to prevent any cyber incidents in the future. UGA and its shareholders could be negatively
impacted as a result. While USCF and the Related Public Funds, including UGA, have established business continuity plans, there
are inherent limitations in such plans.
General Risk Factors
Changes
to U.S. tariff and import/export regulations could have a negative effect on UGA.
There has been
ongoing discussion and commentary regarding significant changes that have been and could be made to U.S. trade policies, treaties
and tariffs. The new U.S. presidential administration and U.S. Congress is in the process of revisiting and, in some cases, reversing,
changes made by the prior U.S. presidential administration and there is uncertainty about the future relationship between the
United States and other countries with respect to trade policies, treaties and tariffs. These developments, or the perception
that any of them could occur, could have a material adverse effect on global economic conditions and the stability of global financial
markets, and could significantly reduce global trade and, in particular, trade between the impacted nations and the United States.
Any of these factors could depress economic activity and negatively impact UGA.
There
is uncertainty surrounding potential legal, regulatory and policy changes by the new presidential administration in the United
States that may directly affect financial institutions and the global economy.
As a result
of the United States presidential election, which occurred on November 3, 2020 and subsequent senate runoff elections, there has
been a change in control of the executive and legislative branches of the U.S. government. Changes in federal policy, including
tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which lead
to changes involving the level of oversight and regulation of the energy sector, climate change, and the financial services industry,
as well as changes in tax rates. The nature, timing and economic and political effects of potential changes to the current legal
and regulatory framework affecting the energy sector and financial institutions remain highly uncertain. Uncertainty surrounding
future changes may adversely affect UGA’s and its investments.
ADDITIONAL
INFORMATION ABOUT UGA, ITS INVESTMENT OBJECTIVE AND INVESTMENTS
UGA is
a Delaware limited partnership organized on April 13, 2007. It operates pursuant to the terms of the Third Amended and Restated
Agreement of Limited Partnership dated as of December 15, 2017 (as amended from time to time, the “LP Agreement”),
which grants full management control of UGA to USCF. UGA maintains its main business office 1850 Mt. Diablo Boulevard, Suite 640,
Walnut Creek, California 94596.
The net
assets of UGA consist primarily of investments in Futures Contracts and, to a lesser extent, in order to comply with regulatory
requirements, risk mitigation measures, liquidity requirements, or in view of market conditions, Other Gasoline-Related Investments.
Market conditions that USCF currently anticipates could cause UGA to invest in Other Gasoline-Related Investments include those
allowing UGA to obtain greater liquidity or execute transactions with more favorable pricing.
UGA invests
substantially the entire amount of its assets in Futures Contracts while supporting such investments by holding the amounts of
its margin, collateral and other requirements relating to these obligations in short-term obligations of the United States of
two years or less (“Treasuries”), cash and cash equivalents. The daily holdings of UGA are available on UGA’s
website at www.uscfinvestments.com.
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 Gasoline Interests. In pursuing this objective, the primary focus
of USCF, is the investment in Futures Contracts and the management of UGA’s investments in Treasuries, cash and/or cash
equivalents for margining purposes and as collateral.
UGA seeks
to invest in a combination of Gasoline Interests such that the daily changes in its NAV, measured in percentage terms, will closely
track the daily changes in the price of the Benchmark Futures Contract, also measured in percentage terms. As a specific benchmark,
USCF endeavors to place UGA’s trades in Gasoline Interests and otherwise manage UGA’s investments so that “A”
will be within plus/minus ten percent (10%) of “B”, where:
|
·
|
A is the average
daily percentage change in UGA’s per share NAV for any period of 30 successive valuation days, i.e., any NYSE
Arca trading day as of which UGA calculates its per share NAV, and
|
|
·
|
B is the average
daily percentage change in the price of the Benchmark Futures Contract over the same period.
|
The following
two charts demonstrate the correlation between the changes in UGA’s NAV and the changes in the Benchmark Futures Contract.
USCF believes that market arbitrage opportunities will cause the daily changes in UGA’s share price on the NYSE Arca to
closely track the daily changes in UGA’s per share NAV. USCF further believes that the daily changes in UGA’s NAV
in percentage terms will closely track the daily changes in percentage terms of the Benchmark Futures Contract, less UGA’s
expenses.
The following
two charts demonstrate the correlation between the changes in UGA’s NAV and the changes in the Benchmark Futures Contract.
The first chart exhibits the daily changes in the last 30 valuation days ended December 31, 2020. The second chart measures monthly
changes since December 31, 2015 through December 31, 2020.
*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
USCF employs
a “neutral” investment strategy in order to track changes in the price of the Benchmark Futures Contract regardless
of whether the price goes up or goes down. UGA’s “neutral” investment strategy is designed to permit investors
generally to purchase and sell UGA’s shares for the purpose of investing indirectly in gasoline in a cost-effective manner,
and/or to permit participants in the gasoline or other industries to hedge the risk of losses in their gasoline-related transactions.
Accordingly, depending on the investment objective of an individual investor, the risks generally associated with investing in
gasoline and/or the risks involved in hedging may exist. In addition, an investment in UGA involves the risk that the daily changes
in the price of UGA’s shares, in percentage terms, will not accurately track the daily changes in the Benchmark Futures
Contract, in percentage terms, and that daily changes in the Benchmark Futures Contract, in percentage terms, will not closely
correlate with daily changes in the spot prices of gasoline, in percentage terms.
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 per share NAV, versus the expected changes in its per share NAV
under the assumption that UGA’s returns had been exactly the same as the daily changes in its Benchmark Futures Contract.
For the year
ended December 31, 2020, the actual total return of UGA as measured by changes in its per share NAV was (24.82)%. This is based
on an initial per share NAV of $32.31 as of December 31, 2019 and an ending per share NAV as of December 31, 2020 of $24.29. During
this time period, UGA made no distributions to its shareholders. However, if UGA’s daily changes in its per share NAV had
instead exactly tracked the changes in the daily total return of the Benchmark Futures Contract, UGA would have had an estimated
per share NAV of $24.32 as of December 31, 2020, for a total return over the relevant time period of (24.73)%. The difference
between the actual per share NAV total return of UGA of (24.82)% and the expected total return based on the Benchmark Futures
Contract of (24.73)% was an error over the time period of (0.093)%, which is to say that UGA’s actual total return underperformed
its benchmark by that percentage. UGA incurs expenses primarily composed of the management fee, brokerage commissions for the
buying and selling of futures contracts, and other expenses. The impact of these expenses, offset by interest and dividend income,
and net of positive or negative execution, tends to cause daily changes in the per share NAV of UGA to track slightly lower than
daily changes in the price of the Benchmark Futures Contract.
Impact
of Contango and Backwardation on Total Returns
Several factors
determine the total return from investing in futures contracts. One factor arises from “rolling” futures contracts
that will expire at the end of the current month (the “near” or “front” month contract) forward each month
prior to expiration. For a strategy that entails holding the near month contract, the price relationship between that futures
contract and the next month futures contract will impact returns. For example, if the price of the near month futures contract
is higher than the next futures month contract (a situation referred to as “backwardation”), then absent any other
change, the price of a next month futures contract tends to rise in value as it becomes the near month futures contract and approaches
expiration. Conversely, if the price of a near month futures contract is lower than the next month futures contract (a situation
referred to as “contango”), then absent any other change, the price of a next month futures contract tends to decline
in value as it becomes the near month futures contract and approaches expiration.
As an example,
assume that the price of gasoline for immediate delivery, is $1.50 per gallon, and the value of a position in the near month futures
contract is also $1.50. Over time, the price of gasoline will fluctuate based on a number of market factors, including demand
for oil relative to supply. The value of the near month futures contract will likewise fluctuate in reaction to a number of market
factors. If an investor seeks to maintain a position in a near month futures contract and not take delivery of physical gallons
of gasoline, the investor must sell the current near month futures contract as it approaches expiration and invest in the next
month futures contract. In order to continue holding a position in the current near month futures contract, this “roll”
forward of the futures contract must be executed every month.
Contango and
backwardation are natural market forces that have impacted the total return on an investment in UGA’s shares during the
past year relative to a hypothetical direct investment in gasoline. In the future, it is likely that the relationship between
the market price of UGA’s shares and changes in the spot prices of gasoline will continue to be impacted by contango and
backwardation. It is important to note that this comparison ignores the potential costs associated with physically owning and
storing gasoline, which could be substantial.
If the futures
market is in backwardation, e.g., when the price of the near month futures contract is higher than the price of the next month
futures contract, the investor would buy a next month futures contract for a lower price than the current near month futures contract.
Assuming the price of the next month futures contract was $1.47 per gallon, or 2% cheaper than the $1.50 near month futures contract,
then, hypothetically, and assuming no other changes (e.g., 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 $1.47 next month futures contract would rise to $1.50 as it approaches
expiration. In this example, the value of an investment in the next month futures contract would tend to outperform the spot price
of gasoline. As a result, it would be possible for the new near month futures contract to rise 12% while the spot price of gasoline
may have risen a lower amount, e.g., only 10%. Similarly, the spot price of gasoline could have fallen 10% while the value of
an investment in the futures contract might have fallen another amount, e.g., only 8%. Over time, if backwardation remained constant,
this difference between the spot price and the futures contract price would continue to increase.
If the futures
market is in contango, an investor would be buying a next month futures contract for a higher price than the current near month
futures contract. Again, assuming the near month futures contract is $1.50 per gallon, the price of the next month futures contract
might be $1.53 per gallon, or 2% more expensive than the front month futures contract. Hypothetically, and assuming no other changes,
the value of the $1.53 next month futures contract would fall to $1.50 as it approaches expiration. In this example, the value
of an investment in the second month would tend to underperform the spot price of gasoline. As a result, it would be possible
for the new near month futures contract to rise only 10% while the spot price of gasoline may have risen a higher amount, e.g.,
12%. Similarly, the spot price of gasoline could have fallen 10% while the value of an investment in the second month futures
contract might have fallen another amount, e.g., 12%. Over time, if contango remained constant, this difference between the spot
price and the futures contract price would continue to increase.
The chart
below compares the daily price of the near month gasoline futures contract to the price of 13th month gasoline futures contract
(i.e., a contract one year forward) over the last 10 years. When the price of the near month futures contract is higher than the
price of the 13th month futures contract, the market would be described as being in backwardation. When the price of the near
month futures contract is lower than the 13th month futures contract, the market would be described as being in contango. Although
the price of the near month futures contract and the price of the 13th month futures contract tend to move together, it can be
seen that at times the near month futures contract prices are higher than the 13th month futures contract prices (backwardation)
and, at other times, the near month futures contract prices are lower than the 13th month futures contract prices (contango).
*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
An alternative
way to view the same data is to subtract the dollar price of the 13th month gasoline futures contract from the dollar price of
the near month gasoline futures contract, as shown in the chart below. When the difference is positive, the market is in backwardation.
When the difference is negative, the market is in contango. The gasoline market spent time in both backwardation and contango
during the last ten years. 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 December 31, 2010 and December 31, 2020. Investors will note that the near
month gasoline futures contract spent time in both backwardation and contango.
*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
While
the investment objective of UGA is not to have the market price of its shares match, dollar for dollar, changes in the spot price
of gasoline, contango and backwardation have impacted the total return on an investment in UGA shares during the past year relative
to a hypothetical direct investment in gasoline. For example, an investment in UGA shares made on December 31, 2019 and held until
December 31, 2020 decreased based upon the changes in the NAV for UGA shares on those days, by approximately 24.82%, while the
spot price of gasoline for immediate delivery during the same period decreased by 17.05% (note: this comparison ignores seasonal
factors and the potential costs associated with physically owning and storing gasoline, which could be substantial). By comparison,
an investment in UGA shares made on December 31, 2018 and held to December 31, 2019 increase based upon the changes in the NAV
for UGA shares on those days, by approximately 42.11%, while the spot price of gasoline for immediate delivery during the same
period increased by 28.26% (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 daily percentage changes
in its per share NAV track the daily percentage changes in the prices of the Benchmark Futures Contract since the impact of backwardation
and contango tend to equally impact the daily percentage changes in price of both UGA’s shares 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.
In managing
UGA’s assets, USCF does not use a technical trading system that issues buy and sell orders. USCF instead employs a quantitative
methodology whereby each time a Creation Basket is sold, USCF purchases Gasoline Interests, such as a Futures Contract for gasoline
traded on the NYMEX, that have an aggregate market value that approximates the amount of Treasuries and/or cash received upon
the issuance of the Creation Basket.
The specific
Futures Contracts purchased depend on various factors, including a judgment by USCF as to the appropriate diversification of UGA’s
investments in futures contracts with respect to the month of expiration, and the prevailing price volatility of particular contracts.
While USCF has made significant investments in NYMEX Futures Contracts, for various reasons, including the ability to enter into
the precise amount of exposure to the gasoline market, position limits or other regulatory requirements limiting UGA’s holdings,
and market conditions, it may invest in Futures Contracts traded on other exchanges or invest in Other Gasoline-Related Investments.
To the extent that UGA invests in Other Gasoline-Related Investments, it would prioritize investments in contracts and instruments
that are economically equivalent to the Benchmark Futures Contract, including cleared swaps that satisfy such criteria, and then,
to a lesser extent, it would invest in other types of cleared swaps and other contracts, instruments and non-cleared swaps, such
as swaps in the over-the-counter market (or commonly referred to as the “OTC market”). If UGA is required by law or
regulation, or by one of its regulators, including a futures exchange, to reduce its position in the Benchmark Futures Contract
to the applicable position limit or to a specified accountability level or if market conditions dictate it would be more appropriate
to invest in Other Gasoline-Related Investments, a substantial portion of UGA’s assets could be invested in accordance with
such priority in Other Gasoline-Related Investments that are intended to replicate the return on the Benchmark Futures Contract.
As UGA’s assets reach higher levels, it is more likely to exceed position limits, accountability levels or other regulatory
limits and, as a result, it is more likely that it will invest in accordance with such priority in Other Gasoline-Related Investments
at such higher levels. In addition, market conditions that USCF currently anticipates could cause UGA to invest in Other Gasoline-Related
Investments include those allowing UGA to obtain greater liquidity or to execute transactions with more favorable pricing. See
“Risk Factors Involved With an Investment in UGA” for a discussion of the potential impact of regulation on UGA’s
ability to invest in OTC transactions and cleared swaps.
USCF may not
be able to fully invest UGA’s assets in Benchmark Futures Contract having an aggregate notional amount exactly equal to
UGA’s NAV. For example, as a standardized contract, the Benchmark Futures Contract is for a specified amount of a particular
commodity, and UGA’s NAV and the proceeds from the sale of a Creation Basket are unlikely to be an exact multiple of the
amounts of that contract. As a result, in such circumstances, UGA may be better able to achieve the exact amount of exposure to
changes in price of the Benchmark Futures Contract through the use of Other Gasoline-Related Investments, such as OTC contracts
that have better correlation with changes in price of the Benchmark Futures Contract.
UGA anticipates
that to the extent it invests in Futures Contracts other than contracts on gasoline (such as futures contracts for diesel-heating
oil, natural gas, and other petroleum-based fuels) and Other Gasoline-Related Investments, it will enter into various non-exchange-traded
derivative contracts to hedge the short-term price movements of such Futures Contracts and Other Gasoline-Related Investments
against the current Benchmark Futures Contract.
USCF does
not anticipate letting UGA’s Futures Contracts expire and taking delivery of the underlying commodity. Instead, USCF closes
existing positions, e.g., when it changes the Benchmark Futures Contract or Other Gasoline-Related Investments or it otherwise
determines it would be appropriate to do so and reinvests the proceeds in new Futures Contracts or Other Gasoline-Related Investments.
Positions may also be closed out to meet orders for Redemption Baskets and in such case proceeds for such baskets will not be
reinvested.
The Benchmark
Futures Contract is changed from the near month contract to expire to the next month contract to expire during one day each month.
On that day, USCF closes or sells UGA’s Gasoline Interests and also reinvests or “rolls” in new Gasoline Interests.
The anticipated
dates on which the Benchmark Futures Contract will be changed and UGA’s Gasoline Interests will be “rolled”
are posted on UGA’s website at www.uscfinvestments.com, and are subject to change without notice. By remaining invested
as fully as possible in Futures Contracts or Other Gasoline-Related Investments, USCF believes that the daily changes in percentage
terms of UGA’s NAV will continue to closely track the daily changes in percentage terms in the prices of the Benchmark Futures
Contract. USCF believes that certain arbitrage opportunities will result in the price of the shares traded on the NYSE Arca closely
tracking the NAV of UGA. Additionally, Futures Contracts traded on the NYMEX have closely tracked the spot price of gasoline.
Based on these expected interrelationships, USCF believes that the daily changes in the price of UGA’s shares as traded
on the NYSE Arca have closely tracked and will continue to closely track on a daily basis, the changes in the spot price of gasoline,
on a percentage basis.
What
are the Trading Policies of UGA?
Investment Objective
The investment
objective of UGA is for the daily changes in percentage terms of its shares’ per share NAV to reflect the daily changes
in percentage terms of the spot price of gasoline (also known as reformulated gasoline blendstock for oxygen blending, or “RBOB”),
for delivery to the New York harbor, as measured by the daily changes in the price of a specified short-term futures contract
on gasoline called the “Benchmark Futures Contract,” plus interest earned on UGA’s collateral holdings, less
UGA’s expenses. The Benchmark Futures Contract is the futures contract on gasoline as traded on the NYMEX that is the near
month contract to expire, except when the near month contract is within two weeks of expiration, in which case it will the futures
contract that is the next month contract to expire.
UGA seeks to
achieve its investment objective by investing so that that the average daily percentage change in UGA’s NAV for any period
of 30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the price
of the Benchmark Futures Contract over the same period.
Liquidity
UGA invests
only in Futures Contracts and Other Gasoline-Related Investments that, in the opinion of USCF, are traded in sufficient volume
to permit the ready taking and liquidation of positions in these financial interests and in Other Gasoline-Related Investments
that, in the opinion of USCF, may be readily liquidated with the original counterparty or through a third party assuming the position
of UGA.
Spot Commodities
While
the Futures Contracts traded on the exchange can be physically settled, UGA does not intend to take or make physical delivery.
UGA may from time to time trade in Other Gasoline-Related Investments, including contracts based on the spot price of gasoline.
Leverage
USCF endeavors
to have the value of UGA’s Treasuries, cash and cash equivalents, whether held by UGA or posted as margin or other collateral,
at all times approximate the aggregate market value of its obligations under its Futures Contracts and Other Gasoline-Related
Investments. Commodity pools’ trading positions in futures contracts or other related investments are typically required
to be secured by the deposit of margin funds that represent only a small percentage of a futures contract’s (or other commodity
interest’s) entire market value. While USCF has not and does not intend to leverage UGA’s assets, it is not prohibited
from doing so under the LP Agreement.
Although
permitted to do so under the LP Agreement, UGA has not and does not intend to leverage its assets and makes its investments accordingly.
Consistent with this, UGA’s investment decisions will take into account the need for UGA to make permitted investments that
also allow it to maintain adequate liquidity to meet its margin and collateral requirements and to avoid, to the extent reasonably
possible, UGA becoming leveraged, including by its holding of assets that have a high probability of causing the net asset value
of UGA to be less than zero.
Borrowings
Borrowings
are not used by UGA, unless UGA is required to borrow money in the event of physical delivery, UGA trades in cash commodities,
or for short-term needs created by unexpected redemptions.
OTC Derivatives (Including
Spreads and Straddles)
In addition
to Futures Contracts, there are also a number of listed options on the Futures Contracts on the principal futures exchanges. These
contracts offer investors and hedgers another set of financial vehicles to use in managing exposure to the gasoline market. Consequently,
UGA may purchase options on gasoline Futures Contracts on these exchanges in pursuing its investment objective.
In addition
to the Futures Contracts and options on the Futures Contracts, there also exists an active non-exchange-traded market in derivatives
tied to gasoline. These derivatives transactions (also known as OTC contracts) are usually entered into between two parties in
private contracts. Unlike most of the exchange-traded Futures Contracts or exchange- traded options on the Futures Contracts,
each party to such contract bears the credit risk of the other party, i.e., the risk that the other party may not be able to perform
its obligations under its contract. To reduce the credit risk that arises in connection with such contracts, UGA will generally
enter into an agreement with each counterparty based on the Master Agreement published by the International Swaps and Derivatives
Association, Inc. (“ISDA”) that provides for the netting of its overall exposure to its counterparty.
USCF assesses
or reviews, as appropriate, the creditworthiness of each potential or existing counterparty to an OTC contract pursuant to guidelines
approved by USCF’s Board.
UGA may
enter into certain transactions where an OTC component is exchanged for a corresponding futures contract (“Exchange for
Related Position” or “EFRP” transactions). In the most common type of EFRP transaction entered into by UGA,
the OTC component is the purchase or sale of one or more baskets of UGA shares. These EFRP transactions may expose UGA to counterparty
risk during the interim period between the execution of the OTC component and the exchange for a corresponding futures contract.
Generally, the counterparty risk from the EFRP transaction will exist only on the day of execution.
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.
During of the
year ended December 31, 2020 and through February 28, 2021, UGA limited its derivatives activities to Futures Contracts and EFRP
transactions.
Pyramiding
UGA
has not employed and will not employ the technique, commonly known as pyramiding, in which the speculator uses unrealized profits
on existing positions as variation margin for the purchase or sale of additional positions in the same or another commodity interest.
Prior Performance of UGA
*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
USCF
manages UGA which is a commodity pool that issues shares traded on the NYSE Arca. The chart below shows, as of February 28, 2021,
the number of Authorized Participants, the total number of baskets created and redeemed since inception and the number of outstanding
shares for UGA.
# of Authorized
|
|
|
|
|
|
|
|
|
|
|
Participants
|
|
|
Baskets Purchased
|
|
|
Baskets Redeemed
|
|
|
Outstanding Shares
|
|
|
10
|
|
|
|
458
|
|
|
|
388
|
|
|
|
3,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Since
the commencement of the offering of UGA’s shares to the public on February 26, 2008 to February 28, 2021, the simple average
daily change in the Benchmark Futures Contract was 0.018% while the simple average daily change in the per share NAV of UGA over
the same time period was 0.017%. The average daily difference was (0.001)% (or (0.1) 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 per share NAV was (0.057)%, 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 table below
shows the relationship between the trading prices of the shares and the daily NAV of UGA, since inception through February 28,
2021. The first row shows the average amount of the variation between UGA’s closing market price and NAV, computed on a
daily basis since inception, while the second and third rows depict the maximum daily amount of the end of day premiums and discounts
to NAV since inception, on a percentage basis. USCF believes that maximum and minimum end of day premiums and discounts typically
occur because trading in the shares continues on the NYSE Arca until 4:00 p.m. New York time while regular trading in the Benchmark
Futures Contract on the NYMEX ceases at 2:30 p.m. New York time and the value of the relevant Benchmark Futures Contract, for
purposes of determining its end of day NAV, can be determined at that time.
|
|
UGA
|
|
Average Difference
|
|
$
|
0.001
|
|
Max Premium %
|
|
|
9.61
|
|
Max Discount %
|
|
|
(4.50
|
)
|
|
|
|
|
|
For more
information on the performance of UGA, see the Performance Tables below.
*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
COMPOSITE
PERFORMANCE DATA FOR UGA
Name of Commodity Pool: United
States Gasoline Fund, LP
Type of Commodity Pool: Exchange
traded security
Inception of Trading: February
26, 2008
Aggregate Subscriptions (from
inception through February 28, 2021): $654,816,058
Total Net Assets as of February
28, 2021: $109,648,060.45
NAV per Share as of February
28, 2021: $31.33
Worst Monthly Percentage Draw-down:
March 2020 (60.41%)%
Worst Peak-to-Valley Draw-down: June
2008 – March 2020 (84.35)%
|
|
Rates of Return*
|
|
Month
|
|
2016
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
January
|
|
|
(13.04
|
)%
|
|
|
(8.80
|
)%
|
|
|
4.90
|
%
|
|
|
4.93
|
%
|
|
|
(11.73
|
)%
|
|
|
10.09
|
%
|
February
|
|
|
(5.85
|
)%
|
|
|
(2.27
|
)%
|
|
|
(8.13
|
)%
|
|
|
14.08
|
%
|
|
|
(9.57
|
)%
|
|
|
17.17
|
%
|
March
|
|
|
6.92
|
%
|
|
|
(2.50
|
)%
|
|
|
4.54
|
%
|
|
|
8.30
|
%
|
|
|
(60.41
|
)%
|
|
|
|
|
April
|
|
|
9.55
|
%
|
|
|
(9.43
|
)%
|
|
|
5.27
|
%
|
|
|
11.23
|
%
|
|
|
23.21
|
%
|
|
|
|
|
May
|
|
|
.21
|
%
|
|
|
3.24
|
%
|
|
|
1.65
|
%
|
|
|
(12.96
|
)%
|
|
|
35.69
|
%
|
|
|
|
|
June
|
|
|
(7.81
|
)%
|
|
|
(4.86
|
)%
|
|
|
0.23
|
%
|
|
|
8.83
|
%
|
|
|
10.66
|
%
|
|
|
|
|
July
|
|
|
(12.63
|
)%
|
|
|
13.03
|
%
|
|
|
(1.79
|
)%
|
|
|
0.87
|
%
|
|
|
(1.11
|
)%
|
|
|
|
|
August
|
|
|
5.51
|
%
|
|
|
12.66
|
%
|
|
|
1.03
|
%
|
|
|
(10.50
|
)%
|
|
|
8.40
|
%
|
|
|
|
|
September
|
|
|
15.88
|
%
|
|
|
(8.32
|
)%
|
|
|
5.13
|
%
|
|
|
3.82
|
%
|
|
|
(1.09
|
)%
|
|
|
|
|
October
|
|
|
(2.34
|
)%
|
|
|
10.14
|
%
|
|
|
(15.82
|
)%
|
|
|
4.50
|
%
|
|
|
(11.53
|
)%
|
|
|
|
|
November
|
|
|
4.10
|
%
|
|
|
0.00
|
%
|
|
|
(19.41
|
)%
|
|
|
0.13
|
%
|
|
|
20.20
|
%
|
|
|
|
|
December
|
|
|
11.28
|
%
|
|
|
2.73
|
%
|
|
|
(7.15
|
)%
|
|
|
6.07
|
%
|
|
|
14.04
|
%
|
|
|
|
|
Annual Rate of Return
|
|
|
7.06
|
%
|
|
|
2.10
|
%
|
|
|
(29.00
|
)%
|
|
|
42.08
|
%
|
|
|
(24.82
|
)%
|
|
|
28.98
|
**
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
The
monthly rate of return is calculated by dividing the ending NAV of a given month by the ending NAV of the previous month,
subtracting 1 and multiplying this number by 100 to arrive at a percentage increase or decrease.
|
**
|
Through February 28,
2021.
|
Draw-down:
Losses experienced over a specified period. Draw-down is measured on the basis of monthly returns only and does not reflect intra-month
figures.
Worst
Monthly Percentage Draw-down: The largest single month loss sustained during the most recent five calendar years and year-to-date.
Worst
Peak-to-Valley Draw-down: The largest percentage decline in the NAV per share over the history of UGA. This need not be a continuous
decline, but can be a series of positive and negative returns where the negative returns are larger than the positive returns.
Worst Peak-to-Valley Draw-down represents the greatest cumulative percentage decline in month-end per share NAV is not equaled
or exceeded by a subsequent month-end per share NAV.
UGA’s
Operations
USCF
and its Management and Traders
USCF
is a single member limited liability company that was formed in the state of Delaware on May 10, 2005. USCF maintains its main
business office at 1850 Mt. Diablo Boulevard, Suite 640, Walnut Creek, California 94596. USCF is a wholly-owned subsidiary of
Wainwright, a Delaware corporation, which is an intermediate holding company that owns USCF and another advisor of exchange traded
funds. Wainwright is a wholly owned subsidiary of Concierge (publicly traded under the ticker CNCG), a publicly traded holding
company that owns various financial and non-financial businesses. Mr. Nicholas Gerber (discussed below), along with certain family
members and certain other shareholders, owns the majority of the shares in Concierge. Wainwright is a holding company that currently
holds both USCF, as well as USCF Advisers LLC, an investment adviser registered under the Investment Advisers Act of 1940, as
amended (“USCF Advisers”). USCF Advisers serves as the investment adviser for the USCF SummerHaven Dynamic Commodity
Strategy No K-1 Fund (“SDCI”), a series of the USCF ETF Trust. USCF Advisers was also the investment adviser for the
USCF Commodity Strategy Fund (the “Mutual Fund”), a series of the USCF Mutual Funds Trust, until March 2019, when
the Mutual Fund liquidated all of its assets and distributed cash pro rata to all remaining shareholders. It was also the investment
adviser for two series of the USCF ETF Trust that liquidated all of their assets and distributed cash pro rata to all remaining
shareholders: the USCF SummerHaven SHPEI Index Fund (“BUY”), until October 2020, and the USCF SummerHaven SHPEN Index
Fund (“BUYN”), until May 2020. USCF ETF Trust and USCF Mutual Funds Trust are registered under the Investment Company
Act of 1940, as amended (the “1940 Act”). The Board of Trustees for the USCF ETF Trust and USCF Mutual Funds Trust
consist of different independent trustees than those independent directors who serve on the Board of Directors of USCF. USCF is
a member of the NFA and registered as a CPO with the CFTC on December 1, 2005 and as a swaps firm on August 8, 2013.
USCF
serves as the general partner of UGA. USCF is also the general partner of the United States Oil Fund, LP (“USO”),
the United States 12 Month Oil Fund, LP (“USL”), the United States Natural Gas Fund, LP (“UNG”), and United
States Brent Oil Fund, LP (“BNO”).
USCF
is also the sponsor of the United States Commodity Index Fund (“USCI”), the United States Copper Index Fund (“CPER”),
and the USCF Crescent Crypto Index Fund (“XBET”), each a series of the United States Commodity Index Funds Trust (“USCIFT”).
A registration statement that had been previously filed for XBET was withdrawn on June 25, 2020.
In addition,
USCF is the sponsor of the USCF Funds Trust, a Delaware statutory trust, and each of its series, the United States 3x Oil Fund
(“USOU”) and the United States 3x Short Oil Fund (“USOD”), which listed their shares on the NYSE Arca
on July 20, 2017 under the ticker symbols “USOU” and “USOD”, respectively. Each of USOU and USOD liquidated
all of its assets and distributed cash pro rata to all remaining shareholders in December 2019.
UGA, UNG,
BNO, UNL, USL, USO, USCI and CPER are referred to collectively herein as the “Related Public Funds.”
The Related
Public Funds are subject to reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and, if registered under the 1940 Act, a Related Public Fund also must comply with the reporting requirements under
the 1940 Act. For more information about each of the Related Public Funds, investors in UGA may call 1-800-920-0259 or visit www.uscfinvestments.com
or the SEC website at www.sec.gov.
USCF
is required to evaluate the credit risk of UGA to the FCMs, oversee the purchase and sale of UGA’s shares by certain Authorized
Participants, review daily positions and margin requirements of UGA and manage UGA’s investments. USCF also pays the fees
of ALPS Distributors, Inc., which serves as the marketing agent for UGA (the “Marketing Agent”), and The Bank of New
York Mellon (“BNY Mellon”), which serves as the administrator (the “Administrator”) and the custodian (the
“Custodian”) for UGA. In no event may the aggregate compensation paid for the Marketing Agent and any affiliate of
USCF for distribution-related services in connection with the offering of shares exceed ten percent (10%) of the gross proceeds
of this offering.
The limited
partners take no part in the management or control, and have a minimal voice in UGA’s operations or business. Limited partners
have no right to elect USCF on an annual or any other continuing basis. If USCF voluntarily withdraws, however, the holders of
a majority of UGA’s outstanding shares (excluding for purposes of such determination shares owned, if any, by the withdrawing
general partner and its affiliates) may elect its successor. USCF may not be removed as general partner except upon approval by
the affirmative vote of the holders of at least 66 2/3 percent of UGA’s outstanding shares (excluding shares, if any, owned
by USCF and its affiliates), subject to the satisfaction of certain conditions set forth in the LP Agreement.
The business
and affairs of USCF are managed by the Board, which is comprised of the Management Directors, each of whom are also executive
officers and employees of USCF, and three independent directors who meet the independent director requirements established by
the NYSE Arca Equities Rules and the Sarbanes-Oxley Act of 2002. The Management Directors have the authority to manage USCF pursuant
to the terms of the LLC Agreement. Through its Management Directors, USCF manages the day-to-day operations of UGA. The Board
has an audit committee, which is made up of the three independent directors (Gordon L. Ellis, Malcolm R. Fobes III and Peter M.
Robinson,). The audit committee is governed by an audit committee charter that is posted on UGA’s website at www.uscfinvestments.com.
The Board has determined that each member of the audit committee meets the financial literacy requirements of the NYSE Arca and
the audit committee charter. The Board has further determined that each of Messrs. Ellis and Fobes have accounting or related
financial management expertise, as required by the NYSE Arca, such that each of them is considered an “Audit Committee Finance
Expert” as such term is defined in Item 407(d)(5) of Regulation S-K.
UGA has
no executive officers. Pursuant to the terms of the LP Agreement, UGA’s affairs are managed by USCF.
The following
are individual Principals, as that term is defined in CFTC Rule 3.1, for USCF: John P. Love, Stuart P. Crumbaugh, Nicholas D.
Gerber, Melinda D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Scott Schoenberger, Gordon L. Ellis, Malcolm R.
Fobes III, Ray W. Allen, Kevin A. Baum, Carolyn M. Yu and Wainwright Holdings, Inc. The individuals who are Principals due to
their positions are John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson,
Gordon L. Ellis, Malcolm R. Fobes III, Ray W. Allen, Kevin A. Baum and Carolyn M. Yu. In addition, Wainwright is a Principal because
it is the sole member of USCF. None of the Principals owns or has any other beneficial interest in UGA. Ray W. Allen and Kevin
Sheehan make trading and investment decisions for UGA. Ray W. Allen, Andrew F Ngim and Kevin Sheehan execute trades on behalf
of UGA. In addition, Nicholas D. Gerber, John P. Love, Robert L. Nguyen, Ray W. Allen, Kevin A. Baum, Kevin Sheehan, Kathryn Rooney,
Maya Lowry, and Ryan Katz are registered with the CFTC as Associated Persons of USCF and are NFA Associate Members. John P. Love,
Kevin A. Baum, Kevin Sheehan and Ray W. Allen are also registered with the CFTC as Swaps Associated Persons.
Ray
W. Allen, 64, Portfolio Manager of USCF since January 2008. Mr. Allen was the portfolio manager of: (1)
UGA from February 2008 until March 2010, and then portfolio manager since May 2015, (2) UHN from April 2008 until March 2010,
and then portfolio manager since May 2015, (3) UNL from November 2009 until March 2010, and then portfolio manager since May 2015.
In addition, he has been the portfolio manager of: (1) DNO since September 2009, (2) USO and USL since March 2010, (3) BNO since
June 2010, (4) UNG since May 2015, (4) USOU and USOD from July 2017 to December 2019, and (5) the USCF Commodity Strategy Fund,
a series of USCF Mutual Funds Trust, from October 2017 to March 2019. Mr. Allen also has served as the portfolio manager of the
USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund, a series of the USCF ETF Trust, since May 2018. Mr. Allen has been a
principal of USCF listed with the CFTC and NFA since March 2009 and has been registered as an associated person of USCF since
July 2015 and from March 2008 to November 2012. Additionally, Mr. Allen has been approved as an NFA swaps associated person of
USCF since July 2015. As of February 2017, he also is an associated person and swap associated person of USCF Advisers, LLC (“USCF
Advisers”). USCF Advisers, an affiliate of USCF, is an investment adviser registered under the Investment Advisers Act of
1940, and, as of February 2017, is registered as a commodity pool operator, NFA member and swap firm. Mr. Allen earned a B.A.
in Economics from the University of California at Berkeley and holds an NFA Series 3 registration.
Kevin
A. Baum, 50, has served as the Chief Investment Officer of USCF since September 1, 2016 and as a Portfolio Manager of
USCF from March 2016 to April 2017. Prior to joining USCF, Mr. Baum temporarily retired from December 2015 to March 2016. Mr.
Baum served as the Vice President and Senior Portfolio Manager for Invesco, an investment manager that manages a family of exchange-traded
funds, from October 2014 through December 2015. Mr. Baum was temporarily retired from May 2012 through September 2014. From May
1993 to April 2012, Mr. Baum worked as the Senior Portfolio Manager, Head of Commodities for OppenheimerFunds, Inc., a global
asset manager. Mr. Baum has been approved as an NFA principal and associated person of USCF since April 2016 and, as of January
2017, a branch manager of USCF. As of February 2017, he also is an associated person and branch manager of USCF Advisers. USCF
Advisers, an affiliate of USCF, is an investment adviser registered under the Investment Advisers Act of 1940, and, as of February
2017, is registered as a commodity pool operator, NFA member and swap firm. Mr. Baum is a CFA Charterholder, CAIA Charterholder,
earned a B.B.A. in Finance from Texas Tech University and holds an NFA Series 3 registration.
Stuart
P. Crumbaugh, 57, Chief Financial Officer, Secretary and Treasurer of USCF since May 2015 and also the Chief Financial
Officer of Concierge, the parent of Wainwright since December 2017. He is also the Treasurer and a member of the Board of Directors
of Marygold & Co., a subsidiary of Concierge, since November 2019. In addition, Mr. Crumbaugh has served as a director of
Wainwright, the parent and sole member of USCF, since December 2016. Mr. Crumbaugh has been a principal of USCF listed with
the CFTC and NFA since July 1, 2015 and, as of January 2017, he is a principal of USCF Advisers. USCF Advisers, an affiliate of
USCF, is an investment adviser registered under the Investment Advisers Act of 1940, and, as of February 2017, is registered as
a commodity pool operator, NFA member and swap firm. Since June 2015, Mr. Crumbaugh has been the Treasurer and Secretary
of USCF Advisers. He has served as a Management Trustee, Chief Financial Officer and Treasurer of (1) USCF ETF Trust since May
2015 and (2) USCF Mutual Funds Trust since October 2016. Mr. Crumbaugh joined USCF as the Assistant Chief Financial Officer on
April 6, 2015. Prior to joining USCF, Mr. Crumbaugh was the Vice President Finance and Chief Financial Officer of Sikka Software
Corporation, a software service healthcare company providing optimization software and data solutions from April 2014 to April
6, 2015. Mr. Crumbaugh served as a consultant providing technical accounting, IPO readiness and M&A consulting services to
various early stage companies with the Connor Group, a technical accounting consulting firm, for the periods of January 2014 through
March 2014; October 2012 through November 2012; and January 2011 through February 2011. From December 2012 through December 2013,
Mr. Crumbaugh was Vice President, Corporate Controller and Treasurer of Auction.com, LLC, a residential and commercial real estate
online auction company. From March 2011 through September 2012, Mr. Crumbaugh was Chief Financial Officer of IP Infusion
Inc., a technology company providing network routing and switching software enabling software-defined networking solutions for
major mobile carriers and network infrastructure providers. Mr. Crumbaugh earned a B.A. in Accounting and Business Administration
from Michigan State University in 1987 and is a Certified Public Accountant – Michigan (inactive).
Nicholas
D. Gerber, 58, Vice President since May 15, 2015 and Management Director since June 2005. Mr. Gerber served as President
and Chief Executive Officer of USCF from June 2005 through May 15, 2015 and Chairman of the Board of Directors of USCF from June
2005 through October 2019. Mr. Gerber co- founded USCF in 2005 and prior to that, he co-founded Ameristock Corporation in March
1995, a California-based investment adviser registered under the Investment Advisers Act of 1940 from March 1995 until January
2013. Since January 26, 2015, Mr. Gerber also has served as the Chief Executive Officer, President, and Chairman of the Board
of Directors of Concierge, which is a company publicly traded under the ticker symbol “CNCG.” Concierge is the sole
shareholder of Wainwright. He is also the CEO and a member of the Board of Directors of Marygold & Co., a subsidiary of Concierge,
since November 2019. Mr. Gerber also is the President and a director of Wainwright, a position he has held since March of 2004.
From August 1995 to January 2013, Mr. Gerber served as Portfolio Manager of Ameristock Mutual Fund, Inc. On January 11, 2013,
the Ameristock Mutual Fund, Inc. merged with and into the Drexel Hamilton Centre American Equity Fund, a series of Drexel Hamilton
Mutual Funds. Drexel Hamilton Mutual Funds is not affiliated with Ameristock Corporation, the Ameristock Mutual Fund, Inc. or
USCF. Mr. Gerber also has served USCF Advisers on the Board of Managers from June 2013 to present, as the President from June
2013 through June 18, 2015, and as Vice President from June 18, 2015 to present. USCF Advisers, an affiliate of USCF, is an investment
adviser registered under the Investment Advisers Act of 1940, and, since February 2017, is registered as a commodity pool operator,
NFA member and swap firm. He also has served as Chairman of the Boards of Trustees of USCF ETF Trust since 2014 and USCF Mutual
Funds Trust since October 2016, respectively, (USCF ETF Trust and together with USCF Mutual Funds Trust are referred to as the
“Trusts”) and each of the Trusts are investment companies registered under the Investment Company Act of 1940, as
amended. In addition, Mr. Gerber served as the President and Chief Executive Officer of USCF ETF Trust from June 2014 until December
2015. Mr. Gerber has been a principal of USCF listed with the CFTC and NFA since November 2005, an NFA associate member and associated
person of USCF since December 2005 and a Branch Manager of USCF since May 2009. Additionally, effective as of January 2017, he
is a principal of USCF Advisers and, effective as of February 2017, he is an associated person, swap associated person, and branch
manager of USCF Advisers. Mr. Gerber earned an MBA degree in finance from the University of San Francisco, a B.A. from Skidmore
College and holds an NFA Series 3 registration.
John
P. Love, 49, President and Chief Executive Officer of USCF since May 15, 2015, Management Director of USCF since
October 2016 and Chairman of the Board of Directors of USCF since October 2019. Mr. Love also is a director of Wainwright, a position
he has held since December 2016. Mr. Love previously served as a Senior Portfolio Manager for the Related Public Funds from March
2010 through May 15, 2015. Prior to that, while still at USCF, he was a Portfolio Manager beginning with the launch of USO in
April 2006. Mr. Love was the portfolio manager of USO from April 2006 until March 2010 and the portfolio manager for USL from
December 2007 until March 2010. Mr. Love has been the portfolio manager of UNG since April 2007, and the portfolio manager of
UGA, UHN, and UNL since March 2010. Mr. Love has served as on the Board of Managers of USCF Advisers since November 2016 and as
its President since June 18, 2015. USCF Advisers, an affiliate of USCF, is an investment adviser registered under the Investment
Advisers Act of 1940, and, as of February 2017, is registered as a commodity pool operator, NFA member and swap firm. He also
acted as co-portfolio manager of the Stock Split Index Fund, a series of the USCF ETF Trust for the period from September 2014
to December 2015, when he was promoted to the position of President and Chief Executive Officer of the USCF ETF Trust. Since October
2016 to present, he also has served as the President and Chief Executive of the USCF Mutual Funds Trust. Mr. Love has been a principal
of USCF listed with the CFTC and NFA since January 17, 2006. Mr. Love has been registered as an associated person of USCF since
February 2015 and from December 1, 2005 to April 16, 2009. Mr. Love has also been registered as a branch manager of USCF since
March 2016. Additionally, Mr. Love has been approved as an NFA swaps associated person since February 2015. Mr. Love is a principal
of USCF Advisers LLC as of January 2017. Additionally, effective as of February 2017, he is an associated person, swap associated
person, and branch manager of USCF Advisers. Mr. Love earned a B.A. from the University of Southern California, holds an NFA Series
3 and FINRA Series 7 registrations and is a CFA Charterholder.
Andrew
F Ngim, 60, co-founded USCF in 2005 and has served as a Management Director since May 2005 and, since August 15, 2016,
has served as the Chief Operating Officer of USCF. Mr. Ngim has served as the portfolio manager for USCI CPER since January 2013
and for the United States Agricultural Index Fund from January 2013 to September 2018. Mr. Ngim also served as USCF’s Treasurer
from June 2005 to February 2012. In addition, he has been on the Board of Managers and has served as the Assistant Secretary and
Assistant Treasurer of USCF Advisers since its inception in June 2013. Prior to and concurrent with his services to USCF and USCF
Advisers, from January 1999 to January 2013, Mr. Ngim served as a Managing Director for Ameristock Corporation, a California-based
investment adviser, which he co-founded in March 1995, and was Co-Portfolio Manager of Ameristock Mutual Fund, Inc. from January
2000 to January 2013. Mr. Ngim also served as portfolio manager of (a) the following series of the USCF ETF Trust: (1) the Stock
Split Index Fund from September 2014 to October 2017, (2) the USCF Restaurant Leaders Fund from November 2016 to October 2017,
(3) USCF SummerHaven SHPEI Index Fund from December 2017 to October 2020, (4) USCF SummerHaven SHPEN Index Fund from December
2017 to April 2020, and (b) a series of USCF Mutual Funds Trust, the USCF Commodity Strategy Fund, from March 2017 to March 2019.
Mr. Ngim also serves as the portfolio manager for the USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund, a series of the
USCF ETF Trust, from May 2018 to present. Mr. Ngim serves as a Management Trustee of: (1) the USCF ETF Trust from August 2014
to the present and (2) the USCF Mutual Funds Trust from October 2016 to present. Mr. Ngim has been a principal of USCF listed
with the CFTC and NFA since November 2005 and a principal of USCF Advisers LLC since January 2017. USCF Advisers, an affiliate
of USCF, is an investment adviser registered under the Investment Advisers Act of 1940, and, as of February 2017, is registered
as a commodity pool operator, NFA member and swap firm. Mr. Ngim earned his B.A. from the University of California at Berkeley.
Robert
L. Nguyen, 61, Management Director and principal since July 2015. Mr. Nguyen served on the Board of Wainwright
from December 2014 to December 2016. Mr. Nguyen co-founded USCF in 2005 and served as a Management Director until
March 2012. Mr. Nguyen was an Investment Manager with Ribera Investment Management, an investment adviser registered
under the Investment Advisers Act of 1940, from January 2013 to March 2015. Prior to and concurrent with his services
to USCF, from January 2000 to January 2013, Mr. Nguyen served as a Managing Principal for Ameristock Corporation,
a California-based investment adviser registered under the Investment Advisers Act of 1940, which he co-founded in March 1995.
Mr. Nguyen was a principal of USCF listed with the CFTC and NFA from November 2005 through March 2012 and an associated
person of USCF listed with the CFTC and NFA from November 2007 through March 2012. Mr. Nguyen has been a principal
of USCF listed with the CFTC and NFA since July 2015 and an associated person of USCF listed with the CFTC and NFA since
December 2015. As of February 2017, he also is an associated person of USCF Advisers. USCF Advisers, an affiliate of
USCF, is an investment adviser registered under the Investment Advisers Act of 1940, and, as of February 2017, is registered
as a commodity pool operator, NFA member and swap firm. Mr. Nguyen earned his B.S. from California State University at Sacramento,
and holds NFA Series 3 and FINRA Series 7 registrations.
Carolyn
M. Yu, 62, Chief Compliance Officer of USCF since February 2013. In addition, she served USCF as the General Counsel
from May 2015 through April 2018 and the Assistant General Counsel from August 2011 through April 2015. Ms. Yu
also served as the General Counsel of Concierge, the parent of Wainwright from November 2017 through December 2018.
Ms. Yu has served as (1) Chief Compliance Officer of USCF Advisers and USCF ETF Trust since May 2015 and of USCF
Mutual Funds Trust since October 2016, (2) Chief AML Officer of USCF ETF Trust since May 2015 and of USCF Mutual
Funds Trust since October 2016, and (3) Chief Legal Officer of USCF Advisers and USCF ETF Trust from May 2015 through
April 2018 and of USCF Mutual Funds Trust from October 2016 through April 2018. Prior to May 2015, Ms. Yu
was the Assistant Chief Compliance Officer and AML Officer of the USCF ETF Trust. Since August 2013, in the case of USCF,
and January 2017, in the case of USCF Advisers LLC, Ms. Yu has been a principal listed with the CFTC and NFA. USCF Advisers
LLC, an affiliate of USCF, is an investment adviser registered under the Investment Advisers Act of 1940, and, as of February 2017,
is registered as a commodity pool operator, NFA member and swap firm. Ms. Yu earned her JD from Golden Gate University School
of Law and a B.S. in business administration from San Francisco State University.
Gordon
L. Ellis, 74, Independent Director of USCF since September 2005. Previously, Mr. Ellis was a founder of International
Absorbents, Inc., Director and Chairman since July 1985 and July 1988, respectively, and Chief Executive Officer and President
since November 1996. He also served as Chairman of Absorption Corp., a wholly owned subsidiary of International Absorbents, Inc.,
which is a leading developer and producer of environmentally friendly pet care and industrial products, from May July 1985 until
July 2010 when it was sold to Kinderhook Industries, a private investment banking firm and remained as a director until March
2013 when Absorption Corp was sold again to J. Rettenmaier & Söhne Group, a German manufacturing firm. Concurrent with
that, he founded and has served as Chairman from November 2010 to present of Lupaka Gold Corp., a firm that acquires, explores
and develops gold mining properties and is currently driving an arbitration suit against the Republic of Peru. He has also served
as a director of Goldhaven Resources, a firm that acquires, explores and develops copper mining properties in Chile, from August
2020 to present. Mr. Ellis has his Chartered Directors designation from The Director’s College (a joint venture of McMaster
University and The Conference Board of Canada). He has been a principal of USCF listed with the CFTC and NFA since November 2005.
Mr. Ellis is a professional engineer and earned an MBA in international finance.
Malcolm
R. Fobes III, 56, Independent Director of USCF and Chairman of USCF’s audit committee since September 2005.
He founded and is the Chairman and Chief Executive Officer of Berkshire Capital Holdings, Inc., a California-based investment
adviser registered under the Investment Advisers Act of 1940 that has been sponsoring and providing portfolio management services
to mutual funds since June 1997. Mr. Fobes serves as Chairman and President of The Berkshire Funds, a mutual fund investment
company registered under the Investment Company Act of 1940. Since 1997, Mr. Fobes has also served as portfolio manager of
the Berkshire Focus Fund, a mutual fund registered under the Investment Company Act of 1940, which concentrates its investments
in the electronic technology industry. He was also contributing editor of Start a Successful Mutual Fund: The Step-by-Step Reference
Guide to Make It Happen (JV Books, 1995). Mr. Fobes has been a principal of USCF listed with the CFTC and NFA since November 2005.
He earned a B.S. in finance with a minor in economics from San Jose State University in California.
Peter
M. Robinson, 63, Independent Director of USCF since September 2005. Mr. Robinson has been a Research Fellow
since 1993 with the Hoover Institution, a public policy think tank located on the campus of Stanford University. He authored three
books and has been published in the New York Times, Red Herring, and Forbes ASAP and is the editor of Can Congress Be Fixed?:
Five Essays on Congressional Reform (Hoover Institution Press, 1995). Mr. Robinson has been a principal of USCF listed with
the CFTC and NFA since December 2005. He earned an MBA from the Stanford University Graduate School of Business, graduated
from Oxford University in 1982 after studying politics, philosophy, and economics and graduated summa cum laude from Dartmouth
College in 1979.
UGA’s
Service Providers
Custodian, Registrar, Transfer
Agent, and Administrator
In its
capacity as the Custodian for UGA, The Bank of New York Mellon (“BNY Mellon” or the “Custodian”) holds
UGA’s Treasuries, cash and/or cash equivalents pursuant to a Custody agreement. BNY Mellon is also the registrar and transfer
agent for the shares. In addition, in its capacity as Administrator for UGA, BNY Melon performs certain administrative and accounting
services for UGA and prepares certain SEC, NFA and CFTC reports on behalf of UGA.
As compensation
for the services that BNY Mellon provides to UGA in the foregoing capacities, and the services BNY Mellon provides to the Related
Public Funds, BNY Mellon receives certain out of pocket costs, transaction fees, and asset based fees, which are accrued daily
and paid monthly USCF.
BNY Mellon
is authorized to conduct a commercial banking business in accordance with the provisions of New York State Banking Law, and is
subject to regulation, supervision, and examination by the New York State Department of Financial Services and the Board of Governors
of the Federal Reserve System.
Marketing Agent
UGA also
employs ALPS Distributors, Inc. (“ALPS Distributors”) as the Marketing Agent, which is further discussed under “What
is the Plan of Distribution?” USCF pays the Marketing Agent an annual fee. In no event may the aggregate compensation paid
to the Marketing Agent and any affiliate of USCF for distribution-related services in connection with the offering of shares exceed
ten percent (10%) of the gross proceeds of the offering.
ALPS Distributors’
principal business address is 1290 Broadway, Suite 1000, Denver, CO 80203. ALPS Distributors is a broker-dealer registered with
the SEC and is a member of FINRA and a member of the Securities Investor Protection Corporation.
Payments to Certain Third
Parties
USCF
or the Marketing Agent, or an affiliate of USCF or the Marketing Agent, may directly or indirectly make cash payments to certain
broker-dealers for participating in activities that are designed to make registered representatives and other professionals more
knowledgeable about exchange-traded funds and exchange-traded products, including UGA and the Related Public Funds, or for other
activities, such as participation in marketing activities and presentations, educational training programs, conferences, the development
of technology platforms and reporting systems.
Additionally,
pursuant to written agreements, USCF may make payments, out of its own resources, to financial intermediaries in exchange for
providing services in connection with the sale or servicing of UGA’s shares, including waiving commissions on the purchase
or sale of shares of participating exchange-traded products.
Payments to
a broker-dealer or intermediary may create potential conflicts of interest between the broker-dealer or intermediary and its clients.
The amounts described above, which may be significant, are paid by USCF and/or the Marketing Agent from their own resources and
not from the assets of UGA or the Related Public Funds.
Futures Commission Merchants
RBC Capital Markets, LLC
On October 8,
2013, USCF entered into a Futures and Cleared Derivatives Transactions Customer Account Agreement with RBC Capital Markets, LLC
(“RBC Capital” or “RBC”) to serve as UGA’s FCM, effective October 10, 2013. This agreement requires
RBC Capital to provide services to UGA, as of October 10, 2013, in connection with the purchase and sale of Futures Contracts
and Other Gasoline-Related Investments that may be purchased or sold by or through RBC Capital for UGA’s account. For the
period October 10, 2013 and after, UGA pays RBC Capital commissions for executing and clearing trades on behalf of UGA.
RBC Capital’s
primary address is 3 World Financial Center, 200 Vesey St., New York, NY 10281. Effective October 10, 2013, RBC Capital became
the futures clearing broker for UGA. RBC Capital is registered in the United States with FINRA as a broker-dealer and with the
CFTC as an FCM. RBC Capital is a member of various U.S. futures and securities exchanges.
RBC Capital
is a large broker dealer subject to many different complex legal and regulatory requirements. As a result, certain of RBC Capital’s
regulators may from time to time conduct investigations, initiate enforcement proceedings and/or enter into settlements with RBC
Capital with respect to issues raised in various investigations. RBC Capital complies fully with its regulators in all investigations
being conducted and in all settlements it reaches. In addition, RBC Capital is and has been subject to a variety of civil legal
claims in various jurisdictions, a variety of settlement agreements and a variety of orders, awards and judgments made against
it by courts and tribunals, both in regard to such claims and investigations. RBC Capital complies fully with all settlements
it reaches and all orders, awards and judgments made against it.
RBC Capital
has been named as a defendant in various legal actions, including arbitrations, class actions and other litigation including those
described below, arising in connection with its activities. Certain of the actual or threatened legal actions include claims for
substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. RBC Capital is also involved,
in other reviews, investigations and proceedings (both formal and informal) by governmental and self-regulatory agencies regarding
RBC Capital’s business, including among other matters, accounting and operational matters, certain of which may result in
adverse judgments, settlements, fines, penalties, injunctions or other relief.
RBC Capital
contests liability and/or the amount of damages as appropriate in each pending matter. In view of the inherent difficulty of predicting
the outcome of such matters, particularly in cases where claimants seek substantial or indeterminate damages or where investigations
and proceedings are in the early stages, RBC Capital cannot predict the loss or range of loss, if any, related to such matters;
how or if such matters will be resolved; when they will ultimately be resolved; or what the eventual settlement, fine, penalty
or other relief, if any, might be. Subject to the foregoing, RBC Capital believes, based on current knowledge and after consultation
with counsel, that the outcome of such pending matters will not have a material adverse effect on the consolidated financial condition
of RBC Capital.
On April
27, 2017, pursuant to an offer of settlement, a Panel of the Chicago Board of Trade Business Conduct Committee (“Panel”)
found that RBC Capital engaged in EFRP transactions which failed to satisfy the Rules of the Chicago Board of Trade (the “Chicago
Board of Trade”) in one or more ways. Specifically, the Panel found that RBC Capital traders entered into EFRP trades in
which RBC Capital accounts were on both sides of the transactions. While the purpose of the transactions was to transfer positions
between the RBC Capital accounts, the Panel found that the manner in which the trades occurred violated the Chicago Board of Trade’s
prohibition on wash trades. The Panel found that RBC Capital thereby violated CBOT Rules 534 and (legacy) 538.B. and C. In accordance
with the settlement offer, the Panel ordered RBC Capital to pay a $175,000 fine. On October 1, 2019, the CFTC issued an order
filing and settling charges against RBCCM for the above activity, as well as related charges. The order required that RBCCM cease
and desist from violating the applicable regulations, pay a $5 million civil monetary penalty, and comply with various conditions,
including conditions regarding public statements and future cooperation with the Commission.
On June
18, 2015, in connection with the Municipalities Continuing Disclosure Cooperation initiative of the SEC, the SEC commenced and
settled an administrative proceeding against RBC Capital for willful violations of Sections 17(a)(2) of the 1933 Act, after the
firm self-reported instances in which it conducted inadequate due diligence in certain municipal securities offerings and as a
result, failed to form a reasonable basis for believing the truthfulness of certain material representations in official statements
issued in connection with those offerings. RBC Capital paid a fine of $500,000.
RBC Capital
and certain affiliates were named as defendants in a lawsuit relating to their role in transactions involving investments made
by a number of Wisconsin school districts in certain collateralized debt obligations. These transactions were also the subject
of a regulatory investigation, which was resolved in 2011. RBC Capital reached a final settlement with all parties in the civil
litigation, and the civil action against RBC Capital was dismissed with prejudice on December 6, 2016.
Beginning in
2015, putative class actions were brought against RBC Capital and/or Royal Bank of Canada in the U.S., Canada and Israel. These
actions were each brought against multiple foreign exchange dealers and allege, among other things, collusive behavior in foreign
exchange trading. Various regulators are also conducting inquiries regarding potential violations of law by a number of banks
and other entities, including RBC Capital, regarding foreign exchange trading. In August 2018, the U.S. District Court entered
a final order approving RBC Capital’s pending settlement with class plaintiffs. Certain institutional plaintiffs opted out
of participating in the settlement and have brought their own claims. In May 2020, the U.S. District Court dismissed RBC Capital
from the optout action, but granted the plaintiffs’ motion to amend the complaint. The Canadian class actions, one other
U.S. action that is purportedly brought on behalf of different classes of plaintiffs, and an action filed in Israel remain pending,
and RBC Capital has reached a settlement for an immaterial amount with respect to an action brought by a class of indirect purchasers.
RBC Capital is awaiting the court’s final approval of the settlement. Based on the facts currently known, it is not
possible at this time for us to predict the ultimate outcome of these investigations or proceedings or the timing of their resolution.
On July
31, 2015, RBC Capital was added as a new defendant in a pending putative class action initially filed in November 2013 in the
United States District Court for the Southern District of New York. The action is brought against multiple foreign exchange dealers
and alleges collusive behavior, among other allegations, in foreign exchange trading. Based on the facts currently known, the
ultimate resolution of these collective matters is not expected to have a material adverse effect on RBC.
On April
13, 2015, RBC Capital’s affiliate, Royal Bank of Canada Trust Company (Bahamas) Limited (RBC Bahamas), was charged in France
with complicity in tax fraud. RBC Bahamas believes that its actions did not violate French law and contested the charge in the
French court. The trial of this matter has concluded and a verdict was delivered on January 12, 2017, acquitting the company and
the other defendants and on June 29, 2018, the French appellate court affirmed the acquittals. The acquittals are being appealed.
Various
regulators and competition and enforcement authorities around the world, including in Canada, the United Kingdom, and the U.S.,
are conducting investigations related to certain past submissions made by panel banks in connection with the setting of the U.S.
dollar London interbank offered rate (“LIBOR”). These investigations focus on allegations of collusion between the
banks that were on the panel to make submissions for certain LIBOR rates. Royal Bank of Canada, RBC Capital’s indirect parent,
is a member of certain LIBOR panels, including the U.S. dollar LIBOR panel, and has in the past been the subject of regulatory
requests for information. In addition, Royal Bank of Canada and other U.S. dollar panel banks have been named as defendants in
private lawsuits filed in the U.S. with respect to the setting of LIBOR including a number of class action lawsuits which have
been consolidated before the U.S. District Court for the Southern District of New York. The complaints in those private lawsuits
assert claims against us and other panel banks under various U.S. laws, including U.S. antitrust laws, the CEA, and state law.
On February 28, 2018, the motion by the plaintiffs in the class action lawsuits to have the class certified was denied in relation
to Royal Bank of Canada. As such, unless that ruling is reversed on appeal, Royal Bank of Canada is no longer a defendant in any
pending class action. Royal Bank of Canada is still a party to the various individual LIBOR actions.
In addition
to the LIBOR actions, in January 2019, a number of financial institutions, including RBC Capital, were named in a purported class
action in New York alleging violations of the U.S. anti-trust laws and common law principles of unjust enrichment in the setting
of LIBOR after the Intercontinental Exchange took over administration of the benchmark interest rate from the British Bankers’
Association in 2014 (the “ICE LIBOR action”). On March 26, 2020, the defendants’ motion to dismiss the ICE LIBOR action
was granted. On April 24, 2020, the plaintiffs filed a notice of appeal. In August 2020, RBC Capital settled an individual LIBOR
action brought by the City of Philadelphia. Based on the facts currently known, it is not possible at this time for us to predict
the ultimate outcome of these investigations or proceedings or the timing of their resolution.
Thornburg
Mortgage Inc. (“TMST”) and RBC Capital were parties to a master repurchase agreement executed in September 2003 whereby
TMST financed its purchase of residential mortgage-backed securities. Upon TMST’s default during the financial crisis, RBC
Capital valued TMST’s collateral at allegedly deflated prices. After TMST’s bankruptcy filing, TMST’s trustee
brought suit against RBC Capital in 2011 for breach of contract. In 2015, TMST was awarded more than $45 million in damages. RBC
Capital has appealed. The appeals court set a briefing schedule and simultaneously ordered the parties to participate in a mediation.
The parties subsequently reached an agreement to settle the matter; a motion to approve the settlement was filed with the bankruptcy
court on January 10, 2016 and granted on February 27, 2017.On October 14, 2014, the Delaware Court of Chancery (the “Court
of Chancery”) in a class action brought by former shareholders of Rural/Metro Corporation, held RBC Capital liable for aiding
and abetting a breach of fiduciary duty by three Rural/Metro directors, but did not make an additional award for attorney’s
fees. A final judgment was entered on February 19, 2015 in the amount of US$93 million plus post judgment interest. RBC Capital
appealed the Court of Chancery’s determination of liability and quantum of damages, and the plaintiffs cross-appealed the
ruling on additional attorneys’ fees. On November 30, 2015, the Delaware Supreme Court affirmed the Court of Chancery with
respect to both the appeal and cross-appeal. RBC Capital is cooperating with an investigation by the SEC relating to this matter.
In particular, the SEC contended that RBC Capital caused materially false and misleading information to be included in the proxy
statement that Rural filed to solicit shareholder approval for the sale in violation of section 14(A) of the Exchange Act and
Rule 14A-9 thereunder. On August 31, 2016, RBC Capital was ordered by the SEC to cease and desist and paid $500,000 in disgorgement,
plus interest of $77,759 and a civil penalty of $2 million.
Please
see RBC Capital’s Form BD, which is available on the FINRA BrokerCheck program, for more details.
RBC Capital
will act only as clearing broker for UGA and as such will be paid commissions for executing and clearing trades on behalf of UGA.
RBC Capital has not passed upon the adequacy or accuracy of this disclosure document. RBC Capital will not act in any supervisory
capacity with respect to USCF or participate in the management of USCF or UGA.
RBC Capital
is not affiliated with UGA or USCF. Therefore, neither USCF nor UGA believes that there are any conflicts of interest with RBC
Capital or its trading principals arising from its acting as UGA’s FCM.
RCG Division of Marex Spectron
On May
28, 2020, UGA entered into a Commodity Futures Customer Agreement with RCG Division of Marex Spectron (“RCG”) to serve
as an FCM for UGA. This agreement requires RCG to provide services to UGA in connection with the purchase and sale of Futures
Contracts and Other Gas-Related Investments that may be purchased or sold by or through RCG for UGA’s account. Under this
agreement, UGA pays RCG commissions for executing and clearing trades on behalf of UGA.
RCG’s
primary address is 360 Madison Avenue, 3rd Floor, New York, NY 10017. RCG is registered in the United States with
FINRA as a broker-dealer and with the CFTC as an FCM. RCG is a member of various U.S. futures and securities exchanges.
RCG is
a large broker dealer subject to many different complex legal and regulatory requirements. As a result, certain of RCG’s
regulators may from time to time conduct investigations, initiate enforcement proceedings and/or enter into settlements with RCG
with respect to issues raised in various investigations. RCG complies fully with its regulators in all investigations which may
be conducted and in all settlements it may reach. Other than as set forth below, as of the date hereof, RCG has no material
litigation to disclose as that term is defined under the CEA and the regulations promulgated thereunder.
On September 23, 2020, without admitting
or denying the CFTC’s findings or conclusions, RCG settled a CFTC administrative action arising out of RCG’s failure
to include regulatory capital deductions in its capital computation in connection with an agreement to guarantee a revolving line
of credit for an affiliated company. The CFTC alleged that, from June 2015 until June 2019, RCG failed to include a regulatory
capital deduction in its capital computation equal to the amounts drawn under the credit facility by its United Kingdom affiliate.
In connection with the settlement, RCG paid a civil monetary penalty of $250,000.
RCG will
act only as clearing broker for UGA and as such will be paid commissions for executing and clearing trades on behalf of UGA. RCG
has not passed upon the adequacy or accuracy of this prospectus. RCG will not act in any supervisory capacity with respect to
USCF or participate in the management of USCF or UGA.
RCG is
not affiliated with UGA or USCF. Therefore, neither USCF nor UGA believes that there are any conflicts of interest with RCG or
its trading principals arising from its acting as UGA’s FCM.
E D & F Man Capital
Markets Inc.
On June
5, 2020, UGA entered into a Customer Agreement E D & F Man Capital Markets Inc. (“MCM”) to serve as an FCM for
UGA. This agreement requires MCM to provide services to UGA in connection with the purchase and sale of Futures Contracts and
Other Gas-Related Investments that may be purchased or sold by or through MCM for UGA’s account. Under this agreement, UGA
pays MCM commissions for executing and clearing trades on behalf of UGA.
MCM’s
primary address is 140 East 45th Street, 10th Floor, New York, NY 10017. MCM is registered in the United States with FINRA as
a broker-dealer and with the CFTC as an FCM. MCM is a member of various U.S. futures and securities exchanges.
MCM is a
large broker dealer subject to many different complex legal and regulatory requirements. As a result, certain of MCM’s
regulators may from time to time conduct investigations, initiate enforcement proceedings and/or enter into settlements with
MCM with respect to issues raised in various investigations. MCM complies fully with its regulators in all investigations
which may be conducted and in all settlements it may reach. Other than as indicated below, there have been no material
civil, administrative, or criminal proceedings pending, on appeal, or concluded against MCM or its principals in the past
five (5) years:
United
States District Court for the Southern District of New York, Civil Action No. 19-CV-8217. In a private litigation, plaintiffs
allege, among other things, that MCM made certain fraudulent misrepresentations to them that they relied upon in connection with
a futures account carried by MCM in its capacity as an FCM. The plaintiffs allege claims of common law fraud, negligence, breach
of fiduciary duty, breach of contract, breach of the duty of good faith and fair dealing and misrepresentation/omission.
JAMS Arbitration.
In a JAMS arbitration, claimants seek monetary damages relating to trading losses in claimants’ futures trading accounts
carried by MCM. JAMS is a private alternative dispute resolution provider that handles mediations and arbitrations in the United
States and other jurisdictions. The MCM accounts at issue were traded pursuant to a power of attorney granted by the claimants
to a registered commodity trading advisor. The claimants seek compensatory damages, punitive damages, disgorgement of commissions
and margin interest, and forgiveness of margin debt plus interest, costs and attorneys’ fees.
FINRA Arbitration.
In a FINRA arbitration, claimants seek monetary damages relating to trading losses in claimants’ equity trading account
carried by MCM. The account was a portfolio margin account and the claimants allege losses relating to the risk parameters and
margin applied to the account. The claimants seek compensatory damages plus interest, costs and attorneys’ fees.
MCM will
act only as clearing broker for UGA and as such will be paid commissions for executing and clearing trades on behalf of UGA. MCM
has not passed upon the adequacy or accuracy of this prospectus. MCM will not act in any supervisory capacity with respect to
USCF or participate in the management of USCF or UGA.
MCM is
not affiliated with UGA or USCF. Therefore, neither USCF nor UGA believes that there are any conflicts of interest with MCM or
its trading principals arising from its acting as UGA’s FCM.
Macquarie Futures USA LLC
On December
3, 2020, UGA has engaged Macquarie Futures USA LLC (“MFUSA”) to serve as an additional FCM. The Customer Agreement
between UGA and MFUSA requires MFUSA to provide services to UGA in connection with the purchase and sale of Futures Contracts
and Other Gasoline-Related Investments that may be purchased or sold by or through MFUSA for UGA’s account. Under this agreement,
UGA pays MFUSA commissions for executing and clearing trades on behalf of UGA.
MFUSA’s
primary address is 125 West 55th Street, New York, NY 10019. MFUSA is registered in the United States with the CFTC as an
FCM providing futures execution and clearing services covering futures exchanges globally. MFUSA is a member of various U.S. futures
and securities exchanges.
MFUSA
is a large broker dealer subject to many different complex legal and regulatory requirements. As a result, certain of MFUSA’s
regulators may from time to time conduct investigations, initiate enforcement proceedings and/or enter into settlements with MFUSA
with respect to issues raised in various investigations. MFUSA complies fully with its regulators in all investigations which
may be conducted and in all settlements it may reach. As of the date hereof, MFUSA has no material litigation to disclose as that
term is defined under the CEA and the regulations promulgated thereunder.
MFUSA
will act only as clearing broker for UGA and as such will be paid commissions for executing and clearing trades on behalf of UGA.
MFUSA has not passed upon the adequacy or accuracy of this prospectus. MFUSA will not act in any supervisory capacity with respect
to USCF or participate in the management of USCF or UGA.
MFUSA
is not affiliated with UGA or USCF. Therefore, neither USCF nor UGA believes that there are any conflicts of interest with MFUSA
or its trading principals arising from its acting as UGA’s FCM.
Commodity Trading Advisor
Currently, USCF
does not employ commodity trading advisors for the trading of UGA contracts. USCF currently does, however, employ SummerHaven
Investment Management, LLC as a trading Advisor for USCI and CPER. If, in the future, USCF does employ commodity trading advisors
for UGA, it will choose each advisor based on arm’s-length negotiations and will consider the advisor’s experience,
fees and reputation.
UGA’s
Fees and Expenses
This
table describes the fees and expenses that you may pay if you buy and hold shares of UGA. You should note that you may pay brokerage
commissions on purchases and sales of UGA’s shares, which are not reflected in the table. Authorized Participants will pay
applicable creation and redemption fees. See “Creation and Redemption of Shares—Creation and Redemption
Transaction Fee,” page 66.
Annual
Fund Operating Expenses (expenses that you pay each year as a
percentage of the value of your investment)
Management Fees(1)
|
|
|
0.60
|
%
|
Distribution Fees
|
|
|
NONE
|
|
Other Fund Expenses(1)
|
|
|
0.42
|
%
|
Expense Fund Waiver(2)
|
|
|
(0.27
|
)%
|
Net Other Fund Expenses
|
|
|
0.15
|
%
|
Total Annual Fund Operating Expenses After Expense Waiver(2)
|
|
|
0.75
|
%
|
Total Annual Fund Operating Expenses Before Expense Waiver(2)
|
|
|
1.02
|
%
|
|
(1)
|
Based on amounts for the
year ended December 31, 2020. The individual expense amounts in dollar terms are shown in the table below. As used in this table,
(i) Professional Expenses include expenses for legal, audit, tax accounting and printing; and (ii) Independent Director and Officer
Expenses include amounts paid to independent directors and for officers’ liability insurance.
|
Management Fees
|
|
$
|
431,847
|
|
Professional Expenses
|
|
$
|
146,835
|
|
Brokerage Commissions
|
|
$
|
137,982
|
|
Independent Director and Officer Expenses
|
|
$
|
8,237
|
|
License Fees
|
|
$
|
10,796
|
|
Registration Fees
|
|
$
|
0
|
|
|
|
|
|
|
These amounts are based
on UGA’s average total net assets, which are the sum of daily total net assets of UGA divided by the number of calendar
days in the year. For the year ended December 31, 2020 UGA’s average total net assets were $71,975,291.
|
(2)
|
USCF has voluntarily agreed
to pay certain expenses typically borne by UGA. Effective May 1, 2021, the expense waiver will no longer be in place.
|
Breakeven
Analysis
The breakeven
analysis below indicates the approximate dollar returns and percentage required for the redemption value of a hypothetical initial
investment in a single share to equal the amount invested twelve months after the investment was made. For purposes of this breakeven
analysis, we have assumed an initial selling price of $31.33 per share which equals the NAV per share at the close of trading
on February 28, 2021. In order for a hypothetical investment in shares to break even over the next 12 months, assuming a selling
price of $31.33 per share, the investment would have to generate a 1.028% or $0.322 return, rounded to $0.32. The amount for this
breakeven analysis takes into account a fee waiver, which USCF may terminate at any time in its discretion. Effective May 1, 2021,
the fee waiver will no longer be in place and, thereafter, in order for a hypothetical investment in share to break even over
the succeeding 12 months, assuming a selling price of $31.33 (the net asset value as of February 28, 2021), the investment would
have to generate 1.299% return or $0.407, rounded to $0.41.
This
breakeven analysis refers to the redemption of baskets by Authorized Participants and is not related to any gains an individual
investor would have to achieve in order to break even. The breakeven analysis is an approximation only. As used in this table,
(i) Professional Expenses include expenses for legal, audit, tax accounting and printing; and (ii) Independent Director and Officer
Expenses include amounts paid to independent directors and for officers’ liability insurance.
Assumed initial selling price per share(1)
|
|
$
|
31.33
|
|
Management Fees (0.600%)(2)
|
|
$
|
0.188
|
|
Creation Basket Fee (0.010%)(3)
|
|
$
|
(0.003
|
)
|
Estimated Brokerage Fee (0.192)%(4)
|
|
$
|
0.060
|
|
Interest Income (0.286%)(5)
|
|
$
|
0.090
|
|
Registration Fees (0.00)%(6)
|
|
$
|
0.000
|
|
NYMEX Licensing Fee (0.015%)(7)
|
|
$
|
0.005
|
|
Independent Director and Officer Expenses (0.011%)(8)
|
|
$
|
0.003
|
|
Professional Expenses (0.204%)(9)
|
|
$
|
0.064
|
|
Amount of trading income (loss) required for the redemption value at the end of
one year to equal the initial selling price of the share(10)
|
|
$
|
0.407
|
|
Percentage of initial selling price per share(10)
|
|
|
1.299
|
%
|
Expense Waiver (0.272)%(11)
|
|
$
|
(0.085
|
)
|
Amount of trading income (loss) required for the redemption value at the end of
one year to equal the initial selling price of the share Inclusive of credit)
|
|
$
|
0.322
|
|
Percentage of initial selling price per share (inclusive of credit)
|
|
|
1.028
|
%
|
|
|
|
|
|
(1)
|
In
order to show a hypothetical investment in shares would break even over the next 12 months, this breakeven analysis uses an
assumed initial selling price of $31.33 per share, which is based on the NAV per share of UGA at the close of trading on February
28, 2021. Investors should note that, because UGA’s NAV changes on a daily basis, the breakeven amount on any given
day could be higher or lower than the amount reflected here.
|
|
(2)
|
UGA is contractually obligated
to pay USCF a management fee of 0.600% per annum on its average total net assets. “Average total net assets” are the
sum of the daily total net assets of UGA (the NAV of UGA calculated as set forth in “Calculating Per Share NAV” beginning
on page 62) divided by the number of calendar days in the year. On days when markets are closed, the daily total net assets are
the daily total net assets from the last day when the market was open. See page 3 for a discussion of net assets of UGA.
|
|
(3)
|
Authorized Participants are
required to pay a Creation Basket fee of $350 for each order they place to create one or more baskets. This breakeven analysis
assumes a hypothetical investment in a single share, which would equal the $350 Creation Basket fee divided by the total number
of outstanding shares plus the 50,000 shares created by the Creation Basket. This calculation will always result in a value that
is below 0.010%, but for purposes of this breakeven analysis we assume a creation basket fee of 0.010%.
|
|
(4)
|
This amount is based on the
actual brokerage fees for UGA calculated on an annualized basis and includes an estimated half-turn commission of $3.50. A half-turn
commission is the commissions liability related to FCM transaction fees for futures contracts on a half-turn basis.
|
|
(5)
|
Interest earned on UGA’s
assets, including its Treasuries holdings.
|
|
(6)
|
UGA pays fees to the SEC
to register its shares for sale. This amount is based on actual registration fees for UGA calculated on an annualized basis and
then amortized over a three year period. This fee may vary in future years.
|
|
(7)
|
The NYMEX licensing fee is
0.015% of the aggregate assets of UGA and the Related Public Funds, (except for BNO, USCI, and CPER). For more information see
“UGA’s Fees and Expenses.”
|
|
(8)
|
Independent Director and
Officer Expenses include amounts paid to independent directors and for officers’ liability insurance. The foregoing assumes
that the average total net assets of UGA as of December 31, 2020, which were $585,896, were aggregated with the average total
net assets of the Related Public Funds as of December 31, 2020, that the aggregate fees paid to the independent directors for
the year ended December 31, 2020 was $8,237 and that the allocable portion of the fees borne by UGA based on the proportion of
its average total net assets when aggregated with the average total net assets of the Related Public Funds equals $71,975,291.
|
|
(9)
|
Professional Expenses include
expenses for legal, audit, tax accounting and printing. UGA estimates the costs attributable to Professional Expenses the year
ended December 31, 2020 is $146,835. The number in the break-even table assumes UGA had $71,975,291 in average total net assets
during the calendar year ended December 31, 2020.
|
|
(10)
|
As noted below, effective
May 1, 2021, the expense waiver will no longer be in place. As a result, effective May 1, 2021, the value reflected
here will be the breakeven amount.
|
|
(11)
|
USCF has voluntarily agreed
to pay certain expenses typically borne by UGA. Effective May 1, 2021, the expense waiver will no longer be in place.
|
Conflicts
of Interest
There are present
and potential future conflicts of interest in UGA’s structure and operation you should consider before you purchase shares.
USCF will use this notice of conflicts as a defense against any claim or other proceeding made. If USCF is not able to resolve
these conflicts of interest adequately, it may impact UGA’s and the Related Public Funds’ ability to achieve their
investment objectives.
UGA and
USCF may have inherent conflicts to the extent USCF attempts to maintain UGA’s asset size in order to preserve its fee income
and this may not always be consistent with UGA’s objective of having the value of its share’s NAV track changes in
the price of the Benchmark Futures Contract.
USCF’s
officers, directors and employees, do not devote their time exclusively to UGA. These persons are directors, officers or employees
of other entities which may compete with UGA for their services. They could have a conflict between their responsibilities to
UGA and to those other entities.
USCF
has adopted policies that prohibit their principals, officers, directors and employees from trading futures and related contracts
in which either UGA or any of the Related Public Funds invests. These policies are intended to prevent conflicts of interest occurring
where USCF, or their principals, officers, directors or employees could give preferential treatment to their own accounts or trade
their own accounts ahead of or against UGA or any of the Related Public Funds.
USCF
has sole current authority to manage the investments and operations of UGA, and this may allow it to act in a way that furthers
its own interests which may create a conflict with your best interests. Limited partners have limited voting control, which will
limit their ability to influence matters such as amendment of the LP Agreement, change in UGA’s basic investment policy,
dissolution of UGA, or the sale or distribution of UGA’s assets.
USCF
serves as the general partner or sponsor to each of UGA and the Related Public Funds. USCF may have a conflict to the extent that
its trading decisions may be influenced by the effect they would have on the other funds it manages. For example, if, as a result
of reaching position limits imposed by the NYMEX, UGA purchased gasoline futures contracts, this decision could impact UGA’s
ability to purchase additional gasoline futures contracts if the number of contracts held by funds managed by USCF reached the
maximum allowed by the NYMEX. Similar situations could adversely affect the ability of any fund to track its Benchmark Futures
Contract.
In addition,
USCF is required to indemnify the officers and directors of the other funds, if the need for indemnification arises. This potential
indemnification will cause USCF’s assets to decrease. If USCF’s other sources of income are not sufficient to compensate
for the indemnification, then USCF may terminate and you could lose your investment.
Whenever
a conflict of interest exists or arises between USCF on the one hand, and the partnership or any limited partner, on the other
hand, any resolution or course of action by USCF in respect of such conflict of interest shall be permitted and deemed approved
by all partners and shall not constitute a breach of the LP Agreement or of any agreement contemplated hereby or of a duty stated
or implied by law or equity, if the resolution or course of action is, or by operation of the LP Agreement is deemed to be, fair
and reasonable to the partnership. If a dispute arises, under the LP Agreement it will be resolved either through negotiations
with USCF or by courts located in the State of Delaware.
Under
the LP Agreement, any resolution is deemed to be fair and reasonable to the partnership if the resolution is:
|
·
|
approved by the audit
committee, although no party is obligated to seek approval and USCF may adopt a resolution or course of action that has not
received approval;
|
|
·
|
on terms no less
favorable to the limited partners than those generally being provided to or available from unrelated third parties; or
|
|
·
|
fair to the limited
partners, taking into account the totality of the relationships of the parties involved including other transactions that
may be particularly favorable or advantageous to the limited partners.
|
The previous
risk factors and conflicts of interest are complete as of the date of this prospectus; however, additional risks and conflicts
may occur which are not presently foreseen by USCF. You may not construe this prospectus as legal or tax advice. Before making
an investment in this fund, you should read this entire prospectus, which can be found on UGA’s website at www.uscfinvestments.com.
You should also consult with your personal legal, tax, and other professional advisors.
Interests of Named Experts and
Counsel
USCF
has employed Eversheds Sutherland (US) LLP to prepare this prospectus. Neither the law firm nor any other expert hired by UGA
to give advice on the preparation of this offering document has been hired on a contingent fee basis. None of them have any present
or future expectation of interest in USCF, Marketing Agent, Authorized Participants, Custodian, Administrator or other service
providers to UGA.
Ownership
or Beneficial Interest in UGA
As of February
28, 2021, neither USCF nor any of the directors or executive officers of USCF own any shares of UGA. In addition, as of such date,
UGA is not aware of any 5% holder of its shares.
USCF’s
Responsibilities and Remedies
Pursuant to
the DRULPA (“Delaware Revised Uniform Limited Partnership Act”), parties may contractually modify or even eliminate
fiduciary duties in a limited partnership agreement to the limited partnership itself, or to another partner or person otherwise
bound by the limited partnership agreement. Parties may not, however, eliminate the implied covenant of good faith and fair dealing.
Where parties unambiguously provide for fiduciary duties in a limited partnership agreement, those expressed duties become the
standard that courts will use to determine whether such duties were breached. For this reason, UGA’s limited partnership
agreement does not explicitly provide for any fiduciary duties so that common law fiduciary duty principles will apply to measure
USCF’s conduct.
A prospective
investor should be aware that USCF has a responsibility to limited partners of UGA to exercise good faith and fairness in all
dealings. The fiduciary responsibility of USCF to limited partners is a developing and changing area of the law and limited partners
who have questions concerning the duties of USCF should consult with their counsel. In the event that a limited partner of UGA
believes that USCF has violated its fiduciary duty to the limited partners, he may seek legal relief individually or on behalf
of UGA under applicable laws, including under DRULPA and under commodities laws, to recover damages from or require an accounting
by USCF. Limited partners may also have the right, subject to applicable procedural and jurisdictional requirements, to bring
class actions in federal court to enforce their rights under the federal securities laws and the rules and regulations promulgated
thereunder by the SEC. Limited partners who have suffered losses in connection with the purchase or sale of the shares may be
able to recover such losses from USCF where the losses result from a violation by USCF of the federal securities laws. State securities
laws may also provide certain remedies to limited partners. Limited partners should be aware that performance by USCF of its fiduciary
duty is measured by the terms of the LP Agreement as well as applicable law. Limited partners are afforded certain rights to institute
reparations proceedings under the CEA for violations of the CEA or of any rule, regulation or order of the CFTC by USCF.
Liability
and Indemnification
Under
the LP Agreement, neither a general partner nor any employee or other agent of UGA nor any officer, director, stockholder, partner,
employee or agent of a general partner (a “Protected Person”) shall be liable to any partner or UGA for any mistake
of judgment or for any action or inaction taken, nor for any losses due to any mistake of judgment or to any action or inaction
or to the negligence, dishonesty or bad faith of any officer, director, stockholder, partner, employee, agent of UGA or any officer,
director, stockholder, partner, employee or agent of such general partner, provided that such officer, director, stockholder,
partner, employee, or agent of the partner or officer, director, stockholder, partner, employee or agent of such general partner
was selected, engaged or retained by such general partner with reasonable care, except with respect to any matter as to which
such general partner shall have been finally adjudicated in any action, suit or other proceeding not to have acted in good faith
in the reasonable belief that such Protected Person’s action was in the best interests of UGA and except that no Protected
Person shall be relieved of any liability to which such Protected Person would otherwise be subject by reason of willful misfeasance,
gross negligence or reckless disregard of the duties involved in the conduct of the Protected Person’s office.
UGA shall,
to the fullest extent permitted by law, but only out of UGA assets, indemnify and hold harmless a general partner and each officer,
director, stockholder, partner, employee or agent thereof (including persons who serve at UGA’s request as directors, officers
or trustees of another organization in which UGA has an interest as a shareholder, creditor or otherwise) and their respective
Legal Representatives and successors (hereinafter referred to as a “Covered Person”) against all liabilities and expenses,
including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and counsel fees
reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceedings,
whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such person may be or may have been threatened, while in office or thereafter,
by reason of an alleged act or omission as a general partner or director or officer thereof, or by reason of its being or having
been such a general partner, director or officer, except with respect to any matter as to which such Covered Person shall have
been finally adjudicated in any such action, suit or other proceeding not to have acted in good faith in the reasonable belief
that such Covered Person’s action was in the best interest of UGA, and except that no Covered Person shall be indemnified
against any liability to UGA or limited partners to which such Covered Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person’s
office. Expenses, including counsel fees so incurred by any such Covered Person, may be paid from time to time by UGA in advance
of the final disposition of any such action, suit or proceeding on the condition that the amounts so paid shall be repaid to UGA
if it is ultimately determined that the indemnification of such expenses is not authorized hereunder.
Meetings
Meetings of
limited partners may be called by USCF and may be called by it upon the written request of limited partners holding at least 20%
of the outstanding shares of UGA. USCF shall deposit written notice to all limited partners of the meeting and the purpose of
the meeting, which shall be held on a date not less than 30 nor more than 60 days after the date of mailing of such notice, at
a reasonable time and place. USCF may also call a meeting upon not less than 20 and not more than 60 days prior notice.
Each
limited partner appoints USCF and each of its authorized officers as its attorney-in-fact with full power and authority in its
name, place and stead to execute, swear to, acknowledge, deliver, file and record all ballots, consents, approval waivers, certificates
and other instruments necessary or appropriate, in the sole discretion of USCF, to make, evidence, give, confirm or ratify any
vote, consent, approval, agreement or other action that is made or given by the partner of UGA. However, when the LP Agreement
establishes a percentage of the limited partners required to take any action, USCF may exercise such power of attorney made only
after the necessary vote, consent or approval of the limited partners.
Termination
Events
UGA will
dissolve at any time upon the happening of any of the following events:
|
·
|
The bankruptcy, dissolution,
withdrawal, or removal of USCF, unless a majority in interest of the limited partners within 90 days after such event elects
to continue UGA and appoints a successor general partner; or
|
|
·
|
The affirmative vote
of a majority in interest of the limited partners, provided that prior to or concurrently with such vote, there shall have
been established procedures for the assumption of UGA’s obligations arising under any agreement to which UGA is a party
and which is still in force immediately prior to such vote regarding termination, and there shall have been an irrevocable
appointment of an agent who shall be empowered to give and receive notices, reports and payments under such agreements, and
hold and exercise such other powers as are necessary to permit all other parties to such agreements to deal with such agent
as if the agent were the sole owner of UGA’s interest, which procedures are agreed to in writing by each of the other
parties to such agreements.
|
Provisions
of Law
According
to applicable law, indemnification of USCF is payable only if USCF determined, in good faith, that the act, omission or conduct
that gave rise to the claim for indemnification was in the best interest of UGA and the act, omission or activity that was the
basis for such loss, liability, damage, cost or expense was not the result of negligence or misconduct and such liability or loss
was not the result of negligence or misconduct by USCF, and such indemnification or agreement to hold harmless is recoverable
only out of the assets of UGA and not from the members, individually.
Provisions of Federal and
State Securities Laws
This
offering is made pursuant to federal and applicable state securities laws. The SEC and state securities agencies take the position
that indemnification of USCF that arises out of an alleged violation of such laws is prohibited unless certain conditions are
met.
Those
conditions require that no indemnification of USCF or any underwriter for UGA may be made in respect of any losses, liabilities
or expenses arising from or out of an alleged violation of federal or state securities laws unless: (i) there has been a successful
adjudication on the merits of each count involving alleged securities law violations as to the party seeking indemnification and
the court approves the indemnification; (ii) such claim has been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the party seeking indemnification; or (iii) a court of competent jurisdiction approves a settlement of the
claims against the party seeking indemnification and finds that indemnification of the settlement and related costs should be
made, provided that, before seeking such approval, USCF or other indemnitee must apprise the court of the position held by regulatory
agencies against such indemnification. These agencies are the SEC and the securities administrator of the State or States in which
the plaintiffs claim they were offered or sold membership interests.
Provisions of the 1933
Act and NASAA Guidelines
Insofar
as indemnification for liabilities arising under the 1933 Act may be permitted to USCF or its directors, officers, or persons
controlling UGA, UGA has been informed that SEC and the various State administrators believe that such indemnification is against
public policy as expressed in the 1933 Act and the North American Securities Administrators Association, Inc. (“NASAA”)
commodity pool guidelines and is therefore unenforceable.
Books
and Records
UGA keeps
its books of record and account at its office located at 1850 Mt. Diablo Boulevard, Suite 640, Walnut Creek, California 94596
or at the offices of the Administrator at its office located at 50 Post Office Square, Boston, MA 02110, or such office, including
of an administrative agent, as it may subsequently designate upon notice. These books and records are open to inspection by any
person who establishes to UGA’s satisfaction that such person is a limited partner upon reasonable advance notice at all
reasonable times during the usual business hours of UGA.
UGA keeps a
copy of UGA’s LP Agreement on file in its office which is available for inspection on reasonable advance notice at all reasonable
times during its usual business hours by any limited partner.
Statements,
Filings, and Reports
At the
end of each fiscal year, UGA will furnish to banks, broker dealers and trust companies (“DTC Participants”) for distribution
to each person who is a shareholder at the end of the fiscal year an annual report containing UGA’s audited financial statements
and other information about UGA. USCF is responsible for the registration and qualification of the shares under the federal securities
laws and federal commodities laws and any other securities and blue-sky laws of the United States or any other jurisdiction as
USCF may select. USCF is responsible for preparing all reports required by the SEC, CFTC and the NYSE Arca, but has entered into
an agreement with the Administrator to prepare these reports as required by the SEC, CFTC and the NYSE Arca on UGA’s behalf.
The financial
statements of UGA will be audited, as required by law and as may be directed by USCF, by an independent registered public accounting
firm designated from time to time by USCF. The accountants report will be furnished by UGA to shareholders upon request. UGA will
make such elections, file such tax returns, and prepare, disseminate and file such tax reports, as it is advised by its counsel
or accountants are from time to time required by any applicable statute, rule or regulation.
Reports to Limited Partners
In addition
to periodic reports filed with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K, all of which can be accessed on the SEC’s website at www.sec.gov or on UGA’s website at www.uscfinvestments.com,
UGA, pursuant to the LP Agreement, will provide the following reports to limited partners in the manner prescribed below:
Annual
Reports. Within 90 days after the end of each fiscal year, USCF shall cause to be delivered to each limited partner who was
a limited partner at any time during the fiscal year, an annual report containing the following:
|
(i)
|
financial statements
of the partnership, including, without limitation, a balance sheet as of the end of the partnership’s fiscal year and
statements of income, partners’ equity and changes in financial position, for such fiscal year, which shall be prepared
in accordance with accounting principles generally accepted in the United States of America consistently applied and shall
be audited by a firm of independent certified public accountants registered with the Public Company Accounting Oversight Board,
|
|
|
|
|
(ii)
|
a general description
of the activities of the partnership during the period covered by the report, and
|
|
|
|
|
(iii)
|
a report of any material
transactions between the partnership and USCF or any of its affiliates, including fees or compensation paid by the partnership
and the services performed by USCF or any such affiliate for such fees or compensation.
|
Quarterly
Reports. Within 45 days after the end of each quarter of each fiscal year, USCF shall cause to be delivered to each limited
partner who was a limited partner at any time during the quarter then ended, a quarterly report containing a balance sheet and
statement of income for the period covered by the report, each of which may be unaudited but shall be certified by USCF as fairly
presenting the financial position and results of operations of the partnership during the period covered by the report. The report
shall also contain a description of any material event regarding the business of the partnership during the period covered by
the report.
Monthly
Reports. Within 30 days after the end of each month, USCF shall cause to be posted on its website and, upon request, to be
delivered to each limited partner who was a limited partner at any time during the month then ended, a monthly report containing
an account statement, which will include a statement of income (loss) and a statement of changes in NAV, for the prescribed period.
In addition, the account statement will disclose any material business dealings between the partnership, USCF, commodity trading
advisor (if any), FCMs, or the principals thereof that previously have not been disclosed in this prospectus or any amendment
thereto, other account statements or annual reports.
UGA will provide
information to its shareholders to the extent required by applicable SEC, CFTC, and NYSE Arca requirements. An issuer, such as
UGA, of exchange-traded securities may not always readily know the identities of the investors who own those securities. UGA will
post the same information that would otherwise be provided in UGA’s reports to limited partners described above including
its monthly account statements, which will include, without limitation, UGA’s NAV, on UGA’s website www.uscfinvestments.com.
Fiscal
Year
The fiscal
year of UGA is the calendar year. USCF may select an alternate fiscal year.
Governing
Law; Consent to Delaware Jurisdiction
The rights
of USCF, UGA, DTC (as registered owner of UGA’s global certificate for shares) and the shareholders, are governed by the
laws of the State of Delaware. USCF, UGA and DTC and, by accepting shares, each DTC Participant and each shareholder, consent
to the jurisdiction of the courts of the State of Delaware and any federal courts located in Delaware. Such consent is not required
for any person to assert a claim of Delaware jurisdiction over USCF or UGA.
Legal
Matters
Litigation and Claims
From time to
time, UGA may be involved in legal proceedings arising primarily from the ordinary course of its business. UGA is not currently
party to any material legal proceedings. In addition, USCF, as the general partner of UGA and the Related Public Funds may, from
time to time, be involved in litigation arising out of its operations in the ordinary course of business. Except as described
herein, USCF is not currently party to any material legal proceedings.
SEC and CFTC
Wells Notices
On August 17,
2020, USCF, USO, and John Love received a “Wells Notice” from the staff of the SEC (the “SEC Wells Notice”).
The SEC Wells Notice relates to USO’s disclosures in late April and early May regarding constraints imposed on USO’s ability to
invest in Oil Futures Contracts. The SEC Wells Notice states that the SEC staff has made a preliminary determination to recommend
that the SEC file an enforcement action against USCF, USO, and Mr. Love alleging violations of Sections 17(a)(1) and 17(a)(3)
of the 1933 Act and Section 10(b) of the 1934 Act and Rule 10b-5 thereunder, in each case with respect to its disclosures and
USO’s actions.
On August 19,
2020, USCF, USO, and Mr. Love received a Wells Notice from the staff of the CFTC (the “CFTC Wells Notice”). The CFTC
Wells Notice states that the CFTC staff has made a preliminary determination to recommend that the CFTC file an enforcement action
against USCF, USO, and Mr. Love alleging violations of Sections 4o(1)(A) and (B) and 6(c)(1) of the CEA, 7 U.S.C. §§
6o(1)(A), (B), 9(1) (2018), and CFTC Regulations 4.26, 4.41, and 180.1(a), 17 C.F.R. §§ 4.26, 4.41, 180.1(a) (2019),
in each case with respect to its disclosures and USO’s actions.
A Wells Notice
is neither a formal charge of wrongdoing nor a final determination that the recipient has violated any law. USCF, USO, and Mr.
Love maintain that USO’s disclosures and their actions were appropriate. They intend to vigorously contest the allegations
made by the SEC staff in the SEC Wells Notice and the CFTC staff in the CFTC Wells Notice.
In re: United
States Oil Fund, LP Securities Litigation
On June 19,
2020, USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported
shareholder Robert Lucas (the “Lucas Class Action”). The Court thereafter consolidated the Lucas Class Action with
two related putative class actions filed on July 31, 2020 and August 13, 2020, and appointed a lead plaintiff. The consolidated
class action is pending in the U.S. District Court for the Southern District of New York under the caption In re: United States
Oil Fund, LP Securities Litigation, Civil Action No. 1:20-cv-04740.
On November
30, 2020, the lead plaintiff filed an amended complaint (the “Amended Lucas Class Complaint”). The Amended Lucas Class
Complaint asserts claims under the 1933 Act, the 1934 Act, and Rule 10b-5. The Amended Lucas Class Complaint challenges statements
in registration statements that became effective on February 25, 2020 and March 23, 2020 as well as subsequent public statements
through April 2020 concerning certain extraordinary market conditions and the attendant risks that caused the demand for oil to
fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The Amended Lucas Class
Complaint purports to have been brought by an investor in USO on behalf of a class of similarly-situated shareholders who purchased
USO securities between February 25, 2020 and April 28, 2020 and pursuant to the challenged registration statements. The Amended
Lucas Class Complaint seeks to certify a class and to award the class compensatory damages at an amount to be determined at trial
as well as costs and attorney’s fees. The Amended Lucas Class Complaint named as defendants USCF, USO, John P. Love, Stuart
P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes III,
as well as the marketing agent, ALPS Distributors, Inc., and the Authorized Participants: ABN Amro, BNP Paribas Securities Corporation,
Citadel Securities LLC, Citigroup Global Markets, Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman
Sachs & Company, J.P. Morgan Securities Inc., Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Company
Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu
Financial BD LLC.
The lead plaintiff
has filed a notice of voluntary dismissal of its claims against BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup
Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Morgan Stanley & Company, Inc., Nomura
Securities International, Inc., RBC Capital Markets, LLC, SG Americas Securities LLC, and UBS Securities LLC.
USCF, USO, and
the individual defendants in In re: United States Oil Fund, LP Securities Litigation intend to vigorously contest
such claims and move for their dismissal.
Wang Class
Action
On July 10,
2020, purported shareholder Momo Wang filed a putative class action complaint, individually and on behalf of others similarly
situated, against defendants USO, USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen,
Peter M. Robinson, Gordon L. Ellis, Malcolm R. Fobes, III, ABN Amro, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup
Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, JP Morgan Securities
Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC
Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC, in the U.S. District Court for
the Northern District of California as Civil Action No. 3:20-cv-4596 (the “Wang Class Action”).
The Wang Class
Action asserted federal securities claims under the 1933 Act, challenging disclosures in a March 19, 2020 registration statement.
It alleged that the defendants failed to disclose to investors in USO certain extraordinary market conditions and the attendant
risks that caused the demand for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia
oil price war. The Wang Class Action was voluntarily dismissed on August 4, 2020.
Mehan Action
On August 10,
2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF,
John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and
Malcolm R. Fobes, III (the “Mehan Action”). The action is pending in the Superior Court of the State of California
for the County of Alameda as Case No. RG20070732.
The Mehan Action
alleges that the defendants breached their fiduciary duties to USO and failed to act in good faith in connection with a March
19, 2020 registration statement and offering and disclosures regarding certain extraordinary market conditions that caused demand
for oil to fall precipitously, including the COVID-19 global pandemic and the Saudi Arabia-Russia oil price war. The complaint
seeks, on behalf of USO, compensatory damages, restitution, equitable relief, attorney’s fees, and costs. All proceedings
in the Mehan Action are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund, LP Securities
Litigation.
USCF, USO, and
the other defendants intend to vigorously contest such claims.
In re United
States Oil Fund, LP Derivative Litigation
On August 27,
2020, purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions
on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis,
Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern
District of New York at Civil Action No. 1:20-cv-06974 (the “Cantrell Action”) and Civil Action No. 1:20-cv-06981
(the “AML Action”), respectively.
The complaints
in the Cantrell and AML Actions are nearly identical. They each allege violations of Sections 10(b), 20(a) and 21D of the 1934
Act, Rule 10b-5 thereunder, and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement,
and waste of corporate assets. These allegations stem from USO’s disclosures and defendants’ alleged actions in light
of the extraordinary market conditions in 2020 that caused demand for oil to fall precipitously, including the COVID-19 global
pandemic and the Saudi Arabia-Russia oil price war. The complaints seek, on behalf of USO, compensatory damages, restitution,
equitable relief, attorney’s fees, and costs. The plaintiffs in the Cantrell and AML Actions have marked their actions as
related to the Lucas Class Action.
On September
9, 2020, the Court entered an order consolidating the Cantrell and AML Actions under the caption In re United States Oil Fund,
LP Derivative Litigation, Civil Action No. 1:20-cv-06974 and appointing co-lead counsel. All proceedings in In re United States
Oil Fund, LP Derivative Litigation are stayed pending disposition of the motion(s) to dismiss in In re: United States Oil Fund,
LP Securities Litigation.
USCF, USO, and
the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation.
Legal Opinion
Eversheds
Sutherland (US) LLP is counsel to and advises UGA and USCF with respect to the shares being offered hereby and has passed upon
the validity of the shares being issued hereunder. Eversheds Sutherland (US) LLP has also provided UGA with its opinion with respect
to federal income tax matters addressed herein.
Experts
Spicer
Jeffries LLP, an independent registered public accounting firm, has audited the statements of financial condition of UGA as of
December 31, 2020 and December 31, 2019, including the schedule of investments as of December 31, 2020 and 2019, and the related
statements of operations, changes in partners’ capital and cash flows for the years ended December 31, 2020, 2019 and 2018,
that appear in the annual report on Form 10-K that is incorporated by reference. The financial- statements of UGA in the Form
10-K were included herein in reliance upon the report of Spicer Jeffries LLP dated February 26, 2021, given on its authority of
such firm as experts in accounting and auditing.
U.S.
Federal Income Tax Considerations
The following
discussion summarizes the material U.S. federal income tax consequences of the purchase, ownership and disposition of shares in
UGA, and the U.S. federal income tax treatment of UGA, as of the date hereof. This discussion is applicable to a beneficial owner
of shares who purchases shares in the offering to which this prospectus relates, including a beneficial owner who purchases shares
from an Authorized Participant. Except where noted otherwise, it deals only with shares held as capital assets and does not deal
with special situations, such as those of dealers in securities or currencies, financial institutions, tax-exempt entities, insurance
companies, persons holding shares as a part of a position in a “straddle” or as part of a “hedging,” “conversion”
or other integrated transaction for federal income tax purposes, traders in securities or commodities that elect to use a mark-to-market
method of accounting, or holders of shares whose “functional currency” is not the U.S. dollar. Furthermore, the discussion
below is based upon the provisions of the Code, as amended, and regulations (“Treasury Regulations”), rulings and
judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result
in U.S. federal income tax consequences different from those discussed below. Persons considering the purchase, ownership or disposition
of shares should consult their own tax advisors concerning the United States federal income tax consequences in light of their
particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.
As used herein,
a “U.S. shareholder” of a share means a beneficial owner of a share that is a U.S. person. A “U.S. person,”
for United States federal income tax purposes, is (i) a citizen or resident of the United States, (ii) a corporation or partnership
created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate the income
of which is subject to United States federal income taxation regardless of its source or (iv) a trust (X) that is subject to the
supervision of a court within the United States and the control of one or more United States persons as described in section 7701(a)(30)
of the Code or (Y) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States
person. A “non-U.S. shareholder” is a holder that is not a U.S. shareholder and a “non-U.S. person” is
an individual or entity that is not a U.S. person. If a partnership holds our shares, the tax treatment of a partner will generally
depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our
shares, you should consult your own tax advisor regarding the tax consequences.
UGA has
received the opinion of Eversheds Sutherland (US) LLP, counsel to UGA, that the material U.S. federal income tax consequences
to UGA and to U.S. shareholders and non-U.S. shareholders will be as described below. In rendering its opinion, Eversheds Sutherland
(US) LLP has relied on the facts described in this prospectus as well as certain factual representations made by UGA and USCF.
The opinion of Eversheds Sutherland (US) LLP is not binding on the IRS, and as a result, the IRS may not agree with the tax positions
taken by UGA. If challenged by the IRS, UGA’s tax positions might not be sustained by the courts. No ruling has been requested
from the IRS with respect to any matter affecting UGA or prospective investors.
EACH
PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN TAX ADVISOR AS TO HOW U.S. FEDERAL INCOME TAX CONSEQUENCES OF AN INVESTMENT
IN UGA APPLY TO YOU AND AS TO HOW THE APPLICABLE STATE, LOCAL OR FOREIGN TAXES APPLY TO YOU.
Tax Status of UGA
UGA is
organized and operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state law.
Under the Code, an entity classified as a partnership that is deemed to be a “publicly traded partnership” is generally
taxable as a corporation for federal income tax purposes. The Code provides an exception to this general rule for a publicly traded
partnership whose gross income for each taxable year of its existence consists of at least 90% “qualifying income”
(“qualifying income exception”). For this purpose, section 7704 defines “qualifying income” as including,
in pertinent part, interest (other than from a financial business), dividends and gains from the sale or disposition of capital
assets held for the production of interest or dividends. In addition, in the case of a partnership a principal activity of which
is the buying and selling of commodities (other than as inventory) or of futures, forwards and options with respect to commodities,
“qualifying income” includes income and gains from such commodities and futures, forwards and options with respect
to commodities. UGA and USCF have represented the following to Eversheds Sutherland (US) LLP:
|
·
|
At least 90% of UGA’s
gross income for each taxable year will be derived from (i) income and gains from commodities (not held as inventory) or futures,
forwards, options, swaps and other notional principal contracts with respect to commodities, and (ii) interest income;
|
|
·
|
UGA is organized
and operated in accordance with its governing agreements and applicable law;
|
|
·
|
UGA has not elected,
and will not elect, to be classified as a corporation for U.S. federal income tax purposes.
|
Based
in part on these representations, Eversheds Sutherland (US) LLP is of the opinion that UGA will be classified as a partnership
for federal income tax purposes and that it is not taxable as a corporation for such purposes. UGA’s taxation as a partnership
rather than a corporation will require USCF to conduct UGA’s business activities in such a manner that it satisfies the
qualifying income exception on a continuing basis. No assurance can be given that UGA’s operations for any given year will
produce income that satisfies the requirements of the qualifying income exception. Eversheds Sutherland (US) LLP will not review
UGA’s ongoing compliance with these requirements and will have no obligation to advise UGA or UGA’s shareholders in
the event of any subsequent change in the facts, representations or applicable law relied upon in reaching its opinion.
If UGA
failed to satisfy the qualifying income exception in any year, other than a failure that is determined by the IRS to be inadvertent
and that is cured within a reasonable time after discovery, UGA would be taxable as a corporation for federal income tax purposes
and would pay federal income tax on its income at regular corporate rates. In that event, shareholders would not report their
share of UGA’s income or loss on their returns. In addition, distributions to shareholders would be treated as dividends
to the extent of UGA’s current and accumulated earnings and profits. Subject to holding period and other requirements, any
such dividend would be a qualifying dividend subject to U.S. federal income tax at the lower maximum tax rates applicable to long-term
capital gains. To the extent a distribution exceeded UGA’s earnings and profits, the distribution would be treated as a
return of capital to the extent of a shareholder’s basis in its shares, and thereafter as gain from the sale of shares.
Accordingly, if UGA were to be taxable as a corporation, it would likely have a material adverse effect on the economic return
from an investment in UGA and on the value of the shares.
The remainder
of this summary assumes that UGA is classified as a partnership for federal income tax purposes and that it is not taxable as
a corporation.
U.S. Shareholders
Tax Consequences of Ownership
of Shares
Taxation
of UGA’s Income. No U.S. federal income tax is paid by UGA on its income. Instead, UGA files annual information returns,
and each U.S. shareholder is required to report on its U.S. federal income tax return its allocable share of the income, gain,
loss, deduction, and credit of UGA. For example, shareholders must take into account their share of ordinary income realized by
UGA from accruals of interest on Treasuries and other investments, and their share of gain from Gasoline Interests. These items
must be reported without regard to the amount (if any) of cash or property the shareholder receives as a distribution from UGA
during the taxable year. Consequently, a shareholder may be allocated income or gain by UGA but receive no cash distribution with
which to pay its tax liability resulting from the allocation, or may receive a distribution that is insufficient to pay such liability.
Because USCF currently does not intend to make distributions, it is likely that in any year UGA realizes net income and/or gain
that a U.S. shareholder will be required to pay taxes on its allocable share of such income or gain from sources other than UGA
distributions. In addition, individuals with income in excess of $200,000 ($250,000 in the case of married individuals filing
jointly) and certain estates and trusts are subject to an additional 3.8% tax on their “net investment income,” which
generally includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than certain
amounts earned from trades or businesses). The income subject to the additional 3.8% tax includes any income from businesses involved
in the trading of financial instruments or commodities.
Allocations
of UGA’s Profit and Loss. Under Code section 704, the determination of a partner’s distributive share of
any item of income, gain, loss, deduction or credit is governed by the applicable organizational document unless the allocation
provided by such document lacks “substantial economic effect.” An allocation that lacks substantial economic effect
nonetheless will be respected if it is in accordance with the partners’ interests in the partnership, determined by taking
into account all facts and circumstances relating to the economic arrangements among the partners. Subject to the discussion below,
concerning certain conventions to be used by UGA, allocations of UGA income pursuant to the Partnership Agreement should be considered
as having substantial economic effect or as being in accordance with a shareholder’s interest in UGA.
In general,
UGA applies a monthly closing-of-the-books convention in determining allocations of economic profit or loss to shareholders. Income,
gain, loss and deduction are determined on a monthly “mark-to-market” basis, taking into account our accrued income
and deductions and realized and unrealized gains and losses for the month. Items of taxable income, deduction, gain, loss and
credit recognized by UGA for federal income tax purposes for any taxable year are allocated among holders in a manner that equitably
reflects the allocation of economic profit or loss.
Under
the monthly allocation convention used by UGA, the investor who holds a share as of the close of business on the last trading
day of the previous month will be treated for purposes of making allocations as if it owned the share throughout the current month
even if such investor disposes of such share during the current month. For example, an investor who buys a share on April 10 of
a year and sells it on May 20 of the same year will be allocated all of the tax items attributable to May (because he is deemed
to hold it through the last day of May) but will not be allocated any of the tax items attributable to April. The tax items attributable
to that share for April will be allocated to the person who is the actual or deemed holder of the share as of the close of business
on the last trading day of March.
Under
the monthly convention, an investor who purchases and sells a share during the same month, and therefore does not hold (and is
not deemed to hold) the share at the close of business on the last trading day of either that month or the previous month, will
receive no allocations with respect to that share for any period. Accordingly, investors may receive no allocations with respect
to shares that they actually held, or may receive allocations with respect to shares attributable to periods that they did not
actually hold the shares.
By investing
in shares, a U.S. Shareholder agrees that, in the absence of new legislation, regulatory or administrative guidance, or judicial
rulings to the contrary, it will file its U.S. income tax returns in a manner that is consistent with the monthly allocation convention
as described above and with the IRS Schedule K-1 or any successor form provided to shareholders by UGA.
In addition,
for any month in which a Creation Basket is issued or a Redemption Basket is redeemed, UGA generally will credit or debit the
“book” capital accounts of its existing shareholders with any unrealized gain or loss on UGA’s assets. The capital
accounts as adjusted in this manner will be used in making tax allocations intended to account for the differences between the
tax basis and fair market value of the assets of UGA at the time new shares are issued or outstanding shares are redeemed (so-called
“reverse Code section 704(c) allocations”). The intended effect of these adjustments is to equitably allocate among
shareholders any unrealized appreciation or depreciation in UGA’s assets existing at the time of a contribution or redemption
for book and tax purposes.
UGA applies
certain conventions in determining and allocating items for tax purposes in order to reduce the complexity and costs of administration.
USCF believes that application of these conventions is consistent with the intent of the partnership provisions of the Code and
the applicable Treasury Regulations, and that the resulting allocations will have substantial economic effect or otherwise should
be respected as being in accordance with shareholders’ interests in UGA for federal income tax purposes. The Code and existing
Treasury Regulations do not expressly permit adoption of these conventions although the monthly allocation convention described
above is consistent with methods permitted under the applicable Treasury Regulations, as well as the legislative history for the
provisions that require allocations to appropriately reflect changes in ownership interests. It is possible that the IRS could
successfully challenge UGA’s allocations methods on the ground that they do not satisfy the technical requirements off the
Code or Treasury Regulations, requiring a shareholder to report a greater or lesser share of items of income, gain, loss, deduction,
or credit than if our method were respected. USCF is authorized to revise our allocation method to conform to any method permitted
under future Treasury Regulations.
The assumptions
and conventions used in making tax allocations may cause a shareholder to be allocated more or less income or loss for federal
income tax purposes than its proportionate share of the economic income or loss realized by UGA during the period it held its
shares. This “mismatch” between taxable and economic income or loss in some cases may be temporary, reversing itself
in a later period when the shares are sold, but could be permanent.
Section
754 Election. UGA has made the election permitted by section 754 of the Code, which election is irrevocable without the consent
of the Service. The effect of this election is that, in connection with secondary market sales, we adjust the purchaser’s
proportionate share of the tax basis of our assets to fair market value, as reflected in the price paid for the shares, as if
the purchaser had directly acquired an interest in our assets. The section 754 election is intended to eliminate disparities between
a partner’s basis in its partnership interest and its share of the tax bases of the partnership’s assets, so that
the partner’s allocable share of taxable gain or loss on a disposition of an asset will correspond to its share of the appreciation
or depreciation in the value of the asset since it acquired its interest. Depending on the price paid for shares and the tax bases
of UGA’s assets at the time of the purchase, the effect of the section 754 election on a purchaser of shares may be favorable
or unfavorable. In order to make the appropriate basis adjustments in a cost-effective manner, UGA will use certain simplifying
conventions and assumptions. In particular, all transfers of shares in UGA will be deemed to take place at a price (the “single
monthly price”) equal to the value of such share at the end of the Business Day during the month in which the transfer takes
place on which the value of a share is lowest at close of the market. Adjustments to be made under Sections 734(b) and 743(b)
of the Code will be made using the same monthly convention, including by reference to the single monthly price. It is possible
the IRS will successfully assert that the conventions and assumptions applied are improper and require different basis adjustments
to be made, which could adversely affect some shareholders.
Mark
to Market of Certain Exchange-Traded Contracts. For federal income tax purposes, UGA generally is required to use a “mark-to-market”
method of accounting under which unrealized gains and losses on instruments constituting “section 1256 contracts”
are recognized currently. A section 1256 contract is defined as: (1) a futures contract that is traded on or subject to the rules
of a national securities exchange which is registered with the SEC, a domestic board of trade designated as a contract market
by the CFTC, or any other board of trade or exchange designated by the Secretary of the Treasury, and with respect to which the
amount required to be deposited and the amount that may be withdrawn depends on a system of “marking to market”; (2)
a forward contract on exchange-traded foreign currencies, where the contracts are traded in the interbank market; (3) a non-equity
option traded on or subject to the rules of a qualified board or exchange; (4) a dealer equity option; or (5) a dealer securities
futures contract.
Under
these rules, section 1256 contracts held by UGA at the end of each taxable year, including for example Futures Contracts and options
on Futures Contracts traded on a U.S. exchange or board of trade or certain foreign exchanges, are treated as if they were sold
by UGA for their fair market value on the last business day of the taxable year. A shareholder’s distributive share of UGA’s
net gain or loss with respect to each section 1256 contract generally is treated as long-term capital gain or loss to the extent
of 60 percent thereof, and as short-term capital gain or loss to the extent of 40 percent thereof, without regard to the actual
holding period (“60-40 treatment”).
Many
of UGA’s Futures Contracts and some of their other commodity interests will qualify as “section 1256 contracts”
under the Code. Gain or loss recognized through disposition, termination or marking-to-market of UGA’s section 1256 contracts
will be subject to 60-40 treatment and allocated to shareholders in accordance with the monthly allocation convention. Cleared
swaps and other commodity swaps will most likely not qualify as section 1256 contracts. If a commodity swap is not treated as
a section 1256 contract, any gain or loss on the swap recognized at the time of disposition or termination will be long-term or
short-term capital gain or loss depending on the holding period of the swap.
Limitations
on Deductibility of Losses and Certain Expenses. A number of different provisions of the Code may defer or disallow the deduction
of losses or expenses allocated to you by UGA, including but not limited to those described below.
A shareholder’s
deduction of its allocable share of any loss of UGA is limited to the lesser of (1) the tax basis in its shares or (2) in the
case of a shareholder that is an individual or a closely held corporation, the amount which the shareholder is considered to have
“at risk” with respect to our activities. In general, the amount at risk will be your invested capital plus your share
of any recourse debt of UGA for which you are liable. Losses in excess of the lesser of tax basis or the amount at risk must be
deferred until years in which UGA generates additional taxable income against which to offset such carryover losses or until additional
capital is placed at risk.
Noncorporate
taxpayers are permitted to deduct capital losses only to the extent of their capital gains for the taxable year plus $3,000 of
other income. Unused capital losses can be carried forward and used to offset capital gains in future years. In addition, a noncorporate
taxpayer may elect to carry back net losses on section 1256 contracts to each of the three preceding years and use them to offset
section 1256 contract gains in those years, subject to certain limitations. Corporate taxpayers generally may deduct capital losses
only to the extent of capital gains, subject to special carryback and carryforward rules.
For taxable
years beginning before January 1, 2026, otherwise deductible expenses incurred by noncorporate taxpayers constituting “miscellaneous
itemized deductions,” generally including investment-related expenses (other than interest and certain other specified expenses),
are not deductible. For taxable years beginning on or after January 1, 2026, such miscellaneous itemized deductions are deductible
only to the extent they exceed 2 percent of the taxpayer’s adjusted gross income for the year. Although the matter is not
free from doubt, we believe management fees we pay to USCF and other expenses we incur will constitute investment-related expenses
subject to the miscellaneous itemized deduction limitation, rather than expenses incurred in connection with a trade or business,
and will report these expenses consistent with that interpretation. In addition, for taxable years beginning on or after January
1, 2026, the Code imposes additional limitations on the amount of certain itemized deductions allowable to individuals with adjusted
gross income in excess of certain amounts by reducing the otherwise allowable portion of such deductions by an amount equal to
the lesser of:
|
·
|
3% of the individual’s
adjusted gross income in excess of certain threshold amounts; or
|
|
·
|
80% of the amount
of certain itemized deductions otherwise allowable for the taxable year.
|
For taxable
years beginning before January 1, 2026, noncorporate shareholders are entitled to a deduction (subject to certain limitations)
equal to their “combined qualified business income.” “Combined qualified business income” for this purpose
includes 20% of a noncorporate taxpayer’s “qualified publicly traded partnership income.” In general, “qualified
publicly traded partnership income” includes a noncorporate taxpayer’s allocable share of “qualified items”
of income, gain, deduction, and loss. A “qualified item” for this purpose is an item of income, gain deduction, or
loss that is effectively connected with a U.S. trade or business and includible income for the year. As discussed below, although
the matter is not free from doubt, UGA believes that the activities directly conducted by UGA will not result in UGA being engaged
in a trade or business within in the United States. See “Non-U.S. Shareholders—Withholding on Allocations and Distributions”
below. As a result, we do not anticipate that any of our items of income, gain, deduction, or loss will be reported as “qualified
publicly traded partnership income” eligible for the deduction for “combined qualified business income.” “Qualified
publicly traded partnership income” also includes any gain or loss from the sale of an interest in a partnership to extent
attributable to “unrealized receivables” or “inventory” under section 751. (For a discussion of section
751, see “Tax Consequences of Disposition of Shares” below.) A noncorporate taxpayer that recognizes any gain or loss
from the sale of an interest in UGA that is attributable to “unrealized receivables” or “inventory” under
section 751 should consult with such taxpayer’s tax advisor to determine whether any portion of such gain or loss constitutes
“qualified publicly traded partnership income” eligible for the deduction for “combined qualified business income.”.
A taxpayer is
generally prohibited from deducting business interest to the extent that it exceeds the sum of (i) business interest income of
such taxpayer, (ii) 30% of the adjusted taxable income of such taxpayer, plus (iii) the floor plan financing interest of such
taxpayer. In the case of partnerships, this determination is made at the partnership level. To the extent that the business income
of the partnership exceeds the amount necessary to absorb all of the partnership’s business interest, such excess amount
is allocated to the partners as excess business income, which amount may be used against any business interest of the partner
(but not any other partnerships). To the extent that the partnership has any disallowed business interest expense, such amount
is allocated among the partners, reduces the partners’ outside basis in their partnership interests by their allocable shares,
and is carried forward to future years. Such carry forward may only be used as a deduction to the extent that the partnership
has excess business income in the future. In the event that a partner transfers a partnership interest with any excess business
interest carry forward amounts, such amounts increase the partner’s basis in its partnership interest immediately before
the transfer. Although it is not free from doubt, UGA does not anticipate that it will be treated as engaged in a trade or business.
As a result, UGA does not anticipate that any portion of its interest expense (if any) will constitute business interest or that
shareholders will be allocated any excess business income as a result of holding UGA shares.
Noncorporate
shareholders generally may deduct “investment interest expense” only to the extent of their “net investment
income.” Investment interest expense of a shareholder will generally include any interest accrued by UGA and any interest
paid or accrued on direct borrowings by a shareholder to purchase or carry its shares, such as interest with respect to a margin
account. Net investment income generally includes gross income from property held for investment (including “portfolio income”
under the passive loss rules but not, absent an election, long-term capital gains or certain qualifying dividend income) less
deductible expenses other than interest directly connected with the production of investment income.
To the
extent that we allocate losses or expenses to you that must be deferred or are disallowed as a result of these or other limitations
in the Code, you may be taxed on income in excess of your economic income or distributions (if any) on your shares. As one example,
you could be allocated and required to pay tax on your share of interest income accrued by UGA for a particular taxable year,
and in the same year be allocated a share of a capital loss that you cannot deduct currently because you have insufficient capital
gains against which to offset the loss. As another example, you could be allocated and required to pay tax on your share of interest
income and capital gain for a year, but be unable to deduct some or all of your share of management fees and/or margin account
interest incurred by you with respect to your shares. Shareholders are urged to consult their own professional tax advisors regarding
the effect of limitations under the Code on your ability to deduct your allocable share of UGA’s losses and expenses.
Tax Basis of Shares
A shareholder’s
tax basis in its shares is important in determining (1) the amount of taxable gain or loss it will realize on the sale or other
disposition of its shares, (2) the amount of non-taxable distributions that it may receive from UGA and (3) its ability to utilize
its distributive share of any losses of UGA on its tax return. A shareholder’s initial tax basis of its shares will equal
its cost for the shares plus its share of UGA’s liabilities (if any) at the time of purchase. In general, a shareholder’s
“share” of those liabilities will equal the sum of (i) the entire amount of any otherwise nonrecourse liability of
UGA as to which the shareholder or an affiliate is the creditor (a “partner nonrecourse liability”) and (ii) a pro
rata share of any nonrecourse liabilities of UGA that are not partner nonrecourse liabilities as to any shareholder.
A shareholder’s
tax basis in its shares generally will be (1) increased by (a) its allocable share of UGA’s taxable income and gain and
(b) any additional contributions by the shareholder to UGA and (2) decreased (but not below zero) by (a) its allocable share of
UGA’s tax deductions and losses and (b) any distributions by UGA to the shareholder. For this purpose, an increase in a
shareholder’s share of UGA’s liabilities will be treated as a contribution of cash by the shareholder to UGA and a
decrease in that share will be treated as a distribution of cash by UGA to the shareholder. Pursuant to certain IRS rulings, a
shareholder will be required to maintain a single, “unified” basis in all shares that it owns. As a result, when a
shareholder that acquired its shares at different prices sells less than all of its shares, such shareholder will not be entitled
to specify particular shares (e.g., those with a higher basis) as having been sold. Rather, it must determine its gain
or loss on the sale by using an “equitable apportionment” method to allocate a portion of its unified basis in its
shares to the shares sold.
Treatment
of UGA Distributions. If UGA makes non-liquidating distributions to shareholders, such distributions generally will not be
taxable to the shareholders for federal income tax purposes except to the extent that the sum of (i) the amount of cash and (ii)
the fair market value of marketable securities distributed exceeds the shareholder’s adjusted basis of its interest in UGA
immediately before the distribution. Any cash distributions in excess of a shareholder’s tax basis generally will be treated
as gain from the sale or exchange of shares.
Tax Consequences of Disposition
of Shares
If a shareholder
sells its shares, it will recognize gain or loss equal to the difference between the amount realized and its adjusted tax basis
for the shares sold. A shareholder’s amount realized will be the sum of the cash or the fair market value of other property
received plus its share of any UGA debt outstanding.
Gain or loss
recognized by a shareholder on the sale or exchange of shares held for more than one year will generally be taxable as long-term
capital gain or loss; otherwise, such gain or loss will generally be taxable as short-term capital gain or loss. A special election
is available under the Treasury Regulations that will allow shareholders to identify and use the actual holding periods for the
shares sold for purposes of determining whether the gain or loss recognized on a sale of shares will give rise to long-term or
short-term capital gain or loss. It is expected that most shareholders will be eligible to elect, and generally will elect, to
identify and use the actual holding period for shares sold. If a shareholder fails to make the election or is not able to identify
the holding periods of the shares sold, the shareholder may have a split holding period in the shares sold. Under such circumstances,
a shareholder will be required to determine its holding period in the shares sold by first determining the portion of its entire
interest in UGA that would give rise to long-term capital gain or loss if its entire interest were sold and the portion that would
give rise to short-term capital gain or loss if the entire interest were sold. The shareholder would then treat each share sold
as giving rise to long-term capital gain or loss and short-term capital gain or loss in the same proportions as if it had sold
its entire interest in UGA.
Under
Section 751 of the Code, a portion of a shareholder’s gain or loss from the sale of shares (regardless of the holding period
for such shares), will be separately computed and taxed as ordinary income or loss to the extent attributable to “unrealized
receivables” or “inventory” owned by UGA. The term “unrealized receivables” includes, among other
things, market discount bonds and short-term debt instruments to the extent such items would give rise to ordinary income if sold
by UGA. However, the short-term capital gain on section 1256 contracts resulting from 60-40 treatment, described above, should
not be subject to this rule.
If some
or all of your shares are lent by your broker or other agent to a third party — for example, for use by the third party
in covering a short sale — you may be considered as having made a taxable disposition of the loaned shares, in which case
—
|
·
|
you may recognize
taxable gain or loss to the same extent as if you had sold the shares for cash;
|
|
·
|
any of UGA’s
income, gain, loss or deduction allocable to those shares during the period of the loan will not be reportable by you for
tax purposes; and
|
|
·
|
any distributions
you receive with respect to the shares will be fully taxable, most likely as ordinary income.
|
Shareholders
desiring to avoid these and other possible consequences of a deemed disposition of their shares should consider modifying any
applicable brokerage account agreements to prohibit the lending of their shares.
Other Tax Matters
Information
Reporting. We report tax information to the beneficial owners of shares. The IRS has ruled that assignees of partnership interests
who have not been admitted to a partnership as partners but who have the capacity to exercise substantial dominion and control
over the assigned partnership interests will be considered beneficial owners for federal income tax purposes. On the basis of
such ruling, except as otherwise provided herein, we treat the following persons as partners for federal income tax purposes:
(1) assignees of shares who are pending admission as limited partners, and (2) shareholders whose shares are held in street name
or by another nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the
ownership of their shares. UGA will furnish shareholders each year with tax information on IRS Schedule K-1 (Form 1065), which
will be used by the shareholders in completing their tax returns.
Persons
who hold an interest in UGA as a nominee for another person are required to furnish to us the following information: (1) the name,
address and taxpayer identification number of the beneficial owner and the nominee; (2) whether the beneficial owner is (a) a
person that is not a U.S. person, (b) a foreign government, an international organization or any wholly-owned agency or instrumentality
of either of the foregoing, or (c) a tax-exempt entity; (3) the number and a description of shares acquired or transferred for
the beneficial owner; and (4) certain information including the dates of acquisitions and transfers, means of acquisitions and
transfers, and acquisition cost for purchases, as well as the amount of net proceeds from sales. Brokers and financial institutions
are required to furnish additional information, including whether they are U.S. persons and certain information on shares they
acquire, hold or transfer for their own account. The nominee is required to supply the beneficial owner of the shares with the
information furnished to us. Penalties may apply for failure to report required information.
Additional
3.8% Tax on Net Investment Income. Individuals with income in excess of $200,000 ($250,000 in the case of married individuals
filing jointly) and certain estates and trusts are subject to an additional 3.8% tax on their “net investment income,”
which generally includes net income from interest, dividends, annuities, royalties, and rents, and net capital gains (other than
certain amounts earned from trades or businesses). The income subject to the additional 3.8% tax includes any income from businesses
involved in the trading of financial instruments or commodities.
Partnership
Audit Procedures. The IRS may audit the federal income tax returns filed by UGA. Partnerships are generally treated as separate
entities for purposes of federal tax audits, judicial review of administrative adjustments by the IRS, and tax settlement proceedings.
The tax treatment of partnership items of income, gain, loss and deduction are determined at the partnership level in a unified
partnership proceeding rather than in separate proceedings with the shareholders.
UGA may
be liable for U.S. federal income tax on any “imputed understatement” of tax resulting from an adjustment as a result
of an IRS audit. The amount of the imputed understatement generally includes increases in allocations of items of income or gains
to any investor and decreases in allocations of items of deduction, loss, or credit to any investor without any offset for any
corresponding reductions in allocations of items of income or gain to any investor or increases in allocations of items of deduction,
loss, or credit to any investor. If UGA is required to pay any U.S. federal income taxes on any imputed understatement, the resulting
tax liability would reduce the net assets of UGA and would likely have an adverse impact on the value of the shares. Under certain
circumstances, UGA may be eligible to make an election to cause the investors to take into account the amount of any imputed understatement,
including any interest and penalties. The ability of a publicly traded partnership such as UGA to make this election is uncertain.
If the election is made, UGA would be required to provide investors who owned beneficial interests in the shares in the year to
which the adjusted allocations relate with a statement setting forth their proportionate shares of the adjustment (“Adjusted
K-1s”). The investors would be required to take the adjustment into account in the taxable year in which the Adjusted K-1s
are issued. The Code generally requires UGA to designate one person as the “partnership representative” who has sole
authority to conduct an audit with the IRS, challenge any adjustment in a court of law, and settle any audit or other proceeding.
The LP Agreement appoints USCF as the partnership representative of UGA.
Tax
Shelter Disclosure Rules. In certain circumstances the Code and Treasury Regulations require that the IRS be notified of taxable
transactions through a disclosure statement attached to a taxpayer’s United States federal income tax return. These disclosure
rules may apply to transactions irrespective of whether they are structured to achieve particular tax benefits. They could require
disclosure by UGA or shareholders if a shareholder incurs a loss in excess a specified threshold from a sale or redemption of
its shares or possibly in other circumstances. While these rules generally do not require disclosure of a loss recognized on the
disposition of an asset in which the taxpayer has a “qualifying basis” (generally a basis equal to the amount of cash
paid by the taxpayer for such asset), they apply to a loss recognized with respect to interests in a pass-through entity, such
as the shares, even if the taxpayer’s basis in such interests is equal to the amount of cash it paid. In addition, under
recently enacted legislation, significant penalties may be imposed in connection with a failure to comply with these reporting
requirements. Investors should consult their own tax advisors concerning the application of these reporting requirements to
their specific situation.
Tax-Exempt
Organizations. Subject to numerous exceptions, qualified retirement plans and individual retirement accounts, charitable organizations
and certain other organizations that otherwise are exempt from federal income tax (collectively “exempt organizations”)
nonetheless are subject to the tax on unrelated business taxable income (“UBTI”). Generally, UBTI means the gross
income derived by an exempt organization from a trade or business that it regularly carries on, the conduct of which is not substantially
related to the exercise or performance of its exempt purpose or function, less allowable deductions directly connected with that
trade or business. If UGA were to regularly carry on (directly or indirectly) a trade or business that is unrelated with respect
to an exempt organization shareholder, then in computing its UBTI, the shareholder must include its share of (1) UGA’s gross
income from the unrelated trade or business, whether or not distributed, and (2) UGA’s allowable deductions directly connected
with that gross income.
UBTI generally
does not include dividends, interest, or payments with respect to securities loans and gains from the sale of property (other
than property held for sale to customers in the ordinary course of a trade or business). Nonetheless, income on, and gain from
the disposition of, “debt-financed property” is UBTI. Debt-financed property generally is income-producing property
(including securities), the use of which is not substantially related to the exempt organization’s tax-exempt purposes,
and with respect to which there is “acquisition indebtedness” at any time during the taxable year (or, if the property
was disposed of during the taxable year, the 12-month period ending with the disposition). Acquisition indebtedness includes debt
incurred to acquire property, debt incurred before the acquisition of property if the debt would not have been incurred but for
the acquisition, and debt incurred subsequent to the acquisition of property if the debt would not have been incurred but for
the acquisition and at the time of acquisition the incurrence of debt was foreseeable. The portion of the income from debt-financed
property attributable to acquisition indebtedness is equal to the ratio of the average outstanding principal amount of acquisition
indebtedness over the average adjusted basis of the property for the year. UGA currently does not anticipate that it will borrow
money to acquire investments; however, UGA cannot be certain that it will not borrow for such purpose in the future. In addition,
an exempt organization shareholder that incurs acquisition indebtedness to purchase its shares in UGA may have UBTI.
The federal
tax rate applicable to an exempt organization shareholder on its UBTI generally will be either the corporate or trust tax rate,
depending upon the shareholder’s form of organization. UGA may report to each such shareholder information as to the portion,
if any, of the shareholder’s income and gains from UGA for any year that will be treated as UBTI; the calculation of that
amount is complex, and there can be no assurance that UGA’s calculation of UBTI will be accepted by the Service. An exempt
organization shareholder will be required to make payments of estimated federal income tax with respect to its UBTI.
Regulated
Investment Companies. Interests in and income from “qualified publicly traded partnerships” satisfying certain
gross income tests are treated as qualifying assets and income, respectively, for purposes of determining eligibility for regulated
investment company (“RIC”) status. A RIC may invest up to 25% of its assets in interests in a qualified publicly traded
partnership. The determination of whether a publicly traded partnership such as UGA is a qualified publicly traded partnership
is made on an annual basis. UGA expects to be a qualified publicly traded partnership in each of its taxable years. However, such
qualification is not assured.
Non-U.S. Shareholders
Generally,
non-U.S. persons who derive U.S. source income or gain from investing or engaging in a U.S. business are taxable on two categories
of income. The first category consists of amounts that are fixed, determinable, annual and periodic income, such as interest,
dividends and rent that are not connected with the operation of a U.S. trade or business (“FDAP”). The second category
is income that is effectively connected with the conduct of a U.S. trade or business (“ECI”). FDAP income (other than
interest that is considered “portfolio interest”) is generally subject to a 30 percent withholding tax, which may
be reduced for certain categories of income by a treaty between the U.S. and the recipient’s country of residence. In contrast,
ECI is generally subject to U.S. tax on a net basis at graduated rates upon the filing of a U.S. tax return. Where a non-U.S.
person has ECI as a result of an investment in a partnership, the ECI is subject to a withholding tax at a rate of 37% (39.6%
for taxable years beginning after December 31, 2025) individual shareholders and a rate of 21% for corporate shareholders.
Withholding
on Allocations and Distributions. The Code provides that a non-U.S. person who is a partner in a partnership that is engaged
in a U.S. trade or business during a taxable year will also be considered to be engaged in a U.S. trade or business during that
year. Classifying an activity by a partnership as an investment or an operating business is a factual determination. Under certain
safe harbors in the Code, an investment fund whose activities consist of trading in stocks, securities, or commodities for its
own account generally will not be considered to be engaged in a U.S. trade or business unless it is a dealer is such stocks, securities,
or commodities. This safe harbor applies to investments in commodities only if the commodities are of a kind customarily dealt
in on an organized commodity exchange and if the transaction is of a kind customarily consummated at such place. Although the
matter is not free from doubt, UGA believes that the activities directly conducted by UGA will not result in UGA being engaged
in a trade or business within in the United States. However, there can be no assurance that the IRS would not successfully assert
that UGA’s activities constitute a U.S. trade or business.
In the
event that UGA’s activities were considered to constitute a U.S. trade or business, UGA would be required to withhold at
the highest rate specified in Code section 1 (currently 37% (39.6% for taxable years beginning after December 31, 2026)) on allocations
of our income to individual non-U.S. Shareholders and the highest rate specified in Code section 11(b) (currently 21%) on allocations
of our income to corporate non-U.S. Shareholders, when such income is allocated or distributed. A non-U.S. shareholder with ECI
will generally be required to file a U.S. federal income tax return, and the return will provide the non-U.S. shareholder with
the mechanism to seek a refund of any withholding in excess of such shareholder’s actual U.S. federal income tax liability.
Any amount withheld by UGA on behalf of a non-U.S. shareholder will be treated as a distribution to the non-U.S. shareholder to
the extent possible. In some cases, UGA may not be able to match the economic cost of satisfying its withholding obligations to
a particular non-U.S. shareholder, which may result in such cost being borne by UGA, generally, and accordingly, by all shareholders.
If UGA
is not treated as engaged in a U.S. trade or business, a non-U.S. shareholder may nevertheless be treated as having FDAP income,
which would be subject to a 30 percent withholding tax (possibly subject to reduction by treaty), with respect to some or all
of its distributions from UGA or its allocable share of UGA income. Amounts withheld on behalf of a non-U.S. shareholder will
be treated as being distributed to such shareholder.
To the
extent any interest income allocated to a non-U.S. shareholder that otherwise constitutes FDAP is considered “portfolio
interest,” neither the allocation of such interest income to the non-U.S. shareholder nor a subsequent distribution of such
interest income to the non-U.S. shareholder will be subject to withholding, provided that the non-U.S. shareholder is not otherwise
engaged in a trade or business in the U.S. and provides UGA with a timely and properly completed and executed IRS Form W-8BEN
or other applicable form. In general, “portfolio interest” is interest paid on debt obligations issued in registered
form, unless the “recipient” owns 10 percent or more of the voting power of the issuer.
Most of UGA’s
interest income qualifies as “portfolio interest.” In order for UGA to avoid withholding on any interest income allocable
to non-U.S. shareholders that would qualify as “portfolio interest,” it will be necessary for all non-U.S. shareholders
to provide UGA with a timely and properly completed and executed Form W-8BEN or W-8BEN-E(or other applicable form). If a non-U.S.
shareholder fails to provide a properly completed Form W-8BEN or W-8BEN-E, or other applicable form USCF may request that the
non-U.S. shareholder provide, within 15 days after the request by USCF, a properly completed Form W-8BEN, W-8BEN-E, or other applicable
form. If a non-U.S. shareholder fails to comply with this request, the shares owned by such non-U.S. shareholder will be subject
to redemption.
Gain
from Sale of Shares. Gain from the sale or exchange of the shares may be taxable to a non-U.S. shareholder if the non-U.S.
shareholder is a nonresident alien individual who is present in the U.S. for 183 days or more during the taxable year. In such
case, the nonresident alien individual will be subject to a 30 percent withholding tax on the amount of such individual’s
gain. In addition, if UGA is treated as being engaged in a U.S. trade or business, a portion of the gain on the sale or exchange
will be treated as effectively connected income subject to U.S. federal income tax to the extent that a sale of UGA’s assets
would give rise to effectively connected income. Although the transferee of a partnership interest is generally required to withhold
10% of the proceeds from the sale of a partnership interest acquired from a non-U.S. partner if any portion of the gain would
be treated as effectively connected income, the IRS has issued a notice in which it has indicated that such withholding requirement
will not apply to transferees of publicly traded partnership interests until the IRS and Treasury issue regulations implementing
such provision. However, this does not relieve a non-U.S. shareholder from U.S. income tax on any gain treated as effectively
connected income.
Branch
Profits Tax on Corporate Non-U.S. Shareholders. In addition to the taxes noted above, any non-U.S. shareholders that are corporations
may also be subject to an additional tax, the branch profits tax, at a rate of 30 percent. The branch profits tax is imposed on
a non-U.S. corporation’s dividend equivalent amount, which generally consists of the corporation’s after-tax earnings
and profits that are effectively connected with the corporation’s U.S. trade or business but are not reinvested in a U.S.
business. This tax may be reduced or eliminated by an income tax treaty between the United States and the country in which the
non-U.S. shareholder is a “qualified resident.”
Prospective
non-U.S. shareholders should consult their tax advisor with regard to these and other issues unique to non-U.S. shareholders.
Backup
Withholding
UGA may
be required to withhold U.S. federal income tax (“backup withholding”) from all payments to: (1) any shareholder who
fails to furnish UGA with his, her or its correct taxpayer identification number or a certificate that the shareholder is exempt
from backup withholding, and (2) any shareholder with respect to whom the IRS notifies UGA that the shareholder has failed to
properly report certain interest and dividend income to the IRS and to respond to notices to that effect. Backup withholding is
not an additional tax and may be returned or credited against a taxpayer’s regular federal income tax liability if appropriate
information is provided to the IRS.
Tax Agent
The beneficial
owners who are of a type, as identified by the nominee through whom their Shares are held, that do not ordinarily have U.S. federal
tax return filing requirements, collectively, Certain K-1 shareholders, have designated the General Partner as their tax agent,
or the Tax Agent, in dealing with the Partnership. In light of such designation and pursuant to Treasury Regulation section 1.6031(b)-1T(c),
as amended from time to time, the Partnership will provide to the Tax Agent Certain K-1 shareholders’ statements as such
term is defined under Treasury Regulation section 1.6031(b)-1T(a)(3), as amended from time to time.
Foreign
Account Tax Compliance Act Provisions
Legislation
commonly referred to as the “Foreign Account Tax Compliance Act,” or “FATCA,” generally imposes a 30%
withholding tax on payments of certain types of income to foreign financial institutions (“FFIs”) unless such FFIs
(i) enter into an agreement with the U.S. Treasury to report certain required information with respect to accounts held by U.S.
persons (or held by foreign entities that have U.S. persons as substantial owners) or (ii) reside in a jurisdiction that has entered
into an intergovernmental agreement (“IGA”) with the United States to collect and share such information and comply
with the terms of such IGA and any enabling legislation or regulations. The types of income subject to the tax include U.S.-source
interest and dividends. While existing U.S. Treasury regulations would also require withholding on payments of the gross proceeds
from the sale of any property that could produce U.S. source interest or dividends, the U.S. Treasury Department has indicated
its intent to eliminate this requirement in subsequent proposed regulations, which state that taxpayers may rely on the proposed
regulations until final regulations are issued. The information required to be reported includes the identity and taxpayer identification
number of each account holder that is a U.S. person and transaction activity within the holder’s account. In addition, subject
to certain exceptions, this legislation also imposes a 30% withholding on payments to foreign entities that are not financial
institutions unless the foreign entity certifies that it does not have a greater than 10% U.S. owner or provides the withholding
agent with identifying information on each greater than 10% U.S. owner. Depending on the status of a non-U.S. shareholder and
the status of the intermediaries through which they hold their shares, Non-U.S. shareholders could be subject to this 30% withholding
tax with respect to distributions on their shares and proceeds from the sale of their shares. Under certain circumstances, a non-U.S.
shareholder might be eligible for refunds or credits of such taxes.
Other
Tax Considerations
In addition
to federal income taxes, shareholders may be subject to other taxes, such as state and local income taxes, unincorporated business
taxes, business franchise taxes, and estate, inheritance or intangible taxes that may be imposed by the various jurisdictions
in which UGA does business or owns property or where the shareholders reside. Although an analysis of those various taxes is not
presented here, each prospective shareholder should consider their potential impact on its investment in UGA. It is each shareholder’s
responsibility to file the appropriate U.S. federal, state, local, and foreign tax returns. Eversheds Sutherland (US) LLP has
not provided an opinion concerning any aspects of state, local or foreign tax or U.S. federal tax other than those U.S. federal
income tax issues discussed herein.
Certain
ERISA Related Considerations
General
Many employee
benefit plans and individual retirement accounts (“IRAs”) are subject to the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”) or the Code, or both. This section discusses certain considerations that arise under
ERISA and the Code that a fiduciary of: (i) an employee benefit plan as defined in ERISA; (ii) a plan as defined in Section 4975
of the Code; or (iii) any collective investment vehicle, business trust, investment partnership, pooled separate account or other
entity the assets of which are treated as comprised (at least in part) of “plan assets” under the ERISA plan asset
rules (“plan asset entity”); who has investment discretion should take into account before deciding to invest in the
entity’s assets in UGA. Employee benefit plans, plans defined under Section 4975 of the Code and plan asset entities are
collectively referred to below as “plans”, and fiduciaries with investment discretion are referred to below as plan
“fiduciaries.”
This summary
is based on the provisions of ERISA, the Code and applicable guidance as of the date hereof. This summary is not intended to be
complete, but only to address certain questions under ERISA and the Code. The summary does not include state or local law.
Potential
plan investors are urged to consult with their own professional advisors concerning the appropriateness of an investment in UGA
and the manner in which limited partnership interests should be purchased. USCF does not represent that the limited partnership
interests hereby offered are appropriate for plans or any particular plan.
Special Investment Considerations
Investments
by plans governed by ERISA are subject to ERISA’s fiduciary requirements, including the requirements of investment prudent
and diversification. As a result, each plan fiduciary must consider the facts and circumstances that are relevant to their plan’s
specific circumstances when evaluating an investment in UGA, including the role that an investment in UGA would play in the plan’s
overall investment portfolio, taking into account the plan’s purpose, the risk and loss of potential return with respect
to the investment, the liquidity, the current return of the total portfolio relative to the anticipated cash flow needs of the
plan, and the projected return of the portfolio and relative to the plan’s investment objectives. Each plan fiduciary, before
deciding to invest in UGA, must be satisfied that its investment in the limited partnership interests in UGA is prudent for the
plan, that the investments of the plan are properly diversified and that an investment in UGA complies with the terms of the plan.
UGA and Plan Assets
Regulations
issued under ERISA contains rules for determining when an investment by a plan in an equity interest of a limited partnership
will result in the underlying assets of the partnership being deemed “plan assets” for purposes of ERISA and Section
4975 of the Code. Those rules provide that assets of a limited partnership will not be deemed to be assets of a plan that purchases
an equity interest in the partnership if the equity interest purchased qualifies as a publicly-offered security. If the underlying
assets of a limited partnership are considered to be assets of any plan for purposes of ERISA or Section 4975 of the Code, the
operations of that partnership would be subject to and, in some cases, limited by, the provisions of ERISA and Section 4975 of
the Code.
An equity interest will qualify
as a publicly offered security if it is:
|
1.
|
freely transferable
(determined based on the relevant facts and circumstances);
|
|
2.
|
part of a class of
securities that is widely held (meaning that the class of securities is owned by 100 or more investors independent of the
issuer and of each other); and
|
|
3.
|
either (a) part of a class of securities
registered under Section 12(b) or 12(g) of the Exchange Act or (b) sold to the plan as part of a public offering pursuant
to an effective registration statement under the 1933 Act and the class of which such security is a part is registered under
the Exchange Act within 120 days (or such later time as may be allowed by the SEC) after the end of the fiscal year of the
issuer in which the offering of such security occurred.
|
Regulations
under ERISA state that the determination of whether a security is “freely transferable” is to be made based on all
of the relevant facts and circumstances. In the case of a security that is part of an offering in which the minimum investment
is $10,000 or less, the following requirements, alone or in combination, ordinarily will not affect a finding that the security
is freely transferable: (1) a requirement that no transfer or assignment of the security or rights relating to the security be
made that would violate any federal or state law, (2) a requirement that no transfer or assignment be made without advance written
notice given to the entity that issued the security, and (3) any restriction on the substitution of an assignee as a limited partner
of a partnership, including a general partner consent requirement, provided that the economic benefits of ownership of the assignor
may be transferred or assigned without regard to such restriction or consent (other than compliance with any of the foregoing
restrictions).
USCF
believes that the conditions described above are satisfied with respect to the limited partnership interests. USCF believes that
the limited partnership interests therefore constitute publicly-offered securities, and the underlying assets of UGA will not
be deemed to “plan assets” of under applicable ERISA regulations.
Prohibited Transactions
ERISA
and the Code generally prohibit certain transactions involving plans and persons who have certain specified relationships to plans.
In general,
UGA limited partnership interests may not be purchased with the assets of a plan if USCF, the clearing brokers, the trading advisors
(if any), or any of their affiliates, agents or employees:
|
·
|
exercise any discretionary
authority or discretionary control with respect to management of the plan;
|
|
·
|
exercise any authority
or control with respect to management or disposition of the assets of the plan;
|
|
·
|
render investment
advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of the plan;
|
|
·
|
have any authority
or responsibility to render investment advice with respect to any monies or other property of the plan; or
|
|
·
|
have any discretionary
authority or discretionary responsibility in the administration of the plan.
|
Also,
a prohibited transaction may occur under ERISA or the Code when circumstances indicate that (1) the investment in an equity interest
is made or retained for the purpose of avoiding application of the fiduciary standards of ERISA, (2) the investment in an equity
interest constitutes an arrangement under which UGA is expected to engage in transactions that would otherwise be prohibited if
entered into directly by the plan purchasing the share, (3) the investing plan, by itself, has the authority or influence to cause
UGA to engage in such transactions, or (4) a person who is prohibited from transacting with the investing plan may, but only with
the aid of certain of its affiliates and the investing plan, cause UGA to engage in such transactions with such person.
Special IRA Rules
Individual retirement
accounts (“IRAs”) are not subject to ERISA’s fiduciary standards, but are subject to their own rules, including
the prohibited transaction rules of Section 4975 of the Code, which generally mirror ERISA’s prohibited transaction rules.
For example, IRAs are subject to special custody rules and must maintain a qualifying IRA custodial arrangement separate and distinct
from UGA and its custodial arrangement. Otherwise, if a separate qualifying custodial arrangement is not maintained, an investment
in the limited partnership interests will be treated as a distribution from the IRA. Additionally, IRAs are prohibited from investing
in certain commingled investments, and USCF makes no representation regarding whether an investment in limited partnership interests
is an inappropriate commingled investment for an IRA. Finally, in applying the prohibited transaction provisions of Section 4975
of the Code, in addition to the rules summarized above, the individual for whose benefit the IRA is maintained is also treated
as the creator of the IRA. For example, if the owner or beneficiary of an IRA enters into any transaction, arrangement, or agreement
involving the assets of his or her IRA to benefit the IRA owner or beneficiary (or his or her relatives or business affiliates)
personally, or with the understanding that such benefit will occur, directly or indirectly, such transaction could give rise to
a prohibited transaction that is not exempted by any available exemption. Moreover, in the case of an IRA, the consequences of
a non-exempt prohibited transaction are that the IRA’s assets will be treated as if they were distributed, causing immediate
taxation of the assets (including any early distribution penalty tax applicable under Section 72 of the Code), in addition to
any other fines or penalties that may apply.
Exempt Plans
Governmental
plans and church plans are generally not subject to ERISA, and the above-described prohibited transaction provisions described
above do not apply to them. These plans are, however, subject to prohibitions against certain related-party transactions under
Section 503 of the Code, which operate similar to the prohibited transaction rules described above. In addition, the fiduciary
of any governmental or church plan should consider any applicable state or local laws and any restrictions and duties of common
law imposed upon the plan.
No view
is expressed as to whether an investment in UGA (and any continued investment in UGA), or the operation and administration of
UGA, is appropriate or permissible for any governmental plan or church plan under Code Section 503, or under any state, county,
local or other law relating to that type of plan.
Allowing
an investment in UGA is not to be construed as a representation by UGA, USCF, any trading advisor, any clearing broker, the Marketing
Agent or legal counsel or other advisors to such parties or any other party that this investment meets some or all of the relevant
legal requirements with respect to investments by any particular plan or that this investment is appropriate for any such particular
plan. The person with investment discretion should consult with the plan’s attorney and financial advisors as to the propriety
of an investment in UGA in light of the circumstances of the particular plan, current tax law and ERISA.
THE
FOREGOING SUMMARY OF ERISA CONSIDERATIONS IS BASED UPON ERISA, JUDICIAL DECISIONS, DEPARTMENT OF LABOR REGULATIONS AND RULINGS
IN EXISTENCE ON THE DATE HEREOF, ALL OF WHICH ARE SUBJECT TO CHANGE. THE SUMMARY IS GENERAL IN NATURE AND DOES NOT ADDRESS EVERY
ERISA ISSUE THAT MAY BE APPLICABLE TO AN INVESTMENT IN UGA OR TO A PARTICULAR INVESTOR.
Form
of Shares
Registered
Form. Shares are issued in registered form in accordance with the LP Agreement. The Administrator has been appointed registrar
and transfer agent for the purpose of transferring shares in certificated form. The Administrator keeps a record of all limited
partners and holders of the shares in certificated form in the registry (the “Register”). USCF recognizes transfers
of shares in certificated form only if done in accordance with the LP Agreement. The beneficial interests in such shares are held
in book-entry form through participants and/or accountholders in DTC.
Book-Entry.
Individual certificates are not issued for the shares. Instead, shares are represented by one or more global certificates,
which are deposited by the Administrator with DTC and registered in the name of Cede & Co., as nominee for DTC. The global
certificates evidence all of the shares outstanding at any time. Shareholders are limited to (1) participants in DTC such as banks,
brokers, dealers and trust companies (“DTC Participants”), (2) those who maintain, either directly or indirectly,
a custodial relationship with a DTC Participant (“Indirect Participants”), and (3) those banks, brokers, dealers,
trust companies and others who hold interests in the shares through DTC Participants or Indirect Participants, in each case who
satisfy the requirements for transfers of shares. DTC Participants acting on behalf of investors holding shares through such participants’
accounts in DTC will follow the delivery practice applicable to securities eligible for DTC’s Same-Day Funds Settlement
System. Shares are credited to DTC Participants’ securities accounts following confirmation of receipt of payment.
DTC.
DTC has advised UGA as follows: DTC is a limited purpose trust company organized under the laws of the State of New York and
is a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial
Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities
for DTC Participants and facilitates the clearance and settlement of transactions between DTC Participants through electronic
book-entry changes in accounts of DTC Participants.
Transfer
of Shares
Transfers
of Shares Only Through DTC. The shares are only transferable through the book-entry system of DTC. Limited partners who are
not DTC Participants may transfer their shares through DTC by instructing the DTC Participant holding their shares (or by instructing
the Indirect Participant or other entity through which their shares are held) to transfer the shares. Transfers are made in accordance
with standard securities industry practice.
Transfers of
interests in shares with DTC are made in accordance with the usual rules and operating procedures of DTC and the nature of the
transfer. DTC has established procedures to facilitate transfers among the participants and/or accountholders of DTC. Because
DTC can only act on behalf of DTC Participants, who in turn act on behalf of Indirect Participants, the ability of a person or
entity having an interest in a global certificate to pledge such interest to persons or entities that do not participate in DTC,
or otherwise take actions in respect of such interest, may be affected by the lack of a definitive security in respect of such
interest.
DTC has
advised us that it will take any action permitted to be taken by a shareholder (including, without limitation, the presentation
of a global certificate for exchange) only at the direction of one or more DTC Participants in whose account with DTC interests
in global certificates are credited and only in respect of such portion of the aggregate principal amount of the global certificate
as to which such DTC Participant or Participants has or have given such direction.
Transfer/Application
Requirements. All purchasers of UGA’s shares, and potentially any purchasers of shares in the future, who wish to become
limited partners or other record holders and receive cash distributions, if any, or have certain other rights, must deliver an
executed transfer application in which the purchaser or transferee must certify that, among other things, he, she or it agrees
to be bound by UGA’s LP Agreement and is eligible to purchase UGA’s securities. Each purchaser of shares offered by
this prospectus must execute a transfer application and certification. The obligation to provide the form of transfer application
will be imposed on the seller of shares or, if a purchase of shares is made through an exchange, the form may be obtained directly
through UGA. Further, USCF may request each record holder to furnish certain information, including that holder’s nationality,
citizenship or other related status. A record holder is a shareholder that is, or has applied to be, a limited partner. An investor
who is not a U.S. resident may not be eligible to become a record holder or one of UGA’s limited partners if that investor’s
ownership would subject UGA to the risk of cancellation or forfeiture of any of UGA’s assets under any federal, state or
local law or regulation. If the record holder fails to furnish the information or if USCF determines, on the basis of the information
furnished by the holder in response to the request, that such holder is not qualified to become one of UGA’s limited partners,
USCF may be substituted as a holder for the record holder, who will then be treated as a non-citizen assignee, and UGA will have
the right to redeem those securities held by the record holder.
A transferee’s
broker, agent or nominee may complete, execute and deliver a transfer application and certification. UGA may, at its discretion,
treat the nominee holder of a share as the absolute owner. In that case, the beneficial holder’s rights are limited solely
to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.
A person
purchasing UGA’s existing shares, who does not execute a transfer application and certify that the purchaser is eligible
to purchase those securities acquires no rights in those securities other than the right to resell those securities. Whether or
not a transfer application is received or the consent of USCF obtained, UGA shares are securities and are transferable according
to the laws governing transfers of securities.
Any transfer
of shares will not be recorded by the transfer agent or recognized by USCF unless a completed transfer application is delivered
to USCF or the Administrator. When acquiring shares, the transferee of such shares that completes a transfer application will:
|
·
|
be an assignee until
admitted as a substituted limited partner upon the consent and sole discretion of USCF and the recording of the assignment
on the books and records of the partnership;
|
|
·
|
automatically request admission
as a substituted limited partner;
|
|
·
|
agree to be bound by the
terms and conditions of, and execute, our LP Agreement;
|
|
·
|
represent that such transferee
has the capacity and authority to enter into our LP Agreement;
|
|
·
|
grant powers of attorney
to USCF and any liquidator of us; and
|
|
·
|
make the consents and waivers
contained in our LP Agreement.
|
An assignee
will become a limited partner in respect of the transferred shares upon the consent of USCF and the recordation of the name of
the assignee on UGA’s books and records. Such consent may be withheld in the sole discretion of USCF.
If consent of
USCF is withheld such transferee shall be an assignee. An assignee shall have an interest in the partnership equivalent to that
of a limited partner with respect to allocations and distributions, including, without limitation, liquidating distributions,
of the partnership. With respect to voting rights attributable to shares that are held by assignees, USCF shall be deemed to be
the limited partner with respect thereto and shall, in exercising the voting rights in respect of such shares on any matter, vote
such shares at the written direction of the assignee who is the record holder of such shares. If no such written direction is
received, such shares will not be voted. An assignee shall have no other rights of a limited partner.
Until
a share has been transferred on UGA’s books, UGA and the transfer agent may treat the record holder of the share as the
absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.
What
is the Plan of Distribution?
Buying and Selling Shares
Most
investors buy and sell shares of UGA in secondary market transactions through brokers. Shares trade on the NYSE Arca under the
ticker symbol “UGA.” Shares are bought and sold throughout the trading day like other publicly traded securities.
When buying or selling shares through a broker, most investors incur customary brokerage commissions and charges. Investors are
encouraged to review the terms of their brokerage account for details on applicable charges.
Marketing Agent and
Authorized Participants
The offering
of UGA’s shares is a best efforts offering. UGA continuously offers Creation Baskets consisting of 50,000 shares through
the Marketing Agent, to Authorized Participants. Authorized Participants pay a $350 fee for each order they place to create or
redeem one or more Creation Baskets or Redemption Baskets. The Marketing Agent receives, for its services as marketing agent to
UGA, a marketing fee of 0.06% on UGA’s assets up to the first $3 billion; and 0.04% on UGA’s assets in excess of $3
billion; provided, however, that in no event may the aggregate compensation paid to the Marketing Agent and any affiliate of USCF
for distribution-related services in connection with this offering exceed ten percent (10%) of the gross proceeds of this offering.
The offering of baskets is being made in compliance with Conduct Rule 2310 of FINRA. Accordingly, Authorized Participants will
not make any sales to any account over which they have discretionary authority without the prior written approval of a purchaser
of shares.
The per
share price of shares offered in Creation Baskets on any subsequent day will be the total NAV of UGA calculated shortly after
the close of the core trading session on the NYSE Arca on that day divided by the number of issued and outstanding shares. An
Authorized Participant is not required to sell any specific number or dollar amount of shares.
When
an Authorized Participant executes an agreement with USCF on behalf of UGA (each such agreement, an “Authorized Participant
Agreement”), such Authorized Participant becomes part of the group of parties eligible to purchase baskets from, and put
baskets for redemption to, UGA. An Authorized Participant is under no obligation to create or redeem baskets, and an Authorized
Participant is under no obligation to offer to the public shares of any baskets it does create.
As of
February 28, 2021, UGA had the following Authorized Participants: Citadel Securities LLC, Citigroup Global Markets Inc., Credit
Suisse Securities USA LLC, Goldman Sachs & Company, JP Morgan Securities Inc., Merrill Lynch Professional Clearing Corp.,
Morgan Stanley & Company Inc., RBC Capital Markets LLC, SG Americas Securities LLC, and Virtu Financial BD LLC.
Because
new shares can be created and issued on an ongoing basis, at any point during the life of UGA, a “distribution”, as
such term is used in the 1933 Act, will be occurring. Authorized Participants, other broker-dealers and other persons are cautioned
that some of their activities may result in their being deemed participants in a distribution in a manner that would render them
statutory underwriters and subject them to the prospectus-delivery and liability provisions of the 1933 Act. In addition, any
purchaser who purchases shares with a view towards distribution of such shares may be deemed to be a statutory underwriter.
Authorized Participants
will comply with the prospectus-delivery requirements in connection with the sale of shares to customers. For example, an Authorized
Participant, other broker-dealer firm or its client will be deemed a statutory underwriter if it purchases a Creation Basket from
UGA, breaks the Creation Basket down into the constituent shares and sells the shares to its customers; or if it chooses to couple
the creation of a supply of new shares with an active selling effort involving solicitation of secondary market demand for the
shares. Authorized Participants may also engage in secondary market transactions in shares that would not be deemed “underwriting”.
For example, an Authorized Participant may act in the capacity of a broker or dealer with respect to shares that were previously
distributed by other Authorized Participants. A determination of whether a particular market participant is an underwriter must
take into account all the facts and circumstances pertaining to the activities of the broker-dealer or its client in the particular
case, and the examples mentioned above should not be considered a complete description of all the activities that would lead to
designation as an underwriter and subject them to the prospectus-delivery and liability provisions of the 1933 Act.
Dealers
who are neither Authorized Participants nor “underwriters” but are nonetheless participating in a distribution (as
contrasted to ordinary secondary trading transactions), and thus dealing with shares that are part of an “unsold allotment”
within the meaning of Section 4(a)(3)(C) of the 1933 Act, would be unable to take advantage of the prospectus-delivery exemption
provided by Section 4(a)(3) of the 1933 Act.
USCF
may qualify the shares in states selected by USCF and intends that sales be made through broker-dealers who are members of FINRA.
Investors intending to create or redeem baskets through Authorized Participants in transactions not involving a broker-dealer
registered in such investor’s state of domicile or residence should consult their legal advisor regarding applicable broker-dealer
or securities regulatory requirements under the state securities laws prior to such creation or redemption.
While
the Authorized Participants may be indemnified by USCF, they will not be entitled to receive a discount or commission from UGA
for their purchases of Creation Baskets.
Calculating
Per Share NAV
UGA’s
per share NAV is calculated by:
|
·
|
Taking the current market
value of its total assets;
|
|
·
|
Subtracting any liabilities;
and
|
|
·
|
Dividing that total by the
total number of outstanding shares.
|
The Administrator
calculates the per share NAV of UGA once each NYSE Arca trading day. The per share NAV for a normal 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.
The 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 traded on the NYMEX, but calculates or determines the value of all other UGA investments as of the earlier of
the close of the NYSE Arca or 4:00 p.m. New York time, in accordance with the current Administrative Agency Agreement among the
Administrator, UGA and USCF. “Other information” customarily used in determining fair value includes information consisting
of market data in the relevant market supplied by one or more third parties including, without limitation, relevant rates, prices,
yields, yield curves, volatilities, spreads, correlations or other market data in the relevant market; or information of the types
described above from internal sources if that information is of the same type used by UGA in the regular course of its business
for the valuation of similar transactions. The information may include costs of funding, to the extent costs of funding are not
and would not be a component of the other information being utilized. Third parties supplying quotations or market data may include,
without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors, brokers and other
sources of market information.
In addition,
in order to provide updated information relating to UGA for use by investors and market professionals, the NYSE Arca calculates
and disseminates throughout the core trading session on each trading day an updated indicative fund value. The indicative fund
value is calculated by using the prior day’s closing per share NAV of UGA as a base and updating that value throughout the
trading day to reflect changes in the most recently reported trade price for the active Benchmark Futures Contract on the NYMEX.
The prices reported for the active Benchmark Futures Contract month are adjusted based on the prior day’s spread differential
between settlement values for that contract and the spot month contract. In the event that the spot month contract is also the
Benchmark Futures Contract, the last sale price for the Benchmark Futures Contract is not adjusted. The indicative fund value
share basis disseminated during NYSE Arca core trading session hours should not be viewed as an actual real time update of the
per share NAV, because the per share NAV is calculated only once at the end of each trading day, based upon the relevant end of
day values of UGA’s investments.
The indicative
fund value is disseminated on a per share basis every 15 seconds during regular NYSE Arca core trading session hours of 9:30 a.m.
New York time to 4:00 p.m. New York time. The normal trading hours of the NYMEX are 9:00 a.m. New York time to 2:30 p.m. New York
time. This means that there is a gap in time at the beginning and the end of each day during which UGA’s shares are traded
on the NYSE Arca, but real-time NYMEX trading prices for futures contracts traded on the NYMEX are not available. During such
gaps in time the indicative fund value will be calculated based on the end of day price of such Gasoline Futures Contracts from
NYMEX’s immediately preceding trading session. In addition, Other Futures Contracts, Other Gasoline-Related Investments
and Treasuries held by UGA will be valued by the Administrator.
The NYSE
Arca disseminates the indicative fund value through the facilities of CTA/CQ High Speed Lines. In addition, the indicative fund
value is published on the NYSE Arca’s website and is available through on-line information services such as Bloomberg and
Reuters.
Dissemination
of the indicative fund value provides additional information that is not otherwise available to the public and is useful to investors
and market professionals in connection with the trading of UGA shares on the NYSE Arca. Investors and market professionals are
able throughout the trading day to compare the market price of UGA and the indicative fund value. If the market price of UGA shares
diverges significantly from the indicative fund value, market professionals will have an incentive to execute arbitrage trades.
For example, if UGA appears to be trading at a discount compared to the indicative fund value, a market professional could buy
UGA shares on the NYSE Arca and sell short gasoline futures contracts. Such arbitrage trades can tighten the tracking between
the market price of UGA and the indicative fund value and thus can be beneficial to all market participants.
UGA reserves
the right to adjust the share price of UGA in the future to maintain convenient trading ranges for investors. Any adjustments
would be accomplished through stock splits or reverse stock splits. Such splits would decrease (in the case of a split) or increase
(in the case of a reverse split) the proportionate NAV per share, but would have no effect on the net assets of UGA or the proportionate
voting rights of shareholders or limited partners.
Creation
and Redemption of Shares
UGA creates
and redeems shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. The creation and redemption
of baskets are only made in exchange for delivery to UGA or the distribution by UGA of the amount of Treasuries and any cash represented
by the baskets being created or redeemed, the amount of which is based on the combined NAV of the number of shares included in
the baskets being created or redeemed determined after 4:00 p.m. New York time on the day the order to create or redeem baskets
is properly received.
Authorized
Participants are the only persons that may place orders to create and redeem baskets. Authorized Participants must be (1) registered
broker-dealers or other securities market participants, such as banks and other financial institutions, that are not required
to register as broker-dealers to engage in securities transactions as described below, and (2) DTC Participants. To become an
Authorized Participant, a person must enter into an Authorized Participant Agreement. The Authorized Participant Agreement provides
the procedures for the creation and redemption of baskets and for the delivery of the Treasuries and any cash required for such
creations and redemptions. The Authorized Participant Agreement and the related procedures attached thereto may be amended by
USCF, without the consent of any shareholder or Authorized Participant. Authorized Participants pay $350 to UGA for each order
they place to create one or more Creation Baskets or to redeem one or more Redemption Baskets. The transaction fee may be reduced,
increased or otherwise changed by USCF. Authorized Participants who make deposits with UGA in exchange for baskets receive no
fees, commissions or other form of compensation or inducement of any kind from either UGA or USCF, and no such person will have
any obligation or responsibility to UGA or USCF to effect any sale or resale of shares.
Certain
Authorized Participants are expected to be capable of participating directly in the physical gasoline market and the gasoline
futures market. In some cases, an Authorized Participant or its affiliates may from time to time acquire gasoline or sell gasoline
and may profit in these instances. USCF believes that the size and operation of the gasoline market make it unlikely that an Authorized
Participant’s direct activities in the gasoline or securities markets will significantly affect the price of gasoline, Gasoline
Interests, or the price of the shares.
Each
Authorized Participant is required to be registered as a broker-dealer under the Exchange Act and is a member in good standing
with FINRA, or exempt from being or otherwise not required to be licensed as a broker-dealer or a member of FINRA, and qualified
to act as a broker or dealer in the states or other jurisdictions where the nature of its business so requires. Certain Authorized
Participants may also be regulated under federal and state banking laws and regulations. Each Authorized Participant has its own
set of rules and procedures, internal controls and information barriers as it determines is appropriate in light of its own regulatory
regime.
Under
the Authorized Participant Agreement, USCF, and UGA under limited circumstances have agreed to indemnify the Authorized Participants
against certain liabilities, including liabilities under the 1933 Act, and to contribute to the payments the Authorized Participants
may be required to make in respect of those liabilities.
The following
description of the procedures for the creation and redemption of baskets is only a summary and an investor should refer to the
relevant provisions of the LP Agreement and the form of Authorized Participant Agreement for more detail, each of which is incorporated
by reference into this prospectus.
Creation Procedures
On any
business day, an Authorized Participant may place an order with the Marketing Agent to create one or more baskets. For purposes
of processing purchase and redemption orders, a “business day” means any day other than a day when any of the NYSE
Arca, the NYMEX or the NYSE is closed for regular trading. Purchase orders must be placed by 12:00 p.m. New York time or the close
of regular trading on the NYSE Arca, whichever is earlier. The day on which the Marketing Agent receives a valid purchase order
is referred to as the purchase order date.
By placing
a purchase order, an Authorized Participant agrees to deposit Treasuries, cash, or a combination of Treasuries and cash, as described
below. Prior to the delivery of baskets for a purchase order, the Authorized Participant must also have wired to the Custodian
the nonrefundable transaction fee due for the purchase order. Authorized Participants may not withdraw a creation request, except
as otherwise set forth in the procedures in the Authorized Participant Agreement.
The manner
by which creations are made is dictated by the terms of the Authorized Participant Agreement. By placing a purchase order, an
Authorized Participant agrees to (1) deposit Treasuries, cash, or a combination of Treasuries and cash with the Custodian, and
(2) if required by USCF in its sole discretion, enter into or arrange for a block trade, an exchange for physical or exchange
for swap, or any other OTC energy transaction (through itself or a designated acceptable broker) with UGA for the purchase of
a number and type of futures contracts at the closing settlement price for such contracts on the purchase order date. If an Authorized
Participant fails to consummate (1) and (2), the order shall be cancelled. The number and types of contracts specified shall be
determined by USCF, in its sole discretion, to meet UGA’s investment objective and shall be purchased as a result of the
Authorized Participant’s purchase of shares.
Determination of Required
Deposits
The total
deposit required to create each Creation Basket (“Creation Basket Deposit”) is the amount of Treasuries and/or cash
that is in the same proportion to the total assets of UGA (net of estimated accrued but unpaid fees, expenses and other liabilities)
on the purchase order date as the number of shares to be created under the purchase order is in proportion to the total number
of shares outstanding on the purchase order date. USCF determines, directly in its sole discretion or in consultation with the
Administrator, the requirements for Treasuries and the amount of cash, including the maximum permitted remaining maturity of a
Treasury and proportions of Treasury and cash that may be included in deposits to create baskets. The Marketing Agent will publish
such requirements at the beginning of each business day. The amount of cash deposit required is the difference between the aggregate
market value of the Treasuries required to be included in a Creation Basket Deposit as of 4:00 p.m. New York time on the date
the order to purchase is properly received and the total required deposit.
Delivery of Required
Deposits
An Authorized
Participant who places a purchase order is responsible for transferring to UGA’s account with the Custodian the required
amount of Treasuries and/or cash by the end of the second business day following the purchase order date. Upon receipt of the
deposit amount, the Administrator directs DTC to credit the number of baskets ordered to the Authorized Participant’s DTC
account on the second business day following the purchase order date. The expense and risk of delivery and ownership of Treasuries
until such Treasuries have been received by the Custodian on behalf of UGA shall be borne solely by the Authorized Participant.
Because
orders to purchase baskets must be placed by 12:00 p.m., New York time, but the total payment required to create a basket during
the continuous offering period will not be determined until after 4:00 p.m., New York time, on the date the purchase order is
received, Authorized Participants will not know the total amount of the payment required to create a basket at the time they submit
an irrevocable purchase order for the basket. UGA’s NAV and the total amount of the payment required to create a basket
could rise or fall substantially between the time an irrevocable purchase order is submitted and the time the amount of the purchase
price in respect thereof is determined.
Rejection of Purchase
Orders
USCF
acting by itself or through the Marketing Agent shall have the absolute right but no obligation to reject a purchase order or
a Creation Basket Deposit if:
|
·
|
it determines that the investment
alternative available to UGA at that time will not enable it to meet its investment objective;
|
|
·
|
it determines that the purchase
order or the Creation Basket Deposit is not in proper form;
|
|
·
|
it believes that the purchase
order or the Creation Basket Deposit would have adverse tax consequences to UGA, the limited partners or its shareholders;
|
|
·
|
the acceptance or receipt
of the Creation Basket Deposit would, in the opinion of counsel to USCF, be unlawful; or
|
|
·
|
circumstances outside the
control of USCF, Marketing Agent or Custodian make it, for all practical purposes, not feasible to process creations of baskets.
|
None
of USCF, the Marketing Agent or the Custodian will be liable for the rejection of any purchase order or Creation Basket Deposit.
Redemption Procedures
The procedures
by which an Authorized Participant can redeem one or more baskets mirror the procedures for the creation of baskets. On any business
day, an Authorized Participant may place an order with the Marketing Agent to redeem one or more baskets. Redemption orders must
be placed by 12:00 p.m. New York time or the close of regular trading on the NYSE Arca, whichever is earlier. A redemption order
so received will be effective on the date it is received in satisfactory form by the Marketing Agent (“Redemption Order
Date”). The redemption procedures allow Authorized Participants to redeem baskets and do not entitle an individual shareholder
to redeem any shares in an amount less than a Redemption Basket, or to redeem baskets other than through an Authorized Participant.
By placing
a redemption order, an Authorized Participant agrees to deliver the baskets to be redeemed through DTC’s book-entry system
to UGA, as described below. Prior to the delivery of the redemption distribution for a redemption order, the Authorized Participant
must also have wired to UGA’s account at the Custodian the non-refundable transaction fee due for the redemption order.
An Authorized Participant may not withdraw a redemption order, except as otherwise set for in the procedures in the Authorized
Participant Agreement.
The manner
by which redemptions are made is dictated by the terms of the Authorized Participant Agreement. By placing a redemption order,
an Authorized Participant agrees to (1) deliver the Redemption Basket to be redeemed through DTC’s book-entry system to
UGA’s account with the Custodian not later than 3:00 p.m. New York time on the second business day following the effective
date of the redemption order (“Redemption Distribution Date”), and (2) if required by USCF in its sole discretion,
enter into or arrange for a block trade, an exchange for physical or exchange for swap, or any other OTC energy transaction (through
itself or a designated acceptable broker) with UGA for the sale of a number and type of futures contracts at the closing settlement
price for such contracts on the Redemption Order Date. If an Authorized Participant fails to consummate (1) and (2) above, the
order shall be cancelled. The number and type of contracts specified shall be determined by USCF, in its sole discretion, to meet
UGA’s investment objective and shall be sold as a result of the Authorized Participant’s sale of shares.
Determination of Redemption
Distribution
The redemption
distribution from UGA consists of a transfer to the redeeming Authorized Participant of an amount of Treasuries and/or cash that
is in the same proportion to the total assets of UGA (net of estimated accrued but unpaid fees, expenses and other liabilities)
on the date the order to redeem is properly received as the number of shares to be redeemed under the redemption order is in proportion
to the total number of shares outstanding on the date the order is received. USCF, directly or in consultation with the Administrator,
determines the requirements for Treasuries and the amounts of cash, including the maximum permitted remaining maturity of a Treasury,
and the proportions of Treasuries and/or cash that may be included in distributions to redeem baskets. The Marketing Agent will
publish an estimate of the redemption distribution per basket as of the beginning of each business day.
Delivery of Redemption
Distribution
The redemption
distribution due from UGA will be delivered to the Authorized Participant by 3:00 p.m. New York time on the second business day
following the redemption order date if, by 3:00 p.m. New York time on such second business day, UGA’s DTC account has been
credited with the baskets to be redeemed. If UGA’s DTC account has not been credited with all of the baskets to be redeemed
by such time, the redemption distribution will be delivered to the extent of whole baskets received. Any remainder of the redemption
distribution will be delivered on the next business day to the extent of remaining whole baskets received if UGA receives the
fee applicable to the extension of the redemption distribution date which USCF may, from time to time, determine and the remaining
baskets to be redeemed are credited to UGA’s DTC account by 3:00 p.m. New York time on such next business day. Any further
outstanding amount of the redemption order shall be cancelled. Pursuant to information from USCF, the Custodian will also be authorized
to deliver the redemption distribution notwithstanding that the baskets to be redeemed are not credited to UGA’s DTC account
by 3:00 p.m. New York time on the second business day following the redemption order date if the Authorized Participant has collateralized
its obligation to deliver the baskets through DTC’s book entry-system on such terms as USCF may from time to time determine.
Suspension or Rejection
of Redemption Orders
USCF may,
in its discretion, suspend the right of redemption, or postpone the redemption settlement date, (1) for any period during which
the NYSE Arca or the NYMEX is closed other than customary weekend or holiday closings, or trading on the NYSE Arca or the NYMEX
is suspended or restricted, (2) for any period during which an emergency exists as a result of which delivery, disposal or evaluation
of Treasuries is not reasonably practicable, or (3) for such other period as USCF determines to be necessary for the protection
of the limited partners or shareholders. For example, USCF may determine that it is necessary to suspend redemptions to allow
for the orderly liquidation of UGA’s assets at an appropriate value to fund a redemption. If USCF has difficulty liquidating
its positions, e.g., because of a market disruption event in the futures markets, a suspension of trading by the exchange
where the futures contracts are listed or an unanticipated delay in the liquidation of a position in an OTC contract, it may be
appropriate to suspend redemptions until such time as such circumstances are rectified. None of USCF, the Marketing Agent, the
Administrator, or the Custodian will be liable to any person or in any way for any loss or damages that may result from any such
suspension or postponement.
Redemption
orders must be made in whole baskets. USCF will reject a redemption order if the order is not in proper form as described in the
Authorized Participant Agreement or if the fulfillment of the order, in the opinion of its counsel, might be unlawful. USCF may
also reject a redemption order if the number of shares being redeemed would reduce the remaining outstanding shares to 100,000
shares (i.e., two baskets) or less.
Creation and Redemption
Transaction Fee
To compensate
UGA for its expenses in connection with the creation and redemption of baskets, an Authorized Participant is required to pay a
transaction fee to UGA of $350. An order may include multiple baskets. The transaction fee may be reduced, increased or otherwise
changed by USCF. USCF shall notify DTC of any change in the transaction fee and will not implement any increase in the fee for
the redemption of baskets until thirty (30) days after the date of the notice.
Tax Responsibility
Authorized
Participants are responsible for any transfer tax, sales or use tax, stamp tax, recording tax, value added tax or similar tax
or governmental charge applicable to the creation or redemption of baskets, regardless of whether or not such tax or charge is
imposed directly on the Authorized Participant, and agree to indemnify USCF and UGA if they are required by law to pay any such
tax, together with any applicable penalties, additions to tax or interest thereon.
Secondary Market Transactions
As noted,
UGA creates and redeems shares from time to time, but only in one or more Creation Baskets or Redemption Baskets. The creation
and redemption of baskets are only made in exchange for delivery to UGA or the distribution by UGA of the amount of Treasuries
and cash represented by the baskets being created or redeemed, the amount of which will be based on the aggregate NAV of the number
of shares included in the baskets being created or redeemed determined on the day the order to create or redeem baskets is properly
received.
As discussed
above, Authorized Participants are the only persons that may place orders to create and redeem baskets. Authorized Participants
must be registered broker-dealers or other securities market participants, such as banks and other financial institutions that
are not required to register as broker-dealers to engage in securities transactions. An Authorized Participant is under no obligation
to create or redeem baskets, and an Authorized Participant is under no obligation to offer to the public shares of any baskets
it does create. Authorized Participants that do offer to the public shares from the baskets they create will do so at per-share
offering prices that are expected to reflect, among other factors, the trading price of the shares on the NYSE Arca, the NAV of
UGA at the time the Authorized Participant purchased the Creation Baskets and the NAV of the shares at the time of the offer of
the shares to the public, the supply of and demand for shares at the time of sale, and the liquidity of the Futures Contract market
and the market for Other Gasoline-Related Investments.
The prices of
shares offered by Authorized Participants are expected to fall between UGA’s NAV and the trading price of the shares on
the NYSE Arca at the time of sale. Shares initially comprising the same basket but offered by Authorized Participants to the public
at different times may have different offering prices. An order for one or more baskets may be placed by an Authorized Participant
on behalf of multiple clients. Authorized Participants who make deposits with UGA in exchange for baskets receive no fees, commissions
or other forms of compensation or inducement of any kind from either UGA or USCF, and no such person has any obligation or responsibility
to USCF or UGA to effect any sale or resale of shares. Shares trade in the secondary market on the NYSE Arca. Shares may trade
in the secondary market at prices that are lower or higher relative to their NAV per share. The amount of the discount or premium
in the trading price relative to the NAV per share may be influenced by various factors, including, among other things, the number
of investors who seek to purchase or sell shares in the secondary market, availability of Creation Baskets, the liquidity of the
Futures Contracts market and the market for Other Gasoline-Related Investments. In addition, while UGA’s shares trade during
the core trading session on the NYSE Arca until 4:00 p.m. New York time, liquidity in the market for Futures Contracts and Other
Gasoline-Related Investments may be reduced after the determination of the settlement price by the NYMEX at 2:30 p.m. New York
time. UGA’s NAV is calculated based on the settlement price of the Benchmark Futures Contract at 2:30 p.m. New York time
and the closing share price of UGA on the NYSE takes into account changes in the price of the Benchmark Futures Contract that
occur after the settlement price is determined. As a result, during this time, trading spreads, and the resulting premium or discount,
on the shares may widen.
Use
of Proceeds
USCF causes
UGA to transfer the proceeds from the sale of Creation Baskets to the Custodian or other custodian for trading activities. USCF
will invest UGA’s assets in Gasoline Interests and investments in Treasuries, cash and/or cash equivalents. When UGA purchases
a Futures Contract and certain exchange-traded Other Gasoline-Related Investments, UGA is required to deposit typically 5% to
30% with the selling FCMs on behalf of the exchange a portion of the value of the contract or other interest as security to ensure
payment for the obligation under Gasoline Interests at maturity. This deposit is known as initial margin. Counterparties in transactions
in OTC contracts will generally impose similar collateral requirements on UGA. USCF will invest the assets that remain after margin
and collateral are posted in Treasuries, cash and/or cash equivalents subject to these margin and collateral requirements. USCF
has sole authority to determine the percentage of assets that are:
|
·
|
held on deposit with
the FCMs or other custodian,
|
|
|
|
|
·
|
used for other investments,
and
|
|
|
|
|
·
|
held in bank accounts
to pay current obligations and as reserves.
|
Approximately
5% to 30% of UGA’s assets have normally been committed as margin for commodity futures contracts. However, from time to
time, the percentage of assets committed as margin may be substantially more, or less than, such range. An FCM, counterparty,
government agency or commodity exchange could increase margin or collateral requirements applicable to UGA to hold trading positions
at any time. Ongoing margin and collateral payments will generally be required for both exchange-traded and OTC contracts based
on changes in the value of the Gasoline Interests. Furthermore, ongoing collateral requirements with respect to OTC contracts
are negotiated by the parties, and may be affected by overall market volatility, volatility of the underlying commodity or index,
the ability of the counterparty to hedge its exposure under a Gasoline Interests, and each party’s creditworthiness. Margin
is merely a security deposit and has no bearing on the profit or loss potential for any positions held. In light of the differing
requirements for initial payments under exchange-traded and OTC contracts and the fluctuating nature of ongoing margin and collateral
payments, it is not possible to estimate what portion of UGA’s assets will be posted as margin or collateral at any given
time. The Treasuries, cash and cash equivalents held by UGA will constitute reserves that will be available to meet ongoing margin
and collateral requirements. All interest income will be used for UGA’s benefit.
The assets
of UGA posted as margin for Futures Contracts are held in segregated accounts pursuant to the CEA and CFTC regulations.
If UGA
enters into a swap agreement, UGA must post both collateral and independent amounts to its swap counterparty(ies). The amount
of collateral UGA posts changes according to the amounts owed by UGA to its counterparty on a given swap transaction, while independent
amounts are fixed amounts posted by UGA at the start of a swap transaction. Collateral and independent amounts posted to swap
counterparties will be held by a third-party custodian.
INFORMATION
YOU SHOULD KNOW
This
prospectus contains information you should consider when making an investment decision about the shares. You may rely on the information
contained in this prospectus. Neither UGA nor USCF has authorized any person to provide you with different information and, if
anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to
sell the shares in any jurisdiction where the offer or sale of the shares is not permitted.
The information
contained in this prospectus was obtained from us and other sources believed by us to be reliable.
You should
rely only on the information contained in this prospectus or any applicable prospectus supplement or any information incorporated
by reference to this prospectus. We have not authorized anyone to provide you with any information that is different. If you receive
any unauthorized information, you must not rely on it. You should disregard anything we said in an earlier document that is inconsistent
with what is included in this prospectus or any applicable prospectus supplement or any information incorporated by reference
to this prospectus. Where the context requires, when we refer to this “prospectus,” we are referring to this prospectus
and (if applicable) the relevant prospectus supplement.
You should
not assume that the information in this prospectus or any applicable prospectus supplement is current as of any date other than
the date on the front page of this prospectus or the date on the front page of any applicable prospectus supplement.
We include
cross references in this prospectus to captions in these materials where you can find further related discussions. The table of
contents tells you where to find these captions.
SUMMARY
OF PROMOTIONAL AND SALES MATERIAL
UGA uses
the following promotional or sales material:
|
·
|
UGA’s website, www.uscfinvestments.com,
and
|
|
·
|
UGA Fact sheet found on UGA’s
website.
|
The materials
described above are not a part of this prospectus or the registration statement of which this prospectus is a part and have been
submitted to the staff of the SEC for their review pursuant to Industry Guide 5.
This section
is provided here as a convenience to you.
INTELLECTUAL
PROPERTY
USCF owns trademark
registrations for UNITED STATES GASOLINE FUND (U.S. Reg. No. 3486625) for “Fund investment services in the field of
gasoline futures contracts, cash-settled options on gasoline futures contracts, forward contracts for gasoline, over-the-counter
transactions based on the price of gasoline, and indices based on the foregoing,” in use since February 22, 2008, and
UGA UNITED STATES GASOLINE FUND, LP (and Flame Design) (U.S. Reg. No. 4440923) for “Financial investment services in
the field of gasoline futures contracts, cash-settled options on gasoline futures contracts, forward contracts for gasoline, over-the-counter
transactions based on the price of gasoline, and indices based on the foregoing,” in use since September 30, 2012.
USCF relies upon these trademarks through which it markets its services and strives to build and maintain brand recognition in
the market and among current and potential investors. So long as USCF continues to use these trademarks to identify its services,
without challenge from any third party, and properly maintains and renews the trademark registrations under applicable laws, rules and
regulations, it will continue to have indefinite protection for these trademarks under current laws, rules and regulations.
USCF owns trademark
registrations for USCF (and Design) (U.S. Reg. No. 5127374) for “Fund investment services,” in use since April 10,
2016, USCF (U.S. Reg No. 5040755) for “Fund investment services,” in use since June 24, 2008, and INVEST
IN WHAT’S REAL (U.S. Reg. No. 5450808) for “Fund investment services,” in use since April 2016. USCF
relies upon these trademarks and service mark through which it markets its services and strives to build and maintain brand recognition
in the market and among current and potential investors. So long as USCF continues to use these trademarks to identify its services,
without challenge from any third party, and properly maintains and renews the trademark registrations under applicable laws, rules and
regulations, it will continue to have indefinite protection for these trademarks under current laws, rules and regulations.
USCF has been granted two patents Nos. 7,739,186 and 8,019,675, for systems and methods for an exchange traded fund (ETF) that
tracks the price of one or more commodities.
WHERE
YOU CAN FIND MORE INFORMATION
USCF
has filed on behalf of UGA a registration statement on Form S-1 with the SEC under the 1933 Act. This prospectus does not contain
all of the information set forth in the registration statement (including the exhibits to the registration statement), parts of
which have been omitted in accordance with the rules and regulations of the SEC. For further information about UGA or the shares,
please refer to the registration statement, which you may access online at www.sec.gov. Information about UGA and the shares
can also be obtained from UGA’s website, http://www.uscfinvestments.com. UGA’s website address is only provided
here as a convenience to you and the information contained on or connected to the website is not part of this prospectus or the
registration statement of which this prospectus is part. UGA is subject to the informational requirements of the Exchange Act
and USCF and UGA will each, on behalf of UGA, file certain reports and other information with the SEC under the Exchange Act.
USCF will file an updated prospectus annually for UGA pursuant to the 1933 Act. The reports and other information can be accessed
online at www.sec.gov.
STATEMENT
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus includes “forward-looking statements” which generally relate to future events or future performance. In
some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,”
“expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” or the negative of these terms or other comparable terminology. All statements (other than statements
of historical fact) included in this prospectus and movements in the commodities markets and indexes that track such movements,
UGA’s operations, USCF’s plans and references to UGA’s future success and other similar matters, are based upon
certain assumptions and analyses USCF has made based on its perception of historical trends, current conditions and expected future
developments, as well as other factors appropriate in the circumstances. Whether or not actual results and developments will conform
to USCF’s expectations and predictions, however, is subject to a number of risks and uncertainties, including the special
considerations discussed in this prospectus, general economic, market and business conditions, changes in laws or regulations,
including those concerning taxes, made by governmental authorities or regulatory bodies, and other world economic and political
developments. See “Risk Factors Involved with an Investment in UGA.’’ Consequently, all the forward-looking
statements made in this prospectus are qualified by these cautionary statements, and there can be no assurance that the events
or developments that will or may occur in the future, including such matters as changes in inflation in the United States, movements
in the stock market, movements in the U.S. and foreign currencies, actual results or developments USCF anticipates will be realized,
or even if substantially realized, that they will result in the expected consequences to, or have the expected effects on, UGA’s
operations or the value of the shares.
INCORPORATION
BY REFERENCE OF CERTAIN INFORMATION
We are a reporting
company and file annual, quarterly and current reports and other information with the SEC. The rules of the SEC allow us to “incorporate
by reference” information that we file with them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an important part of this prospectus. Any reports filed by
us with the SEC subsequent to the date of this prospectus and before the date that any offering of any securities by means of
this prospectus and any accompanying prospectus supplement is terminated will automatically update and, where applicable, supersede
any information contained in this prospectus or incorporated by reference in this prospectus. We incorporate by reference the
documents listed below and any future filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this prospectus until all of the securities offered by this prospectus and any accompanying prospectus supplement
have been sold or we otherwise terminate the offering of these securities; provided, however, that information “furnished”
under Item 2.02 or Item 7.01 of Form 8-K or other information “furnished” to the SEC which is not deemed filed is
not incorporated by reference in this prospectus and any accompanying prospectus supplement.
|
·
|
Annual Report on Form 10-K
for the fiscal year ended December 31, 2020, filed with the SEC on February 26, 2021.
|
Any statement
contained in a document incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes
of this prospectus to the extent that a statement contained in this prospectus or in any other filed documents that also is or
is deemed to be incorporated by reference in this prospectus modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We will
provide to each person to whom a prospectus is delivered, including any beneficial owner, a copy of these filings at no cost,
upon written or oral request at the following address or telephone number:
United States
Gasoline Fund, LP
Attention: Katie
Rooney
1850 Mt. Diablo
Boulevard, Suite 640,
Walnut
Creek, California 94596
(510) 522-9600
We make
our electronic filings with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to these reports available on our website free of charge as soon as practicable after we file or furnish
them with the SEC. The information contained on our website does not constitute a part of this prospectus, and our website address
supplied above is intended to be an inactive textual reference only and not an active hyperlink to our website.
Privacy
Policy
UGA and
USCF may collect or have access to certain nonpublic personal information about current and former investors. Nonpublic personal
information may include information received from investors such as an investor’s name, social security number and address,
as well as information received from brokerage firms about investor holdings and transactions in shares of UGA.
UGA and
USCF do not disclose nonpublic personal information except as required by law or as described in their Privacy Policy. In general,
UGA and USCF restrict access to the nonpublic personal information they collect about investors to those of their and their affiliates’
employees and service providers who need access to such information to provide products and services to investors.
UGA and
USCF maintain safeguards that comply with federal and applicable state laws to protect investors’ nonpublic personal information.
These safeguards are reasonably designed to (1) ensure the security and confidentiality of investors’ records and information,
(2) protect against any anticipated threats or hazards to the security or integrity of investors’ records and information,
and (3) protect against unauthorized access to or use of investors’ records or information that could result in substantial
harm or inconvenience to any investor. Third-party service providers with whom UGA and USCF share nonpublic personal information
about investors must agree to follow appropriate standards of security and confidentiality, which includes safeguarding such non-public
personal information physically, electronically and procedurally.
A copy of UGA’s
and USCF’s current Privacy Policy is available at http://www.uscfinvestments.com.
APPENDIX
A
Glossary
of Defined Terms
In this
prospectus, each of the following terms has the meanings set forth after such term:
1933
Act: The Securities Act of 1933.
1940
Act: Investment Company Act of 1940.
Adjusted
K-1: A statement to investors who owned beneficial interests in the shares in the year to which the adjusted allocations relate
setting forth their proportionate shares of the adjustment.
Administrator:
BNY Mellon.
Authorized
Participant: A person that directly purchases or redeems Creation Baskets or Redemption Baskets, respectively, from or to
UGA.
Authorized
Participant Agreement: An agreement with USCF on behalf of UGA whereby a person becomes an Authorized Participant.
Backup
Withholding: U.S. federal income tax that is required to be withheld.
Basket:
A block of 50,000 shares.
Benchmark
Futures Contract: The near month contract to expire 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 to expire for gasoline traded
on the NYMEX.
BNO:
United States Brent Oil Fund, LP.
BNY
Mellon: The Bank of New York Mellon.
Board:
USCF’s board of directors.
Business
Day: Any day other than a day when any of the NYSE Arca, the NYMEX or the New York Stock Exchange is closed for regular trading.
CEA:
Commodity Exchange Act.
CFTC:
Commodity Futures Trading Commission, an independent agency with the mandate to regulate commodity futures and options in
the United States.
Cleared
Swap Contract: A financial contract, whose value is designed to track the return of stocks, bonds, currencies, commodities,
or some other benchmark, that is submitted to a central clearinghouse after it is either traded OTC or on an exchange or other
trading platform.
Code:
Internal Revenue Code.
Commodity
Pool: An enterprise in which several individuals contribute funds in order to trade futures contracts or options on futures
contracts collectively.
Commodity
Pool Operator or CPO: Any person engaged in a business which is of the nature of an investment trust, syndicate, or similar
enterprise, and who, in connection therewith, solicits, accepts, or receives from others, funds, securities, or property, either
directly or through capital contributions, the sale of stock or other forms of securities, or otherwise, for the purpose of trading
in any commodity for future delivery or commodity option on or subject to the rules of any contract market.
Concierge:
Concierge Technologies Inc., a company publicly traded under the ticker symbol “CNCG.”
CPER: United
States Copper Index Fund.
Creation
Basket: A block of 50,000 shares, used by UGA to issue shares.
Creation
Basket Deposit: The total deposit required to create each basket.
Custodian:
The Bank of New York Mellon.
DCM:
Designated contract market.
DNO:
United States Short Oil Fund, LP.
DTC:
The Depository Trust Company. DTC will act as the securities depository for the shares.
DTC
Participant: An entity that has an account with DTC.
DTEF:
A derivatives transaction execution facility.
ECI:
Income that is effectively connected with the conduct of a U.S. trade or business.
ERISA:
Employee Retirement Income Security Act of 1974.
Exchange
Act: The Securities Exchange Act of 1934.
Exchange
for Related Position (EFRP): An off market transaction which involves the swapping (or exchanging) of an over-the-counter
(OTC) position for a futures position. The OTC transaction must be for the same or similar quantity or amount of a specified commodity,
or a substantially similar commodity or instrument. The OTC side of the EFRP can include swaps, swap options, or other instruments
traded in the OTC market. In order that an EFRP transaction can take place, the OTC side and futures components must be “substantially
similar” in terms of either value and or quantity. The net result is that the OTC position (and the inherent counterparty
credit exposure) is transferred from the OTC market to the futures market. EFRPs can also work in reverse, where a futures position
can be reversed and transferred to the OTC market.
FDAP:
Amounts that are fixed, determinable, annual and periodic income, such as interest, dividends and rent that are not connected
with the operation of a U.S. trade or business.
FCM:
Futures Commission Merchant.
FFI:
Foreign financial institution.
FINRA:
Financial Industry Regulatory Authority.
Futures
Contracts: Futures contracts for gasoline, crude oil, heating oil, natural gas, and other petroleum-based fuels that are traded
on the NYMEX, ICE Futures or other U.S. and foreign exchanges.
Gasoline:
Gasoline, also known as reformulated gasoline blendstock for oxygen blending, or “RBOB”, for delivery to the New
York harbor.
Gasoline
Interests: Futures Contracts and Other Gasoline-Related Investments.
ICE
Futures: The ICE Futures Europe and ICE Futures U.S. together the leading electronic regulated futures and options exchange
for global energy markets.
IGA:
Intergovernmental agreement.
Indirect
Participants: Banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly.
IRA:
Individual retirement account.
IRS:
U.S. Internal Revenue Service.
ISDA: International
Swaps and Derivatives Association, Inc.
Limited
Liability Company (LLC): A type of business ownership combining several features of corporation and partnership structures.
LLC
Agreement: Sixth Amended and Restated Limited Liability Company Agreement of USCF, dated as of May 15, 2015 (as amended from
time to time).
LP
Agreement: The Third Amended and Restated Agreement of Limited Partnership dated as of December 15, 2017.
Margin:
The amount of equity required for an investment in futures contracts.
Management
Directors: The four management directors that are on USCF’s board of directors.
Marketing
Agent: ALPS Distributors, Inc.
NAV:
Net asset value of UGA.
NFA:
National Futures Association.
NSCC:
National Securities Clearing Corporation.
NYMEX:
The New York Mercantile Exchange, the primary exchange on which futures contracts are traded in the U.S. UGA expects to invest
primarily in futures contracts, and particularly in futures contracts traded on the NYNEX. 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.
NYSE
Arca: NYSE Arca, Inc.
Option:
The right, but not the obligation, to buy or sell a futures contract or forward contract at a specified price on or before
a specified date.
Other
Gasoline-Related Investments: Gasoline-related investments other than Futures Contracts such as cash-settled options on Futures
Contracts, forward contracts for gasoline, and over-the-counter transactions that are based on the price of gasoline, crude oil
and other petroleum-based fuels, Futures Contracts and indices based on the foregoing.
OTC
Derivative: A financial contract, whose value is designed to track the return on stocks, bonds, currencies, commodities, or
some other benchmark, that is traded OTC or off organized exchanges.
Position
Limit Rule: Regulatory limits imposed by the CFTC on speculative positions in certain physical commodity futures and option
contracts and swaps that are economically equivalent to such contracts in the agriculture, energy and metals markets and rules
addressing the circumstances under which market participants would be required to aggregate their positions with other persons
under common ownership or control.
Prudential
Regulators: The CFTC, the SEC and the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve
System, the Federal Deposit Insurance Corporation, the Farm Credit Administration and the Federal Housing Finance Agency, collectively.
Redemption
Basket: A block of 50,000 shares used by UGA to redeem shares.
Redemption
Order Date: The date a redemption order is received in satisfactory form and approved by the Marketing Agent.
Register:
The record of all Shareholders and holders of the shares in certificated form kept by the Administrator.
Related
Public Funds: United States Gasoline Fund, LP (“UGA”); United States 12 Month Natural Gas Fund, LP (“UNL”);
United States 12 Month Oil Fund, LP (“USL”); United States Oil Fund, LP (“USO”); United States Brent Oil
Fund, LP (“BNO”); United States Natural Gas Fund, LP (“UNG”); United States Copper Index Fund (“CPER”);
United States Commodity Index Fund (“USCI”).
SEC:
Securities and Exchange Commission.
SEF: A
swap execution facility.
Secondary
Market: The stock exchanges and the over-the-counter market. Securities are first issued as a primary offering to the public.
When the securities are traded from that first holder to another, the issues trade in these secondary markets.
Shareholders:
Holders of Shares.
Shares:
Common shares representing fractional undivided beneficial interests in UGA.
Spot
Contract: A cash market transaction in which the buyer and seller agree to the immediate purchase and sale of a commodity,
usually with a two-day settlement.
Swap
Contract: Swap transactions generally involve contracts between two parties to exchange a stream of payments computed by reference
to a notional amount and the price of the asset that is the subject of the swap. Swap transactions that are not cleared through
central counterparties are called “uncleared” or “over-the-counter” (“OTC”) swaps.
Tracking
Error: Possibility that the daily NAV of UGA will not track the price of gasoline.
Treasuries:
Obligations of the U.S. government with remaining maturities of 2 years or less.
UBTI:
Unrelated business taxable income.
UGA:
United States Gasoline Fund, LP.
UHN:
United States Diesel-Heating Oil Fund, LP.
UNG:
United States Natural Gas Fund, LP.
UNL:
United States 12 Month Natural Gas Fund, LP.
USAG:
United States Agriculture Index Fund.
USCF:
United States Commodity Funds LLC (the general partner), a Delaware limited liability company, which is registered as a CPO,
who controls the investments and other decisions of UGA.
USCI:
United States Commodity Index Fund.
USL:
United States 12 Month Oil Fund, LP.
USO:
United States Oil Fund, LP.
USOD:
United States 3x Oil Fund.
USOU:
United States 3x Short Oil Fund.
Valuation
Day: Any NYSE Arca trading day as of which UGA calculates its NAV.
Wainwright:
Wainwright Investments, Inc.
You: The
owner or holder of shares.
PART
II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
Set forth
below is an estimate (except as indicated) of the amount of fees and expenses (other than underwriting commissions and discounts)
payable by the registrant in connection with the issuance and distribution of the shares pursuant to the prospectus contained
in this registration statement.
|
|
Amount
|
|
Amount SEC registration fee
|
|
$
|
141,429.45
|
|
NYSE Arca Listing Fee (actual)
|
|
$
|
6,375
|
|
FINRA filing fees (actual)
|
|
|
N/A
|
|
Blue Sky expenses
|
|
|
N/A
|
|
Auditor’s fees and expenses (estimate)
|
|
$
|
45,000
|
|
Legal fees and expenses (estimate)
|
|
$
|
4,000
|
|
Printing expenses (estimate)
|
|
$
|
22,000
|
|
Total
|
|
$
|
218,804.45
|
|
|
|
|
|
|
Item
15. Indemnification of Directors and Officers
UGA shall,
to the fullest extent permitted by law, but only out of UGA assets, indemnify and hold harmless a general partner and each officer,
director, stockholder, partner, employee or agent thereof (including persons who serve at UGA’s request as directors, officers
or trustees of another organization in which UGA has an interest as a Unitholder, creditor or otherwise) and their respective
Legal Representatives and successors (hereinafter referred to as a “Covered Person”) against all liabilities
and expenses, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties,
and counsel fees reasonably incurred by any Covered Person in connection with the defense or disposition of any action, suit or
other proceedings, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person
may be or may have been involved as a party or otherwise or with which such person may be or may have been threatened, while in
office or thereafter, by reason of an alleged act or omission as a general partner or director or officer thereof, or by reason
of its being or having been such a general partner, director or officer, except with respect to any matter as to which such Covered
Person shall have been finally adjudicated in any such action, suit or other proceeding not to have acted in good faith in the
reasonable believe that such Covered Person’s action was in the best interest of UGA, and except that no Covered Person
shall be indemnified against any liability to UGA or limited partners to which such Covered Person would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such
Covered Person’s office. Expenses, including counsel fees so incurred by any such Covered Person, may be paid from time
to time by UGA in advance of the final disposition of any such action, suit or proceeding on the condition that the amounts so
paid shall be repaid to UGA if it is ultimately determined that the indemnification of such expenses is not authorized hereunder.
As to any matter
disposed of by a compromise payment by any such Covered Person, pursuant to a consent decree or otherwise, no such indemnification
either for said payment or for any other expenses shall be provided unless such compromise shall be approved as in the best interests
of UGA, after notice that it involved such indemnification by any disinterested person or persons to whom the questions may be
referred by United States Commodity Funds LLC (“USCF”) the general partner, provided that there has been obtained
an opinion in writing of independent legal counsel to the effect that such Covered Person appears to have acted in good faith
in the reasonable belief that his or her action was in the best interests of UGA and that such indemnification would not protect
such persons against any liability to UGA or its limited partners to which such person would otherwise by subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of office.
Approval by
any disinterested person or persons shall not prevent the recovery from persons as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith in the reasonable belief that such Covered Person’s
action was in the best interests of UGA or to have been liable to UGA or its limited partners by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person’s office.
The right
of indemnification hereby provided shall not be exclusive of or affect any other rights to which any such Covered Person may be
entitled. An “interested Covered Person” is one against whom the action, suit or other proceeding on the same
or similar grounds is then or has been pending and a “disinterested person” is a person against whom none of
such actions, suits or other proceedings or another action, suit or other proceeding on the same or similar grounds is then or
has been pending. Nothing contained in this provision shall affect any rights to indemnification to which personnel of a general
partner, other than directors and officers, and other persons may be entitled by contract or otherwise under law, nor the power
of UGA to purchase and maintain liability insurance on behalf of any such person.
Nothing
in this provision shall be construed to subject any Covered Person to any liability to which he is not already liable under this
Agreement or applicable law.
Each
limited partner agrees that it will not hold any Affiliate or any officer, director, stockholder, partner, employee or agent of
any Affiliate of USCF liable for any actions of USCF or any obligations arising under or in connection with this Agreement or
the transactions contemplated hereby.
Item
16. Exhibits
(a) Exhibits
(1)
|
Incorporated by reference to Registrant’s
Registration Statement on Form S-1(File No. 333-142206), filed on April 18, 2007.
|
(2)
|
Incorporated by reference to Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 13, 2013.
|
(3)
|
Incorporated by reference to Registrant’s
Registration Statement on Form 8-K, filed on March 30, 2020.
|
(4)
|
Incorporated by reference to the Registrant’s
Current Report on Form 8-K, filed on October 24, 2011.
|
(5)
|
Incorporated by reference to Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2015, filed on March 11, 2016.
|
(6)
|
Incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-195419) filed on March 31, 2016
|
(7)
|
Incorporated by reference to Registrant’s
Registration Statement on Form S-1 (File No. 333- 162717) filed on October 28, 2009.
|
(8)
|
Incorporated by reference to Registrant’s
Current Report on Form 8-K, filed on December 15, 2017.
|
|
|
(9)
|
Incorporated by reference to the Registrant’s
Quarterly Report on Form 10-Q for the Quarter ended September 30, 2009, filed on November 16, 2009.
|
|
|
(10)
|
Incorporated by reference to Registrant’s
Current Report on Form 8-K, filed on October 10, 2013.
|
|
|
(11)
|
Incorporated by reference to Pre-Effective
Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-237337) filed on April 23, 2020.
|
|
|
(12)
|
Incorporated by reference to Registrant’s
Current Report on Form 8-K, filed on May 29, 2020.
|
|
|
(13)
|
Incorporated by reference to Registrant’s
Current Report on Form 8-K, filed on June 9, 2020.
|
|
|
(14)
|
Incorporated by reference to Registrant’s
Current Report on Form 8-K, filed on December 7, 2020.
|
|
|
(15)
|
Incorporated by reference to Registrant’s
Quarterly Report on Form 10-Q for the Quarter ended June 30, 2012, filed on August 9, 2012.
|
|
|
*
|
Filed herewith.
|
(b)
|
Financial Statement Schedules
|
The financial statement schedules
are either not applicable or the required information is included in the financial statements and footnotes related thereto.
Item
17. Undertakings
(a)
|
The undersigned registrant
hereby undertakes:
|
|
(1)
|
To file,
during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
|
|
|
|
|
|
(i)
|
To include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
|
|
|
|
|
|
|
(ii)
|
To reflect in the
prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement.
|
|
|
|
|
|
|
(iii)
|
To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material
change to such information in the registration statement.
|
Provided, however, that paragraphs
(a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 or Form F-3 and
the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
|
|
|
|
|
(3)
|
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the
offering.
|
|
|
|
|
(4)
|
That, for the purpose
of determining liability under the Securities Act of 1933 to any purchaser:
|
|
|
(i)
|
If the registrant is subject
to Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance
on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement as
of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first
use.
|
|
(5)
|
That, for the purpose of determining
liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be
a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
|
|
(i)
|
Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424
(§230.424 of this chapter);
|
|
(ii)
|
Any free
writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
|
|
(iii)
|
The portion
of any other free writing prospectus relating to the offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant; and
|
|
(iv)
|
Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
|
|
(b)
|
The undersigned registrant
hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
|
|
|
|
|
(c)
|
Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such issue.
|
(d)
|
The undersigned registrant
hereby undertakes:
|
|
(1)
|
To send
to the limited partner at least on an annual basis a detailed statement of any transactions with the General Partner or its
affiliates, and of fees, commissions, compensation and other benefits paid, or accrued to the General Partner or its affiliates
for the fiscal year completed, showing the amount paid or accrued to each recipient and the services performed.
|
|
(2)
|
To provide
to the limited partner the financial statements required by Form 10-K for the first full fiscal year of operations of the
partnership.
|
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 1 to Form S-3 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Walnut Creek, State of California, on March 10, 2021.
|
UNITED STATES GASOLINE FUND,
LP
|
|
United States Commodity Funds
LLC
|
|
as General Partner
|
|
|
|
|
By:
|
/s/ John
P. Love
|
|
|
John P. Love
|
|
|
President and Chief Executive Officer of
|
|
|
United States Commodity Funds LLC
|
|
|
|
Pursuant to the requirements
of the Securities Act of 1933, this Post-Effective Amendment No. 1 to Form S-3 has been signed by the following persons
in the capacities and on the dates indicated. The document may be executed by signatories hereto on any number of counterparts,
all of which shall constitute one and the same instrument.
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
John P. Love
|
|
President,
Chief Executive Officer, and Management Director
|
|
March 10, 2021
|
John P.
Love
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/
Stuart P. Crumbaugh
|
|
Chief Financial
Officer
|
|
March 10,
2021
|
Stuart P.
Crumbaugh
|
|
(Principal
Financial and Accounting Officer)
|
|
|
|
|
|
|
|
*
|
|
Management
Director
|
|
March 10,
2021
|
Nicholas
D. Gerber
|
|
|
|
|
|
|
|
|
|
*
|
|
Management
Director
|
|
March 10,
2021
|
Andrew F
Ngim
|
|
|
|
|
|
|
|
|
|
*
|
|
Management
Director
|
|
March 10,
2021
|
Robert L.
Nguyen
|
|
|
|
|
|
|
|
|
|
*
|
|
Independent
Director
|
|
March 10,
2021
|
Peter M.
Robinson
|
|
|
|
|
|
|
|
|
|
*
|
|
Independent
Director
|
|
March 10,
2021
|
Gordon L.
Ellis
|
|
|
|
|
|
|
|
|
|
*
|
|
Independent
Director
|
|
March 10,
2021
|
Malcolm
R. Fobes III
|
|
|
|
|
* Signed by John P. Love pursuant
a power of attorney signed by each individual on March 23, 2020.
Grafico Azioni United States Gasoline (AMEX:UGA)
Storico
Da Apr 2024 a Mag 2024
Grafico Azioni United States Gasoline (AMEX:UGA)
Storico
Da Mag 2023 a Mag 2024